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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