SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE [ X ] SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 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:1-8089 DANAHER CORPORATION (Exact name of registrant as specified in its charter) Delaware 59-1995548 (State of incorporation) (I.R.S.Employer Identification number) 1250 24th Street, N.W., Suite 800 Washington, D.C. 20037 (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: 202-828-0850 Securities Registered Pursuant to Section 12(b) of the Act: Name of Exchanges Title of each class on which registered Common Stock $.01 par Value New York Stock Exchange, Inc. Pacific Stock Exchange, Inc. Securities registered pursuant to Section 12(g) of the Act: NONE (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 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. [X] As of March 20, 1996, the number of shares of common stock outstanding was 58,124,128 and were held by approximately 3,000 holders. The aggregate market value of common shares held by non-affiliates of the Registrant on such date was approximately $1.13 billion, based upon the closing price of the Company's common shares as quoted on the New York Stock Exchange composite tape on such date. EXHIBIT INDEX APPEARS ON PAGE 8 DOCUMENTS INCORPORATED BY REFERENCE Part II and Part IV incorporate certain information by reference from the registrant's Annual Report to Shareholders for the year ended December 31, 1995. With the exception of the pages of the Annual Report to Shareholders specifically incorporated herein by reference, the Annual Report to Shareholders is not deemed to be filed as part of this Form 10-K. Part III incorporates certain information by reference from the registrant's proxy statement for its 1996 annual meeting of stockholders. With the exception of the pages of the 1996 Proxy Statement specifically incorporated herein by reference, the 1996 Proxy Statement is not deemed to be filed as part of this Form 10-K. ITEM 1. BUSINESS General Danaher Corporation ("Danaher" or the "Company"), originally DMG, Inc., was organized in 1969 as a Massachusetts real estate investment trust. In 1978 it was reorganized as a Florida corporation under the name Diversified Mortgage Investors, Inc. ("DMI") which in a second reorganization in 1980 became a subsidiary of a newly created holding company named DMG, Inc. The Company adopted the name Danaher in 1984 and was reincorporated as a Delaware corporation following the 1986 annual meeting of shareholders. The Company conducts its operations through two business segments: Tools and Components and Process/Environmental Controls. Tools and Components The Tools and Components segment is comprised of the Danaher Hand Tool Group (including Special Markets and Professional Tool Division, which includes Armstrong Bros. Tool Co., a premier manufacturer and marketer of industrial hand tools), Matco Tools ("Matco"), Jacobs Chuck Manufacturing Company ("Jacobs"), Iseli Company ("Iseli"), Delta Consolidated Industries, Jacobs Vehicle Equipment Company, Hennessy Industries and the hardware and electrical apparatus lines of Joslyn Manufacturing Company (JMC), which was acquired in September, 1995. This segment is one of the largest domestic producers and distributors of general purpose mechanics' hand tools and automotive specialty tools. Other products manufactured by these companies include tool boxes and storage devices, diesel engine retarders, wheel service equipment, drill chucks, custom designed headed tools and components, hardware and components for the power generation and transmission industries, high quality precision socket screws, fasteners, and high quality miniature precision parts. The Company's business strategy in this segment is focused on increasing sales to existing customers, broadening channels of distribution, developing new products and achieving production efficiencies and enhanced quality and customer service through "Just-In-Time" and related manufacturing techniques. Danaher Tool Group (DTG) is one of the largest domestic producers of general purpose mechanics' hand tools (primarily ratchets, sockets and wrenches) and specialized automotive service tools for the professional and "do-it-yourself" markets. DTG has been the principal manufacturer of Sears, Roebuck and Co.'s Craftsman line of mechanics' hand tools for over 50 years. Approximately 80% of the over 100 million pieces sold to Sears annually are sold in tool sets that include from three to 900 pieces. Net sales to Sears were approximately 16% of total Company sales in 1995. DTG's Special Markets Group sells to Sears under a five year evergreen agreement, that requires Sears to purchase a significant portion of its annual requirements for its private-label Craftsman mechanics' hand tool line from DTG. For over 30 years, DTG has also been a primary supplier of specialized automotive service tools to NAPA, which has approximately 6,500 outlets at present. In addition, DTG has been the designated supplier of general purpose mechanics' hand tools to NAPA since 1983. DTG specialized automotive service tools are also sold under the K-D Tools brand, its industrial tools and products are also sold under the Armstrong and Allen brand names, and fastener products under the Holo-Krome name are sold to independent distributors and other customers in the "do-it-yourself," professional automotive, commercial and industrial markets. Professional mechanics' tools are distributed by Matco which has approximately 1,100 independent mobile distributors who sell primarily to individual professional mechanics. Matco is one of the leading suppliers in this market. Jacobs is the market leader in the drill chuck business with its highly respected and well recognized brand name and Iseli is a leader in the manufacture of miniature precision parts produced on Swiss screw machines. Delta is the market leader in boxes and other storage containers serving the vehicle aftermarket and manufactures and markets containers serving numerous specialty areas. Wheel service equipment is manufactured under the Coats, Bada and Ammco brand names. Products include tire changers, wheel balancers, wheel weights and brake service equipment. Wheel service equipment is sold primarily to wholesale distributors and national accounts. These markets are served by the Company's sales personnel. Diesel engine retarders are manufactured at Jacobs. The "Jake Brake" technology was developed by Jacobs and represents the premier brand of engine retarders. The product is sold by Jacobs' sales personnel to original equipment manufacturers and aftermarket distributors. The nation's oldest manufacturer of poleline hardware and a U.S. market share leader, the hardware division of JMC manufactures a wide variety of products used in the construction and maintenance of electric power, telephone and cable television systems. Its products range from specialized fasteners to sophisticated castings and forgings. The electrical apparatus division of JMC manufactures surge protection devices rated as high as 468,000 volts for the electric power utility industry. Surge arresters are designed to eliminate the damaging effects of electrical surges caused by lightning and other overvoltage conditions on a utility's power system. The major raw materials used by this segment, including high quality steel, are available from a variety of sources in sufficient quantities. Process/Environmental Controls The Process/Environmental Controls segment is comprised of the Veeder-Root Company ("Veeder-Root"), Danaher Controls, Partlow/ Anderson Instruments, Gulton Industries-Graphic Instruments, West Instruments, Ltd., QualiTROL Corporation, A.L. Hyde Company, Hengstler, and the controls product line business units of Joslyn Corporation, which was acquired in September, 1995. These companies produce and sell underground storage tank leak detection systems and temperature, level and position sensing devices, power switches and controls, communication line products, power protection products, liquid flow measuring devices and electronic and mechanical counting and controlling devices. These products are distributed by the Company's sales personnel and independent representatives to original equipment manufacturers, distributors and other end users. The Company's strategy in the Process/Environmental Controls segment is to concentrate on the rapid expansion of its environmental controls product line, including the Veeder-Root TM storage tank leak detection systems business. The Company believes that Veeder-Root is the premier manufacturer of state-of-the-art tank measuring and leak detection systems for underground fuel storage tanks and, accordingly, is uniquely positioned to respond to the increased demand for these products fueled by environmental regulations. The Company is also expanding its other offerings in the environmental controls product line to encompass applications related to markets other than petroleum storage and to address nonregulatory business requirements. This expansion program includes both internally developed new product offerings as well as selective product line acquisitions. In its instruments product line, the Company's strategy is to continue enhancing its global controls and instrument position by both new product development and complementary acquisitions. The companies within the Instrument Group have significant synergies in both product offerings and channels of distribution. The Company plan is to leverage these synergies in product design, engineering and manufacturing, and product marketing. Veeder-Root is also the predominant worldwide supplier of mechanical gasoline pump computing devices and a manufacturer of other measuring and counting devices. Other business lines within this segment include extruded thermoplastic mill shapes and custom molded plastic products. The raw materials utilized by companies in this segment are stock items, principally metals and plastic, electrical and electronic components. These materials are readily available from a number of sources in sufficient quantities. Patents, Licenses, etc. The Company has patents of its own and has acquired licenses under patents of others. The Company does not consider that its business, as a whole, is dependent on any single patent, group of patents, trademark or franchise. The Company does, however, offer many patented products and is periodically engaged in litigation concerning patents and licenses. Seasonal Nature of Business As a whole, the Company's businesses are not subject to material seasonal fluctuations. Backlog The Company's products are manufactured primarily in advance of order and either shipped or assembled from stock. Backlogs are not significant as sales are often dependent on orders requiring immediate shipment from inventory. Employee Relations At December 31, 1995, the Company employed approximately 10,500 persons. Of these, approximately 1,600 were hourly-rated unionized employees. The Company considers its labor relations to be good. Research and Development The Company's research and development expenditures were $36,400,000 for 1995, $26,800,000 for 1994, and $24,000,000 for 1993. Environmental and Safety Regulations Certain of the Company's operations are subject to federal, state and local environmental laws and regulations which impose limitations on the discharge of pollutants into the air and water and establish standards for treatment, storage and disposal of solid and hazardous wastes. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. JMC previously operated wood treating facilities that chemically preserved utility poles, pilings and railroad ties. All such treating operations were discontinued or sold prior to 1982. These facilities used wood preservatives that included creosote, pentachlorophenol and chromium-arsenic-copper. While preservatives were handled in accordance with all appropriate procedures called for at the time, subsequent changes in environmental laws may require the generators of these spent preservatives to be responsible for the cost of remedial actions at the sites where spent preservatives have been deposited. The Company is continuing its investigation of these sites and remediation technologies. The Company has made a provision for environmental compliance; however, there can be no assurance that estimates of environmental liabilities will not change. In addition to environmental compliance costs, the Company may incur costs related to alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. The Company believes that its liability, if any, for past or current waste handling practices will not have a material adverse effect on its financial condition. The Company must also comply with various federal, state and local safety regulations in connection with its operations. The Company's compliance with these regulations has had no material adverse effect on its financial condition. Major Customers The Company has a customer in the tools segment, Sears, Roebuck and Co. ("Sears"), which accounted for 16% of consolidated sales in 1995. Although the relationship with Sears is long-standing, the Company believes the loss of this business could have an adverse effect on its operations. ITEM 2. PROPERTIES The Company occupies over 4 million square feet of manufacturing, distribution, service and office space at various domestic and foreign locations. The principal properties are listed below and are constructed of concrete, brick, cement, cinderblock or some combination of these materials. The Company believes that its plants have adequate productive capacity and are suitably used for the manufacture of its products and that its warehouses, distribution centers and sales offices are suitably located and utilized for the marketing of its products and services. Location Principal Use Owned/Leased .................................................................... .. Tools and Components Springdale, AK Manufacturing Owned Springfield, MA Manufacturing Owned Gastonia, NC Manufacturing Leased Fayetteville,AK (2) Manufacturing Owned Baltimore, MD Distribution Leased Brampton, Ontario Distribution Leased Lakewood, NY Manufacturing Owned Nashville, TN Distribution Owned Stow, OH Distribution Owned West Hartford, CT Manufacturing Owned Terryville, CT Manufacturing Owned Walworth, WI Manufacturing Owned Dundee, Scotland Manufacturing Owned Sheffield, England Manufacturing Owned Clemson, SC Manufacturing Owned Jonesboro, AK Manufacturing Owned Jonesboro, AK Manufacturing Leased Raleigh, NC Manufacturing Leased Chicago, IL (3) Manufacturing Owned Bloomfield, CT Manufacturing Owned LaVergne, TN Manufacturing Owned Bowling Green, KY Manufacturing Owned Process/Environmental Controls Altoona, PA Manufacturing Owned Elizabethtown, NC Manufacturing Owned Market Harborough, England Manufacturing Leased Sao Paulo, Manufacturing Owned Brazil New Hartford & Fairport, NY Manufacturing Owned Gurnee, IL Manufacturing Leased Grenloch, NJ Manufacturing Owned Providence, RI Manufacturing Owned Brighton, England Manufacturing Leased Aldingen, Germany Manufacturing Owned Aldingen, Germany (2) Manufacturing Leased Wehingen, Germany (2) Manufacturing Leased Eatontown, NJ Distribution Leased Broxbourne, England Distribution Leased Cleveland, OH (3) Manufacturing Owned Goleta, CA Manufacturing Owned Lachine, Quebec Manufacturing Leased Lancaster, SC Manufacturing Owned Moorpark, CA Manufacturing Leased Paso Robles, CA Manufacturing Leased San Jose, CA Manufacturing Owned Spokane, WA Manufacturing Leased In addition to the facilities listed, the Company owns or leases various facilities including offices or properties in Washington, District of Columbia; Simsbury, Connecticut; as well as facilities in Uppermill, Livingston, Gloucester and Richmond, Great Britain; Melbourne and Sydney, Australia; Nagoya, Osaka and Tokyo, Japan; Toronto, Canada; Paris, Bron, Toulouse, Bordeaux, Tours and Selestat, France; and Stuttgart, Germany. ITEM 3. LEGAL PROCEEDINGS A former subsidiary of the Company is engaged in litigation in several states with respect to product liability. The Company sold the subsidiary in 1987. Under the terms of the sale agreement, the Company agreed to indemnify the buyer of the subsidiary for product liability related to tools manufactured by the subsidiary prior to June 4, 1987. The cases involve approximately 3,000 plaintiffs, in state and federal courts. All other major U.S. air tool manufacturers are also defendants. The gravamen of these complaints is that the defendants' air tools, when used in different types of manufacturing environments over extended periods of time, were defective in design and caused various physical injuries. The plaintiffs seek compensatory and punitive damages. The cases are in preliminary stages of discovery and pleading and the Company intends to defend its position vigorously. The Company's maximum indemnification obligation under the contract is approximately $85,000,000. The Company believes it has insurance coverage for all or a substantial part of the damages, if any. The outcome of this litigation is not currently predictable. JMC is a defendant in a class action tort suit. The suit alleges exposure to chemicals and property devaluation resulting from wood treating operations previously conducted at a Louisiana site. Both the size of the class and the damages are uncertain. The Company has tendered the defense of the suit to its insurance carrier. JMC believes that it may have adequate insurance coverage for the litigation; however, because of the above uncertainties, JMC is unable to determine at this time the potential liability, if any. In addition to the litigation noted above, the Company and its subsidiaries are from time to time subject to ordinary routine litigation incidental to their business. The Company believes that the results of the above noted litigation and other pending legal proceedings would not have a materially adverse effect on the Company's financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER No matters were submitted to a vote of security holders during the fourth quarter of 1995. PART II ITEMS 5 THROUGH 8. The information required under Items 5 through 8 is included in the Registrant's Annual Report to its Shareholders for the year ended December 31, 1995, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEMS 10 THROUGH 13. The information required under Items 10 through 13 is included in the Registrant's Proxy Statement for its 1996 annual meeting, and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K a) Document List 1. Financial Statements Response to this portion of Item 14 is submitted per the Index to Financial Statement Schedules on page 8 of this report. 2. Supplementary Data and Financial Statement Schedules Response to this portion of Item 14 is submitted per the Index to Financial Statement Schedules on page 8 of this report. 3. An Index of Exhibits is on page 9 of this report. b) Reports on Form 8-K filed in the fourth quarter of 1995. NONE DANAHER CORPORATION INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES Page Number in: Annual Report Form 10K To Shareholders Annual Report: Report of Independent Public Accountants on Schedule: 15 Financial Statements: Consolidated Statements of Earnings, year ended December 31, 1995, 1994, and 1993. 18 Consolidated Balance Sheets, December 31, 1995 and 1994 19 Consolidated Statements of Cash Flows, years ended December 31, 1995, 1994, and 1993 20 Consolidated Statements of Stockholders' Equity, years ended December 31, 1995, 1994, and 1993 21 Notes to Consolidated Financial Statements 22 Supplemental Data: Selected Financial Data 14 Market Prices of Common Stock 31 Schedules: II - Valuation and Qualifying Accounts 16 Schedules other than those listed above have been omitted from this Annual Report because they are not required, are not applicable or the required information is included in the financial statements or the notes thereto. Exhibits: (3) Articles of Incorporation and By-Laws. (a) The Articles of Incorporation of Danaher Incorporated by (filed as Annex B to Danaher's Proxy Reference Statement dated October 7, 1986). (b) The By-Laws of Danaher. Incorporated By Reference (10) Material Contracts: (a) Employment Agreement between Danaher Incorporated by Corporation and George M. Sherman dated Reference as of January 2, 1990 (b) Credit Agreement Dated As of September 7, Incorporated by 1990. Among Danaher Corporation, the Reference Financial Institutions Listed Therein and Bankers Trust Company as Agent. (c) Agreement as of November 1, 1990 between Incorporated by Danaher Corporation, Easco Hand Tools, Inc. Reference and Sears, Roebuck and Co. (d) Note Agreement as of November 1, 1992 Incorporated by Between Danaher Corporation and Lenders Reference Referenced Therein. (e) Note Agreement as of April 1, 1993 Incorporated by Between Danaher Corporation and Lenders Reference Referenced Therein. (f) Agreement and Plan of Merger, dated as of Incorporated by August 20, 1995 Between Danaher Corporation Reference and Affiliates and Joslyn Corporation (13) Annual Report to Securityholders (22) Subsidiaries of Registrant. (24) Consent of Independent Public Accountants. (27) Financial Data Schedules 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. DANAHER CORPORATION By: /s/ GEORGE M.SHERMAN George M. Sherman President and Chief Executive Officer Date: March 21, 1996 /s/ GEORGE M. SHERMAN President and Chief Executive Officer George M. Sherman /s/ STEVEN M. RALES Chairman of the Board Steven M. Rales /s/ MITCHELL P. RALES Chairman of the Executive Committee Mitchell P. Rales /s/ WALTER G. LOHR, JR. Director Walter G. Lohr, Jr. /s/ DONALD J. EHRLICH Director Donald J. Ehrlich /s/ MORTIMER M. CAPLIN Director Mortimer M. Caplin /s/ A. EMMET STEPHENSON, JR. Director A. Emmet Stephenson, Jr. /s/ PATRICK W. ALLENDER Senior Vice President-Chief Financial Patrick W. Allender Officer and Secretary /s/ C. SCOTT BRANNAN Vice President and Controller C. Scott Brannan REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON THE FINANCIAL STATEMENT SCHEDULES To Danaher Corporation: We have audited in accordance with generally accepted auditing standards, the financial statements included in pages 7 to 23 of the Danaher Corporation and Subsidiaries' Annual Report to Shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 26, 1996. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the index are the responsibility of the Company's management and are presented for the purpose of complying with the Securities and Exchange Commission's rules and are not a part of the basic financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the financial statements taken as a whole. ARTHUR ANDERSEN LLP Washington, D.C. January 26, 1996 DANAHER CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (000's omitted) Additions Write Balance Charged Offs, Classification at to Charged Write Balance Beginning Costs to Downs at End of & other & of Period Expenses Accounts Deductions Period Year Ended December 31, 1995 Allowances deducted from asset accounts: Allowance for 4,148 doubtful accounts $11,638 $ 4,847 $ 2,961(a) $ 1,867(b) $13,431 Year Ended December 31, 1994 Allowances deducted from asset accounts: Allowance for doubtful accounts $ 8,043 $ 6,630 $ 487(a) $ 3,522 $11,638 Year Ended December 31, 1993 Allowances deducted from asset accounts: Allowance for doubtful accounts $ 6,350 $ 4,188 $ - $ 2,495 $ 8,043 Notes: (a) - Amounts related to businesses acquired. (b) - Amounts related to businesses disposed of.