10-QPeriod: Q3 FY2007

DANAHER CORP /DE/ Quarterly Report for Q3 Ended Sep 28, 2007

Filed October 18, 2007For Securities:DHR

Summary

Danaher Corporation's (DHR) 10-Q filing for the quarter ending September 28, 2007, reveals a robust financial performance driven by significant sales growth and strategic acquisitions. The company reported a substantial increase in net earnings for both the three-month and nine-month periods, bolstered by strong operational performance across its diverse business segments, including Professional Instrumentation and Medical Technologies. A key event during the quarter was the sale of the power quality business, which resulted in a significant after-tax gain, positively impacting net earnings. Strategically, Danaher continued its acquisition spree, notably with the acquisition of ChemTreat, Inc., and also announced a major pending acquisition of Tektronix, Inc. for approximately $2.8 billion. These moves underscore the company's commitment to expanding its market presence and product offerings within its core segments. Despite increased interest expenses due to higher debt levels resulting from acquisitions, the company maintained healthy cash flow from operations, demonstrating effective financial management. Investors can note the company's ongoing focus on growth through both organic initiatives and strategic M&A activity, supported by a solid liquidity position.

Key Highlights

  • 1Net earnings significantly increased to $483.7 million for the three months ended September 28, 2007, up from $268.1 million in the prior year period. For the nine months ended September 28, 2007, net earnings rose to $1.05 billion from $798.3 million.
  • 2Sales from continuing operations grew by 13.5% for the three months and 15.5% for the nine months ended September 28, 2007, compared to the respective periods in 2006.
  • 3The company completed the sale of its power quality business in July 2007, recognizing an after-tax gain of $150 million.
  • 4Danaher announced a definitive agreement to acquire Tektronix, Inc. for approximately $2.8 billion, a move expected to close in the fourth quarter of 2007, further expanding its Professional Instrumentation segment.
  • 5Acquisition activity remained strong, with the company acquiring ChemTreat, Inc. for $425 million in July 2007, along with nine other smaller companies or product lines during the first nine months of the year.
  • 6Goodwill increased from $6.56 billion at December 31, 2006, to $7.34 billion at September 28, 2007, primarily due to recent acquisitions.
  • 7The company maintained a strong operating cash flow of $1.07 billion for the nine months ended September 28, 2007, demonstrating consistent cash generation.

Frequently Asked Questions

Danaher's net earnings saw a significant increase driven by strong sales growth from both existing businesses and strategic acquisitions. The sale of the power quality business also contributed a substantial after-tax gain of $150 million, further boosting overall net earnings for the period.

Danaher financed recent acquisitions, such as ChemTreat, primarily through commercial paper and available cash. For the pending Tektronix acquisition, the company anticipates using a combination of borrowings under committed credit facilities, commercial paper, debt securities, and potentially equity or equity-linked securities.

The substantial increase in goodwill from $6.56 billion to $7.34 billion is primarily a result of Danaher's active acquisition strategy. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired, indicating the company's continued investment in acquiring businesses that align with its strategic goals.

The sale of the power quality business was reported as a discontinued operation. It resulted in a significant after-tax gain of $150 million ($0.45 per diluted share) recognized in the third quarter of 2007, which positively impacted net earnings. The results of this business have been reclassified for all periods presented to reflect it as discontinued.