Building Businesses DBS Is How We Build Market Leadership 14 I Am Pleased to Report That Danaher Delivered Positions in the Businesses We Acquire
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Danaher 2099 Pennsylvania Avenue NW, 12th Floor Danaher 2006 Building Washington, DC 20006 Annual T: 202.828.0850 Report Businesses www.danaher.com 2006 Annual Report 2278061_cover.indd78061_cover.indd 1 33/26/07/26/07 44:52:46:52:46 PPMM At Danaher we build good businesses — businesses focused on delivering innovative products and solutions to our customers. Shareholder Information / www.danaher.com Over the last ten years, Danaher revenues have grown Our transfer agent can help you Additional inquiries may be directed to with a variety of shareholder related Investor Relations at: over four-fold, a result of consistent organic growth cou- services including: Danaher Corporation — Change of address 2099 Pennsylvania Avenue NW, 12th Floor pled with a disciplined acquisition strategy. This success — Lost stock certifi cates Washington, DC 20006 — Transfer of stock to another person Phone: 202.828.0850 is also refl ected in Danaher’s share price performance — Additional administrative services Fax: 202.828.0860 Email: [email protected] generating a ten year compounded annual growth rate Contacting our Transfer Agent Computershare Annual Meeting of over 20% per year. PO Box 43078 Danaher’s annual shareholder meeting will Providence, RI 02940-3078 be held on May 15, 2007 in Washington, D.C. Toll Free: 800-568-3476 Shareholders who would like to attend the Outside the US: 312-588-4991 meeting should register with Investor Rela- tions by calling 202.828.0850 or via Investor Relations e-mail at [email protected]. Financial Operating Highlights 2006 2005 This annual report along with a variety of (dollars in thousands except per share data and number of associates) other fi nancial materials can be viewed at Auditors www.danaher.com. Ernst & Young LLP, Baltimore, Maryland Sales $ 9,596,404 $ 7,984,704 Operating profi t $ 1,517,993 $ 1,264,668 Stock Listing Net earnings $ 1,122,029 $ 897,800 Symbol: DHR Earnings per share (diluted) $ 3.48 $ 2.76 New York Stock Exchange Operating cash fl ow $ 1,547,251 $ 1,203,801 Capital expenditures $ 137,706 $ 121,206 Free cash fl ow (operating cash fl ow less capital expenditures) $ 1,409,545 $ 1,082,595 Number of associates 45,000 40,000 Total assets $ 12,864,151 $ 9,163,109 Total debt $ 2,433,716 $ 1,041,722 Stockholders’ equity $ 6,644,660 $ 5,080,350 Total capitalization (total debt plus stockholders’ equity) $ 9,078,376 $ 6,122,072 2278061_cover.indd78061_cover.indd 2 33/26/07/26/07 44:53:25:53:25 PPMM 1 Danaher Ten-Year Shareholder Return | 1997-2006 DHR S&P 500 600% 500% 400% 300% 200% 100% 0% -100% 97 98 99 00 01 02 03 04 05 06 2278061_interior.indd78061_interior.indd 1 33/26/07/26/07 44:45:45:45:45 PPMM Five-Year Compounded Annual Growth 2 SalesOperating Income EPS Operating Cash Flow Year End Price Five-Year Compounded Five-Year Compounded Five-Year Compounded Five-Year Compounded Five-Year Annual Growth Annual Growth Rate 25% Annual Growth Rate Annual Growth Compounded Rate 20% 28% before effect of Rate 20% Annual Growth (in millions) accounting change and Rate 19% (in millions) reduction of income (in millions) tax reserves related to previously discontinued operations $9,596 $1,518 $3.48 $1,547 $72.44 $55.78 $7,985 $1,265 $2.76 $57.41 $1,204 $6,889 $1,105 $2.30 $1,033 $45.88 $5,294 $846 $862 $4,577 $1.69 $701 $710 $32.85 $1.39 02 03 04 05 06 02 03 04 05 0602 03 04 05 06 02 03 04 05 06 02 03 04 05 06 2278061_interior.indd78061_interior.indd 2 33/26/07/26/07 44:45:53:45:53 PPMM The Danaher Business System drives excep- tional levels of performance in each of our 3 businesses by focusing on improving quality, delivery, cost, and innovation. DBS is a customer- centric approach enabling continuous improvement and is further enhanced by an increasing number of growth breakthrough initiatives. The following case studies highlight some of these successes. 2278061_interior.indd78061_interior.indd 3 33/26/07/26/07 44:49:41:49:41 PPMM Network infrastructure is constantly changing to meet the 4 performance and security demands of today’s advanced user. The Fluke Networks OptiView Series III Integrated Network Analyzer gives IT technicians a clear view of an entire enterprise — providing visibility into every piece of hardware, application, and connection on a network. No other portable network infrastructure tool offers this much vision and all-in-one capability. Electrical Communications Metrology Industrial Medical 2278061_interior.indd78061_interior.indd 4 33/26/07/26/07 44:47:06:47:06 PPMM In 1998, Fluke was a well-known and well-respected brand primarily serving industrial and engineering end users. With a dedication to innovation, supported by the Danaher Business System and the addition of 20 bolt-on acquisitions, it has grown year after year. Fluke continues to leverage its powerful global brand, creat- ing one of the most extensive hand-held electronic test product offerings available. As a result, Fluke products now serve industrial, electrical, communications, medical, and metrology customers around the world. Building Markets Electronic Test Revenues have increased 120 % 120% since 1998. 2278061_interior.indd78061_interior.indd 5 33/26/07/26/07 44:47:33:47:33 PPMM Building Capacity Environmental According to United Nations, % 20 20% of the world’s population lacks access to potable drinking water. Since 1996, Danaher has been dedi- cated to improving the quality of water — one of the world’s most precious resources. Danaher has created the world’s leading provider of water quality analytics and UV disinfection. With increasing demands for water quality in North America and Europe as well as in developing markets such as China, Eastern Europe and India, Danaher will continue to evolve and expand to help meet the world’s future water quality needs. 2278061_interior.indd78061_interior.indd 6 33/26/07/26/07 44:47:43:47:43 PPMM Our Hach/Lange and Trojan UV businesses help countries and municipalities keep pace with their infrastructure needs 7 and ensure clean, safe water supplies. As a global leader in water quality analytics and UV disinfection we provide prod- ucts ranging from the Hach 1720E turbidimeter addressing drinking water compliance requirements to ultraviolet systems that disinfect billions of gallons of water every day. 2278061_interior.indd78061_interior.indd 7 33/26/07/26/07 44:47:52:47:52 PPMM Until a few years ago, all panoramic, full-mouth x-rays used ® 8 fi lm technology. Gendex launched the Gendex Orthoralix 8500 DDE, Digital Panoramic X-Ray System in September 2005 and has helped revolutionize dental imaging by providing a cost-effective digital solution that is faster, safer, and more reliable than traditional fi lm. 2278061_interior.indd78061_interior.indd 8 33/26/07/26/07 44:48:09:48:09 PPMM Danaher is out to revolutionize dentistry. Our goal is to become the technology leader, facilitating a dentist’s ability to 9 improve the health, beauty, and youthful appearance of their patients, while minimizing the time and discomfort of treatment. Our products drive procedures that can create results that last a lifetime. Medical Technologies $84 billion spent annually on 84 dental services in the United States, per the American Dental Association. Building Innovation 2278061_interior.indd78061_interior.indd 9 33/26/07/26/07 44:50:19:50:19 PPMM 10 Date-sensitive products. Brand protec- tion. Global product tracking. Danaher’s Product Identifi cation business started with the acquisition of Videojet in 2002 and since that time has grown into a global leader in the industry. With the most comprehensive product offering in the industry, sales and service cover- age second to none, and a commitment to providing innovative solutions for our customers, Product Identifi cation has built a business capable of meeting or exceeding the most demanding marking and reading requirements. Building Assurance Product Identifi cation 15 new product introductions 15 in 2006. 2278061_interior.indd78061_interior.indd 1100 33/27/07/27/07 111:52:241:52:24 AAMM Videojet’s new Excel small character continuous ink jet printer applies variable data, including lot codes and “best if 11 used by” dates, on a wide variety of products and packag- ing, helping to assure the consumer that a product is safe and fresh. Danaher’s broad array of marking and tracking technologies apply codes to more than one trillion products each year, addressing a diverse set of customer needs. 2278061_interior.indd78061_interior.indd 1111 33/26/07/26/07 44:50:40:50:40 PPMM Leica instruments provide researchers and clinicians the 12 tools to help search for the presence and sources of cancer. Through the use of a Leica Confocal SP5 microscope, the pathologist is able to identify cancer in a mouse’s brain and observe its response to specifi c new drugs. Seeing cancerous cells in their molecular form helps researchers target new therapies for management of the disease. 2278061_interior.indd78061_interior.indd 1122 33/26/07/26/07 44:51:03:51:03 PPMM 13 Medical Technologies 33% of cancer-related deaths % 33 are preventable through early diagnosis, according to the World Health Organization. Building Hope Leica is one of the most respected and recognized professional brands in the world. With over 100 years of innovative optical engineering in its history, Leica has driven the discovery of science from school settings to leading-edge national laboratories. 2278061_interior.indd78061_interior.indd 1133 33/26/07/26/07 44:51:16:51:16 PPMM Dear Fellow Shareholder, Building Businesses DBS is how we build market leadership 14 I am pleased to report that Danaher delivered positions in the businesses we acquire.