10-QPeriod: Q1 FY2001

DANAHER CORP /DE/ Quarterly Report for Q1 Ended Mar 30, 2001

Filed April 19, 2001For Securities:DHR

Summary

Danaher Corporation (DHR) reported a solid first quarter for 2001, with net sales increasing by 16% year-over-year to $1,005.3 million. This growth was driven primarily by strong performance in the Process/Environmental Controls segment, which saw core volume growth of 8%. However, the Tools and Components segment experienced a significant decline of 19% due to the slowdown in the domestic economy. Acquisitions played a notable role, contributing 19% to the quarter's sales growth, though they also impacted gross profit margins negatively. The company also saw an increase in operating profit to $138.4 million from $117.6 million in the prior year's quarter. Financially, Danaher ended the quarter with a substantial increase in cash and cash equivalents to $669.2 million, up from $176.9 million at year-end 2000, largely due to a significant issuance of $830 million in zero-coupon convertible senior notes (LYONS). Long-term debt increased substantially to $1,106.9 million. Despite increased interest expense, the company's operating cash flow grew by 25%, demonstrating robust operational cash generation. Management remains confident in its liquidity and ability to meet financial obligations and fund future growth.

Key Highlights

  • 1Net sales increased 16% to $1,005.3 million, driven by the Process/Environmental Controls segment.
  • 2Operating profit grew to $138.4 million from $117.6 million in the prior year's quarter.
  • 3Cash and cash equivalents significantly increased to $669.2 million from $176.9 million, supported by debt issuance.
  • 4The company issued $830 million in zero-coupon convertible senior notes (LYONS) during the quarter.
  • 5The Tools and Components segment saw a 19% decline in sales due to economic slowdown.
  • 6Gross profit margin slightly decreased to 37.5% due to the inclusion of lower-margin acquired businesses and segment performance.
  • 7Acquisitions contributed 19% to sales growth, but also increased selling, general, and administrative expenses and impacted gross margins.

Frequently Asked Questions

Danaher's sales growth was primarily driven by an 8% core volume increase in the Process/Environmental Controls segment, particularly from strong shipments of indoor power quality products and Fluke Network test equipment. Acquisitions also contributed significantly, accounting for 19% of the quarter's sales growth.

The Tools and Components segment experienced a significant decline of 19% compared to the first quarter of 2000. This downturn was attributed to a slowdown in the domestic economy impacting sales of hand tools, drill chucks, and diesel engine retarders.

Danaher issued $830 million in LYONS, raising approximately $505 million in net proceeds. While a portion was used to pay down debt, the remainder is earmarked for general corporate purposes, including potential future acquisitions. This issuance significantly boosted the company's cash position and provided funding flexibility.

Total debt under the company's borrowing facilities increased significantly to $1,182 million at March 30, 2001, from $795 million at December 31, 2000. This increase is mainly due to borrowings to finance acquisitions and the recent issuance of LYONS, which increased long-term debt to $1,106.9 million.