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 -------------------- 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 April 18, 2001 was 142,530,545.
DANAHER CORPORATION ------------------- INDEX FORM 10-Q <TABLE> <CAPTION> PART I - FINANCIAL INFORMATION Page - ------ ---- <S> <C> 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 </TABLE>
DANAHER CORPORATION ------------------- CONSOLIDATED CONDENSED BALANCE SHEETS ------------------------------------- (000's omitted) <TABLE> <CAPTION> March 30, December 31, 2001 2000 ------------ ---------- (unaudited) (NOTE 1) ASSETS ------ <S> <C> <C> 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 ----------- ----------- 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) ----------- ----------- Total stockholders' equity 2,036,097 1,942,333 ----------- ----------- Total liabilities and stockholders' equity $ 4,509,378 $ 4,031,679 =========== =========== </TABLE> See notes to consolidated condensed financial statements. 1
DANAHER CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS --------------------------------------------- (000's omitted except per share amounts) (unaudited) <TABLE> <CAPTION> Three Months Ended March 30, March 31, 2001 2000 ----------- ----------- <S> <C> <C> 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 ---------- ---------- Total operating expenses 866,865 750,218 ---------- ---------- Operating profit 138,418 117,629 Interest expense, net 6,296 2,213 ---------- ---------- Earnings from continuing operations before income taxes 132,122 115,416 Income taxes 49,545 43,859 ---------- ---------- Net earnings $ 82,577 $ 71,557 ========== ========== Basic earnings per share $ .58 $ .50 ========== ========== Average common stock outstanding 142,874 142,751 ========== ========== Diluted earnings per share $ .56 $ .49 ========== ========== Average common stock and common equivalent shares outstanding 150,466 145,370 ========== ========== </TABLE> See notes to consolidated condensed financial statements. 2
DANAHER CORPORATION ------------------- CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY --------------------------------------------------------- (000's omitted) (unaudited) <TABLE> <CAPTION> Accumulated Additional Other Common Stock Paid-In Retained Comprehensive Comprehensive Shares Amount Capital Earnings Income Income ------------------------------------------------------------------------ <S> <C> <C> <C> <C> <C> <C> 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 ======= ====== ======== ========== ======== ======= </TABLE> See notes to consolidated condensed financial statements. 3
DANAHER CORPORATION ------------------- 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 --------- --------- Total operating cash flows 173,694 139,065 --------- --------- 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) --------- --------- Net cash used in investing activities (97,084) (237,538) --------- --------- 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) --------- --------- Net cash provided by (used in) financing activities 416,607 (68,970) --------- --------- Effect of exchange rate changes on cash (911) (866) --------- --------- Net change in cash and equivalents 492,306 (168,309) Beginning balance of cash equivalents 176,924 260,281 --------- --------- Ending balance of cash equivalents $ 669,230 $ 91,972 ========= ========= Supplemental disclosures: Cash interest payments $ 1,569 $ 2,157 ========= ========= Cash income tax payments $ 11,360 $ 5,455 ========= ========= See notes to consolidated condensed financial statements. 4
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 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
<TABLE> <CAPTION> Sales Operating Profit --------------- ---------------- 2001 2000 2001 2000 ---- ---- ---- ---- <S> <C> <C> <C> <C> 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) ---------- -------- -------- -------- $1,005,283 $867,847 $138,418 $117,629 ========== ======== ======== ======== </TABLE> 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: <TABLE> <CAPTION> Net Earnings Shares Per Share (Numerator) (Denominator) Amount --------------------------------------- <S> <C> <C> <C> 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 ======= ======= ==== <CAPTION> Net Earnings Shares Per Share (Numerator) (Denominator) Amount --------------------------------------- <S> <C> <C> <C> For the Three Months Ended March 31, 2000 </TABLE> 6
<TABLE> <S> <C> <C> <C> Basic EPS: $71,557 142,751 $.50 Incremental shares from assumed exercise of dilutive options: - 2,619 ----------------------------------- Diluted EPS: $71,557 145,370 $.49 ======= ======= ==== </TABLE> NOTE 4. ACQUISITIONS ------------ 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 ---------- 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 -------------- ------------------------- Patrick W. Allender Chief Financial Officer Date: April 18, 2001 By: /s/ Christopher C. McMahon -------------- --------------------------- Christopher C. McMahon Controller 10