-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MWL/YZkNwSxVVkoxXzngAIBo436jk9/y1hz+N4Q0QIM96E4z4XMw4fHSRcCAeiBG 9KLVa7b3ZRknTvo7G+2w4w== 0000928385-00-000790.txt : 20000322 0000928385-00-000790.hdr.sgml : 20000322 ACCESSION NUMBER: 0000928385-00-000790 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000321 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DANAHER CORP /DE/ CENTRAL INDEX KEY: 0000313616 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 591995548 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-08089 FILM NUMBER: 574777 BUSINESS ADDRESS: STREET 1: 1250 24TH ST NW STREET 2: SUITE 800 CITY: WASHINGTON STATE: DC ZIP: 20037 BUSINESS PHONE: 2028280850 MAIL ADDRESS: STREET 1: 1250 24TH STREET NW STREET 2: SUITE 800 CITY: WASHINGTON STATE: DC ZIP: 20037 FORMER COMPANY: FORMER CONFORMED NAME: DMG INC DATE OF NAME CHANGE: 19850221 10-K405 1 FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 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 (Zip Code) Executive Offices)
Registrant's telephone number, including area code: 202-828-0850 Securities Registered Pursuant to Section 12(b) of the Act: Name of Exchanges Title of each class on which registered - ------------------- ------------------- Common Stock $.01 par Value New York Stock Exchange, Inc. Pacific Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: NONE (Title of Class) 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 --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 17, 2000, the number of shares of common stock outstanding was 141.3 million and were held by approximately 3,500 holders. The aggregate market value of common shares held by non-affiliates of the Registrant on such date was approximately $4.1 billion, based upon the closing price of the Company's common shares as quoted on the New York Stock Exchange composite tape on such date. 1 EXHIBIT INDEX APPEARS ON PAGE 14 2 DOCUMENTS INCORPORATED BY REFERENCE Part II and Part IV incorporate certain information by reference from the registrant's Annual Report to Shareholders for the year ended December 31, 1999. With the exception of the pages of the Annual Report to Shareholders specifically incorporated herein by reference, the Annual Report to Shareholders is not deemed to be filed as part of this Form 10-K. Part III incorporates certain information by reference from the registrant's proxy statement for its 2000 annual meeting of stockholders. With the exception of the pages of the 2000 Proxy Statement specifically incorporated herein by reference, the 2000 Proxy Statement is not deemed to be filed as part of this Form 10-K. Certain information included or incorporated by reference in this document may be deemed to be "forward looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements, other than statements of historical facts, that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future are forward looking statements. Such statements are characterized by terminology such as "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions. These statements are based on assumptions and assessments made by the Company management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. These forward looking statements are subject to a number of risks and uncertainties, including but not limited to continuation of the Company's longstanding relationship with major customers, the Company's ability to integrate acquired businesses into its operations and realize planned synergies, the extent to which acquired businesses are able to meet the Company's expectations and operate profitably, changes in regulations (particularly environmental regulations) which could affect demand for products in the Process/Environmental Controls segment and unanticipated developments that could occur with respect to contingencies such as environmental matters and litigation. In addition, the Company is subject to risks and uncertainties that affect the manufacturing sector generally including, but not limited to, economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices. Any such forward looking statements are not guarantees of future performances and actual results, developments and business decisions may differ from those 3 envisaged by such forward looking statements. The Company disclaims any duty to update any forward looking statements, all of which are expressly qualified by the foregoing. ITEM 1. BUSINESS - ----------------- The Company conducts its operations through two business segments: Process/Environmental Controls and Tools and Components. Process/Environmental Controls - ------------------------------ The Process/Environmental Controls segment is comprised of Hach Company, Fluke Corporation ("Fluke"), Veeder-Root Company ("Veeder-Root"), Danaher Controls, Partlow/West, Anderson Instruments, West Instruments, QualiTROL Corporation, A.L. Hyde Company, Hengstler, McCrometer, the controls product line business units of Joslyn Corporation and Pacific Scientific Company, Namco Controls, Dolan-Jenner, Atlas Copco Controls, M&M Precision Systems, Communications Technology Corporation, Gems Sensors and the Dr. Bruno Lange Group. These companies produce and sell compact, professional electronic test tools, underground storage tank leak detection systems and motion, position, speed, temperature, level and position instruments and sensing devices, power switches and controls, communication line products, power protection products, liquid flow and quality measuring devices, quality assurance products and systems, safety devices and electronic and mechanical counting and controlling devices. These products are distributed by the Company's sales personnel and independent representatives to original equipment manufacturers, distributors and other end users. The Company's strategy in the Process/Environmental Controls segment is to concentrate on the rapid expansion of its key strategic product lines, including environmental, electronic test and measurement, motion and others. One key product in the environmental controls product line is the Veeder-Root storage tank leak detection system. The Company believes that Veeder-Root is the premier manufacturer of state-of-the-art tank measuring and leak detection systems for underground fuel storage tanks. Veeder-Root continues to expand its environmental controls product and service offering to encompass applications related to markets other than petroleum storage and to address nonregulatory business requirements. The Company has a leadership position in the water quality testing and control market, into which is sold its Hach, Dr. Lange, Pacific Scientific, and Sigma branded products. These products include analytical instruments used in water quality 4 monitoring, and chemicals and other consumables used in the process. The Company markets these products worldwide, both direct to end users and through distributors. Fluke is engaged in the design, manufacture and marketing of compact, professional electronic test tools. Fluke's principal products are portable instruments that measure voltage, current, power quality, frequency, temperature, pressure and other key functional parameters of electronic equipment. Fluke distributes its products in over 100 countries, serving two major markets: industrial tools and networks. In its instruments product line, the Company's strategy is to continue enhancing its global controls and instrument position by both new product development and complementary acquisitions. Danaher's instrument companies have significant synergies in both product offerings and channels of distribution. The Company's plan is to leverage these synergies in product design, engineering and manufacturing, and product marketing. M&M Precision Systems provides both quality assurance products and systems which enhance both quality and manufacturing effectiveness as well as motion products which are generally components of other devices. Pacific Scientific has two major product lines, motion and safety equipment. Nearly half of Pacific Scientific's sales consists of electric motors, drives and controls. The Company also manufactures and sells electronic drives as part of its Atlas Copco Controls division. These electric motors and controls are sold primarily to original equipment manufacturers who incorporate them into a wide variety of products. Pacific Scientific motors are used in factory automation, medical, printing, plastic extrusion and molding, paper converting, vending, textile, aerospace, fitness and many other types of equipment. Safety equipment includes mainly fire detection and suppression equipment, crew restraints, flight control and pyrotechnic devices. Safety equipment is sold mainly in the aviation and aerospace industry. The Company also provides worldwide sales, service and repair of its products for airlines and other users of safety equipment. Other business lines within this segment include extruded thermoplastic mill shapes and custom molded plastic products. The raw materials utilized by companies in this segment are stock items, principally metals and plastic, electrical and electronic components. These materials are readily available from a number of sources in sufficient quantities. 5 Tools and Components - -------------------- The Tools and Components segment is comprised of the Danaher Hand Tool Group (including Special Markets, Professional Tool Division and Asian Tool Division), Matco Tools ("Matco"), Jacobs Chuck Manufacturing Company ("Jacobs"), Delta Consolidated Industries ("Delta"), Jacobs Vehicle Systems Company, Hennessy Industries and the hardware and electrical apparatus lines of Joslyn Manufacturing Company (JMC). This segment is one of the largest worldwide producers and distributors of general purpose mechanics' hand tools and automotive specialty tools. Other products manufactured by these companies include tool boxes and storage devices, diesel engine retarders, wheel service equipment, drill chucks, custom designed headed tools and components, hardware and components for the power generation and transmission industries, high quality precision socket screws, fasteners, and high quality miniature precision parts. The Company's business strategy in this segment is focused on increasing sales to existing customers, broadening channels of distribution, developing new products, geographic expansion and achieving production efficiencies and enhanced quality and customer service. Danaher Tool Group (DTG) is one of the largest worldwide producers of general purpose mechanics' hand tools (primarily ratchets, sockets and wrenches) and specialized automotive service tools for the professional and "do-it- yourself" markets. DTG has been the principal manufacturer of Sears, Roebuck and Co.'s Craftsman/(R)/ line of mechanics' hand tools for over 60 years. Approximately 80% of the over 200 million pieces sold to Sears annually are sold in tool sets that include from three to over 1,000 pieces. DTG's Special Markets Group sells to Sears under a five year evergreen agreement, that requires Sears to purchase a significant portion of its annual requirements for its private-label Craftsman mechanics' hand tool line from DTG, subject to certain conditions. For over 30 years, DTG has also been a primary supplier of specialized automotive service tools to NAPA, which has approximately 6,100 outlets. In addition, DTG has been the designated supplier of general purpose mechanics' hand tools to NAPA since 1983. DTG specialized automotive service tools are also sold under the K-D Tools/(R)/ brand, its industrial tools and products are also sold under the Armstrong/(R)/ and Allen brand names, and fastener products under the Holo-Krome/(R)/ name are sold to independent distributors and other customers in the "do-it-yourself," professional automotive, commercial and industrial markets. 6 Professional mechanics' tools are distributed by Matco which has approximately 1,300 independent mobile distributors who sell primarily to individual professional mechanics. Matco is one of the leading suppliers in this market. Jacobs/(R)/ is the market leader in the drill chuck business with its highly respected and well recognized brand name. Delta is a leading manufacturer of pickup truck toolboxes and industrial storage boxes and its products are sold under the DELTA/(R)/ and JOBOX/(R)/ brand names. Wheel service equipment is manufactured under the Coats/(R)/, Bada/(R)/ and Ammco/(R)/ brand names. Products include tire changers, wheel balancers, wheel weights and brake service equipment. Wheel service equipment is sold primarily to wholesale distributors and national accounts. These markets are served by the Company's sales personnel. Diesel engine retarders are manufactured at Jacobs Vehicle Systems Company. The "Jake Brake/(R)/" technology was developed by Jacobs Vehicle and represents the leading brand of engine retarders. The product is sold by Jacobs' sales personnel to original equipment manufacturers and aftermarket distributors. JMC manufactures a wide variety of products used in the construction and maintenance of electric power, telephone and cable television systems. Its products range from specialized fasteners to sophisticated castings and forgings. JMC also manufactures surge protection devices for the electric power utility industry. The major raw materials used by this segment, including high quality steel, are available from a variety of sources in sufficient quantities. Patents, Licenses, etc. - ----------------------- The Company has patents of its own and has acquired licenses under patents of others. The Company does not consider that its business, as a whole, is dependent on any single patent, group of patents, trademark or franchise. The Company does, however, offer many patented products and is periodically engaged in litigation concerning patents and licenses. 7 Seasonal Nature of Business - --------------------------- As a whole, the Company's businesses are not subject to material seasonal fluctuations. Backlog - ------- The Company's products are manufactured primarily in advance of order and either shipped or assembled from stock. Backlogs are not significant as sales are often dependent on orders requiring immediate shipment from inventory. Employee Relations - ------------------ At December 31, 1999, the Company employed approximately 19,000 persons. Of these, approximately 2,300 were hourly-rated unionized employees. The Company considers its labor relations to be good. Research and Development - ------------------------ The Company's research and development expenditures were $119 million for 1999, $121 million for 1998 and $96 million for 1997. Environmental and Safety Regulations - ------------------------------------ Certain of the Company's operations are subject to federal, state and local environmental laws and regulations which impose limitations on the discharge of pollutants into the air and water and establish standards for treatment, storage and disposal of solid and hazardous wastes. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. JMC previously operated wood treating facilities that chemically preserved utility poles, pilings and railroad ties. All such treating operations were discontinued or sold prior to 1982. These facilities used wood preservatives that included creosote, pentachlorophenol and chromium-arsenic-copper. While preservatives were handled in accordance with then existing law, environmental law now imposes retroactive liability, in some circumstances, on persons who owned or operated wood-treating sites. JMC is remediating some of its former sites and will remediate other sites in the future. The Company has made a provision for environmental remediation; however, there can be no assurance that estimates of environmental liabilities will not change. 8 In addition to environmental compliance costs, the Company may incur costs related to alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. The Company believes that its liability, if any, for past or current waste handling practices will not have a material adverse effect on its results of operation, financial condition and cash flow. The Company must also comply with various federal, state and local safety regulations in connection with its operations. The Company's compliance with these regulations has had no material adverse effect on its financial condition. Major Customers - --------------- The Company has no customers which accounted for more than 10% of consolidated sales in 1999. The Company's largest single customer is Sears, Roebuck and Co. ("Sears"), and although the relationship with Sears is long- standing, the Company believes the loss or material reduction of this business could have a material adverse effect on its operations. ITEM 2. PROPERTIES - ------------------- The Company occupies over 6 million square feet of manufacturing, distribution, service and office space at various domestic and foreign locations. The principal properties are listed below. The Company believes that its plants have adequate productive capacity and are suitably used for the manufacture of its products and that its warehouses, distribution centers and sales offices are suitably located and utilized for the marketing of its products and services.
Location Principal Use Owned/Leased - -------- ------------- ------------ Process/Environmental Controls - -------------------------------- Altoona, PA Manufacturing Owned Elizabethtown, NC Manufacturing Owned
9
Location Principal Use Owned/Leased - -------- ------------- ------------ Process/Environmental Controls - -------------------------------- Market Harborough, England Manufacturing Leased Sao Paulo, Brazil Manufacturing Owned New Hartford & Fairport, NY Manufacturing Owned Gurnee, IL Manufacturing Leased Grenloch, NJ Manufacturing Owned Brighton, England Manufacturing Leased Aldingen, Germany Manufacturing Owned Aldingen, Germany (2) Manufacturing Leased Wehingen, Germany (2) Manufacturing Leased Eatontown, NJ Distribution Leased Broxbourne, England Distribution Leased Cleveland, OH (3) Manufacturing Owned Goleta, CA Manufacturing Owned Birmingham, England Manufacturing Leased Juarez, Mexico Manufacturing Leased Lachine, Quebec Manufacturing Leased Lancaster, SC Manufacturing Owned Paso Robles, CA Manufacturing Leased San Jose, CA Manufacturing Owned Hemet, CA Manufacturing Owned Etobicoke, Canada Manufacturing Leased Highland Heights, OH Manufacturing Owned Herzhorn, Germany Manufacturing Owned West Carollton, OH Manufacturing Owned Loffingen, Germany Manufacturing Owned Tamworth, England Manufacturing Leased Basingstoke, England Manufacturing Owned Baretswil, Switzerland Manufacturing Owned Plainville, CT Manufacturing Owned Everett, WA Manufacturing Owned Einhoven, Netherlands Manufacturing Leased Chandler, AZ Manufacturing Leased Duarte, CA Manufacturing Leased Rockford, IL Manufacturing Leased Grants Pass, OR Manufacturing Owned
10
Location Principal Use Owned/Leased - -------- ------------- ------------ Process/Environmental Controls - -------------------------------- Wilmington, MA Manufacturing Leased Kazmarek, Slovakia Manufacturing Leased Weymouth, MA Manufacturing Owned Loveland, CO Manufacturing Owned Ames, IA Manufacturing Owned Elkhart, IN Manufacturing Owned Stockholm, Sweden Manufacturing Owned Hertfordshire, England Distribution Owned Enis, Ireland Manufacturing Leased Tools and Components - -------------------------------- Springdale, AK Manufacturing Owned Springfield, MA Manufacturing Owned Gastonia, NC Manufacturing Leased Fayetteville,AK (2) Manufacturing Owned Baltimore, MD Distribution Leased Brampton, Ontario Distribution Leased Lakewood, NY Manufacturing Owned Nashville, TN Distribution Owned Stow, OH Distribution Owned West Hartford, CT Manufacturing Owned Terryville, CT Manufacturing Owned Walworth, WI Manufacturing Owned Dundee, Scotland Manufacturing Owned Sheffield, England Manufacturing Owned Clemson, SC Manufacturing Owned Jonesboro, AK Manufacturing Owned Raleigh, NC Manufacturing Leased Chicago, IL (3) Manufacturing Owned Bloomfield, CT Manufacturing Owned LaVergne, TN Manufacturing Owned Bowling Green, KY Manufacturing Owned Suzhou, China Manufacturing Owned Shanghai, China (3) Manufacturing Owned Taichung, Taiwan Manufacturing Leased Dallas, TX Manufacturing Leased Atlanta, GA Manufacturing Owned Mexico City, Mexico Manufacturing Leased
In addition to the facilities listed, the Company owns or leases various facilities including offices or properties in Washington, District of Columbia; Simsbury, Connecticut; as well as facilities in Uppermill, Livingston, Gloucester and Richmond, Great Britain; Melbourne and Sydney, Australia; Nagoya, Osaka and Tokyo, Japan; Toronto, Canada; Paris, Bron, Toulouse, Lyon, Bordeaux, Tours and Selestat, France; and Stuttgart, Germany. 11 ITEM 3. LEGAL PROCEEDINGS - -------------------------- A former subsidiary of the Company is engaged in litigation in several states with respect to product liability. The Company sold the subsidiary in 1987. Under the terms of the sale agreement, the Company agreed to indemnify the buyer of the subsidiary for product liability related to tools manufactured by the subsidiary prior to June 4, 1987. The cases involve approximately 3,000 plaintiffs, in state and federal courts. All other major U.S. air tool manufacturers are also defendants. The gravamen of these complaints is that the defendants' air tools, when used in different types of manufacturing environments over extended periods of time, were defective in design and caused various physical injuries. The plaintiffs seek compensatory and punitive damages. The Company has accepted an agreement in principle to settle these claims. Completion of this settlement agreement will not result in a material adverse effect on the Company's results of operations or financial condition. In addition to the litigation noted above, the Company and its subsidiaries are from time to time subject to ordinary routine litigation incidental to their business. The Company believes that the results of the above noted litigation and other pending legal proceedings would not have a materially adverse effect on the Company's financial condition. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDER - ----------------------------------------------------------- No matters were submitted to a vote of security holders during the fourth quarter of 1999. PART II ITEMS 5 THROUGH 8. - ------------------ The information required under Items 5 through 8 is included in the Registrant's Annual Report to its Shareholders for the year ended December 31, 1999, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND - ------------------------------------------------------------------------ FINANCIAL DISCLOSURE - -------------------- NONE 12 PART III ITEMS 10 THROUGH 13. - ------------------- The information required under Items 10 through 13 is included in the Registrant's Proxy Statement for its 2000 annual meeting, and is incorporated herein by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM ---------------------------------------------------------------------- 8-K - --- a) Document List 1. Financial Statements Response to this portion of Item 14 is submitted per the Index to Financial Statement Schedules on page 13 of this report. 2. Supplementary Data and Financial Statement Schedules Response to this portion of Item 14 is submitted per the Index to Financial Statement Schedules on page 13 of this report. 3. An Index of Exhibits is on page 14 of this report. b) Reports on Form 8-K filed in the fourth quarter of 1999. NONE 13 DANAHER CORPORATION INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES
Page Number in: --------------- Annual Report ------------- Form 10K To Shareholders -------- --------------- Annual Report: - -------------- Report of Independent Public Accountants on Schedule 17 Financial Statements: - --------------------- Consolidated Statements of Earnings, year ended December 31, 1999, 1998, and 1997 18 Consolidated Balance Sheets, December 31, 1999 and 1998 19 Consolidated Statements of Cash Flows, years ended December 31, 1999, 1998, and 1997 20 Consolidated Statements of Stockholders' Equity, years ended December 31, 1999, 1998, and 1997 21 Notes to Consolidated Financial Statements 22 Supplemental Data: - ------------------ Selected Financial Data 12 Market Prices of Common Stock 31 Schedules: - ---------- II - Valuation and Qualifying Accounts 18
Schedules other than those listed above have been omitted from this Annual Report because they are not required, are not applicable or the required information is included in the financial statements or the notes thereto. 14 Exhibits: - --------- (3) Articles of Incorporation and By-Laws (a) The Articles of Incorporation of Danaher Incorporated by Reference to Exh 3 of 6/26/98 Form 10-Q (b) The By-Laws of Danaher Incorporated by Reference to Exh 3 of 6/26/98 Form 10-Q (10) Material Contracts: (a) Employment Agreement between Danaher Incorporated by Corporation and George M. Sherman Reference to Exh 10(a) dated as of January 2, 1990 of 6/26/98 Form 10-Q (b) Credit Agreement Dated As of September 7, Incorporated by 1990. Among Danaher Corporation, the Reference to Exh 10(b) Financial Institutions Listed Therein of 6/26/98 10-Q and Bankers Trust Company as Agent (c) Agreement as of November 1, 1990 between Incorporated by Danaher Corporation, Easco Hand Tools, Inc. Reference to Exh 10(c) and Sears, Roebuck and Co. of 6/26/98 Form 10-Q (d) Note Agreement as of November 1, 1992 Incorporated by Between Danaher Corporation and Lenders Reference to Exh 10(d) Referenced Therein of 6/26/98 Form 10-Q (e) Note Agreement as of April 1, 1993 Incorporated by Between Danaher Corporation and Lenders Reference to Exh 10(d) Referenced Therein Of 6/26/98 Form 10-Q (f) Danaher Corporation 1998 Stock Option Plan Incorporated by Reference to Exh A of Proxy statement dated March 30, 1998 (g) Indenture Agreement as of October 28, 1998 Incorporated by Between Danaher Corporation and The First Reference to Form S-3 National Bank of Chicago, as Trustee (File 333-63591) (13) Annual Report to Securityholders (21) Subsidiaries of Registrant (23) Consent of Independent Public Accountants (27) Financial Data Schedules
15 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 By: /s/ GEORGE M. SHERMAN ------------------------- George M. Sherman President and Chief Executive Officer Date: March 17, 2000 /s/ GEORGE M. SHERMAN President and Chief Executive Officer - ------------------------------- George M. Sherman /s/ STEVEN M. RALES Chairman of the Board - ------------------------------- Steven M. Rales /s/ MITCHELL P. RALES Chairman of the Executive Committee - ------------------------------- Mitchell P. Rales /s/ WALTER G. LOHR, JR. Director - ------------------------------- Walter G. Lohr, Jr. /s/ DONALD J. EHRLICH Director - ------------------------------- Donald J. Ehrlich /s/ MORTIMER M. CAPLIN Director - ------------------------------- Mortimer M. Caplin /s/ ALAN G. SPOON Director - ------------------------------- Alan G. Spoon /s/ A. EMMET STEPHENSON, JR. Director - ------------------------------- A. Emmet Stephenson, Jr. /s/ PATRICK W. ALLENDER Executive Vice President-Chief Financial - ------------------------------- Patrick W. Allender Officer and Secretary /s/ CHRISTOPHER C. MCMAHON Vice President and Controller - ------------------------------- Christopher C. McMahon
16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON THE FINANCIAL STATEMENT SCHEDULES To Danaher Corporation: We have audited in accordance with generally accepted auditing standards, the consolidated financial statements included in the Danaher Corporation and Subsidiaries' Annual Report to Shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated January 27, 2000. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedules listed in the index are the responsibility of the Company's management and are presented for the purpose of complying with the Securities and Exchange Commission's rules and are not a part of the consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the consolidated financial statements taken as a whole. /s/ ARTHUR ANDERSEN LLP Baltimore, Maryland January 27, 2000 17 DANAHER CORPORATION AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (000's omitted)
Additions Write Balance Charged Offs, Classification at to Charged Write Balance Beginning Costs to Downs at End of & other & of Period Expenses Accounts Deductions Period - --------------------------------------------------------------------- Year Ended December 31, 1999 Allowances deducted from asset accounts: Allowance for doubtful accounts: $24,000 $10,756 $ 185(a) $ 6,941 $28,000 ======= ======= ====== ======= ======= Year Ended December 31, 1998 Allowances deducted from asset accounts: Allowance for doubtful accounts $19,000 $ 9,442 $ 2,698(a) $ 7,140 $24,000 ======= ======= ======= ======= ======= Year Ended December 31, 1997 Allowances deducted from asset accounts: Allowance for doubtful accounts: $16,000 $ 6,986 $ 510(a) $ 4,496 $19,000 ======= ======= ====== ======= =======
Notes:(a) - Amounts related to businesses acquired, net of amounts related to businesses disposed. 18 EX-13 2 EXHIBIT 13 SHAREHOLDERS' INFORMATION Auditors Arthur Andersen LLP Baltimore, MD Shareholders' Information Shareholder requests for information or assistance, please write or call our corporate office. Danaher Corporation c/o Investor Relations 1250 24th Street, NW Suite 800 Washington, D.C. 20037 (202) 828-0850 Internet Address www.danaher.com Stock Listing Symbol: DHR New York and Pacific Stock Exchanges Transfer Agent SunTrust Bank Atlanta, Georgia Form 10-K A copy of the Annual Report to the Securities and Exchange Commission on Form 10-K may be obtained by writing to Danaher Corporation. Market Prices of Common Stock - ------------------------------------------------------------- 1999 1998 - ------------------------------------------------------------- High Low High Low --------------------------------------------- First Quarter 55 46 3/8 38 3/32 29 1/2 Second Quarter 69 51 3/8 38 7/8 34 25/32 Third Quarter 62 5/8 47 1/2 45 3/4 30 Fourth Quarter 54 3/8 42 3/4 54 5/16 29 3/8 - ------------------------------------------------------------------------- High and low per share data are as quoted on the New York Stock Exchange. - -------------------------------------------------------------------------
Selected Financial Data (000's omitted, except per share data) 1999 1998 1997 1996 1995 Sales $3,197,238 $3,047,061 $2,619,100 $ 2,352,249 $ 2,011,529 Operating profit 458,007 384,112 319,346 284,411 230,906 Earnings from continuing operations 261,624** 192,186* 188,576 166,511 138,899 Per share Diluted 1.79** 1.33* 1.31 1.17 0.97 Basic 1.84** 1.37* 1.35 1.19 1.00 Discontinued operations -- -- -- 79,811 2,550 Per share Diluted -- -- -- 0.56 0.02 Basic -- -- -- 0.57 0.02 Net earnings 261,624** 192,186* 188,576 246,322 141,449 Earnings per share Diluted 1.79** 1.33* 1.31 1.72 0.99 Basic 1.84** 1.37* 1.35 1.76 1.01 Dividends per share 0.07 0.09 0.10 0.10 0.10 Total assets 3,047,071 2,840,859 2,264,741 2,148,888 1,848,335 Total debt 374,634 503,639 229,095 239,927 294,547
* Includes $28.6 million in after-tax costs ($0.20 per share) from the merger with the Fluke Corporation ** Includes $9.8 million in after-tax costs ($0.07 per share) from the merger with the Hach Company 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- RESULTS OF OPERATION - -------------------------------------------------------------------------------- Danaher Corporation (the "Company") operates a variety of businesses through its wholly owned subsidiaries. These businesses are conducted in two business segments: Process/Environmental Controls and Tools and Components. In its Process/Environmental Controls segment, the Company is a leading producer of compact electronic test instruments, leak detection sensors for underground fuel storage tanks and motion, position, temperature, pressure, level, flow, water quality and power reliability and quality control devices. In Tools and Components, the Company is the principal manufacturer of Sears, Roebuck and Company's Craftsman(R) line, National Automotive Parts Association (NAPA(R)) line, K-D(R) automotive line, and the Matco(R), Armstrong(R) and Allen(TM) lines of mechanics' hand tools. The Company also manufactures Allen(TM) wrenches, Jacobs(R) drill chucks and diesel engine retarders, Delta(R) storage containers and Coats(R) and Ammco(R) wheel service equipment. Presented below is a summary of sales by business segment (000's omitted).
- ------------------------------------------------------------------------------------------ 1999 1998 1997 - ------------------------------------------------------------------------------------------ $ % $ % $ % Process/Environmental Controls 1,854,184 58.0 1,752,552 57.5 1,426,339 54.5 Tools and Components 1,343,054 42.0 1,294,509 42.5 1,192,761 45.5 --------------------------------------------------------- 3,197,238 100.0 3,047,061 100.0 2,619,100 100.0
- -------------------------------------------------------------------------------- THE PROCESS/ENVIRONMENTAL CONTROLS - -------------------------------------------------------------------------------- The Process/Environmental Controls segment includes Hach Company, Fluke Corporation, Veeder-Root Company, Danaher Controls, Partlow, Anderson Instruments, West Instruments, QualiTROL Corporation, A.L. Hyde Company, Hengstler, the controls product line business units of Joslyn Corporation and Pacific Scientific Company, Namco Controls, Atlas Copco Controls, M&M Precision Systems, Communications Technology Corporation, Current Technology, Gems Sensors, and the Dr. Bruno Lange Group. These companies produce and sell water testing instruments and chemicals, compact electronic test instruments, underground storage tank leak detection systems and temperature, level, motion and position sensing devices, water/wastewater test and monitoring instruments, power switches and controls, power protection products, aviation safety products, liquid flow measuring devices, quality assurance products and systems, and electronic and mechanical counting and controlling devices. These products are distributed by the Company's sales personnel and independent representatives to original equipment manufacturers, distributors and end-users. - -------------------------------------------------------------------------------- 1999 COMPARED TO 1998 - -------------------------------------------------------------------------------- 1999 sales increased 6% from 1998 levels. Net unit volume increases of 3.5% were driven by gains in the water quality and power quality product lines, offset by lower sales of underground storage tank monitoring systems. 1999 was negatively impacted by price decreases and foreign currency translation decreases totaling over 1%. Acquisition activity contributed 4% of the increase, due primarily to the full-year impact of the Pacific Scientific Company and Dr. Bruno Lange Group acquisitions. Operating margins increased from 13.7% to 15.5% due to overall cost reductions and improvements in margins of the businesses acquired in 1998. - -------------------------------------------------------------------------------- 1998 COMPARED TO 1997 - -------------------------------------------------------------------------------- Sales in 1998 were 23% higher than in 1997 for this segment. The acquisitions of Pacific Scientific Company and the Dr. Bruno Lange Group, the full-year effect of the Gems Sensors acquisition in August, 1997 and several minor business acquisitions and dispositions provided a 20% increase from 1997. The remainder of the sales change was generated by an increase in unit volume of 3%, with prices essentially flat. Operating margins increased from 13.3% to 13.7%, due to higher sales of environmental products, cost reductions and the elimination of Fluke's 1997 European restructuring activities, offset by lower operating margins of businesses acquired in 1998. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- TOOLS AND COMPONENTS - -------------------------------------------------------------------------------- The Tools and Components segment is comprised of the Danaher Hand Tool Group (including Special Markets, Asian Tools, Professional Tools and Matco Tools divisions), Jacobs Chuck Manufacturing Company, Delta Consolidated Industries, Jacobs Vehicle Systems, Hennessy Industries and the hardware and electrical apparatus lines of Joslyn Manufacturing Company. This segment is one of the largest domestic producers and distributors of general purpose and specialty mechanics' hand tools. Other products manufactured by these companies include toolboxes and storage devices, diesel engine retarders, wheel service equipment, drill chucks, custom designed headed tools and components, hardware and components for the power generation and transmission industries, high-quality precision socket screws, fasteners, and high-quality miniature precision parts. - -------------------------------------------------------------------------------- 1999 COMPARED TO 1998 - -------------------------------------------------------------------------------- Sales in 1999 were 4% higher than in 1998. This increase consists of higher unit shipment volume of 5%, offset by price decreases of 1%. Demand for diesel engine retarders and professional mechanics' tools was particularly strong in 1999. Operating margins increased from 12.3% to 14.0%, driven by higher sales volumes spread over a fixed cost base and continued manufacturing cost improvements. - -------------------------------------------------------------------------------- 1998 COMPARED TO 1997 - -------------------------------------------------------------------------------- Sales increased 8.5% from 1997 to 1998. Unit volume increases of 10%, offset by price decreases of 1.5%, accounted for this increase. Operating profit margins increased from 12.1% in 1997 to 12.3% in 1998, driven by higher sales levels and productivity gains. Demand levels were strong across consumer, professional and international hand tool lines. Sales of diesel engine retarders were also strong in 1998. - -------------------------------------------------------------------------------- GROSS PROFIT - -------------------------------------------------------------------------------- Gross profit, as a percentage of sales, was 38.7% in 1999, a 0.7 percentage point improvement compared to 38.0% achieved in 1998. Product and manufacturing overhead cost reductions, combined with increases in higher margin product lines, drove this improvement. Gross profit margin was 38.0% in 1998, a 1.5 percentage point increase compared to 1997. Productivity improvements were achieved in all business segments. Higher volume levels and a shift in mix to the higher gross margin products of the acquired companies in the Process/Environmental Controls business segment contributed to the improvement. - -------------------------------------------------------------------------------- OPERATING EXPENSES - -------------------------------------------------------------------------------- In 1999, selling, general and administrative expenses were 24.3% of sales, an improvement of 1.1 percentage points from 1998 levels. Cost reductions in administrative overhead expenses and higher sales levels spread over a fixed cost base generated this improvement. Selling, general and administrative expenses for 1998 as a percentage of sales were 1.1 percentage points higher than the 1997 level. This reflects the higher operating expense levels of the businesses acquired in 1998. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- INTEREST COSTS AND FINANCING TRANSACTIONS - -------------------------------------------------------------------------------- The Company's debt financing is composed primarily of publicly issued 6% notes due 2008, privately placed debt maturing in April 2003 at an average interest cost of 7%, uncommitted lines and a revolving credit facility which provides senior financing of $250 million for general corporate purposes. The interest rates for borrowing under the facility float with base rates. Interest expense in 1999 was $9.6 million lower than in 1998, due to lower debt and higher cash levels generated primarily by substantial cash flow from operations. Interest expense in 1998 was $13.3 million higher than in 1997, as average borrowing levels increased due to acquisitions. - -------------------------------------------------------------------------------- INCOME TAXES - -------------------------------------------------------------------------------- The 1999 effective rate of 39.1% is 0.3 percentage points lower than in 1998. This decrease results primarily from a lower ratio of nondeductible amortization compared to taxable income. The 1998 effective tax rate of 39.4% is 1.0 percentage point higher than in 1997, resulting from the nondeductible expenses associated with the Fluke Corporation merger in July 1998. - -------------------------------------------------------------------------------- INFLATION - -------------------------------------------------------------------------------- The effect of inflation on the Company's operations has been minimal in 1999, 1998 and 1997. - -------------------------------------------------------------------------------- READINESS FOR YEAR 2000 - -------------------------------------------------------------------------------- The Company experienced no significant systems or other Y2K effects with transitioning into the new year. No disturbance arose from customers or vendors associated with the new year. Although the Company believes there is no material risk exposure, the Year 2000 Readiness Plan as discussed in the Current Report dated July 9, 1998 remains in place. - -------------------------------------------------------------------------------- FINANCIAL INSTRUMENTS AND RISK MANAGEMENT - -------------------------------------------------------------------------------- The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates, which could impact its results of operations and financial condition. The Company manages its exposure to these risks through its normal operating and financing activities. There were no material derivative instrument transactions during any of the periods presented. The Company has generally accepted the exposure to exchange rate movements relative to its investment in foreign operations without using derivative financial instruments to manage this risk. The fair value of the Company's fixed-rate long-term debt is sensitive to changes in interest rates. The value of this debt is subject to change as a result of movements in interest rates. Sensitivity analysis is one technique used to evaluate this potential impact. Based on a hypothetical immediate 100 basis point increase in interest rates at December 31, 1999, the market value of the Company's fixed-rate long-term debt would be impacted by a net decrease of $17 million. This methodology has certain limitations, and these hypothetical gains or losses would not be reflected in the Company's results of operations or financial conditions under current accounting principles. 15 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES - -------------------------------------------------------------------------------- In 1999, the Company acquired Atlas Copco Controls and additional smaller businesses for a total of $65 million. The Company also acquired Pacific Scientific Company for approximately $420 million in cash in March 1998. See Note 2 to Consolidated Financial Statements for a further discussion of the impact of acquisitions. In January 1996, the Company sold its Fayette Tubular Products subsidiary for $155 million. As discussed previously, $250 million of the Company's debt is fixed at an average interest cost of 6%, and $30 million is fixed at an interest rate of 7%. Substantially all remaining borrowings are short-term in nature and float with referenced base rates. As of December 31, 1999, the Company has unutilized commitments under its revolving credit facility of $250 million. As of December 31, 1999, the Company held $260 million of cash and cash equivalents. These amounts are invested in highly liquid investment grade debt instruments with a maturity of ninety days or less. Cash flow has been strong in all periods from 1997 through 1999. In July, 1999, the Company sold $70 million of treasury stock through its Hach Company subsidiary. Operations generated $419 million, $353 million and $343 million in cash in 1999, 1998 and 1997, respectively. The principal use of funds has been capital expenditures of $89 million, $102 million and $97 million in 1999, 1998 and 1997, respectively, and net cash paid for acquisitions of $65 million, $532 million and $147 million in 1999, 1998 and 1997, respectively. The net result of the above, combined with working capital changes, was a decrease in debt of $130 million in 1999, an increase in debt of $215 million in 1998 and a decrease of $11 million in 1997. The Company's funds provided from operations, as well as the existing bank facility and available credit lines, should provide sufficient available funds to meet the Company's working capital, capital expenditure, dividend and debt service requirements for the foreseeable future. 16 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF DANAHER CORPORATION - -------------------------------------------------------------------------------- We have audited the accompanying consolidated balance sheets of Danaher Corporation (a Delaware corporation) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits, the financial statements referred to above present fairly, in all material respects, the financial position of Danaher Corporation and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP Baltimore, MD January 27, 2000 17 CONSOLIDATED STATEMENTS OF EARNINGS (in thousands, except per share data) - -------------------------------------------------------------------------------- Year Ended December 31 1999 1998 1997 - -------------------------------------------------------------------------------- Sales $3,197,238 $3,047,061 $2,619,100 Cost of sales 1,960,822 1,889,229 1,663,491 Selling, general and administrative expenses 778,409 773,720 636,263 ---------------------------------- Total operating expenses 2,739,231 2,662,949 2,299,754 Operating profit 458,007 384,112 319,346 Other expense 11,778 40,796 -- Interest expense 16,667 26,307 12,993 ---------------------------------- Earnings before income taxes 429,562 317,009 306,353 Income taxes 167,938 124,823 117,777 ---------------------------------- Net earnings $ 261,624 $ 192,186 $ 188,576 ================================== Basic earnings per share: Net earnings $ 1.84 $ 1.37 $ 1.35 ---------------------------------- Average shares outstanding 141,832 139,816 139,725 ================================== Diluted earnings per share: Net earnings $ 1.79 $ 1.33 $ 1.31 ---------------------------------- Average common stock and common equivalent shares outstanding 146,089 143,987 143,479 ================================== - -------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- 18 CONSOLIDATED BALANCE SHEETS (in thousands) - -------------------------------------------------------------------------------- As of December 31 1999 1998 - -------------------------------------------------------------------------------- Assets Current assets: Cash and equivalents $ 260,281 $ 47,798 Trade accounts receivable, less allowance for doubtful accounts of $28,000 and $24,000 544,738 485,543 Inventories 324,673 337,481 Prepaid expenses and other 72,425 60,874 ----------------------- Total current assets 1,202,117 931,696 Property, plant and equipment, net 500,189 510,198 Other assets 52,476 111,203 Excess of cost over net assets of acquired companies, less accumulated amortization of $196,000 and $159,000 1,292,289 1,287,762 ----------------------- $3,047,071 $ 2,840,859 ======================= Liabilities and Stockholders' Equity Current liabilities: Notes payable and current portion of debt $ 33,597 $ 59,721 Trade accounts payable 213,209 161,782 Accrued expenses 461,980 479,743 ----------------------- Total current liabilities 708,786 701,246 Other liabilities 288,494 294,907 Long-term debt 341,037 443,918 Stockholders' equity: Common stock, one cent par value; 300,000 shares authorized; 154,035 and 153,297 issued; 142,440 and 141,701 outstanding 1,540 1,533 Additional paid-in capital 420,036 332,057 Accumulated other comprehensive income (34,105) (2,373) Retained earnings 1,321,283 1,069,571 ----------------------- Total stockholders' equity 1,708,754 1,400,788 ----------------------- $3,047,071 $ 2,840,859 ======================= The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. 19 CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) - ------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31 1999 1998 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Cash flows from operating activities: Earnings from continuing operations $ 261,624 $ 192,186 $ 188,576 Depreciation and amortization 126,419 114,527 98,338 Change in accounts receivable (60,327) 4,409 (50,978) Change in inventories 11,149 13,851 10,742 Change in accounts payable 45,852 (13,869) 22,956 Change in other assets and liabilities 34,390 41,578 73,548 ---------------------------------------------- Total operating cash flows 419,107 352,682 343,182 ============================================== Cash flows from investing activities: Payments for additions to property, plant and equipment, net (88,909) (101,614) (96,946) Disposition of businesses -- 16,250 -- Net cash paid for acquisitions (64,834) (532,368) (147,238) ---------------------------------------------- Net cash used in investing activities (153,743) (617,732) (244,184) ============================================== Cash flows from financing activities: Proceeds from sale of treasury stock 69,845 -- -- Proceeds from issuance of common stock 18,141 30,545 9,075 Dividends paid (9,912) (12,840) (14,525) Borrowings (repayments) of debt (129,851) 214,905 (10,801) Purchase of common stock -- (2,066) (80,223) ---------------------------------------------- Net cash provided by (used in) financing activities (51,777) 230,544 (96,474) Effect of exchange rate changes on cash (1,104) 1,726 (1,453) ---------------------------------------------- Net change in cash and equivalents 212,483 (32,780) 1,071 ---------------------------------------------- Beginning balance of cash and equivalents 47,798 80,578 79,507 ---------------------------------------------- Ending balance of cash and equivalents $ 260,281 $ 47,798 $ 80,578 ============================================== Supplemental disclosures: Cash interest payments $ 16,348 $ 26,495 $ 14,875 ============================================== Cash income tax payments $ 114,617 $ 79,301 $ 86,156 ==============================================
- -------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- 20 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(in thousands) - ------------------------------------------------------------------------------------------------------------------------------- Accumulated Additional Other Common Stock Paid-in Retained Comprehensive Comprehensive Shares Amount Capital Earnings Income Income - ------------------------------------------------------------------------------------------------------------------------------- Balance, December 31, 1996 152,752 $1,528 $ 365,135 $ 717,078 $ 7,516 -- Net earnings for the year -- -- -- 188,576 -- $ 188,576 Dividends declared -- -- -- (14,525) -- -- Common stock issued for options exercised 180 2 9,073 -- -- -- Purchase of common stock -- -- (80,223) -- -- -- Unrealized gain on securities held -- -- -- -- 1,700 1,700 Sale of securities held -- -- -- -- (4,000) (3,500) Decrease from translation of foreign financial statements -- -- -- -- (18,666) (18,666) Other -- -- 935 (904) -- -- --------------------------------------------------------------------------- Balance, December 31, 1997 152,932 $1,530 $ 294,920 $ 890,225 $(13,450) $ 168,110 =========================================================================== Net earnings for the year -- -- -- 192,186 -- 192,186 Dividends declared -- -- -- (12,840) -- -- Common stock issued for options exercised 365 3 30,542 -- -- -- Purchase of common stock -- -- (2,066) -- -- -- Common stock issued for acquisitions -- -- 8,661 -- -- -- Increase from translation of foreign financial statements -- -- -- -- 12,777 12,777 Sale of securities held -- -- -- -- (1,700) (1,700) --------------------------------------------------------------------------- Balance, December 31, 1998 153,297 $1,533 $ 332,057 $ 1,069,571 $ (2,373) $ 203,263 =========================================================================== Net earnings for the year -- -- -- 261,624 -- 261,624 Dividends declared -- -- -- (9,912) -- -- Common stock issued for options exercised 738 7 18,134 -- -- -- Sale of treasury stock -- -- 69,845 -- -- -- Decrease from translation of foreign financial statements -- -- -- -- (31,732) (31,732) --------------------------------------------------------------------------- Balance, December 31, 1999 154,035 $1,540 $ 420,036 $ 1,321,283 $(34,105) $ 229,892 ===========================================================================
- -------------------------------------------------------------------------------- The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. - -------------------------------------------------------------------------------- 21 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- (1) Summary of Significant Accounting Policies: - -------------------------------------------------------------------------------- ACCOUNTING PRINCIPLES The consolidated financial statements include the accounts of the Company and its subsidiaries. The accounts of certain of the Company's foreign subsidiaries are included on the basis of a fiscal year ending November 30. This procedure was adopted to allow sufficient time to include these companies in the consolidated financial statements. All significant intercompany balances and transactions have been eliminated upon consolidation. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. INVENTORY VALUATION Inventories include material, labor and overhead and are stated principally at the lower of cost or market using the last-in, first-out method (LIFO). PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost. The provision for depreciation has been computed principally by the straight- line method based on the estimated useful lives (3 to 35 years) of the depreciable assets. OTHER ASSETS Other assets include principally deferred income taxes, noncurrent trade receivables and capitalized costs associated with obtaining financings which are being amortized over the term of the related debt. FAIR VALUE OF FINANCIAL INSTRUMENTS For cash and equivalents, the carrying amount is a reasonable estimate of fair value. For long-term debt, rates available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt. EXCESS OF COST OVER NET ASSETS OF ACQUIRED COMPANIES This asset is being amortized on a straight-line basis over forty years. $37,268,000, $34,269,000 and $25,786,000 of amortization was charged to expense for the years ended December 31, 1999, 1998 and 1997, respectively. When events and circumstances so indicate, all long-term assets, including the Excess of cost over net assets of acquired companies, are assessed for recoverability based upon cash flow forecasts. Should an impairment exist, fair value estimates would be determined based on the cash flow forecasts, discounted at a market rate of interest. FOREIGN CURRENCY TRANSLATION Exchange adjustments resulting from foreign currency transactions are generally recognized in net earnings, whereas adjustments resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income within stockholders' equity. Net foreign currency transaction gains or losses are not material in any of the years presented. STATEMENTS OF CASH FLOWS The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents. INCOME TAXES The Company provides income taxes for unremitted earnings of foreign subsidiaries which are not considered permanently reinvested in that operation. EARNINGS PER SHARE The computation of diluted earnings per share is based on the weighted average number of common shares and common stock equivalents outstanding during the year. ACCUMULATED OTHER COMPREHENSIVE INCOME This consists of the following as of December 31 (000's omitted): - -------------------------------------------------------------------------------- 1999 1998 1997 - -------------------------------------------------------------------------------- Cumulative foreign translation adjustment $(34,105) $(2,373) $(15,150) Unrealized gain on securities -- -- 1,700 ----------------------------------- $(34,105) $(2,373) $(13,450) ================================================================================ - -------------------------------------------------------------------------------- (2) Acquisitions: - -------------------------------------------------------------------------------- On July 14, 1999, Hach Company was acquired and merged into the Company. The Company issued 0.2987 shares of common stock in exchange for each outstanding share of Hach; 6,594,430 shares were exchanged for all outstanding Hach shares. The transaction was a tax-free reorganization and was accounted for as a pooling-of-interests. Accordingly, the financial statements as presented have been restated to reflect the combined companies. Hach Company's year-end was a fiscal year ending on April 30. To combine with the Company, the twelve month periods ending January 30, 1999 and January 31, 1998 for Hach have been utilized. Hach is engaged in the manufacture and marketing of instruments and kits to analyze chemical and other properties of water and aqueous solutions. Reflected in Other expense is a one-time charge of $11.8 million ($9.8 million after-tax or $.07 per share) to reflect the costs of the transaction and the elimination of redundant activities and operations. The majority of these costs are cash expenses and were incurred during 1999. On July 9, 1998, Fluke Corporation was acquired and merged into the Company. The Company issued 17,785,122 shares of common stock in exchange for all outstanding Fluke shares; 0.90478 shares were exchanged for each Fluke share. The transaction was a tax-free reorganization and was accounted for as a pooling-of-interests. Accordingly, the financial statements as presented have been restated to reflect the combined companies. Fluke Corporation's year-end was a 52/53-week fiscal year ending on the last Friday in April. To combine with the Company, the twelve month periods ending January 23, 1998 and January 24, 1997 for Fluke have been utilized. Fluke is engaged in the manufacture and marketing of compact, 22 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS professional electronic test tools. Reflected in Other expense is a one-time charge of $40.8 million ($28.6 million after-tax or $.20 per share) to reflect the costs of the transaction and integrating and implementing efficiencies associated with information, operational and administrative systems. The majority of these costs are cash expenses and were incurred during 1998. The Company acquired Pacific Scientific Company as of March 9, 1998. Total consideration was approximately $420 million. The fair value of assets acquired was approximately $520 million and approximately $100 million of liabilities were assumed. The transaction is being accounted for as a purchase. The unaudited pro forma information for the period set forth below gives effect to this transaction as if it had occurred at the beginning of the period. The pro forma information is presented for informational 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, 1998 1997 - -------------------------------------------------------------------------- Net sales $3,118,643 $2,929,560 Net earnings from continuing operations 190,530 181,580 Earnings per share from continuing operations (diluted) $ 1.32 $ 1.27 ========================================================================== - -------------------------------------------------------------------------------- (3) Inventory - -------------------------------------------------------------------------------- The major classes of inventory are summarized as follows (000's omitted): - -------------------------------------------------------------------------------- December 31, 1999 December 31, 1998 - -------------------------------------------------------------------------------- Finished goods $128,134 $130,463 Work in process 67,437 75,768 Raw material 129,102 131,250 ---------------------------- $324,673 $337,481 ================================================================================ If the first-in, first-out (FIFO) method had been used for inventories valued at LIFO cost, such inventories would have been $11,394,000 and $10,615,000 higher at December 31, 1999 and 1998, respectively. - -------------------------------------------------------------------------------- (4) Property, Plant and Equipment - -------------------------------------------------------------------------------- The major classes of property, plant and equipment are summarized as follows (000's omitted): - -------------------------------------------------------------------------------- December 31, 1999 December 31, 1998 - -------------------------------------------------------------------------------- Land and improvements $ 25,595 $ 26,607 Buildings 209,118 207,933 Machinery and equipment 818,200 768,990 ----------------------------- 1,052,913 1,003,530 Less accumulated depreciation (552,724) (493,332) ----------------------------- $ 500,189 $ 510,198 ================================================================================ - -------------------------------------------------------------------------------- (5) Financing - -------------------------------------------------------------------------------- Financing consists of the following (000's omitted): - -------------------------------------------------------------------------------- December 31, December 31, 1999 1998 - -------------------------------------------------------------------------------- Notes payable due 2008 $250,000 $250,000 Notes payable due 2003 30,000 30,000 Notes payable due 1999 -- 41,200 Other 94,634 182,439 ---------------------------- 374,634 503,639 Less-currently payable 33,597 59,721 ---------------------------- $341,037 $443,918 ================================================================================ The Notes due 2008 were issued in October 1998 at an average interest cost of 6.1%. The Company has complied with covenants relating to limitations on secured debt and sale and leaseback transactions. The carrying amount approximates fair value. The Notes due 2003 had an original average life of approximately 10 years and an average interest cost of 7%. The carrying amount approximates fair value. The Notes due 1999 had an original average life of approximately 7 years and an average interest cost of 7.3%. The estimated fair value of the Notes was approximately $41.7 million at December 31, 1998. Other includes principally short-term borrowings under uncommitted lines of credit which are payable upon demand. The carrying amount approximates fair value. The weighted 23 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS average interest rate for short-term borrowings was 5.3%, 5.8% and 5.9% for each of the three years ended December 31, 1999, 1998 and 1997, respectively. The Company also has a bank credit facility which provides revolving credit through September 30, 2001, of up to $250 million. The Company has complied with covenants relating to maintenance of working capital, net worth, debt levels, interest coverage, and payment of dividends applicable to the Notes due 2003 and the revolving credit facility. The facility provides funds for general corporate purposes at an interest rate of LIBOR plus .125%. There were no borrowings under the bank facility during the three years ended December 31, 1999. The Company is charged a fee of .075% per annum for the facility. Commitment and facility fees of $187,500 were incurred in 1999, 1998 and 1997. Other debt is classified as noncurrent as management intends to refinance it and the bank credit facility provides the ability to refinance maturities to September 30, 2001. The minimum principal payments during the next five years are as follows: 2000 -$33,597,000; 2001 - $57,061,000; 2002 - $724,000; 2003 - $30,356,000; 2004 -$310,000; and $252,586,000 thereafter. - -------------------------------------------------------------------------------- (6) Accrued Expenses and Other Liabilities: - -------------------------------------------------------------------------------- Selected accrued expenses and other liabilities include the following (000's omitted): - -------------------------------------------------------------------------------- December 31, 1999 December 31, 1998 - -------------------------------------------------------------------------------- Current Noncurrent Current Noncurrent Compensation and benefits $126,130 $54,057 $114,393 $49,143 Claims, including self insurance and litigation 16,221 91,920 15,051 85,286 Post retirement benefits 5,000 73,006 5,000 75,500 Environmental and regulatory compliance 34,156 60,719 38,209 67,926 Taxes, income and other 45,065 7,950 59,814 7,699 ================================================================================ Approximately $7 million of accrued expenses and other liabilities were guaranteed by bank letters of credit. - -------------------------------------------------------------------------------- (7) Pension and Employee Benefit Plans: - -------------------------------------------------------------------------------- The Company has noncontributory defined benefit pension plans which cover certain of its domestic hourly employees. Benefit accruals under most of these plans have ceased, and pension expense for defined benefit plans is not significant for any of the periods presented. It is the Company's policy to fund, at a minimum, amounts required by the Internal Revenue Service. In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for some of its retired employees. Certain employees may become eligible for these benefits as they reach normal retirement age while working for the Company. The following sets forth the funded status of the plans as of the most recent actuarial valuations using a measurement date of September 30 (millions): 24 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------------------------------------------------------------ Pension Benefits Other Benefits 1999 1998 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------------ Change in benefit obligation: Benefit obligation at beginning of year $ 267.8 $ 194.6 $ 72.8 $ 70.8 Service cost 12.9 12.0 0.5 0.4 Interest cost 17.2 15.6 4.7 4.9 Plan participants' contributions -- -- -- -- Amendments -- (20.0) -- -- Actuarial gain (loss) (27.0) 18.4 (8.2) 0.6 Acquisition -- 65.5 -- -- Benefits paid (21.1) (18.3) (6.1) (3.9) --------------------------------------------------------- Benefit obligation at end of year 249.8 267.8 63.7 72.8 Change in plan assets: Fair value of plan assets at beginning of year 287.8 232.6 -- -- Actual return on plan assets 47.7 5.4 -- -- Acquisition -- 70.1 -- -- Employer distribution -- (2.0) -- -- Benefits paid (21.1) (18.3) -- -- --------------------------------------------------------- Fair value of plan assets at end of year 314.4 287.8 -- -- Funded status 64.6 20.0 (63.7) (72.8) Unrecognized net actuarial gain (47.7) (2.7) (14.3) (7.7) --------------------------------------------------------- Prepaid (accrued) benefit cost $ 16.9 $ 17.3 $ (78.0) $ (80.5) ==================================================================================================================================== Weighted-average assumptions as of December 31: Discount rate 7.75% 6.75% 7.75% 6.75% Expected return on plan assets 10.0% 10.0% -- --
For measurement purposes, an 8 percent annual rate of increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to decrease gradually to 6 percent by 2002 and remain at that level thereafter.
Components of net periodic benefit cost: Service cost $12.9 $12.0 $ 0.5 $ 0.4 Interest cost 17.2 15.6 4.7 4.9 Expected return on plan assets (27.4) (22.0) -- -- Recognized net actuarial gain (2.2) (0.3) (1.0) (1.0) ------------------------------------------------------- Net periodic benefit cost $ 0.5 $ 5.3 $ 4.2 $ 4.3 ====================================================================================================================================
The Company acquired Pacific Scientific Company on March 9, 1998, including their pension and postretirement benefit plans. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects: - -------------------------------------------------------------------------------- 1 Percentage 1 Percentage Point Increase Point Increase - -------------------------------------------------------------------------------- Effect on total of service and interest cost components $0.5 $(0.5) Effect on postretirement benefit obligation 6.5 (5.9) ================================================================================ Substantially all employees not covered by defined benefit plans are covered by defined contribution plans which generally provide funding based on a percentage of compensation. Pension expense for all plans amounted to $35,624,000, $33,303,000 and $33,450,000 for the years ended December 31, 1999, 1998 and 1997, respectively. - -------------------------------------------------------------------------------- (8) Stock Transactions - -------------------------------------------------------------------------------- The common stock of the Company was split two-for-one to holders of record as of May 5, 1998. All common stock and per share amounts have been restated to reflect the stock split for all periods presented. 25 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company has adopted a non-qualified stock option plan for which it is authorized to grant options to purchase up to 15,000,000 shares. Under the plan, options are granted at not less than existing market prices, expire ten years from the date of grant and generally vest ratably over a five-year period. An option to acquire 2,000,000 shares was granted to a senior executive outside of the plan in 1990. Changes in stock options were as follows: - -------------------------------------------------------------------------------- Number of Shares Under Option (thousands) - -------------------------------------------------------------------------------- Outstanding at December 31, 1996 (average $10.18 per share) 7,310 Granted (average $24.78 per share) 3,204 Exercised (average $7.63 per share) (180) Cancelled (207) ------- Outstanding at December 31, 1997 (average $14.86 per share) 10,127 Granted (average $43.11 per share) 1,154 Exercised (average $9.52 per share) (365) Cancelled (611) ------- Outstanding at December 31, 1998 (average $17.26 per share) 10,305 Granted (average $49.66 per share) 942 Exercised (average $9.54 per share) (738) Cancelled (292) ------- Outstanding at December 31, 1999 (at $3.19 to $67.75 per share, average $20.48 per share) 10,217 ================================================================================ As of December 31, 1999, options with a weighted average remaining life of 3.8 years covering 5,717,000 shares were exercisable at $3.19 to $45.38 per share (average $11.59 per share) and options covering 2,711,000 shares remain available to be granted. Options outstanding at December 31, 1999 are summarized below: - -------------------------------------------------------------------------------- Number Average Average Number Average Exercise Outstanding Exercise Remaining Exercisable Exercise Price (thousands) Price Life (thousands) Price - -------------------------------------------------------------------------------- $3.19 to $4.25 1,380 $ 3.28 0.1 years 1,380 $ 3.28 $5.03 to $7.47 1,240 $ 6.39 3 years 1,240 $ 6.39 $7.97 to $11.75 1,028 $10.26 4 years 1,028 $10.26 $14.13 to $20.81 1,366 $15.67 6 years 1,151 $15.34 $21.25 to $32.22 3,473 $24.25 7 years 738 $24.35 $35.19 to $67.75 1,730 $46.64 9 years 180 $38.23 Nonqualified options have been issued only at fair market value exercise prices as of the date of grant during the periods presented herein, and the Company's policy does not recognize compensation costs for options of this type. Beginning in 1996, the pro forma costs of these options granted subsequent to January 1, 1995 have been calculated using the Black-Scholes option pricing model and assuming a 6% risk-free interest rate, a 10-year life for the option, a 37% expected volatility and dividends at the current annual rate. The weighted average grant date fair market value of options issued was $28 per share in 1999, $18 per share in 1998 and $10 per share in 1997. Had this method been used in the determination of income, net earnings would have decreased by approximately $10.7 million in 1999, $7.8 million in 1998 and $5.3 million in 1997 and diluted earnings per share would have decreased by $.07 in 1999, $.05 in 1998 and $.04 in 1997. These pro forma amounts may not be representative of the effects on pro forma net earnings for future years. - -------------------------------------------------------------------------------- (9) Leases and Commitments: - -------------------------------------------------------------------------------- The Company's leases extend for varying periods of time up to 10 years and, in some cases, contain renewal options. Future minimum rental payments for all operating leases having initial or remaining noncancelable lease terms in excess of one year are $28,000,000 in 2000, $23,000,000 in 2001, $19,000,000 in 2002, $14,000,000 in 2003, $10,000,000 in 2004 and $22,000,000 thereafter. Total rent expense charged to income for all operating leases was $34,000,000, $32,000,000 and $25,000,000 for the years ended December 31, 1999, 1998 and 1997, respectively. 26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- (10) Litigation and Contingencies: - -------------------------------------------------------------------------------- A former subsidiary of the Company is engaged in litigation in multiple states with respect to product liability. The Company sold the subsidiary in 1987. Under the terms of the sale agreement, the Company agreed to indemnify the buyer of the subsidiary for product liability related to tools manufactured by the subsidiary prior to June 4, 1987. The cases involve approximately 3,000 plaintiffs, in state and federal courts in multiple states. All other major U.S. air tool manufacturers are also defendants. The gravamen of these complaints is that the defendants' air tools, when used in different types of manufacturing environments over extended periods of time, were defective in design and caused various physical injuries. The plaintiffs seek compensatory and punitive damages. The Company has accepted an agreement in principle to settle these claims. Completion of this settlement agreement will not result in a material adverse effect on the Company's results of operations or financial condition. A subsidiary, Joslyn Manufacturing Company (JMC), previously operated wood treating facilities that chemically preserved utility poles, pilings and railroad ties. All such treating operations were discontinued or sold prior to 1982. These facilities used wood preservatives that included creosote, pentachlorophenol and chromium-arsenic-copper. While preservatives were handled in accordance with then existing law, environmental law now imposes retroactive liability, in some circumstances, on persons who owned or operated wood-treating sites. JMC is remediating some of its former sites and will remediate other sites in the future. The Company has made a provision for environmental remediation; however, there can be no assurance that estimates of environmental liabilities will not change. In addition to the litigation noted above, the Company is from time to time subject to routine litigation incidental to its business. These lawsuits primarily involve claims for damages arising out of the use of the Company's products, some of which include claims for punitive as well as compensatory damages. The Company is also involved in proceedings with respect to environmental matters including sites where the Company has been identified as a potentially responsible party under federal and state environmental laws and regulations. The Company believes that the results of the above noted litigation and other pending legal proceedings will not have a materially adverse effect on the Company's results of operations or financial condition, notwithstanding any related insurance recoveries. A subsidiary of the Company has sold, with limited recourse, certain of its accounts and notes receivable. A provision for estimated losses as a result of the limited recourse has been included in accrued expenses. No gain or loss arose from these transactions. - -------------------------------------------------------------------------------- (11) Income Taxes: - -------------------------------------------------------------------------------- The provision for income taxes for the years ended December 31 consists of the following (000's omitted): - -------------------------------------------------------------------------------- 1999 1998 1997 - -------------------------------------------------------------------------------- Federal: Current $ 111,809 $ 90,560 $ 101,385 Deferred 16,139 12,151 (1,751) State and local 11,665 6,647 13,611 Foreign 28,325 15,465 4,532 --------------------------------------- Income tax provision $ 167,938 $ 124,823 $ 117,777 ================================================================================ Deferred income taxes are reflected in Prepaid expenses and other and in Other assets. Deferred tax assets consist of the following (000's omitted): - -------------------------------------------------------------------------------- December 31, 1999 1998 - -------------------------------------------------------------------------------- Bad debt allowance $ 10,242 $ 8,492 Inventories 9,913 9,086 Property, plant and equipment (41,564) (42,669) Post retirement benefits 33,827 33,795 Insurance, including self- insurance 27,108 24,243 Environmental compliance 23,946 25,031 Other accruals 15,538 36,700 All other accounts (19,575) (19,104) -------------------------- Net deferred tax asset $ 59,435 $ 75,574 ================================================================================ 27 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The effective income tax rate for the years ended December 31 varies from the statutory federal income tax rate as follows: - -------------------------------------------------------------------------------- Percentage of PreTax Earnings 1999 1998 1997 - -------------------------------------------------------------------------------- Statutory federal income tax rate 35.0% 35.0% 35.0% Increase (decrease) in tax rate resulting from: Permanent differences in amortization of certain assets for tax and financial reporting purposes 2.7 3.7 3.1 State income taxes (net of federal income tax benefit) 1.8 1.4 2.7 Taxes on foreign earnings (0.9) (1.4) (2.4) Costs of Hach (1999) and Fluke (1998) mergers 0.5 0.7 -- ------------------------------ Effective income tax rate 39.1% 39.4% 38.4% ================================================================================ - -------------------------------------------------------------------------------- (12) Segment Data: - -------------------------------------------------------------------------------- Operating profit represents total revenues less operating expenses, excluding Other expense, Interest expense and Income taxes. The identifiable assets by segment are those used in each segment's operations. Intersegment amounts are eliminated to arrive at consolidated totals. Detailed segment data is presented in the following table (000's omitted): - -------------------------------------------------------------------------------- Operations in Different Industries-- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Year Ended December 31, 1999 1998 1997 - -------------------------------------------------------------------------------- Total Sales: Process/ Environmental Controls $1,854,184 $1,752,552 $1,426,339 Tools and Components 1,343,054 1,294,509 1,192,761 ---------------------------------------- $3,197,238 $3,047,061 $2,619,100 ==================================================================== =========== Operating Profit: Process/ Environmental Controls $ 286,997 $ 239,794 $ 189,431 Tools and Components 187,511 159,225 144,370 Other (16,501) (14,907) (14,455) ---------------------------------------- $ 458,007 $ 384,112 $ 319,346 ================================================================================ Identifiable Assets: Process/ Environmental Controls $1,793,873 $1,783,142 $1,345,250 Tools and Components 995,234 994,364 832,614 Other 257,964 63,353 86,877 ---------------------------------------- $3,047,071 $2,840,859 $2,264,741 ================================================================================ Liabilities: Process/ Environmental Controls $ 596,332 $ 595,360 $ 451,743 Tools and Components 381,025 374,726 421,526 Other 360,960 469,985 218,247 ---------------------------------------- $1,338,317 $1,440,071 $1,091,516 ================================================================================ Depreciation and Amortization: Process/ Environmental Controls $ 81,647 $ 69,416 $ 53,430 Tools and Components 44,772 45,111 44,908 ---------------------------------------- $ 126,419 $ 114,527 $ 98,338 ================================================================================ Capital Expenditures: Process/ Environmental Controls $ 53,358 $ 61,422 $ 58,642 Tools and Components 35,551 40,192 38,304 ---------------------------------------- $ 88,909 $ 101,614 $ 96,946 ================================================================================ 28 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Operations in Geographical Areas-- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Year Ended December 31, 1999 1998 1997 - -------------------------------------------------------------------------------- Total sales: United States $ 2,507,517 $ 2,418,500 $ 2,061,875 Germany 166,268 151,136 116,796 United Kingdom 138,066 123,511 124,065 All other 385,387 353,914 316,364 ------------------------------------------ $ 3,197,238 $ 3,047,061 $ 2,619,100 ================================================================================ Long-lived assets: United States $ 1,747,086 $ 1,821,142 $ 1,308,569 Germany 22,101 22,931 19,187 United Kingdom 24,967 21,157 17,570 All other 50,800 43,933 40,950 Less: Deferred taxes and financial instruments (59,435) (75,574) (97,588) ------------------------------------------ $ 1,785,519 $ 1,833,589 $ 1,288,688 ================================================================================ Sales outside the United States: Direct sales $ 689,721 $ 628,561 $ 557,225 Exports 263,000 259,000 242,000 ------------------------------------------ $ 952,721 $ 887,561 $ 799,225 ================================================================================ - -------------------------------------------------------------------------------- (13) Quarterly Data-Unaudited (000's omitted except per share data) - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ 1999 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $793,044 $774,133 $781,867 $848,194 Gross profit 295,484 301,930 311,068 327,934 Operating profit 102,681 113,857 119,216 122,253 Net earnings 59,122 66,353 61,846* 74,303 Earnings per share: Basic $ .42 $ .47 $ .43* $ .52 Diluted $ .41 $ .46 $ .42* $ .51
- -------------------------------------------------------------------------------- * Includes $9.8 million after-tax costs ($0.07 per share) from the merger with Hach Company - --------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------ 1998 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter - ------------------------------------------------------------------------------------------------------------------------------------ Net sales $680,005 $773,204 $758,253 $835,599 Gross profit 245,170 292,141 300,607 319,914 Operating profit 76,514 97,662 103,489 106,447 Net earnings 44,628 55,658 31,010* 60,890 Earnings per share: Basic $ .32 $ .40 $ .22* $ .43 Diluted $ .31 $ .39 $ .21* $ .42
- -------------------------------------------------------------------------------- * Includes $28.6 million after-tax costs ($0.20 per share) from the merger with Fluke Corporation - -------------------------------------------------------------------------------- 29 DANAHER CORPORATION AND SUBSIDIARIES Major Operating Company Executives A.L. Hyde Company Kurt C. Glaser President Atlas Copco Controls Hermann E. Braun President (acting) Current Technology, Inc. Joseph W. Roark President Cyberex, Inc. Maureen F. Austin President Danaher Controls James W. Appelgren President Danaher Tool Group Professional Tools Division Jake R. Nichol President Danaher Tool Group Special Markets Division Thomas R. Sulentic President Delta Consolidated Industries Thomas P. Joyce, Jr. President Dr. Bruno Lange Group Elmar F. Illek President Fluke Corporation Thomas S. Gross President Gems Sensors Frank A. Wilson President (acting) Hach Company Elmar F. Illek President Hengstler GmbH Hermann E. Braun President Hennessy Industries, Inc. Vincent E. Piacenti President Jacobs Chuck Manufacturing Company C. Michael Heath President Jacobs Vehicle Systems, Inc. Gary A. Masse President Jennings Technology Company John P. Williamson President Joslyn Hi-Voltage Company James F. Domo President Joslyn Manufacturing Company Joseph A. Hahn President Joslyn Sunbank Company Donald G. McClintock, Jr. President Matco Tools Corporation Thomas N. Willis President M&M Precision Systems Corporation Gerald W. Blankenship President Namco Controls Corporation Robert E. Joyce President Pacific Scientific Automation Technology Group William T. Fejes, Jr. President Pacific Scientific Company Fisher Pierce Division Steven L. Breitzka President Pacific Scientific Company Instruments Division Simon R. Appleby President Pacific Scientific Energetic Materials Company Thomas L. Walsh President Pacific Scientific Safety & Aviation Group Richard G. Knoblock President Partlow/West Corporation Craig B. Purse President QualiTROL Corporation Ronald N. Meyer President Veeder-Root Company Scott G. Clawson President Corporate Officers George M. Sherman President and Chief Executive Officer Patrick W. Allender Executive Vice President, Chief Financial Officer and Secretary H. Lawrence Culp, Jr. Executive Vice President Brian M. McNeill Executive Vice President Steven E. Simms Executive Vice President William J. Butler Vice President and Group Executive Dennis D. Claramunt Vice President and Group Executive Thomas S. Gross Vice President and Group Executive Elmar F. Illek Vice President and Group Executive Daniel L. Comas Vice President - Corporate Development Mark C. DeLuzio Vice President - Danaher Business System James H. Ditkoff Vice President - Finance & Tax Dennis A. Longo Vice President - Human Resources Christopher C. McMahon Vice President - Controller Uldis K. Sipols Vice President - Procurement Directors Mortimer M. Caplin Partner Caplin & Drysdale Donald J. Ehrlich President, Chairman and Chief Executive Officer Wabash National Corp. Walter G. Lohr, Jr. Partner Hogan & Hartson Mitchell P. Rales Chairman of the Executive Committee Danaher Corporation Steven M. Rales Chairman of the Board Danaher Corporation George M. Sherman President and Chief Executive Officer Danaher Corporation Alan G. Spoon President The Washington Post Company A. Emmet Stephenson, Jr. Chairman of the Board Startek, Inc. EX-21 3 EXHIBIT 21 DANAHER CORPORATION AND SUBSIDARIES EXHIBIT TO 1999 ANNUAL REPORT ON FORM 10K (21) SUBSIDIARIES OF REGISTRANT
STATE OR DOING JURISDICTION OF BUSINESS NO. Corporation INCORPORATION AS (DBA) 1 Danaher Corporation Delaware - 2 Danaher Insurance Company Delaware - 3 DMG Plastics, Inc. Delaware - 4 FJ 900 Inc. Delaware - 5 Armstrong Tools, Inc. Delaware - 6 Utica Holding Company Delaware - 7 Fluke Corporation Washington - 8 Fluke Electronics Corporation Washington - 9 Fluke International Corporati Washington - 10 Fluke Deutschland GmbH Germany - 11 Fluke Electronics Canada Canada - 12 Fluke Electronics (Malaysia) Malaysia - 13 Fluke South East Asia Pte.Ltd Singapore - 14 KK Fluke Japan - 15 Fluke Australia Pty Ltd Australia - 16 Fluke do Brazil Ltda. Brazil - 17 Fluke Europe B.V. Netherlands - 18 Fluke Holding B.V. Netherlands - 19 Fluke Industrial B.V. Netherlands - 20 Fluke Nederland B.V. Netherlands - 21 Fluke Vertriebsgesellschaft m Austria - 22 Fluke Belgium N.V./S.A. Belgium - 23 Fluke Danmark A/S Denmark - 24 Fluke Finland Oy Finland - 25 Fluke France S.A. France - 26 Fluke Italia S.r.l. Italy - 27 Fluke Norge A/S Norway - 28 Fluke Iberica S.L. Spain - 29 Fluke Sverige AB Sweden - 30 Contronic Development AB - AC Sweden - 31 Advanced Motion Controls AB - Sweden - 32 Fluke Switzerland AG Switzerland - 33 Fluke U.K. Ltd. U.K. - 34 DH Holdings Corp. Delaware - 35 DCI Consolidated Industries, Delaware - 36 Delta Consolidated Industries Arkansas - 37 Truck Storage Incorporated Delaware - 38 Danaher Finance Company Delaware - 39 Sonix, Inc. Virginia - 40 Sonix Technologies SDV.BHD. Malaysia - 41 Gems Sensors Inc. Delaware - 42 Industrial Sensors, Inc.- AF Delaware - 43 Jacobs Chuck Manufacturing Co Delaware - 44 Jacobs Chuck Mfg. (Suzhou) Co China - 45 Jacobs Chuck Trading (Shangha China - 46 Jacobs Japan Inc. Delaware - 47 Power Tool Holders Incorporat Delaware - 48 Kistler-Morse Corporation Delaware - 49 AB Kihlstroms Manometerfabrik Sweden - 50 Jessie & J Company, Ltd. - Y Hong Kong - 51 Gems Sensors AG Switzerland - 52 The Partlow Corporation New York - 53 Time & Temperature Controls C Delaware -
STATE OR DOING JURISDICTION OF BUSINESS NO. Corporation INCORPORATION AS (DBA) 54 Anderson Instrument Co. Inc. New York - 55 Flow Measurement Corporation Delaware - 56 Western Pacific Industries In Delaware - 57 Swiss Precision Parts Corp. Delaware - 58 A.L. Hyde Company Delaware - 59 Extrusions Plastics, Inc. Delaware - 60 World Plastic Extruders, Inc. New York - 61 Holo-Krome Company Delaware - 62 The Allen Manufacturing Compa Delaware - 63 Industrial Fasteners, Inc. Delaware - 64 Quality Wire Processing, Inc. Delaware - 65 Holo-Krome Australia Pty Ltd. Australia - 66 Danaher Canada, Inc. Alberta - 67 Veeder-Root Company Delaware - 68 Launchchange Limited - Z U.K. - 69 West Instruments Ltd. - W U.K. - 70 Veeder-Root Environmental Sys U.K. - 71 Gwendolene Holdings Ltd. U.K. - 72 Gems Sensors Ltd. - W U.K. - 73 Holo-Krome Ltd. - W U.K. - 74 Jacobs Manufacturing Co. Ltd. U.K. - 75 Piccadilly Precision Engineer U.K. - 76 Danaher UK Industries Ltd. - U.K. - 77 Pacific Scientific Ltd.- AE U.K. - 78 CGF Automation Ltd. U.K. - 79 Contents Measuring Systems Li U.K. - 80 Buhler Montec Group Ltd. - AK U.K. - 81 82 Veeder-Root Ltd. U.K. - 83 QualiTROL Instruments Ltd. U.K. - 84 Robin Electronics Ltd. U.K. - 85 Petroleum Industry Controls, Delaware - 86 Veeder-Root of N.C., Inc. Delaware - 87 Veeder-Root do Brasil Brazil - 88 Veeder-Root SARL - U France - 89 Veeder-Root Service Company Delaware - 90 Old Tide Corp. California - 91 Jacobs Vehicle Systems, Inc. Delaware - 92 Jacobs Mexico, S.A.de C.V. Mexico - 93 Diesel Engine Retarders, Inc. Delaware - 94 McCrometer, Inc. Delaware - 95 Commercial Avenue Company Delaware - 96 Hach Company Delaware - 97 Hach Europe, S.A. Belgium - 98 Hach Sales & Service Canada L Canada - 99 Environmental Test Systems, I Delaware - 100 Lea Way Hand Tool Corp. Taiwan - 101 Joslyn Holding Company Delaware - 102 Joslyn Company, LLC Delaware - 103 Joslyn Manufacturing Company, Delaware - 104 Joslyn Electronic Systems Com Delaware - 105 Joslyn Hi-Voltage Company, LL Delaware - 106 Joslyn Clark Controls, LLC Delaware - 107 Sunbank Family of Companies, California - 108 Joslyn Sunbank Company, LLC California - 109 Air Dry Company of America, L Delaware - 110 Jennings Technology Company, Delaware - 111 Jennings Land Company Delaware - 112 Cyberex, LLC Delaware - 113 Cyberex, B.V. Netherlands - 114 Danaher Canadian Holdings Inc Ontario - 115 Plastifab Industries Ontario - 116 Joslyn Canada Ontario - 117 Hengstler Canada LP Ontario - 118 QualiTROL Canada LP Ontario - 119 Hennessy Industries Canada LP Ontario -
STATE OR DOING JURISDICTION OF BUSINESS NO. Corporation INCORPORATION AS (DBA) 120 Danaher Tool Group LP Ontario - 121 Danaher Canada Partners Inc. Ontario - 122 Acme-Cleveland Corp. Ohio - 123 AC Intermediate Co. Ohio - 124 ACMS Incorporated Ohio - 125 Acme-Cleveland Laser Systems, Ohio - 126 Acme Communications Technolog Ohio - 127 Ball Screws and Actuators Co. California - 128 Communications Technology Cor California - 129 Communications Technology (Ca Brit.Colum. - 130 Communications Technology Cor Mexico - 131 Phoenix Microsystems, Inc. Alabama - 132 Dolan-Jenner Industries, Inc. Massachusetts - 133 Dolan-Jenner Europe, B.V. (60 Netherlands - 134 LSMT Corp. Michigan - 135 143420 Ontario, Inc. Ontario - 136 M & M de France, Inc. Ohio - 137 M & M Precision Systems Corp. Ohio - 138 Master Gears Corp.- AF Delaware - 139 Precision Gauges, Inc.- AF Delaware - 140 Namco Controls Corp. Ohio - 141 American Sigma, Inc. New York - 142 Kingsley Tools, Inc. Delaware - 143 Easco Hand Tools Inc. Delaware - 144 Hand Tool Design Corporation Delaware - 145 KD Tools of Puerto Rico, Inc. Delaware - 146 Beamco, Inc. Wisconsin - 147 Dynapar Corporation Illinois - 148 Encoders Incorporated Delaware - 149 Hennessy Industries Inc. Delaware - 150 Service Station Products Comp Delaware - 151 Wheel Service Equipment Corpo Delaware - 152 Hengstler Espana SA Spain - 153 Current Technology, Inc. Delaware - 154 GID Acquisition Company Delaware - 155 Data Recorders Incorporated Delaware - 156 Hecon Properties, Inc. New Jersey - 157 Hengstler Italia SRL - T Italy - 158 Hengstler Japan Corp. Japan - 159 Matco Tools Corporation New Jersey - 160 Mechanics Custom Tools Corpor Delaware - 161 NMTC, Inc. Delaware - 162 Danaher Alberta Inc. Alberta - 163 Pacific Scientific Company California - 164 Pacific Scientific Instrument California - 165 Fisher Pierce Company California - 166 PacSci Motion Control, Inc. Massachusetts - 167 Pacific Scientific Energetic Delaware - 168 Wermex Corporation Texas - 169 Bobinas del Sur Mexico - 170 Pacific Scientific Internatio California - 171 Pacific Scientific SARL France - 172 Advanced Servo Systems Limite Ireland - 173 Light Controls Corp.- AF Delaware - 174 QualiTROL Corporation New York - 175 QualiTROL GmbH - X Germany - 176 Hengstler GmbH Germany - 177 KACO GmbH - Y Germany - 178 Hengstler Controle Numerique France - 179 Societe Civile Immobiliere France - 180 Gems Sensors GmbH Germany - 181 Veeder-Root GmbH Germany - 182 Dr.Bruno Lange GmbH & Co.KG - Germany - 183 Namco Controls GmbH - X Germany - 184 Cleveland Precision Systems G Germany - 185 Pacific Scientific GmbH - X Germany -
STATE OR DOING JURISDICTION OF BUSINESS NO. Corporation INCORPORATION AS (DBA) 186 Eduard Bautz GmbH & Co.KG Germany - 187 Danaher GbR Germany - 188 Power Transformer Controls Co Delaware - 189 JS Technology, Inc. Delaware -
EX-23 4 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included (or incorporated by reference) in this Form 10-K, into the Company's previously filed Registration Statement File No. 33-32402. /s/ ARTHUR ANDERSEN LLP Baltimore, Maryland March 17, 2000 EX-27 5 EXHIBIT 27
5 1,000 YEAR DEC-31-1999 DEC-31-1999 260,281 0 572,738 28,000 324,673 1,202,117 1,052,913 552,724 3,047,071 708,786 0 0 0 1,540 1,707,214 3,047,071 3,197,238 3,197,238 1,960,822 2,739,231 11,778 0 16,667 429,562 167,938 261,624 0 0 0 261,624 1.84 1.79
-----END PRIVACY-ENHANCED MESSAGE-----