HACH CO, 10-K, 1998-07-29

HACH CO
10-K, 1998-07-29
LABORATORY ANALYTICAL INSTRUMENTS

Previous: ROYAL OAK MINES INC, 8-K, 1998-07-29

Next: AMERICAN HERITAGE FUND INC, N-30D, 1998-07-29

<PAGE>

FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED APRIL 30, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ___________

Commission file number: 0-3947
HACH COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 42-0704420
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

5600 Lindbergh Drive, Loveland, CO 80538
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(970) 669-3050
(REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act:
COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS)
CLASS A COMMON STOCK, $1.00 PAR VALUE
(TITLE OF CLASS)

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 (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No ____

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. _____

As of July 10, 1998, 8,963,059 shares of Common Stock and
8,542,581 shares of Class A Common Stock were outstanding. The aggregate
value of 2,689,861 shares of Common Stock and 2,735,410 shares of Class A
Common Stock held by non-affiliates (based upon the last sales prices of
$11.25 and $10.25 on July 10, 1998, for the Registrant's Common Stock and
Class A Common Stock, respectively, as listed in the WALL STREET JOURNAL in
the NASDAQ National Market System section on July 10, 1998) was approximately
$58,000,000.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Hach Company Annual Report to Stockholders for
the year ended April 30, 1998 (the "1998 Annual Report") are incorporated by
reference into Parts I, II and IV.

Portions of the Hach Company Proxy Statement for the Annual
Meeting of Stockholders scheduled to be held September 15, 1998 (the "1998
Proxy Statement") are incorporated by reference into Part III.

<PAGE>

NOTE ON FORWARD-LOOKING INFORMATION

Certain statements contained in this Form 10-K constitute
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. The Company intends that such forward-looking statements be subject to
the safe harbors created thereby. Statements containing the words and phrases
"looking ahead," "projected," "we are confident," "should be," "will be,"
"predicted," "believe," "plans," "expect," "estimated" and "anticipate" and
similar expressions identify forward-looking statements. These
forward-looking statements reflect the Company's current views with respect
to future events and financial performance, but are subject to many
uncertainties and factors relating to the Company's operations and business
environment which could change at any time and which may cause the actual
results of the Company to be materially different from any future results
expressed or implied by such forward-looking statements. There are inherent
difficulties in predicting important factors. Potential risks and
uncertainties include, but are not limited to, changes in customer demand and
requirements, delays in introducing new products, foreign exchange rates, the
level of government funding, especially municipalities funding for
water-related products, changes in federal income tax laws and regulations,
competition, unanticipated expenses and delays in the integration of any
newly-acquired business, unanticipated expenses relating to plant
construction and expansion, the timing and scope of technological advances,
the ability to attract and retain skilled technical, marketing and management
personnel, ability to successfully implement its strategies and the soundness
of those strategies, conditions in the U.S. economy in general and world wide
economic and business conditions. The mix of products sold in a quarter is a
result of a combination of factors, including, but not limited to, changes in
customer demands and/or requirements, new product announcements, price
changes, changes in delivery dates, and price competition from other
suppliers. The Company undertakes no obligation to publicly update or revise
any forward-looking statements whether as a result of new information, future
events or otherwise.

<PAGE>

PART I

ITEM 1. BUSINESS

The Registrant was incorporated in Iowa in 1951 and
reincorporated in Delaware on April 3, 1968.

Additional information required by this item appears under the
heading "Description of Business" on pages 14 and 15 of the 1998 Annual
Report and as Note 9 of the Notes to Consolidated Financial Statements,
"Segment Information," on pages 27 and 28 of the 1998 Annual Report.

The Company operates primarily in an industry that encompasses
laboratory instruments, process analyzers and test kits which analyze the
chemical content and other properties of water and other aqueous solutions.
This industry encompasses the chemicals manufactured and sold by the Company,
most of which are used with the instruments and test kits manufactured by the
Company.

On April 30, 1998, in exchange for approximately $16 million
in cash and the Company's Common Stocks, the Company acquired Environmental
Test Systems, Inc., which is engaged in the business of developing and
manufacturing chemical test strips for measuring water quality for consumer
and industrial applications.

Sales for the Company's European subsidiary are made to
European dealers and to customers in the Middle East and Mediterranean Africa
in Belgium francs and U.S. dollars, respectively. Payments from the European
subsidiary to the U.S. parent are made in U.S. dollars and are subject to the
exchange rate in effect at the time of payment. Export transactions made to
all other parts of the world by the international staff based in Loveland,
Colorado, are conducted primarily in U.S. dollars.

The amount of sales made into the international marketplace is
influenced to some degree by the strength of the U.S. dollar against other
currencies. Other conditions which to some extent affect the sales of the
Company's products in international markets include restrictive tariff and
trade policies imposed by foreign countries, and domestic and foreign tax and
economic policies.

ITEM 2. PROPERTIES

The principal physical properties of the Registrant are as
follows:

The Registrant owns a 150,000 square foot steel frame,
concrete building situated on 50 acres adjacent to the Loveland, Colorado
airport at 5600 Lindbergh Drive in Loveland, Colorado.

<PAGE>

This building contains the Registrant's executive and administrative offices
and its research, development, engineering and instrument manufacturing
operations. A 66,000 square foot building is under construction at the
Loveland site and is scheduled for completion in September 1998. This
building will house part of the Company's instrument manufacturing operations.

The Registrant also owns a 169,000 square foot building
complex situated on 45 acres at 100 Dayton Avenue in Ames, Iowa. These
facilities contain chemical manufacturing operations, a chemical research
laboratory, the home office service function and the shipping department and
warehouse for all of the products manufactured and sold by the Registrant.

The Registrant also owns two buildings totaling 45,000 square
feet located in Loveland, Colorado. These buildings contain the Registrant's
plastic component manufacturing operation, part of the Registrant's component
assembly operation and an employee training center.

The Registrant's wholly-owned subsidiary, Hach Europe, S.A.,
owns a distribution and manufacturing plant containing approximately 44,000
square feet in Namur, Belgium.

The Registrant's wholly-owned subsidiary, Environmental Test
Systems, Inc. ("ETS") owns a facility in Elkhart, Indiana. The Elkhart
Facility is a two-story Varco-Pruden pre-engineered metal building that
currently comprises 40,000 square feet, with 35,000 square feet of first
floor manufacturing, office and warehouse space and 5,000 square feet of
second floor office space. The land at the Elkhart Facility will support
expansion of an additional 20,000 square feet.

All of the Registrant's principal physical properties are
modern and were designed and constructed to the Registrant's specifications
specifically for use in its business.

ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders, through the
solicitation of proxies or otherwise.

EXECUTIVE OFFICERS OF REGISTRANT

<TABLE>
<CAPTION>
Name Age Title
<S> <C> <C>
Kathryn Hach-Darrow 75 Chairman of the Board, Chief Executive
Officer, Chairman of the Executive Committee
and Director

Bruce J. Hach 52 President and Chief Operating Officer and
Director

<PAGE>

Robert O. Case 76 Secretary and General Counsel

Gary R. Dreher 45 Vice President and Chief Financial Officer
and Director

Loel J. Sirovy 59 Senior Vice President, Operations

Jerry M. Churchill 58 Vice President, Domestic Sales

Larry D. Thompson 54 Vice President, Ames Chemical Operations

Kenneth Ogan 53 Vice President, Research and Development and
Chief Technical Officer

Brian K. Bowden 33 Vice President, Information Systems
Technology

Mark J. Stephenson 39 Vice President, Marketing and Customer
Support Services - President, ETS
</TABLE>

Kathryn Hach-Darrow has been active in the business of the
Registrant since its inception. She has served on the Board of Directors and
was responsible, prior to May 6, 1977, as Executive Vice President for
certain of the Registrant's administrative and marketing matters. On May 5,
1977, the Board of Directors elected Mrs. Hach-Darrow President and Chief
Operating Officer. On April 28, 1983, she was elected Vice Chairman of the
Board of Directors and on February 28, 1986, she was elected Chairman of the
Board, Chief Executive Officer and Chairman of the Executive Committee and
Director, and has served in these capacities since that date.

Bruce J. Hach, son of Kathryn Hach-Darrow, joined the
Registrant November 1, 1970 and served the Company in various capacities.
From August 27, 1985 to February 28, 1986, he was an Assistant Vice President
in charge of Human Relations. He was elected Senior Vice President on
February 28, 1986. On April 30, 1987, he was elected a Director of the
Registrant, and he was elected Executive Vice President of the Registrant on
August 27, 1987. In August 1988, he was elected President and Chief
Operating Officer of the Registrant and has served in these capacities since
that date.

Robert O. Case has been Secretary of the Registrant since May
29, 1968. He was named General Counsel to the Registrant on August 29, 1989.
From September 1989 to February 1991, he was a shareholder of the Chicago,
Illinois law firm of Schuyler, Roche & Zwirner and a member of its management
committee. From February 1, 1991 to April 30, 1993, he was of counsel to
Schuyler, Roche & Zwirner. Since May 1, 1993, Mr. Case has been of counsel to
McBride Baker & Coles, a Chicago, Illinois law firm. Mr. Case was a director
of the Registrant from May 29, 1968, until his retirement as a Director of
the Registrant effective at the August 30, 1994 Annual Meeting of
Shareholders.

<PAGE>

Gary R. Dreher joined the Registrant on January 17, 1977. He
has held a variety of positions since then. In September 1985, he was named
Controller for the Company. In August 1990, he was elected Vice President
and Treasurer of the Registrant. He was named Vice President and Chief
Financial Officer on November 22, 1994 and has served in that capacity since
that date. He was elected a Director of the Company at the Company's Annual
Meeting of Shareholders on August 30, 1994.

Loel J. Sirovy joined the Registrant on October 19, 1972. He
has held a number of management positions in Production and Human Relations.
On September 1, 1985, he was elected Vice President of Instrument Operations.
On April 28, 1989, he was elected Senior Vice President of Manufacturing. On
August 25, 1992, he was elected Senior Vice President of Operations of the
Registrant and has served in that capacity since that date.

Jerry M. Churchill joined the Registrant on December 1, 1977,
as Marketing Manager of Carle Instruments, Inc., which was a wholly-owned
subsidiary of the Registrant engaged in the manufacturing and sale of gas
chromatographs. On April 2, 1981, he was elected Vice President of Carle
Instruments, Inc. After Carle Instruments, Inc. was merged into Hach
Company, Mr. Churchill was made Assistant Vice President of Chromatography
Operations on September 18, 1983. On February 28, 1986, he was elected Vice
President of Domestic Sales and Marketing. On February 27, 1990, he was
elected Senior Vice President of Marketing and Sales. On August 25, 1992, he
was elected Senior Vice President of Domestic Sales of the Registrant. On
August 24, 1993, he was named Vice President of Domestic Sales of the
Registrant and has served in that capacity since that date. Mr. Churchill
was a Director of the Registrant from August 28, 1990, until his retirement
as a Director of the Registrant effective at the August 29, 1995 Annual
Meeting of Shareholders.

Larry D. Thompson joined the Registrant on April 6, 1964. He
has held a variety of positions in Chemical Operations. In April 1991, he
was named Plant Manager of the Ames, Iowa facility. On August 25, 1992, he
was elected Vice President of Ames Chemical Operations of the Registrant and
has served in that capacity since that date.

Kenneth Ogan joined the Registrant in February 1996 as Vice
President of Research and Development and Chief Technical Officer and has
served in that capacity since that date. He most recently served as
Principal Scientist, Sales and Marketing Division and, prior to that, as
Senior Manager, Advanced Technology Group for Hitachi Instruments, Inc.,
where he was employed from 1989 through January 1996. Prior to joining
Hitachi Instruments, Inc., he was a Group Manager in Instrumentation and
Research and Development for Perkin-Elmer, Inc.

Brian K. Bowden joined the Registrant on January 4, 1988. He
has held a number of management positions in Research and Development,
Production, Marketing and Information Services. On January 7, 1997, he was
elected Vice President of Information Systems Technology of the Registrant
and has served in that capacity since that date.

Mark J. Stephenson joined the Registrant on May 1, 1998, as
Vice President of Marketing Services and President of the Company's
subsidiary, ETS. He most recently served as President

<PAGE>

of ETS prior to its acquisition by the Company on April 30, 1998, and prior
to that, as Senior Vice President and Vice President of Marketing and Sales
of ETS, where he was employed since 1988.

The officers of the Company serve at the pleasure of the Board
of Directors.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The information required by this item appears under the
heading "Common Stock Price Range and Dividends" on page 15 of the 1998
Annual Report and is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

The information required by this item appears under the
heading "Comparative Financial Data - 10-Year Summary" on pages 16 and 17 of
the 1998 Annual Report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

The information required by this item appears in the
Chairman's and President's letter "To Our Fellow Shareholders" on pages 2, 3
and 4 of the 1998 Annual Report and under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 13 and 14 of the 1998 Annual Report, all of which is incorporated
herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item appears in the
Consolidated Financial Statements and the Notes thereto on pages 18 through
28 of the 1998 Annual Report and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item appears under the
heading "Election of Directors" on pages 5 and 6 in the 1998 Proxy
Statement and under the caption "Executive Officers of

<PAGE>

the Registrant" at pages 4 through 7 at the end of Part I of this Report and
is incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item appears under the
heading "Executive Compensation" on pages 8 through 17 in the 1998 Proxy
Statement, and is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item appears under the
heading "Beneficial Ownership of Company Securities By Directors, Officers
and Principal Shareholders" on pages 3 through 5 in the 1998 Proxy Statement,
and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item appears under the
headings "Certain Transactions and Business Relationships" on page 7 of the
1998 Proxy Statement and "Compensation Committee Interlocks and Insider
Participation" on page 17 of the 1998 Proxy Statement, and each is
incorporated herein by reference.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report on Form 10-K:

1. FINANCIAL STATEMENTS: The information required by this item appears on
the pages listed below in the 1998 Annual Report and is incorporated by
reference in response to Item 14(a) 1.

Page No. in
1998 ANNUAL REPORT
<S> <C>
Report of Independent Accountants 18

Financial Statements:

Consolidated statements of income for the years
ended April 30, 1998, 1997 and 1996 19

Consolidated balance sheets, April 30, 1998 and 1997 20

Consolidated statements of stockholders' equity for the
years ended April 30, 1998, 1997 and 1996 21

<PAGE>

Consolidated statements of cash flows for the years
ended April 30, 1998, 1997 and 1996 22

Notes to the consolidated financial statements 23
</TABLE>

2. FINANCIAL STATEMENT SCHEDULE: The following schedule should be read in
conjunction with the consolidated financial statements incorporated by
reference in Item 8 of this Form 10-K. Schedules other than that listed
have been omitted because they are not applicable or not required.

Page No. in
Schedule this Report
-------- -----------
<S> <C>
Report of Independent Accountants on the
Financial Statement Schedule 14
Valuation and Qualifying Accountants 15
(Schedule II)

</TABLE>

3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K: The following exhibits are
included in this Annual Report on Form 10-K. The items identified below as
Exhibits (10)c - (10)l. are management contracts or compensatory plans required
to be filed as an Exhibit to this Annual Report on Form 10-K pursuant to Item
14(c) on Form 10-K.

NO. ASSIGNED IN
EXHIBIT TABLE ON PAGE NO. IN
ITEM 601 OF REG. S-K EXHIBIT THIS REPORT
<S> <C> <C>
(3) a. Restated Certificate of Incorporation of the
Registrant -- hereby incorporated by reference
to Exhibit 99.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended
October 26, 1996, Commission File No. 0-3947;
Certificate of Amendment to Article Fourth of
the Restated Certificate of Incorporation of
the Registrant as filed with the Delaware
Secretary of State on September 10, 1997 --
hereby incorporated by reference to Exhibit 1.2
to the Company's Registration Statement on Form
8-A, Commission File No. 0-3947, as filed with
the Commission on September 10, 1997.

(3) b. By-laws of the Registrant, as amended and
restated through October 26, 1996 -- hereby
incorporated by reference to Exhibit 99.3 to the
Registrant's Quarterly Report on Form 10-Q for
the quarter ended October 26, 1996, Commission
File No. 0-3947.

(10) c. Hach Company 1993 Stock Option Plan as Amended
and Restated as of November 25, 1997.

(10) d. Form of Stock Option Agreement under 1993 Stock
Option Plan -- hereby incorporated by reference to
Exhibit (10)d. to the Registrant's Annual Report

<PAGE>

on form 10-K for the year ended April 30, 1994,
Commission file No. 0-3947.

(10) e. Hach Company Restated 1983 Stock Option Plan --
hereby incorporated by reference to Exhibit (10) d.
to the Registrant's Annual Report on Form 10-K for
the year ended April 30, 1993, Commission File No. 0-3947.

(10) f. Form of Stock Option Agreements for 1983 Stock
Option Plan -- hereby incorporated by reference to
Exhibit (10)e. of the Registrant's Annual Report on
Form 10-K for the fiscal year ended April 30, 1991,
Commission File No. 0-3947.

(10) g. Hach Company Restated Director's Bonus Compensation
Plan -- hereby incorporated by reference to Exhibit (10)f.
of the Registrant's Annual Report on Form 10-K for the
fiscal year ended April 30, 1991, Commission File No.
0-3947; Fifth Amendment to Directors Bonus
Compensation Plan -- hereby incorporated by reference to
Exhibit (10)g. to the Registrant's Annual Report on
Form 10-K for the year ended April 30, 1996,
Commission File No. 0-3947.

(10) h. Executive Employment Agreements between the Company
and each of Bruce J. Hach, Loel J. Sirovy,
Jerry M. Churchill, Gary R. Dreher, and Larry D. Thompson --
hereby incorporated by reference to Exhibit 10(h). to the
Registrant's Annual Report on Form 10-K for the year ended
April 30, 1994, Commission File No. 0-3947;
Executive Employment Agreement between the Company
and Kenneth Ogan -- hereby incorporated by reference to
Exhibit (10)h. to the Registrant's Annual Report on Form 10-K
for the year ended April 30, 1996, Commission File No. 0-3947;
Employment Agreement between the Company and
Mark Stephenson dated April 30, 1998.

(10) i. Hach Company 1995 Employee Stock Purchase Plan as Amended
and Restated as of January 1, 1998.

(10) j. Hach Company Deferred Compensation Plan (as amended
through March 1, 1995) -- hereby incorporated by reference
to Exhibit (10)j. of the Registrant's Annual Report on Form
10-K for the fiscal year ended April 30, 1995, Commission
File No. 0-3947.

<PAGE>

(10) k. Trust Under Hach Company Deferred Compensation Plan
dated as of April 10, 1995 between the Company and the
Dauphin Deposit Bank and Trust Company, as trustee
hereby incorporated by reference to Exhibit (10)k. of the
Registrant's Annual Report on Form 10-K for the fiscal
year ended April 30, 1995, Commission File No. 0-3947.

(10) l. Hach Company 1995 Non-Employee Director Stock Plan
Amended and Restated as of November 25, 1997.

(10) m. Revolving Credit Agreement dated as of July 7, 1997
among the Registrant, Hach Europe S.A. and Colorado
National Bank--hereby incorporated by reference to Exhibit
(10)m. to the Registrant's Annual Report on Form 10-K for
the year ended April 30, 1997, Commission File No. 0-3947.

(13) n. Pages 2, 3, 4 and 13 through 28 of the Registrant's Annual
Report to Stockholders for the year ended April 30, 1998.

(21) o. Subsidiaries of the Registrant.

(23) p. Consent of PricewaterhouseCoopers LLP

(27) q. Financial Data Schedules (electronic filing only)

(b) No reports on Form 8-K were filed during the quarter ended April 30, 1998.

(c) and (d) The exhibits and financial statement schedules required to be filed by this
item are attached to or incorporated by reference in this report.

</TABLE>

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

HACH COMPANY

July 29, 1998 By: /s/ Kathryn Hach-Darrow
- ------------- ------------------------------------------------
Date Kathryn Hach-Darrow, Chairman of the Board,
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

July 29, 1998 By: /s/ Kathryn Hach-Darrow
- ------------- ------------------------------------------------
Date Kathryn Hach-Darrow, Chairman of the Board,
Chief Executive Officer and Director

July 29, 1998 By: /s/ Gary R. Dreher
- ------------- ------------------------------------------------
Date Gary R. Dreher, Vice President, Chief Financial
Officer, Principal Accounting Officer and Director

July 29, 1998 By: /s/ Bruce J. Hach
- ------------- ------------------------------------------------
Date Bruce J. Hach, Director

July 29, 1998 By: /s/ Fred W. Wenninger
- ------------- ------------------------------------------------
Date Fred W. Wenninger, Director

July 29, 1998 By: /s/ Joseph V. Schwan
- ------------- ------------------------------------------------
Date Joseph V. Schwan, Director

<PAGE>

July 29, 1998 By: /s/ John N. McConnell
- ------------- ------------------------------------------------
Date John N. McConnell, Director

July 29, 1998 By: /s/ Linda O. Doty
- ------------- ------------------------------------------------
Date Linda O. Doty, Director

<PAGE>

Report of Independent Accountants on the Financial Statement Schedule

To the Board of Directors of Hach Company

Our audits of the consolidated financial statements referred to in our report
dated June 4, 1998 appearing in the 1998 Annual Report to Shareholders of
Hach Company and Subsidiaries (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule included in Item
14(a)(2) of this Form 10-K. In our opinion, the Financial Statement Schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.

PricewaterhouseCoopers LLP

Denver, Colorado
June 4, 1998

<PAGE>

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Year Ended April 30, 1998, 1997 and 1996
(In thousands)

<TABLE>
<CAPTION>
Balance at Charged to Balance
beginning costs and Deductions at end
of period expenses /(Writeoff) of period
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance for Doubtful Accounts:
Year ended April 30, 1998 $ 249 $ 72 $ (16) $ 305
Year ended April 30, 1997 248 69 (68) 249
Year ended April 30, 1996 247 87 (86) 248
Inventory Reserve:
Year ended April 30, 1998 $ 555 $ 1,317 $ (869) $ 1,003
Year ended April 30, 1997 188 1,369 (1,002) 555
Year ended April 30, 1996 505 245 (562) 188

</TABLE>

<PAGE>

INDEX TO EXHIBITS
<TABLE>
<CAPTION>

NO. ASSIGNED IN
EXHIBIT TABLE ON PAGE NO. IN
ITEM 601 OF REG. S-K EXHIBIT THIS REPORT
<S> <C>
(3) a. Restated Certificate of Incorporation of the
Registrant -- hereby incorporated by reference
to Exhibit 99.2 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended
October 26, 1996, Commission File No. 0-3947;
Certificate of Amendment to Article Fourth of
the Restated Certificate of Incorporation of
the Registrant as filed with the Delaware
Secretary of State on September 10, 1997 --
hereby incorporated by reference to Exhibit 1.2
to the Company's Registration Statement on Form
8-A, Commission File No. 0-3947, as filed with
the Commission on September 10, 1997.

(3) b. By-laws of the Registrant, as amended through
October 26, 1996 -- hereby incorporated by reference
to Exhibit 99.3 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended October 26, 1996,
Commission File No. 0-3947.

(10) c. Hach Company 1993 Stock Option Plan as Amended
and Restated as of November 25, 1997.

(10) d. Form of Stock Option Agreement under 1993 Stock
Option Plan -- hereby incorporated by reference to
Exhibit (10)d. to the Registrant's Annual Report
on form 10-K for the year ended April 30, 1994,
Commission file No. 0-3947.

<PAGE>

Form 10-K for the year ended April 30, 1996,
Commission File No. 0-3947.

(10) i. Hach Company 1995 Employee Stock Purchase Plan
as Amended and Restated as of January 1, 1998.

(10) l. Hach Company 1995 Non-Employee Director Stock Plan
Amended and Restated as of November 25, 1997.

(10) m. Revolving Credit Agreement dated as of July 7, 1997
among the Registrant, Hach Europe S.A. and
Colorado National Bank-- hereby incorporated by reference to
Exhibit (10)m. to the Registrant's Annual Report on Form 10-K for
the year ended April 30, 1997, Commission File No. 0-3947.

(13) n. Pages 2, 3, 4 and 13 through 28 of the Registrant's Annual
Report to Stockholders for the year ended April 30, 1998.

(21) o. Subsidiaries of the Registrant.

<PAGE>

(23) p. Consent of PricewaterhouseCoopers LLP

(27) q. Financial Data Schedules (electronic filing only)

</TABLE>

<PAGE>

HACH COMPANY
1993 STOCK OPTION PLAN
AS AMENDED AND RESTATED AS OF NOVEMBER 25, 1997

1. PURPOSE OF THE PLAN.

The purposes of this Stock Option Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to
provide additional incentive to such individuals, and to promote the success
of the Company's business by aligning employee financial interests with
long-term shareholder value.

Options granted hereunder may be either Incentive Stock Options or
Non-qualified Stock Options, at the discretion of the Board and as reflected
in the terms of the written option agreement.

2. DEFINITIONS.

As used herein, the following definitions shall apply:

(a) "Board" shall mean the Committee, if such Committee has been
appointed, or the Board of Directors of the Company, if such Committee has
not been appointed.

(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.

(c) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one
is appointed; provided, however, if the Board of Directors appoints more
than one Committee pursuant to Section 4, then "Committee" shall refer to
the appropriate Committee, as indicated by the context of the reference.

(d) "Common Stock" shall mean the $1.00 par value Common Stock of
Hach Company.

(e) "Class A Common Stock" shall mean the $1.00 par value Class A
Common Stock of the Company.

(f) "Stock" shall include Common Stock and Class A Common Stock as
indicated by the context of the reference.

<PAGE>

(g) "Company" shall mean Hach Company, a Delaware corporation, and
any successor thereto.

(h) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of sick
leave, maternity leave, infant care leave, medical emergency leave,
military leave, or any other leave of absence authorized in writing by a
Vice President of the Company prior to its commencement.

(i) "Disinterested Person" shall have the same meaning as defined in
Rule 16b-3(c)(2) promulgated by the Securities and Exchange Commission
pursuant to its authority under the Exchange Act.

(j) "Employee" shall mean any person, including officers, employed by
the Company or any Parent or Subsidiary of the Company.

(k) "Incentive Stock Option" shall mean any Option intended to
qualify as an incentive stock option within the meaning of Section 422 of
the Code.

(l) "Maximum Annual Employee Grant" shall have the meaning set forth
in Section 5(e).

(m) "Nonqualified Stock Option" shall mean an Option not intended to
qualify as an Incentive Stock Option.

(n) "Option" shall mean a stock option granted pursuant to the Plan.

(o) "Optioned Stock" shall mean the Stock subject to an Option.

(p) "Optionee" shall mean an Employee who receives an Option.

(q) "Outside Director" shall have the same meaning as defined or
interpreted for purposes of Section 162(m) of the Code.

(r) "Parent" shall mean a "parent corporation" whether now or
hereafter existing, as defined in Section 424(e) of the Code.

-2-

<PAGE>

(s) "Plan" shall mean this 1993 Stock Option Plan, including any
amendments hereto.

(t) "Share" shall mean one share of Stock, as adjusted in accordance
with Section 12 of the Plan.

(u) "Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

3. STOCK SUBJECT TO THE PLAN.

Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of Shares which may be optioned and sold under the Plan is
Six Hundred Twenty-Five Thousand (625,000) shares of Common Stock and Two
Million, One Hundred Twenty-Five Thousand (2,125,000) shares of Class A
Common Stock. The Shares may be authorized, but unissued, or reacquired
shares of Stock.

If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future Option grants under the Plan.

4. ADMINISTRATION OF THE PLAN.

(a) PROCEDURE. The Plan shall be administered by the Board of
Directors of the Company.

(i) The Board of Directors may appoint one or more Committees
each consisting of not less than two members of the Board of Directors
to administer the Plan on behalf of the Board of Directors, subject to
such terms and conditions as the Board of Directors may prescribe.
Once appointed, such Committees shall continue to serve until
otherwise directed by the Board of Directors.

(ii) Any grants of Options to officers who are subject to
Section 16 of the Securities Exchange Act of 1934 (the "Exchange Act")
shall only be made by a Committee of two or more directors, each of
whom is a Disinterested Person provided, however, that in the case of
grants as to which Section 162(m) might otherwise apply such grant
shall only be made by a Committee comprised solely of Outside
Directors.

-3-

<PAGE>

(iii) Subject to the foregoing subparagraphs (1) and (2),
from time to time the Board of Directors may increase the size of the
Committee(s) and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution
therefor, or fill vacancies however caused.

(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive
Stock Options or Nonqualified Stock Options; (ii) to grant options to
purchase solely Common Stock or solely Class A Common Stock or a
combination of both Common Stock and Class A Common Stock; (iii) to
determine, in accordance with Section 8(b) of the Plan, the fair market
value of the Stock; (iv) to determine, in accordance with Section 8(a) of
the Plan, the exercise price per share of Options to be granted; (v) to
determine the Employees to whom, and the time or times at which, Options
shall be granted and the number of Shares to be represented by each Option;
(vi) to interpret the Plan; (vii) to prescribe, amend, and rescind rules
and regulations relating to the Plan; (viii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with
the consent of the holder thereof, modify or amend each Option; (ix) to
reduce the exercise price per share of outstanding and unexercised Options;
(x) to accelerate or defer (with the consent of the Optionee) the exercise
date of any Option; (xi) to authorize any person to execute on behalf of
the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (xii) to make all other determinations
deemed necessary or advisable for the administration of the Plan.

(c) EFFECT OF BOARD'S DECISION. All decisions, determinations, and
interpretations of the Board shall be final and binding on all Optionees
and any other holders of any Options granted under the Plan.

5. ELIGIBILITY.

(a) Options may be granted only to Employees. Notwithstanding the
foregoing, Kathryn Hach-Darrow is not eligible to participate in the Plan.
For avoidance of doubt, directors are not eligible to participate in the
Plan unless they are full-time Employees.

-4-

<PAGE>

(b) Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonqualified Stock Option and
shall specify whether they relate to Common Stock or Class A Common Stock
or both classes. However, notwithstanding such designations, to the extent
that the aggregate fair market value of the Shares with respect to which
options designated as Incentive Stock Options are exercisable for the first
time by any Optionee during any calendar year (under all plans of the
Company) exceeds $100,000, such Options shall be treated as Nonqualified
Stock Options.

(c) For purposes of Section 5(b), Options shall be taken into account
in the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.

(d) Nothing in the Plan or any Option granted hereunder shall confer
upon any Optionee any right with respect to continuation of employment with
the Company, nor shall it interfere in any way with the Optionee's right or
the Company's right to terminate the employment relationship at any time,
with or without cause.

(e) The maximum number of Shares with respect to which an Option or
Options may be granted to any Employee in any one taxable year of the
Company shall not exceed fifty thousand (50,000) shares (the "Maximum
Annual Employee Grant").

6. TERM OF PLAN.

The Plan shall become effective as of December 17, 1993; provided that
the Plan and any Options granted prior to the 1994 Annual Meeting of the
Company's stockholders are subject to the approval by the stockholders at
that meeting. It shall continue in effect until December 17, 2003, unless
sooner terminated under Section 15 of the Plan.

7. TERM OF OPTION.

The term of each Option shall be no more than ten (10) years from the
date of grant. However, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the term of the Option shall be no
more than five (5) years from the date of grant.

-5-

<PAGE>

8. EXERCISE PRICE AND CONSIDERATION.

(a) The per Share exercise price under each Option shall be such
price as is determined by the Board, subject to the following:

(1) In the case of an Incentive Stock Option

(i) granted to an Employee who at the time of the grant of
such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per
Share on the date of grant.

(ii) granted to any other Employee, the per Share exercise
price shall be no less than 100% of the fair market value per
Share on the date of grant.

(2) In the case of a Nonqualified Stock Option the per Share
exercise price may be less than, equal to, or greater than the fair
market value per Share on the date of grant.

(b) The fair market value per Share shall be the closing price per
share of the Common Stock or the Class A Common Stock, as applicable, on
the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System on the date of grant. If there is no
reported closing price of such shares of Common Stock or Class A Common
Stock on NASDAQ on such day the closing price for such day for such stock
will be deemed to be the mean of the closing bid and asked quotations on
NASDAQ for that day. If the Common Stock ceases to be listed on the NASDAQ
National Market System, the Board shall designate an alternative method of
determining the fair market value of the Common Stock or Class A Common
Stock.

(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined
by the Board at the time of grant and may consist of cash and/or check.
Payment may also be made by delivering a properly executed exercise notice
together with irrevocable instructions to a broker to promptly

-6-

<PAGE>

deliver to the Company the amount of sale proceeds necessary to pay the
exercise price. An Optionee may also in addition pay all or a part of the
purchase price with Shares of Common Stock and/or Shares of Class A Common
Stock, provided, however that in the case of Options granted before
September 10, 1997, the date the Company's dual class capital structure
became effective, options must be exercised in tandem (i.e. both the option
on Common Stock and the companion option on Class A Common Stock which
resulted from the change to a dual class capital structure must be
exercised at the same time) and, provided further, that the number of
shares of each class which may be so utilized in payment of the options
shall be subject to such additional rules and restrictions as the Committee
or the Board may promulgate for such exercises. Shares used to pay the
exercise price shall be valued at their fair market value on the exercise
date. With the approval of the Board, the Optionee may borrow from the
Company all or any portion of the funds needed to pay the price on such
terms and conditions as the Board deems appropriate, provided that (i) the
interest rate for any such loan by the Company shall not be less than the
"applicable federal rate" (as defined by Code Section 1274(d)(1)(A)) in
effect on the date of such loan or any other rate as necessary to avoid
the imputation of interest under the Code or other applicable law, (ii)
proceeds of the loan are used solely to pay the exercise price of an
Option granted pursuant to this Plan, and (iii) the Optionee executes a
promissory note and such other documents as the Board deems appropriate to
evidence the Optionee's indebtedness to the Company, and pledges the
Shares received in exchange for such borrowed funds as collateral for
such loan.

(d) Prior to issuance of the Shares upon exercise of an Option, the
Optionee shall pay any federal, state, and local withholding obligations of
the Company, if applicable. If any disqualifying disposition described in
Section 421(b) of the Code is made with respect to Shares acquired upon
exercise of an Incentive Stock Option granted pursuant to the Plan or any
election described in Section 10 is made, then the person making such
disqualifying disposition or election shall notify the Company promptly in
writing of such event and remit to the Company an amount sufficient to
satisfy all federal, state, and local withholding taxes thereby incurred;
provided that, in lieu of or in addition to the foregoing, the Company
shall have the right to withhold such sums from compensation otherwise due
to the Optionee or from any Shares due to the Optionee under the Plan. An
Optionee may elect to pay such

-7-

<PAGE>

withholding tax obligations by having the Company withhold Shares of
Common Stock having a value equal to the amount required to be withheld.
The value of the Shares to be withheld shall equal the fair market value
of the Shares on the day the Option is exercised. The following provisions
shall apply to such elections if made by an Optionee who is a Section 16
officer (i) if an Optionee has received multiple Options, a separate
election must be made for each Option; (ii) the election may be a "standing
election," i.e., upon making an election, a fixed date need not be set for
the exercise of the Option to which the election relates; (iii) the
election will be subject to the approval or disapproval of the Board, which
approval or disapproval may be given at any time after the election to
which it relates; (iv) the election may not be made within six months
following the date of grant of the Option to which it relates; (v) the
election must be made six months prior to the day the Option is exercised,
or both the election and exercise must be made in the ten-day
"window period" beginning on the third day following the release of the
Company's quarterly or annual summary statement of sales and earnings;
and (vi) an election may be revoked, or may be reinstituted after a
revocation, only upon six months' prior notice.

9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board at the time of grant, and as shall be
permissible under the terms of the Plan.

An Option may not be exercised for a fraction of a Share.

An Option shall be deemed to be exercised when written notice of such
exercise (designating the class of stock being exercised if the Option was
granted for both classes and both classes are then subject to exercise) has
been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.
In the event no class is specified in the written notice, the notice of
exercise shall be deemed to first apply to Class A Common Stock and secondly
to the Common Stock if both classes are subject to exercise at the time
written notice of exercise is given. Full payment may, as authorized by the
Board, consist of any consideration and method of payment allowable under
Section 8(c) of the Plan. Until the

-8-

<PAGE>

issuance (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such stock certificate promptly upon exercise of the
Option. In the event that the exercise of an Option is treated in part as
the exercise of an Incentive Stock Option and in part as the exercise of a
Nonqualified Stock Option pursuant to Section 5(b), the Company shall issue a
stock certificate evidencing the Shares treated as acquired upon the exercise
of an Incentive Stock Option and a separate sock certificate evidencing the
Shares treated as acquired upon the exercise of a Nonqualified Stock Option,
and shall identify each such certificate accordingly in its stock transfer
records. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except
as provided in Section 11 of the Plan.

Exercise of an Option in any manner shall result in a decrease in the
number of Shares of the class of stock as to which such exercise relates
which thereafter may be available, both for purposes of the Plan and for sale
under the Option, by the number of Shares as to which the Option is exercised.

(b) TERMINATION OF STATUS AS EMPLOYEE. In the event of termination
of an Optionee's Continuous Status as an Employee, such Optionee may
exercise stock options to the extent exercisable on the date of
termination. Such exercise must occur within three (3) months (or such
shorter time as may be specified in the grant), after the date of such
termination (but in no event later than the date of expiration of the term
of such Option as set forth in the Option Agreement). To the extent that
the Optionee was not entitled to exercise the Option at the date of such
termination, or does not exercise such Option within the time specified
herein, the Option shall terminate.

(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee as a result of total and permanent disability (i.e.,
the inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last
for a continuous period of twelve (12)

-9-

<PAGE>

months), the Optionee may exercise the Option, but only to the extent of
the right to exercise that would have accrued had the Optionee remained
in Continuous Status as an Employee for a period of twelve (12) months
after the date on which the Employee ceased working as a result of the
total and permanent disability. Such exercise must occur within eighteen
(18) months (or such shorter time as is specified in the grant) from the
date on which the Employee ceased working as a result of the total and
permanent disability (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement). To the
extent that the Optionee was not entitled to exercise such Option within
the time specified herein, the Option shall terminate.

(d) DEATH OF OPTIONEE. Notwithstanding the provisions of Section
9(b) above, in the event of the death of an Optionee:

(i) who as at the time of death was an Employee of the Company,
the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of
expiration of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that would have accrued had the
Optionee continued living and remained in Continuous Status as an
Employee twelve (12) months after the date of death; or

(ii) whose Option has not yet expired but whose Continuous Status
as an Employee terminated not more than three (3) months prior to the
date of death, the Option may be exercised, at any time within six (6)
months following the date of death (but in no event later than the
date of expiration of the term of such Option as set forth in the
Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at
the date of termination.

(e) EXTENSION OF EXERCISE PERIOD. Notwithstanding subsections (b),
(c), and (d) above, the Board shall have the authority to extend the
expiration date of any outstanding option in circumstances in which it
deems such action to be appropriate (provided that no such extension shall
extend the

-10-
<PAGE>

term of an option beyond the date on which the option would have
expired if no termination of the Employee's Continuous Status as an
Employee had occurred).

10. NOTIFICATION UNDER CODE SECTION 83(b).

The Board may, on the date of grant of an Option or any later date,
prohibit an Optionee from making the election described in this Section 10.
If the Board has not prohibited such Optionee from making such election, and
the Optionee, in connection with the exercise of any Option, makes the
election permitted under Section 83(b) of the Code (i.e., an election to
include in such Optionee's gross income in the year of transfer the amounts
specified in Section 83(b) of the Code), such Optionee shall notify the
Company of such election within 10 days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and notification
required pursuant to regulations issued under the authority of Section 83(b)
of the Code.

11. NON-TRANSFERABILITY OF OPTIONS.

The Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws
of descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; MERGER OR CHANGE IN
CONTROL.

Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock or Class A Common Stock covered by each
outstanding Option, the Maximum Annual Employee Grant and the number of
shares of Common Stock or Class A Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock or Class A Common
Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares,
respectively, of Common Stock or Class A Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, or reclassification
of the Common Stock or Class A Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock or Class A Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt

-11-

<PAGE>

of consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock or Class A Common
Stock subject to an Option.

In the event of the proposed dissolution or liquidation of the Company,
each Option will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any
Option shall terminate as of the date fixed by the Board and give each
Optionee the right to exercise an Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. In the event of a proposed sale of all or substantially all
of the assets of the Company, or the merger of the Company with or into
another corporation, each Option shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary
of such successor corporation, unless such successor corporation does not
agree to assume an Option or to substitute an equivalent option, in which
case the Board shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Board shall notify the Optionee that the Option shall be fully exercisable
for a period of thirty (30) days from the date of such notice, and the Option
will terminate upon the expiration of such period.

13. TIME OF GRANTING OPTIONS.

The date of grant of an Option shall, for all purposes, be the date on
which the Company completes the corporate action relating to the grant of an
option and all conditions to the grant have been satisfied, provided that
conditions to the exercise of an option shall not defer the date of grant.
Notice of a grant shall be given to each Employee to whom an Option is so
granted within a reasonable time after the determination has been made.

-12-

<PAGE>

14. SUBSTITUTIONS AND ASSUMPTIONS.

The Board shall have the right to substitute or assume Options in
connection with mergers, reorganizations, separations, or other transactions
to which Section 424(a) of the Code applies, provided such substitutions and
assumptions are permitted by Section 424 of the Code and the regulations
promulgated thereunder. The number of Shares reserved pursuant to Section 3
may be increased by the corresponding number of Options assumed and, in the
case of a substitution, by the net increase in the number of Shares subject
to Options before and after the substitution.

15. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable
(including, but not limited to amendments which the Board deems appropriate
to enhance the Company's ability to claim deductions related to stock
option exercises); provided that, the following revisions or amendments
shall require approval of or ratification by the stockholders of the
Company:

(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 12 of the
Plan; or

(ii) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any change which would require stockholder approval
pursuant to Rule 16b-3 promulgated by the Securities and Exchange
Commission pursuant to its authority under the Exchange Act.

(b) EMPLOYEES IN FOREIGN COUNTRIES. The Board shall have the
authority to adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its Subsidiaries may operate to assure
the viability of the benefits from Options granted to Employees employed in
such countries and to meet the objectives of the Plan.

(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force

-13-

<PAGE>

and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which
agreement must be in writing and signed by the Optionee and the Company.

16. CONDITIONS UPON ISSUANCE OF SHARES.

Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, and the requirements of any
stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.

17. RESERVATION OF SHARES.

The Company, during the term of this Plan, will at all times reserve and
keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

18. OTHER COMPENSATION PLANS.

Nothing contained in the Plan shall prevent the Company or any affiliate
from adopting or continuing in effect other or additional compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.

19. NO ILLEGAL TRANSACTIONS.

The Plan and all Options granted pursuant to it are subject to all laws
and regulations of any governmental authority which may be applicable
thereto; and notwithstanding any provision of the Plan or any Option,
Optionees shall not be entitled to exercise Options or receive the benefits
thereof and the Company shall not be obligated to deliver any Shares or pay
any benefits to a Optionee if such exercise, delivery, receipt or payment of
benefits would constitute a violation by the Optionee or the Company of any
provision of any such law or regulation.

20. CONTROLLING LAW.

The law of the State of Colorado, except its law with respect to choice
of law and except as to matters relating to corporate law

-14-

<PAGE>

(in which case the corporate law of the State of Delaware shall control),
shall be controlling in all matters relating to the Plan.

21. TAX LITIGATION.

The Company shall have the right, but not the obligation, to contest, at
its expense, any tax ruling or decision, administrative or judicial, on any
issue that is related to the Plan and that the Company believes to be
important to Optionees and to conduct any such contest or any litigation
arising therefrom to a final decision.

22. SEVERABILITY.

If all or any part of the Plan is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall
not serve to invalidate any portion of the Plan not declared to be unlawful
or invalid. Any Section or part of a Section so declared to be unlawful or
invalid shall, if possible, be construed in a manner in which will give
effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid.

23. INDEMNIFICATION.

Each person who is or at any time serves as a member of the Board shall
be indemnified and held harmless by the Company against and from: (i) any
loss, cost, liability or expense, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, that may be imposed
upon or reasonably incurred by such person in connection with or resulting
from any claim, action, suit, or proceeding to which such person may be a
party or in which such person may be involved by reason of any action or
failure to act under the Plan; and (ii) any and all amounts paid by such
person in satisfaction of judgment in any such action, suit or proceeding
relating to the Plan. Each person covered by this indemnification provision
shall give the Company an opportunity, at its own expense, to handle and
defend the same before such person undertakes to handle and defend it on such
person's own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the By-Laws of the Company, as a matter of law, or otherwise,
or any power that the Company may have to indemnify such person or hold such
person harmless.

-15-

<PAGE>

24. RELIANCE ON REPORTS.

Each member of the Board shall be fully justified in relying or acting
in good faith upon any report made by the independent public accountants of,
or counsel for, the Company and upon any other information furnished in
connection with the Plan. In no event shall any person who is or shall have
been a member of the Board be liable for any determination made or other
action taken or any failure to act in reliance upon any such report or
information or for any action taken, including the furnishing of information,
or failure to act, if done in good faith.

25. EXPENSES.

The Company shall bear all expenses of administering the Plan.

26. TITLES AND HEADINGS.

The titles and headings of the sections in the Plan are for convenience
of reference only, and in the event of any conflict, the text of the Plan,
rather than such titles or headings, shall control.

27. STOCKHOLDER APPROVAL.

The Plan is subject to approval by the shareholders of the Company at
the Annual Meeting of Shareholders to be held in September, 1998.

-16-

<PAGE>

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 30,
1998 between Hach Company, a Delaware corporation (the "Company"), and Mark
Stephenson (the "Executive").

R E C I T A L S

A. Company is a major manufacturer and distributor of laboratory
instruments, process analyzers, test kits and chemical reagents primarily
used to analyze the chemical content and other properties of water.

B. Company and Environmental Test Systems, Inc., an Indiana
corporation), have entered into an Agreement and Plan of Merger ("Merger
Agreement") dated January 21, 1998, as amended as of February 26, 1998,
pursuant to which Environmental Test Systems, Inc. will merge into a
wholly-owned subsidiary of the Company (the "Merger") with the surviving
company being a wholly owned subsidiary of the Company with its name changed
to "Environmental Test Systems, Inc." As used herein "ETS" shall mean both
Environmental Test Systems, Inc. prior to the Merger and the surviving
corporation in the Merger.

C. Executive has served as the President of ETS, and the Company
wishes to employ Executive from and after the closing of the Merger as a
Vice-President of the Company and to work for Company and ETS, upon the terms
and conditions set forth in this Agreement.

D. In the course of his employment, Executive has or will have
knowledge of or access to, important trade secrets and confidential
information of the Company and ETS and their affiliates.

AGREEMENT

The parties, intending to be legally bound, agree as follows:

1. DEFINITIONS

For the purposes of this Agreement, the following terms have the
meanings specified or referred to in this Section 1.

"AFFILIATE" means any Person which controls, is controlled by, or is
under common control with, the Company, and shall include, without
limitation, the parent or subsidiary of the Company, if any.

"AGREEMENT" means this Employment Agreement, as amended from time to
time.

<PAGE>

"BENEFITS" shall have the meaning given it in Section 3.2.

"BOARD OF DIRECTORS" means the board of directors of the Company.

"CONFIDENTIAL INFORMATION" means any and all:

(a) trade secrets concerning the business and affairs of the Company
and its Affiliates, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements,
price lists, market studies, business plans, computer software and programs
(including object code and source code), computer software and database
technologies, systems, structures, and architectures (and related formulae,
compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) and any other
information, however documented, that is a trade secret within the meaning of
applicable Colorado and Indiana trade secret law; and

(b) information concerning the business and affairs of the Company and
its Affiliates (which includes historical financial statements, financial
projections and budgets, historical and projected sales, capital spending
budgets and plans, the names and backgrounds of key personnel, personnel
training and techniques and materials), however documented; and

(c) notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company and its Affiliates containing or
based, in whole or in part, on any information included in the foregoing.

"DISABILITY" shall have the meaning given it in Section 6.2.

"EFFECTIVE DATE" means the date stated in the first paragraph of the
Agreement.

"EMPLOYEE INVENTION" means any idea, invention, technique, modification,
process, or improvement (whether patentable or not), any industrial design
(whether registrable or not), any mask work, however fixed or encoded, that
is suitable to be fixed, embedded or programmed in a semiconductor product
(whether recordable or not), and any work of authorship (whether or not
copyright protection may be obtained for it) created, conceived, or developed
by the Executive, either solely or in conjunction with others, during the
Employment Period, or a period that includes a portion of the Employment
Period, that relates in any way to, or is useful in any manner in, the
business then being conducted or proposed to be conducted by the Company and
its Affiliates, and any such item created by the Executive, either solely or
in conjunction with others, following termination of the Executive's
employment with the Company or its Affiliates, that is based upon or uses
Confidential Information.

"EMPLOYMENT PERIOD" means the term of the Executive's employment under
this Agreement.

<PAGE>

"FOR CAUSE" shall have the meaning given it in Section 6.3.

"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization, or governmental body.

"POST-EMPLOYMENT PERIOD" shall have the meaning given it in Section 8.2.

"PROPRIETARY ITEMS" shall have the meaning given it in Section
7.2(a)(iv).

"SALARY" shall have the meaning given it in Section 3.1.

2. EMPLOYMENT TERMS AND DUTIES

2.1 EMPLOYMENT

The Company hereby employs the Executive, and the Executive hereby
accepts employment by the Company, upon the terms and conditions set forth in
this Agreement.

2.2 TERM

(a) INITIAL TERM. Subject to the provisions of Section 6, the term of
the Executive's employment under this Agreement will be for the period from
the Effective Date through April 30, 2001, unless renewed in accordance with
the provisions of Section 2.2(b).

(b) RENEWAL. Subject to the provisions of Section 6, in the event the
term of this Agreement ends on April 30, 2001, and Executive continues in the
employment of the Company to that date without any of the events set forth in
Section 6.1 having previously occurred, the term of this Agreement shall
automatically be extended for an additional one year period (and thereafter,
annually for successive additional one year periods) commencing May 1, 2001
(and each May 1 thereafter) unless either party gives the other written
notice of his or its intent not to renew by December 1, 2000 (and annually,
by any December 1 thereafter).

2.3 DUTIES

The Executive will have such duties as are assigned or delegated to the
Executive by the Board of Directors or Chief Executive Officer of the
Company, and will initially serve as a Vice-President of the Company and
President of ETS. At all times during the term hereof, Executive shall be
employed in an executive position with the Company. The Executive
acknowledges that he may be assigned to provide services to or on behalf of
the Company's Affiliates as part of his duties under this Agreement. The
Executive will devote his entire business time, attention, skill, and energy
exclusively to the business of the Company and its

<PAGE>

Affiliates, will use his best efforts to promote the success of the business
of the Company and its Affiliates, and will cooperate fully with the Board of
Directors in the advancement of the best interests of the Company and its
Affiliates. If the Executive is elected as a director of the Company or as a
director or officer of any of its Affiliates, the Executive will fulfill his
duties as such director or officer without additional compensation.

3. COMPENSATION

3.1 SALARY.

The Executive will be paid an annual salary (the "Salary") during the
term of this Agreement of $155,000.00 which shall be prorated for the period
between the date of this Agreement and April 30, 1998. The Company by action
of its Board of Directors reserves the right to increase, but not decrease,
the Executive's Salary during the Term of this Agreement. The Salary will be
payable in equal periodic installments according to the Company's customary
payroll practices. In the event the term of the Agreement is renewed beyond
April 30, 2001, the Company and Executive will negotiate in good faith with
respect to an annual salary for the renewal terms.

3.2 BENEFITS. The Executive will, during the Employment Period, be
permitted to participate in such stock option, pension, profit sharing,
bonus, life insurance, hospitalization, major medical, and other employee
benefit plans of the Company that may be in effect from time to time, to the
extent the Executive is and remains eligible under the terms of those plans
(collectively, the "Benefits").

4. EXPENSES

(a) The Company will pay on behalf of the Executive (or reimburse the
Executive for) reasonable expenses incurred by the Executive at the request
of, or on behalf of, the Company or its Affiliates in the performance of the
Executive's duties pursuant to this Agreement, and in accordance with the
Company's employment policies, including reasonable expenses incurred by the
Executive in attending conventions, seminars, and other business meetings, in
appropriate business entertainment activities, and for promotional expenses.
The Executive must file expense reports prior to reimbursement with respect
to such expenses in accordance with the Company's policies.

(b) The Company will pay for or reimburse Executive for all reasonable
costs of moving his residence from Elkhart, Indiana to Loveland, Colorado.

5. VACATIONS AND HOLIDAYS

The Executive will be entitled to a paid vacation each year in
accordance with the vacation policies of the Company in effect for its
executive officers from time to time with seniority credit being given toward
vacation eligibility for all years of service with ETS but without credit for
accumulated vacation days not taken while employed by ETS. Vacation must be
taken by the Executive at such time or times as approved by the Chairman of
the Board or Chief Executive

<PAGE>

Officer. The Executive will also be entitled to the paid holidays set forth
in the Company's policies.

6. TERMINATION

6.1 EVENTS OF TERMINATION

Notwithstanding anything in this Agreement to the contrary, the term of
Executive's employment under this Agreement, and any and all other rights of
the Executive under this Agreement or otherwise as an employee of the
Company, will terminate (except as otherwise provided in this Section 6):

(a) upon the death of the Executive;

(b) upon the disability of the Executive (as defined in Section 6.2) on
the tenth (10) day following notice from either party to the other; or

6.2 DEFINITION OF DISABILITY

For purposes of Section 6.1, the Executive will be deemed to have a
"disability" if, for physical or mental reasons, the Executive is unable to
perform the essential functions of the Executive's duties under this
Agreement for 90 consecutive days, or 120 days during any twelve month
period, as determined in accordance with this Section 6.2. Prior to the
tenth (10th) day after he receives notice from the Company that it is
terminating this Agreement due to the disability of the Executive, the
Executive may notify the Company in writing that he disputes the Company's
assertion of his disability. In such event, the disability of the Executive
will be determined by a licensed medical doctor selected by the Company and
reasonably acceptable to the Executive. If the Company and the Executive
cannot agree on the selection of a medical doctor within ten (10) days of
Executive's notice of dispute, each of them will promptly select a medical
doctor and the two medical doctors will select a third medical doctor who
will determine whether the Executive has a disability. The determination of
the medical doctor selected under this Section 6.2 will be binding on both
parties. The Executive must submit to a reasonable number of examinations by
the medical doctor making the determination of disability under this Section
6.2, and the Executive hereby authorizes the disclosure and release to the
Company of such determination and all supporting medical records. If the
Executive is not legally competent, the Executive's legal guardian or duly
authorized attorney-in-fact will act in the Executive's stead, under this
Section 6.2, for the purposes of submitting the Executive to the
examinations, and providing the authorization of disclosure, required under
this Section 6.2.

6.3 DEFINITION OF "FOR CAUSE"

For purposes of Section 6.1, the phrase "for cause" means: (a) the
breach of a material provision of this Agreement by the Executive which
continues uncured for 10 days after receipt

<PAGE>

by the Executive of written notice of such breach from the Company; (b) the
Executive's failure to comply with or adhere to any written policy of the
Company or its Affiliates which failure continues for 10 days after receipt
by the Executive of written notice from the Company which specifically
identifies such failure; (c) the appropriation (or attempted appropriation)
of a business opportunity of the Company or its Affiliates, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the Company or its Affiliates; (d) the
misappropriation (or attempted misappropriation) of any of the funds or
property of the Company or its Affiliates; (e) the conviction of, or the
entering of a guilty plea or plea of no contest with respect to, Executive's
commission of any criminal offense which involves dishonesty or breach of
trust; or (f) any willful conduct by the Executive which is demonstrably and
materially injurious to the reputation of the Company or its Affiliates. The
termination of the Executive's employment hereunder shall not be deemed "for
cause" unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board
called and held for that purpose (after reasonable notice to and an
opportunity for the Executive to be heard before the Board with
representation by counsel if Executive so desires), finding that in the good
faith opinion of the Board, the Executive was guilty of the conduct set forth
in any one or more of clauses (a) through (f) above.

6.4 TERMINATION PAY

Effective upon the termination of this Agreement, the Company will be
obligated to pay the Executive (or, in the event of his death, his designated
beneficiary as defined below) only such compensation as is provided in this
Section 6.4, and in lieu of all other amounts and in settlement and complete
release of all claims the Executive may have against the Company and its
Affiliates. For purposes of this Section 6.4, the Executive's designated
beneficiary will be such individual beneficiary or trust, located at such
address, as the Executive may designate by notice to the Company from time to
time or, if the Executive fails to give notice to the Company of such a
beneficiary, the Executive's estate. Notwithstanding the preceding sentence,
the Company will have no duty, in any circumstances, to attempt to open an
estate on behalf of the Executive, to determine whether any beneficiary
designated by the Executive is alive or to ascertain the address of any such
beneficiary, to determine the existence of any trust, to determine whether
any person or entity purporting to act as the Executive's personal
representative (or the trustee of a trust established by the Executive) is
duly authorized to act in that capacity, or to locate or attempt to locate
any beneficiary, personal representative, or trustee.

(a) TERMINATION BY THE COMPANY FOR CAUSE. If the Company terminates
this Agreement for cause, the Executive will be entitled to receive his
Salary only through the date such termination is effective without prejudice
as to the Company's rights to pursue any other remedy available to it at law
or in equity.

(b) TERMINATION UPON DISABILITY. If this Agreement is terminated by
either party as a result of the Executive's disability, as determined under
Section 6.2, the Company will pay the Executive his Salary through the
remainder of the calendar month during which such termination

<PAGE>

is effective. Any bonuses which the Executive would have become entitled to
for the fiscal year in which termination occurs, shall when determined, be
prorated and paid to the termination date.

(c) TERMINATION UPON DEATH. If this Agreement is terminated because of
the Executive's death, the Executive will be entitled to receive his Salary
through the end of the calendar month in which his death occurs. Any bonuses
which the Executive would have become entitled to had he lived throughout the
full fiscal year under the Company's Officers Bonus Plan when determined for
the year in which the Executive's death occurred shall be prorated and paid
to the date of death.

(d) BENEFITS. The Executive's accrual of, or participation in plans
providing for, the Benefits will cease at the effective date of the
termination or non-renewal of this Agreement, and the Executive will be
entitled to accrued Benefits pursuant to such plans only as provided in such
plans.

7. NON-DISCLOSURE COVENANT; EMPLOYEE INVENTIONS

7.1 ACKNOWLEDGMENTS BY THE EXECUTIVE

The Executive acknowledges that (a) during the Employment Period and as
a part of his employment, the Executive was afforded access to Confidential
Information; (b) public disclosure of such Confidential Information could
have an adverse effect on the Company and its business; (c) because the
Executive possesses substantial technical expertise and skill with respect to
the Business, the Company (or, as applicable, its Affiliates) desires to
obtain exclusive ownership of each Employee Invention, and the Company (or,
as applicable, its Affiliates) may be at a substantial competitive
disadvantage if it fails to acquire exclusive ownership of each Employee
Invention; and (d) the provisions of this Section 7 are reasonable and
necessary to prevent the improper use or disclosure of Confidential
Information and to provide the Company (or, as applicable, its Affiliates)
with exclusive ownership of all Employee Inventions.

<PAGE>

7.2 AGREEMENTS OF THE EXECUTIVE

In consideration of the compensation and benefits to be paid or provided
to the Executive by the Company or its Affiliates under this Agreement, the
Executive covenants as follows:

(a) CONFIDENTIALITY.

(i) During and following the Employment Period, the Executive will
hold in confidence the Confidential Information and will not disclose it to
any person except with the specific prior written consent of the Company
(or, as applicable, its Affiliates) or except as otherwise expressly
permitted by the terms of this Agreement.

(ii) Any trade secrets of the Company or its Affiliates will be
entitled to all of the protections and benefits under applicable Colorado
trade secret law and any other applicable law. If any information that the
Company or its Affiliates deems to be a trade secret is found by a court of
competent jurisdiction not to be a trade secret for purposes of this
Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. The Executive hereby waives
any requirement that the Company or its Affiliates submit proof of the
economic value of any trade secret or post a bond or other security.

(iii) None of the foregoing obligations and restrictions applies to
any part of the Confidential Information that the Executive demonstrates
was or became generally available to the public other than as a result of a
disclosure by the Executive.

(iv) The Executive will not remove from the premises of the Company
(or, as applicable, its Affiliates) (except to the extent such removal is
for purposes of the performance of the Executive's duties at home or while
traveling, or except as otherwise specifically authorized by the Company
(or, as applicable, its Affiliates)) any document, record, notebook, plan,
model, component, device, or computer software or code, whether embodied in
a disk or in any other form (collectively, the "Proprietary Items"). The
Executive recognizes that, as between the Company and its Affiliates and
the Executive, all of the Proprietary Items, whether or not developed by
the Executive, are the exclusive property of the Company (or, as
applicable, its Affiliates). Upon termination of this Agreement by either
party, or upon the request of the Company (or, as applicable, its
Affiliates) during the Employment Period, the Executive will return to the
Company all of the Proprietary Items in the Executive's possession or
subject to the Executive's control, and the Executive shall not retain any
copies, abstracts, sketches, or other physical embodiment of any of the
Proprietary Items.

(b) EMPLOYEE INVENTIONS. Each Employee Invention will belong
exclusively to the Company (or, as applicable, its Affiliates). The
Executive acknowledges that all of the Executive's writing, works of
authorship, and other Employee Inventions are works made for hire and the
property of the Company (or, as applicable, its Affiliates), including any
copyrights, patents, or other intellectual property rights pertaining
thereto. If it is determined that any such

<PAGE>

works are not works made for hire, the Executive hereby assigns to the
Company (or, as applicable, its Affiliates) all of the Executive's right,
title, and interest, including all rights of copyright, patent, and other
intellectual property rights, to or in such Employee Inventions. The
Executive covenants that he will promptly:

(i) disclose to the Company (or, as applicable, its Affiliates) in
writing any Employee Invention;

(ii) assign to the Company or to a party designated by the Company
(or, as applicable, its Affiliates), at the request of the Company (or, as
applicable, its Affiliates) and without additional compensation, all of the
Executive's right to the Employee Invention for the United States and all
foreign jurisdictions;

(iii) execute and deliver to the Company (or, as applicable, its
Affiliates) such applications, assignments, and other documents as the
Company (or, as applicable, its Affiliates) may request in order to apply
for and obtain patents or other registrations with respect to any Employee
Invention in the United States and any foreign jurisdictions;

(iv) sign all other papers necessary to carry out the above
obligations; and

(v) give testimony and render any other assistance but without
expense to the Executive in support of the rights of the Company (or, as
applicable, its Affiliates) to any Employee Invention.

7.3 DISPUTES OR CONTROVERSIES

The Executive recognizes that should a dispute or controversy arising
from or relating to this Agreement be submitted for adjudication to any
court, arbitration panel, or other third party, the preservation of the
secrecy of Confidential Information may be jeopardized. All pleadings,
documents, testimony, and records relating to any such adjudication will be
maintained in secrecy and will be available for inspection by the Company
(or, as applicable, its Affiliates), the Executive, and their respective
attorneys and experts, who will agree, in advance and in writing, to receive
and maintain all such information in secrecy, except as may be limited by
them in writing.

8. NON-COMPETITION AND NON-INTERFERENCE

8.1 ACKNOWLEDGMENTS BY THE EXECUTIVE

The Executive acknowledges that: (a) the services to be performed by
him under this Agreement are of a special, unique, unusual, extraordinary,
and intellectual character; (b) the business of the Company and its
Affiliates is national in scope and its products are marketed throughout the
United States; (c) the Company and its Affiliates compete with other
businesses that are or could be located in any part of the United States; and
(d) the provisions of this Section 8 are reasonable and necessary to protect
the business of the Company and its Affiliates.

<PAGE>

8.2 COVENANTS OF THE EXECUTIVE

In consideration of the acknowledgments by the Executive, and in
consideration of the compensation and benefits to be paid or provided to the
Executive by the Company and its Affiliates, the Executive covenants that he
will not, directly or indirectly:

(a) during the Employment Period, except in the course of his
employment hereunder, and during the Post-Employment Period, engage or invest
in, own, manage, operate, finance, control, or participate in the ownership,
management, operation, financing, or control of, be employed by, associated
with, or in any manner connected with, lend the Executive's name or any
similar name to, lend Executive's credit to or render services or advice to,
any business whose products or activities compete in whole or in part with
the products or activities of the Company or its Affiliates anywhere within
the United States; provided, however, that the Executive may purchase or
otherwise acquire up to (but not more than) one percent of any class of
securities of any enterprise (but without otherwise participating in the
activities of such enterprise) if such securities are listed on any national
or regional securities exchange or have been registered under Section 12(g)
of the Securities Exchange Act of 1934; and, provided further, that this
covenant shall not preclude Executive from becoming employed full time in a
position with a major public company in a capacity that does not involve
participation in any competitive activities which may be carried on as a
separate line of business by a division or affiliate of such company.

(b) whether for the Executive's own account or for the account of any
other person, at any time during the Employment Period and the
Post-Employment Period, solicit business of the same or similar type being
carried on by the Company or its Affiliates, from any person known by the
Executive to be a customer of the Company or its Affiliates, whether or not
the Executive had personal contact with such person during and by reason of
the Executive's employment with the Company or its Affiliates;

(c) whether for the Executive's own account or the account of any other
person (i) at any time during the Employment Period and the Post-Employment
Period, solicit, employ, or otherwise engage as an employee, independent
contractor, or otherwise, any person who is or was an employee of the Company
or its Affiliates at any time during the Employment Period or in any manner
induce or attempt to induce any employee of the Company or its Affiliates to
terminate his employment with the Company; or (ii) at any time during the
Employment Period and the Post-Employment Period, interfere with the
relationship of the Company or its Affiliates with any person, including any
person who at any time during the Employment Period was an employee,
contractor, supplier, or customer of the Company or its Affiliates; or

(d) at any time during or after the Employment Period, disparage the
Company or its Affiliates or any of their shareholders, directors, officers,
employees, or agents.

For purposes of this Section 8.2, the term "Post-Employment Period"
means the twelve month period beginning on the date of termination of the
Executive's employment with the Company or its Affiliates.

<PAGE>

The period of time applicable to any covenant in this Section 8.2 will
be extended by the duration of any violation by the Executive of such
covenant. The Executive will, while the covenant under this Section 8.2 is in
effect, give notice to the Company, within ten days after accepting any other
employment, of the identity of the Executive's employer. The Company or its
Affiliates may notify such employer that the Executive is bound by this
Agreement and, at its election, may furnish such employer with a copy of this
Agreement or relevant portions thereof.

Notwithstanding the other provisions of this Section 8.2, Executive may,
during the Employment Period and during the Post-Employment Period, continue
to own a minority ownership interest in Serim Research Corporation.

9. GENERAL PROVISIONS

9.1 INJUNCTIVE RELIEF AND ADDITIONAL REMEDY

The Executive acknowledges that the injury that would be suffered by the
Company or its Affiliates as a result of a breach of the provisions of this
Agreement (including any provision of Sections 7 and 8) would be irreparable
and that an award of monetary damages to the Company or its Affiliates for
such a breach would be an inadequate remedy. Consequently, the Company and
its Affiliates will have the right, in addition to any other rights it may
have, to obtain injunctive relief to restrain any breach or threatened breach
or otherwise to specifically enforce any provision of this Agreement, and
none of the Company or its Affiliates will be obligated to post bond or other
security in seeking such relief. Without limiting the rights of the Company
or its Affiliates under this Section 9 or any other remedies of the Company,
if the Executive breaches any of the provisions of Section 7 or 8, the
Company (and its Affiliates, as applicable) will have the right to cease
making any payments otherwise due to the Executive under this Agreement.

9.2 COVENANTS OF SECTIONS 7 AND 8 ARE ESSENTIAL AND INDEPENDENT
COVENANTS

The covenants by the Executive in Sections 7 and 8 are essential
elements of this Agreement, and without the Executive's agreement to comply
with such covenants, the Company would not have entered into this Agreement
or employed or continued the employment of the Executive.

The Executive's covenants in Sections 7 and 8 are independent covenants
and the existence of any claim by the Executive against the Company under
this Agreement or otherwise, will not excuse the Executive's breach of any
covenant in Section 7 or 8.

If the Executive's employment hereunder expires or is terminated, this
Agreement will continue in full force and effect as is necessary or
appropriate to enforce the covenants and agreements of the Executive in
Sections 7 and 8.

<PAGE>

9.3 OBLIGATIONS CONTINGENT ON PERFORMANCE

The obligations of the Company hereunder, including its obligation to
pay the compensation provided for herein, are contingent upon the Executive's
performance of the Executive's obligations hereunder.

9.4 WAIVER

The rights and remedies of the parties to this Agreement are cumulative
and not alternative. Neither the failure nor any delay by either party in
exercising any right, power, or privilege under this Agreement will operate
as a waiver of such right, power, or privilege, and no single or partial
exercise of any such right, power, or privilege will preclude any other or
further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of
the claim or right unless in writing signed by the other party; (b) no waiver
that may be given by a party will be applicable except in the specific
instance for which it is given; and (c) no notice to or demand on one party
will be deemed to be a waiver of any obligation of such party or of the right
of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.

9.5 BINDING EFFECT; DELEGATION OF DUTIES PROHIBITED

The Company may assign this Agreement to an Affiliate only with the
prior written consent of the Executive. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties hereto and their
respective successors, assigns, heirs, and legal representatives, including
any entity with which the Company may merge or consolidate or to which all or
substantially all of its assets may be transferred. The duties and covenants
of the Executive under this Agreement, being personal, may not be assigned or
delegated.

9.6 NOTICES

All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
facsimile (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and facsimile
numbers set forth below (or to such other addresses and facsimile numbers as
a party may designate by notice to the other parties):

<PAGE>

<S> <C>
If to Company: Hach Company
5600 Lindbergh Drive
Loveland, Colorado 80538
Attention: Gary R. Dreher
Facsimile No.: (970) 962-6709

With a copy (which McBride Baker & Coles
shall not constitute 500 West Madison Street
notice) to: 40th Floor
Chicago, Illinois 60661
Attention: Robert O. Case
Facsimile No.: (312) 993-9350

If to the Executive: Mark Stephenson
Office: Environmental Test Systems, Inc.
23575 County Road 106
P. O. Box 4659
Elkhart, IN 46514-0659
Facsimile No.: (219) 262-2495

with a copy (which William R. Neale, Esq.
shall not constitute Krieg, DeVault, Alexander & Capehart
notice) to: One Indiana Square, Suite 2800
Indianapolis, IN 46204-2017
Facsimile No. (317) 636-1507
</TABLE>

9.7 ENTIRE AGREEMENT; AMENDMENTS

This Agreement contains the entire agreement between the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, between the parties hereto with respect to
the subject matter hereof. This Agreement may not be amended orally, but
only by an agreement in writing signed by the parties hereto.

<PAGE>

9.8 GOVERNING LAW

This Agreement will be governed by the laws of the State of Colorado
without regard to conflicts of laws principles.

9.9 JURISDICTION

Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement shall be brought against either
of the parties exclusively in the federal and state courts located in the
State of Colorado and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any
action or proceeding referred to in the preceding sentence may be served on
either party anywhere in the world.

9.10 SECTION HEADINGS; CONSTRUCTION

The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references
to "Section" or "Sections" refer to the corresponding Section or Sections of
this Agreement unless otherwise specified. All words used in this Agreement
will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.

9.11 SEVERABILITY

If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.

9.12 COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.

<PAGE>

9.13 WAIVER OF JURY TRIAL

THE PARTIES HERETO HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION WITH
RESPECT TO THIS AGREEMENT.

9.14 EFFECTIVENESS

This Agreement is binding upon the parties as of the date of its
execution but it shall become effective only as of the Effective Time of the
Merger (as defined in the Merger Agreement.) If the Merger does not occur,
this Agreement shall be treated as being null and void.

IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date above first written above.

HACH COMPANY

By: /s/ Bruce J. Hach
-----------------------
Its: President

/s/ Mark Stephenson
--------------------
Mark Stephenson

<PAGE>

HACH COMPANY
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED AS OF JANUARY 1, 1998

The purpose of this Plan is to provide employees a continued opportunity
to purchase shares of Hach Class A Common Stock through semi-annual offerings
to be made during the five-year period commencing July 1, 1995. As of
January 1, 1998, five hundred thousand (500,000) shares of Class A Common
Stock in the aggregate have been approved for this purpose. The shares of
Class A Common Stock to be sold to participants under this Plan may be
treasury shares, authorized and unissued shares or Plan Purchase shares as
provided in Section 20 below.

1. ADMINISTRATION. The Plan shall be administered by a Committee
appointed by the Board of Directors from its members or members of senior
management, consisting of at least three members. Members of the Committee
shall not be eligible to participate in the Plan.

2. ELIGIBILITY. Except as provided below, all employees of the
Corporation or its domestic subsidiaries who shall have been employed for a
period of 180 days preceding an offering period and whose customary
employment exceeds twenty (20) hours per week shall be eligible to
participate in the Plan in accordance with such rules as may be prescribed by
the Committee from time to time, which rules, however, shall neither permit
nor deny participation in the Plan contrary to the requirements of the
Internal Revenue Code (including, but not limited to, Section 423(b)(3), (4),
(5) and (8) thereof) and the regulations promulgated thereunder. No employee
may be granted an option if such employee, immediately after the option is
granted, owns 5% or more of the total combined voting power or value of the
stock of the Corporation or any subsidiary. For purposes of the preceding
sentence, the rules of Section 424(d) of the Internal Revenue Code shall
apply in determining the stock ownership of an employee, and stock that the
employee may purchase under outstanding options shall be treated as stock
owned by the employee.

3. OFFERINGS. The Corporation shall make one or more six-month
offerings to employees to purchase Class A Common Stock under this Plan. Each
offering period shall be six months in duration, commencing on January 1 and
July 1 of each year. During such offering periods (or during such portion
thereof as an employee may elect to participate) the amounts received as
compensation by an employee shall constitute the measure of such of the
employee's participation in the offering as is based on compensation.

4. PARTICIPATION. An employee eligible on the effective date of any
offering may participate in such offering at any time by completing and
forwarding a payroll deduction authorization to the employee's appropriate
payroll location. The form will authorize a regular payroll deduction from
the employee's compensation, and must specify the date on which such
deduction is to commence, which may not be retroactive. Such authorization
shall be applicable to subsequent offering periods unless the employer
increases or decreases the employee's payroll deduction as provided in
Section 6 or withdraws from participation as provided in Section 7 below.

<PAGE>

5. DEDUCTIONS. The Corporation shall maintain payroll deduction
accounts for all participating employees. With respect to any offering made
under this Plan, an employee may authorize a payroll deduction of a whole
percentage (up to a maximum of 10 %) of the compensation the employee
receives during the offering period (or during such portion thereof in which
the employee may elect to participate).

No employee may be granted an option that permits his or her rights to
purchase stock under this Plan, and any other stock purchase plan of the
Corporation and its subsidiaries, to accrue at a rate that exceeds $25,000 of
the fair market value of such stock (determined at the effective date of the
applicable offering) for each calendar year in which the option is
outstanding at any time.

6. DEDUCTION CHANGES. An employee may increase or decrease the
employee's payroll deduction by filing a new payroll deduction authorization
at any time. The change may not become effective sooner than the next
offering period after receipt of the authorization.

7. WITHDRAWAL.

(a) A participating employee may withdraw payroll deductions
credited to such employee's account under the Plan at any time by giving
written notice to a designated representative of the Corporation no later
than 7 days prior to the last day of any offering period. All of the payroll
deductions credited to the employee's account will be paid to the employee
promptly after receipt of such notice of withdrawal, and no further
deductions will be made from such employee's pay during that Offering Period.

(b) An employee's withdrawal will not have any effect upon such
employee's eligibility to participate in any similar plan which may hereafter
be adopted by the Corporation or in any subsequent Offering Period under this
Plan.

8. PURCHASE OF SHARES. Each employee participating in any offering
under this Plan shall be granted an option, upon the effective date of such
offering, for as many full and fractional shares of Class A Common Stock as
the participating employee may elect to purchase with up to 10% of the
compensation received during the specified offering period (or during such
portion thereof as the employee may elect to participate), to be paid by
payroll deductions during such period.

Notwithstanding the foregoing, in no event shall the number of
shares purchased by an employee during an offering period exceed 2,000 shares.

The purchase price for each share purchased shall be the lower of
85% of the fair market price of a share of Class A Common Stock on the
commencement date of the offering period or 85% of the fair market price of a
share of Class A Common Stock on the last day of the offering period. As of
the last day of any offering period, the account of each participating
employee shall be totaled, and the employee shall be deemed to have exercised
an option to purchase one or more full or fractional shares at the
then-applicable price; the employee's account shall be charged for the amount
of the purchase; and the ownership of such share or shares shall

<PAGE>

be appropriately evidenced on the books of the Corporation. Additional shares
covered by the employee's option shall be purchased in the same manner, as of
the last day of each subsequent offering period. A participating employee may
not purchase a share under any offering period beyond 6 months from the
effective date thereof. Any balance remaining in an employee's payroll
deduction account at the end of an offering period will be carried forward to
the next offering period.

9. EMPLOYEE ACCOUNTS AND CERTIFICATES. Upon purchase of one or more
full or fractional shares by a Plan participant pursuant to Section 8 hereof,
the Corporation shall establish a book entry account in the name of the
employee to reflect the share(s) purchased at that time. Certificates shall
be issued only on request for full shares. In the event a participant
terminates his or her account, any fractional share held in the account will
be paid to the participant in cash.

10. REGISTRATION OF SHARES. Shares may be registered only in the name
of the employee, or, if the employee so indicates on the employee's payroll
deduction authorization form, in the employee's name jointly with a member of
the employee's family, with right of survivorship. An employee who is a
resident of a jurisdiction that does not recognize such a joint tenancy may
have shares registered in the employee's name as tenant in common or as
community property with a member of the employee's family, without right of
survivorship.

11. DEFINITIONS.

(a) The term "Corporation" or "Hach" means Hach Company, a
Delaware corporation.

(b) The term "Class A Common Stock" means Class A Common Stock,
par value $1.00 per share, of Hach.

(c) The phrase "fair market price" per share on any given date
shall mean (i) the closing price of Class A Common Stock as reported on the
NASDAQ National Market System or, (ii) if on any such date Class A Common
Stock is not reported on such System, the average of the closing bid and
asked prices with respect to Class A Common Stock as furnished by a
professional market maker making a market in Class A Common Stock selected by
the Board of Directors, or (iii) if no such closing price or average of the
closing bid and asked prices are available, such closing price or if not
available, such average of the closing bid and asked prices on the next
preceding business day on which such price or prices were reported, or (iv)
if no such price or prices are available, the fair market value of the Class
A Common Stock as of such date as determined in good faith by the Board of
Directors.

(d) The term "subsidiary" means a subsidiary of the Corporation
within the meaning of Section 424(f) of the Internal Revenue Code and the
regulations promulgated thereunder.

12. RIGHTS AS A STOCKHOLDER. None of the rights or privileges of a
stockholder of the Corporation shall exist with respect to shares purchased
under this Plan unless and until such shares shall have been appropriately
evidenced on the books of the Corporation.

<PAGE>

13. RIGHTS ON RETIREMENT. DEATH OR TERMINATION OF EMPLOYMENT. In the
event of a participating employee's retirement, death, or termination of
employment, the employee shall be ineligible to continue to participate in
the Plan, and no payroll deduction shall be taken from any pay due and owing
to the employee after the pay period during which the employee became
ineligible.

14. RIGHTS NOT TRANSFERABLE. Rights under this Plan are not
transferable by a participating employee other than by will or the laws of
descent and distribution, and are exercisable during the employee's lifetime
only by the employee.

15. APPLICATION OF FUNDS AND ADMINISTRATIVE FEES. All funds received
or held by the Corporation under this Plan may be used for any corporate
purpose. The Committee may impose reasonable administrative fees on
participating employees to defray the administrative costs of the Plan, which
shall in no event exceed the actual administrative costs of the Plan.
Initially, the fee shall be $10 per participating employee. An employee who
withdraws from participation shall pay an additional administration fee
should such employee elect to again participate in a subsequent offering
under this Plan.

16. ADJUSTMENTS IN CASE OF CHANGES AFFECTING CLASS A COMMON STOCK. In
the event of a subdivision of outstanding shares, or the payment of a stock
dividend, the number of shares approved for this Plan, and the share
limitation set forth in Section 8 hereof, shall be increased proportionately,
and such other adjustments shall be made as may be deemed equitable by the
Board of Directors. In the event of any other change affecting Class A Common
Stock, such adjustments shall be made as may be deemed equitable by the Board
of Directors to give proper effect to such event.

17. AMENDMENT OF THE PLAN. The Board of Directors may at any time, or
from time to time, amend this Plan in any respect, except that, without the
approval of a majority of the shares of stock of the Corporation then issued
and outstanding and entitled to vote, no amendment shall be made (i)
increasing the number of shares approved for this Plan (other than as
provided in Section 16 hereof), (ii) decreasing the purchase price per share,
(iii) withdrawing the administration of this Plan from a Committee consisting
of persons not eligible to participate in the Plan, or (iv) changing the
designation of subsidiaries eligible to participate in the Plan.

18. TERMINATION OF THE PLAN. This Plan and all rights of employees
under any offering hereunder shall terminate:

(a) On the day that participating employees become entitled to
purchase a number of shares equal to or greater than the number of shares
remaining available for purchase. If the number of shares so purchasable is
greater than the shares remaining available, the available shares shall be
allocated by the Committee among such participating employees in such manner
as it deems fair; or

(b) At any time, at the discretion of the Board of Directors.

No offering hereunder shall be made which shall extend beyond June 30,
2000.

<PAGE>

19. GOVERNMENTAL REGULATIONS. The Corporation's obligation to sell and
deliver Class A Common Stock under this Plan is subject the approval of any
governmental authority required in connection with the authorization,
issuance, or sale of such stock.

20. PLAN SHARES PURCHASES. Purchases of outstanding shares may be made
pursuant to and on behalf of this Plan, upon such terms as the Corporation
may approve, for delivery under this Plan.

<PAGE>

HACH COMPANY
1995 NON-EMPLOYEE DIRECTOR STOCK PLAN
AS AMENDED AND RESTATED AS OF NOVEMBER 25, 1997

ARTICLE I - PURPOSE OF THE PLAN

The purpose of the Hach Company 1995 Non-Employee Director
Stock Plan is to promote the long-term growth of Hach Company by increasing
the proprietary interest of Non-Employee Directors in Hach Company and to
attract and retain highly qualified and capable Non-Employee Directors.

ARTICLE II - DEFINITIONS

Unless the context clearly indicates otherwise, the following
terms shall have the following meanings:

2.1 "ANNUAL RETAINER" means the annual cash retainer fee
payable by the Corporation to a Non-Employee Director for services as a
director of the Corporation, as such amount may be changed from time to time.

2.2 "AWARD" means an award granted to a Non-Employee
Director under the Plan in the form of Options or Shares, or any combination
thereof.

2.3 "BOARD" means the Board of Directors of Hach Company.

2.4 "CORPORATION" means Hach Company.

2.5 "COMMON STOCK" shall mean the $1.00 par value Common
Stock of Hach Company.

2.6 "CLASS A COMMON STOCK" shall mean the $1.00 par value
Class A Common Stock of Hach Company.

2.7 "FAIR MARKET VALUE" shall mean the value of one Share of
Common Stock or Class A Common Stock determined as follows:

(a) If the Shares are traded on an exchange, the price at which
Shares traded at the close of business on the date of
valuation; or

(b) If the Shares are traded over-the-counter on the NASDAQ
System, the closing price, if one is available, or the mean
between the bid and asked prices on said System at the
close of business on the date of valuation; or

<PAGE>

(c) If neither (a) nor (b) above applies, the fair market value
of Common Stock and Class A Common Stock as determined by
the Board or the Committee in good faith. Such determination
shall be conclusive and binding on all persons.

2.8 "OPTION" means an Option to purchase Shares awarded under
Article VII or IX which does not meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, or any successor law.

2.9 "OPTION GRANT DATE" means the date upon which an Option
is granted to a Non-Employee Director.

2.10. "OPTIONEE" means a Non-Employee Director of the
Corporation to whom an Option has been granted or, in the event of such
Non-Employee Director's death prior to the expiration of an Option, such
Non-Employee Director's executor, administrator, beneficiary or similar
person, or, in the event of a transfer permitted by Article VII hereof, such
permitted transferee.

2.11 "NON-EMPLOYEE DIRECTOR" means a director of the
Corporation who is not an employee of the Corporation or any subsidiary of
the Corporation.

2.12 "PLAN" means the Hach Company 1995 Non-Employee
Director Stock Plan, as amended and restated from time to time.

2.13 "STOCK AWARD DATE" means the date on which Shares are
awarded to a Non-Employee Director.

2.14 "SHARES" shall include Common Stock and Class A Common
Stock as indicated by the context of the reference.

2.15 "STOCK OPTION AGREEMENT" means a written agreement
between a Non-Employee Director and the Corporation evidencing an Option.

ARTICLE III - ADMINISTRATION OF THE PLAN

3.1 ADMINISTRATOR OF THE PLAN. The Plan shall be
administered by a Committee appointed by the Board and consisting of two or
more Directors who are not eligible to participate in the Plan ("Committee").

3.2 AUTHORITY OF COMMITTEE. Subject to the provisions of the
Plan, the Committee shall have full power and authority to: (i) interpret and
construe the Plan and adopt such rules and regulations as it shall deem
necessary and advisable to implement and administer the Plan and (ii)
designate persons other than members of the Committee to carry out its
responsibilities, subject to such limitations, restrictions and conditions as
it may prescribe, such determinations to be made in accordance with the
Committee's best business judgment as to the best interests of the

-2-

<PAGE>

Corporation and its stockholders and in accordance with the purposes of the
Plan; provided, however, that the Committee shall have no discretion with
respect to the eligibility or selection of Non-Employee Directors to receive
options under the Plan, the number of Shares subject to any such options or
the Plan, or the purchase price thereunder, nor shall the Committee have
authority to take any action or make any determination that would materially
increase the benefits accruing to participants under the Plan. The Committee
may delegate administrative duties under the Plan to one or more agents as it
shall deem necessary or advisable.

3.3 DETERMINATION OF COMMITTEE. A majority of the Committee
shall constitute a quorum at any meeting of the Committee, and all
determinations of the Committee shall be made by a majority of its members.
Any determination of the Committee under the Plan may be made without notice
or a meeting of the Committee by a written consent signed by all members of
the Committee.

3.4 EFFECT OF COMMITTEE DETERMINATIONS. No member of the
Committee or the Board shall be personally liable for any action or
determination made in good faith with respect to the Plan or any Award or to
any settlement of any dispute between a Non-Employee Director and the
Corporation. Any decision or action taken by the Committee or the Board with
respect to an Award or the administration or interpretation of the Plan shall
be conclusive and binding upon all persons.

ARTICLE IV - AWARDS UNDER THE PLAN

Awards in the form of Options shall be granted to Non-Employee
Directors in accordance with Article VIII. Awards in the form of Options,
Shares of Common Stock or of Class A Common Stock, or any of such Options or
Shares, or a combination thereof, may be granted to Non-Employee Directors in
accordance with Article IX. Each Option granted under the Plan shall be
evidenced by a Stock Option Agreement in such form and containing such terms
and conditions (not inconsistent with the Plan) as the Committee shall adopt.

ARTICLE V - ELIGIBILITY

Non-Employee Directors of the Corporation shall be eligible to
participate in the Plan in accordance with Articles VIII and IX.

ARTICLE VI - SHARES SUBJECT TO THE PLAN

Subject to adjustment as provided in Article XII, the
aggregate number of Shares which may be issued upon the award of Shares and
the exercise of Options shall not exceed One Hundred Fifty Thousand (150,000)
Shares of Common Stock and One Hundred Fifty Thousand (150,000) Shares of
Class A Common Stock. To the extent that Shares subject to an outstanding
Option are not issued or delivered by reason of the expiration, termination,
cancellation or forfeiture of such Option or by reason of the delivery of
Shares (either actually or by attestation) to pay all or a portion of the
exercise price of such Option, then such Shares shall again be available
under the Plan.

-3-

<PAGE>

ARTICLE VII - NON-TRANSFERABILITY OF OPTIONS

All Options granted under the Plan shall not be transferable
by a Non-Employee Director during his or her lifetime and may not be
assigned, exchanged, pledged, transferred or otherwise encumbered or disposed
of except by court order, will or by the laws of descent and distribution.
Notwithstanding the foregoing, in the event Options may be transferable
without failing to comply with Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, then each Option shall be transferable to the extent set
forth in the related Stock Option Agreement, as determined by the Committee
(provided that all Options granted under Article VIII with the same Option
Grant Date shall have identical provisions relating to the transferability of
such Options). In the event that any Option is thereafter transferred as
permitted by the preceding sentence, the permitted transferee thereof shall
be deemed the Optionee hereunder. Options shall be exercisable during the
Optionee's lifetime only by the Optionee or by the Optionee's guardian, legal
representative or similar person.

ARTICLE IX - NON-ELECTIVE OPTIONS

Each Non-Employee Director shall be granted Options, subject
to the following terms and conditions.

8.1 TIME OF GRANT. On the date of the adoption of this Plan
by the Board each present Non-Employee Director shall be granted an Option to
purchase Five Thousand (5,000) Shares. Each Non-Employee Director who is
first elected or begins to serve as a Non-Employee Director on or after
September 10, 1977 shall be granted an Option to purchase Four Thousand
(4,000) Shares on the date he or she is elected. On the first business day
of September of each year (or, if later, on the date on which a person is
first elected or begins to serve as a Non-employee director), each person who
is a Non-Employee Director shall be automatically granted an Option to
purchase Two Thousand (2,000) Shares which number shall be pro-rated if such
Non-Employee Director is first elected or begins to serve as a Non-Employee
Director on a date other than the date of an annual meeting of stockholders.
Shares subject to options granted pursuant to the preceding two sentences
after September 9, 1997 shall be apportioned equally between Common Stock and
Class A Common Stock.

8.2 PURCHASE PRICE. The purchase price per Share under each
Option granted pursuant to this Article shall be 100% of the Fair Market
Value per Share on the Option Grant Date.

8.3 EXERCISE OF OPTIONS. Each Option shall be fully
exercisable on and after that date which is six months after the Option Grant
Date and, subject to Article X, shall not be exercisable prior to such date.
In no event shall the period of time over which the Option may be exercised
exceed ten years from the Option Grant Date. An Option, or portion thereof,
may be exercised in whole or in part only with respect to whole Shares.

An Option shall be deemed to be exercised when written notice
of such exercise (designating the class of stock being exercised if the
Option was granted for both classes and both

-4-

<PAGE>

classes are then subject to exercise) has been given to the Corporation in
accordance with the terms of the Option by the person entitled to exercise
the Option. In the event no class is specified in the written notice, the
notice of exercise shall be deemed to first apply to Class A Common Stock and
secondly to Common Stock if both classes are subject to exercise at the time
written notice of exercise is given.

Shares shall be issued to the Optionee pursuant to the
exercise of an Option only upon receipt by the Corporation from the Optionee
of payment in full either in cash or by surrendering (or attesting to the
ownership of) Shares of the class to be issued together with proof acceptable
to the Committee that such Shares have been owned by the Optionee for at
least six months prior to the date of exercise of the Option, or a
combination of cash and such Shares, in an amount or having a combined value
equal to the aggregate purchase price for the Shares subject to the Option or
portion thereof being exercised. The Shares issued to an Optionee for the
portion of any Option exercised by attesting to the ownership of Shares shall
not exceed the number of Shares issuable as a result of such exercise
(determined as though payment in full therefor were being made in cash) less
the number of Shares for which attestation of ownership is submitted. The
value of owned Shares submitted (directly or by attestation) in full or
partial payment for the Shares purchased upon exercise of an Option shall be
equal to the aggregate Fair Market Value of such owned Shares on the date of
the exercise of such Option.

8.4 TERMINATION OF SERVICE. In the event of the termination
of service on the Board by the holder of any Option by reason of voluntary
resignation, (other than for disability or mandatory retirement) or failure,
as a nominee, to be elected at an annual meeting of stockholders, the then
outstanding Options of such holder shall be exercisable on their stated
exercisable date and shall expire three years after such termination, or on
their stated expiration date, whichever occurs first. In the case of removal
for cause, the then outstanding Options of such holder shall be exercisable
only to the extent that they were exercisable on the date of such removal and
shall expire six months after such removal or on their stated expiration
date, whichever occurs first. Options that are not exercisable on the date
of such removal shall be forfeited.

8.5 RETIREMENT. In the event of termination of service by
reason of mandatory retirement pursuant to Board policy, the then outstanding
Options shall be exercisable on their stated exercisable dates and shall
expire on their stated expiration dates. In the case of retirement prior to
the retirement date required by mandatory Board policy, all Options
outstanding on the retirement date shall be exercisable on their stated
exercisable date and shall expire three years after the retirement date, or
on their stated expiration date, whichever comes first.

8.6 DISABILITY. In the event of termination of service by
reason of disability (as defined herein), the outstanding Options shall be
exercisable on their stated exercisable dates and shall expire on their
stated expiration dates. "Disability" as used herein shall mean an
Optionee's inability to engage in any substantial gainful activity because of
any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted, or can be expected to last,
for a continuous period of six months or longer.

-5-

<PAGE>

8.7 DEATH. In the event of the death of the holder of any
Option, each of the then outstanding Options of such holder shall become
immediately exercisable, and shall be exercisable by the holder's beneficiary
at any time until the expiration date of the Option (as may be adjusted
pursuant to Sections 8.4 or 8.5). Optionee shall designate beneficiaries in
accordance with procedures established by the Committee.

8.8 PAYMENT OF TAX WITHHOLDING. In order to enable the
Corporation to meet any applicable federal, state or local withholding tax
requirements arising as a result of the exercise of an Option, the Optionee
shall pay the Corporation the amount of tax to be withheld or may elect to
satisfy such obligation by delivering to the Corporation Shares owned by the
Optionee for six months prior to exercising the Option, or by making a
payment to the Corporation consisting of a combination of cash and such
Shares. The value of any Share of Common Stock or Class A Common Stock
delivered to the Corporation pursuant to this Section 8.8 shall be the Fair
Market Value on the date to be used to determine the amount of tax to be
withheld.

ARTICLE IX - ELECTIVE OPTIONS AND SHARES

Each Non-Employee Director shall be granted Options or Shares,
or a combination thereof, subject to the following terms and conditions:

9.1 TIME OF GRANT. On the first business day of September of
each year, Options, Shares of Common Stock or of Class A Common Stock, or any
of such Options or Shares, or a combination thereof, shall be granted to each
Non-Employee Director who, at least one month prior thereto, files with the
Committee or its designee a written election to receive Options or Shares, or
a combination thereof, in lieu of all or a portion of such Non-Employee
Director's Annual Retainer. No statement in such written election as to the
class of Shares to be received shall be of any effect. In the event a
Non-Employee Director does not file a written election in accordance with the
second preceding sentence by reason of becoming a Non-Employee Director after
the date which is one month prior to the first business day of September in
any year, Options, Shares of Common Stock, Class A Common Stock, or any of
such Options or Shares, or a combination thereof, shall be granted to such
Non-Employee Director on the first day (the "Effective Date") which is one
month after the date such Non-Employee Director files with the Committee or
its designee such written election; provided, however, that such election may
apply only to the portion of such Non-Employee Director's Annual Retainer
determined by multiplying such Non-Employee Director's Annual Retainer by a
fraction, the numerator of which is the number of days from and including the
Effective Date to and including the last day of the period for which such
Annual Retainer would otherwise be payable, and the denominator of which is
365 or 366, as the case may be. An election pursuant to the first sentence
of this Section 9.1 may be revoked or changed only on or prior to the date
which is one month prior to the first business day of the following
September. An election pursuant to the third sentence of this Section 9.1
shall be irrevocable. Shares payable in options or shares awarded with
respect to an election pursuant to this Section shall be apportioned equally
in value between Common Stock and Class A Common Stock.

-6-

<PAGE>

9.2 NUMBER AND TERMS OF OPTIONS. The number of Shares
subject to an Option granted pursuant to this Article shall be determined as
follows: (i) the portion of the Annual Retainer which the Non-Employee
Director has elected pursuant to Section 9.1 to be payable in Options shall
be multiplied by four (4); (ii) one-half of that product shall be divided by
the Fair Market Value per share of Common Stock on the Option Grant Date to
determine the number of Shares of Common Stock to be subject to the Option
granted; (iii) the other one-half of that product shall be divided by the
Fair Market Value per share of Class A Common Stock on the Option Grant Date
to determine the number of Shares of Class A Common Stock to be subject to
the Option granted. Any fraction of a Share shall be disregarded and the
remaining amount of such Annual Retainer shall be paid in cash. The purchase
price per share under each Option granted pursuant to this Article shall be
100% of the Fair Market Value per Share on the Option Grant date. Each
Option granted pursuant to this Article shall be exercisable in accordance
with and subject to the terms and provisions of Article VIII other than
Section 8.1 thereof.

9.3 NUMBER OF SHARES. The Number of Shares granted pursuant
to this Article shall be determined as follows: (i) the portion of the
Annual Retainer which the Non-Employee Director has elected pursuant to
Section 9.1 to be payable in Shares shall be divided in two (2); (ii)
one-half of that portion shall be divided by the Fair Market Value per share
of Common Stock on the Stock Award Date to determine the number of Shares of
Common Stock to be granted pursuant to this Article; (iii) the other one-half
of that portion shall be divided by the Fair Market Value per share of Class
A Common Stock on the Stock Award Date to determine the number of Shares of
Class A Common Stock to be granted pursuant to this Article. Any fraction of
a Share shall be disregarded and the remaining amount of such Annual Retainer
shall be paid in cash. Upon an Award of Shares to a Non-Employee Director,
the stock certificate representing such Shares shall be issued and delivered
to the Non-Employee Director, whereupon the Non-Employee Director shall
become a stockholder of the Corporation with respect to such Shares and shall
be entitled to vote the Shares.

ARTICLE X - CHANGE OF CONTROL

10.1 EFFECT OF CHANGE OF CONTROL. Upon the occurrence of an
event of "Change of Control", as defined below, any and all outstanding
Options shall become immediately exercisable.

10.2 DEFINITION OF CHANGE CONTROL. A "Change of Control"
shall occur when:

(a) the stockholders of the Corporation approve a definitive
agreement or plan to merge or consolidate the Corporation
with or into another corporation (other than a merger or
consolidation which would result in the Voting Stock (as
defined below) of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than fifty percent of the
combined voting power of the voting securities of the
Corporation or such surviving entity outstanding immediately
after such merger or consolidation), or to sell, or
otherwise dispose of, all or substantially all of the
Corporation's property and assets, or to liquidate the
Corporation; or

-7-

<PAGE>

(b) the individuals who are Continuing Directors of the
Corporation (as defined below) cease for any reason to
constitute at least a majority of the Board of the
Corporation.

The term "Continuing Director" means (i) any member of the
Board who is a member of the Board on September 1, 1995 or (ii) any person
who subsequently becomes a member of the Board whose nomination for election
or election to the Board is recommended or approved by a majority of the
Continuing Directors. The term "Voting Stock" means all capital stock of the
Corporation which by its terms may be voted on all matters submitted to
stockholders of the Corporation generally.

ARTICLE XI - AMENDMENT AND TERMINATION

The Board may amend the Plan from time to time or terminate
the Plan at any time; provided, however, that no action authorized by this
Article shall adversely change the terms and conditions of an outstanding
Option without the Optionee's consent and, subject to Article XII, the number
of Shares subject to an Option granted under Article VIII, the purchase price
therefor, the date of grant of any such Option and the termination provisions
relating to such Option shall not be amended more than once every six months,
other than to comply with changes in the Internal Revenue Code of 1986, as
amended, or any successor law, or the Employee Retirement Income Security Act
of 1974, as amended, or any successor law, or the rules and regulations
thereunder.

ARTICLE XII - ADJUSTMENT PROVISIONS

12.1 If the Corporation shall at any time change the number
of issued Shares of Common Stock, Class A Common Stock, or both classes of
stock without new consideration to the Corporation (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Shares of Common Stock, Class A Common Stock, or both classes of Stock) or
make a distribution of cash or property which has a substantial impact on the
value of issued Shares of Common Stock, of Class A Common Stock, or both
classes of stock, the total number of Shares of Common Stock, Class A Common
Stock, or both classes of stock reserved for issuance under the Plan shall be
appropriately adjusted and the number of Shares covered by each outstanding
Option and the purchase price per Share under each outstanding Option and the
number of Shares underlying Options to be issued annually pursuant to Section
8.1 shall be adjusted so that the aggregate consideration payable to the
Corporation and the value of each such Option shall not be changed.

12.2 Notwithstanding any other provision of the Plan, and
without affecting the number of Shares reserved or available hereunder, the
Committee shall authorize the issuance, continuation or assumption of
outstanding Options or provide for other equitable adjustments after changes
in the Shares resulting from any merger, consolidation, sale of assets,
acquisitions of property or stock, recapitalization, reorganization or
similar occurrence in which the Corporation

-8-

<PAGE>

is the continuing or surviving corporation, upon such terms and conditions as
it may deem necessary to preserve Optionees' rights under the Plan.

12.3 In the case of any sale of assets, merger, consolidation
or combination of the Corporation with or into another corporation other than
a transaction in which the Corporation is the continuing or surviving
corporation and which does not result in the outstanding Shares being
converted into or exchanged for different securities, cash or other property,
or any combination thereof (an "Acquisition"), any Optionee who holds an
outstanding Option shall have the right (subject to the provisions of the
Plan and any limitation applicable to the Option) thereafter and during the
term of the Option, to receive upon exercise thereof the Acquisition
Consideration (as defined below) receivable upon the Acquisition by the
holder of the number of Shares which would have been obtained upon exercise
of the Option or portion thereof, as the case may be, immediately prior to
the Acquisition. The term "Acquisition Consideration" shall mean the kind
and amount of shares of the surviving or new corporation, cash, securities,
evidence of indebtedness, other property or any combination thereof
receivable in respect of one Share of the Corporation upon consummation of an
Acquisition.

ARTICLE XIII - COMPLIANCE WITH SEC REGULATIONS

It is the Corporation's intent that the Plan comply in all
respects with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and any related regulations. If any provision
of this Plan is later found not to be in compliance with such Rule and
regulations, the provision shall be deemed null and void. All grants and
exercises of Options under this Plan shall be executed in accordance with the
requirements of Section 16 of the Exchange Act and regulations promulgated
thereunder.

ARTICLE XIV - MISCELLANEOUS PROVISIONS

14.1 RIGHTS AS STOCKHOLDER. An Optionee under the Plan shall
have no rights as a holder of Common Stock or Class A Common Stock with
respect to Option grants hereunder, unless and until certificates for Shares
of such stock are issued to the Optionee or such Shares are credited to the
Optionee's Account.

14.2 COMPLIANCE WITH LEGAL REGULATIONS. During the term of
the Plan and the term of any Options granted under the Plan, the Corporation
shall at all times reserve and keep available such number of Shares as may be
issuable under the Plan, and shall seek to obtain from any regulatory body
having jurisdiction any requisite authority required in the opinion of
counsel for the Corporation in order to grant Options to purchase Shares of
Common Stock or Class A Common Stock or to issue Shares of either class of
stock pursuant thereto. If in the opinion of counsel for the Corporation the
transfer, issue or sale of any Shares under the Plan shall not be lawful for
any reason, including the inability of the Corporation to obtain from any
regulatory body having jurisdiction authority deemed by such counsel to be
necessary to such transfer, issuance or sale, the Corporation shall not be
obligated to transfer, issue or sell any such Shares. In any event, the
Corporation shall not be obligated to transfer, issue or sell any Shares to
any participant unless a registration statement which complies with the
provisions of the Securities

-9-

<PAGE>

Act of 1933, as amended (the "Securities Act"), is in effect at the time with
respect to such Shares or other appropriate action has been taken under and
pursuant to the terms and provisions of the Securities Act, or the
Corporation receives evidence satisfactory to the Committee that the
transfer, issuance or sale of such Shares, in the absence of an effective
registration statement or other appropriate action, would not constitute a
violation of the terms and provisions of the Securities Act.

14.3 COSTS AND EXPENSES. The costs and expenses of
administering the Plan shall be borne by the Corporation and not charged to
any Option or to any Non-Employee Director receiving an Option.

ARTICLE XV - EFFECTIVE DATE

The Plan shall be submitted to the stockholders of the
Corporation for approval and, if approved by a majority of all the votes cast
at the 1996 annual meeting of stockholders, shall become effective as of the
date of approval by the Board. If stockholder approval is not obtained at
the 1996 annual meeting of stockholders, the Plan shall be nullified.

-10-

<PAGE>

TO OUR FELLOW SHAREHOLDERS

Fiscal 1998 will be remembered as one of the most exciting and rewarding years
in Hach Company's 50-plus-year history. During the year, Hach not only posted
record financial results, but also successfully recapitalized its financial
structure for the better while making significant capital investments for future
growth. These achievements were made in conjunction with the following major
events, which are sure to mold the future of Hach Company.

- - The repurchase of 6.4 million Hach common shares from Lawter International.
- - The acquisition of Environmental Test System, Inc. (ETS).
- - The creation and issuance of a second class of common stock.

Net sales for 1998 were an all-time record $128,058,000, a 5% increase from 1997
sales of $121,480,000. Domestic sales increased nearly 7% while international
sales increased 4%. International sales were adversely affected by the strong
US dollar and economic conditions in Asia. Sales volume in Europe increased
nearly 12%, but the strong dollar had the effect of reducing 1998 European sales
by approximately $2,380,000 when compared to 1997. Sales in Asia, which
represent approximately 8% of total sales, decreased 5%. Over the past three
years, Asian sales had been growing at a compound annual rate of 20%. Despite
the poor economic conditions in Asia, international sales outside of Europe
showed a healthy 7% increase from 1997 amounts. For the year, net income per
share decreased 7%, reflecting higher interest expense, lower interest income,
and the write-off of purchased research and development associated with the ETS
acquisition. Without this write-off, earnings per share increased 24% for the
year and 33% for the fourth quarter. Economic Profit increased to $6,850,000
from $4,367,000 in 1997, thus yielding Economic Value Added of $2,483,000 for
1998. Economic Profit is defined as net operating profit after taxes, in excess
of a computed capital charge for average capital employed. Economic Value Added
represents the growth in Economic Profit from year to year. We believe that
Economic Value Added is the single best measure of assessing our overall
performance.

The stock buyback from Lawter significantly improved the Company's capital
structure, and we are confident it will benefit our shareholders over the long
term. Prior to the transaction, Hach had accumulated over $40 million in cash
and had no debt. Since the transaction, cash balances have been reduced and $30
million in debt has been incurred. Going forward, we believe that a certain
amount of debt financing is appropriate and will help lead to greater returns
for shareholders.

<PAGE>

To further enhance our capital structure, a second class of common stock was
created and issued. These Class A shares, which are non-voting, offer the
Company greater flexibility to finance future growth, provide greater continuity
of ownership, and offer stockholders more flexibility and liquidity. The Class
A shares carry a higher cash dividend rate and are traded on the NASDAQ National
Market under the symbol HACHA. During fiscal year 1998, we continued to make
investments in the Company aimed at growing sales and profits. Fiscal year 1998
capital spending totaled approximately $11.5 million, and the majority of this
spending was for two improvement projects. We invested in a new building at our
main plant in Loveland, Colorado, and initiated upgrades to our information
systems. Both projects are scheduled for completion in the first half of fiscal
year 1999 and should provide adequate capacity for several years.

In addition to capital investments, Hach closed on the acquisition of ETS on
April 30, 1998. Together, scientists from both companies will redefine the term
"simplified chemistry." ETS is an industry leader in developing, manufacturing
and marketing diagnostic reagent test strips for both consumer and industrial
applications. Test strips are used for on-site testing in pools and spas, and
in the automotive, industrial, medical, soil, and consumer test markets.

[PHOTO]

Kathryn Hach - Darrow and Bruce Hach

This investment is part of the company's strategy to grow through the
acquisition of complementary businesses. In the future, we expect further
acquisitions to play a key role in our growth.

<PAGE>

Over the years, much of our success has been due to our exceptional customer
service and awareness of customers' needs. To help assure we maintain this
level of service and awareness, we realigned our organization along lines of
business matched to the key products we sell. The new organization will enable
us to focus on market solutions that will improve our ability to deliver
world-class products to customers. It will also help to customize sales,
support and business programs for each key product line.

Looking ahead to 1999 and beyond, the opportunities before us position the
Company for continued growth. While populations around the world continue to
grow exponentially, the supply of fresh water remains static. These populations
and their growth rates cannot be sustained without a supply of clean water.

Let us share with you some startling statistics. Currently, more than two
billion people on earth live without any kind of sanitation system. Ninety-five
percent of all cities in the world discharge untreated sewage and wastes into
natural waterways. The demand for clean water for drinking, modern industry and
recreation presents tremendous business opportunities. This is where Hach comes
in.

Hach has established itself as a world leader in providing products for water
quality analysis. Our products ensure that water is safe for its intended uses.
These products cover a wide range of technologies and their uses require
different skill levels. From low-cost test kits to on-line process instruments,
our products fulfill the water quality testing needs of analysts around the
world. Clean water is, and will continue to be, an important resource, and Hach
products will continue to provide reliable and cost-effective means for
analyzing its quality.

We would like to personally thank our employees, customers, shareholders,
suppliers and business partners for their commitment and contributions over the
past year. We believe we have positioned the Company to benefit from the many
opportunities before us. In our opinion, the future has never looked better.

/s/ Kathryn C. Hach-Darrow

Kathryn C. Hach-Darrow
Chairman of the Board
and Chief Executive Officer

/s/ Bruce J. Hach

Bruce J. Hach
President
and Chief Operating Officer

<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

RESULTS OF OPERATIONS: 1998 COMPARED TO 1997

Net sales were a record $128,058,000, an increase of 5.4% over 1997 net sales of
$121,480,000. The Company's domestic and international net sales increased 6.5%
and 3.5% respectively, due primarily to unit volume increases in most of the
Company's major product lines. Both the strong U.S. dollar and the economic
conditions in Asia adversely affected sales. The company's European
subsidiary's sales increased 12% when measured in Belgium Francs, but the strong
U.S. dollar had the effect of reducing fiscal year 1998 European sales by 3%
compared with fiscal year 1997 sales. Sales throughout Asia, which represent
approximately 8% of consolidated sales, decreased 5% from the prior year's
amount.

Cost of sales increased 4.0% to $64,854,000 from $62,342,000. This cost item,
composed of material, labor and product overhead, increased because of unit
volume increases. The gross margin was 49.4% and 48.7% of net sales for 1998
and 1997 respectively. The gross margin increase was due primarily to the
geographic mix of products sold. In general, international sales have lower
gross margins than domestic sales due to the higher discounting granted to the
Company's international distributors.

Selling, general and administrative expense increased 6.5% to $35,566,000 from
$33,385,000. The increase was due primarily to normal wage and salary
increases, costs associated with the increased sales volume, and higher
advertising costs.

Research and development expense decreased 1.2% to $8,360,000 from $8,459,000.
The decrease was primarily due to lower expenditures for outside development
projects.

The Company also incurred a one-time charge of $3,000,000 for purchased research
and development costs associated with the acquisition of Environmental Test
Systems, Inc. (ETS).

Interest income decreased to $994,000 from $1,799,000. The decrease was due to
lower average investments in the current period, due to the repurchase of $60
million of the Company's common stock.

Interest expense increased to $1,588,000 from $13,000. The increase was due to
interest on a long-term loan used to repurchase Hach Company common stock owned
by Lawter International.

The effective income tax rate was 42.0%, compared to 34.5% in 1997. The
increase in the effective income tax rate was due primarily to the write-off of
non-deductible research and development costs associated with the acquisition of
ETS.

Net dollar sales for the Company's European subsidiary decreased 2.5% to
$16,122,000 from $16,531,000, due primarily to a stronger U.S. dollar. The
actual sales volume increased by 12% from that of the prior year. The operating
income decreased 78% to $519,000 from $2,380,000. The decrease was due
primarily to increased costs for U.S. goods, brought about by a stronger dollar
on a weighted average basis in fiscal year 1998 as compared to fiscal year 1997.

RESULTS OF OPERATIONS: 1997 COMPARED TO 1996

Net sales were a record $121,480,000, an increase of 6.3% over 1996 net sales of
$114,285,000. The Company's domestic and international net sales increased 5.7%
and 7.3% respectively, due primarily to unit volume increases in most of the
Company's major product lines. Although sales measured in Belgium francs
increased, a strong U.S. dollar had the effect of reducing European sales by
approximately $1,300,000 when compared to the prior year. International sales
outside of Europe increased 16%.

Cost of sales increased 7.8% to $62,342,000 from $57,839,000. This cost item,
composed of material, labor and product overhead, increased because of unit
volume increases. The gross margin was 48.7% and 49.4% of net sales for 1997
and 1996 respectively. The gross margin decrease was due primarily to the
geographic mix of products sold. In general, international sales have lower
gross margins than domestic sales due to the higher discounting granted to the
Company's international distributors.

Selling, general and administrative expense increased 1.2% to $33,385,000 from
$33,000,000. The increase was due primarily to normal wage and salary increases
and costs associated with the increased sales volume, offset partially by
efficiency improvements throughout the administrative area.

Research and development expense increased 13.3% to $8,459,000 from $7,464,000.
The increase was primarily due to normal wage and salary increases and increased
emphasis on research and development efforts.

Interest income increased to $1,799,000 from $1,324,000. The increase was the
result of higher average investments in the current period.

The effective income tax rate was 34.5%, compared to 35.0% in 1996. The
decrease in the effective income tax rate was due primarily to foreign tax
credits.

Net dollar sales for the Company's European subsidiary decreased 4.6% to
$16,531,000 from $17,290,000, due primarily to a stronger U.S. dollar. The
actual unit sales volume increased by 3.3% from that of the prior year. The
operating income decreased 35% to $2,380,000 from $3,689,000. The decrease was
due primarily to increased costs for U.S. goods, brought about by a stronger
U.S. dollar on a weighted average basis in fiscal year 1997 as compared to
fiscal year 1996. In addition, during 1997 the Company increased the transfer
price for U.S. goods sold to its European subsidiary.

CAPITAL RESOURCES AND LIQUIDITY

The Company experienced substantial change in its capital structure during the
year ended April 30, 1998. On July 8, 1997, the Company purchased 6,314,446
shares of its common stock from Lawter International. The purchase price was
approximately $60 million. The Company used $30 million of existing cash and
$30 million of bank borrowings to finance the stock purchase. The bank
borrowings provide for a revolving line of credit of up to $40 million.

The Revolving Credit Agreement contains covenants and provisions that restrict,
among other things, the ability of the Company and its material subsidiaries to:
(i) create liens on any of its property or assets or assign any rights to
security interests in future revenues; (ii) engage in sale and leaseback
transactions; (iii) engage in mergers, consolidations and sales of all or
substantially all of their assets on a consolidated basis; (iv) enter into
agreements restricting dividends and advances by the subsidiaries; and, (v)
engage in transactions with affiliates other than those based on arm's-length
negotiations. The Revolving Credit Agreement also limits the ability of the
Company and or subsidiaries to purchase capital items, incur indebtedness or
issue preferred stock. The Revolving Credit Agreement also requires the Company
to satisfy certain financial performance criteria.

On April 30, 1998, the Company purchased privately held Environmental Test
Systems, Inc. (ETS). The purchase price was approximately $16,320,000. The
Company used $7,659,000 of existing cash and issued $8,661,000 worth of Common
Stock and Class A Common Stock from its existing treasury shares.

Company cash dividends paid in 1998, 1997 and 1996 were $2,142,000, $2,728,000
and $2,502,000, respectively. The Company intends to continue to increase cash
dividend payments, provided long-term growth is not jeopardized.

The Company monitors cash flow and capital expenditures in great detail as part
of its total budgeting process. During fiscal year 1998, the Company spent
approximately $14,500,000 on capital equipment, approximately $3,000,000 of
which was related to the ETS purchase. During fiscal year 1999, the Company
expects to spend approximately $7,500,000 on capital items consisting primarily
of production equipment and computer and peripheral equipment to support
production, research and development and administration. During fiscal year
1998, the Company began construction of a 66,350 square foot building at the
Loveland, Colorado site. The Company expects to spend approximately $2,500,000
in fiscal year 1999 to complete the building. The addition will provide more
manufacturing, research and development and office space. Occupancy is
scheduled for late summer or early fall of 1998.

Throughout most of the world, the Company transacts business in U.S. dollars.
In Europe, the Company's foreign subsidiary, Hach Europe, transacts business
primarily in Belgium Francs. The change in the cumulative currency translation
adjustment in 1998 was due primarily to a stronger U.S. dollar at April 30, 1998
compared to April 30, 1997.

<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)

The Company intends to finance its capital projects and working capital needs
through existing cash and investments, projected cash flow from operations and
use of its revolving line of credit.

EFFECTS OF INFLATION ON THE COMPANY

The Company is affected by inflation to about the same degree as other American
companies. The Company sells a great variety of products and has a relatively
small order size and short production runs. This causes a higher ratio of
support or overhead personnel in the factory, research and selling functions.
Thus, the impact of wage increases is somewhat greater than would be typical.
As the rate of inflation has declined in recent years, the impact of inflation
on the Company has lessened.

YEAR 2000 COMPUTER SYSTEMS COMPLIANCE

The Company is in the process of the modification or conversion of Company
computer systems to provide for proper functioning beyond calendar year 1999.
It is anticipated that substantially all of these Year 2000 costs will be
incurred during fiscal 1998 and 1999. Management believes that resources are
available to complete the modification and conversion and that its costs will
not materially affect the Company's operating results or financial condition.
Management believes that the Year 2000 compliance will be completed well before
the end of fiscal year 1999. The Company cannot predict the nature or
materiality of the impact on its operations or operating results of
noncompliance by parties outside of its control.

NEW ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements,
in order to measure all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners. Comprehensive income, as defined by SFAS No. 130, is the total of
net income and other comprehensive income (all other non-owner changes in
equity). The Company's foreign currency translation adjustment is categorized
as an element of other comprehensive income under this statement. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, and is
applicable for interim and annual periods. As such, the Company will adopt this
statement in the first quarter of fiscal year 1999. The result of adoption will
be a revised display of the Company's foreign currency translation adjustment.

In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION. SFAS No. 131 requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise. Reportable segments, as defined by
this statement, correspond to the way management organizes units and evaluates
performance internally, and may be based upon products, geography, legal entity,
management structure or combination of these methods. SFAS No. 131 is effective
for years beginning after December 15, 1997. Companies would be required to
restate prior period information upon adoption. The Company will adopt SFAS No.
131 for the fiscal year ending April 30, 1999. The adoption of SFAS No. 131
will result in additional disclosures relating to the Company's reportable
segments.

- -------------------------------------------------------------------------------

HACH COMPANY AND SUBSIDIARIES

DESCRIPTION OF BUSINESS

GENERAL NATURE AND SCOPE OF BUSINESS

Hach Company is engaged predominantly in an industry that encompasses laboratory
instruments, process analyzers and test kits which are used to analyze the
chemical content and other properties of water and other aqueous solutions.
This industry encompasses the analytical reagents and chemicals manufactured and
sold by the Company. The Company manufactures and sells a small amount of
chemicals for uses not associated with the Company's analytical systems for
water analysis.

SALES BY PRINCIPAL PRODUCT GROUP
(PERCENT OF NET SALES) 1998 1997 1996
- -----------------------------------------------------------------
<S> <C> <C> <C>
Analytical Reagents and Chemicals 32.2% 31.7% 30.9%
Laboratory and Portable Instruments 30.7% 29.5% 29.7%
Continuous Reading Process Analyzers 15.4% 17.4% 16.8%
Portable Test Kits and Replacements 12.2% 12.2% 13.2%
Other 9.5% 9.2% 9.4%
- -----------------------------------------------------------------
Total 100% 100% 100%
- -----------------------------------------------------------------
- -----------------------------------------------------------------
</TABLE>

Analytical reagents and chemicals are manufactured and sold to support the Hach
testing systems of laboratory and portable instruments, process analyzers and
portable test kits. More stringent water quality standards and a worldwide
direction toward better control of processes--exhibited by ISO (International
Organization for Standardization) 9000 registration of many industrial
companies--drive the demand for the Company's products and their continued use.

Laboratory and portable instruments consist of Hach-manufactured analytical
instruments in the following categories: spectrophotometers and colorimeters,
turbidimeters, Ion Selective Electrodes, COD (chemical oxygen demand) apparatus,
digestion apparatus, and precision reagent-dispensing devices. These products
are sold to municipal water and wastewater utilities, chemical manufacturers,
industrial water conditioning firms and organizations, power utilities,
commercial analytical laboratories, and government agencies for the testing and
monitoring of controlled impurities in water systems.

Continuous-reading process analyzers consist of Hach-manufactured products in
the following categories: colorimetric analyzers, process turbidimeters, pH
controllers and analyzer accessories. These products are sold to municipalities
for monitoring and controlling drinking water quality and to ensure that
wastewater treatment procedures comply with government regulations.
Steam-generating plants, including operations at electrical utilities,
petrochemical processors, heavy industry installations, and pulp and paper
factories, use the Company's continuous-reading process analyzers for on-line
monitoring of cooling-tower and boiler-feedwater quality. The microelectronics
industry uses the Company's trace silica analyzers to monitor ultrapure water
systems used in processing electronic components.

Hach offers more than 200 different test kits for 12 different application areas
ranging from agriculture to water quality. These portable test kits are
recognized worldwide for ease of use, innovative chemistry, field-oriented
design and rugged construction. Test kits are sold to municipalities for use in
monitoring drinking water distribution systems; to conservation groups to
monitor for influences impacting the environment; to educators for use in
teaching environmental awareness; to customers monitoring industrial processes;
to the water-conditioning industry to use in testing water quality; and to
environmental regulatory authorities for use in checking compliance
requirements.

No material part of the business of the Company is dependent upon a single
product or any customer or a small group of customers.

<PAGE>

HACH COMPANY AND SUBSIDIARIES

DESCRIPTION OF BUSINESS (CONTINUED)

DISTRIBUTION

Hach Company sells its analytical systems throughout the United States by direct
marketing. The Company has Regional Sales Managers located across the country
and responsive telemarketing Customer Service Representatives in the Loveland
facility selling its products. The Company directly distributes products to
customers in the United States through a modern distribution facility in Ames,
Iowa.

Independent distributors and sales representatives, who may handle complementary
and/or competitive product lines, are used to sell and distribute the Company's
products to international customers. Customers in Canada are supported directly
by a sales and service office in Winnipeg, Manitoba.

Hach Company operates a facility in Namur, Belgium, for the marketing and
distribution of its products to the European market. The Namur facility
primarily services the Company's European independent distributors and, to a
lesser extent, distributors and sales agents in Mediterranean Africa, and the
Middle East.

AVAILABILITY OF MATERIALS

The Company has developed close working relationships with many of its key
vendors to assure an adequate and continuous supply of materials for the
Company's products. There are some unique components that would cause temporary
stoppage of specific products if these components were not available. However,
since the Company could obtain alternate sources of supply after a reasonable
period of time, the temporary stoppage would not have a material adverse effect
on the Company.

COMPETITION

The Company competes domestically with a fairly large number of companies.
These companies range in size from a few which are larger than Hach and sell,
primarily, laboratory and portable instruments, to numerous smaller companies
which sell products competitive with only a few of Hach's products. The Company
is not aware of any company which competes with it across the full range of
products sold by it or which competes with it in all major product lines.

Different competitive factors are of greater or lesser importance with respect
to each of the Company's product lines although, overall, technical
sophistication, reliability, quality, relative ease of operation and price
probably are most important. The Company believes that it has no competitive
disadvantages with respect to any of these factors. In many instances the
Company has a competitive advantage due to the relative ease with which
individuals without technical backgrounds can use the Company's products to
perform analyses. Hach Company's competition in international markets is
comparable to its competition in domestic markets. However, the international
competition, particularly from Europe, appears to be growing more aggressive and
competes across a broader range of products.

RESEARCH

During fiscal 1998, 1997 and 1996, the Company spent $8,360,000, $8,459,00 and
$7,464,000, respectively, on Company-sponsored research and development
activities. In fiscal 1998, the Company also incurred a one-time charge of
$3,000,000 for purchased research and development costs associated with the
acquisition of Environmental Test Systems Inc. (ETS).

PATENTS

The Company owns a number of patents. While the company regards its patents as
valuable, it does not consider any of its business materially dependent upon any
single patent.

BACKLOG

The dollar amounts of backlogged orders at May 30, 1998 and May 30, 1997 were
$7,253,000 and $5,593,000, respectively. During the current fiscal year the
Company expects to fill all of the orders which were backlogged at May 30, 1998.

EMPLOYEES

At April 30, 1998, the Company employed approximately 955 people. The Company
is not a party to any collective bargaining agreements.

- -------------------------------------------------------------------------------

HACH COMPANY AND SUBSIDIARIES

COMMON STOCK PRICE RANGE AND DIVIDENDS

COMMON STOCK CASH CLASS A COMMON STOCK CASH
FISCAL SALE DIVIDENDS SALE DIVIDENDS
YEAR QUARTER HIGH LOW PER SHARE HIGH LOW PER SHARE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1998 Fourth 11 9 .03 10 5/8 8 .04
Third 13 5/8 10 .03 10 8 7/8 .04
Second 13 3/8 10 3/16 .03 12 9 1/8 .03
First 21 1/2 14 1/2 .03 --- --- .03

1997 Fourth 19 3/4 14 1/2 .03 --- --- .03
Third 19 16 1/4 .03 --- --- .03
Second 20 14 7/8 .03 --- --- .03
First 17 1/2 14 1/2 .03 --- --- .03
</TABLE>

The Company's Common Stocks trade on the Nasdaq Stock Market under the symbols
HACH and HACHA. The preceding table sets forth the daily high and low last
sales prices for both classes of the Company's Common Stocks for the periods
indicated, as reported in the Wall Street Journal, together with the amounts of
dividends paid for the fiscal years ended April 30, 1998 and 1997. These prices
represent quotations between dealers in securities, do not include retail
markdowns or commissions and do not necessarily represent "actual transactions."
The current quoted prices for both classes of the Company's stocks are listed
daily in the Wall Street Journal in the Nasdaq National Market System section.
On April 30, 1998 there were approximately 970 holders of record of the
Company's Common Stock and 960 holders of record of the Company's Class A Common
Stock.

<PAGE>

HACH COMPANY AND SUBSIDIARIES

COMPARATIVE FINANCIAL DATA--10-YEAR SUMMARY
(IN THOUSANDS EXCEPT RATIO AND PER SHARE DATA)

SUMMARY OF OPERATIONS Years ended April 30, 1998 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales:
United States . . . . . . . . . . . . . . . . . . $ 82,740 $ 77,688 $ 73,472
International . . . . . . . . . . . . . . . . . . 45,318 43,792 40,813
- ----------------------------------------------------------------------------------------------------
Worldwide . . . . . . . . . . . . . . . . . . . . 128,058 121,480 114,285

Cost of sales. . . . . . . . . . . . . . . . . . . 64,854 62,342 57,839
Selling, general and administrative expense. . . . 35,566 33,385 33,000
Research and development expense . . . . . . . . . 8,360 8,459 7,464
Provision to reduce carrying value of
electrochemical assets. . . . . . . . . . . . . . --- --- ---
Purchased research and development expense . . . . 3,000 --- ---
Interest income. . . . . . . . . . . . . . . . . . 994 1,799 1,324
Interest expense . . . . . . . . . . . . . . . . . 1,588 13 6
Income taxes . . . . . . . . . . . . . . . . . . . 6,584 6,585 6,046
Net income . . . . . . . . . . . . . . . . . . . . 9,100* 12,495 11,254
Per share data:+++
Net income: basic . . . . . . . . . . . . . . . . 0.52* 0.55 0.50
Net income: diluted . . . . . . . . . . . . . . . 0.51* 0.55 0.50
Cash dividends per share--Common. . . . . . . . . 0.12 0.12 0.11
Cash dividends per share--Class A . . . . . . . . 0.14 0.12 0.11

OTHER DATA
Current ratio. . . . . . . . . . . . . . . . . . . 2.71 4.71 4.59
Working capital. . . . . . . . . . . . . . . . . . $ 29,440 $ 53,332 $ 41,886
Property, plant and equipment, net . . . . . . . . 36,099 28,804 29,112
Total assets . . . . . . . . . . . . . . . . . . . 102,350 105,580 93,655
Long-term liabilities. . . . . . . . . . . . . . . 30,765 1,726 1,347
Stockholders' equity . . . . . . . . . . . . . . . 39,819 87,289 78,820
Equity per share at year end +++ . . . . . . . . . 2.26 3.84 3.47
Sales per employee . . . . . . . . . . . . . . . . 146 140 132
Weighted average shares outstanding: basic +++ . . 17,643 22,730 22,736
Weighted average shares outstanding: diluted +++ 17,751 22,762 22,736
</TABLE>

<PAGE>

1995 1994 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales:
United States . . . . . . . . . . . . . . . $ 69,867 $ 69,100 $ 62,497 $ 57,148 $ 50,476 $ 45,645 $ 40,598
International . . . . . . . . . . . . . . . 35,402 31,269 31,504 27,591 21,844 17,456 15,253
- ---------------------------------------------------------------------------------------------------------------------------------
Worldwide . . . . . . . . . . . . . . . . . 105,269 100,369 94,001 84,739 72,320 63,101 55,851

Cost of sales. . . . . . . . . . . . . . . . 51,994 49,534 46,623 41,938 36,094 32,193 27,392
Selling, general and administrative expense. 32,240 30,802 28,685 25,936 22,360 18,912 17,619
Research and development expense . . . . . . 6,875 6,586 5,752 4,951 4,372 3,991 3,519
Provision to reduce carrying value of . . .
electrochemical assets. . . . . . . . . . . 775 --- --- --- --- --- ---
Purchased research and development expense . --- --- --- --- --- --- ---
Interest income. . . . . . . . . . . . . . . 661 467 427 312 296 311 332
Interest expense . . . . . . . . . . . . . . 1 12 48 119 177 244 283
Income taxes . . . . . . . . . . . . . . . . 4,775 4,842 4,700 4,357 3,648 3,007 2,815
Net income . . . . . . . . . . . . . . . . . 9,270+ 9,508++ 8,620 7,750 5,965 5,065 4,555
Per share data: +++
Net income: basic . . . . . . . . . . . . . .41+ 0.42++ 0.38 0.34 0.26 0.22 0.20
Net income: diluted . . . . . . . . . . . . .41+ 0.42++ 0.38 0.34 0.26 0.22 0.20
Cash dividends per share--Common. . . . . . 0.09 0.07 0.06 0.05 0.05 0.04 0.03
Cash dividends per share--Class A . . . . . 0.09 0.07 0.06 0.05 0.05 0.04 0.03

OTHER DATA
Current ratio. . . . . . . . . . . . . . . . 4.55 4.14 3.49 2.72 2.79 2.89 2.76
Working capital. . . . . . . . . . . . . . . $ 38,596 $ 30,699 $ 25,124 $ 20,977 $ 17,631 $ 16,546 $ 14,555
Property, plant and equipment, net . . . . . 29,128 28,903 29,270 28,094 25,024 21,678 18,221
Total assets . . . . . . . . . . . . . . . . 84,258 74,358 66,971 61,619 52,849 47,217 42,530
Long-term liabilities. . . . . . . . . . . . 2,070 2,081 2,246 2,104 2,593 3,131 3,629
Stockholders' equity . . . . . . . . . . . . 71,328 62,497 54,651 47,301 40,401 35,328 30,610
Equity per share at year end +++ . . . . . . 3.13 2.74 2.40 2.08 1.78 1.56 1.35
Sales per employee . . . . . . . . . . . . . 120 112 105 98 90 85 82
Weighted average shares outstanding:
basic +++ . . . . . . . . . . . . . . . . . 22,771 22,772 22,724 22,697 22,639 22,623 22,610
Weighted average shares outstanding:
diluted +++ . . . . . . . . . . . . . . . . 22,771 22,788 22,773 22,731 22,639 22,623 22,610
</TABLE>

*Includes a one-time charge of $3,000,000 or $.17 per share for purchased
research and development costs associated with the acquisition of Environmental
Test Systems, Inc. (ETS).
+Net income for 1995 includes a one-time pretax charge of $775,000 or $.03 per
share after tax for the provision to reduce carrying value of electrochemical
assets.
++Net income for 1994 includes a benefit of $448,000 or $.02 per share for the
cumulative effect of a change in accounting for income taxes.
+++All share and per share amounts have been restated to give effect to the
adoption of SFASNo. 128 in third quarter of fiscal year 1998, the two-for-one
stock split in October 1997, the five-for-four stock split in April 1994, the
three-for-two stock split in June 1992, and the five-for-four stock splits in
fiscal 1991, 1990 and 1989.

<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S REPORT AND REPORT OF INDEPENDENT ACCOUNTANTS

Stockholders of Hach Company:

The information presented in this Annual Report was prepared by your Company's
management. The financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis. These principles
require choices among alternatives and numerous estimates of financial matters.
We believe that the accounting principles chosen are appropriate in the
circumstances and the estimates and judgments involved in Hach's financial
reporting are reasonable. All other financial and operating data included in
this Annual Report are presented to provide information we believe is useful to
investors.

Management recognizes its responsibility for the integrity and objectivity of
the information presented. To meet this responsibility, management maintains a
system of internal accounting controls designed to provide reasonable assurance
that the financial reports are fairly presented and that our employees comply
with our stated policies and procedures, including policies on the ethical
conduct of business.

The Audit Committee recommended and the Board of Directors approved the
appointment of PricewaterhouseCoopers LLP as independent auditor for the
Company. The PricewaterhouseCoopers LLP report on the financial statements is
presented in this Annual Report.

Audit and related activities of PricewaterhouseCoopers LLP are conducted
throughout the year for the purposes of the annual audit and reviews of interim
financial statements. The audit of the financial statements is conducted in
accordance with generally accepted auditing standards and includes tests of
internal controls and accounting records as deemed necessary.

The Audit Committee of the Board of Directors, which is composed solely of
outside directors, performs an oversight role relating to Hach's public
financial reporting. The Audit Committee meets at least two times a year with
management and PricewaterhouseCoopers LLP, both privately and collectively, to
discuss internal accounting control and financial reporting matters.
PricewaterhouseCoopers LLP has access to the Audit Committee to discuss any
matter.

KATHRYN HACH-DARROW
Chairman of the Board

GARY R. DREHER
Vice President and
Chief Financial Officer

To the Stockholders and Board of Directors of Hach Company:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity, and cash flows present
fairly, in all material respects, the financial position of Hach Company and
Subsidiaries at April 30, 1998 and 1997, and the results of their operations and
their cash flows for each of the three years in the period ended April 30, 1998,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
June 4, 1998

<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)

1998 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $128,058 $121,480 $114,285
Cost of sales 64,854 62,342 57,839
- ------------------------------------------------------------------------------------------
Gross profit 63,204 59,138 56,446
Selling, general and administrative expense 35,566 33,385 33,000
Research and development expense 8,360 8,459 7,464
Purchased research and development expense 3,000 --- ---
- ------------------------------------------------------------------------------------------
Income from operations 16,278 17,294 15,982
Interest income 994 1,799 1,324
Interest expense (1,588) (13) (6)
- ------------------------------------------------------------------------------------------
Income before income taxes 15,684 19,080 17,300
Income tax expense 6,584 6,585 6,046
- ------------------------------------------------------------------------------------------
Net income $9,100 $12,495 $11,254
- ------------------------------------------------------------------------------------------
Net income per share: basic $ 0.52 $ 0.55 $ 0.50
Net income per share: diluted $ 0.51 $ 0.55 $ 0.50
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
Weighted average shares outstanding: basic 17,643 22,730 22,736
Weighted average shares outstanding: diluted 17,751 22,762 22,736
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

19
<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
APRIL 30, 1998 AND 1997
(IN THOUSANDS EXCEPT SHARE DATA)

1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,358 $ 14,575
Marketable securities, held to maturity 680 19,100
Accounts receivable, less reserves of $305 and $249, respectively 20,937 17,829
Inventories, net 15,360 11,798
Deferred tax assets and other current assets 5,282 4,416
- ----------------------------------------------------------------------------------------------------------------
Total current assets 46,617 67,718
- ----------------------------------------------------------------------------------------------------------------

Property, plant and equipment, at cost:
Buildings and improvements 30,615 23,404
Machinery and equipment 52,412 46,555
- ----------------------------------------------------------------------------------------------------------------
83,027 69,959

Less: allowance for depreciation and amortization 47,211 42,141
- ----------------------------------------------------------------------------------------------------------------
35,816 27,818

Land 1,083 986
- ----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 36,899 28,804
- ----------------------------------------------------------------------------------------------------------------

Marketable securities, held to maturity 836 7,406
Acquired product technology 12,199 ---
Goodwill 3,204 ---
Other assets 2,595 1,652
- ----------------------------------------------------------------------------------------------------------------

Total assets $102,350 $105,580
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------

LIABILITIES
Current liabilities:
Current portion of long term debt $ 1,069 $ ---
Accounts payable 4,591 4,044
Accrued liabilities:
Compensation 1,407 1,082
Compensated absences 3,933 3,655
Profit sharing 3,483 3,473
Income taxes payable 720 753
Other 1,974 1,379
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 17,177 14,386
- ----------------------------------------------------------------------------------------------------------------
Long term liabilities 2,771 1,726
Long term debt 35,994 ---
Deferred income taxes 6,589 2,179
- ----------------------------------------------------------------------------------------------------------------
Total liabilities 62,531 18,291
- ----------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized 25,000,000 shares; issued 11,622,953 shares 11,623 11,623
Class A common stock, $1 par value; authorized 20,000,000 shares in 1998;
issued 11,622,953 shares 11,623 ---
Capital contributed in excess of par value of common stock --- 453
Retained earnings 72,714 76,944
Unearned ESOP shares (2,629) ---
Cumulative currency translation adjustment (437) 338
- ----------------------------------------------------------------------------------------------------------------

92,894 89,358

Less: shares held in treasury, at cost (2,667,001 Common, 3,123,074 Class A
in 1998 and 254,356 Common, 254,356 Class A in 1997) (53,075) (2,069)
- ----------------------------------------------------------------------------------------------------------------
Total stockholders' equity 39,819 87,289
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $102,350 $105,580
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

20
<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>

COMMON CAPITAL RETAINED UNEARNED CUMULATIVE SHARES HELD TOTAL
STOCK, $1 CONTRIBUTED IN EARNINGS ESOP CURRENCY IN TREASURY, STOCKHOLDERS'
PAR VALUE EXCESS OF PAR SHARES TRANSLATION AT COST EQUITY
VALUE OF ADJUSTMENT
COMMON STOCK
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance April 30, 1995 $11,623 $ 148 $58,425 --- $2,405 $(1,273) $71,328

Net income --- --- 11,254 --- --- --- 11,254
Cash dividends,
$.11 per share each class --- --- (2,502) --- --- --- (2,502)
Purchase of treasury
stock (47,638 shares of each class) --- --- --- --- --- (736) (736)
Stock options exercised, net
(21,722 shares of each class) --- 168 --- --- --- 77 245
Foreign currency
translation adjustment --- --- --- --- (769) --- (769)
- ----------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1996 $11,623 $ 316 $67,177 --- $1,636 $(1,932) $78,820

Net income --- --- 12,495 --- --- --- 12,495
Cash dividends,
$.12 per share each class --- --- (2,728) --- --- --- (2,728)
Purchase of treasury
stock (19,500 shares of each class) --- --- --- --- --- (326) (326)
Shares purchased under
employee stock purchase plan --- 137 --- --- --- 189 326
Foreign currency
translation adjustment --- --- --- --- (1,298) --- (1,298)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE APRIL 30, 1997 $11,623 $ 453 $76,944 --- $ 338 $(2,069) $87,289

NET INCOME --- --- 9,100 --- --- --- 9,100
CASH DIVIDENDS,
$.14 PER SHARE CLASS A COMMON
$.12 PER SHARE COMMON --- --- (2,142) --- --- --- (2,142)
STOCK SPLIT, CLASS A COMMON 11,623 (453) (11,121) --- --- (49) ---
PURCHASE OF TREASURY STOCK
(3,173,355 SHARES COMMON,
3,176,223 SHARES CLASS A COMMON) --- --- --- --- --- (60,642) (60,642)
ISSUANCE OF TREASURY STOCK - ETS
ACQUISITION (697,915 SHARES COMMON,
246,602 SHARES CLASS A COMMON) --- --- --- --- --- 8,661 8,661
STOCK OPTIONS EXERCISED, NET
(62,795 SHARES COMMON,
60,903 SHARES CLASS A COMMON) --- --- (67) --- --- 1,024 957
PURCHASE OF UNEARNED ESOP SHARES --- --- --- (2,629) --- --- (2,629)
FOREIGN CURRENCY
TRANSLATION ADJUSTMENT --- --- --- --- (775) --- (775)
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE APRIL 30, 1998 $23,246 $ --- $72,714 $(2,629) $(437) $(53,075) $39,819
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

21
<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>

1998 1997 1996
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 9,100 $ 12,495 $11,254
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 6,233 6,196 6,049
Write-off of purchased research and development 3,000 -- --
(Benefit) for deferred income taxes (1,011) (38) (277)
Loss on disposal of equipment 54 40 63
Changes in current assets and liabilities, excluding effects of acquisition:
(Increase) decrease in accounts receivable (639) (1,983) 490
(Increase) decrease in inventories (2,024) 971 (1,038)
(Increase) decrease in other current assets (139) (376) 798
Increase (decrease) in accounts payable (5) 1,218 (9)
Increase in accrued liabilities 1,387 1,873 2,170
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 15,956 20,396 19,500
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition, net of cash acquired (6,655) -- --
Proceeds from sale of equipment 14 11 271
Capital expenditures (11,528) (6,163) (6,488)
Purchases of investments held-to-maturity (2,601) (21,727) (23,397)
Proceeds from maturities of short-term investments 27,591 17,341 9,587
(Increase) decrease in other assets (647) 32 (395)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities 6,174 (10,506) (20,422)
- --------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Capital lease obligations 166 -- --
Payments on capital lease obligations (32) -- (6)
Dividends paid (2,142) (2,728) (2,502)
Proceeds from borrowings 30,000 -- --
Purchases of treasury stock (60,642) (326) (736)
Shares purchased under employee stock purchase plan 957 326 245
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities (31,693) (2,728) (2,999)
Effects of exchange rate changes (654) (1,074) (642)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (10,217) 6,088 (4,563)
Cash and cash equivalents at the beginning of the year 14,575 8,487 13,050
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 4,358 $14,575 $ 8,487
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
Income taxes paid during the year $ 7,686 $ 6,231 $ 5,028
Interest paid during the year, net of amounts capitalized $ 1,553 $ -- $ --

Details of acquisition:
Fair value of assets $26,845
Liabilities 10,525
- ------------------------------------------------------------------------------------------
Cash and equity paid $16,320
Less equity transferred 8,661
Less cash acquired 1,004
- ------------------------------------------------------------------------------------------
Net cash paid for acquisition $ 6,655
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

22
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany transactions and
account balances have been eliminated in consolidation.

Certain amounts in the financial statements for prior years have been
reclassified to conform with the current year's presentation.

CASH EQUIVALENTS AND CONCENTRATIONS OF CREDIT RISK
Cash and cash equivalents include currency on hand, demand deposits with banks
or other financial institutions, and other highly liquid securities purchased
with a maturity of three months or less. Financial instruments which
potentially subject the Company to concentrations of credit risk consist
principally of cash and cash equivalents. The Company places its cash and cash
equivalents with high-credit-quality financial institutions. At times, these
deposits may exceed federally insured limits. The Company has not experienced
any losses in such accounts.

The Company's concentration of credit risk with respect to accounts receivable
is limited due to a large customer base and its geographic dispersion.

INVESTMENTS
The Company accounts for investments in accordance with SFASNo. 115, "Accounting
for Certain Investments in Debt and Equity Securities." This accounting
standard requires companies to classify securities as held-to-maturity, trading
or available-for-sale. Prior to July 1997, the majority of the Company's
marketable securities were classified as held to maturity. In July 1997 the
Company sold approximately $23 million of investments that had been classified
as held-to-maturity to finance the repurchase of 6,314,446 shares of the
Company's common stock. Upon the sale of these investments, the Company
realized losses totaling $44,000. The cost of securities sold is based on the
specific identification method. The carrying amount of securities approximated
the fair value at April 30, 1998, and 1997.

INVENTORIES
Inventories are valued at the lower of cost or market. In general, cost is
determined on the basis of the last-in, first-out (LIFO), first-in, first-out
(FIFO) or the average cost methods.

PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment are stated at cost. Depreciation and
amortization are computed by using the straight-line method based on estimated
useful lives of the related assets or the lease term. Estimated useful lives
range from three to 30 years.

Maintenance and repairs are charged to expense as incurred while major renewals
and improvements are capitalized.

The Company capitalizes interest costs on certain assets that require a period
of time to prepare them for their intended use. Total interest costs incurred
during fiscal year 1998 were $1,693,000, of which $105,000 were capitalized to
fixed assets.

The cost and related allowances for depreciation of assets sold or otherwise
disposed of are deducted from the related accounts and resulting gains or losses
are reflected in operations.

SOFTWARE COSTS
In March 1998, the American Institute of Certified Public Accountants issued a
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." This statement addresses
costs that are capitalizable and costs that must be expensed, and provides
guidance on amortization periods for internal use software. This SOP is
required to be adopted for fiscal years beginning after December 15, 1998, with
early adoption encouraged. The Company's existing accounting policy for
software development costs is in conformity with the provisions of this SOP. As
such, the Company adopted this statement in the fourth quarter of fiscal year
1998, resulting in no financial statement impact. Amounts of unamortized
software costs were $2,215,000 and $1,320,000 as of April 30, 1998 and 1997
respectively.

INCOME TAXES
The Company accounts for taxes using an asset and liability approach. The asset
and liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of those assets and liabilities.

FOREIGN CURRENCY TRANSLATION
Foreign asset and liability accounts are converted into U.S. dollars using the
exchange rate in effect at the end of the year, and revenue and expense accounts
are converted at the average exchange rate in effect during the year.

The Company's European subsidiary occasionally enters into foreign exchange
forward contracts in an attempt to mitigate risk of currency fluctuations on a
portion of the anticipated inventory purchases to be made from Hach Company.
Gains and losses on these contracts are included in the determination of net
income. As of April 30, 1998 and April 30, 1997, the Company had no forward
contracts.

REVENUE RECOGNITION
The Company sells a large number of different tangible products and the average
size of a customer order is relatively small. Revenue is recognized upon
passage of title from the Company to customers. Customers purchasing products
from the Company may return the products within a 30-day period if they are not
satisfied. Estimated returns are charged against earnings in the period the
original sale occurred.

ADVERTISING
Costs associated with advertising are expensed in the year incurred except for
direct-response advertising costs. Direct-response advertising costs, mainly
related to the Products for Analysis catalog, are recorded as prepaid and
amortized over the life of the associated program which is generally one year.
Advertising expense was $4,051,000, $3,741,000 and $4,352,000 in 1998, 1997 and
1996, respectively.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported therein. Due to the inherent uncertainty involved in
making estimates, actual results reported in future periods may be based upon
amounts which differ from those estimates.

NEW ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements,
in order to measure all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners. Comprehensive income, as defined by SFAS No. 130, is the total of
net income and other comprehensive income (all other non-owner changes in
equity). The Company's foreign currency translation adjustment is categorized
as an element of other comprehensive income under this statement. SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, and is
applicable for interim and annual periods. As such, the Company will adopt this
statement in the first quarter of fiscal year 1999. The result of adoption will
be a revised display of the Company's foreign currency translation adjustment.

23
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. BUSINESS COMBINATION

On April 30, 1998, the Company completed the acquisition of Environmental Test
Systems ("ETS"). ETS is engaged in the business of developing and manufacturing
chemical test strips measuring water quality for both consumer and industrial
applications. The transaction has been accounted for as a purchase. Under the
terms of the agreement, shares of the Company's common stock worth approximately
$8,661,000 and $7,659,000 in cash were exchanged for all outstanding shares of
ETS. A one-time charge of $3,000,000 was recorded in the fourth quarter for
purchased research and development costs associated with the acquisition of ETS.
The amount of $3,000,000 allocated to purchased research and development was
determined through established valuation techniques in the water analysis
industry and was expensed upon acquisition, because technological feasibility
had not been established and no future alternative uses existed. The Company
acquired product technology from ETS valued at $12,199,000. This acquired
product technology, valued based on future cash flows, will be amortized on a
straight-line basis over twenty years. Amounts allocated to goodwill and
intangibles will be amortized on a straight-line basis up to thirty years.

The purchase price allocated to the acquired assets and assumed liabilities
based on fair values was as follows (in thousands):

<TABLE>
- -----------------------------------------------------------------------
<S> <C>
Cash $ 1,004
Accounts receivable 2,470
Inventory 1,538
Other current assets 145
Property and equipment 2,990
Purchased research and development 3,000
Acquired product technology 12,199
Goodwill and intangibles 3,499
Current and long-term liabilities (2,320)
Long-term debt (5,994)
Deferred income tax liabilities (4,840)
Unearned ESOP shares 2,629
- -----------------------------------------------------------------------
Total $16,320
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
</TABLE>

The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company and ETS as if the acquisition had occurred
at the beginning of fiscal year 1997, with pro forma adjustments to give effect
to amortization of acquired technology and goodwill, interest expense on
acquisition debt and certain other adjustments, together with related income tax
effects.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C>
Net sales $138,900 $134,697
Net income 12,217 10,768
Net income per share--basic .66 .45
Net income per share--diluted .65 .45
</TABLE>

In management's opinion, the unaudited pro forma combined results of operations
are not indicative of the actual results that would have occurred had the
acquisition been consummated at the beginning of fiscal 1998 or at the beginning
of fiscal 1997 or of future operations of the combined companies under the
ownership and management of the Company.

3. INVENTORIES

Components of inventory at April 30 were:

<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C>
Raw materials and purchased parts $ 4,545 $ 2,811
Work in process 1,555 1,534
Finished goods 8,882 7,031
Resale 378 422
- ---------------------------------------------------------------------------
Inventories, net $15,360 $11,798
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>

Inventory valuation allowances at April 30, 1998, 1997 and 1996 were $1,003,000,
$555,000 and $188,000 respectively.

Management believes the LIFO method, which results in better matching of current
costs with current revenues, minimizes inflation-induced inventory profits and
thus more clearly reflects the results of operations. The cost of inventories
stated under the LIFO method for 1998, was approximately 75% and 1997 was
approximately 80% of the value of total inventories.

For purposes of comparison to companies not utilizing the LIFO method, the
following information is presented. If all inventories had been determined
using the current replacement cost at April 30, 1998 and 1997, reported
inventories would have been $2,877,000 and $3,184,000 higher, respectively.
Reported net income would have been $190,000 ($.01 per common share) lower for
fiscal 1998, $226,000 ($.02 per common share) higher for fiscal 1997, and
$94,000 ($.004 per common share) higher for fiscal year 1996. The impact on
reported net income utilizing LIFO, as opposed to the current replacement cost
method, has been computed by taking the change from year to year in the
difference between the inventory valuation under LIFO and the inventory
valuation under current replacement costs and tax affecting such difference by
38% for 1998, 1997 and for 1996, the approximate incremental tax rate for each
year.

4. LONG-TERM DEBT

Long-term debt consists of the following at April 30, 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
- ---------------------------------------------------------------------------
<S> <C>
Borrowings under revolving credit agreement $30,000
ESOP debt guarantee 2,629
Subordinated notes payable 4,191
Bank note payable 243
- ---------------------------------------------------------------------------
Total 37,063
Less current portion 1,069
- ---------------------------------------------------------------------------
Long-term debt $35,994
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>

During the first quarter of 1998, the Company entered into a revolving credit
agreement with a bank. Under the Revolving Credit Agreement, the Company may
borrow up to $40,000,000 under a five-year unsecured revolving credit facility,
which matures on July 1, 2002. The Agreement has restrictions on amounts
outstanding which consist of (i) $40,000,000 to June 30, 2000; (ii) $32,500,000
form July 1, to June 30, 2001; and (iii) $22,500,000 from July 1, 2001 to the
revolving Credit Maturity Date of July 1, 2002. At April 30, 1998, the Company
had $30 million outstanding. The Revolving Credit Agreement allows the Company
to borrow at interest rates that vary based on the Banks Reference Rate or the
London Interbank Offered Rate (LIBOR), at the option of the Company. The
interest rate as of April 30, 1998, on the $30 million was 6.67%. The interest
period for the loan is 90 days, which began on April 6, 1998. The Company is
also required to pay a commitment fee of 12.5 or 25.0 basis points per annum,
depending on certain financial ratios, on the average daily amount of unused
funds. The carrying value of the long-term debt approximates fair value.

ESOP debt guarantee represents borrowings by the ETS ESOP trust which have been
irrevocably guaranteed by the Company. The subordinated notes payable represent
notes payable to former ETS shareholders.

24
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The revolving credit agreement, ESOP debt guarantee, subordinated note payable
and bank note payable contain similar restrictions relating to dividends,
investments, guarantees and other borrowings and maintenance of certain
financial ratios.

Subsequent to year-end the Company borrowed an additional $3,300,000 under the
revolving credit agreement. The proceeds from the revolving credit agreement
were used to pay off subordinated notes payable.

5. INCOME TAXES

Income before income tax expense consisted of the following:

<TABLE>
<CAPTION>
(THOUSANDS OF DOLLARS)
1998 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes:
Domestic $15,033 $16,559 $13,386
Foreign 651 2,521 3,914
- ----------------------------------------------------------------------------
$15,684 $19,080 $17,300
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Income tax expense:
Current:
Federal $6,639 $ 4,852 $ 4,122
State 703 775 631
Foreign 253 997 1,570
- ----------------------------------------------------------------------------
7,595 6,624 6,323
Deferred:
Federal $ (912) $ (63) $ (227)
State (95) 30 (46)
Foreign (4) (6) (4)
- ----------------------------------------------------------------------------
(1,011) (39) (277)
- ----------------------------------------------------------------------------
Total $ 6,584 $ 6,585 $ 6,046
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
</TABLE>

Components of the net deferred tax assets (liabilities) resulting from
differences in book and tax accounting methods are as follows:

NET DEFERRED TAX ASSET (LIABILITY) (THOUSANDS OF DOLLARS)

1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Vacation pay $ 1,171 $ 1,104 $ 1,087
Inventory capitalization 969 654 527
Deferred compensation 909 652 376
Intercompany profits 231 271 120
Bad debt and sales return reserves 132 --- ---
Marketable securities --- 114 108
Employee benefit plans --- --- 83
Tax attribute carryovers 114 --- ---
Other 101 113 122
- -------------------------------------------------------------------------------------------
Total deferred tax assets 3,627 2,908 2,423

Deferred tax liabilities:

Accelerated depreciation $1,875 $2,103 $1,749
Foreign deferrals 35 86 91
Employee benefit plans 74 97 ---
Acquired product technology 4,758 --- ---
- -------------------------------------------------------------------------------------------
Total deferred tax liabilities 6,742 2,286 1,840

Net deferred tax asset (liability) $(3,115) $ 622 $ 583
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------

Current deferred tax asset 3,474 2,801 2,397
- -------------------------------------------------------------------------------------------
Noncurrent deferred tax liability 6,589 2,179 1,814
- -------------------------------------------------------------------------------------------
Net deferred tax asset (liability) $(3,115) $ 622 $ 583
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>

The Company believes, based upon past earnings, that all of the deferred tax
assets will be realized. Accordingly, no valuation allowance has been provided.

Effective tax rates on income before income taxes for the years ended April 30,
1998, 1997 and 1996 were 42%, 35% and 35%, respectively. The effective income
tax rate for the years ended April 30 varies from the statutory Federal income
tax rate as follows:

(THOUSANDS OF DOLLARS)
1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed statutory expense $5,489 $6,487 $5,882
State income tax, net 379 512 443
Difference between U.S.
statutory rates and foreign
effective rates 22 135 235
Foreign sales corporation (274) (212) (136)
Tax credits, net (300) (352) (306)
Purchased research and development 1,125 --- ---
Other, net 143 15 (72)
- -------------------------------------------------------------------------------------------
$6,584 $6,585 $6,046
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>

Undistributed earnings intended to be reinvested indefinitely by the foreign
subsidiaries totaled $4,818,000 at April 30, 1998. These earnings would become
taxable upon the sale or liquidation of the foreign subsidiaries or upon the
remittance of dividends. The determination of the deferred tax liability
related to these undistributed earnings is not practicable and, accordingly, no
U.S. deferred tax has been recorded.

6. EMPLOYEE BENEFITS

EMPLOYEE PROFIT SHARING AND SAVINGS PLANS
The Company has an employee profit-sharing plan covering substantially all
regular employees of the Company with the maximum contribution limited to the
amount allowable for federal tax purposes. Each year the Company's Board of
Directors approves an amount the Company will contribute to the plan. The
Company has a savings plan which qualifies under Section 401(k) of the Internal
Revenue Code. Eligible employees may contribute from 1% to 12% of their income
on a pretax basis to this savings plan. The Company matches 50% of the first 4%
of the employee's contribution. The Company's annual contributions under these
Plans were $2,591,000 in 1998, $2,638,000 in 1997, and $2,385,000 in 1996.

EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains two Employee Stock Ownership Plans (ESOP). The Company
accounts for both plans in accordance with Employer's Accounting for Employee
Stock Ownership Plans (SOP 93-6). The Hach Company ESOP is a noncontributing
plan established to acquire shares of the Company's common stocks for the
benefit of eligible employees. Each year the Company's Board of Directors
approves an amount the Company will contribute to the plan. The Company
contributions to the plan were $891,000 in 1998, $917,000 in 1997, and $829,000
in 1996. As of April 30, 1998, all shares in the Hach Company ESOP were
allocated to participants.

As part of the acquisition of ETS, the Company assumed the Environmental Test
System ESOP. The ETS ESOP was established in 1996 for the benefit of
ETS employees. The ETS ESOP trust acquired shares of ETS with the proceeds of a
bank loan that is guaranteed by the Company and is recorded in the Company's
consolidated balance sheet at April 30, 1998. All ETS shares were converted to
Hach Company Common shares at the time the acquisition was completed.

The Company's contributions to the ESOP, plus dividends paid on shares held by
the ESOP, are used to repay the loan principal and interest. As the ESOP debt
is repaid, shares held by the ESOP are released from collateral and allocated to
qualified ESOP participants.

At April 30, 1998, the ETS ESOP trust held 476,041 shares of Hach Company Common
stock of which 59,505 shares were allocated to participants, 7,934 shares were
committed to be released, and 408,602 shares were unreleased.

25
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>

Common Shares Class A Common Shares
Options Weighted Average Options Weighted Average
Outstanding Exercise Price Outstanding Exercise Price
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at April 30, 1995 278,202 $ 8.800 278,202 $ 8.800
Granted 245,000 8.075 245,000 8.075
Exercised (33,827) 4.480 (33,827) 4.480
Expired (20,000) 9.500 (20,000) 9.500
- ----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1996 469,375 $ 8.705 469,375 $ 8.705
Granted 88,648 8.395 88,648 8.395
- ----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1997 558,023 $ 8.655 558,023 $ 8.655
Granted 11,708 10.375 262,208 9.539
Exercised (58,884) 8.467 (58,884) 8.467
Expired (93,500) 10.719 (93,500) 10.719
Forfeited (8,418) 10.719 (8,418) 10.719
- ----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1998 408,929 $ 8.216 659,429 $ 8.704

Options exercisable at:
April 30, 1997 332,016 $ 9.005 332,016 $ 9.005
April 30, 1998 290,883 8.243 290,883 8.243
</TABLE>

STOCK OPTION PLANS
The Company has two active stock option plans. Under the 1993 Stock Option Plan
the Company periodically grants certain officers and key employees incentive
stock options to purchase common stock. A total of 625,000 Common shares and
625,000 Class A Common shares have been reserved for option at a price not less
than the market price on the date of grant. Options granted under the plan may
not be exercised until one year after the date of grant. Options are
exercisable in installments on a cumulative basis beginning in the second year
after grant and expiring not later than ten years from the date of grant. Under
the 1995 Non-Employee Director Stock Plan, 150,000 Common shares and 150,000
Class A Common shares have been reserved for option. The option price per share
is equal to the fair market value of a company share on the date of grant. The
term of each option may not exceed ten years, and an option first becomes
exercisable six months after the option grant date. Options granted prior to
October, 1997 must be exercised with an equal number of Common and Class A
Common shares being purchased.

A summary of the status of the Company's stock options plans, adjusted for the
stock split in October, 1997, appears above.

EMPLOYEE STOCK PURCHASE PLAN
The Company has an Employee Stock Purchase Plan for all eligible employees.
Under the plan, shares of the Company's common stocks may be purchased at
six-month intervals at 85% of the lower of the fair market value on the first or
the last day of each six-month period. Employees may purchase shares through
payroll deductions not exceeding 10% of their gross compensation during an
offering period. During 1998, employees purchased 20,754 Common shares on June
30, 1997 at a price of $8.075 per share, adjusted for the two for one stock
split, and 10,118 Common shares at a price of $9.15 per share and 10,118 Class A
Common shares at a price of $9.17 per share on December 31, 1997. At April 30,
1998, 441,970 shares of each class of stock were reserved for future issuance.

PRO FORMA INFORMATION
Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation," requires companies to measure employee stock compensation plans
based on the fair value method of accounting. However, the Statement allows the
alternative of continued use of Accounting Principles Board (APB) Opinion No.
25, "Accounting for Stock Issued to Employees," with pro forma disclosure of net
income and earnings per share determined as if the fair value based method had
been applied in measuring compensation cost. The Company adopted the new
standard in 1997, using the disclosure method, and elected the continued use of
APB Opinion No. 25 for financial statement purposes.

Pro forma information regarding net income and earnings per share is required to
be determined as if the Company had accounted for its employee stock options
(including shares issued under the Employee Stock Purchase Plan, collectively
called "options") granted subsequent to April 30, 1995 under the fair value
based method of that statement. The fair value of options granted in 1998, 1997
and 1996 reported below has been estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions:

Employee Stock
Stock Options Purchase Plan Shares
- -------------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expected life 4.0 4.0 4.0 .5 .5 .5
(in years)
Risk-free interest rate 5.3% 6.2% 5.7% 5.3% 5.4% 5.5%
Volatility .330 .233 .233 .330 .233 .233
Dividend yield 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
</TABLE>

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility. Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the fair
value of its options. The weighted average estimated fair value of employee
stock options granted during 1998, 1997 and 1996 was $2.96, $4.18 and $3.87 per
share, respectively. The weighted average estimated fair value of shares
granted under the Employee Stock Purchase Plan during 1998, 1997 and 1996 was
$3.16, $3.88 and $3.40 respectively.

The majority of the company's stock options are classified as Incentive Stock
Options and therefore, provide no tax benefit for the Company.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The Company's pro
forma information follows:

26
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
1998 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Pro forma net income (in thousands) $ 8,512 $12,067 $11,029
Pro forma earnings per share-basic $ .48 $ .53+ $ .49+
Pro forma earnings per share-diluted $ .48 $ .53+ $ .49+
</TABLE>

+Restated for the two-for-one stock split effected in the form of a stock
dividend.

Because SFAS No. 123 is applicable only to options granted subsequent to April
30, 1995, the resulting pro forma effect may not be representative of that to be
expected in future years.

At April 30, 1998 options with a weighted average remaining life of 3.41 years
covering 1,068,358 shares were outstanding at $8.063 to $10.375 per share.
Shares available for future grants amounted to 316,812 of Common stock and
66,312 of Class A Common stock at April 30, 1998. Adjusted for the two-for-one
stock split, 320,102 Common shares and 320,102 Class A Common shares were
available at April 30, 1997, and 408,750 Common shares and 408,750 Class A
Common shares were available at April 30, 1996.

DEFERRED COMPENSATION PLAN
The Company has a Deferred Compensation Plan which permits eligible employees to
defer a portion of their compensation. The deferred compensation, together with
a Company contribution and accumulated earnings is accrued but unfunded. At
April 30, 1998, 1997 and 1996 the liability for the deferred compensation is
$2,169,000, $1,507,000 and $1,087,000 respectively and is included with
long-term liabilities.

7. CAPITAL STOCK

On July 8, 1997, the Company repurchased the entire block of Hach Company Common
Stock which was owned by Lawter International. This stock represented
approximately 28% ownership in Hach Company. The Company purchased the
3,157,223 shares for $19.00 per share. On June 26, 1997, the date the
transaction with Lawter was first announced, the Company's Common Stock price
closed at $18.25 per share. The price paid to Lawter represented a 4% premium
to the closing price on June 26, 1997. Among other factors, the Company's Board
of Directors reviewed numerous financial models and information, including the
impact on earnings per share, in arriving at the $19.00 per share price.

On May 19, 1997, the Board of Directors approved a proposal to amend the
Company's Certificate of Incorporation to allow for a second class of common
stock. At the Company's annual meeting on September 9, 1997 the Company's
shareholders approved the amendment for a new class of stock designated as Class
A Common Stock. On September 9, 1997, the Company's Board of Directors declared
a stock split effected in the form of a stock dividend, payable to all holders
of record of Common Stock on September 21, 1997, one share of Class A Common
Stock for each share of Common Stock outstanding. The Class A stock is
non-voting except under certain limited circumstances. All per share figures
and common stock amounts in the consolidated financial statements have been
restated to give effect to the stock split.

- --------------------------------------------------------------------------------

8. EARNINGS PER SHARE

In Fiscal 1998, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings per Share " ("SFAS No. 128") which specifies the computation,
presentation and disclosure requirements for basic and diluted earnings per
share. Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share includes the addition of potential common shares assuming the
conversion of all outstanding stock options using the treasury stock method.
The table below is a reconciliation of shares outstanding for basic and diluted
earnings per share.

FISCAL YEARS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) April 30, 1998 April 30, 1997 April 30, 1996

Per Per Per
Share Share Share
Income Shares Amount Income Shares Amount Income Shares Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income available to common stockholders $ 9,100 17,643 $ 0.52 $ 12,495 22,730 $ 0.55 $ 11,254 22,736 $ 0.50

Effective of dilutive securities
Stock options -- 108 0.01 -- 32 -- -- 0 --
- -----------------------------------------------------------------------------------------------------------------------------------

Diluted earnings per share
Income available to common stockholders $ 9,100 17,751 $ 0.51 $ 12,495 22,762 $ 0.55 $ 11,254 22,736 $ 0.50
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Options to purchase shares of the Company's common stock of 11,708 in 1998,
121,606 in 1997, and 259,289 in fiscal 1996 were outstanding during the
respective periods but were not included in the computation due to the
antidilutive effect of the conversion. Prior periods have been restated to give
effect to the adoption of SFAS No. 128 in fiscal year 1998 and the two-for-one
stock split in October 1997.

- --------------------------------------------------------------------------------

9. SEGMENT INFORMATION

The Company operates primarily in an industry that encompasses laboratory
instruments, process analyzers and test kits which analyze the chemical content
and other properties of water and other aqueous solutions. This industry also
encompasses the chemicals manufactured and sold by the Company, most of which
are used with the instruments and test kits manufactured by the Company.

Sales for the Company's European subsidiary are made to European dealers and to
customers in the Middle East and Mediterranean Africa in Belgium francs and U.S.
dollars, respectively. Payments from the European subsidiary to the U.S. parent
are made in U.S. dollars and are subject to the exchange rate in effect at the
time of payment. Export transactions made to all other parts of the world by
the international staff based in Loveland, Colorado, are conducted primarily in
U.S. dollars.

The amount of sales made into the international marketplace is influenced to
some degree by the strength of the U.S. dollar against other currencies. Other
conditions which to some extent affect the sales of the Company's products in
international markets include restrictive tariff and trade policies imposed by
foreign countries, and domestic and foreign tax and economic policies.

27
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The table below summarizes certain financial information by geographic segments:

GEOGRAPHIC SEGMENT INFORMATION (THOUSANDS OF DOLLARS) 1998 1997 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales to Unaffiliated Customers:
United States:
Domestic $ 82,741 $ 77,688 $ 73,472
- ---------------------------------------------------------------------------------------------
Export:

Canada 5,030 5,018 4,840
Asia 10,294 10,875 9,388
Australia/Oceania 1,786 1,360 1,496
Mexico/Central America/Caribbean 4,225 3,619 2,738
South America 5,516 4,121 3,313
Other 2,344 2,268 1,748
- ---------------------------------------------------------------------------------------------
29,195 27,261 23,523
- ---------------------------------------------------------------------------------------------
111,936 104,949 96,995
Europe 16,122 16,531 17,290
- ---------------------------------------------------------------------------------------------
128,058 121,480 114,285
- ---------------------------------------------------------------------------------------------
Net Sales to European Subsidiaries:
United States 12,844 11,402 10,140
Eliminations (12,844) (11,402) (10,140)
- ---------------------------------------------------------------------------------------------
$128,058 $121,480 $114,285
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Income from Operations:
United States $ 15,759 $ 14,914 $ 12,293
Europe 519 2,380 3,689
- ---------------------------------------------------------------------------------------------
$ 16,278 $ 17,294 $ 15,982
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Identifiable Assets:
United States $ 65,147 $ 51,244 $ 49,384
Europe 8,050 7,186 8,342
- ---------------------------------------------------------------------------------------------
73,197 58,430 57,726
Corporate Assets 29,153 47,150 35,929
- ---------------------------------------------------------------------------------------------
$102,350 $105,580 $ 93,655
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
</TABLE>

10. UNAUDITED SUMMARY OF QUARTERLY FINANCIAL INFORMATION

(THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)

First Second Third Fourth
Quarter Quarter Quarter Quarter
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fiscal Year 1998:
Net sales $32,414 $31,542 $30,337 $33,765
Gross profit 15,863 15,533 14,784 17,024
Net income 3,320 2,755 2,600 425*
Net income per share: basic 0.16+ ++ 0.16++ 0.16 0.04*
Net income per share: diluted 0.16+ ++ 0.16++ 0.16 0.03*
Fiscal Year 1997:
Net sales $28,910 $30,284 $29,481 $32,805
Gross profit 14,163 14,960 14,157 15,858
Net income 2,960 3,215 3,025 3,295
Net income per share: basic+ ++ 0.13 0.14 0.13 0.15
Net income per share: diluted+ ++ 0.13 0.14 0.13 0.15
</TABLE>

*Includes one-time charge of $3,000,000 or $.17 per share for purchased research
and development costs associated with the acquisition of Environmental Test
Systems, Inc.
+Restated for the two-for-one stock split effected in the form of a stock
dividend.
++Restated to give effect to the adoption of SFAS No. 128 in the third quarter
of fiscal year 1998.

FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements, including without
limitation, statements regarding expected financial results. Actual results may
materially differ from those in the forward-looking statements. Factors that
may cause such differences include changes in customer demand and requirements,
delays in introducing new products, foreign exchange rate fluctuations, the
level of government funding, especially funding by municipalities for
water-related products, competition and conditions in the U.S. economy in
general, and worldwide economic conditions. The Company undertakes no
obligation to publicly update or revise any forward-looking statements whether
as a result of new information, further events or otherwise.

28
<PAGE>

Hach Company and
Subsidiaries Corporate Data

WORLD HEADQUARTERS:

5600 Lindbergh Drive
Loveland, Colorado, U.S.A.

U.S.A. SALES

Davis, California
Corona, California
Loveland, Colorado
Daytona Beach, Florida
Snellville, Georgia
Roselle, Illinois
Fort Wayne, Indiana
Huxley, Iowa
Louisville, Kentucky
Westminster, Maryland
Preston, Mississippi
Auburn, New Hampshire
New York, New York
Mt. Laurel, New Jersey
Oklahoma City, Oklahoma
Columbus, Ohio
Sullivan's Island, South Carolina
Georgetown, Texas
Conroe, Texas
Mill Creek, Washington

INTERNATIONAL SALES

Headquarters: Loveland,
Colorado, U.S.A.
European Sales: Namur, Belgium
Overseas distributors and
sales agents in principal cities
throughout the world
Hach Sales & Service Canada Ltd.
Winnipeg, Manitoba, Canada

WHOLLY OWNED SUBSIDIARIES

HACH EUROPE, S.A./N.V.
Namur, Belgium
HACH (BARBADOS) FSC, INC.
Loveland, Colorado
HACH SALES & SERVICE CANADA LTD.
Winnipeg, Manitoba, Canada
ENVIRONMENTAL TEST SYSTEMS, INC.
Elkhart, Indiana

BOARD OF DIRECTORS

KATHRYN HACH-DARROW
Chairman of the Board
and Chief Executive Officer

BRUCE J. HACH
President and Chief
Operating Officer

GARY R. DREHER
Vice President
and Chief Financial Officer

LINDA O. DOTY
Partner
Doty & Associates
Denver, Colorado

JOHN N. MCCONNELL
Chairman and President
Labconco
Kansas City, Missouri

JOSEPH V. SCHWAN
Chief Operating Officer
and Executive Vice President
Standard Register
Dayton, Ohio

FRED W. WENNINGER
Independent Businessman
Spokane, Washington

TRANSFER AGENT
AND STOCK REGISTRAR
HARRIS TRUST & SAVINGS BANK
311 West Monroe Street
Chicago, Illinois 60690

AUDITOR
PRICEWATERHOUSECOOPERS LLP
370 17th Street
Denver, Colorado 80202

CORPORATE OFFICERS
KATHRYN HACH-DARROW
Chairman of the Board
and Chief Executive Officer

BRUCE J. HACH
President and Chief
Operating Officer

ROBERT O. CASE
Secretary and General Counsel

LOEL J. SIROVY
Senior Vice President
Operations

JERRY M. CHURCHILL
Vice President
Domestic Sales

GARY R. DREHER
Vice President and
Chief Financial Officer

KENNETH OGAN
Vice President
Research & Development
and Chief Technical Officer

BRIAN BOWDEN
Vice President
Information Systems Technology

LARRY D. THOMPSON
Vice President
Ames Chemical Operations

MARK J. STEPHENSON
Vice President
Marketing and Customer
Support Services
President, ETS

FOR MORE INFORMATION
To learn more about Hach Company, visit our site on the World Wide Web
at www.hach.com.

<PAGE>

EXHIBIT (21)o.
(ITEM 601(21))

SUBSIDIARIES OF THE REGISTRANT

<TABLE>
<CAPTION>
Jurisdiction
of
Subsidiary Incorporation
- ---------- -------------
<S> <C>

Hach Europe, S.A./N.V. Belgium

Hach (Barbados) FSC, Inc. Barbados

Hach Sales & Service Canada Ltd. Canada

Environmental Test Systems, Inc. Delaware
</TABLE>

<PAGE>

Exhibit (23)p.
(Item 601(23))

[PricewaterhouseCoopers LLP Letterhead]

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 333-39675), Form S-8 (No. 333-39019), Form S-8
(No. 33-90584), and Form S-8 (No. 33-64793) of Hach Company and Subsidiaries
of our report dated June 4, 1998, appearing on page 18 of the Annual Report
to Shareholders which is incorporated in this Annual Report on Form 10-K. We
also consent to the incorporation by reference of our report on the Financial
Statement Schedule, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Denver, Colorado
July 28, 1998

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<CASH> 4,358
<SECURITIES> 680
<RECEIVABLES> 21,242
<ALLOWANCES> 305
<INVENTORY> 15,360
<CURRENT-ASSETS> 46,617
<PP&E> 84,110
<DEPRECIATION> 47,211
<TOTAL-ASSETS> 102,350
<CURRENT-LIABILITIES> 17,177
<BONDS> 0
0
0
<COMMON> 23,246
<OTHER-SE> 16,573
<TOTAL-LIABILITY-AND-EQUITY> 102,350
<SALES> 128,058
<TOTAL-REVENUES> 128,058
<CGS> 64,854
<TOTAL-COSTS> 64,854
<OTHER-EXPENSES> 46,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,588
<INCOME-PRETAX> 15,684
<INCOME-TAX> 6,584
<INCOME-CONTINUING> 9,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,100
<EPS-PRIMARY> .52<F1>
<EPS-DILUTED> .51<F1>
<FN>
<F1>THIS STATEMENT HAS BEEN RESTATED AS A RESULT OF SFAS NO. 128, EARNINGS PER
SHARE, AND APPLICABLE STOCK SPLITS.
</FN>

</TABLE>

<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> APR-30-1998 APR-30-1998 APR-30-1998
<PERIOD-START> MAY-01-1997 MAY-01-1997 MAY-01-1997
<PERIOD-END> JAN-31-1998 NOV-01-1997 AUG-02-1997
<CASH> 9,757 9,485 9,626
<SECURITIES> 801 879 1,488
<RECEIVABLES> 17,255 17,666 17,754
<ALLOWANCES> 274 265 249
<INVENTORY> 13,765 12,899 12,006
<CURRENT-ASSETS> 46,412 45,101 44,445
<PP&E> 76,574 75,211 73,554
<DEPRECIATION> 46,115 45,064 43,621
<TOTAL-ASSETS> 80,866 78,786 77,926
<CURRENT-LIABILITIES> 12,702 12,665 14,050
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 23,246 23,246 11,623
<OTHER-SE> 10,761 8,782 18,120
<TOTAL-LIABILITY-AND-EQUITY> 80,866 78,786 77,926
<SALES> 94,293 63,956 32,414
<TOTAL-REVENUES> 94,293 63,956 32,414
<CGS> 48,113 32,561 16,551
<TOTAL-COSTS> 48,113 32,561 16,551
<OTHER-EXPENSES> 32,402 21,905 11,053
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 1,093 656 140
<INCOME-PRETAX> 13,471 9,433 5,150
<INCOME-TAX> 4,796 3,358 1,830
<INCOME-CONTINUING> 8,675 6,075 3,320
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 8,675 6,075 3,320
<EPS-PRIMARY> .48<F1> .32<F1> .16<F1>
<EPS-DILUTED> .48<F1> .32<F1> .16<F1>
<FN>
<F1>THIS STATEMENT HAS BEEN RESTATED AS A RESULT OF SFAS NO. 128, EARNINGS PER
SHARE, AND APPLICABLE STOCK SPLITS.
</FN>

</TABLE>

<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> APR-30-1997 APR-30-1997 APR-30-1997 APR-30-1997
<PERIOD-START> MAY-01-1996 MAY-01-1996 MAY-01-1996 MAY-01-1996
<PERIOD-END> APR-30-1997 JAN-25-1997 OCT-26-1996 JUL-27-1996
<CASH> 14,575 11,986 7,945 11,104
<SECURITIES> 19,100 16,149 24,987 21,176
<RECEIVABLES> 18,078 17,930 18,467 17,277
<ALLOWANCES> 249 215 213 250
<INVENTORY> 11,798 12,849 12,955 12,496
<CURRENT-ASSETS> 67,718 63,581 60,741 54,097
<PP&E> 70,945 71,112 69,454 68,097
<DEPRECIATION> 42,141 41,751 40,617 39,198
<TOTAL-ASSETS> 105,580 102,157 99,510 93,590
<CURRENT-LIABILITIES> 14,386 12,627 12,705 9,658
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 11,623 11,623 11,623 11,623
<OTHER-SE> 75,666 73,902 71,611 69,049
<TOTAL-LIABILITY-AND-EQUITY> 105,580 102,157 99,510 93,590
<SALES> 121,480 88,675 59,194 28,910
<TOTAL-REVENUES> 121,480 88,675 59,194 28,910
<CGS> 62,342 45,395 30,071 14,747
<TOTAL-COSTS> 62,342 45,395 30,071 14,747
<OTHER-EXPENSES> 41,844 30,498 20,497 9,963
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> 19,080 14,043 9,427 4,550
<INCOME-TAX> 6,585 4,843 3,252 1,590
<INCOME-CONTINUING> 12,495 9,200 6,175 2,960
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 12,495 9,200 6,175 2,960
<EPS-PRIMARY> .55<F1> .40<F1> .27<F1> .13<F1>
<EPS-DILUTED> .55<F1> .40<F1> .27<F1> .13<F1>
<FN>
<F1>THIS STATEMENT HAS BEEN RESTATED AS A RESULT OF SFAS NO. 128, EARNINGS PER
SHARE, AND APPLICABLE STOCK SLPITS.
</FN>

</TABLE>

<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> APR-30-1996 APR-30-1996 APR-30-1996 APR-30-1996
<PERIOD-START> MAY-01-1995 MAY-01-1995 MAY-01-1995 MAY-01-1995
<PERIOD-END> APR-30-1996 JAN-27-1996 OCT-28-1995 JUL-29-1995
<CASH> 8,487 7,534 9,207 9,248
<SECURITIES> 22,120 21,590 8,889 8,092
<RECEIVABLES> 16,094 16,180 16,314 17,310
<ALLOWANCES> 248 215 258 262
<INVENTORY> 12,769 13,202 12,556 12,075
<CURRENT-ASSETS> 53,183 50,728 50,051 48,653
<PP&E> 67,683 67,077 66,752 66,341
<DEPRECIATION> 38,571 37,947 37,238 36,612
<TOTAL-ASSETS> 93,295 92,357 88,960 85,366
<CURRENT-LIABILITIES> 11,314 11,880 11,546 10,102
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 11,623 11,623 11,623 11,623
<OTHER-SE> 67,197 65,398 63,416 61,545
<TOTAL-LIABILITY-AND-EQUITY> 93,295 92,357 88,960 85,366
<SALES> 114,285 83,904 55,905 27,188
<TOTAL-REVENUES> 114,285 83,904 55,905 27,188
<CGS> 57,839 42,047 27,785 13,438
<TOTAL-COSTS> 57,839 42,047 27,785 13,438
<OTHER-EXPENSES> 40,464 30,098 20,179 9,968
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> 17,300 12,753 8,552 4,016
<INCOME-TAX> 6,046 4,453 3,002 1,406
<INCOME-CONTINUING> 11,254 8,300 5,550 2,610
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 11,254 8,300 5,550 2,610
<EPS-PRIMARY> .50<F1> .37<F1> .25<F1> .12<F1>
<EPS-DILUTED> .50<F1> .37<F1> .25<F1> .12<F1>
<FN>
<F1>THIS STATEMENT HAS BEEN RESTATED AS A RESULT OF SFAS NO. 128, EARNINGS PER
SHARE, AND APPLICABLE STOCK SPLITS.
</FN>

</TABLE>