SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended September 27, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-1995548
(State of incorporation) (I.R.S. Employer Identification number)
1250 24th Street, N.W., Suite 800
Washington, D.C. 20037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 202-828-0850
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
The number of shares of common stock outstanding at October 17, 1996 was
58,478,218.
DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at September 27, 1996 and December 31, 1995 . . . . . 1
Consolidated Condensed Statements of
Earnings for the three months and
nine months ended September 27, 1996
and September 29, 1995. . . . . . . . . . . .. . . . 2
Consolidated Condensed Statements of
Cash Flow for the nine months ended
September 27, 1996 and September 29, 1995 . . . . . 3
Notes to Consolidated Condensed
Financial Statements. . . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . 5
Liquidity and Capital Resources. . . . . . . . . . . 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . 7
Item 2. Change in Securities. . . . . . . . . . . . 7
Item 3. Defaults Upon Senior Securities . . . . . . 7
Item 4. Submission of matters to a vote of
Security Holders. . . . . . . . . . . . . . 7
Item 5. Other Information . . . . . . . .. . . . . . 7
Item 6. Exhibits and Reports on Form 8-K . . . . . . 7
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
September 27, December 31,
1996 1995
(NOTE 1)
ASSETS
Current Assets:
Cash and cash equivalents . . . $ 21,949 $ 7,938
Accounts receivable, net . . . 294,259 224,652
Inventories:
Finished goods . . . . . . . 108,297 89,932
Work in process . . . . . . . 49,602 51,904
Raw material and supplies . . 71,900 60,054
Total inventories. . . . 229,799 201,890
Prepaid expenses and other
current assets . . . . . . . 44,992 31,990
Total current assets . . 590,999 466,470
Property, plant and equipment, net
of depreciation of $211,355 and
$168,566 respectively . . . . . . 310,939 291,937
Other assets . . . . . . . . . . . . 99,296 119,444
Excess of cost over net assets of
acquired companies, net . . . . . 791,469 608,140
Total assets . . . . . . . $1,792,703 $1,485,991
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt . . . $ 16,558 $ 14,970
Accounts payable . . . . . . . . . 110,260 92,290
Accrued expenses . . . . . . . . . 380,769 296,878
Total current liabilities . 507,587 404,138
Other liabilities . . . . . . . . . . 265,716 226,925
Long-term debt. . . . . . . . . . . . 268,710 268,617
Stockholders' equity:
Common stock - $.01 par value . . . 637 634
Additional paid-in capital . . . . . 325,881 315,205
Retained earnings . . . . . . . . . 473,432 304,363
Cumulative foreign translation
adjustment . . . . . . . . . . . . 339 3,598
Treasury stock . . . . . . . . . . . (49,599) (37,489)
Total stockholders' equity . . . . . . 750,690 586,311
Total liabilities and
stockholders' equity . . $ 1,792,703 $ 1,485,991
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
Sept. 27, Sept. 29, Sept 27, Sept. 29,
1996 1995 1996 1995
Net revenues $ 470,787 $ 368,724 $ 1,315,241 $1,056,597
Operating costs and
expenses:
Cost of sales 321,766 257,614 903,939 740,813
Selling, general and
administrative expenses 83,266 60,400 233,072 175,514
Goodwill and other
amortization 5,462 3,616 14,507 10,629
Total operating costs
and expenses 410,494 321,630 1,151,518 926,956
Operating profit 60,293 47,094 163,723 129,641
Interest expense, net 5,248 1,384 11,212 3,900
Earnings from continuing
operations before income
taxes 55,045 45,710 152,511 125,741
Income taxes 21,468 17,362 59,481 49,341
Earnings from continuing
operations $ 33,577 $ 28,348 $ 93,030 $ 76,400
Earnings from discontinued
operations, net of taxes
of $ -0-, $290, $ -0-,
and $940 -- 452 79,811 1,468
Net Earnings $ 33,577 $ 28,800 $172,841 $ 77,868
Per Share:
From continuing
operations $ .56 $ .47 $ 1.55 $1.28
From discontinued
operations -- .01 $ 1.33 .02
Net earnings $ .56 $ .48 $ 2.88 $1.30
Average common stock and
equivalent shares
outstanding 60,045,807 59,922,535 59,970,139 59,849,641
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted except per share amounts)
(unaudited)
Nine Months Ended
Sept. 27, 1996 Sept. 29, 1995
Cash flows from operating activities:
Net earnings from operations $ 93,030 $ 77,868
Noncash items, depreciation
and amortization 51,325 48,899
Increase in accounts receivable (44,174) (49,142)
(Increase) decrease in inventories 9,147 (29,074)
Increase in accounts payable 11,466 4,111
Change in other assets and
liabilities 26,085 20,230
Total operating cash flows 146,879 72,892
Cash flows from investing activities:
Sale of Fayette Tubular Products 155,000 --
Payments for additions to property,
plant and equipment, net (38,731) (53,143)
Cash paid for acquisitions (235,503) (142,912)
Net cash used in investing
activities (119,234) (196,055)
Cash flow from financing activities:
Acquisition of Treasury Stock (12,110) --
Proceeds from issuance of common stock 1,796 3,100
Borrowings of debt 534 131,864
Payment of dividends (3,772) (3,500)
Net cash provided by (used in)
financing activities (13,562) 131,464
Effect of exchange rate changes on cash (82) 211
Net change in cash and cash equivalents 14,011 8,512
Beginning balance of cash and cash
equivalents 7,938 1,978
Ending balance of cash and cash
equivalents $ 21,949 $ 10,490
Supplemental disclosures:
Cash interest payments $ 11,659 $ 7,967
Cash income tax payments $ 52,588 $ 48,503
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 27, 1996
(unaudited)
NOTE 1. GENERAL
The consolidated condensed financial statements included
herein have been prepared by Danaher Corporation (the
Company) without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations; however, the Company
believes that the disclosures are adequate to make the
information presented not misleading. The condensed
financial statements included herein should be read in
conjunction with the financial statements and the notes
thereto included in the Company's 1995 Annual Report on Form
10-K.
In the opinion of the registrant, the accompanying
financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present
fairly the financial position of the Company at September 27,
1996 and December 31, 1995, its results of operations for the
three months and nine months ended September 27, 1996 and
September 29, 1995, and its cash flows for the nine months
ended September 27, 1996 and September 29, 1995.
NOTE 2. ACQUISITION OF JOSLYN CORPORATION AND ACME-
CLEVELAND CORPORATION
The Company obtained control of Joslyn Corporation
(Joslyn) as of September 1, 1995 when Joslyn's shareholders
tendered approximately 75% of the outstanding shares to
Danaher for $34 per share in cash. The remaining 25% was
acquired on October 31, 1995. Total consideration for
Joslyn was approximately $245 million. The fair value of
assets acquired is approximately $345 million and
approximately $100 million of liabilities were assumed. The
transaction has been accounted for as a purchase.
The Company obtained control of Acme-Cleveland
Corporation (Acme) as of July 2, 1996. Total consideration
for Acme was approximately $200 million. The fair value of
assets acquired is approximately $240 million and
approximately $40 million of liabilities were assumed. The
transaction is being accounted for as a purchase. The
purchase price allocations have been completed on a
preliminary basis, subject to adjustment should new or
additional facts about the business become known.
The unaudited pro forma information for the period set
forth below gives effect to the transactions as if they had
occurred at the beginning of each period. The pro forma
information is presented for information purposes only and is
not necessarily indicative of the results of operations that
actually would have been achieved had the acquisition been
consummated as of that time (unaudited, 000's omitted):
Year Ended Nine Months Ended Nine Months Ended
December 31, September 29, September 27,
1995 1995 1996
Net Sales $ 1,767,154 $1,304,528 $1,389,063
Net Earnings 111,838 80,404 94,268
Earnings per $ 1.87 $ 1.34 $1.57
Share
NOTE 3. DISCONTINUED OPERATIONS
In January, 1996, the Company sold its Fayette Tubular
Products subsidiary for $155 million cash. A gain of $79.8
million was recognized in the first quarter of 1996. As the
company no longer operates in the transportation business
segment, amounts for 1995 have been restated to reflect
Fayette as a discontinued operation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net revenues for the 1996 quarter and nine-month period
were 28% and 24% higher compared to the corresponding periods
in 1995. Customer demand was higher in all business
segments. Acquisitions accounted for approximately 24% and
21% of sales growth in the quarter and the nine-month period.
Gross profit margins for the 1996 third quarter and
nine-month period, as a percentage of sales, were
approximately 31.7% and 31.3%, respectively. For the quarter
and nine-month period, gross profit margins are up 1.5 and
1.4 percentage points because the acquired companies provide
a higher gross margin and productivity improvements within
the existing business units were experienced.
Selling, general and administrative expenses for the
1996 third quarter as a percentage of sales were
approximately 1.3 percentage points higher than the 1995
level. For the 1996 nine-month period, these costs as a
percentage of sales are also higher principally due to the
higher overall selling expense structure of the acquired
businesses.
Interest expense for the 1996 quarter and nine-month
period was 279% and 187% higher than the 1995 levels due to
higher average debt levels, principally due to acquisitions
made in 1996 and September, 1995.
The effective tax rate for the nine-month period is lower
in 1996 than in 1995. This reflects principally the lesser
impact of nondeductible goodwill amortization given higher
pretax earnings and a lower income tax expense for certain
foreign operations.
Liquidity and Capital Resources
Total debt increased $145 million from the second quarter
to $285 million. This reflects the financing of the Acme-
Cleveland acquisition and increased working capital offset by
net earnings. Increased accounts receivable were largely
related to the consumer hand tool business which had just
entered its peak selling season. The Company anticipates
reductions in working capital levels in the fourth quarter.
The Company's regular quarterly dividend of $.025 per
share was declared for holders of record on September 26,
1996, payable on October 25, 1996.
The Company's cash provided from operations, as well as
credit facilities available, should provide sufficient
available funds to meet anticipated working capital
requirements, capital expenditures, dividends and scheduled
debt repayments.
PART II
ITEM 1. Legal Proceedings
None
ITEM 2. Change in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of Security
Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
DANAHER CORPORATION:
Date: October 17, 1996 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: October 17, 1996 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller