2012 ANNUAL REPORT 1 TABLE of CONTENTS Environmental 2 Test & Measurement 4 Dental 6 Life Sciences & Diagnostics 8 Industrial Technologies 10 Letter to the Shareholders 12 2012 Form 10-K 16 Supplemental Financial Information 141 Directors & Executive Officers 143 Shareholder Information 144 DANAHER FINANCIAL OPERATING HIGHLIGHTS (dollars in millions, except per share data and number of associates) 2012 2011 Sales* $ 18,260.4 $ 16,090.5 Operating Profit* $ 3,165.1 $ 2,617.2 Net Earnings* $ 2,299.3 $ 1,935.3 Earnings per share (diluted)* $ 3.23 $ 2.77 Operating Cash Flow* $ 3,502.1 $ 2,732.1 Capital Expenditures* $ 458.3 $ 334.5 Free Cash Flow (operating cash flow less capital expenditures)* $ 3,043.8 $ 2,397.6 Number of Associates 63,000 59,000 Total Assets $ 32,941.0 $ 29,949.5 Total Debt $ 5,343.1 $ 5,305.2 Stockholders’ Equity $ 19,083.9 $ 16,971.8 Total Capitalization (total debt plus stockholders’ equity) $ 24,427.0 $ 22,277.0 *from continuing operations Environmental We provide products that help protect our water supply and air quality by serving two primary markets: water quality and retail/commercial petroleum. Our water quality business provides instrumentation and disinfection systems to help analyze and manage the quality of ultra- pure, potable, waste, ground and ocean water in residential, commercial, industrial and natural resource applications. Our retail/commercial petroleum business is a leading worldwide provider of solutions and services focused on fuel dispensing, remote fuel management, point-of- sale systems, payment systems and environmental compliance. 3 Test & Measurement We are a global provider of electronic measurement instruments, professional test tools, thermal imaging and calibration equipment used in electrical and industrial applications. We offer test, measurement and monitoring products that are used in electronic design, manufacturing and advanced technology development. We also offer monitoring, management and optimization tools as well as security solutions for communications and enterprise networks. 5 Dental We are a leading worldwide provider of a broad range of consumables, equipment and services for the dental market. Our products are used to diagnose, treat and prevent disease and ailments of the teeth, gums and supporting bone, as well as improve the aesthetics of the human smile. 7 Life Sciences & Diagnostics We offer a broad range of research and clinical tools that scientists use to study cells and cell components in order to understand the causes of disease, identify new therapies and test new drugs and vaccines. We also offer analytical instruments, reagents, consumables, software and services that hospitals, physician’s offices, reference laboratories and other critical care settings use to diagnose disease and make treatment decisions. 9 Industrial Technologies We develop and manufacture equipment, consumables and software for various printing, marking, coding, design and color management applications on consumer and industrial products. We also provide electromechanical motion control solutions for the industrial automation and packaging markets. 11 Dear Shareholders 2012 was another record year for Danaher. Our teams executed well amidst economic uncertainty with excellent free cash flow, superior earnings growth and strong operating margin expansion for the year. We achieved many financial milestones: • Revenues increased 13.5% to $18.3 billion with core revenue growth of 2.5% • Free cash flow exceeded $3 billion for the first time in our history with a free cash flow to net income conversion ratio of 132%, representing the 21st consecutive year in which free cash flow exceeded net income • Deployed $1.8 billion of capital on 14 acquisitions H. LAWRENCE CULP, JR. • Repurchased 12.5 million shares of Danaher stock President & Chief Executive Officer at an average price of approximately $52 per share • Diluted net earnings per share increased more than 16% to $3.23 DANAHER TodAY The evolution of our portfolio continued throughout 2012, as evidenced by our theme of “Building a Global Science and Technology Company with DBS.” Today, our portfolio includes market-leading brands, as it always has, but with a discernible shift towards more global, more science and technology focused businesses. Across our five segments our businesses will continue to benefit from exposure to favorable long- term macro trends such as heightened environmental concerns, greater healthcare requirements around the world and the rapid expansion of wireless networks. 13 > X-RITE In 2012, we acquired X-rite, the global leader in color science and technology. X-rite, which includes color industry leader Pantone, develops, manufactures, markets and supports innovative color solutions through measurement systems, software, color standards and services. Combining these capabilities with Esko’s suite of products and services enables us to offer industry leading solutions in each step of the consumer packaging workflow, from brand management to marking and coding. Two key underlying themes that highlight the We have also expanded our presence in high-growth expansion and reshaping of the Danaher portfolio markets around the world. In 2001 our high-growth are a bias for growing our recurring revenue base market exposure was fairly limited, representing and an increased emphasis on expanding our 7% of total revenues. In 2012, those geographies presence in high-growth markets. represented 25% of a much bigger revenue base. Our growth has been a function of a number of investments We have placed a particular focus on growing our and DBS activities that have positioned Danaher to recurring revenue base organically and inorganically. serve more fully the faster-growing geographic markets Organically, we’re making innovation investments of the future. and improving our go-to-market initiatives. From an inorganic perspective, we’ve acquired new A quieter, but no less significant part of our evolution, businesses like ChemTreat, Beckman Coulter and has been our transition out of some of our legacy EskoArtwork, which have high recurring revenues businesses that were no longer considered core. and where the Danaher Business System (DBS) In the last five years, we’ve divested businesses has had a significant impact. We believe these which represented 30% of Danaher’s 2001 revenue businesses not only provide more stability in base while reinvesting those proceeds back into tough times, but also strong margin opportunities our strategic growth platforms. Ten years ago, throughout an entire economic cycle. Our approach approximately 50% of our revenues were derived has helped significantly increase our recurring from what we consider to be our strategic growth revenue base to 40% of total revenues in 2012, up platforms. In 2012, that number was nearly 90%, from 25% in 2007. reflecting the move towards higher growth, higher margin, more global businesses, where many of our brands are market leaders. DBS TodAY When we began developing DBS at Jake Brake Our Dream-Develop-Deliver (3D) growth tool set back in the 1980s, our objective was to increase helps drive market share gains and organic growth productivity and efficiency on the factory floor across our operating businesses. Whether we’re while improving quality and customer service. identifying new “white space” opportunities at Today, that goal is as much a part of DBS as it was Fluke, accelerating the pace of new product in those early years. As Danaher’s portfolio has development in Dental or increasing our use of transformed, DBS has evolved to meet new needs. the Internet to generate and nurture sales leads at We’ve expanded DBS to address both our growth Videojet, our 3D tools take core DBS fundamentals and leadership development priorities as well into research and development, marketing, sales as our long-standing lean agenda. and service to improve performance. Our most important core value is “The Best Team > BECKMAN CoULTER – UPDATE Wins.” Recruiting, developing and retaining a great We had an outstanding first full year with Beckman team is a priority for every Danaher operating Coulter. DBS has had an immediate impact on product business. Leadership matters a lot, as does building quality, regulatory compliance, customer satisfaction and growth. The team achieved several milestones in a deep bench of talent within each of our businesses. 2012, including: DBS helps us in each of these important functions, • On-time delivery improved to over 90% whether we’re working on senior management • Greater than 25% reduction in unscheduled service succession or recruiting sales people in Brazil. calls since Danaher’s acquisition We see the positive impact DBS has on our lean, • Launched several new products including the AU 5800 Series, the UniCel DxH Slidemaker Stainer growth and leadership efforts every day. Within and the Biomek 4000 our businesses, we’ve delivered above-market revenue growth at many operating companies as DBS improved execution in key areas. Notably, ChemTreat had seen ten consecutive quarters of double-digit growth through the end of 2012. We’ve also seen an increase in the cadence of new product development at businesses like Videojet where localized product initiatives in high-growth markets have led to above market growth in those regions. Finally, we’ve seen DBS accelerate new product introductions and improve go-to-market initiatives at Radiometer, Tektronix Communications and Leica Biosystems to help capture market share. All told, our