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.
First Call Analyst:
SOURCE: Danaher Corporation
CONTACT: Andy Wilson, Vice President, Investor Relations, Danaher
Web Site: http://www.danaher.com/