DANAHER 2014 ANNUAL REPORT Danaher Financial Operating Highlights (dollars in millions except per share data and number of associates) 2014 2013 Sales $ 19,914 $ 19,118 Operating Profit $ 3,431 $ 3,275 Net Earnings $ 2,598 $ 2,695 Net Earnings Per Share (diluted) $ 3.63 $ 3.80 Operating Cash Flow $ 3,758 $ 3,585 Capital Expenditures $ 597 $ 552 Free Cash Flow (Operating Cash Flow less Capital Expenditures) $ 3,161 $ 3,033 Number of Associates 71,000 66,000 Total Assets $ 36,992 $ 34,672 Total Debt* $ 3,473 $ 3,499 Stockholders’ Equity $ 23,450 $ 22,451 Total Capitalization (Total Debt plus Stockholders’ Equity) $ 26,923 $ 25,950 * Long-Term Debt ($3,401 for 2014 and $3,437 for 2013) plus Notes Payable and Current Portion of Long-Term Debt ($72 for 2014 and $62 for 2013) ENVIRONMENTAL TEST & MEASUREMENT INDUSTRIAL TECHNOLOGIES LIFE SCIENCES & DIAGNOSTICS DENTAL ENVIRONMENTAL Our products help protect the global water supply, ensure environmental stewardship, enhance the safety of personal data and improve business efficiencies. OurWater Quality platform provides instrumentation and disinfection systems to help analyze, treat and manage the quality of ultra-pure, potable, waste, ground and ocean water in residential, commercial, industrial and natural resource applications. Our Gilbarco Veeder-Root platform is a leading worldwide provider of solutions and services focused on fuel dispensing, remote fuel management, point-of-sale and payment systems, environmental compliance, vehicle tracking and fleet management. REDUCING MAINTENANCE REQUIREMENTS AND COSTS WHILE INCORPORATING THE MOST EFFICIENT TECHNOLOGIES AVAILABLE, THE TROJANUVTORRENT™ LEADS THE WAY FOR LARGE-SCALE DRINKING WATER DISINFECTION. Thanks to leading-edge technology from TrojanUV, New York City’s water is safe to drink, right from the tap. TEST & MEASUREMENT Our customers count on us to help them design cutting-edge innovations, keep their businesses up and running and safeguard their network operations. Our Instruments platform offers test, measurement and monitoring products that are used in electronic design, manufacturing and advanced technology development, as well as for installation, service and maintenance of electrical, industrial, electronic and calibration applications. Our Communications platform offers solutions used in the design, deployment, monitoring and security of traditional, virtualized, mobile and cloud-based networks operated by communications service providers, hosting service providers, enterprises and government agencies worldwide. BY DELIVERING VIDEO SERVICE PROVIDERS REAL-TIME MONITORING OF HUNDREDS OF CHANNELS 24/7, PLUS ALERTING, REPORTING AND TRENDING ANALYSES, ® TEKTRONIX SENTRY ENABLES OPTIMAL DELIVERY OF SERVICES WHILE REDUCING OPERATING COSTS. Broadcast, cable and streaming content providers count on Tektronix to help them monitor the quality of their video signals. INDUSTRIAL TECHNOLOGIES Our solutions help protect the world’s food supply, improve packaging design and quality, verify pharmaceutical dosages and authenticity, and power innovative machines. Our Product Identification platform develops and manufactures equipment, consumables and software for various printing, marking, coding, design and color management applications on consumer and industrial products. Our Automation platform provides electromechanical motion control solutions for the industrial automation market and various precision motion applications, including packaging, medical equipment, robotics and circuit board assembly. WITH ADVANCED IMAGE CAPTURE AND BLUETOOTH WIRELESS TECHNOLOGIES THAT SET A NEW STANDARD FOR ACCURACY AND VERSATILITY, CAPsuRE™ QUICKLY AND EASILY MATCHES COLOR INSPIRATION FROM ANY SURFACE, MATERIAL OR FABRIC TO A PANTONE COLOR. Pantone products encourage colorful exploration and expressions of creativity from inspiration to implementation. LIFE SCIENCES & DIAGNOSTICS We are at the leading edge of scientific research and advancing patient health with the highest diagnostic confidence. OurLife Sciences platform offers 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. Our Diagnostics platform offers 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. OFFERING UNPARALLELED QUALITY OF RESULTS, INNOVATIVE EFFICIENCY SOLUTIONS ® AND REVOLUTIONARY SCALABILITY, THE UNICEL DXH™ 800 IS A COMPLETE TESTING SOLUTION THAT IMPROVES PATIENT CARE AND HEMATOLOGY LAB PRODUCTIVITY. Beckman Coulter hematology analyzers help doctors detect cancer cells and quickly determine treatment options for children with leukemia. DENTAL We enable dental professionals to provide the highest level of patient care and confidently optimize their work environment. Our Dental platform develops products that 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. We are a leading worldwide provider of a broad range of dental consumables, equipment and services, and are dedicated to driving technological innovations that help dental professionals improve clinical outcomes and enhance productivity. WITH STATE-OF-THE-ART TECHNOLOGIES THAT HELP DENTAL PROFESSIONALS IMPROVE DIAGNOSTICS, TREATMENT PLANNING AND PATIENT INTERACTION, ® NOBELCLINICIAN IS THE KEY TO SUCCESSFUL DENTAL TREATMENTS. Nobel Biocare’s implant-based solutions are helping give a lifetime of smiles to more than 10 million patients each year. DEAR SHAREHOLDERS, 2014 was a year of strong performance for Danaher, exceeding our expectations in a number of ways. Our team executed well using the tools of the Danaher Business System (DBS). We gained market share in many of our businesses, delivered strong core revenue growth, drove solid core margin expansion and generated record free cash flow. 2014 HIGHLIGHTS ❱ We generated revenue of $19.9 billion with 3.5% core revenue growth. ❱ We had core operating margin expansion of 65 basis points and our reported operating margin was 17.2%. ❱ We achieved record free cash flow of $3.2 billion, marking the 23rd consecutive year in which our free cash flow exceeded our net income. ❱ We increased our spending in sales and marketing and research and development by more than $200 million. ❱ We increased our annual dividend to 40 cents per share from 10 cents per share. In 2014, ten of our businesses grew organic revenues more than 5% and THOMAS P. JOYCE, JR. six businesses posted double digit organic revenue growth. Among these was Jacobs Vehicle Systems, with greater than 20% growth. Jacobs has President and Chief Executive Officer been in the Danaher portfolio for more than 20 years and is the birthplace of DBS. The Jacobs team continues to exemplify the impact of DBS, just as it did more than two decades ago. INNOVATION DEFINES OUR FUTURE New product innovation played a big role in our 2014 of Danaher’s total revenue from the high growth markets. performance as approximately $4 billion of our revenue While strength in the U.S. and relative stability in Europe have was generated by new products launched in the last three continued, certain high growth markets saw deceleration years. We were particularly proud of the recognition of these during the year. As a result, our investments in those markets efforts at Leica Microsystems, where our key opinion leader will continue to be carefully and thoughtfully selected to make and longtime collaborator, Dr. Stefan Hell, along with two sure we realize our full potential in 2015 and beyond. other scientists, was awarded the Nobel Prize in Chemistry for his work with super-resolution light microscopy. This is DANAHER BRINGS DBS LEARNING TO the fourth year in a row in which Leica instruments were GLOBAL ASSOCIATES cited in Nobel Prize winning work. To better serve associates in our expanding global footprint, WINNING IN HIGH GROWTH MARKETS Danaher opened two new DBS Universities in 2014: DBSU – Europe, located in Wetzlar, Germany at Leica Microsystems, The high growth markets are also an important part of our and DBSU – Asia, located in Shanghai, China at Tektronix. overall growth story. For example, in the Middle East, we They join the cornerstone DBSU – Americas which opened grew organic revenues more than 15% in 2014. Our team in in Wood Dale, Illinois at Videojet more than 10 years ago. that region has done a remarkable job harnessing our global These centers represent the continuing evolution of how we scale and collaborating with one another to drive stronger teach DBS at Danaher. They are in close proximity to several commercial execution and, ultimately, to better serve our Danaher operating companies, which provide great learning customers. In 2014, we derived more than $5 billion, or 26%, opportunities at “gemba,” the place where work happens. GOING DIGITAL Our digital initiatives continue to gain traction. Many of our further innovation, growth and collaboration opportunities businesses are leveraging digital trends to create greater with our other dental companies. Nobel Biocare is an customer intimacy, deliver more value for our customers outstanding strategic addition to our Dental segment. and, ultimately, gain greater competitive advantage. ❱ Since launching Gilbarco Veeder-Root’s Insite360 just 2015 PRIORITIES over