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 29, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from _____________ to ______
Commission File Number: 1-8089
DANAHER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 59-1995548
---------------------- ----------------------
(State of incorporation) (I.R.S. Employer
Identification number)
1250 24th Street, N.W., Suite 800
Washington, D.C. 20037
- ---------------------------------------- ----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 202-828-0850
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of shares of common stock outstanding at October 19, 2000 was
141,860,035.
DANAHER CORPORATION
-------------------
INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at September 29, 2000 and December 31, 1999 3
Consolidated Condensed Statements of
Earnings for the three months and
nine months ended September 29, 2000 and
October 1, 1999 4
Consolidated Condensed Statements of
Cash Flow for the nine months ended
September 29, 2000 and October 1, 1999 5
Notes to Consolidated Condensed
Financial Statements 6-7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-9
PART II - OTHER INFORMATION
Item 6. (a) Exhibits: 9
(b) Reports on Form 8-K: None
DANAHER CORPORATION
-------------------
CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(000's omitted)
---------------
(Unaudited)
September 29, December 31,
2000 1999
---------- ----------
ASSETS
______
Current Assets:
Cash and cash equivalents $ 153,791 $ 260,281
Accounts receivable, net 668,594 544,738
Inventories:
Finished goods 173,954 128,134
Work in process 95,985 67,437
Raw material and supplies 209,155 129,102
---------- ----------
Total inventories 479,094 324,673
Prepaid expenses and other
current assets 73,225 72,425
---------- ----------
Total current assets 1,374,704 1,202,117
Property, plant and equipment, net
of accumulated depreciation of
$627,689 and $552,724,
respectively 576,702 500,189
Other assets 97,720 52,476
Excess of cost over net assets of
acquired companies, net 1,840,709 1,292,289
---------- ----------
Total assets $3,889,835 $3,047,071
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable and current
portion of long-term debt $ 59,844 $ 33,597
Accounts payable 254,456 213,209
Accrued expenses 690,103 461,980
---------- ----------
Total current liabilities 1,004,403 708,786
Other liabilities 287,550 288,494
Long-term debt 745,243 341,037
Stockholders' equity:
Common stock-$.01 par value 1,555 1,540
Additional paid-in capital 350,678 420,036
Retained earnings 1,550,557 1,321,283
Accumulated other comprehensive
income (50,151) (34,105)
---------- ----------
Total stockholders' equity 1,852,639 1,708,754
---------- ----------
Total liabilities and
stockholders' equity $3,889,835 $3,047,071
========== ==========
See notes to consolidated condensed financial statements.
3
DANAHER CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
---------------------------------------------
(000's omitted except per share amounts)
(unaudited)
Quarter Ended Nine Months Ended
September 29, October 1, September 29, October 1,
2000 1999 2000 1999
-------- -------- ---------- ----------
Net sales $986,786 $781,867 $2,745,408 $2,349,044
Operating costs and expenses:
Cost of sales 599,814 470,799 1,678,957 1,440,562
Selling, general and
administrative expenses 227,265 182,515 631,887 545,280
Goodwill and other
amortization 12,863 9,337 33,426 27,448
-------- -------- ---------- ----------
Total operating costs and
expenses 839,942 662,651 2,344,270 2,013,290
-------- -------- ---------- ----------
Operating profit 146,844 119,216 401,138 335,754
Other (Note 3) - 11,778 - 11,778
Interest expense, net 11,965 2,720 19,769 15,233
-------- -------- ---------- ----------
Earnings before income taxes 134,879 104,718 381,369 308,743
Income taxes 51,254 42,872 144,920 121,422
-------- -------- ---------- ----------
Net Earnings $ 83,625 $ 61,846 $ 236,449 $ 187,321
======== ======== ========== ==========
Basic earnings per share $.59 $.43 $1.66 $1.32
======== ======== ========== ==========
Average shares outstanding 142,363 142,494 142,453 141,457
======== ======== ========== ==========
Diluted earnings per share $.58 $.42 $1.63 $1.28
======== ======== ========== ==========
Average common stock and
equivalent shares
outstanding 145,290 146,785 145,301 145,852
======== ======== ========== ==========
See notes to consolidated condensed financial statements.
4
DANAHER CORPORATION
-------------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
----------------------------------------------
(000's omitted)
(unaudited)
Nine Months Ended
September 29, October 1,
2000 1999
--------- ---------
Cash flows from operating activities:
Net earnings from operations $ 236,449 $ 187,321
Noncash items, depreciation
and amortization 109,226 96,460
Change in accounts receivable 10,792 (16,481)
Change in inventories (62,762) (12,872)
Change in accounts payable (3,058) 27,713
Change in other assets and liabilities 106,078 83,361
--------- ---------
Total operating cash flows 396,725 365,502
--------- ---------
Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (61,047) (61,508)
Cash paid for acquisitions (640,693) (60,380)
--------- ---------
Net cash used in investing activities (701,740) (121,888)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of treasury stock - 69,845
Proceeds from issuance of common stock 12,831 15,617
Borrowing (repayments) of debt 275,988 (88,144)
Payment of dividends (7,175) (7,773)
Purchase of common stock (82,174) -
--------- ---------
Net cash provided by (used in)
financing activities 199,470 (10,455)
--------- ---------
Effect of exchange rate changes on cash (945) (819)
--------- ---------
Net change in cash and cash equivalents (106,490) 232,340
Beginning balance of cash and cash
equivalents 260,281 47,798
--------- ---------
Ending balance of cash and cash
equivalents $ 153,791 $ 280,138
========= =========
Supplemental disclosures:
Cash interest payments $ 11,442 $ 9,635
========= =========
Cash income tax payments $ 29,824 $ 82,210
========= =========
See notes to consolidated condensed financial statements.
5
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 accounting principles generally accepted in the
United States have been condensed or omitted pursuant to such rules and
regulations; however, the Company believes that the disclosures are adequate to
make the information presented not misleading. The condensed financial
statements included herein should be read in conjunction with the financial
statements and the notes thereto included in the Company's 1999 Annual Report on
Form 10-K.
In the opinion of the registrant, the accompanying financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of the Company at
September 29, 2000 and December 31, 1999, its results of operations for the
three months and nine months ended September 29, 2000 and October 1, 1999, and
its cash flows for the nine months ended September 29, 2000 and October 1, 1999.
Total comprehensive income was as follows:
2000 1999
------ ------
(millions)
Quarter $ 85.3 $ 73.4
Nine Months $220.4 $169.4
Total comprehensive income for all periods represents net income and the change
in cumulative foreign translation adjustment.
NOTE 2. SEGMENT INFORMATION
Segment information is presented consistently with the basis described
in the 1999 Annual Report. There has been no material change in total assets or
liabilities by segment. Segment results for the quarter and nine months ended
September 29, 2000 and October 1, 1999 are shown below:
6
Sales
Third Quarter Nine Months
2000 1999 2000 1999
-------- -------- ---------- ----------
Process/Environmental
Controls $664,663 $455,057 $1,735,388 $1,369,200
Tool and Components 322,123 326,810 1,010,020 979,844
-------- -------- ---------- ----------
$986,786 $781,867 $2,745,408 $2,349,044
======== ======== ========== ==========
Operating Profit
Third Quarter Nine Months
2000 1999 2000 1999
-------- -------- ---------- ----------
Process/Environmental
Controls $104,092 $ 73,936 $ 276,566 $ 215,680
Tool and Components 47,739 48,981 138,509 132,316
Other (4,987) (3,701) (13,937) (12,242)
-------- -------- ---------- ----------
$146,844 $119,216 $ 401,138 $ 335,754
======== ======== ========== ==========
NOTE 3. MERGERS
On July 14, 1999, the Company acquired Hach Company. The Company
issued .2987 shares of common stock in exchange for each outstanding
share of Hach Company. The transaction was a tax-free reorganization and
was accounted for as a pooling-of-interests. Accordingly, the financial
statements presented have been restated to reflect the combined
companies. Hach is engaged in the manufacture and marketing of
instruments and kits to analyze the chemical and other properties of
water and aqueous solutions.
Third quarter 1999 results include a one-time charge of $11.8
million ($9.8 million after-tax or $0.07 per diluted share) to reflect
the costs of the transaction and the elimination of redundant activities
and operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Results of Operations
- ---------------------------
Net sales for the 2000 quarter were 26% higher than the 1999
quarter. Net sales for the nine-month period were 17% higher than the
corresponding period in 1999. Acquisitions accounted for 21% and 11% of
the third quarter and nine-month sales growth, respectively. Comparable
companies grew approximately 5% for the quarter and 6% for the nine-month
period. This growth was driven by volume gains in the Electronic Test,
Motion, Power Quality, and Hand Tools businesses. Unfavorable currency
translation impacts of approximately 2% for the quarter and year to date
period combined with a decline in the diesel engine retarder business
unit to offset the volume growth.
7
Gross profit margin in 2000, as a percentage of sales, was
approximately 39.2% for the quarter and 38.8% for the nine-month period,
a decrease of 0.6 percentage points and an increase of 0.2 percentage
points from 1999 levels, respectively. The decrease for the quarter
results from the lower gross margins of businesses acquired during 2000.
The year to date increase was attributable primarily to the leverage of
higher shipment volumes spread over the fixed cost base and productivity
improvements, offset by lower gross margins of businesses acquired during
2000.
Selling, general and administrative expenses for the 2000 quarter
and nine-month period increased $45 million and $87 million,
respectively, reflecting the impact of recently acquired companies,
increased variable spending generated by higher sales volumes, and
increased spending in electronic commerce activities. These expenses, as
a percentage of sales, fell 0.3 and 0.2 points, respectively, driven by
the leverage of a larger revenue base spread over fixed costs, and the
impact of recently acquired companies.
The effective tax rate of 38.0% for the third quarter and the
nine-month period in 2000 is 2.94 points and 1.33 points lower than in
1999, respectively, primarily due to a higher proportion of foreign
earnings in 2000 and non-deductible merger costs incurred in the 1999
third quarter.
Liquidity and Capital Resources
- ---------------------------
Operating cash flow for the nine months ended September 29, 2000
was $31.2 million higher than in 1999, resulting from improved earnings
and increased deferred tax liabilities, offset by increases in
inventories. Total debt increased to $805.1 million at September 29,
2000, compared to $374.6 million at December 31, 1999. This increase
relates principally to new borrowings incurred to finance acquisitions.
In the first quarter of 2000, the Company repurchased $82 million of the
Company's common stock. For the nine months ended September 29, 2000,
cash used in acquisitions totaled $640.7 million, consisting primarily of
the acquisitions of American Precision Industries, Inc., Kollmorgen
Corporation, and Warner Electric. In the third quarter of 2000, on July
3, 2000, the Company purchased the motion control businesses of Warner
Electric for $144 million in cash.
8
On July 26, 2000, the Company issued EU 300,000,000 of 6.25%
Notes due 2005. The cash and cash equivalents of $153.8 million on the
September 29, 2000 balance sheet were invested in highly liquid
investment grade short term instruments.
A regular quarterly dividend of $.02 per share was declared,
payable on October 31, 2000 to shareholders of record on September 29,
2000.
The Company's cash provided from operations, as well as credit
facilities available, should provide sufficient available funds to meet
anticipated working capital requirements, capital expenditures,
acquisitions, dividends and scheduled debt repayments.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Exhibits: (27) Financial Data Schedules
(b) Reports on Form 8-K: None
9
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 19, 2000 By: /s/ Patrick W. Allender
---------------- -----------------------
Patrick W. Allender
Chief Financial Officer
Date: October 19, 2000 By: /s/ Christopher C. McMahon
---------------- ---------------------------
Christopher C. McMahon
Controller
10