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.
The number of shares of common stock outstanding at July 17, 1997 was 58,424,737.
DANAHER CORPORATION
INDEX
FORM 10-Q
|
PART 1 |
- FINANCIAL INFORMATION |
Page |
| Item 1. |
Financial Statements | |
|
|
Consolidated Condensed Balance Sheet at June 27, 1997 and and December 31, 1996 |
3 |
|
|
Consolidated Condensed Statements of Earnings for the three months and six months ended June 27, 1997 and June 27, 1996 |
4 |
|
|
Consolidated Condensed Statements of Cash Flows 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 2 |
- OTHER INFORMATION |
|
|
Item 6. |
(a) Exhibits: (27) Financial Data Schedules |
9 |
|
|
(b) Reports on Form 8-K: |
None |
DANAHER CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
(000's omitted)
|
ASSETS |
June 27, 1997 (unaudited) |
December 31, 1996 |
Current Assets: |
Cash and 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, 1997 | June 28, 1996 | June 27, 1997 | June 28, 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 on sale of discontinued operations, net of income 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 FLOWS
(000's omitted)
(unaudited)
|
| | Six Months Ended |
| | June 27, 1997 | June 28, 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 |
| Repayment 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 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)
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 December 31, 1996 | Quarter Ended June 28, 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 | 59,887,111 | 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.
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| | | DANAHER CORPORATION: |
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Date: | July 17, 1997 |
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By: |
/s/ Patrick W. Allender |
|
Patrick W. Allender Chief Financial Officer
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Date: | July 17, 1997 |
|
By: |
/s/ C. Scott Brannan |
|
C. Scott Brannan Controller
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