-----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, F8ejhub4OKNUiIBaPs71DuIR8D7Be56bVUYnpfk6XMCDRpnP28JNwKs0xjRrfg2S m5JomHxWpyUFxJNqmKpSvQ== 0000313616-97-000017.txt : 19970329 0000313616-97-000017.hdr.sgml : 19970329 ACCESSION NUMBER: 0000313616-97-000017 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970328 SROS: NYSE 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08089 FILM NUMBER: 97566033 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-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE [ X ] SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1996 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 27, 1997, the number of shares of common stock outstanding was 58,921,377 and were held by approximately 3,000 holders. The aggregate market value of common shares held by non-affiliates of the Registrant on such date was approximately $1.4 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. EXHIBIT INDEX APPEARS ON PAGE 8 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, 1996. 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 1997 annual meeting of stockholders. With the exception of the pages of the 1997 Proxy Statement specifically incorporated herein by reference, the 1997 Proxy Statement is not deemed to be filed as part of this Form 10-K. ITEM 1. BUSINESS General Danaher Corporation ("Danaher" or the "Company"), originally DMG, Inc., was organized in 1969 as a Massachusetts real estate investment trust. In 1978 it was reorganized as a Florida corporation under the name Diversified Mortgage Investors, Inc. ("DMI") which in a second reorganization in 1980 became a subsidiary of a newly created holding company named DMG, Inc. The Company adopted the name Danaher in 1984 and was reincorporated as a Delaware corporation following the 1986 annual meeting of shareholders. The Company conducts its operations through two business segments: Tools and Components and Process/Environmental Controls. Tools and Components The Tools and Components segment is comprised of the Danaher Hand Tool Group (including Special Markets and Professional Tool Division, which includes Armstrong Bros. Tool Co., a premier manufacturer and marketer of industrial hand tools), Matco Tools ("Matco"), Jacobs Chuck Manufacturing Company ("Jacobs"), Iseli Company ("Iseli"), Delta Consolidated Industries, Jacobs Vehicle Systems, Hennessy Industries and the hardware and electrical apparatus lines of Joslyn Manufacturing Company (JMC). This segment is one of the largest domestic 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 and achieving production efficiencies and enhanced quality and customer service through "Just-In-Time" and related manufacturing techniques. Danaher Tool Group (DTG) is one of the largest domestic 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 line of mechanics' hand tools for over 50 years. Approximately 80% of the over 100 million pieces sold to Sears annually are sold in tool sets that include from three to 900 pieces. Net sales to Sears were approximately 14% of total Company sales in 1996. 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. For over 30 years, DTG has also been a primary supplier of specialized automotive service tools to NAPA, which has approximately 6,500 outlets at present. 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 brand, its industrial tools and products are also sold under the Armstrong and Allen brand names, and fastener products under the Holo-Krome name are sold to independent distributors and other customers in the "do-it-yourself," professional automotive, commercial and industrial markets. Professional mechanics' tools are distributed by Matco which has approximately 1,100 independent mobile distributors who sell primarily to individual professional mechanics. Matco is one of the leading suppliers in this market. Jacobs is the market leader in the drill chuck business with its highly respected and well recognized brand name and Iseli is a leader in the manufacture of miniature precision parts produced on Swiss screw machines. Delta is the market leader in boxes and other storage containers serving the vehicle aftermarket and manufactures and markets containers serving numerous specialty areas. Wheel service equipment is manufactured under the Coats, Bada and Ammco 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. The "Jake Brake" technology was developed by Jacobs and represents the premier brand of engine retarders. The product is sold by Jacobs' sales personnel to original equipment manufacturers and aftermarket distributors. The nation's oldest manufacturer of poleline hardware and a U.S. market share leader, the hardware division of 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. The electrical apparatus division of JMC manufactures surge protection devices rated as high as 468,000 volts for the electric power utility industry. Surge arresters are designed to eliminate the damaging effects of electrical surges caused by lightning and other overvoltage conditions on a utility's power system. The major raw materials used by this segment, including high quality steel, are available from a variety of sources in sufficient quantities. Process/Environmental Controls The Process/Environmental Controls segment is comprised of the Veeder-Root Company ("Veeder-Root"), Danaher Controls, Partlow/ Anderson Instruments, Gulton Industries-Graphic Instruments, West Instruments, Ltd., QualiTROL Corporation, A.L. Hyde Company, Hengstler, McCrometer, the controls product line business units of Joslyn Corporation and the operating businesses of Acme-Cleveland Corporation (Namco Controls, M&M Precision Systems, TxPort, Inc. and Communications Technology Corporation) acquired in July, 1996. These companies produce and sell underground storage tank leak detection systems and temperature, level and position sensing devices, power switches and controls, communication line products, power protection products, liquid flow measuring devices, telecommunications products, 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 other end users. The Company's strategy in the Process/Environmental Controls segment is to concentrate on the rapid expansion of its environmental controls product line, including the Veeder-Root TM storage tank leak detection systems business. 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 and, accordingly, is uniquely positioned to respond to the increased demand for these products fueled by environmental regulations. The Company is also expanding its other offerings in the environmental controls product line to encompass applications related to markets other than petroleum storage and to address nonregulatory business requirements. This expansion program includes both internally developed new product offerings as well as selective product line acquisitions. 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. The companies within the Instrument Group have significant synergies in both product offerings and channels of distribution. The Company plan is to leverage these synergies in product design, engineering and manufacturing, and product marketing. Veeder-Root is also the predominant worldwide supplier of mechanical gasoline pump computing devices and a manufacturer of other measuring and counting devices. Namco is a leader in part presence, part position and machine status sensing solutions for industrial process automation applications. 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. Telecommunications products include automated data transmission analyzers, single and multi-function test equipment, computerized cable test and database management systems, digital data access devices and molded cable closures and terminals used in outside plant and network applications. 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. 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. 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, 1996, the Company employed approximately 11,600 persons. Of these, approximately 1,600 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 $46,964,000 for 1996, $36,400,000 for 1995 and $26,800,000 for 1994. 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 all appropriate procedures called for at the time, subsequent changes in environmental laws may require the generators of these spent preservatives to be responsible for the cost of remedial actions at the sites where spent preservatives have been deposited. The Company is continuing its investigation of these sites and remediation technologies. The Company has made a provision for environmental compliance; however, there can be no assurance that estimates of environmental liabilities will not change. 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 financial condition. 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 a customer in the tools segment, Sears, Roebuck and Co. ("Sears"), which accounted for 14% of consolidated sales in 1996. Although the relationship with Sears is long-standing, the Company believes the loss of this business could have an adverse effect on its operations. ITEM 2. PROPERTIES The Company occupies over 4 million square feet of manufacturing, distribution, service and office space at various domestic and foreign locations. The principal properties are listed below and are constructed of concrete, brick, cement, cinderblock or some combination of these materials. 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 ...................................................................... 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 Jonesboro, AK Manufacturing Leased Raleigh, NC Manufacturing Leased Chicago, IL (3) Manufacturing Owned Bloomfield, CT Manufacturing Owned LaVergne, TN Manufacturing Owned Bowling Green, KY Manufacturing Owned Process/Environmental Controls Altoona, PA Manufacturing Owned Elizabethtown, NC Manufacturing Owned Market Harborough, England Manufacturing Leased Sao Paulo, Brazil Manufacturing Owned New Hartford & Fairport, NY Manufacturing Owned Gurnee, IL Manufacturing Leased Grenloch, NJ Manufacturing Owned Providence, RI 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 Lachine, Quebec Manufacturing Leased Lancaster, SC Manufacturing Owned Moorpark, CA Manufacturing Leased Paso Robles, CA Manufacturing Leased San Jose, CA Manufacturing Owned Hemet, CA Manufacturing Owned Atlanta, GA Manufacturing Owned Madison, AL Manufacturing Leased 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 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, Bordeaux, Tours and Selestat, France; and Stuttgart, Germany. 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 cases are in preliminary stages of discovery and pleading and the Company intends to defend its position vigorously. The Company's maximum indemnification obligation under the contract is approximately $85,000,000. The Company believes it has insurance coverage for all or a substantial part of the damages, if any. The outcome of this litigation is not currently predictable. JMC is a defendant in a class action tort suit. The suit alleges exposure to chemicals and property devaluation resulting from wood treating operations previously conducted at a Louisiana site. Both the size of the class and the damages are uncertain. The Company has tendered the defense of the suit to its insurance carrier. JMC believes that it may have adequate insurance coverage for the litigation; however, because of the above uncertainties, JMC is unable to determine at this time the potential liability, if any. 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 1996. 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, 1996, and is incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEMS 10 THROUGH 13. The information required under Items 10 through 13 is included in the Registrant's Proxy Statement for its 1997 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 1996. NONE 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: 16 Financial Statements: Consolidated Statements of Earnings, year ended December 31, 1996, 1995, and 1994. 16 Consolidated Balance Sheets, December 31, 1996 and 1995 17 Consolidated Statements of Cash Flows, years ended December 31, 1996, 1995, and 1994 18 Consolidated Statements of Stockholders' Equity, years ended December 31, 1996, 1995, and 1994 19 Notes to Consolidated Financial Statements 20 Supplemental Data: Selected Financial Data 12 Market Prices of Common Stock 29 Schedules: II - Valuation and Qualifying Accounts 17 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. Exhibits: (3) Articles of Incorporation and By-Laws. (a) The Articles of Incorporation of Danaher Incorporated by (filed as Annex B to Danaher's Proxy Reference Statement dated October 7, 1986). (b) The By-Laws of Danaher. Incorporated By Reference (10) Material Contracts: (a) Employment Agreement between Danaher Incorporated by Corporation and George M. Sherman dated Reference as of January 2, 1990 (b) Credit Agreement Dated As of September 7, Incorporated by 1990. Among Danaher Corporation, the Reference Financial Institutions Listed Therein and Bankers Trust Company as Agent. (c) Agreement as of November 1, 1990 between Incorporated by Danaher Corporation, Easco Hand Tools, Inc. Reference and Sears, Roebuck and Co. (d) Note Agreement as of November 1, 1992 Incorporated by Between Danaher Corporation and Lenders Reference Referenced Therein. (e) Note Agreement as of April 1, 1993 Incorporated by Between Danaher Corporation and Lenders Reference Referenced Therein. (13) Annual Report to Securityholders (22) Subsidiaries of Registrant. (24) Consent of Independent Public Accountants. (27) Financial Data Schedules 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 27, 1997 /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/ A. EMMET STEPHENSON, JR. Director A. Emmet Stephenson, Jr. /s/ PATRICK W. ALLENDER Senior Vice President-Chief Financial Patrick W. Allender Officer and Secretary /s/ C. SCOTT BRANNAN Vice President and Controller C. Scott Brannan REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Danaher Corporation: We have audited in accordance with generally accepted auditing standards, the financial statements included in pages 16 to 26 of 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 29, 1997. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in the index is the responsibility of the Company's management and is presented for the purpose of complying with the Securities and Exchange Commission's rules and is not a part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the financial statements taken as a whole. ARTHUR ANDERSEN LLP Washington, D.C. January 29, 1997 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, 1996 Allowances deducted from asset accounts: Allowance for doubtful accounts: $13,431 $ 5,763 $ 507(a) $ 4,833 $14,868 Year Ended December 31, 1995 Allowances deducted from asset accounts: Allowance for 4,148 doubtful accounts: $11,638 $ 4,847 $ 2,961(a) $ 1,867(b) $13,431 Year Ended December 31, 1994 Allowances deducted from asset accounts: Allowance for doubtful accounts $ 8,043 $ 6,630 $ 487(a) $ 3,522 $11,638 Notes:(a) - Amounts related to businesses acquired. (b) - Amounts related to businesses disposed of. EXHIBIT 24 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. ARTHUR ANDERSEN LLP Washington, D.C. March 26, 1997 EX-27 2
5 1000 YEAR DEC-31-1996 DEC-31-1996 26444 0 281536 14868 204236 546741 538436 218830 1765074 474573 0 0 0 642 799619 1765074 1811878 1811878 1239846 1585742 0 0 16376 209760 81801 127959 79811 0 0 207770 3.47 3.47
EX-21 3 [TYPE]EX-21 [C] DANAHER CORPORATION & SUBSIDIARIES Exhibit to 1996 Annual Report on Form 10K (22) Subsidiaries of Registrant State/ Jurisdiction of Incorp. DBA No. Corporation 138 143420 Ontario, Inc. Ontario - 125 AC Intermediate Co. Ohio - 124 Acme-Cleveland Corp. Ohio - 127 Acme-Cleveland Laser Systems, Inc. Ohio - 128 Acme Communications Tech.Sys.Corp. Ohio - 126 ACMS Incorporated Ohio - 112 Air Dry Company of America, LLC Delaware - 58 A.L. Hyde Company Delaware - 62 The Allen Manufacturing Company Delaware Danaher Tool Group 147 American Sigma, Inc. New York - 20 Ammco Tools, Inc. Illinois Hennessy/Ammco 129 Amtronx Inc. Ohio - 54 Anderson Instrument Co., Inc. New York - 5 Armstrong Tools, Inc. Delaware Partlow/Anderson 130 Ball Screws and Actuators Co., Inc. California - 12 Beamco, Inc. Wisconsin - 92 CEI Acquisition Company Delaware Veeder-Root Co. 80 CGF Automation Limited England - 30 Chicago Pneumatic Tool Co. Delaware - 44 Cleveland Precision Systems GmbH Germany - 96 Commercial Avenue Company Delaware - 132 Communications Technology (CN)Ltd. Brit.Colum. - 31 Communications Technology Corp. California - 133 Communications Technology Corp., S.A. Mexico - 81 Contents Measuring Systems Limited England - 117 Cyberex, B.V. Netherlands - 115 Cyberex, LLC Delaware - 116 Cyberex Limited England - 145 Danaher Alberta, Inc. Alberta - 146 Danaher Canada, Inc. Alberta - 1 Danaher Corporation Delaware - 50 Danaher Finance Company Delaware - 90 Data Recorders Incorporated Delaware - 98 DCI Consolidated Industries, Inc. Delaware - 99 Delta Consolidated Industries, Inc. Arkansas - 8 DH Holdings Corp. Delaware - 2 DHR Services, Inc. Delaware - 23 Diesel Engine Retarders, Inc. Delaware - 6 Diversified Mortgage Investors, Inc. Delaware - 3 DMG Plastics, Inc. Delaware - 136 Dolan-Jenner Europe, B.V. Netherlands - 135 Dolan-Jenner Industries, Inc. Mass. - 14 Dynapar Corporation Illinois Danaher Controls 9 Easco Hand Tools, Inc. Delaware Danaher Tool Group 15 Encoders Incorporated Delaware - 101 Exidyne Instrumentation Technologies Pennsylvania - 59 Extrusion Plastics, Inc. Delaware - 134 Fire Networks, Inc. Delaware - 4 FJ 900, Inc. Delaware - 55 Flow Measurement Corporation Delaware - 89 GID Acquisition Company Delaware GID Instruments 76 Gwendolene Holdings Limited England - 10 Hand Tool Design Corporation Delaware - 120 Hecon Industries, Inc. New Jersey - 121 Hecon Properties, Inc. New Jersey - 48 Hengstler Belgium SPRL Belgium - 49 Hengstler Canada, Inc. Ontario - 39 Hengstler Controle Numerique SARL France - 47 Hengstler Espa a, S.A. Spain - 84 Hengstler Flexitime Limited England - 37 Hengstler GmbH Germany - 83 Hengstler Great Britain Limited England - 82 Hengstler Industries Limited England - 46 Hengstler Italia SRL Italy - 45 Hengstler Japan Corp. Japan - 85 Hengstler Leasing Limited England - 51 Hengstler Nederland, B.V. Netherlands - 41 Hengstler Tid och Passage, A.B. Sweden - 18 Hennessy Industries Canada, Inc. Ontario - 16 Hennessy Industries, Inc. Delaware Hennsessy/Ammco 65 Holo-Krome Australia Pty, Ltd. Australia - 61 Holo-Krome Company Delaware - 87 Holo-Krome Limited England - 64 Holo-Krome Uniform Fasteners, Inc. California - 95 Houma Realty Company Delaware - 63 Industrial Fasteners, Inc. Delaware - 24 Jacobs Chuck Manufacturing Company Delaware - 25 Jacobs Chuck Mfg.(Suzhou) Co.Ltd. China - 26 Jacobs Chuck Trading (Shanghai) Co.LtdChina - 27 Jacobs Japan, Inc. Delaware - 86 Jacobs Manufacturing Co. Ltd. England - 22 Jacobs Vehicle Systems, Inc. Delaware - 114 Jennings Land Company Delaware - 113 Jennings Technology Company, LLC Delaware Joslyn Jennings 119 Joslyn Canada, Inc. Ontario - 109 Joslyn Clark Controls, LLC Delaware - 103 Joslyn Company, LLC Delaware - 105 Joslyn Electronic Systems Company, LLCDelaware - 118 Joslyn Foreign Sales Corp. Virgin Is. - 106 Joslyn Hi-Voltage Company, LLC Delaware - 102 Joslyn Holding Company Delaware - 104 Joslyn Manufacturing Co. Delaware - 108 Joslyn Research & Development Corp. Delaware - 111 Joslyn Sunbank Company, LLC Maryland - 107 JPP Corporation Delaware - 97 JS Technology, Inc. Delaware - 38 KACO GmbH Germany - 19 K-D Tools of Canada Ltd. Ontario - 11 K-D Tools of Puerto Rico, Inc. Delaware - 123 Kistler-Morse Corporation Delaware - 72 Launchchange Limited England - 137 LSMT Corp. Michigan - 29 Matco Tools Corporation New Jersey - 122 McCrometer, Inc. Delaware - 31 Mechanics Custom Tools Corporation Delaware - 91 Middle Road Company Delaware - 139 M & M de France, Inc. Ohi - 140 M & M Precision Systems Corp. Ohio - 141 Namco Controls Corporation Ohio - 43 Namco Controls GmbH Germany - 32 NMTC, Inc. Delaware Matco Tools 94 Normandy Court Company Delaware - 13 Old Tide Corp. California - 52 The Partlow Corporation New York Partlow/Anderson 68 Petroleum Industry Controls, Inc. Delaware - 142 Phoenix Microsystems, Inc. Alabama - 77 Piccadilly Precision Engineering Ltd.U.K. - 148 Plastifab, Inc. Canada - 28 Power Tool Holders Incorporated Delaware - 34 Power Transformer Controls Company Delaware - 35 QualiTROL Canada, Inc. Ontario - 33 QualiTROL Corporation New York - 36 QualiTROL GmbH Germany - 79 QualiTROL Instruments Limited England - 66 Quality Wire Processing, Inc. Delaware Danaher Tool Group 88 Relay Park Realisations Ltd. England - 40 SCI Hengstler France - 17 Service Station Products Company Delaware - 78 Spline Gauges Ltd. U.K. - 149 Sullivan Property Holding Company Delaware - 110 Sunbank Family of Companies, LLC Maryland - 57 Swiss Precision Parts Corp. Delaware - 53 Time & Temperature Controls Corp. Delaware - 100 Truck Storage Incorporated Delaware - 144 TxPort Data Inc. Canada - 143 TxPort Inc. Delaware - 7 Utica Holding Company Delaware - 67 Veeder-Root Company Delaware - 70 Veeder-Root do Brasil Brazil - 75 Veeder-Root Environmental Systems Ltd.England - 42 Veeder-Root GmbH Germany - 74 Veeder-Root Limited England - 69 Veeder-Root of N.C., Inc. Delaware Danaher Tool Group 71 Veeder-Root SARL France - 93 Warrick Controls, Inc. Delaware - 73 West Instruments Limited England - 56 Western Pacific Industries, Inc. Delaware Iseli Co. 21 Wheel Service Equipment Corporation Delaware - 60 World Plastic Extruders, Inc. New York - EX-13 4 DANAHER CORPORATION 1996 ANNUAL REPORT SELECTED FINANCIAL DATA (000's omitted except per share data) 1996 1995 1994 1993 1992 Net revenues $1,811,878 $1,486,769 $1,113,973 $937,633 $845,684 Operating profit 226,136 180,257 124,427 87,058 58,899 Earnings from continuing operations 127,959 105,766 72,319 48,030 30,443 Per share 2.13 1.77 1.24 .83 .53 Discontinued operations 79,811 2,550 9,331 5,719 1,158 Per share 1.33 .04 .16 .10 .02 Earnings before cumulative effect of accounting change 207,770 108,316 81,650 53,749 31,601 Per share 3.47 1.81 1.40 .93 .55 Cumulative effect of accounting change* -- -- -- (36,000) -- Per share* -- -- -- (.62) -- Net earnings 207,770 108,316 81,650 17,749 31,601 Earnings per common share 3.47 1.81 1.40 .31 .55 Dividends declared 5,360 4,672 3,710 3,412 -- Dividends per share .09 .08 .065 .06 -- Total assets 1,765,074 1,485,991 1,105,645 872,472 769,815 Total debt 236,327 283,587 185,286 133,585 168,768 * Adoption of accrual method specified by SFAS No. 106 for post retirement benefits. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Danaher Corporation (the "Company") operates a variety of businesses through its wholly-owned subsidiaries. These businesses are conducted in two business segments: Tools and Components and Process/Environmental Controls. In Tools and Components, the Company is the principal manufacturer of Sears, Roebuck and Co.'s Craftsman line, National Automotive Parts Association line, K-D automotive line, and the Matco, Armstrong and Allen lines of mechanics' hand tools. The Company also manufactures Allen wrenches, Jacobs drill chucks and diesel engine retarders, and Coats and Ammco wheel service equipment. In its Process/Environmental Controls segment, the Company is a leading producer of leak detection sensors for underground fuel storage tanks and motion, temperature, pressure, level, flow and power reliability and quality control devices. Presented below is a summary of revenues broken down by business segment (000's omitted). 1996 1995 1994 $ % $ % $ % Tools and Components $1,103,443 60.9% $1,005,005 67.6% $ 809,989 72.7% Process/ Environmental Controls 708,435 39.1 481,764 32.4 303,984 27.3 $1,811,878 100.0% $1,486,769 100.0% $1,113,973 100.0% Tools and Components The Tools and Components segment is comprised of the Danaher Hand Tool Group (including Special Markets and Professional Tools divisions), Matco Tools, Jacobs Chuck Manufacturing Company, Iseli Company, Delta Consolidated Industries, Jacobs Vehicle Systems, Hennessy Industries and the hardware and electrical apparatus lines of Joslyn Manufacturing Company ("JMC"). 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 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. 1996 COMPARED TO 1995 Revenues in this segment increased 10% from 1995. Of this increase, acquisitions accounted for approximately 5%, higher unit volumes accounted for approximately 5% and increased average pricing accounted for less than 1%. Sales levels were benefitted by particularly strong demand in the mobile tool distribution and storage device areas, offset somewhat by decreased demand for diesel engine retarders as North American and Asian heavy truck production decreased in 1996. Operating margins increased from 11.2% to 11.6%. This margin increase reflects the benefits of the higher sales volumes and continued manufacturing process improvements, offset by the full year effect of the lesser margins associated with the hardware and electrical apparatus lines of JMC. 1995 COMPARED TO 1994 Revenues in 1995 were 24% higher than 1994. Acquisitions accounted for 17%, while price increases provided 1% and higher shipment volumes provided 6%. Demand for drill chucks and diesel engine retarders was particularly strong in 1995. Operating profit growth exceeded the sales improvement at 39%, reflecting continued process improvements in the manufacturing operations. The acquired operations of Delta, which were only reflected for one month in 1994 operations, and the hardware and electrical apparatus lines of JMC provided lesser profit margins than the existing business units, partially offsetting the performance improvements. Process/Environmental Controls The Process/Environmental Controls segment is comprised of the Veeder-Root Company, Danaher Controls, Partlow/Anderson Instrument, Gulton Industries-Graphic Instruments, West Instruments, Ltd., Qualitrol Corporation, A.L. Hyde Company, Hengstler, McCrometer, the controls product line business units of Joslyn Corporation and the operating businesses of Acme-Cleveland Corporation (Namco Controls, M&M Precision Systems, TxPort, Inc. and Communications Technology Corporation) acquired in July, 1996. These companies produce and sell underground storage tank leak detection systems and temperature, level and position sensing devices, power switches and controls, communication line products, power protection products, liquid flow measuring devices, telecommunication products, 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 other end users. 1996 COMPARED TO 1995 Revenue growth of 47% in 1996 was largely the result of the full year effect of the September, 1995 Joslyn acquisition and the 1996 Acme-Cleveland acquisition. Acquisitions contributed 44% of the growth, with the balance coming from higher unit volumes of 3% and price increases averaging less than 1%. Demand was very strong in the North American market, which was largely offset by sluggish economic conditions in international markets, particularly in Germany. Operating profit increased 39% from 1995, reflecting the acquired businesses' contributions and a steady overall contribution from the base businesses. 1995 COMPARED TO 1994 Revenues in 1995 were 58% higher than in 1994 in this segment. Business acquisitions in the segment contributed 52% of the increase. Of the remaining increase, higher unit volumes contributed 5% and increased average pricing provided 1%. Demand for underground storage tank monitoring equipment remained strong. Operating margins decreased from 18.6% to 16.8%, entirely due to the impact of the Hengstler and Joslyn acquisitions. Base business showed a modest increase in operating margin. The Hengstler acquisition has significantly increased market position in Europe for the counter and encoder product lines. Discontinued Operations In January, 1996, the Company divested its Fayette Tubular Products subsidiary. As the Company no longer operates in the Transportation business segment, Fayette's operation is shown as a discontinued operation. A gain of approximately $80 million was recognized in the first quarter of 1996. Gross Profit Gross profit margin in 1996 was 31.6%, a 1.5 percentage point improvement compared to 1995. Productivity improvements were achieved in all business segments and a shift in mix to the higher margin products of the acquired companies in the Process/Environmental Controls business segment contributed to the improvement. Gross profit, as a percentage of sales, in 1995 was 30.1%, a 1.2 percentage point increase compared to the 28.9% achieved in 1994. Productivity improvements, combined with increased fixed cost leverage, resulted in margin improvement. A shift in product mix associated with the acquisitions also increased the gross profit margin. Operating Expenses In 1996, selling, general and administrative expenses were 19.1% of sales, an increase of 1.1 percentage points from 1995 levels. This principally reflects the higher operating expense levels of the businesses acquired in 1996 and September, 1995. Selling, general and administrative expenses for 1995 as a percentage of sales were approximately 0.2 percentage points higher than the 1994 level. This reflects higher cost ratios in the businesses acquired. Interest Costs and Financing Transactions The Company debt financing is provided by $100 million in privately placed debt, maturing in April, 2003 at an average interest cost of 7.2%, and a revolving credit facility which provides for senior financing of $250 million for general corporate purposes. The interest rates for borrowing under the facility float with base rates. The Company's financing requirements in these years were satisfied by the financing discussed above and through borrowings under uncommitted lines. Interest expense in 1996 was $9.2 million higher than in 1995 as average borrowing levels increased due to acquisitions. Interest expense in 1995 was 125% higher than in 1994, due to higher average borrowing levels caused primarily by the acquisitions made in the fourth quarter of 1994 and the third quarter of 1995. Income Taxes The 1996 effective tax rate of 39.0% reflects a greater impact of nondeductible amortization resulting from the acquisitions and higher taxes on foreign earnings as loss carryforwards were not available to reduce tax expense in 1996. The effective tax rate decreased 1.4 percentage points in 1995 to 38.9% of pre-tax income. The decrease in 1995 is principally due to a lower effective rate on certain foreign earnings and the utilization of tax carryforwards in foreign jurisdictions which were not previously recognized in earlier years. Inflation The effect of inflation on the Company's operations has been minimal in 1996, 1995, and 1994. Liquidity and Capital Resources The Company acquired Acme-Cleveland Corporation for approximately $200 million in July, 1996 and, in September, 1995, acquired Joslyn Corporation for approximately $245 million in cash consideration. See Note 2 to Consolidated Financial Statements for a further discussion of the impact of these acquisitions. In December, 1995, the Company entered into an agreement to sell its Fayette Tubular Products subsidiary for $155 million in cash consideration. The transaction closed in January, 1996, and the proceeds were used to reduce short-term borrowings. In 1994, the Company acquired Delta Consolidated Industries, Hengstler GmbH, Armstrong Brothers Tool Company and several smaller entities. Aggregate consideration for these transactions was approximately $167 million including approximately $31 million in common stock. These acquisitions had no significant impact on the 1994 results of operations as the larger acquisitions were not completed until the fourth quarter. These entities have combined annual sales levels of $220 million. As discussed previously, $100 million of the Company's debt is fixed at an average interest cost of 7.2%. Substantially all remaining borrowings are short-term in nature and float with referenced base rates. As of December 31, 1996, the Company has unutilized commitments under its revolving credit facility of $250 million. Cash flow has been strong in all periods from 1994 through 1996. Operations generated $217 million, $174 million and $140 million in cash in 1996, 1995, and 1994, respectively. The principal use of funds has been capital expenditures of $51 million, $59 million and $35 million in 1996, 1995 and 1994, respectively and cash paid for acquisitions of $246 million, $208 million and $136 million in 1996, 1995, and 1994, respectively. Cash flow for 1996 included the $155 million proceeds from the Fayette sale. The net result of the above, combined with working capital changes, was a decrease in debt of $48 million in 1996, and increases of $98 million and $52 million in 1995 and 1994. 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. 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, 1996 and 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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, the financial statements referred to above present fairly, in all material respects, the financial position of Danaher Corporation and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Washington, D.C. January 29, 1997 DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (in thousands of dollars, except per share data) Year Ended December 31, 1996 1995 1994 Net revenues.. . . . . . $1,811,878 $1,486,769 $1,113,973 Cost of sales. .. . . . . 1,239,846 1,039,622 791,874 Selling, general and administrative expenses.. . . . . . . . 345,896 266,890 197,672 Total operating expenses.. . . . . . . . 1,585,742 1,306,512 989,546 Operating profit. . . . . 226,136 180,257 124,427 Interest expense. . . .. 16,376 7,198 3,201 Earnings from continuing operations before income taxes . . . . . 209,760 173,059 121,226 Income taxes. . . . . 81,801 67,293 48,907 Earnings from continuing operations . .. . . . 127,959 105,766 72,319 Discontinued operations, net of income taxes of $0, $1,630 and $5,966 (1996 - gain on sale; 1995 and 1994 - earnings from operations). . . . . . . 79,811 2,550 9,331 Net earnings. . . . . . . $ 207,770 $ 108,316 $ 81,650 Per share: Continuing operations $2.13 $1.77 $1.24 Discontinued operations 1.33 .04 .16 Net earnings $3.47 $1.81 1.40 Average common stock and common equivalent shares outstanding. . 59,954,636 59,862,673 58,326,572 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands of dollars) As of December 31, ASSETS 1996 1995 Current assets: Cash and equivalents. . . . . . . . . . $ 26,444 $ 7,938 Trade accounts receivable, less allowance for doubtful accounts of $14,868 and $13,431 . .. . . . . . . . . . . . . . 266,668 224,652 Inventories. . .. . . . . . . . . . . . . 204,236 201,890 Prepaid expenses and other. . . . . . . . 49,393 31,990 Total current assets . . . . . . . . 546,741 466,470 Property, plant and equipment, net. . . . 319,606 291,937 Other assets . . . . . . . . . . . . . . . 105,903 119,444 Excess of cost over net assets of acquired companies, less accumulated amortization of $92,583 and $72,125 . . . . . . . . . 792,824 608,140 $1,765,074 $1,485,991 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable and current portion of debt .$ 16,757 $ 14,970 Trade accounts payable. . . . .. . . . . 110,194 92,290 Accrued expenses. . . . . . . .. . . .. . 347,622 296,878 Total current liabilities. . . . . . 474,573 404,138 Other liabilities. . . . . . . .. . . . . 270,670 226,925 Long-term debt . . . . . . . . . . . . . 219,570 268,617 Stockholders' equity: Common stock, one cent par value; 125,000,000 sharesauthorized; 64,186,673 and 63,406,214 issued; 58,889,067 and 58,503,008 outstanding. 642 634 Additional paid-in capital. . . . . . . 333,587 315,205 Cumulative foreign translation adjustment and other . . . . . . .. . . . . . . 8,858 3,598 Retained earnings. . . . . . .. . . . . . . 506,773 304,363 Treasury stock, at cost; 5,297,606 and 4,903,206 shares.. . . . . . . . . . (49,599) (37,489) Total stockholders' equity. . . . . 800,261 586,311 $1,765,074 $1,485,991 The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets. DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars) Year Ended December 31, 1996 1995 1994 Cash flows from operating activities: Earnings from continuing operations $127,959 $105,766 $ 72,319 Earnings from discontinued operations . - 2,550 9,331 Depreciation and amortization. . . 68,626 58,527 42,554 Increase in accounts receivable. . . (11,818) (20,098) (15,786) (Increase) decrease in inventories. . 38,866 (15,589) (938) Increase in accounts payable. . . . . 10,385 626 8,712 Change in other assets and liabilities. . . . . . . . . . . . (16,904) 42,374 24,162 Total operating cash flows. .. 217,114 174,156 140,354 Cash flows from investing activities: Payments for additions to property, plant and equipment, net (51,255) (59,172) (34,811) Sale of Fayette Tubular Products. . . 155,000 - - Ivestments in equity securities. . . - - (22,032) Net cash paid for acquisitions. . . .(246,427) (207,941) (136,055) Net cash used in investing activities . . . . . . (142,682) (267,113) (192,898) Cash flows from financing activities: Proceeds from issuance of common stock. . . . . . . . . . . 9,507 3,559 992 Dividends paid . . . . . . . . . . (5,065) (4,672) (3,420) Borrowings (repayments) of debt. . . (48,407) 98,301 51,701 Purchase of common stock . . . . . (12,110) - - Net cash provided by (used in) financing activities. . . . . (56,075) 97,188 49,273 Effect of exchange rate changes on cash. .. . . . . . . . . . 149 108 269 Net change in cash and equivalents. . . . . . . . . . . 18,506 4,339 (3,002) Beginning balance of cash and equivalents. . . . . . . . . . 7,938 3,599 6,601 Ending balance of cash and equivalents . . . . . . . . . . $ 26,444 $ 7,938 $ 3,599 Supplemental disclosures: Cash interest payments. . . . $ 16,981 $ 13,699 $ 9,505 Cash income tax payments .. $ 80,152 $ 69,853 $ 65,837 Common stock issued for acquisitions . .. . . . . . $ 8,883 $ - $ 31,131 The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands of dollars) Cumulative Foreign Additional Translation Common Stock Paid-in Retained Treasury Adjustment Shares Amount Capital Earnings Stock and Other Balance, January 1,1994. 61,800,328 $ 309 $279,532 $123,095 $(37,489)$(1,781) Net earnings for the year.. - - - 81,650 - - Dividends declared. . . . - - - (3,710) - - Common stock issued for options exercised. . . . 58,774 - 992 - - - Common stock issued for acquisitions . . . . . 1,339,106 7 31,124 - - - Two-for-one common stock split . . . . . . . . . . - 316 - (316) - - Increase from translation of foreign financial statements. - - - - - 2,371 Balance, December 31, 1994 63,198,208 632 311,648 200,719 (37,489) 590 Net earnings for the year. - - - 108,316 - - Dividends declared. . . . . - - - (4,672) - - Common stock issued for options exercised. . . . 208,006 2 3,557 - - Increase from translation of foreign financial statements. - - - - - 3,008 Balance, December 31, 1995 63,406,214 634 315,205 304,363 (37,489) 3,598 Net earnings for the year.. - - - 207,770 - - Dividends declared. .. .. - - - - (5360) - - Common stock issued for options exercised. . . . 483,233 5 9,502 - - - Purchase of common stock .. - - - (12,110) - Unrealized gain on securities held. . . . . . .. . . . . - - - - - 4,000 Common stock issued for acquisitions. . . . . . . . 297,226 3 8,880 - - - Increase from translation of foreign financial statements - - - - - 1,260 Balance, December 31,1996 64,186,673 $642 $333,587 $506,773 $(49,599) $8,858 The accompanying Notes to Consolidated Financial Statements are an integral part of these 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. Preparation of these consolidated financial statements necessarily includes the use of management's 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, equity securities, noncurrent trade receivables and capitalized costs associated with obtaining financings which are being amortized over the term of the related debt. Available for sale equity securities with a cost of approximately $6.6 million have been shown at their fair market value as of December 31, 1996. This $4 million unrealized gain has been reflected as a component of stockholders' equity. No realized gains or losses are reflected in any of the years presented. 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. $20,458,000, $14,482,000 and $9,765,000 of amortization was charged to expense for the years ended December 31, 1996, 1995, and 1994, 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. No impairment losses have been recognized in any of the periods presented. 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 separate component of 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 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 earnings per share is based on the weighted average number of common shares and common stock equivalents outstanding during the year. Discontinued Operations - In January, 1996, the Fayette Tubular Products subsidiary was sold for approximately $155 million. The Company no longer operates in the Transportation business segment, and hence prior periods have been restated to reflect Fayette as a discontinued operation. A gain of approximately $80 million was recognized in 1996. Net revenues for Fayette were $155 million in 1995 and $175 million in 1994. Net assets reflected in prepaid expenses and other and in other assets were $48 million as of December 31, 1995. (2) Acquisitions: The Company obtained control of Acme-Cleveland Corporation (Acme) as of July 2, 1996. Total consideration for Acme was approximately $200 million. The fair value of assets acquired is approximately $240 million, including $140 million of excess cost over net assets acquired, and approximately $40 million of liabilities were assumed. The transaction is being accounted for as a purchase. The purchase price allocations have been completed on a preliminary basis, subject to adjustment should new or additional facts about the business become known. The Company obtained control of Joslyn Corporation (Joslyn) as of September 1, 1995 when Joslyn's shareholders tendered approximately 75% of the outstanding shares to the Company for $34 per share in cash. The remaining 25% was acquired in October, 1995. Total consideration for Joslyn was approximately $245 million. The fair value of assets acquired was approximately $345 million, including $180 million of excess of cost over net assets acquired, and approximately $100 million of liabilities were assumed. The transaction was accounted for as a step acquisition purchase. Results of operations reflect a minority interest elimination for the two- month period between the change in control and the merger of Joslyn. The unaudited pro forma information for the periods set forth below give effect to these transactions as if they had occurred at the beginning of each 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 acquisitions been consummated as of that time (unaudited, 000's omitted): Year Ended December 31, December 31, 1996 1995 Net Sales .. . . . . . . . . . $ 1,885,700 $ 1,767,154 Net Earnings from continuing operations . . . . . . .. . . 129,197 111,838 Earnings per share from continuing operations . . . . . . . . . . . $ 2.15 $ 1.87 In 1994, the Company acquired Delta Consolidated Industries, Hengstler GmbH, Armstrong Brothers Tool Company and several smaller entities. Aggregate consideration for these transactions was approximately $167 million, consisting of $136 million in cash and $31 million in common stock. The fair value of the assets acquired was approximately $240 million and approximately $73 million of liabilities were assumed in these acquisitions. The transactions have been accounted for as purchases. These acquisitions had no significant impact on 1994 results of operations as the larger acquisitions were not completed until the fourth quarter. These entities have combined annual sales levels of approximately $220 million. (3) Inventory: The major classes of inventory are summarized as follows (000's omitted): December 31, 1996 December 31, 1995 Finished goods. . . . . . $ 88,083 $ 89,932 Work in process. . . . . . 49,681 51,904 Raw material . . . . . . . 66,472 60,054 $ 204,236 $ 201,890 If the first-in, first-out (FIFO) method had been used for inventories valued at LIFO cost, such inventories would have been $10,959,000 and $12,167,000 higher at December 31, 1996 and 1995, respectively. (4) Property, Plant and Equipment: The major classes of property, plant and equipment are summarized as follows (000's omitted): December 31, 1996 December 31, 1995 Land and improvements . . . $ 17,457 $ 15,015 Buildings . . . . . .. . . 107,343 93,312 Machinery and equipment. . . . . 413,636 352,176 538,436 460,503 Less accumulated depreciation.. (218,830) (168,566) Property, plant and equipment..$ 319,606 $ 291,937 (5) Financing: Financing consists of the following (000's omitted): December 31, 1996 December 31, 1995 Notes payable . . . . . $100,600 $115,300 Other . . . . . . . . . . 135,727 168,287 236,327 283,587 Less-currently payable.. . 16,757 14,970 $219,570 $268,617 The Notes had an original average life of approximately 6.5 years and an average interest cost of 7.2%. Principal amortization began in December 1995 and continues through April 2003. The estimated fair value of the Notes was $101 million and $120 million as of December 31, 1996 and 1995. Other includes principally short-term borrowings under uncommitted lines of credit which are payable upon demand. The carrying amount approximates fair value. The Company 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 and the revolving credit facility. The facility provides funds for general corporate purposes at an interest rate of LIBOR plus .125%. The weighted average interest rate was 5.8%, 6.0% and 5.1% for each of the three years ended December 31, 1996. Weighted average borrowings under the bank facility were $-0-, $5,000,000 and $2,986,000 for the years ended December 31, 1996, 1995 and 1994. Maximum amounts outstanding for these years were $-0-, $60,000,000 and $33,525,000 respectively. The Company is charged a fee of .075% per annum for the facility. Commitment and facility fees of $234,000, $216,000 and $258,000 were incurred in 1996, 1995 and 1994. Interest expense of $7,150,000 and $6,112,000 is included in discontinued operations for the years ended December 31, 1995 and 1994. The minimum principal payments during the next five years are as follows: 1997 - $16,757,000; 1998 - $14,835,000; 1999 - $41,335,000; 2000 - $135,000; 2001 - $132,860,000; and $30,405,000 thereafter. (6) Accrued Expenses and Other Liabilities: Selected accrued expenses and other liabilities include the following (000's omitted): December 31, 1996 December 31, 1995 Employee compensation . . . . $ 77,402 $ 60,655 Insurance, including self insurance . . . . . .. . . . 58,364 49,961 Post retirement benefits. . . 76,819 76,844 Environmental compliance . . . 82,591 88,212 Approximately $21 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. The following sets forth the funded status of the plans as of the most recent actuarial valuations (000's omitted): 1996 1995 Assets Exceed Accumulated Assets Exceed Accumulated Accumulated Benefits Accumulated Benefits Benefits Exceed Assets Benefits Exceed Assets Actuarial present value of benefit obligations: Vested benefit obligation.. $56,216 $55,587 $58,595 $57,042 Accumulated benefit obligation. . . . . . . . 57,637 58,371 59,516 59,649 Projected benefit obligation 57,650 58,371 59,516 59,649 Fair value of plan assets (consisting of stocks, bonds and temporary cash investments).. . . . . . . 79,226 55,040 72,969 56,240 Projected benefit obligation (in excess of) or less than plan assets. . . . . . . . . 21,576 (3,331) 13,453 (3,409) Unrecognized net (gain)loss .(14,360) 4,257 (4,120) 2,919 Unrecognized net asset. . . . (487) (1,129) (605) (1,269) Pension (liability) prepaid recognized in the balance sheet. . . . . . . . . . . .$ 6,729 $ (203) $ 8,728 $(1,759) The expected long-term rate of return on plan assets was 10%. The discount rate used in determining pension cost and benefit obligations was 7.5% at January 1, 1996 and December 31, 1996. 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 $16,754,000, $11,870,000 and $8,677,000 for the years ended December 31, 1996, 1995 and 1994, respectively. In addition to providing pension benefits, the Company provides certain healthcare and life insurance benefits for some of its retired employees. Certain employees may become eligible for these benefits as they reach normal retirement age while working for the Company. Post retirement benefits cost included the following components (000's omitted): 1996 1995 1994 Service cost . . . . . . . .$ 536 $ 298 $ 256 Interest cost . . . . . . . . 4,295 4,734 3,995 $4,831 $5,032 $4,251 The following sets forth the program's funded status (000's omitted): December 31, 1996 December 31, 1995 Accumulated Post Retirement Benefit Obligation (APBO): Retirees. . . . . . . . $52,387 $52,788 Fully eligible active participants. . . . .. . 10,563 10,840 Other active participants. 9,243 11,265 Total APBO . . . . . . . . 72,193 74,893 Net Gains . . . . . . . . . . 4,626 1,951 Plan assets . .. . . . . . . - - Accrued Liability . . . . . $76,819 $76,844 A 10% annual rate of increase in per capita costs of covered healthcare benefits was assumed for 1997, decreasing to 6% by 2002. A 1% increase in the assumed cost trend assumption would increase the APBO by $7.2 million and would have increased 1996 costs by approximately $600,000. A discount rate of 7.5% was used to determine both Plan costs and the APBO as of December 31, 1995 and 1996. (8) Stock Transactions: The Company has adopted a non-qualified stock option plan for which it is authorized to grant options to purchase up to 5,000,000 shares. Under the plan, options are granted at not less than 85% of existing market prices, expire ten years from the date of grant and generally vest ratably over a five-year period. An option to acquire 1,000,000 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 Outstanding at January 1, 1994 3,045,376 Granted (average $23.06 per share) 456,100 Exercised (average $8.38 per share) (58,774) Cancelled (41,600) Outstanding at December 31, 1994 3,401,102 Granted (average $30.71 per share) 383,300 Exercised (average $9.54 per share) (208,006) Cancelled (136,520) Outstanding at December 31, 1995 (average $14.23 per share) 3,439,876 Granted (average $37.61 per share) 887,100 Exercised (average $7.76 per share) (483,233) Cancelled (188,508) Outstanding at December 31, 1996 (at $5.94 to $45.63 per share, average $20.35 per share) 3,655,235 As of December 31, 1996, options with a weighted average remaining life of 6.9 years covering 1,920,000 shares were exercisable at $5.94 to $32.63 per share (average $12.48 per share) and options covering 949,284 shares remain available to be granted. 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 7% risk-free interest rate, a 10-year life for the option, a 15% expected volatility and dividends at the current annual rate. The weighted average grant date fair market value of options issued was approximately $13 per share in 1995 and $15 per share in 1996. Had this method been used in the determination of income for 1996, net income would have decreased by approximately $1.4 million and earnings per share would have decreased by $.02. Since this amount represents only the proforma effect of options granted since January 1, 1995, there was only a negligible impact on reported net income for 1995, and the 1995 and 1996 proforma amounts are not likely to be representative of the effects on proforma net income 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 $14,215,000 in 1997, $11,836,000 in 1998, $8,184,000 in 1999, $4,682,000 in 2000, $4,106,000 in 2001 and $10,762,000 thereafter. Total rent expense charged to income for all operating leases was $16,009,000, $16,067,000 and $8,947,000 for the years ended December 31, 1996, 1995, and 1994, respectively. (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 cases are in preliminary stages of discovery and pleading and the Company intends to defend its position vigorously. The Company's maximum indemnification obligation under the contract is approximately $85,000,000. The Company believes it has insurance coverage for all or a substantial part of the damages, if any. The outcome of this litigation is not currently predictable. 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. JMC is a defendant in a class action tort suit. The suit alleges exposure to chemicals, allegedly causing various physical injuries, and property devaluation resulting from wood treating operations previously conducted at a Louisiana site. The size of the class, the number of injuries related to the alleged exposures and the amount of alleged damages are all disputed and uncertain. The Company has tendered the defense of the suit to its insurance carrier. The Company believes that it may have adequate insurance coverage for the litigation; however, because of the above uncertainties, the Company is unable to determine at this time the potential liability, if any. 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): 1996 1995 1994 Federal. .. . . . . . . . . $69,357 $56,308 $40,297 State and local.. . . . . . 5,284 6,815 5,400 Foreign. . . . .. . . . . . 7,160 4,170 3,210 $81,801 $67,293 $48,907 Income tax expense currently payable was $74,908,000, $73,225,000 and $70,865,000 for the years ended December 31, 1996, 1995 and 1994, respectively. Deferred income taxes are reflected in prepaid expenses and other current assets and in other assets. Deferred tax assets (the valuation allowances relate to foreign jurisdictions where operating loss carryforwards exist) consist of the following (000's omitted): December 31, 1996 1995 Bad debt allowance . . . . . . . . . . . $ 5,505 $ 4,681 Inventories . . . . . . . . . . . . . . (171) (926) Property, plant and equipment . . . . . . (29,100) (25,395) Post retirement benefits. . . . . . . . . 30,552 28,405 Insurance, including self insurance . . . 18,920 18,486 Environmental compliance . .. . . . . . . 28,102 32,638 Other accruals . . . . . . . . . . . . . . 42,559 35,603 All other accounts . . . . . . . . . . . . (4,793) (3,840) Operating loss carryforwards . . . . . . . 8,265 7,000 Gross deferred tax asset . . . . . . . . . 99,839 96,652 Valuation allowances.. . . . . . . . . . (8,265) (7,000) Net deferred tax asset . . . . . . . . . .$ 91,574 $ 89,652 The effective income tax rate for the years ended December 31 varies from the statutory Federal income tax rate as follows: Percentage of Pre-Tax Earnings 1996 1995 1994 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. . . . 3.4 2.9 2.8 State income taxes (net of Federal income tax benefit).. . . . . . . . . 1.6 2.6 2.9 Taxes on foreign earnings. . . . . . (1.0) (1.6) (0.4) Effective income tax rate. .. . . . 39.0% 38.9% 40.3% (12) Segment Data: The Company operates within two major business segments: Tools and Components, and Process/Environmental Controls. The Tools and Components segment has a customer which accounted for approximately 14%, 16% and 21% of total sales in 1996, 1995 and 1994, respectively. Operating profit represents total revenues less operating expenses, excluding interest and taxes on income. The identifiable assets by segment are those used in each segment's operations. Intersegment amounts are eliminated to arrive at consolidated totals. The detail segment data is presented in the following table (000's omitted): Operations in Different Industries - Year Ended December 31, 1996 1995 1994 Total Revenues: Tools and Components $1,103,443 $1,005,005 $ 809,989 Process/Environmental Controls 708,435 481,764 303,984 $1,811,878 $1,486,769 $1,113,973 Operating Profit: Tools and Components $ 128,118 $ 112,981 $ 81,463 Process/Environmental Controls 112,243 80,804 56,632 Other (14,225) (13,528) (13,668) $ 226,136 $ 180,257 $ 124,427 Identifiable Assets: Tools and Components $ 861,345 $ 821,604 $ 687,908 Process/Environmental Controls 849,199 599,466 340,952 Other 54,530 64,921 76,785 $1,765,074 $1,485,991 $1,105,645 Depreciation and Amortization: Tools and Components $ 40,237 $ 35,211 $ 32,220 Process/Environmental Controls 28,389 23,316 10,334 $ 68,626 $ 58,527 $ 42,554 Capital Expenditures: Tools and Components $ 31,346 $ 48,500 $ 40,392 Process/Environmental Controls 19,909 10,672 8,348 Sales of Fixed Assets - - (13,929) $ 51,255 $ 59,172 $ 34,811 Operations in Geographical Areas - Year Ended December 31, 1996 1995 1994 Total Revenues: United States. . . . . . $1,565,110 $1,235,933 $1,004,697 Europe .. . .. . . . . . 205,416 205,228 77,126 Other. . . . . . . . . . 41,352 45,608 32,150 $1,811,878 $1,486,769 $1,113,973 Operating Profit: United States. .. . . . $ 207,433 $ 156,170 $ 115,589 Europe . . . . . . . . . 15,107 20,348 7,179 Other. . . . . . . . . . 3,596 3,739 1,659 $ 226,136 $ 180,257 $ 124,427 Identifiable Assets: United States. . . . . . $1,552,665 $1,292,166 $1,029,825 Europe . . . . . . . . . 188,660 173,949 62,833 Other. . . . . . . . . . 23,749 19,876 12,987 $1,765,074 $1,485,991 $1,105,645 Export sales were approximately $144 million, $107 million and $91 million for the years ended December 31, 1996, 1995 and 1994. (13) Quarterly Data-Unaudited (000's omitted except per share data) 1996 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Net revenues. . . $409,557 $434,897 $470,787 $496,637 Gross profit. . . 124,293 137,988 149,021 160,730 Operating profit. 47,128 56,302 60,293 62,413 Earnings from continuing operations 26,928 32,525 33,577 34,929 Gain on sale from discontinued operations . . . . . 79,811 - - - Net earnings. . . . . 106,739 32,525 33,577 34,929 Earnings per share: Continuing operations $ .45 $ .54 $ .56 $ .58 Discontinued operations 1.34 - - - Net earnings $1.79 $ .54 $ .56 $ .58 1995 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Net revenues. . . .. . $335,982 $351,891 $368,724 $430,172 Gross profit. .. . . . 96,707 107,967 111,110 131,363 Operating profit. . . . 36,838 45,709 47,094 50,616 Earnings from continuing operations. . . . . . 21,412 26,640 28,348 29,366 Earnings from discontinued operations 436 580 452 1,082 Net earnings. . .. . . . 21,848 27,220 28,800 30,448 Earnings per share: Continuing operations $ .36 $ .45 $ .47 $ .49 Discontinued operations .01 .01 .01 .02 Net earnings $ .37 $ .45 $ .48 $ .51 Danaher Corporation and Subsidiaries Operating Executives A.L. Hyde Company Richard L. Garthwaite President American Sigma, Inc. William G. Hungerford President Communications Technology Corporation Alan G. Hutcheson President Cyberex, Inc. Gus Stevens President Danaher Controls James W. Appelgren President Danaher Tool Group Professional Tools Division Steven E. Simms President Danaher Tool Group Special Markets Division Thomas R. Sulentic President Delta Consolidated Industries Thomas P. Joyce, Jr. President Gulton-Graphic Instruments William J. Butler President Hengstler GmbH Hermann E. Braun President Hennessy Industries, Inc. Steven E. Simms Acting President Jacobs Chuck Manu- facturing Company Dennis D. Claramunt President Jacobs Vehicle Systems, Inc. Gregory T.H. Davies President Jennings Technology Corporation John P. Williamson President Joslyn Electronic Systems Corporation S. Keith Swanson President Joslyn Hi-Voltage Corporation James F. Domo President Joslyn Manufacturing Company Gary P. Prasser President Joslyn Sunbank Corporation P. Edward Prutzman President Matco Tools Corporation Thomas N. Willis President M&M Precision Systems Corporation James E. Helton President Namco Controls Corporation Alex A. Joseph President Partlow Corporation Lawrence C. Curtis President Qualitrol Corporation Alex A. Joseph Acting President TxPort, Inc. Mark H. Hoffman President Veeder-Root Company H. Lawrence Culp, Jr. President Officers and Senior Executives George M. Sherman President and Chief Executive Officer Patrick W. Allender Senior Vice President, Chief Financial Officer and Secretary C. Scott Brannan Vice President - Administration and Controller Dennis D. Claramunt Vice President and Group Executive Daniel L. Comas Vice President - Corporate Development H. Lawrence Culp, Jr. Vice President and Group Executive Gregory T.H. Davies Vice President and Group Executive Mark C. DeLuzio Vice President - Danaher Business System James H. Ditkoff Vice President - Finance & Tax Steven E. Simms Vice President and Group Executive John P. Watson Vice President and Group Executive 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 Partner Equity Group Holdings Chairman of the Executive Committee Danaher Corporation Steven M. Rales Partner Equity Group Holdings Chairman of the Board Danaher Corporation George M. Sherman President and Chief Executive Officer Danaher Corporation A. Emmet Stephenson, Jr. President Stephenson and Company Auditors Arthur Andersen LLP Washington, D.C. Shareholders' Information Shareholder requests for information or assistance, please write or call our corporate office. Danaher Corporation c/o Investor Relations 1250 24th Street, N.W. Suite 800 Washington, D.C. 20037 (202) 828-0850 Internet Address: http://www.danaher.com Stock Listing Symbol: DHR New York and Pacific Stock Exchanges Transfer Agent ChaseMellon Shareholder Services, LLC Pittsburgh, Pennsylvania 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 1996 1995 High Low High Low First Quarter . . . . . 37 1/4 29 1/2 29 7/8 24 1/4 Second Quarter . . .. . 43 1/2 36 1/8 32 26 3/8 Third Quarter. . . .. . 43 1/8 36 1/8 34 3/8 30 1/4 Fourth Quarter. . .. . 46 5/8 40 1/2 33 1/4 30 1/4 High and low per share data are as quoted on the New York Stock Exchange. -----END PRIVACY-ENHANCED MESSAGE-----