What were Danaher's primary revenue drivers in 2002?

Danaher's revenue growth in 2002 was primarily driven by strategic acquisitions, particularly in the Process/Environmental Controls segment. Key acquisitions included Gilbarco, Videojet Technologies, and Viridor Instrumentation, which significantly boosted sales in environmental, product identification, and water quality markets. The Tools & Components segment also contributed with core volume growth, especially from Matco Tools.

How did the adoption of SFAS No. 142 impact Danaher's financial statements?

The adoption of SFAS No. 142, effective January 1, 2002, eliminated the amortization of goodwill and certain other intangible assets. This resulted in a one-time, non-cash impairment charge of $200 million ($173.8 million after tax) related to the company's power quality business unit, as the carrying value of goodwill exceeded its implied fair value. While this reduced net earnings for the year, it also removed approximately $55 million in annual goodwill amortization expenses going forward.

What is Danaher's strategy for future growth?

Danaher's growth strategy centers on both core organic growth initiatives and continued strategic acquisitions. The company aims to gain market share and expand geographically. Management believes that the acquisition of complementary businesses, integrated effectively through the Danaher Business System, will be a key driver of future revenue and profit growth.

What are the key risks and uncertainties facing Danaher, as highlighted in the filing?

The filing outlines several risks, including the ability to maintain customer relationships, increased competition, market acceptance of new products, currency exchange rate fluctuations, raw material price volatility, and geopolitical uncertainties (such as the situation in Iraq). The company also faces risks related to integrating acquired businesses, achieving cost efficiencies, and potential product liability or environmental matters.

DHR 10-K FY2002 Annual Report — Revenue, Net Income, EPS

Summary

Danaher Corporation's 2002 10-K filing highlights a year of significant strategic acquisitions, particularly within the Process/Environmental Controls segment, which now represents 74% of the company's revenue. The Tools & Components segment experienced modest growth. The company demonstrated strong operational cash flow generation and free cash flow growth, reflecting disciplined capital allocation and effective execution of its Danaher Business System principles. Despite facing market softness in certain sectors, such as semiconductor and electronic assembly, and increased geopolitical uncertainties impacting some end markets, Danaher's diversified business model and strategic acquisitions provided resilience and growth. The company also addressed a significant accounting change with the adoption of SFAS No. 142, leading to the cessation of goodwill amortization and an associated impairment charge. Management remains focused on both organic growth initiatives and continued pursuit of strategic acquisitions to drive future expansion and market share gains. The filing also details robust liquidity, a manageable debt structure, and provides insights into the company's operational segments and risk management strategies.

Key Highlights

1Danaher Corporation reported total sales of $4.58 billion for the year ended December 31, 2002, an increase from $3.78 billion in 2001, driven significantly by acquisitions.

2The Process/Environmental Controls segment was the primary growth engine, contributing 74% of total sales, fueled by key acquisitions like Gilbarco and Videojet Technologies.

3The Tools & Components segment saw a more modest 2% sales increase, with growth attributed to core volume increases and strong performance in channels like Matco Tools.

4Operating profit increased to $701.1 million from $502.0 million in the prior year, reflecting improved operational performance and the benefits of acquisitions.

5The company adopted SFAS No. 142, ceasing goodwill amortization and recording a $200 million impairment charge related to its power quality business unit.

6Free cash flow reached a record $645 million, a 23% increase from 2001, showcasing strong cash generation and efficient working capital management.

7Danaher had no single customer accounting for more than 10% of consolidated sales in 2002, though Sears, Roebuck and Co. remains a significant customer for the Tools and Components segment.

DANAHER CORP /DE/ Annual Report, Year Ended Dec 31, 2002

Summary

Key Highlights

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