Danaher Reports Fourth Quarter and Full Year 2008 Results

WASHINGTON, Jan. 26 /PRNewswire-FirstCall/ — Danaher Corporation (NYSE: DHR) announced results for the fourth quarter and year ended December 31, 2008. Net earnings for the fourth quarter were $305.7 million, or $0.92 per diluted share. Included in the fourth quarter results are certain non-cash charges related to the acquisition of Tektronix for fair value adjustments to recorded inventory and deferred revenue which reduced net earnings by approximately $5 million or $0.01 per diluted share, as well as after-tax charges of approximately $62 million or $0.18 per diluted share related to previously announced restructuring activities. Absent these two items, adjusted earnings per diluted share was $1.11, essentially flat versus last year’s adjusted earnings per diluted share from continuing operations of $1.12.

Sales from continuing operations for the 2008 fourth quarter were $3.18 billion, 1% higher than the $3.14 billion reported for the 2007 fourth quarter.

Net earnings for the full year 2008 were $1.3 billion, or $3.95 per diluted share. Included in the full year 2008 earnings per diluted share are the fourth quarter 2008 items noted above, as well as the non-cash charges recorded in the first three quarters of 2008 related to the acquisition of Tektronix for fair value adjustments to recorded inventory and deferred revenue which reduced net earnings by approximately $0.12 per diluted share and gains from the net reduction in income tax reserves and discrete tax benefits of approximately $0.03 per diluted share. Absent these items, adjusted earnings per diluted share were $4.23, an increase of 10.5% compared to the 2007 full year adjusted earnings per diluted share from continuing operations of $3.83.

Sales from continuing operations for 2008 were $12.7 billion compared to $11 billion for 2007, an increase of 15%.

Attached is a reconciliation of adjusted diluted net earnings per share from continuing operations to diluted net earnings per share from continuing operations calculated according to GAAP, for the three and twelve month periods ended December 31, 2008 and the comparable prior year periods.

H. Lawrence Culp, Jr., President and Chief Executive Officer, stated, “The dramatic downturn in the global economy in the latter part of 2008 negatively impacted a number of our businesses, our end markets and our customers. In spite of these unprecedented headwinds we were able to deliver a solid 2008 performance. Core revenues decreased 1% in the quarter and increased 2.5% for the full year. Operating cash flow from continuing operations in 2008 was a record $1.9 billion, representing a 9.5% increase over our record 2007 performance. While we expect 2009 to be a difficult year, we believe our solid portfolio of businesses, our strong balance sheet and the Danaher Business System will provide our experienced team the opportunity to outperform.”

Danaher Corporation is a leading manufacturer of Professional Instrumentation, Medical Technologies, Industrial Technologies, and Tools and Components (www.danaher.com).

Statements in this release that are not strictly historical, including the statements regarding expectations for 2009 and any other statements regarding events or developments that we believe or anticipate will or may occur in the future, may be “forward-looking” statements. There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements. These factors include, among other things, the current economic recession and the upheaval in the credit markets and financial services industry, competition, our ability to develop and successfully market new products and technologies, our ability to expand our business in new markets, our ability to identify, consummate and integrate appropriate acquisitions, litigation and other contingent liabilities including intellectual property and environmental matters, our compliance with applicable laws and regulations and changes in applicable laws and regulations, tax audits and changes in our tax rate, currency exchange rates, commodity costs and surcharges, our relationships with and the performance of our channel partners, our ability to achieve projected efficiencies, cost reductions, sales growth and earnings, economic and other conditions in the end-markets we sell into, and general domestic and international economic conditions. Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2007 Annual Report on Form 10-K and Third Quarter 2008 Quarterly Report on Form 10-Q. These forward-looking statements speak only as of the date of this release and the Company does not assume any obligation or intend to update any forward-looking statement.



                       DANAHER CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS

    ($ in thousands, except per share amounts)

                              Three Months Ended           Year Ended
                              12/31/08   12/31/07     12/31/08    12/31/07

    Sales                   $3,176,506 $3,141,177  $12,697,456 $11,025,917

    Operating costs and
     expenses:
        Cost of sales        1,724,897  1,690,647    6,757,262   5,985,022
        Selling, general
         and administrative
         expenses              860,491    769,178    3,345,274   2,713,097
        Research and
         development expenses  167,467    216,582      725,443     601,424
        Other (income) expense       -          -            -     (14,335)
            Total operating
             expenses        2,752,855  2,676,407   10,827,979   9,285,208

    Operating profit           423,651    464,770    1,869,477   1,740,709
         Interest expense      (25,433)   (32,793)    (130,174)   (109,702)
         Interest income         4,000      2,735       10,004       6,092

    Earnings from
     continuing
     operations before
     income taxes              402,218    434,712    1,749,307   1,637,099

    Income taxes               (96,532)  (114,487)    (431,676)   (423,101)

    Earnings from
     continuing operations     305,686    320,225    1,317,631   1,213,998

    Earnings from
     discontinued operations,
     net of income taxes             -          -            -     155,906

    Net earnings              $305,686   $320,225   $1,317,631  $1,369,904

    Earnings per share from
     continuing operations:
          Basic                  $0.96      $1.02        $4.13       $3.90
          Diluted                $0.92      $0.97        $3.95       $3.72

    Earnings per share from
     discontinued operations:
          Basic                      -          -            -        $0.50
          Diluted                    -          -            -        $0.47

    Net earnings per share:
          Basic                  $0.96      $1.02        $4.13       $4.40
          Diluted                $0.92      $0.97        $3.95       $4.19

    Average common stock and
     common equivalent
     shares outstanding:
          Basic                319,523    315,437      319,361     311,225
          Diluted              333,593    334,013      335,863     329,459


    This information is presented for reference only.  Final audited financial
    statements will include footnotes, which should be referenced when
    available, to more fully understand the contents of this information.



                         DANAHER CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS

    As of December 31 ($and shares in thousands)

    ASSETS                                              2008         2007

    Current Assets:
         Cash and equivalents                         $392,854     $239,108
         Trade accounts receivable, less allowance
          for doubtful accounts of $120,730 and
          $108,781, respectively
                                                     1,894,585    1,984,384
         Inventories                                 1,142,309    1,193,615
         Prepaid expenses and other current assets     757,371      632,660
             Total current assets                    4,187,119    4,049,767

        Property, plant and equipment, net           1,108,653    1,108,634
    Other assets                                       432,257      507,550
    Goodwill                                         9,210,581    9,241,011
    Other intangible assets, net                     2,519,422    2,564,973

         Total assets                              $17,458,032  $17,471,935

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current Liabilities:
           Notes payable and current portion of
            long-term debt                             $66,159     $330,480
        Trade accounts payable                       1,108,961    1,125,600
        Accrued expenses and other liabilities       1,534,575    1,443,773
           Total current liabilities                 2,709,695    2,899,853

    Other long-term liabilities                      2,386,605    2,090,630
    Long-term debt                                   2,553,170    3,395,764
    Stockholders' equity:
        Common stock - $0.01 par value, 1 billion
         shares authorized; 354,487 and 352,608
         issued; 318,380 and 317,984 outstanding,
         respectively                                    3,544        3,526
        Additional paid-in capital                   1,812,963    1,718,716
        Retained earnings                            8,095,155    6,820,756
        Accumulated other comprehensive income        (103,100)     542,690
           Total stockholders' equity                9,808,562    9,085,688

        Total liabilities and stockholders' equity $17,458,032  $17,471,935


    This information is presented for reference only.  Final audited financial
    statements will include footnotes, which should be referenced when
    available, to more fully understand the contents of this information.



                       DANAHER CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS

    Year Ended December 31 ($ in thousands)

                                                         2008        2007
     Cash flows from operating activities:
        Net earnings                                 $1,317,631  $1,369,904
        Less: earnings from discontinued
         operations, net of tax                               -     155,906
        Net earnings from continuing operations       1,317,631   1,213,998
        Non-cash items, net of the effect of
         discontinued operations:
        Depreciation                                    193,997     173,942
        Amortization                                    145,290      94,550
        Stock compensation expense                       86,000      73,347
        Change in deferred income taxes                  27,691      29,870
        Change in trade accounts receivable, net         71,403     (72,555)
        Change in inventories                            33,119      38,094
        Change in accounts payable                        3,713     103,800
        Change in prepaid expenses and other
         assets                                          (4,773)     38,601
        Change in accrued expenses and other
         liabilities                                    (15,042)      5,661
         Total operating cash flows from continuing
          operations                                  1,859,029   1,699,308
         Total operating cash flows from
          discontinued operations                             -     (53,533)
       Net cash flows from operating activities       1,859,029   1,645,775

     Cash flows from investing activities:
       Payments for additions to property, plant
        and equipment                                  (193,783)   (162,071)
       Proceeds from disposals of property, plant
        and equipment                                     1,088      15,537
       Cash paid for acquisitions                      (423,208) (3,576,562)
       Cash paid for investment in acquisition
        target and other marketable securities                -     (23,219)
       Proceeds from sale of investment and
        divestitures                                          -     301,278
       Proceeds from refundable escrowed purchase
        price                                            48,504           -
         Total investing cash flows from continuing
          operations                                   (567,399) (3,445,037)
         Total investing cash flows from
          discontinued operations                             -        (722)
           Net cash used in investing activities       (567,399) (3,445,759)

     Cash flows from financing activities:
        Proceeds from issuance of common stock           82,430     733,028
        Payment of dividends                            (38,259)    (34,275)
        Purchase of treasury stock                      (74,165)   (117,486)
        Net (repayments) proceeds of borrowings
         (maturities of 90 days or less)               (905,567)    647,761
        Proceeds of borrowings (maturities longer
         than 90 days)                                   72,652     493,705
        Repayments of borrowings (maturities
         longer than 90 days)                          (259,344)    (10,563)
           Net cash (used in) generated by financing
            activities                               (1,122,253)  1,712,170

     Effect of exchange rate changes on cash
      and equivalents                                   (15,631)      9,112
              Net change in cash and equivalents        153,746     (78,702)

     Beginning balance of cash and equivalents          239,108     317,810
     Ending balance of cash and equivalents            $392,854    $239,108



    This information is presented for reference only.  Final audited financial
    statements will include footnotes, which should be referenced when
    available, to more fully understand the contents of this information.



                        DANAHER CORPORATION AND SUBSIDIARIES
                               SEGMENT INFORMATION

    ($ in thousands, unaudited)

    Sales                   Three Months Ended             Year Ended
                           12/31/08     12/31/07      12/31/08    12/31/07
    Professional
     Instrumentation     $1,243,949   $1,097,511    $4,860,764  $3,537,912
    Medical
     Technologies           843,820      866,311     3,277,026   2,997,986
    Industrial
     Technologies           777,932      812,435     3,265,451   3,153,377
    Tools & Components      310,805      364,920     1,294,215   1,336,642

                         $3,176,506   $3,141,177   $12,697,456 $11,025,917

    Operating Profit

    Professional
     Instrumentation       $221,960     $175,227      $907,254    $709,502
    Medical
     Technologies            90,134      132,863       370,473     393,230
    Industrial
     Technologies           106,569      132,046       522,112     532,477
    Tools & Components       30,343       43,211       157,673     175,634
    Other                   (25,355)     (18,577)      (88,035)    (70,134)

                           $423,651     $464,770    $1,869,477  $1,740,709

    Operating Margins

    Professional
     Instrumentation          17.8%        16.0%         18.7%       20.1%
    Medical
     Technologies             10.7%        15.3%         11.3%       13.1%
    Industrial
     Technologies             13.7%        16.3%         16.0%       16.9%
    Tools & Components         9.8%        11.8%         12.2%       13.1%

    Total                     13.3%        14.8%         14.7%       15.8%



    Restructuring & Other
     Related Charges

    Professional
     Instrumentation        $28,813            -       $28,813           -
    Medical
     Technologies            26,081            -        26,081           -
    Industrial
     Technologies            23,093            -        23,093           -
    Tools & Components        3,978            -         3,978           -

    Total                   $81,965            -       $81,965           -


    Restructuring Cost
     Classification
    Cost of sales           $33,130            -       $33,130           -
    Selling, general and
     administrative expenses 48,835            -        48,835           -

                            $81,965            -       $81,965           -


    This information is presented for reference only.  Final audited financial
    statements will include footnotes, which should be referenced when
    available, to more fully understand the contents of this information



    Danaher Corporation
    Supplemental Reconciliation of Net Earnings from Continuing Operations and
    Diluted Net Earnings Per Share from Continuing Operations (GAAP) to
    Adjusted Net Earnings from Continuing Operations and Adjusted Diluted Net
    Earnings Per Share from Continuing Operations (Non-GAAP)

    Three Months and Years Ended December 31, 2008 and December 31, 2007
    ($in 000's except per share data)

                  Three Months Ended               Years Ended
                  December  December       %    December  December       %
                  31, 2008  31, 2007    Change  31, 2008  31, 2007    Change

    Net Earnings
     from
     Continuing
     Operations
     per GAAP     $305,686  $320,225    -4.5% $1,317,631 $1,213,998     8.5%

    After-tax
     charges for
     purchased
     in-process
     research and
     development
     and fair value
     adjustments
     to recorded
     inventory
     and deferred
     revenue
     balances
     related to the
     acquisition
     of Tektronix
     ($6.9 million
     & $59.5 million
     pre-tax for
     the three months
     and year ended
     December 31,
     2007)           5,150    66,000              44,465     66,000

    After-tax
     charge
     related to
     fourth
     quarter 2008
     restructuring
     actions and
     related charges
     ($82.0 million
     pre-tax).      61,500         -              61,500          -

    Gains from net
     reduction in
     income tax
     reserves and
     discrete tax
     benefits       (1,160)  (14,562)             (9,524)   (21,084)

    After-tax
     gain on
     indemnity
     proceeds
     related to
     litigation
     matter
     ($12.5 million
     pre-tax)            -         -                   -    (8,110)

    Adjusted
     Net Earnings
     from
     Continuing
     Operations
     (Non-GAAP)   $371,176  $371,663    -0.1% $1,414,072 $1,250,804    13.1%


    Diluted Net
     Earnings
     Per Share
     from
     Continuing
     Operations
     per GAAP        $0.92     $0.97    -5.2%      $3.95      $3.72     6.2%

    After-tax
     charges for
     purchased
     in-process
     research and
     development
     and fair
     value
     adjustments
     to recorded
     inventory
     and deferred
     revenue
     balances
     related to the
     acquisition
     of Tektronix
     ($6.9 million
     & $59.5 million
     pre-tax for the
     three months
     and year ended
     December 31,
     2007)            0.01      0.20                0.13       0.20

    After-tax
     charge
     related to
     fourth
     quarter 2008
     restructuring
     actions and
     related
     charges
     ($82.0 million
     pre-tax).        0.18         -                0.18          -

    Gains from
     net reduction
     in income tax
     reserves and
     discrete
     tax benefits        -     (0.05)              (0.03)     (0.07)

    After-tax
     gain on
     indemnity
     proceeds
     related to
     litigation
     matter
     ($12.5 million
     pre-tax)            -         -                   -     (0.02)

    Adjusted
     Diluted
     Net Earnings
     Per Share
     from
     Continuing
     Operations
     (Non-GAAP)      $1.11     $1.12    -0.9%     $ 4.23      $3.83    10.4%



    Danaher Corporation
    Supplemental Reconciliation of Revenue Growth (GAAP) to Revenue Growth
    from Existing Businesses (Non-GAAP)
    Three Months Ended December 31, 2008 and December 31, 2007

                                  Three Months Ended         Year Ended
                                 December 31, 2008 vs.   December 31, 2008 vs.
                                    Comparable 2007        Comparable 2007
                                        Period                 Period
    Components of Sales Growth

    Existing Businesses                  -1.0%                    2.5%
    Acquisitions                          6.0%                   10.5%
    Impact of currency translation       -4.0%                    2.0%
    Total                                 1.0%                   15.0%


Notes to Non-GAAP Reconciliation Schedule

General

In addition to the results provided in this release in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), the Company has provided the following non-GAAP measures:

(1) Adjusted net earnings from continuing operations for the three months and year ended December 31, 2008 and December 31, 2007 and adjusted net earnings from continuing operations per diluted share for the three months and year ended December 31, 2008 and December 31, 2007. These measures are calculated on a basis which:

  • in the 2008 period, exclude (a) certain non-cash charges related to the acquisition of Tektronix, Inc. for fair value adjustments to recorded inventory and deferred revenue balances, (b) gains related to a reduction of income tax reserves and discrete tax benefits and (c) charges related to fourth quarter 2008 restructuring actions and related charges; and
  • in the 2007 period, exclude (a) gains related to a reduction of income tax reserves and discrete tax benefits, and (b) the gain on indemnity proceeds received in connection with a litigation matter and (c) certain non-cash charges for purchased in-process research and development and fair value adjustments to recorded inventory and deferred revenue balances related to the acquisition of Tektronix.

The Company also discloses the year-over-year percentage change in these non-GAAP measures. Collectively, these non-GAAP measures are referred to as the “non-GAAP earnings measures”.

(2) Core revenue growth from existing businesses (presented on a stand-alone basis), which is defined as revenue growth from businesses that have been owned for one year or more, excluding the effects of foreign currency fluctuations.

The non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures. Danaher’s non-GAAP measures may be defined differently than similar non-GAAP measures that are used by other companies.

Non-GAAP earnings measures and revenue growth from existing businesses

Danaher’s management believes that the non-GAAP earnings measures and revenue growth from existing businesses reflect additional ways of viewing aspects of Danaher’s operations that, when viewed with and reconciled to the corresponding GAAP measures, provide a more complete understanding of Danaher’s results of operations and help identify underlying trends in Danaher’s business. The items that have been excluded from the non-GAAP earnings measures have been excluded because items of this nature and size occur with inconsistent frequency and for reasons that may be unrelated to Danaher’s commercial performance during the period, and we believe are not indicative of Danaher’s ongoing operating costs or gains in a given period. Similarly, revenue growth from existing businesses excludes items that are not completely under management’s control, such as the impact of changes in foreign currency exchange rates, and items that do not reflect the underlying growth of the company, such as acquisition and divestiture activity.

Danaher’s management uses these non-GAAP measures in assessing current performance against prior period performance and against forecasted performance, in forecasting financial results for future periods, and in making decisions about internal budgets, resource allocation and financial goals for its business units. Danaher’s management believes that these non-GAAP measures help investors and others, if they so choose, in understanding and evaluating Danaher’s current operating performance and future prospects in the same manner as management does. In addition, Danaher believes that analysts and others in the investment community use these non-GAAP measures to assess Danaher’s performance against prior period performance and against forecasted performance, compare Danaher’s performance to the performance of our peer companies, identify trends in Danaher’s performance and provide estimates of future performance.

A general limitation of these non-GAAP measures is that use of these measures (as compared to the related GAAP measures of net earnings from continuing operations, revenue and revenue growth) may reduce comparability with other companies who may calculate similar non-GAAP measures differently. A particular limitation of the non-GAAP earnings measures is that they exclude charges that can significantly affect Danaher’s results of operations and that may recur in the course of Danaher’s business (though at times and in amounts that may be difficult to predict). Similarly, a particular limitation of revenue growth from existing businesses is that it excludes items that can significantly impact our revenues. Danaher management compensates, and believes that investors should compensate, for these and other limitations of these non-GAAP measures by also considering Danaher’s financial results as determined in accordance with GAAP, including the GAAP measures described above in this paragraph.

[Via http://www.prnewswire.com]

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