What caused the net loss in the first quarter of 2002?

The net loss of $91.0 million was primarily caused by a one-time accounting charge of $173.8 million (after tax) related to the adoption of SFAS No. 142, 'Goodwill and Other Intangible Assets.' This charge represents an impairment of goodwill, particularly in the company's power quality business unit. Excluding this non-recurring item, Danaher reported an operating profit.

How did the company's sales perform in the first quarter?

Net sales for the first quarter of 2002 were $1,004.2 million, which was essentially flat compared to $1,005.3 million in the same period of 2001. While some segment sales, like Tools and Components, saw declines, the Process/Environmental Controls segment experienced growth driven by recent acquisitions, which offset decreases in core volume and currency impacts.

How has the adoption of SFAS No. 142 impacted the company's financial statements?

The adoption of SFAS No. 142 led to the cessation of goodwill amortization, which the company estimates would have been approximately $62 million per year. It also required an impairment test, resulting in the significant $173.8 million after-tax charge recognized in the first quarter of 2002. This change effectively removed goodwill amortization from the income statement and replaced it with potential future impairment charges if goodwill's value declines.

DHR 10-Q Quarterly Report Q1 FY2002 — Revenue, Net Income, EPS

Q: What were the major uses of cash during the quarter?

The largest use of cash was for acquisitions, totaling $815.7 million, which included significant purchases like Marconi Data Systems, Viridor Instrumentation, and Marconi Commerce Systems. The company also utilized cash for debt repayments and dividend payments, while raising substantial funds through a common stock offering.

Summary

Danaher Corporation's first quarter 2002 filing reveals a mixed financial performance. While net sales remained relatively flat year-over-year at $1,004.2 million, the company reported a net loss of $91.0 million, or ($0.63) per diluted share. This loss is largely attributable to a significant one-time accounting change related to the adoption of SFAS No. 142, which resulted in a $173.8 million after-tax impairment charge primarily in the power quality business unit. Excluding this non-recurring item, the company would have reported net earnings of $82.7 million, or $0.57 per diluted share, showing operational profitability. The company executed a significant acquisition strategy during the quarter, spending $815.7 million on acquisitions including Marconi Data Systems, Viridor Instrumentation, and Marconi Commerce Systems, significantly increasing its goodwill and other intangible assets. This strategic expansion, however, contributed to higher interest expenses. Despite the net loss, operating cash flow showed a strong increase of 52% year-over-year, driven by improved working capital management and a reduction in accounts receivable. The company also successfully completed a $467 million common stock offering to support its growth initiatives.

Key Highlights

1Reported a net loss of $91.0 million for the quarter, primarily due to a $173.8 million after-tax impairment charge from the adoption of SFAS No. 142 (Goodwill and Other Intangible Assets).
2Excluding the accounting change, net earnings before the effect of accounting change were $82.7 million, with diluted EPS of $0.55, indicating underlying operational profitability.
3Net sales for the quarter were $1,004.2 million, virtually flat compared to $1,005.3 million in the prior year's quarter.
4Significant acquisition activity during the quarter, with $815.7 million spent on acquiring Marconi Data Systems, Viridor Instrumentation, and Marconi Commerce Systems, expanding the Process/Environmental Controls segment.
5Operating cash flow increased substantially by 52% to $263.2 million, demonstrating strong cash generation from operations.
6Completed a $467 million common stock offering to fund general corporate purposes, including future acquisitions.
7Interest expense increased by $4.6 million due to higher average net debt levels resulting from acquisition financing.

DANAHER CORP /DE/ Quarterly Report for Q1 Ended Mar 29, 2002

Summary

Key Highlights

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