SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
[ X ] SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended June 27, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-8089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-1995548
(State of incorporation) (I.R.S. Employer
Identification number)
1250 24th Street, N.W., Suite 800
Washington, D.C. 20037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 202-828-0850
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to such filing requirements for the past 90
days.
Yes X No
The number of shares of common stock outstanding at July 17, 1997
was 58,424,737.
DANAHER CORPORATION
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheet
at June 27, 1997 and December 31, 1996 3
Consolidated Condensed Statements of
Earnings for the three months and
six months ended June 27, 1997 and
June 28, 1996 4
Consolidated Condensed Statements of
Cash Flow for the six months ended
June 27, 1997 and June 28, 1996 5
Notes to Consolidated Condensed
Financial Statements 6-8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 8-9
PART II - OTHER INFORMATION
Item 6. (a) Exhibits: 9
(27) Financial Data Schedules
(b) Reports on Form 8-K: None
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
June 27, December 31,
1997 1996
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 35,048 $ 26,444
Accounts receivable, net 290,528 266,668
Inventories:
Finished goods 96,301 88,083
Work in process 46,968 49,681
Raw material and supplies 72,477 66,472
Total inventories 215,746 204,236
Prepaid expenses and other
current assets 44,427 49,393
Total current assets 585,749 546,741
Property, plant and equipment, net
of accumulated depreciation of
$244,487 and $218,830,
respectively 327,580 319,606
Other assets 94,612 105,903
Excess of cost over net assets of
acquired companies, net 811,223 792,824
Total assets $1,819,164 $1,765,074
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current
portion of long-term debt $ 24,837 $ 16,757
Accounts payable 123,634 110,194
Accrued expenses 373,997 347,622
Total current liabilities 522,468 474,573
Other liabilities 270,479 270,670
Long-term debt 190,885 219,570
Stockholders' equity:
Common stock-$.01 par value 642 642
Additional paid-in capital 334,616 333,587
Retained earnings 573,628 506,773
Cumulative foreign translation
adjustment and other (4,113) 8,858
Treasury Stock (69,441) (49,599)
Total stockholders' equity 835,332 800,261
Total liabilities and
stockholders' equity $1,819,164 $1,765,074
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Six Months Ended
June 27, June 28, June 27, June 28,
1997 1996 1997 1996
Net revenues $502,789 $434,897 $969,230 $844,454
Operating costs and expenses:
Cost of sales 338,725 296,909 657,686 582,173
Selling, general and
administrative expenses 92,266 76,934 178,532 149,806
Goodwill and other
amortization 5,856 4,752 11,613 9,045
Total operating costs and
expenses 436,847 378,595 847,831 741,024
Operating profit 65,942 56,302 121,399 103,430
Interest expense, net 3,236 2,981 7,100 5,964
Earnings from continuing
operations before income
taxes 62,706 53,321 114,299 97,466
Income taxes 24,448 20,796 44,506 38,013
Earnings from continuing
operations $ 38,258 $ 32,525 $ 69,793 $ 59,453
Gain from sale of dis-
continued operations,
net of taxes of $ -0-. - - - 79,811
Net Earnings $ 38,258 $ 32,525 $ 69,793 $139,264
Per Share:
From continuing operations $ .64 $ .54 $ 1.16 $ .99
From discontinued operations - - - 1.33
Net earnings $ .64 $ .54 $ 1.16 $2.33
Average common stock and
equivalent shares
outstanding 60,029,047 59,932,305 60,203,733 59,806,356
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(000's omitted)
(unaudited)
Six Months Ended
June 27, June 28,
1997 1996
Cash flows from operating activities:
Net earnings from operations $ 69,793 $ 59,453
Noncash items, depreciation
and amortization 38,273 33,033
Increase in accounts receivable (21,769) (31,382)
(Increase) decrease in inventories (1,270) 7,199
Increase in accounts payable 10,654 8,847
Change in other assets and liabilities 40,188 (14,542)
Total operating cash flows 135,869 62,608
Cash flows from investing activities:
Sale of Fayette Tubular Products -- 155,000
Payments for additions to property,
plant, and equipment, net (25,976) (21,130)
Cash paid for acquisitions (58,962) (37,701)
Net cash provided by (used in)
investing activities (84,938) 96,169
Cash flows from financing activities:
Acquisition of treasury stock (19,842) (12,110)
Proceeds from issuance of common stock 1,029 1,470
Repayments of debt (20,605) (144,545)
Payment of dividends (2,938) (2,333)
Net cash used in financing activities (42,356) (157,518)
Effect of exchange rate changes on cash 29 (28)
Net change in cash and cash equivalents 8,604 1,231
Beginning balance of cash and cash
equivalents 26,444 7,938
Ending balance of cash and cash
equivalents $ 35,048 $ 9,169
Supplemental disclosures:
Cash interest payments $ 6,693 $ 6,631
Cash income tax payments $ 44,266 $ 47,546
See notes to consolidated condensed financial statements.
DANAHER CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. GENERAL
The consolidated condensed financial statements included herein
have been prepared by Danaher Corporation (the Company) without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules
and regulations; however, the Company believes that the disclosures are
adequate to make the information presented not misleading. The condensed
financial statements included herein should be read in conjunction with the
financial statements and the notes thereto included in the Company's 1996
Annual Report on Form 10-K.
In the opinion of the registrant, the accompanying financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company
at June 27, 1997 and December 31, 1996, its results of operations for the
three months and six months ended June 27, 1997 and June 28, 1996, and its
cash flows for the six months ended June 27, 1997 and June 28, 1996.
NOTE 2. ACQUISITION OF ACME-CLEVELAND CORPORATION
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 was approximately $240
million and approximately $40 million of liabilities were assumed. The
transaction was accounted for as a purchase.
The unaudited pro forma information for the period set forth
below give effect to the transaction as if it 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 Six Months Ended
December 31 June 28,
1996 1996
Net Sales $1,885,700 $ 918,276
Net Earnings 129,197 60,691
Earnings per Share $ 2.15 $ 1.01
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.
NOTE 4. NONRECURRING TRANSACTIONS
The company sold its investment in Tylan General Corporation and
recognized a gain of approximately $3.5 million before income taxes in the
first quarter of 1997. This was offset by a charge to close facilities
within the Hengstler subsidiary and relocate work to an existing company
facility.
NOTE 5. EARNINGS PER SHARE
Statement of Financial Accounting Standards Number 128 will
change the reporting of earnings per share effective in the fourth quarter
of 1997. Basic earnings per share will not include stock options as common
stock equivalents and will be higher than previously reported primary
earnings per share. Diluted earnings per share will equal previously
reported primary earnings per share under the company's current capital
structure. The pro-forma impact on previously reported 1996 and 1997
earnings per share would be as shown below.
Year Six Months Quarter
1996 1997 1996 1997 1996
Average shares
outstanding (basic
earnings per share) 58,623,470 58,887,111 58,458,103 58,657,248 58,536,124
Stock option
equivalents 1,331,166 1,316,622 1,348,253 1,371,799 1,396,181
Average shares and
equivalents (diluted
earnings per share) 59,954,636 60,203,733 59,806,356 60,029,047 59,932,305
Continuing operations-
Basic earnings per share $2.18 $1.19 $1.02 $.65 $.56
Diluted earnings per share $2.13 $1.16 $ .99 $.64 $.54
NOTE 6. TENDER OFFER FOR EXIDE ELECTRONICS GROUP, INC.
On July 10, 1997, the Company proposed to acquire all
outstanding shares of Exide Electronics Group, Inc. for approximately $230
million in a merger transaction whereby Exide Electronics Group, Inc.
shareholders would receive $20 per share in cash. If the merger is
completed, which remains uncertain as of the date of this quarterly report,
the Exide Electronics Group, Inc. businesses would be an addition to the
Company's Process/ Environmental Controls business segment.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Net sales for the 1997 quarter were 15.6% higher than the 1996
quarter. Net sales for the six-month period were 14.8% higher than the
corresponding period in 1996. This is principally due to continued increases
in market share in all segments, with comparable companies accounting for
approximately 4% of sales growth in both the quarter and six-month periods.
Gross profit margin in 1997, as a percentage of sales, was
approximately 32.6% for the quarter and 32.1% for the six-month period, an
increase of .9 and 1.0 percentage points, respectively, from 1996 levels.
The gross margin increase was attributable to both the effect of the
acquired companies which provide a higher gross margin and productivity
improvements within the existing business units.
Selling, general and administrative expenses for the 1997
quarter and six-month period increased in total dollars principally due to
the higher volume levels. Selling, general and administrative expenses as a
percentage of sales was 18.4% for both the 1997 quarter and the six month
period. This represents an increase of .7 percentage points from prior
periods. This reflects principally the impact of the acquired businesses
which have a higher overall selling expense structure than the existing
business units.
Interest expense for the quarter and six-month period was 8.6% and
19.0% higher than the 1996 levels, due to higher average debt levels,
principally due to acquisitions made in 1996.
The effective tax rate for both the second quarter and six-month
periods is approximately equal for 1997 and 1996.
Liquidity and Capital Resources
Since December 31, 1996, the Company has experienced increases
in accounts receivable and accounts payable. This is due to the lower
activity levels experienced in the last weeks of 1996 caused by the holiday
season. During the second quarter, the Company acquired 500,000 shares of
treasury stock at an average cost of $39.70 per share. Total debt decreased
to $215.7 million at June 27, 1997, primarily as a result of strong
operating performance, offset by cash paid for acquisitions, the
acquisition of treasury stock, and the increase in working
capital discussed above.
A regular quarterly dividend of $.025 share was declared,
payable on July 25, 1997 to holders of record on June 27, 1997.
The Company's cash provided from operations, as well as credit
facilities available, should provide sufficient available funds to meet
anticipated working capital requirements, capital expenditures,
acquisitions, dividends and scheduled debt repayments.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DANAHER CORPORATION:
Date: July 17, 1997 By: /s/ Patrick W. Allender
Patrick W. Allender
Chief Financial Officer
Date: July 17, 1997 By: /s/ C. Scott Brannan
C. Scott Brannan
Controller