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 March 30, 2001
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
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DANAHER CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 59-1995548
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(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 ___
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The number of shares of common stock outstanding at April 18, 2001 was
142,530,545.
DANAHER CORPORATION
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INDEX
FORM 10-Q
PART I - FINANCIAL INFORMATION Page
- ------ ----
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
at March 30, 2001 and December 31, 2000 1
Consolidated Condensed Statements of
Earnings for the three months ended
March 30, 2001 and March 31, 2000 2
Consolidated Condensed Statements of
Stockholders' Equity for the three months
ended March 30, 2001 3
Consolidated Condensed Statements of
Cash Flows for the three months ended
March 30, 2001 and March 31, 2000 4
Notes to Consolidated Condensed
Financial Statements 5-7
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations 7-8
PART II - OTHER INFORMATION
- -------
Item 6. Exhibits and Reports on Form 8-K 9
DANAHER CORPORATION
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CONSOLIDATED CONDENSED BALANCE SHEETS
-------------------------------------
(000's omitted)
March 30, December 31,
2001 2000
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(unaudited) (NOTE 1)
ASSETS
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Current Assets:
Cash and equivalents $ 669,230 $ 176,924
Accounts receivable, net 647,774 704,214
Inventories:
Finished goods 155,889 152,509
Work in process 96,995 95,402
Raw material and supplies 207,983 212,699
----------- -----------
Total inventories 460,867 460,610
Prepaid expenses and other
current assets 93,081 132,558
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Total current assets 1,870,952 1,474,306
Property, plant and equipment, net
of accumulated depreciation of
641,000 and 633,000 respectively 549,571 575,531
Other assets 112,506 117,942
Excess of cost over net assets of
acquired companies, net 1,976,349 1,863,900
----------- -----------
Total assets $ 4,509,378 $ 4,031,679
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Notes payable and current
portion of long-term debt $ 75,190 $ 81,633
Accounts payable 253,868 262,095
Accrued expenses 670,176 674,812
----------- -----------
Total current liabilities 999,234 1,018,540
Other liabilities 367,145 357,249
Long-term debt 1,106,902 713,557
Stockholders' equity:
Common stock - $.01 par value 1,562 1,556
Additional paid-in capital 377,535 364,426
Retained earnings 1,715,208 1,635,481
Accumulated other comprehensive
income (58,208) (59,130)
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Total stockholders' equity 2,036,097 1,942,333
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Total liabilities and
stockholders' equity $ 4,509,378 $ 4,031,679
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See notes to consolidated condensed financial statements.
1
DANAHER CORPORATION
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CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
---------------------------------------------
(000's omitted except per share amounts)
(unaudited)
Three Months Ended
March 30, March 31,
2001 2000
----------- -----------
Net sales $1,005,283 $ 867,847
Cost of sales 628,398 537,958
Selling, general and
administrative expenses 223,862 202,486
Goodwill and other amortization 14,605 9,774
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Total operating expenses 866,865 750,218
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Operating profit 138,418 117,629
Interest expense, net 6,296 2,213
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Earnings from continuing operations
before income taxes 132,122 115,416
Income taxes 49,545 43,859
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Net earnings $ 82,577 $ 71,557
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Basic earnings per share $ .58 $ .50
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Average common stock outstanding 142,874 142,751
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Diluted earnings per share $ .56 $ .49
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Average common stock and common
equivalent shares outstanding 150,466 145,370
========== ==========
See notes to consolidated condensed financial statements.
2
DANAHER CORPORATION
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CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
---------------------------------------------------------
(000's omitted)
(unaudited)
Accumulated
Additional Other
Common Stock Paid-In Retained Comprehensive Comprehensive
Shares Amount Capital Earnings Income Income
------------------------------------------------------------------------
Balance, December 31, 2000 155,650 $1,556 $364,426 $1,635,481 $(59,130) --
Net earnings for the period -- -- -- 82,577 -- $82,577
Dividends declared -- -- -- (2,850) -- --
Common stock issued for
options exercised 515 6 13,109 -- -- --
Decrease from translation
of foreign financial
statements -- -- -- -- 922 922
------- ------ -------- ---------- -------- -------
Balance, March 30, 2001 156,165 $1,562 $377,535 $1,715,208 $(58,208) $83,499
======= ====== ======== ========== ======== =======
See notes to consolidated condensed financial statements.
3
DANAHER CORPORATION
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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(000's omitted)
(unaudited)
Three Months Ended
March 30, March 31,
2001 2000
--------- ---------
Cash flows from operating activities:
Net earnings from operations $ 82,577 $ 71,557
Noncash items, depreciation and
amortization 43,632 35,042
Change in accounts receivable 39,127 2,324
Change in inventories (11,953) (20,512)
Change in accounts payable (9,525) 610
Change in other assets and liabilities 29,836 50,044
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Total operating cash flows 173,694 139,065
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Cash flows from investing activities:
Payments for additions to property,
plant, and equipment, net (21,104) (15,036)
Cash paid for acquisitions, net (75,980) (222,502)
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Net cash used in investing activities (97,084) (237,538)
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Cash flows from financing activities:
Proceeds from issuance of common stock 13,115 11,480
Dividends paid (2,850) (2,125)
Proceeds from borrowing of debt 406,342 3,849
Purchase of common stock - (82,174)
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Net cash provided by (used in)
financing activities 416,607 (68,970)
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Effect of exchange rate changes on cash (911) (866)
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Net change in cash and equivalents 492,306 (168,309)
Beginning balance of cash equivalents 176,924 260,281
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Ending balance of cash equivalents $ 669,230 $ 91,972
========= =========
Supplemental disclosures:
Cash interest payments $ 1,569 $ 2,157
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Cash income tax payments $ 11,360 $ 5,455
========= =========
See notes to consolidated condensed financial statements.
4
DANAHER CORPORATION
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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
(unaudited)
NOTE 1. GENERAL
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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 2000 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 March 30, 2001 and
December 31, 2000, its results of operations for the three months ended March
30, 2001, and March 31, 2000, and its cash flows for the three months ended
March 30, 2001 and March 31, 2000.
Total comprehensive income was $83.5 million and $63.7 million for the 2001
and 2000 quarters, respectively.
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 2000 Annual Report. There has been no material change in total assets or
liabilities by segment. Segment results for the 2001 and 2000 first quarters are
shown below:
5
Sales Operating Profit
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2001 2000 2001 2000
---- ---- ---- ----
Process/Environmental Controls $ 724,170 $520,448 $115,770 $ 81,660
Tools and Components 281,113 347,399 28,078 40,220
Other - - (5,430) (4,251)
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$1,005,283 $867,847 $138,418 $117,629
========== ======== ======== ========
NOTE 3. EARNINGS (LOSS) PER SHARE
Basic EPS is calculated by dividing earnings by the weighted average number
of common shares outstanding for the applicable period. Diluted EPS is
calculated after adjusting the numerator and the denominator of the basic EPS
calculation for the effect of all potential dilutive common shares outstanding
during the period. Information related to the calculation of earnings per share
of common stock is summarized as follows:
Net Earnings Shares Per Share
(Numerator) (Denominator) Amount
---------------------------------------
For the Three Months Ended
March 30, 2001
Basic EPS: $82,577 142,874 $.58
Adjustment for interest
on convertible debentures: 1,677 -
Incremental shares from
assumed exercise of
dilutive options: - 3,282
Incremental shares from
assumed conversion of the
convertible debenture: - 4,310
----------------------------------
Diluted EPS: $84,254 150,466 $.56
======= ======= ====
Net Earnings Shares Per Share
(Numerator) (Denominator) Amount
---------------------------------------
For the Three Months Ended
March 31, 2000
6
Basic EPS: $71,557 142,751 $.50
Incremental shares from
assumed exercise of
dilutive options: - 2,619
-----------------------------------
Diluted EPS: $71,557 145,370 $.49
======= ======= ====
NOTE 4. ACQUISITIONS
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On January 2, 2001, the Company acquired United Power Corporation. The
consideration was approximately $108 million. The fair value of the assets
acquired was approximately $118 million, and approximately $10 million of
liabilities were assumed. The transaction is being accounted for as a purchase.
On March 27, 2000, American Precision Industries was acquired and merged
into the Company. Total consideration was approximately $250 million, including
assumption of approximately $60 million of debt. The heat transfer businesses of
American Precision Industries are being carried as assets held for sale and are
included in the other assets at March 30, 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------- -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Results of Operations
- ---------------------
Net sales for the first quarter of 2001 of $1,005.3 million were 16% higher
than the 2000 first quarter. Core volume growth of 8% in the
Process/Environmental Controls segment was driven primarily by strong shipments
of indoor power quality products and Fluke Network test equipment. The Tools and
Components segment declined 19% from the 2000 first quarter, as sales of hand
tools, drill chucks and diesel engine retarders were severely impacted by the
slowdown in the domestic economy. Acquisitions, primarily those completed during
2000, accounted for 19% of the quarter's sales growth. Currency effects were a
negative 1% for the quarter.
Gross profit margin for the first quarter of 2001, as a percentage of
sales, was 37.5%, which represents a 0.5 percentage point decrease from 2000
levels. This decrease results primarily from the addition of lower gross margin
product lines that are part of businesses acquired during 2000, and lower
volumes in the tools and components segment.
Selling, general and administrative expenses for the 2001 first
7
quarter were 10.6% higher than in 2000 due primarily to the impact of
acquisitions. As a percentage of sales, these costs were 22% and 23% in 2001 and
2000, respectively, reflecting cost initiatives across all businesses.
Interest expense of $6.3 million in 2001 was $4.1 million higher than the
corresponding 2000 period. Average net debt levels (total debt less cash) were
significantly higher in 2001, reflecting borrowings undertaken to finance
acquisitions.
The 2001 effective tax rate of 37.5% is .5% lower than the 2000 effective
rate, mainly due to a higher proportion of foreign earnings in 2001 compared to
2000.
Liquidity and Capital Resources
- -------------------------------
The 2001 first quarter operating cash flow grew 25% from 2000 levels. A
large decrease in accounts receivable combined with higher net earnings to drive
this growth. Net capital spending increased $6 million from the 2000 first
quarter.
Total debt under the Company's borrowing facilities increased to $1,182
million at March 30, 2001, compared to $795 million at December 31, 2000. During
the first quarter of 2001, the Company issued $830 million (value at maturity)
in zero-coupon convertible senior notes due 2021 known as Liquid Yield Option
Notes or LYONS. The net proceeds to the Company were approximately $505 million,
of which approximately $100 million was used to pay down debt, and the balance
will be used for general corporate purposes, including potential future
acquisitions. The LYONS are convertible into approximately 6.0 million common
shares of the Company, and carry a yield to maturity of 2.375%.
Net cash paid for acquisitions was $76.0 million for the 2001 first quarter.
On January 2, 2001, the Company acquired United Power Corporation for
approximately $108 million in cash. The Company also disposed of two small
product lines during the quarter, yielding cash proceeds of approximately $32
million. There was no material gain or loss recognized on the sale of these
product lines. On March 27, 2000, the Company acquired American Precision
Industries, Inc. for a cash price of $19.25 per share or $250 million including
assumption of debt.
The Company declared a regular quarterly dividend of $.02 per share payable
on April 27, 2001, to holders of record on March 30, 2001.
8
The cash and cash equivalents of $669 million on the March 30, 2001 balance
sheet were invested in highly liquid investment grade short term instruments.
Interest income of $5.3 million was recognized in the 2001 first quarter. The
Company's cash provided from operations, as well as credit facilities available,
should provide sufficient available funds to meet normal working capital
requirements, capital expenditures, dividends, scheduled debt repayments, and to
fund acquisitions, if applicable.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Reports on Form 8-K: The Company filed a Current Report on
Form 8-K dated January 17, 2001 reporting on its offering of
zero-coupon convertible debt securities.
(b) Exhibits: NONE
9
SIGNATURES
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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: April 18, 2001 By: /s/ Patrick W. Allender
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Patrick W. Allender
Chief Financial Officer
Date: April 18, 2001 By: /s/ Christopher C. McMahon
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Christopher C. McMahon
Controller
10