10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number: 1-8089

DANAHER CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	59-1995548
(State of incorporation)	(I.R.S. Employer Identification number)
2099 Pennsylvania Ave. NW Washington, D.C.	20006-1813
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 202-828-0850

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Name of Exchanges on which registered
Common Stock $.01 par Value	New York Stock Exchange, Inc. Pacific Stock Exchange, Inc.

Securities registered pursuant to Section 12(g) of the Act:

NONE

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.

Yes      X     No            

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange act Rule 12b-2).

Yes      X     No            

As of March 17, 2003, the number of shares of common stock outstanding was 152.7 million and were held by approximately 2,800 holders. The aggregate market value of common shares held by non-affiliates of the Registrant on June 28, 2002 was approximately $7.6 billion, based upon the closing price of the Company’s common shares as quoted on the New York Stock Exchange composite tape on such date.

EXHIBIT INDEX APPEARS ON PAGE 48

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the registrant’s proxy statement for its 2003 annual meeting of stockholders. With the exception of the pages of the 2003 Proxy Statement specifically incorporated herein by reference, the 2003 Proxy Statement is not deemed to be filed as part of this Form 10-K.

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TABLE OF CONTENTS

			PAGE
PART I
	Item 1.	Business	4
	Item 2.	Properties	9
	Item 3.	Legal Proceedings	9
	Item 4.	Submission of Matters to a Vote of Security Holders	9
PART II
	Item 5.	Market for the Registrant’s Common Equity and Related Stockholder Matters	10
	Item 6.	Selected Financial Data	10
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
	Item 7a	Quantitative and Qualitative Disclosures about Market Risk	20
	Item 8.	Financial Statements and Supplementary Data	21
	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	46
PART III
	Item 10.	Directors and Executive Officers of the Registrant	46
	Item 11.	Executive Compensation	46
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	46
	Item 13.	Certain Relationships and Related Transactions	46
	Item 14.	Controls and Procedures	46
	Item 15.	Exhibits, Financial Statement Schedules and Reports on Form 8-K	46

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INFORMATION RELATING TO FORWARD LOOKING STATEMENTS

Certain information included or incorporated by reference in this document may be deemed to be “forward looking statements” within the meaning of the federal securities laws. All statements, other than statements of historical facts, that address activities, events or developments that Danaher Corporation (“Danaher,” the “Company,” “we,” “us,” “our”) intends, expects, projects, believes or anticipates will or may occur in the future are forward looking statements. Such statements are characterized by terminology such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and similar expressions. These statements are based on assumptions and assessments made by the Company’s management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. These forward looking statements are subject to a number of risks and uncertainties, including but not limited to:

• the Company’s ability to continue longstanding relationships with major customers and penetrate new channels of distribution;

• increased competition;

• demand for and market acceptance of new and existing products, including changes in regulations (particularly environmental regulations) which could affect demand for products in the Process/Environmental Controls segment;

• adverse changes in currency exchange rates or raw material commodity prices;

• unanticipated developments that could occur with respect to contingencies such as litigation, product liability exposures and environmental matters;

• risks customarily encountered in foreign operations, including transportation interruptions, changes in a country’s or region’s political or economic conditions, trade protection measures, different protection of intellectual property and changes in laws or licensing or regulatory requirements;

• risks related to the U.S. and international response to recent terrorist activities and the potential for war in Iraq;

• changes in the environment for making acquisitions and dispositions, including changes in accounting or regulatory requirements or in the market value of acquisition candidates;

• the Company’s ability to integrate acquired businesses into its operations, realize planned synergies and operate such businesses profitably in accordance with expectations;

• the Company’s ability to achieve projected levels of efficiencies and cost reduction measures; and

• other risks and uncertainties that affect the manufacturing sector generally including, but not limited to, economic, political, governmental and technological factors affecting the Company’s operations, markets, products, services and prices.

Any such forward looking statements are not guarantees of future performances and actual results, developments and business decisions may differ from those envisaged by such forward looking statements. The Company disclaims any duty to update any forward looking statement, all of which are expressly qualified by the foregoing.

PART I

ITEM 1.    BUSINESS

Operating Segments

Danaher conducts its operations through two business segments: Process/Environmental Controls and Tools & Components. The Process/Environmental Controls segment accounted for approximately 74% of Danaher’s revenues in 2002 and the Tools & Components segment accounted for approximately 26% of Danaher’s revenues in 2002. For additional information regarding the Company’s segments, please refer to Note 14 in the Consolidated Financial Statements included in this Annual Report.

PROCESS/ENVIRONMENTAL CONTROLS

The Process/Environmental Controls segment encompasses four strategic platforms (Motion, Environmental, Electronic Test, and Product Identification) and three focused niche businesses (Power Quality, Aerospace and Defense, and Industrial Controls). Process/Environmental Controls products are distributed by the Company’s sales personnel and independent representatives to distributors, end-users, and original equipment manufacturers.

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STRATEGIC PLATFORMS

Electronic Test. The Electronic Test platform, representing approximately 20% of segment revenue in 2002, was created through the acquisition of Fluke Corporation in 1998, and has since been supplemented by various acquisitions. Fluke designs, manufactures, and markets a variety of compact professional test tools, as well as calibration equipment, for electrical, industrial, electronic, and calibration applications. These test products measure voltage, current, resistance, power quality, frequency, temperature, pressure, and other key electrical parameters.

In 2000, Fluke Networks was separated from Fluke as a stand-alone business unit. Fluke Networks provides software and hardware products used for the testing, monitoring, and analysis of local and wide area (“enterprise”) networks and the fiber and copper infrastructure of those networks.

The Company believes that the Fluke and Fluke Networks brand names and trade dress are well-recognized and well-regarded among targeted customers. Both Fluke and Fluke Networks are leaders in their served market segments.

Environmental. As of December 31, 2002, Environmental, representing approximately 30% of segment revenue in 2002, was Danaher’s largest strategic platform. The Environmental platform serves two main markets: water quality and retail/commercial petroleum.

Danaher’s water quality operations provide a wide range of instruments, related consumables, and services used to detect and measure chemical, physical, and microbiological parameters in drinking water, wastewater, groundwater, and ultrapure water. Typical users of these products include municipal drinking water and wastewater treatment plants, industrial process water and wastewater treatment facilities, and third-party testing laboratories. The Company is a worldwide leader in this market, providing products under a variety of well-known brands. We entered the water quality sector in 1996 and have enhanced our geographical coverage and product and service breadth through subsequent acquisitions including Dr. Lange, Hach Company, and Viridor Instrumentation, which was acquired in February 2002.

Through the Gilbarco Veeder-Root business, Danaher is a leading worldwide provider of technologies and services for the retail/commercial petroleum market. The Company designs, manufactures, and markets a wide range of products including monitoring and leak detection systems, vapor recovery equipment, fuel dispensers, point-of-sale and merchandising systems, and submersible turbine pumps. Within our target markets, we also provide remote monitoring and outsourced fuel management services, including compliance services, fuel system maintenance, and inventory planning and supply chain support. Danaher has participated in the retail/commercial petroleum market since the mid-1980s through its Veeder-Root business, and substantially enhanced its geographic coverage and product and service breadth through the recent acquisitions of Red Jacket and of Gilbarco (formerly known as Marconi Commerce Systems), which was acquired in February 2002.

Motion. Danaher’s Motion platform, representing approximately 20% of segment revenue in 2002, provides motors, drives, controls, mechanical components (such as ball screws, linear bearings, clutches/brakes, and linear actuators) and related products for various precision motion markets such as packaging equipment, medical equipment, robotics, circuit board assembly equipment, and electric vehicles such as lift trucks. The Company is currently one of the leading worldwide providers of precision motion control equipment. We entered the motion industry through the acquisition of Pacific Scientific Company in 1998, and have subsequently expanded our product and geographic breadth with various additional acquisitions, including American Precision Industries, Kollmorgen Corporation, the motion businesses of Warner Electric Company, and Thomson Industries, which was acquired in October 2002. Operations in the Motion platform are conducted through three divisions: General Purpose Systems, addressing general motion applications, Linear Motion Systems, addressing linear motion applications, and Specialty Motors, addressing minimotor applications.

Product Identification. The Product Identification platform, which accounted for approximately 10% of segment revenues in 2002, designs, manufactures, and markets a variety of equipment used to print bar codes, date codes, lot codes, and other tracking and marketing information on primary and secondary packaging. Typical users of these products include food and beverage manufacturers, pharmaceutical manufacturers, and commercial printing and mailing operations. Danaher entered the Product Identification market through the acquisition of Videojet (formerly known as Marconi Data Systems) in February 2002. The acquisition of Willett International in January 2003, further expanded the product and geographic coverage of this platform. Today, Danaher is a leader in its served Product Identification market segments.

FOCUSED NICHE BUSINESSES

Aerospace and Defense. Aerospace and Defense designs, manufactures, and markets a variety of aircraft safety equipment, including smoke detection and fire suppression systems, energetic material systems, electronic security systems, motors and actuators, and electrical power generation and management

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subsystems, as well as submarine periscopes and photonic masts. These product lines came principally from the Pacific Scientific and Kollmorgen acquisitions, and are marketed under the Pacific Scientific, Sunbank, Securaplane, Kollmorgen Electro-Optical, and Calzoni brands.

Industrial Control. Danaher’s Industrial Control products include instruments that measure and control discrete manufacturing variables such as temperature, position, quantity, and time, as well as level and flow measurement devices for various non-water-related end-markets. These products are marketed under a variety of brands, including Dynapar, Eagle Signal, Hengstler, Partlow, Anderson, West, Dolan-Jenner, Namco, GEMS Sensors, and Setra.

Power Quality. Power Quality serves two general markets. Through the Danaher Power Solutions business, Danaher provides products such as digital static transfer switches, power distribution units, and transient voltage surge suppressors. Sold under the Cyberex, Current Technology, Joslyn and United Power brands, these products are typically incorporated within systems used to ensure high-quality, reliable power in commercial and industrial environments. Danaher’s other power quality businesses provide a variety of products, marketed under the Joslyn Hi-Voltage, Joslyn, Qualitrol, Jennings, and Fisher-Pierce brands, and are mainly used in power transmission and distribution systems. Customers are primarily utilities.

TOOLS & COMPONENTS

The Tools & Components segment encompasses one strategic platform, Mechanics’ Hand Tools, and five focused niche businesses. Products are distributed by the Company’s sales personnel and independent representatives to distributors, end-users, and original equipment manufacturers.

STRATEGIC PLATFORM

Mechanics’ Hand Tools. The Mechanics’ Hand Tools platform, representing approximately 65% of segment revenue in 2002, encompasses two businesses: Danaher Tool Group (“DTG”) and Matco Tools Corporation (“Matco”). DTG is one of the largest worldwide producers of general purpose mechanics’ hand tools, primarily ratchets, sockets, and wrenches, and specialized automotive service tools for the professional and “do-it-yourself” markets. DTG has been the principal manufacturer of Sears, Roebuck and Co.’s Craftsman^® line of mechanics’ hand tools for over 60 years. DTG has also been the primary supplier of specialized automotive service tools to the National Automotive Parts Association (NAPA) for over 30 years, and the designated supplier of general purpose mechanics’ hand tools to NAPA since 1983. In addition to this private label business, Danaher also markets various products under its own brand names, including mechanics’ hand tools for industrial and consumer markets under the Armstrong, Allen and Sata brands, automotive service tools under the K-D Tools brand, and specialty fasteners under the Holo-Krome brand.

Matco manufactures and distributes professional automotive equipment, tools, and toolboxes through independent mobile distributors, who sell primarily to professional mechanics. The business is one of the leaders in the hand tool mobile distribution channel.

FOCUSED NICHE BUSINESSES

Delta Consolidated Industries. Delta is a leading manufacturer of automotive truckboxes and industrial gang boxes, which it sells under the DELTA and JOBOX brands.

Hennessy Industries. Hennessy is a leading North American full-line wheel service equipment manufacturer, providing brake lathes, vehicle lifts, tire changers, wheel balancers, and wheel weights under the Ammco, Bada, and Coats brands.

Jacobs Chuck Manufacturing Company. Jacobs designs, manufactures, and markets chucks and precision tool and workholders, primarily for the portable power tool industry. Founded by the inventor of the three-jaw drill chuck, Jacobs maintains a worldwide leadership position in drill chucks.

Jacobs Vehicle Systems (“JVS”). JVS is a leading worldwide supplier of supplemental braking systems for commercial vehicles, selling Jake Brake brand engine retarders for class 7 and 8 vehicles and exhaust brakes for class 2 through 7 vehicles. With over 2 million engine retarders installed, JVS has maintained a leadership position in its industry since introducing the first engine retarder in 1961.

Joslyn Manufacturing Company. Joslyn Manufacturing designs, manufactures, and markets pole line hardware, electrical apparatus, and termination enclosures for the electrical utility and telecommunications markets.

The following discussions of Raw Materials, Patents/Trademarks, Competition, Seasonal Nature of Business, Backlog, Employee Relations, Research and Development, Government Contracts, Environmental and

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Safety Regulations, International Operations and Major Customers include information common to both of our segments.

Raw Materials

The Company’s manufacturing operations employ a wide variety of raw materials. Danaher believes that it will generally be able to obtain adequate supplies of major raw material requirements or reasonable substitutes at reasonable costs.

Patents/Trademarks

The Company owns numerous patents and trademarks, and has also acquired licenses under patents and trademarks owned by others. Although in aggregate the Company’s intellectual property is important to its operations, the Company does not consider any single patent or trademark to be of material importance to either segment or to the business as a whole. From time to time, however, the Company does engage in litigation to protect its patents and trademarks.

Competition

Our served markets are generally highly competitive and global in nature. Because of the diversity of products the Company manufactures and the variety of markets it serves, the Company encounters a wide variety of competitors. The Company faces numerous regional or specialized competitors, many of which are well-established in their markets. In addition, some of the Company’s competitors are larger companies or divisions of larger companies that have greater sales, marketing, research, and financial resources than the Company. Key competitive factors typically include price, quality, delivery speed, service and support, innovation, product features and performance, and brand name.

Seasonal Nature of Business

Although certain Danaher businesses experience seasonal fluctuations in demand, as a whole, the Company is not subject to material seasonality.

Backlog

Backlog is generally not considered a significant factor in the Company’s business as relatively short delivery periods and rapid inventory turnover are characteristic of most of its products.

Employee Relations

At December 31, 2002, the Company employed approximately 29,000 permanent and temporary persons, of which approximately 17,000 were employed in the United States and approximately 12,000 were employed outside the United States. Of these United States employees, approximately 3,200 were hourly-rated unionized employees. The Company also has government-mandated collective bargaining arrangements or union contracts in other countries. The Company considers its labor relations to be good.

Research and Development

The Company’s research and development expenditures were approximately $174 million for 2002, $119 million for 2001 and $138 million for 2000. The Company conducts research and development activities for the purpose of developing new products and services and improving existing products and services.

Government Contracts

The Company has agreements relating to the sale of products to government entities, primarily defense-related products and water and wastewater related products, and, as a result, is subject to various statutes and regulations that apply to companies doing business with the government. The laws governing government contracts differ from the laws governing private contracts. For example, many government contracts contain pricing terms and conditions that are not applicable to private contracts. The Company’s agreements relating to the sale of products to government entities may be subject to termination, reduction or modification in the event of changes in government requirements, reductions in federal spending and other factors. The Company is also subject to investigation and audit for compliance with the regulations governing government contracts, including requirements related to procurement integrity, export control, employment practices, the accuracy of records and the recording of costs. A failure to comply with these regulations might result in suspension of these contracts, administrative penalties or suspension or debarment from U.S. government contracting or subcontracting for a period of time.

Environmental and Safety Regulations

Certain of the Company’s operations are subject to environmental laws and regulations in the jurisdictions in which they operate, which impose limitations on the discharge of pollutants into the

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ground, air and water and establish standards for the generation, treatment, use, storage and disposal of solid and hazardous wastes. The Company must also comply with various health and safety regulations in both the United States and abroad in connection with its operations. The Company believes that it is in substantial compliance with applicable environmental, health and safety laws and regulations. Compliance with these laws and regulations has not had and, based on current information and the applicable laws and regulations currently in effect, is not expected to have a material adverse effect on the Company’s capital expenditures, earnings or competitive position.

In addition to environmental compliance costs, the Company may incur costs related to alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. In addition to clean-up actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of or exposure to hazardous substances. The Company has received notification from the U.S. Environmental Protection Agency, and from state and foreign environmental agencies, that conditions at a number of sites where the Company and others disposed of hazardous wastes require clean-up and other possible remedial action and may be the basis for monetary sanctions, including sites where the Company has been identified as a potentially responsible party under federal and state environmental laws and regulations. The Company has projects underway at several current and former manufacturing facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations. In particular, Joslyn Manufacturing Company (“JMC”), a subsidiary of the Company, previously operated wood treating facilities that chemically preserved utility poles, pilings and railroad ties. All such treating operations were discontinued or sold prior to 1982. Danaher acquired JMC in September 1995. These facilities used wood preservatives that included creosote, pentachlorophenol and chromium-arsenic-copper. While preservatives were handled in accordance with then existing law, environmental law now imposes retroactive liability, in some circumstances, on persons who owned or operated wood-treating sites. JMC is remediating some of its former sites and will remediate other sites in the future.

The Company has made a provision for environmental remediation; however, there can be no assurance that estimates of environmental liabilities will not change. The Company generally makes an assessment of the costs involved for its remediation efforts based on environmental studies as well as its prior experience with similar sites. If the Company determines that it has potential liability for properties currently owned or previously sold, it accrues the total estimated costs, including investigation and remediation costs, associated with the site. While the Company actively pursues appropriate insurance recoveries, it does not recognize any insurance recoveries for environmental liability claims until realized. The ultimate cost of site cleanup is difficult to predict given the uncertainties of the Company’s involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. As such, there can be no assurance that the Company’s estimates of environmental liabilities will not change. In view of the Company’s financial position and reserves for environmental matters, the Company believes that its liability, if any, for past or current waste disposal practices and other hazardous materials handling practices will not have a material adverse effect on its results of operation, financial condition and cash flow.

International Operations

The Company’s net revenue originating outside the U.S., as a percentage of the Company’s total net revenue, was approximately 28 percent in 2002, 31 percent in 2001 and 24 percent in 2000. The Company’s long-lived assets located outside of the U.S., as a percentage of the Company’s total long-lived assets, was approximately 15 percent in 2002, 12 percent in 2001 and 5 percent in 2000. Most of the Company’s sales in international markets are made by foreign sales subsidiaries and through various representatives and distributors. However, the Company also sells into international markets directly from the U.S.

The Company’s international business is subject to risks customarily encountered in foreign operations, including interruption in the transportation of parts to the Company and finished goods to the Company’s customers, changes in a specific country’s or region’s political or economic conditions, trade protection measures, import or export licensing requirements, unexpected changes in tax laws and regulatory requirements, difficulty in staffing and managing widespread operations, differing labor regulations and differing protection of intellectual property. The Company is also exposed to foreign currency exchange rate risk inherent in its sales commitments, anticipated sales, and assets and liabilities denominated in currencies other than the local functional currency, and may also become subject to interest rate risk inherent in any debt incurred, or investment and finance receivable portfolios held. The U.S. and international response to recent terrorist activities, and the potential for war in Iraq, could exacerbate these risks. Financial information about the Company’s international operations is contained in Note 14 of the consolidated financial statements included in Item 8 of this

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report.

Major Customers

The Company has no customers which accounted for more than 10% of consolidated sales in 2002. The Company’s largest single customer is Sears, Roebuck and Co. (“Sears”), and although the relationship with Sears is long-standing, the Company believes the loss or material reduction of this business could have a material adverse effect on the results of operations of the Tools and Components segment and of the Company as a whole.

Available Information

The Company maintains an internet website at www.danaher.com. The Company makes available free of charge on the website its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after filing such material electronically with, or furnishing such material to, the SEC. The Company’s Internet site and the information contained therein or connected thereto are not incorporated by reference into this Form 10-K.

Danaher Corporation, originally DMG, Inc., was organized in 1969 as a Massachusetts real estate investment trust. In 1978 it was reorganized as a Florida corporation under the name Diversified Mortgage Investors, Inc. (“DMI”) which in a second reorganization in 1980 became a subsidiary of a newly created holding company named DMG, Inc. The Company adopted the name Danaher in 1984 and was reincorporated as a Delaware corporation following the 1986 annual meeting of shareholders.

ITEM 2.    PROPERTIES

The Company’s corporate headquarters are located in Washington, D.C. At December 31, 2002, the Company had approximately 130 significant manufacturing and distribution locations worldwide, comprising approximately 17 million square feet, of which approximately 11 million square feet are owned and approximately 6 million square feet are leased. Of these manufacturing and distribution locations, approximately 85 facilities are located in the United States and approximately 45 are located outside the United States, primarily in Europe and to a lesser extent in Asia-Pacific, Canada, and Latin America. The approximate number of manufacturing and distribution locations by business segment are: Process/ Environmental Controls, 95; and Tools and Components, 35. The Company considers its facilities suitable and adequate for the purposes for which they are used and does not anticipate difficulty in renewing existing leases as they expire or in finding alternative facilities.

ITEM 3.    LEGAL PROCEEDINGS

The Company has been engaged in product liability litigation related to an air tool product line that was disposed in 1987. The Company has accepted an agreement, in principle, to settle the claims related to this litigation. The Company believes that completion of this settlement will not result in a material adverse effect on the Company’s results of operations or financial condition.

In addition to the litigation noted above, the Company is, from time to time, subject to routine litigation incidental to its business. These lawsuits primarily involve claims for damages arising out of the use of the Company’s products, allegations of patent and trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes. Some of these lawsuits include claims for punitive as well as compensatory damages. The Company estimates its exposure for product liability and accrues for this estimated liability up to the limits of the deductibles under available insurance coverage. All other claims and lawsuits are handled on a case-by-case basis. As previously noted under Item 1, the Company is also involved in proceedings with respect to environmental matters, including sites where it has been identified as a potentially responsible party under federal and state environmental laws and regulations. The Company believes that the results of the above-noted litigation and other pending legal proceedings will not have a materially adverse effect on the Company’s results of operations, cash flows or financial condition, notwithstanding any related insurance recoveries.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth quarter of 2002.

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PART II

ITEM 5.    MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company’s common stock is traded on the New York Stock Exchange and the Pacific Stock Exchange under the symbol DHR. On March 17, 2003, there were approximately 2,800 registered holders of record of the Company’s common stock. The high and low common stock prices per share as reported on the New York Stock Exchange, and the dividends paid per share, in each case for the periods described below, were as follows:

	2002						2001
	High		Low		Dividends Per Share		High		Low		Dividends Per Share
First quarter	$	74.25	$	58.51	$	.02	$	68.69	$	52.21	$	0.02
Second quarter		75.46		61.28		.02		65.49		51.51		0.02
Third quarter		66.36		52.60		.025		59.20		43.90		0.02
Fourth quarter		67.19		52.98		.025		64.10		45.57		0.02

The payment of dividends by the Company in the future will be determined by the Company’s Board of Directors and will depend on business conditions, the Company’s financial earnings and other factors.

ITEM 6.    SELECTED FINANCIAL DATA

	2002			2001			2000		1999			1998
	(in thousands except per share data)
Sales	$	4,577,232		$	3,782,444		$	3,777,777	$	3,197,238		$	3,047,061
Operating profit		701,122	(c)		502,011	(c)		552,149		458,007			384,112
Net earnings before effect of accounting change and reduction of income tax reserves related to previously discontinued operation		434,141	(c)		297,665	(c)		324,213		261,624	(b)		192,186	(a)
Net earnings		290,391	(c)		297,665	(c)		324,213		261,624	(b)		192,186	(a)
Earnings per share before accounting change and reduction of income tax reserves related to previously discontinued operation
Basic		2.89	(c)		2.07	(c)		2.28		1.84	(b)		1.37	(a)
Diluted		2.79	(c)		2.01	(c)		2.23		1.79	(b)		1.33	(a)
Earnings per share
Basic		1.93	(c)		2.07	(c)		2.28		1.84	(b)		1.37	(a)
Diluted		1.88	(c)		2.01	(c)		2.23		1.79	(b)		1.33	(a)
Dividends per share		0.09			0.08			0.07		0.07			0.09
Total assets		6,029,145			4,820,483			4,031,679		3,047,071			2,840,859
Total debt		1,309,964			1,191,689			795,190		374,634			503,639

(a) Includes $28.6 million in after-tax costs ($0.20 per share) from the merger with the Fluke Corporation.

(b) Includes $9.8 million in after-tax costs ($0.07 per share) from the merger with the Hach Company.

(c) Includes $69.7 million ($43.5 million after-tax or $0.29 per share) in costs from restructuring charges taken in the fourth quarter of 2001 and an adjustment of $6.3 million ($4.1 million after-tax or $0.03 per share) in after-tax costs recorded in the fourth quarter of 2002.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements.

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Overview

Danaher Corporation designs, manufactures and markets industrial and consumer products with strong brand names, proprietary technology and major market positions in two business segments: Process/Environmental Controls and Tools and Components. The Process/Environmental Controls segment is a leading producer of environmental products, including water quality analytical instrumentation and leak detection systems for underground fuel storage tanks; retail petroleum automation products; compact professional electronic test tools; product identification equipment and consumables; and motion, position, speed, temperature, pressure, level, flow, particulate and power reliability and quality control and safety devices. In its Tools and Components Segment, the Company is a leading producer and distributor of general purpose mechanics’ hand tools and automotive specialty tools, as well as of toolboxes and storage devices, diesel engine retarders, wheel service equipment, drill chucks, and hardware and components for the power generation and transmission industries.

Management believes that the Company’s future sales growth will come from both core organic growth and acquisitions. The Company invests significant resources in its organic growth initiatives across its business units. Additionally, the Company has completed numerous acquisitions and expects new acquisitions to provide revenue growth in the future. During 2003, the Company expects its primary served markets to remain essentially flat, with the majority of its revenue growth coming from market share gains and geographic expansion.

Results of Operations

Summary Of Sales By Business Segment.

	2002				2001				2000
	(in thousands)
Process/Environmental Controls	$	3,385,154	74.0	%	$	2,616,797	69.2	%	$	2,441,986	64.6	%
Tools and Components		1,192,078	26.0	%		1,165,647	30.8	%		1,335,791	35.4	%
	$	4,577,232	100.0	%	$	3,782,444	100.0	%	$	3,777,777	100.0	%

PROCESS/ENVIRONMENTAL CONTROLS

The Process/Environmental Controls segment is comprised of Hach Company, the Dr. Bruno Lange Group, Videojet Technologies, Fluke Corporation, Fluke Networks, Gilbarco, Veeder-Root Company, the Danaher Industrial Controls Group, the Danaher Motion Group (including General Purpose Systems, Linear Motion Systems and the Specialty Motors Division), Gems Sensors, Danaher Power Solutions, QualiTROL Corporation, and the aerospace and defense businesses of Pacific Scientific and Kollmorgen Corporation. These companies produce and sell compact, professional electronic test tools; product identification equipment and consumables; retail petroleum automation products; underground storage tank leak detection systems; motion, position, speed, temperature, and level instruments and sensing devices; power switches and controls; communication line products; power protection products; liquid flow and quality measuring devices; quality assurance products and systems; safety devices; and electronic and mechanical counting and controlling devices.

2002 COMPARED TO 2001

Sales of the Process/Environmental Controls segment increased 29% in 2002 compared to 2001. The acquisitions in February 2002 of Gilbarco and Videojet Technologies as well as several smaller 2001 and 2002 acquisitions provided a 36% increase in segment sales. This increase was offset by an 8% unit volume decline in existing businesses. A favorable currency translation impact provided a 1% revenue increase, and prices were essentially flat compared to 2001.

Revenues from the Company’s environmental business, representing approximately 30% of segment revenue, increased over 90% in 2002 compared to 2001, resulting primarily from the acquisitions of Gilbarco and Viridor in February 2002 and two smaller acquisitions completed in 2002 and 2001. Acquisitions provided the entirety of this growth, as core operations declined approximately 2%. Modest growth in the Company’s water quality business units was offset by weakness in demand for ultrapure instrumentation, brought on primarily by weakness in semiconductor end markets, and in Veeder-Root’s leak detection market. The Company believes geopolitical uncertainties in oil-producing regions contributed to the decline in demand in the end markets served by the Gilbarco/Veeder-Root business in 2002. Electronic test revenues, representing approximately 20% of segment revenues, grew 6% during 2002, also due to acquisition activity. Acquisitions contributed 11% of this growth, which was offset by a core volume decline of 5%, resulting from weakness in both industrial and network test equipment sales. Sales in the Company’s motion businesses, representing approximately 20% of segment revenues, declined 3%, as a core volume decline of 9% was offset by acquisition growth of 6%. Continued softness in semiconductor and electronic assembly end market demand was a leading factor in motion’s core volume decline.

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Aerospace and defense revenues increased 7% in 2002, resulting from acquisition activity of 5% and core volume growth of 2%. Power quality sales declined 28% in 2002, due to a significant decline in end user demand that began in early 2001 and has continued through 2002. Sales of the Company’s industrial controls product lines fell 7% due to recession-related weakness in their served end markets. In February 2002, the Company established its product identification business with the acquisition of Videojet Technologies, which accounted for approximately 11% of the segment’s growth during 2002.

Operating profit margins for the segment were 16.0% in 2002 compared to 14.9% in 2001. Excluding the impact of the 2001 restructuring program from both 2002 and 2001, margins decreased 0.7 points from 16.5% in 2001 to 15.8% in 2002. Approximately 130 basis points of the change in operating margin resulted from the dilutive impact of lower operating margins of the new businesses acquired during 2001 and 2002. Additionally, margin declines from lower sales volumes at the business units described above, and increases in expenditures on growth opportunities in the segment, were offset by the cessation of goodwill amortization as of January 1, 2002, and other cost reductions including the partial benefit of the 2001 restructuring actions.

2001 COMPARED TO 2000

Sales in 2001 were 7% higher than in 2000 for this segment. The full-year impact of the 2000 acquisitions of American Precision Industries, Kollmorgen Corporation, Warner Electric Motion and acquisitions of several smaller businesses in 2001 provided a 15% increase from 2000. Two small product line dispositions in 2001 caused a 2% decrease in 2001 segment sales. The remainder of the sales change was generated by a decrease in unit volume of 5% and a 1% negative currency translation impact. Overall segment prices remained flat for 2001 compared to 2000.

Revenues from the motion business grew approximately 20% from 2000 levels. An increase of 40% from acquisitions was offset by declines in revenues from existing businesses of approximately 20%, driven by recession-related weakness in end markets, particularly semiconductor end markets. Electronic test revenues declined 1.5%. Acquisition growth of 3.5% and continued growth in sales of Fluke Networks business were offset by declines in sales of Fluke industrial products. Environmental revenues for 2001 increased 17% from 2000. 7% of this growth resulted from acquisitions, with the balance coming from core growth in the Veeder-Root and water quality product lines. The Company’s aerospace and defense business units grew 39% in 2001. Acquisition growth of 30%, in particular that provided by the full-year impact of the Kollmorgen acquisition, accounted for most of the increase. Power quality revenues declined 14% in 2001, as net acquisition growth of 6% offset significant declines in end-user demand.

Operating profit margins, excluding the effects of the restructuring charge recorded in the fourth quarter of 2001, increased from 15.7% to 16.5% due to aggressive cost reduction actions across all business units and continued margin improvements in recently acquired companies.

TOOLS AND COMPONENTS

The Tools and Components Segment is comprised of the Danaher Hand Tool Group (including the Special Markets, Asian Tools, Professional Tools and Matco Tools Divisions), Jacobs Chuck Manufacturing Company, Delta Consolidated Industries, Jacobs Vehicle Systems, Hennessy Industries, and the hardware and electrical apparatus lines of Joslyn Manufacturing Company. This segment is one of the largest domestic producers and distributors of general purpose and specialty mechanics’ hand tools. Other products manufactured by these companies include toolboxes and storage devices; diesel engine retarders; wheel service equipment; drill chucks; custom-designed headed tools and components; hardware and components for the power generation and transmission industries; and high-quality precision socket screws, fasteners, and miniature precision parts.

2002 COMPARED TO 2001

Revenues in the Tools and Components segment grew 2% in 2002. The entirety of this growth represents core sales volume growth, as there were no acquisitions in this segment during 2001 and 2002, and price and currency impacts were negligible. Hand tool revenues, representing approximately 65% of segment sales, grew 2%, generated primarily by increases in the Matco sales channel as a result of continued market share gains. Additionally, hand tool revenues in the Company’s Asian channels grew, but were offset by declines in domestic retail channels. Sales of diesel engine retarders at the Jacobs Vehicle Systems business unit increased significantly, as OEM customers accelerated their 2002 order rates to meet a regulatory deadline. Diesel engine retarder demand declined sharply following passage of the regulatory deadline in October 2002, and is expected to negatively impact engine retarder revenues during 2003. Increases in this segment in 2002 were offset by declines in the Delta and Jacobs Chuck business units.

Operating profit margins for the segment were 15.2% in 2002 compared to 11.3% in 2001. Excluding the impact of the 2001 restructuring program from both 2002 and 2001, margins increased 1.6 points from 13.5% in 2001 to 15.1% in 2002. This increase resulted from the effect of higher revenue levels, the cessation of goodwill amortization as of January 1, 2002, and other cost reductions including the partial benefit of the 2001 restructuring actions.

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2001 COMPARED TO 2000

Sales declined 13% from 2000 to 2001. Continued weakness in the heavy-duty truck market significantly impacted sales of diesel engine retarders, accounting for a 4% drop in segment revenues. Sharp declines in drill chuck sales combined with a fall in hand tool revenues to contribute a 6% reduction in segment sales from 2000. Sales in both the Joslyn hardware and electrical apparatus lines and the Delta Industries product lines reflected double-digit declines from the sales levels achieved by those lines in 2000 due to recessionary pressures in the markets they serve. Price and currency impacts were negligible for this segment. Operating profit margins, excluding the effects of the restructuring charge recorded in the fourth quarter of 2001, decreased from 14.2% to 13.5%. The unfavorable impact of lower production volumes was partially offset by aggressive cost reduction actions taken across all business units.

GROSS PROFIT

Gross profit margin for 2002 was 39.0%, an increase of 0.8 points compared to 38.2% in 2001. This increase resulted from the benefits of the 2001 restructuring program and other improvements in the gross margins of core business units, in addition to the effect of slightly higher gross margins of newly acquired businesses.

Gross profit margin in 2001 was 38.2%, a 0.5% decrease compared to 38.7% achieved in 2000. Lower core volume and lower margins associated with businesses acquired in 2000 and 2001 drove the reduction, and were partially offset by overhead cost reductions and process improvements in all business units.

OPERATING EXPENSES

In 2002, selling, general and administrative expenses were 23.8% of sales, an increase of 0.7 points from 2001 levels. This increase is due primarily to the effect of newly acquired businesses and their higher relative cost structures, offset by the elimination of goodwill amortization effective January 1, 2002.

Selling, general and administrative expenses for 2001 as a percentage of sales were 23.1%, 1 point lower than in 2000. Aggressive cost reductions and reductions in discretionary spending implemented in late 2000 and throughout 2001 drove this decrease.

RESTRUCTURING CHARGE

In the fourth quarter of 2001, the Company recorded a restructuring charge of $69.7 million ($43.5 million after tax, or $0.29 per share). During the fourth quarter of 2001, management determined that it would restructure certain of its product lines, principally its drill chuck, power quality and industrial controls divisions, to improve financial performance. The primary objective of the restructuring plan was to reduce operating costs by consolidating, eliminating and/or downsizing existing operating locations. No significant product lines have been discontinued. Severance costs for the termination of approximately 1,100 employees was estimated at $49 million. These employees include all classes of employees, including hourly direct, indirect salaried and management personnel, at the affected facilities. Approximately $16 million of the charge was to provide for impaired assets associated with the closure of 16 manufacturing and distribution facilities in North America and Europe. The assets impaired were principally equipment and leasehold improvements associated with the facilities to be closed. The remainder of the charge was for other exit costs including lease termination costs. Approximately $25.5 million of the $69.7 million charge related to the Tools and Components segments and approximately $44.2 million of the charge related to the Process/Environmental Controls segment. A table describing the application of the restructuring accrual is included in Note 3 to the Company’s Consolidated Financial Statements.

The expected annual pre-tax cost reduction, net of increased costs at other facilities, from the restructuring is approximately $38 million of which approximately 50% has been realized in 2002 with the full year benefit to be realized in 2003. These net cost reductions will primarily reduce the cost of goods sold in the Company’s Consolidated Statement of Earnings. As of December 31, 2002, the restructuring program has been substantially completed as planned. While certain estimates are required in determining the net amount of cost savings achieved, based on the Company’s analysis of the impact of the restructuring, management believes these net costs savings have been realized.

Due to minor changes to the original restructuring plan and to costs incurred being less than estimated, in December 2002, the Company adjusted its restructuring reserves accrued as part of the fourth quarter 2001 restructuring charge by approximately $6.3 million ($4.1 million after tax, or $0.03 per share).

In conjunction with the closing of the facilities, approximately $4 million of inventory was written off in the fourth quarter of 2001 as unusable in future operating locations. This inventory consisted principally of component parts and raw materials, which were either redundant to inventory at the

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facilities being merged and/or were not economically feasible to relocate since the inventory was purchased to operate on equipment and tooling which was not being relocated. The inventory write-off was included in Cost of Sales in the fourth quarter of 2001 and was not part of the restructuring charge.

INTEREST COSTS AND FINANCING TRANSACTIONS

The Company’s debt financing as of December 31, 2002 was composed primarily of $542 million of zero coupon convertible notes due 2021 (“LYONs”), $315 million of 6.25% Eurobond notes due 2005 and $250 million of 6% notes due 2008. The Company maintains uncommitted lines and a revolving $500 million senior unsecured credit facility available for general corporate purposes. There have been no borrowings under the revolving credit facility since it was established in June 2001. Borrowings under the revolving credit agreement bear interest of Eurocurrency rate plus .21% to .70%, depending on the Company’s current debt rating. The credit facility has a fixed five year term. There were no borrowings outstanding under the Company’s uncommitted lines of credit as of December 31, 2002.

Net interest expense of $43.7 million in 2002 was $17.9 million higher than 2001. Returns on invested cash balances fell significantly, as general short-term market interest rates declined substantially throughout 2002. Interest income of $10.3 million and $22.4 million was recognized in 2002 and 2001, respectively. Net interest expense in 2001 was $3.5 million lower than in 2000 due to an increase in interest earned as a result of higher average invested cash balances during 2001.

INCOME TAXES

The 2002 effective tax rate of 34.0% is 3.5% lower than the 2001 effective rate, mainly due to the effect of adopting SFAS No. 142 and its resulting cessation of goodwill amortization, and also due to a higher proportion of foreign earnings in 2002 compared to 2001.

In connection with the completion of a federal income tax audit, the Company adjusted certain income tax related reserves established related to the sale of a previously discontinued operation and recorded a $30 million credit to its fourth quarter 2002 income statement. This credit has been classified separately below net earnings from continuing operations since the tax reserves related to a previously discontinued operation.

The 2001 effective tax rate of 37.5% is 0.5% lower than in 2000, driven primarily by a higher proportion of foreign earnings in 2001 compared to 2000.

INFLATION

The effect of inflation on the Company’s operations has been minimal in 2002, 2001 and 2000.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates, which could impact its results of operations and financial condition. The Company manages its exposure to these risks through its normal operating and financing activities.

The fair value of the Company’s fixed-rate long-term debt is sensitive to changes in interest rates. The value of this debt is subject to change as a result of movements in interest rates. Sensitivity analysis is one technique used to evaluate this potential impact. Based on a hypothetical, immediate 100 basis-point increase in interest rates at December 31, 2002, the market value of the Company’s fixed-rate long-term debt would decrease by $15 million. This methodology has certain limitations, and these hypothetical gains or losses would not be reflected in the Company’s results of operations or financial conditions under current accounting principles. In January 2002, the Company entered into two interest rate swap agreements for the term of the 6% notes due 2008 having a notional principal amount of $100 million whereby the effective interest rate on $100 million of these notes will be the six month LIBOR rate plus approximately 0.425%. In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, the Company accounts for these swap agreements as fair value hedges. Since these instruments qualify as “effective” or “perfect” hedges, they will have no impact on net income or stockholders’ equity. See Note 7 of the Consolidated Financial Statements for further discussion.

The Company has a number of manufacturing sites throughout the world and sells its products in more than 30 countries. As a result, it is exposed to movements in the exchange rates of various currencies against the United States dollar and against the currencies of countries in which it manufactures and sells products and services. The Company’s issuance of Eurobond notes in 2000 provides an offset to a portion of the Company’s European net asset position. The Company has generally accepted the exposure to exchange rate movements relative to its investment in foreign operations without using derivative financial instruments to manage this risk.

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Other than the above noted swap arrangements, there were no material derivative instrument transactions during any of the periods presented. Additionally, the Company does not have significant commodity contracts or derivatives.

LIQUIDITY AND CAPITAL RESOURCES

The Company continues to generate substantial cash from operations and remains in a strong financial position, with resources available for reinvestment in existing businesses, strategic acquisitions and managing the capital structure on a short- and long-term basis. Being a key source of the Company’s liquidity, operating cash flow grew $101.9 million to $710.3 million in 2002, or 16.7% during 2002 as compared to 2001. The increase in operating cash flow in 2002 over 2001 was primarily the result of higher earnings and improved working capital management. Improvements were achieved in each working capital component during 2002, driven by Danaher Business System efforts to improve asset turnover. Gross capital spending of $65.4 million for 2002 decreased $19.0 million from 2001, as increased capital spending from new acquisitions was more than offset by declines in core businesses. Capital expenditures are a significant use of funds and are made primarily for machinery, equipment and the improvement of facilities. In 2003, the Company expects capital spending of approximately $100 million. Disposals of fixed assets yielded $26.5 million of cash proceeds for 2002, primarily due to the sale of six facilities in 2002. A net after-tax gain of $3.9 million, approximately $.02 per share, was recorded on the facility sales and is included as a reduction of selling, general and administrative expenses.

In addition to measuring its cash flow generation and usage based upon the operating, investing, and financing classifications included in the Consolidated Statement of Cash Flows, the Company also measures its free cash flow. Free cash flow for 2002, which is defined as operating cash flow of $710 million less capital expenditures of $65 million, grew to a record $645 million, an increase of 23% from 2001. Free cash flow for 2001 is defined as operating cash flow of $608 million less capital expenditures of $84 million. Free cash flow provides a measurement of the cash flows from operations available for purposes other than ongoing capital expenditures.

Investing activities for the year ended December 31, 2002, used cash of $1,145 million compared to $488 million of cash used in 2001. As discussed below, the Company has completed numerous acquisitions of existing businesses during the year ended December 31, 2002 as well as the years ended December 31, 2001 and 2000. All of the acquisitions during this time period have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill typically arises because the purchase prices for these targets reflect the competitive nature of the process by which we acquired the targets and the complementary strategic fit and resulting synergies these targets bring to existing operations.

On October 18, 2002, the Company acquired 100% of Thomson Industries, Inc. in a stock and asset acquisition, for approximately $147 million in cash including transaction costs (net of $2 million of acquired cash), an agreement to pay $15 million over the next 6 years, and an additional maximum contingent consideration of up to $60 million cash based on the future performance of Thomson through December 31, 2005. On February 25, 2002, the Company completed the divestiture of API Heat Transfer, Inc. to an affiliate of Madison Capital Partners for approximately $63 million (including $53 million in net cash and a note receivable in the principal amount of $10 million), less certain liabilities of API Heat Transfer, Inc. paid by the Company at closing and subsequent to closing. On February 5, 2002, the Company acquired 100% of Marconi Data Systems, formerly known as Videojet Technologies, from Marconi plc in a stock acquisition, for approximately $400 million in cash including transaction costs. On February 4, 2002, the Company acquired 100% of Viridor Instrumentation Limited from the Pennon Group plc in a stock acquisition, for approximately $137 million in cash including transaction costs. On February 1, 2002, the Company acquired 100% of Marconi Commerce Systems, formerly known as Gilbarco, from Marconi plc in a stock acquisition, for approximately $309 million in cash including transaction costs (net of $17 million of acquired cash). In addition, during the year ended December 31, 2002, the Company acquired 8 smaller companies, for total consideration of approximately $166 million in cash including transaction costs.

On January 2, 2001, the Company acquired 100% of the assets of United Power Corporation for approximately $108 million in cash including transaction costs. The Company acquired 11 smaller companies during 2001 for total cash consideration of approximately $343 million including transaction costs. The Company also disposed of two small product lines during 2001, yielding cash proceeds of approximately $33 million.

On July 3, 2000, the Company acquired 100% of the assets of the motion businesses of Warner Electric Corporation for approximately $147 million cash including transaction costs. On June 20, 2000, the Company acquired 100% of the common stock of Kollmorgen Corporation for approximately $267 million cash including transaction costs. The Company also assumed debt with a fair market value of approximately $95 million in connection with this acquisition. On March 27, 2000, the Company acquired 100% of the common stock of American Precision Industries for approximately $186 million cash including transaction costs. The Company also assumed debt with a fair market value of approximately $60 million in connection with this acquisition. The Company acquired 5 smaller companies during 2000 for total cash

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consideration of approximately $109 million including transaction costs.

Financing activities generated cash of $516 million in 2002 compared to $410 million in 2001. In March 2002, the Company completed the issuance of 6.9 million shares of the Company’s common stock. Proceeds of the common stock issuance, net of the related expenses, were approximately $467 million. The Company has used the proceeds to repay approximately $230 million of short-term borrowings incurred in the first quarter of 2002 related to the Videojet, Gilbarco and Viridor acquisitions. During the first quarter of 2001, the Company issued $830 million (value at maturity) in zero-coupon convertible senior notes due 2021 known as Liquid Yield Option Notes or LYONS. The net proceeds to the Company were approximately $505 million, of which approximately $100 million was used to pay down debt, and the balance was used for general corporate purposes, including acquisitions. The LYONs carry a yield to maturity of 2.375%. Holders of the LYONs may convert each of their LYONs into 7.2676 shares of Danaher common stock (in the aggregate for all LYONs, approximately 6.0 million shares of Danaher common stock) at any time on or before the maturity date of January 22, 2021. The Company may redeem all or a portion of the LYONs for cash at any time on or after January 22, 2004. Holders may require the Company to purchase all or a portion of the notes for cash and/or Company common stock, at the Company’s option, on January 22, 2004 or on January 22, 2011. The Company will pay contingent interest to the holders of LYONs during any six-month period commencing after January 22, 2004 if the average market price of a LYON for a measurement period preceding such six-month period equals 120% or more of the sum of the issue price and accrued original issue discount for such LYON. Except for the contingent interest described above, the Company will not pay interest on the LYONs prior to maturity.

Total debt under the Company’s borrowing facilities increased to $1,310.0 million at December 31, 2002, compared to $1,191.7 million at December 31, 2001. This increase was due primarily to the change in the U.S dollar/Euro exchange rates and the resulting impact on the Company’s Euro denominated debt as well as the effect of assumed debt obligations related to 2002 acquisitions. As discussed previously, as of December 31, 2002, $315 million of the Company’s debt was fixed at a rate of 6.25%, $250 million was fixed at an average interest cost of 6% (subject to the interest rate swaps described above) and the Company’s LYONs obligations (which as of December 31, 2002 amounted to $542 million) carry a yield to maturity of 2.375%(with contingent interest payable as described above). Substantially all remaining borrowings have interest costs that float with referenced base rates. As of December 31, 2002, the Company had unutilized commitments under its revolving credit facility of $500 million. As of December 31, 2002, the Company held $810 million of cash and cash equivalents that were invested in highly liquid investment grade debt instruments with a maturity of 90 days or less. As of December 31, 2002, the Company was in compliance with all debt covenants under the aforementioned debt instruments, including limitations on secured debt and debt levels. None of the Company’s debt instruments contain trigger clauses requiring the Company to repurchase or pay off its debt if rating agencies downgrade the Company’s debt rating. In addition, as of the date of this Annual Report on Form 10-K, the Company could issue up to approximately $500 million of securities under its shelf registration statement with the Securities and Exchange Commission.

In January 2002, the Company entered into two interest rate swap agreements for the term of the Company’s 6% notes due 2008 having a notional principal amount of $100 million whereby the effective interest rate on $100 million of the notes will be the six month LIBOR rate plus approximately 0.425%. In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, the Company accounts for these swap agreements as fair value hedges. Since these instruments qualify as “effective” or “perfect” hedges, they will have no impact on net income or stockholders’ equity.

Due to declines in the equity markets, the fair value of the Company’s pension fund assets has decreased since 2001. In accordance with SFAS No. 87, “Employers’ Accounting for Pensions”, the Company recorded a minimum pension liability adjustment of $76.9 million (net of tax benefit of $39.6 million) at December 31, 2002. This adjustment results in a direct charge to stockholders’ equity and does not impact net income, but is included in other comprehensive income. Calculations of the amount of pension and other postretirement benefits costs and obligations depend on the assumptions used in such calculations. These assumptions include discount rates, expected return on plan assets, rate of salary increases, health care cost trend rates, mortality rates, and other factors. While the Company believes that the assumptions used in calculating its pension and other postretirement benefits costs and obligations are appropriate, differences in actual experience or changes in the assumptions may affect the Company’s financial position or results of operations. For 2003, the Company anticipates lowering the expected long-term rate of return assumption from 9% to 8.5% for the Company’s defined benefit pension plans. The Company anticipates there will be no funding requirements for the defined benefit plans in 2003.

In the third and fourth quarters of 2001, the Company repurchased 375,500 shares of its common stock at a cost of $17.3 million. In the first quarter of 2000, the Company repurchased 2,042,300 shares of the Company’s common stock for total consideration of $82.2 million.

The ongoing costs of compliance with existing environmental laws and regulations have not had, and are not expected to have, a material adverse effect on the Company’s cash flows or financial position.

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The Company will continue to have cash requirements to support working capital needs and capital expenditures, and to pay interest and service debt. In order to meet these cash requirements, the Company intends to use available cash and internally generated funds and to borrow under its credit facility or under uncommitted lines of credit. The Company believes that cash provided from these sources will be adequate to meet its cash requirements for the foreseeable future.

CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

The following tables summarize, as of December 31, 2002, and by period due or expiration of commitment, certain of the Company’s contractual obligations and other commercial commitments.

Payments due by Period

	Total		Less than 1 Year		1–3 Years		4–5 Years		Over 5 Years
	(in thousands)
Long-term debt (a)	$	1,309,964	$	112,542	$	385,949	$	5,792	$	805,681
Non-cancelable operating leases (b)		261,000		54,000		78,000		56,000		73,000
Total	$	1,570,964	$	166,542	$	463,949	$	61,792	$	878,681

(a) As described in Note 7 to the Consolidated Financial Statements

(b) As described in Note 11 to the Consolidated Financial Statements

Other Commercial Commitments

			Amount of Commitment Expiration Per Period
	Total Amounts Committed		Less than 1 Year		1–3 Years		4–5 Years		Over 5 Years
	(in thousands)
Standby Letters of Credit and Performance Bonds	$	58,000	$	51,000	$	7,000		—		—
Guarantees		102,000		100,000		2,000		—		—
Contingent Purchase Consideration		60,000		—		10,000		10,000		40,000
Standby Repurchase Obligations		2,000		1,000		1,000		—		—
Total Commercial Commitments	$	222,000	$	152,000	$	20,000	$	10,000	$	40,000

Standby letters of credit and performance bonds are generally issued to secure the Company’s obligations under short-term contracts to purchase raw materials and components for manufacture and for performance under specific manufacturing agreements. In general these commitments do not extend for more than a few months.

Guarantees reflected in the table above primarily relate to the Company’s Matco subsidiary, which has sold, with recourse, or provided credit enhancements for certain of its accounts receivable and notes receivable. Amounts outstanding under this program approximated $93 million, $92 million and $70 million as of December 31, 2002, 2001 and 2000, respectively. The subsidiary accounts for such sales in accordance with SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities—a replacement of SFAS No. 125.” A provision for estimated losses as a result of the recourse has been included in accrued expenses. No gain or loss arose from these transactions.

In connection with the Company’s acquisition of Thomson, the Company has entered into agreements to pay $15 million over the next 6 years, and an additional maximum contingent consideration of up to $60 million cash based on the future performance of Thomson through December 31, 2005.

Aside from the sale of accounts receivable described above, the contingent consideration related to the acquisition of Thomson, the leases included in the table above, and certain performance bonds and guarantees included in the table above, the Company has not entered into any off-balance sheet financing arrangements as of December 31, 2002. Also, the Company does not have any unconsolidated special purpose entities as of December 31, 2002.

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ACCOUNTING POLICIES

Management’s discussion and analysis of the Company’s financial condition and results of operations are based upon the Company’s Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates these estimates, including those related to bad debts, inventories, intangible assets, pensions and other post-retirement benefits, income taxes, and contingencies and litigation. The Company bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company believes the following critical accounting policies affect management’s more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. For a detailed discussion on the application of these and other accounting policies, see Note 1 in our Consolidated Financial Statements.

Accounts receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the inability of the Company’s customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Inventory. The Company records inventory at the lower of cost or market. The estimated market value is based on assumptions for future demand and related pricing. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.

Acquired intangibles. The Company’s business acquisitions typically result in goodwill and other intangible assets, which affect the amount of future period amortization expense and possible impairment expense that the Company will incur. The Company has adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, the new accounting standard for goodwill, which requires that the Company, on an annual basis, calculate the fair value of the reporting units that contain the goodwill and compare that to the carrying value of the reporting unit to determine if impairment exists. Impairment testing must take place more often if circumstances or events indicate a change in the impairment status. Management judgment is required in calculating the fair value of the reporting units.

Long-lived assets. The Company periodically evaluates the net realizable value of long-lived assets, including property, plant and equipment, relying on a number of factors including operating results, budgets, economic projections and anticipated future cash flows.

Purchase accounting. In connection with its acquisitions, the Company assesses and formulates a plan related to the future integration of the acquired entity. This process begins during the due diligence process and is concluded within twelve months of the acquisition. The Company accrues estimates for certain costs, related primarily to personnel reductions and facility closures or restructurings, anticipated at the date of acquisition, in accordance with Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” Adjustments to these estimates are made up to 12 months from the acquisition date as plans are finalized. To the extent these accruals are not utilized for the intended purpose, the excess is recorded as a reduction of the purchase price, typically by reducing recorded goodwill balances. Costs incurred in excess of the recorded accruals are expensed as incurred.

NEW ACCOUNTING STANDARDS

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, “Business Combinations.” This statement requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001, and establishes specific criteria for the recognition of intangible assets separately from goodwill. The Company has followed the requirements of this statement for business acquisitions made after June 30, 2001. See Note 2 of the Consolidated Financial Statements.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” This statement requires that goodwill and intangible assets deemed to have an indefinite life not be amortized. Instead of amortizing goodwill and intangible assets deemed to have an indefinite life, the statement requires a test for impairment to be performed annually, or immediately if conditions indicate that such an impairment, measured on a reporting unit basis, could exist. The Company adopted the statement effective January 1, 2002. Danaher has nine reporting units closely aligned with the Company’s strategic platforms and specialty

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niche businesses. They are as follows: Tools, Motion, Electronic Test, Power Quality, Environmental, Aerospace and Defense, Industrial Controls, Level/Flow, and Product Identification.

As a result of adopting SFAS No. 142, the Company will no longer record goodwill amortization which amounted to approximately $55 million and $46 million, net of tax, in 2001 and 2000, respectively. Using the fair value measurement requirement, rather than the undiscounted cash flows approach, the Company recorded an impairment related to the Company’s power quality business unit of $200 million ($173.8 million after tax), approximately 8.7% of intangible assets recorded as of January 1, 2002.

The following table provides the comparable effects of adopting of SFAS No. 142 for the two years ended December 31, 2001 and 2000.

For the Years Ended December 31:

	2001	2000
	(in thousands except earning per share amounts)
Reported Net Earnings	$297,665	$324,213
Add back: Goodwill Amortization (net of tax)	54,978	45,995
Adjusted Net Earnings	$352,643	$370,208
Basic Net Earnings per Share
	2001	2000
Reported Net Earnings	$2.07	$2.28
Add back: Goodwill Amortization (net of tax)	.39	.32
Adjusted Net Earnings	$2.46	$2.60
Diluted Net Earnings per Share
	2001	2000
Reported Net Earnings	$2.01	$2.23
Add back: Goodwill Amortization (net of tax)	.36	.31
Adjusted Net Earnings	$2.37	$2.54

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement is effective for fiscal years beginning after June 15, 2002. The Company does not believe that implementation of this SFAS will have a material impact on its financial statements.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” which supersedes SFAS No. 121. Though it retains the basic requirements of SFAS No. 121 regarding when and how to measure an impairment loss, SFAS No. 144 provides additional implementation guidance. SFAS No. 144 applies to long-lived assets to be held and used or to be disposed of, including assets under capital leases of lessees; assets subject to operating leases of lessors; and prepaid assets. SFAS No. 144 also expands the scope of a discontinued operation to include a component of an entity, and eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. This statement was effective January 1, 2002. Implementation of this SFAS did not have a material impact on the Company’s financial statements.

In April 2002, the FASB approved SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections.” SFAS No. 145 rescinds previous accounting guidance, which required all gains and losses from extinguishment of debt be classified as an extraordinary item. Under SFAS No. 145, classification of debt extinguishment depends on the facts and circumstances of the transaction. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. The Company does not expect this SFAS to have a material impact on its financial statements.

In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, rather than at the date of the entity’s commitment to an exit plan. This statement is effective for exit and disposal activities that are

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initiated after December 31, 2002. Since adoption of this SFAS is prospective, the Company does not believe that the implementation of this SFAS will have a material impact on its financial statements.

In December 2002, the FASB issued Statement No. 148 (FAS 148), “Accounting for Stock-Based Compensation-Transition and Disclosure” which amends FASB No. 123 (FAS 123), “Accounting for Stock-Based Compensation.” FAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements of FAS 123 to require disclosures in both the annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and disclosure provisions of FAS 148 will be effective for the Company’s financial statements issued for the first quarter of 2003. As allowed by FAS 123, the Company follows the disclosure requirements of FAS 123, but continues to account for its employee stock option plans in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, which results in no charge to earnings when options are issued at fair market value. Therefore, at this time, adoption of this statement will not have a material impact on the Company’s financial position or results of operations.

In December 2002, the FASB issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires a guarantor to make additional disclosures in its interim and annual financial statements regarding the guarantor’s obligations. In additions, FIN 45 requires, under certain circumstances, that a guarantor recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken when issuing the guarantee. The Company has adopted the disclosure requirements for the fiscal year ended December 31, 2002. The adoption of this interpretation did not have a material impact on the Company’s financial statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is included under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS

	Year Ended December 31,
	2002			2001		2000
	(in thousands, except per share data)
Sales	$	4,577,232		$	3,782,444	$	3,777,777
Cost of sales		2,791,175			2,338,027		2,315,731
Selling, general and administrative expenses		1,091,208			872,680		909,897
Restructuring expenses		(6,273	)		69,726		—
Total operating expenses		3,876,110			3,280,433		3,225,628
Operating profit		701,122			502,011		552,149
Interest expense, net		43,654			25,747		29,225
Earnings before income taxes		657,468			476,264		522,924
Income taxes		223,327			178,599		198,711
Net earnings, before effect of accounting change and reduction of income tax reserves		434,141			297,665		324,213
Reduction of income tax reserves related to previously discontinued operation		30,000			—		—
Effect of accounting change, net of tax, adoption of SFAS No. 142		(173,750	)		—		—
Net earnings	$	290,391		$	297,665	$	324,213
Basic net earnings per share:
Net earnings before effect of accounting change and reduction of income tax reserves	$	2.89		$	2.07	$	2.28
Add: Reduction of income tax reserves		0.20			—		—
Less: Effect of accounting change		(1.16	)		—		—
Net earnings	$	1.93		$	2.07	$	2.28
Diluted net earnings per share:
Net earnings before effect of accounting change and reduction of income tax reserves	$	2.79		$	2.01	$	2.23
Add: Reduction of income tax reserves		0.19			—		—
Less: Effect of accounting change		(1.10	)		—		—
Net earnings	$	1.88		$	2.01	$	2.23
Average common stock and common equivalent shares outstanding:
Basic		150,224			143,630		142,469
Diluted		158,482			151,848		145,499

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	As of December 31,
	2002			2001
ASSETS	(in thousands)
Current assets:
Cash and equivalents	$	810,463		$	706,559
Trade accounts receivable, less allowance for doubtful accounts of $64,000 and $44,000		759,028			585,318
Inventories		485,587			408,236
Prepaid expenses and other		332,188			174,502
Total current assets		2,387,266			1,874,615
Property, plant and equipment, net		597,379			533,572
Other assets		36,796			119,639
Goodwill and other intangible assets		3,007,704			2,292,657
	$	6,029,145		$	4,820,483
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and current portion of long-term debt	$	112,542		$	72,356
Trade accounts payable		366,587			235,501
Accrued expenses		786,183			709,437
Total current liabilities		1,265,312			1,017,294
Other liabilities		556,812			455,270
Long-term debt		1,197,422			1,119,333
Stockholders’ equity:
Common stock, one cent par value; 500,000 shares authorized; 166,545 and 157,327 issued; 152,532 and 143,314 outstanding		1,665			1,573
Additional paid-in capital		915,562			375,279
Accumulated other comprehensive income		(105,973	)		(69,736	)
Retained earnings		2,198,345			1,921,470
Total stockholders’ equity		3,009,599			2,228,586
	$	6,029,145		$	4,820,483

The accompanying Notes to the Consolidated Financial Statements are an integral part of these balance sheets.

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DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2002			2001			2000
	(in thousands)
Cash flows from operating activities:
Net earnings	$	290,391		$	297,665		$	324,213
Reduction of income tax reserves		(30,000	)		—			—
Effect of change in accounting principle		173,750			—			—
		434,141			297,665			324,213
Depreciation and amortization		129,565			178,390			149,721
Change in trade accounts receivable		59,030			142,308			(15,926	)
Change in inventories		77,544			66,833			(38,451	)
Change in accounts payable		54,008			(38,138	)		(81	)
Change in other assets		(71,536	)		(62,641	)		(78,599	)
Change in accrued expenses and other liabilities		27,595			24,054			171,368
Total operating cash flows		710,347			608,471			512,245
Cash flows from investing activities:
Payments for additions to property, plant and equipment		(65,430	)		(84,457	)		(103,718	)
Proceeds from disposals of property, plant and equipment		26,466			3,872			15,215
Cash paid for acquisitions		(1,158,129	)		(439,814	)		(708,594	)
Proceeds from divestitures		52,562			32,826			1,800
Net cash used in investing activities		(1,144,531	)		(487,573	)		(795,297	)
Cash flows from financing activities:
Proceeds from issuance of common stock		512,105			28,169			26,580
Dividends paid		(13,516	)		(11,676	)		(10,015	)
Proceeds from debt borrowings		37,528			517,564			340,409
Debt repayments		(19,820	)		(107,048	)		(74,319	)
Purchase of treasury stock		—			(17,299	)		(82,174	)
Net cash provided by financing activities		516,297			409,710			200,481
Effect of exchange rate changes on cash		21,791			(973	)		(786	)
Net change in cash and equivalents		103,904			529,635			(83,357	)
Beginning balance of cash and equivalents		706,559			176,924			260,281
Ending balance of cash and equivalents	$	810,463		$	706,559		$	176,924

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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DANAHER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

	Common Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income			Comprehensive Income
	Shares	Amount
	(in thousands)
Balance, December 31, 1999	154,035	$	1,540	$	420,036		$	1,321,283		$	(34,105	)
Net earnings for the year	—		—		—			324,213			—		$	324,213
Dividends declared	—		—		—			(10,015	)		—			—
Common stock issued for options exercised	1,615		16		26,564			—			—			—
Purchase of treasury stock	—		—		(82,174	)		—			—			—
Decrease from translation of foreign financial statements	—		—		—			—			(25,025	)		(25,025	)
Balance, December 31, 2000	155,650	$	1,556	$	364,426		$	1,635,481		$	(59,130	)	$	299,188
Net earnings for the year	—		—		—			297,665			—			297,665
Dividends declared	—		—		—			(11,676	)		—			—
Common stock issued for options exercised	1,677		17		28,152			—			—			—
Purchase of treasury stock	—		—		(17,299	)		—			—			—
Decrease from translation of foreign financial statements	—		—		—			—			(10,606	)		(10,606	)
Balance, December 31, 2001	157,327	$	1,573	$	375,279		$	1,921,470		$	(69,736	)	$	287,059
Net earnings for the year	—		—		—			290,391			—			290,391
Dividends declared	—		—		—			(13,516	)		—			—
Sale of common stock	6,900		69		466,936			—			—			—
Common stock issued for options exercised	2,318		23		73,347			—			—			—
Increase from translation of foreign financial statements	—		—		—			—			40,704			40,704
Minimum pension liability (net of tax benefit of $39,637)	—		—		—			—			(76,941	)		(76,941	)
Balance, December 31, 2002	166,545	$	1,665	$	915,562		$	2,198,345		$	(105,973	)	$	254,154

The accompanying Notes to the Consolidated Financial Statements are an integral part of these statements.

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(1)    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Business—Danaher Corporation designs, manufactures and markets industrial and consumer products with strong brand names, proprietary technology and major market positions in two business segments: Process/Environmental Controls and Tools and Components. The Process/Environmental Controls segment is a leading producer of environmental products, including water quality analytical instrumentation and leak detection systems for underground fuel storage tanks; compact professional electronic test tools; product identification equipment and consumables; retail petroleum automation products; and motion, position, speed, temperature, pressure, level, flow, particulate and power reliability and quality control and safety devices. In its Tools and Components Segment, the Company is a leading producer and distributor of general purpose mechanics’ hand tools and automotive specialty tools, as well as of toolboxes and storage devices, diesel engine retarders, wheel service equipment, drill chucks, and hardware and components for the power generation and transmission industries.

Accounting Principles—The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Inventory Valuation—Inventories include material, labor and overhead and are stated principally at the lower of cost or market using the last-in, first-out method (LIFO).

Property, Plant and Equipment—Property, plant and equipment are carried at cost. The provision for depreciation has been computed principally by the straight-line method based on the estimated useful lives (3 to 35 years) of the depreciable assets.

Other Assets—Other assets include principally deferred income taxes, assets held for sale, noncurrent trade receivables and capitalized costs associated with obtaining financings which are amortized over the term of the related debt.

Fair Value of Financial Instruments—For cash and equivalents, the carrying amount is a reasonable estimate of fair value. For long-term debt, rates available for debt with similar terms and remaining maturities are used to estimate the fair value of existing debt.

Goodwill and Other Intangible Assets—Goodwill and other intangible assets result from the Company’s acquisition of existing businesses. In accordance with Statement of Financial Accounting Standard (SFAS) No. 142, amortization of recorded goodwill balances ceased effective January 1, 2002, however amortization of certain intangible assets continues over the estimated useful lives of the identified asset. Amortization expense for all goodwill and other intangible assets was $8,177,000, $64,705,000 and $48,586,000 for the years ended December 31, 2002, 2001 and 2000, respectively. See Notes 2 and 16 for additional information. At December 31, 2002 and 2001, goodwill and other intangible assets includes other intangible assets, net of accumulated amortization, of $231,000,000 and $116,000,000, respectively. Other intangible assets consist primarily of tradenames, trademarks, patents and other proprietary technology.

Shipping and Handling—Shipping and handling costs are included as a component of cost of sales. Shipping and handling costs billed to customers are included in sales.

Revenue Recognition—The Company’s standard terms of sale are FOB Shipping Point and, as such, the Company generally records revenue upon shipment and when any significant obligations to the customer have been fulfilled.

Foreign Currency Translation—Exchange adjustments resulting from foreign currency transactions are generally recognized in net earnings, whereas adjustments resulting from the translation of financial statements are reflected as a component of accumulated other comprehensive income within stockholders’ equity. Net foreign currency transaction gains or losses are not material in any of the years presented.

Cash and Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the date of purchase to be cash equivalents.

Income Taxes—The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.”

Accumulated Other Comprehensive Income—Accumulated other comprehensive income consists of primarily cumulative foreign translation loss adjustments of $29,032,000, $69,736,000, and $59,130,000 for 2002,

25

2001 and 2000, respectively and a minimum pension liability loss adjustment of $76,941,000 (net of $39,637,000 tax benefit) recorded in 2002. (See Note 9)

Accounting for Stock Options—As described in Note 10, the Company accounts for the issuance of stock options under the intrinsic value method under Accounting Principles Board Statement Number 25, “Accounting for Stock Issued to Employees” and the disclosure requirements of FAS 123, “Accounting for Stock-Based Compensation.”

New Accounting Pronouncements—See Note 16.

(2)    ACQUISITIONS AND DIVESTITURES:

The Company has completed numerous acquisitions of existing businesses during the years ended December 31, 2002, 2001 and 2000. These acquisitions have either been completed because of their strategic fit with an existing Company business or because they are of such a nature and size as to establish a new strategic platform for growth for the Company. All of the acquisitions during this time period have been additions to the Company’s Process/Environmental Controls segment, have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these targets reflect a number of factors including the future earnings and cash flow potential of these target companies; the multiple to earnings, cash flow and other factors at which companies similar to the target have been purchased by other acquirers; the competitive nature of the process by which we acquired the target; and because of the complementary strategic fit and resulting synergies these targets bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair market value of the acquired assets and liabilities. The Company obtains this information during due diligence and through other sources. In the months after closing, as the Company obtains additional information about these assets and liabilities and learns more about the newly acquired business, it is able to refine the estimates of fair market value and more accurately allocate the purchase price. Examples of factors and information that we use to refine the allocations include: tangible and intangible asset appraisals; cost data related to redundant facilities; employee/personnel data related to redundant functions; product line integration and rationalization information; management capabilities; and information systems compatibilities. The only items considered for subsequent adjustment are items identified as of the acquisition date. The Company’s acquisitions in 2002, 2001, and 2000 have not had any significant pre-acquisition contingencies (as contemplated by SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises”) which were expected to have a significant effect on the purchase price allocation.

The Company also periodically disposes of existing operations that are not deemed to strategically fit with its ongoing operations or are not achieving the desired return on investment. The following briefly describes the Company’s acquisition and divestiture activity for the above-noted periods.

On October 18, 2002, the Company acquired 100% of Thomson Industries, Inc. in a stock and asset acquisition, for approximately $147 million in cash including transaction costs (net of $2 million of acquired cash), an agreement to pay $15 million over the next 6 years, and additional maximum contingent consideration of up to $60 million cash based on the future performance of Thomson through December 31, 2005. Thomson is a leading U.S. producer of linear motion control products. The acquisition resulted in the recognition of goodwill of $78 million primarily related to the anticipated future earnings and cash flow potential of Thomson and its leadership in the motion industry. The future earnings and cash flow potential is expected to be enhanced through cost reduction activities as well as by potential synergies to be gained by integrating Thomson’s operations with existing Danaher operations in complimentary product lines. The results of Thomson’s operations have been included in the Company’s Consolidated Statement of Earnings since October 18, 2002.

On February 25, 2002, the Company completed the divestiture of API Heat Transfer, Inc. to an affiliate of Madison Capital Partners for approximately $63 million (including $53 million in net cash and a note receivable in the principal amount of $10 million), less certain liabilities of API Heat Transfer, Inc. paid by the Company at closing and subsequent to closing. API Heat Transfer, Inc. was part of the Company’s acquisition of American Precision Industries, Inc. and was recorded as an asset held for sale as of the time of the acquisition. No gain or loss was recognized at the time of sale.

On February 5, 2002, the Company acquired 100% of Marconi Data Systems, formerly known as Videojet Technologies (“Videojet”), from Marconi plc in a stock acquisition, for approximately $400 million in cash including transaction costs. Videojet is a worldwide leader in the market for non-contact product marking equipment and consumables. The acquisition resulted in the recognition of goodwill of $276 million primarily related to the anticipated future earnings and cash flow potential and worldwide leadership of Videojet in the product marking equipment and consumables market. Videojet represents a new strategic platform for Danaher and was acquired in a competitive acquisition process. The results of Videojet’s operations have been included in the Company’s Consolidated Statement of Earnings since

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February 5, 2002.

On February 4, 2002, the Company acquired 100% of Viridor Instrumentation Limited (“Viridor”) from the Pennon Group plc in a stock acquisition, for approximately $137 million in cash including transaction costs. Viridor is a global leader in the design and manufacture of analytical instruments for clean water, waste water, ultrapure water and other fluids and materials. The acquisition resulted in the recognition of goodwill of $109 million primarily related to the anticipated future earnings and cash flow potential of Viridor and its global leadership in the area of “process water” instrumentation. The future earnings and cash flow potential is expected to be enhanced through cost reduction activities as well as by potential synergies to be gained by integrating Viridor’s operations with existing Danaher operations in complementary product lines. The results of Viridor’s operations have been included in the Company’s Consolidated Statement of Earnings since February 4, 2002.

On February 1, 2002, the Company acquired 100% of Marconi Commerce Systems, formerly known as Gilbarco (“Gilbarco”), from Marconi plc in a stock acquisition, for approximately $309 million in cash including transaction costs (net of $17 million of acquired cash). Gilbarco is a global leader in retail automation and environmental products and services. The acquisition resulted in the recognition of goodwill of $226 million primarily related to the anticipated future earnings and cash flow potential of Gilbarco and its worldwide leadership in retail automation and environmental products and services. The future earnings and cash flow potential is expected to be enhanced through cost reduction activities as well as the potential synergies to be gained by integrating Gilbarco’s operations with existing Danaher subsidiaries in complementary product lines. The results of Gilbarco’s operations have been included in the Company’s Consolidated Statement of Earnings since February 1, 2002.

In addition, during the year ended December 31, 2002, the Company acquired 8 smaller companies, for total consideration of approximately $166 million in cash including transaction costs. These companies were all acquired to complement existing units of the Process/Environmental Controls segment. Each of these 8 companies individually has less than $60 million in annual revenues and were purchased for a price of less than $75 million.

On January 2, 2001, the Company acquired 100% of the assets of United Power Corporation (“UPC”) from UPC for approximately $108 million in cash including transaction costs. UPC operates in the power conditioning industry and manufactures products ranging from high isolation transformers to rotary uninterruptible power supply systems. The acquisition resulted in the recognition of goodwill of $102 million. The results of operations for UPC have been included in the Company’s Consolidated Statement of Earnings since January 2, 2001.

The Company acquired 11 smaller companies during 2001 for total cash consideration of approximately $343 million including transaction costs. In general, each company is a manufacturer and assembler of light electronic control and instrumentation products, in markets including electronic and network test, aerospace, industrial controls, and water quality. These companies were all acquired to complement existing units of the Process/Environmental Controls segment. Each of these 11 companies individually has less than $50 million in annual revenues and were purchased for a price of less than $70 million.

The Company also disposed of two small product lines during 2001, yielding cash proceeds of approximately $33 million. There were no material gains or losses recognized on the sale of these product lines.

In 2000, the Company acquired three businesses to form the core of its new Motion strategic platform, American Precision Industries, Kollmorgen Corporation and the motion businesses of Warner Electric Company (the “Motion acquisition”). These businesses all brought different products and capabilities to the Company and have been integrated to form the Company’s Motion business. These acquisitions resulted in the recognition of goodwill of $578 million.

On July 3, 2000, the Company acquired 100% of the assets of the motion businesses of Warner Electric Corporation (“Warner”) for approximately $147 million cash including transaction costs. The results of operations for Warner have been included in the Company’s Consolidated Statement of Earnings since July 3, 2000. These businesses were purchased from an entity controlled by Steven M. Rales and Mitchell P. Rales, the Company’s Chairman of the Board and Chairman of the Executive Committee, respectively. The transaction was unanimously recommended by an independent committee of the Company’s Board of Directors, who received an opinion from an independent financial advisor as to the fairness of the transaction.

On June 20, 2000, the Company acquired 100% of the common stock of Kollmorgen Corporation (“Kollmorgen”) for approximately $267 million cash including transaction costs. The Company also assumed debt with a fair market value of approximately $95 million in connection with this acquisition. Kollmorgen operates in the motion industry. The results of operations for Kollmorgen have been included in the Company’s Consolidated Statement of Earnings since June 20, 2000.

On March 27, 2000, the Company acquired 100% of the common stock of American Precision Industries (“API”) for approximately $186 million cash including transaction costs. The Company also assumed debt

27

with a fair market value of approximately $60 million in connection with this acquisition. API operates in the motion industry. The results of operations for API have been included in the Company’s Consolidated Statement of Earnings since March 27, 2000.

The Company acquired 5 smaller companies during 2000 for total cash consideration of approximately $109 million including transaction costs. In general, each company is a manufacturer and assembler of light electronic control and instrumentation products, in market segments including electronic and network test, aerospace, environmental controls, and water quality. These companies were all acquired to complement existing units of the Process/Environmental Controls segment. Each of these 5 companies individually has less than $50 million in annual revenues and was acquired for a purchase price of less than $50 million.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for each significant acquisition consummated during 2002, 2001 and 2000 (in thousands):

2002 Acquisitions

	Thomson			VideoJet			Viridor			Gilbarco			All Others			Total
Accounts Receivable	$	21,665		$	61,206		$	12,747		$	97,888		$	20,827		$	214,333
Inventory		32,211			24,759			14,462			49,455			18,863			139,750
Property, Plant and Equipment		31,417			36,880			8,181			48,636			6,779			131,893
Goodwill		78,353			275,612			108,918			225,513			146,008			834,404
Other Intangible Assets, primarily Trade Names and Patents		20,670			50,600			7,400			30,800			13,756			123,226
Accounts Payable		(11,709	)		(9,725	)		(3,884	)		(37,521	)		(7,653	)		(70,492	)
Other Assets and Liabilities, net		(25,282	)		(16,692	)		(10,971	)		(82,001	)		(31,903	)		(166,849	)
Assumed Debt		—			(23,839	)		—			(23,369	)		(928	)		(48,136	)
Net Cash Consideration	$	147,325		$	398,801		$	136,853		$	309,401		$	165,749		$	1,158,129

2001 Acquisitions

	UPC			All Others			Total
Accounts Receivable	$	8,502		$	33,484		$	41,986
Inventory		6,054			46,331			52,385
Property, Plant and Equipment		331			32,867			33,198
Goodwill		101,705			267,555			369,260
Other Intangible Assets, primarily Trade Names and Patents		—			17,000			17,000
Accounts Payable		(3,742	)		(10,448	)		(14,190	)
Other Assets and Liabilities, net *		(5,287	)		(50,478	)		(55,765	)
Assumed Debt		—			(4,060	)		(4,060	)
Net Cash Consideration	$	107,563		$	332,251		$	439,814

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2000 Acquisitions

	Motion Group			All Others			Total
Accounts Receivable	$	123,399		$	15,526		$	138,925
Inventory		75,585			11,315			86,900
Property, Plant and Equipment		91,960			8,325			100,285
Goodwill		577,996			87,998			665,994
Accounts Payable		(41,087	)		(8,415	)		(49,502	)
Other Assets and Liabilities, net *		(72,263	)		(6,556	)		(78,819	)
Assumed Debt		(155,189	)		—			(155,189	)
Net Cash Consideration	$	600,401		$	108,193		$	708,594

* Included in other assets and liabilities is approximately $11 million and $1 million of accrued transaction costs related to 2001 and 2000 acquisitions, respectively.

As of December 31, 2002, the Company does not anticipate further material adjustments to the purchase price allocations of any of the above transactions with the exception of Thomson, the acquisition of which was consummated in the fourth quarter of 2002. The Company is continuing to evaluate Thomson’s operations to determine the cost estimates for any integration activities to be undertaken and will adjust the estimated amounts accrued for these activities by no later than fourth quarter of 2003. The Company is also waiting on cost estimates with respect to exiting various lease obligations of Thomson which will require adjustment.

The unaudited pro forma information for the periods set forth below gives effect to the above noted acquisitions as if they had occurred at the beginning of the period. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time (unaudited, in thousands except per share amounts):

	2002		2001
Net sales	$	4,868,397	$	5,147,556
Net earnings before change in accounting principle and reversal of income tax reserves		430,521		287,760
Net earnings		286,771		287,760
Diluted earnings per share before change in accounting principle and reversal of income tax reserves		2.77		1.94
Diluted earnings per share		1.86		1.94

In connection with its acquisitions, the Company assesses and formulates a plan related to the future integration of the acquired entity. This process begins during the due diligence process and is concluded within twelve months of the acquisition. The Company accrues estimates for certain costs, related primarily to personnel reductions and facility closures or restructurings, anticipated at the date of acquisition, in accordance with Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” Adjustments to these estimates are made up to 12 months from the acquisition date as plans are finalized. To the extent these accruals are not utilized for the intended purpose, the excess is recorded as a reduction of the purchase price, typically by reducing recorded goodwill balances. Costs incurred in excess of the recorded accruals are expensed as incurred. While the Company is still finalizing its exit plans with respect to certain of its acquisitions, it does not anticipate significant changes to the current accrual levels related to any acquisitions completed prior to the date of this report with the exception of Thomson, as indicated above.

Accrued liabilities associated with these exit activities include the following (in thousands, except headcount):

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	Motion Group Acquisitions			United Power Corporation			Videojet			Viridor			Gilbarco			Thomson			All Others			Total
Planned Headcount Reduction:
Accrual related to 2000 acquisitions		62			—			—			—			—			—			344			406
Reductions in 2000		(46	)		—			—			—			—			—			(60	)		(106	)
Adjustments to previously provided reserves		—			—			—			—			—			—			—			—
Balance December 31, 2000		16			—			—			—			—			—			284			300
Accrual related to 2001 acquisitions		—			29			—			—			—			—			413			442
Reductions in 2001		(648	)		(19	)		—			—			—			—			(189	)		(856	)
Adjustments to previously provided reserves		1,814			—			—			—			—			—			62			1,876
Balance December 31, 2001		1,182			10			—			—			—			—			570			1,762
Accrual related to 2002 acquisitions		—			—			223			147			640			990			252			2,252
Reductions in 2002		(456	)		(10	)		(217	)		(105	)		(369	)		(54	)		(628	)		(1,839	)
Adjustments to previously provided reserves		(726	)		—			—			—			—			—			(40	)		(766	)
Balance December 31, 2002		—			—			6			42			271			936			154			1,409
Involuntary Employee Termination Benefits:
Accrual related to 2000 acquisitions	$	22,148			—			—			—			—			—		$	1,685		$	23,833
Costs incurred in 2000		(3,538	)		—			—			—			—			—			(489	)		(4,027	)
Adjustments to previously provided reserves		—			—			—			—			—			—			—			—
Balance December 31, 2000		18,610			—			—			—			—			—			1,196			19,806
Accrual related to 2001 acquisitions		—			33			—			—			—			—			10,239			10,272
Costs incurred in 2001		(21,717	)		(136	)		—			—			—			—			(5,621	)		(27,474	)
Adjustments to previously provided reserves		36,352			168			—			—			—			—			3,642			40,162
Balance December 31, 2001		33,245			65			—			—			—			—			9,456			42,766
Accrual related to 2002 acquisitions		—			—			8,367			3,694			27,322			16,771			5,665			61,819
Costs incurred in 2002		(14,643	)		(65	)		(6,754	)		(2,099	)		(11,255	)		(230	)		(8,253	)		(43,299	)
Adjustments to previously provided reserves		(11,937	)		—			—			—			—			—			2,586			(9,351	)
Balance December 31, 2002	$	6,665		$	—		$	1,613		$	1,595		$	16,067		$	16,541		$	9,454		$	51,935
Facility Closure and Restructuring Costs:
Accrual related to 2000 acquisitions	$	15,000			—			—			—			—			—		$	1,331		$	16,331
Costs incurred in 2000		—			—			—			—			—			—			(682	)		(682	)
Adjustments to previously provided reserves		—			—			—			—			—			—			—			—
Balance December 31, 2000		15,000			—			—			—			—			—			649			15,649
Accrual related to 2001 acquisitions		—			245			—			—			—			—			8,179			8,424
Costs incurred in 2001		(7,753	)		—			—			—			—			—			(3,188	)		(10,941	)
Adjustments to previously provided reserves		12,990			—			—			—			—			—			754			13,744
Balance December 31, 2001		20,237			245			—			—			—			—			6,394			26,876
Accrual related to 2002 acquisitions		—			—			2,166			3,578			3,190			7,582			20,272			36,788

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Costs incurred in 2002		(3,102	)		(126	)		(1,252	)		(1,189	)		(617	)		(1,158	)		(11,982	)		(19,426	)
Adjustments to previously provided reserves		(15,000	)		—			—			—			—			—			5,671			(9,329	)
Balance December 31, 2002	$	2,135		$	119		$	914		$	2,389		$	2,573		$	6,424		$	20,355		$	34,909

In 2001, the Company recorded purchase price adjustments related to Motion acquisition in 2000 primarily related to finalization of the cost estimates for severance and facility closure costs associated with its integration activities ($49 million) and the determinations of the fair values of the assets and liabilities acquired including accounts receivable, inventories and warranty costs ($54 million). These adjustments increased goodwill by approximately $103 million. In 2002, the Company recorded a reduction of goodwill related to these acquisitions of approximately $27 million, which had no impact on net earnings. This reduction related to reserves that were not necessary and reserves associated with facilities that were not closed due to unexpected delays in commencing certain planned integration activities. Involuntary employee termination benefits are presented as a component of the Company’s compensation and benefits accrual included in accrued expenses in the accompanying balance sheet. Facility closure and restructuring costs are separately reflected in other accrued expenses.

(3)    RESTRUCTURING CHARGE:

In the fourth quarter of 2001, the Company recorded a restructuring charge of $69.7 million ($43.5 million after tax, or $0.29 per share). During the fourth quarter of 2001, management determined that it would restructure certain of its product lines, principally its drill chuck, power quality and industrial controls divisions, to improve financial performance. The primary objective of the restructuring plan was to reduce operating costs by consolidating, eliminating and/or downsizing existing operating locations. No significant product lines were discontinued. Severance costs for the termination of approximately 1,100 employees approximated $49 million. These employees included all classes of employees, including hourly direct, indirect salaried and management personnel, at the affected facilities. Approximately $16 million of the charge was to impair assets associated with the closure of 16 manufacturing and distribution facilities in North America and Europe. The assets impaired were principally equipment and leasehold improvements associated with the 16 facilities to be closed. The remainder of the charge was for other exit costs including lease termination costs. Approximately $25.5 million of the $69.7 million charge related to our Tools and Components segments and approximately $44.2 million of the charge related to our Process/Environmental Controls segment.

Due to minor changes to the original restructuring plan and to costs incurred being less than estimated, in December 2002, the Company adjusted its restructuring reserves accrued as part of the fourth quarter 2001 restructuring charge by approximately $6.3 million ($4.1 million after tax, or $0.03 per share).

In conjunction with the closing of the facilities, approximately $4 million of inventory was written off as unusable in future operating locations. This inventory consisted principally of component parts and raw materials, which were either redundant to inventory at the facilities being merged and/or were not economically feasible to relocate since the inventory was purchased to operate on equipment and tooling which was not being relocated. The inventory write-off was included in cost of sales in the fourth quarter of 2001 and was not part of the restructuring charge.

The table below presents a rollforward of the activity in the restructuring accrual.

	Headcount Reductions		Employee Separation Costs			Impairment of Facility Assets			Lease Termination and Other Restructuring Costs			Total
	(in thousands, except headcount)
Total Restructuring Charge	1,120		$	49,000		$	15,700		$	5,000		$	69,700
Amounts Expended/ Recognized in 2001	(67	)		(3,300	)		(15,035	)		—			(18,335	)
Balance at December 31, 2001	1,053			45,700			665			5,000			51,365
Amounts Expended in 2002	(934	)		(31,118	)		(665	)		(2,367	)		(34,150	)
Amounts Reversed in 2002	—			(6,273	)		—			—			(6,273	)
Balance at December 31, 2002	119		$	8,309		$	—		$	2,633		$	10,942

(4)    EARNINGS PER SHARE (EPS):

Basic EPS is calculated by dividing earnings by the weighted-average number of common shares outstanding for the applicable period. Diluted EPS is calculated after adjusting the numerator and the denominator of the basic EPS calculation for the effect of all potential dilutive common

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shares outstanding during the period. Information related to the calculation of earnings per share of common stock before the effect of the accounting change and reduction of income tax reserves related to a previously discontinued operation is summarized as follows:

	For the Year Ended December 31, 2002,
	Net Earnings Before the Effect of the Accounting Change and Reduction of Income Tax Reserves (Numerator)		Shares (Denominator)	Per Share Amount
	(in thousands, except per share amounts)
Basic EPS	$	434,141	150,224	$	2.89
Adjustment for interest on convertible debentures		7,901	—
Incremental shares from assumed exercise of dilutive options		—	2,227
Incremental shares from assumed conversion of the convertible debenture		—	6,031
Diluted EPS	$	442,042	158,482	$	2.79
	For the Year Ended December 31, 2001
	Net Earnings (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS	$	297,665	143,630	$	2.07
Adjustment for interest on convertible debentures		7,246	—
Incremental shares from assumed exercise of dilutive options		—	2,618
Incremental shares from assumed conversion of the convertible debenture		—	5,600
Diluted EPS	$	304,911	151,848	$	2.01
	For the Year Ended December 31, 2000
	Net Earnings (Numerator)		Shares (Denominator)	Per Share Amount
Basic EPS	$	324,213	142,469	$	2.28
Incremental shares from assumed exercise of dilutive options		—	3,030
Diluted EPS	$	324,213	145,499	$	2.23

(5)    INVENTORY:

The major classes of inventory are summarized as follows (in thousands):

	December 31, 2002		December 31, 2001
Finished goods	$	165,061	$	131,316
Work in process		119,872		95,119
Raw material		200,654		181,801
	$	485,587	$	408,236

If the first-in, first-out (FIFO) method had been used for inventories valued at LIFO cost, such inventories would have been $5,947,000 and $12,229,000 higher at December 31, 2002 and 2001, respectively.

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(6)    PROPERTY, PLANT AND EQUIPMENT:

The major classes of property, plant and equipment are summarized as follows (in thousands):

	December 31, 2002			December 31, 2001
Land and improvements	$	37,802		$	31,641
Buildings		350,293			287,655
Machinery and equipment		1,041,206			945,698
		1,429,301			1,264,994
Less accumulated depreciation		(831,922	)		(731,422	)
	$	597,379		$	533,572

(7)    FINANCING:

Financing consists of the following (in thousands):

	December 31, 2002		December 31, 2001
Notes payable due 2008	$	250,000	$	250,000
Notes payable due 2005		314,760		266,850
Notes payable due 2003		30,000		30,000
Zero-coupon convertible senior notes due 2021		541,737		529,096
Uncommitted lines of credit		—		10,000
Other		173,467		105,743
		1,309,964		1,191,689
Less—currently payable		112,542		72,356
	$	1,197,422	$	1,119,333

The Notes due 2008 were issued in October 1998 at an average interest cost of 6.1%. The fair value of the 2008 Notes, after taking into account the interest rate swaps discussed below, is approximately $264 million at December 31, 2002. In January 2002, the Company entered into two interest rate swap agreements for the term of the notes due 2008 having a notional principal amount of $100 million whereby the effective net interest rate on $100 million of the Notes will be the six-month LIBOR rate plus approximately ..425%. Rates are reset twice per year. At December 31, 2002, the net interest rate on $100 million of the Notes was 2.15% after giving effect to the interest rate swap agreement. In accordance with SFAS No. 133 (“Accounting for Derivative Instruments and Hedging Activities”, as amended), the Company accounts for these swap agreements as fair value hedges. Since these instruments qualify as “effective” or “perfect” hedges, they will have no impact on net income or stockholders’ equity.

The Notes due 2005 (the Eurobond Notes), with a stated amount of EU 300 million were issued in July 2000 and bear interest at 6.25% per annum. The fair value of the Eurobond Notes is approximately $331 million at December 31, 2002.

The Notes due 2003 had an original average life of approximately 10 years and an average interest cost of 7%. The carrying amount approximates fair value.

In January 2001, the Company issued $830 million (value at maturity) in zero-coupon convertible senior notes due 2021 known as Liquid Yield Option Notes or LYONs. The net proceeds to the Company were approximately $505 million. The LYONs are convertible into approximately 6.0 million common shares of the Company, and carry a yield to maturity of 2.375% (with contingent interest payable as described below). Holders of the LYONs may convert each of their LYONs into 7.2676 shares of Danaher common stock (in the aggregate for all LYONs, approximately 6.0 million shares of Danaher common stock) at any time on or before the maturity date of January 22, 2021. The Company may redeem all or a portion of the LYONs for cash at any time on or after January 22, 2004. Holders may require the Company to purchase all or a portion of the notes for cash and/or Company common stock, at the Company’s option, on January 22, 2004 or on January 22, 2011. The Company will pay contingent interest to the holders of LYONs during any six-month period commencing after January 22, 2004 if the average market price of a LYON for a measurement period preceding such six-month period equals 120% or more of the sum of the issue price and accrued original issue discount for such LYON. Except for the contingent interest described above, the

33

Company will not pay interest on the LYONs prior to maturity. The fair value of the LYONs notes is approximately $558 million at December 31, 2002.

The borrowings under uncommitted lines of credit are principally short-term borrowings payable upon demand. The carrying amount approximates fair value. The weighted-average interest rate for short-term borrowings under the uncommitted lines of credit was 5.0% and 6.2% at December 31, 2001 and 2000. There were no outstanding amounts under uncommitted lines of credit at December 31, 2002.

The Company also has a bank credit facility which provides revolving credit through June 26, 2006, of up to $500 million. The facility provides funds for general corporate purposes at an interest rate of a Eurocurrency rate plus .21% to .70%, depending on the Company’s current debt rating. There were no borrowings under bank facilities during the three years ended December 31, 2002. The Company is charged a fee of .065% to .175% per annum for the facility, depending on the Company’s current debt rating. Commitment and facility fees of $406,000, $301,000 and $190,000 were incurred in 2002, 2001 and 2000, respectively.

The Company has complied with all debt covenants, including limitations on secured debt and debt levels. None of the Company’s debt instruments contain trigger clauses requiring the Company to repurchase or pay off its debt if rating agencies downgrade the Company’s debt rating.

The minimum principal payments during the next five years are as follows: 2003 - $112,542,000; 2004 - $68,465,000; 2005 - $317,484,000; 2006 - $2,865,000; 2007 - $2,927,000; and $805,681,000 thereafter.

The Company made interest payments of $44,024,000, $38,789,000 and $21,057,000 in 2002, 2001 and 2000, respectively.

(8) ACCRUED EXPENSES AND OTHER LIABILITIES:

Selected accrued expenses and other liabilities include the following (in thousands):

	December 31, 2002				December 31, 2001
	Current		Noncurrent		Current		Noncurrent
Compensation and benefits	$	308,156	$	134,760	$	157,516	$	71,959
Claims, including self-insurance and litigation		33,011		61,306		44,951		79,468
Postretirement benefits		7,000		100,800		5,000		74,600
Environmental and regulatory compliance		32,094		82,528		36,202		62,541
Taxes, income and other		110,142		133,247		146,717		148,209
Sales and product allowances		53,443		—		51,063		—
Warranty		46,539		14,696		30,542		10,180
Restructuring costs (See Note 3)		10,942		—		51,365		—
Other, individually less than 5% of overall balance		184,856		29,475		186,081		8,313
	$	786,183	$	556,812	$	709,437	$	455,270

Approximately $58 million of accrued expenses and other liabilities were guaranteed by bank letters of credit as of December 31, 2002.

(8)    PENSION AND EMPLOYEE BENEFIT PLANS:

The Company has noncontributory defined benefit pension plans which cover certain of its domestic hourly employees. Benefit accruals under most of these plans have ceased, and pension expense for defined benefit plans is not significant for any of the periods presented. It is the Company’s policy to fund, at a minimum, amounts required by the Internal Revenue Service.

In addition to providing pension benefits, the Company provides certain health care and life insurance benefits for some of its retired employees. Certain employees may become eligible for these benefits as they reach normal retirement age while working for the Company. The following sets forth the funded status of the plans as of the most recent actuarial valuations using a measurement date of September 30 (in millions):

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	Pension Benefits						Other Benefits
	2002			2001			2002			2001
Change in benefit obligation
Benefit obligation at beginning of year	$	333.5		$	322.5		$	78.7		$	67.0
Service cost		18.5			9.7			1.1			0.6
Interest cost		33.5			24.0			9.4			5.0
Amendments		(14.1	)		—			0.5			—
Actuarial loss		19.9			4.1			39.9			12.7
Acquisitions		168.4			—			24.9			—
Benefits paid		(33.1	)		(26.8	)		(7.5	)		(6.6	)
Benefit obligation at end of year		526.6			333.5			147.0			78.7
Change in plan assets
Fair value of plan assets at beginning of year		352.7			421.5			—			—
Actual return on plan assets		(45.8	)		(42.1	)		—			—
Employer contribution		0.5			0.1			—			—
Acquisition		172.6			—
Benefits paid		(33.1	)		(26.8	)		—			—
Fair value of plan assets at end of year		446.9			352.7			—			—
Funded status		(79.7	)		19.2			(147.0	)		(78.7	)
Accrued contribution		—			—			2.0			1.7
Unrecognized transition obligation		(0.3	)		(0.4	)		—			—
Unrecognized loss (gain)		175.5			61.7			36.9			(1.7	)
Unrecognized prior service cost		(26.9	)		(14.8	)		0.3			(0.9	)
Prepaid (accrued) benefit cost	$	68.6		$	65.7		$	(107.8	)	$	(79.6	)
Weighted-average assumptions as of December 31:
Discount rate		7.0	%		7.5	%		7.0	%		7.5	%
Expected return on plan assets		9.0	%		10.0	%		—			—

For measurement purposes, an eleven percent and ten percent annual rate of increase in the per capita cost of covered health care benefits was assumed in 2003 and 2004, respectively. The rate was assumed to decrease to six percent by 2008 and remain at that level thereafter.

	Pension Benefits						Other Benefits
	2002			2001			2002			2001
Components of net periodic benefit cost
Service cost	$	18.5		$	9.7		$	1.1		$	0.6
Interest cost		33.5			24.0			9.4			5.0
Expected return on plan assets		(48.1	)		(39.7	)		—			—
Amortization of transition obligation		(0.1	)		(0.2	)		—			—
Amortization of (gain) loss		—			(0.6	)		1.3			(0.6	)
Amortization of prior service cost		(1.9	)		(1.9	)		(.7	)		(1.0	)
Net periodic (benefit) cost	$	1.9		$	(8.7	)	$	11.1		$	4.0

The Company acquired Gilbarco, Inc. on February 1, 2002, Videojet Technologies on February 5, 2002, Viridor Instrumentation Limited on February 4, 2002 and Thomson Industries on October 18, 2002, including each of their pension and post retirement plans.

The Company acquired Kollmorgen Corporation on June 20, 2000, including their pension and postretirement benefit plans. The Company acquired American Precision Industries on March 27, 2000, including their pension plans.

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Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage point change in assumed health care cost trend rates would have the following effects:

	One-Percentage Point Increase		One-Percentage Point Decrease
Effect on total of service and interest cost components	$	1.2	$	(1.0	)
Effect on postretirement benefit obligation		14.7		(12.7	)

Substantially all employees not covered by defined benefit plans are covered by defined contribution plans, which generally provide funding based on a percentage of compensation.

Pension expense for all plans amounted to $45,490,000, $38,002,000, and $36,555,000 for the years ended December 31, 2002, 2001 and 2000, respectively. In addition, due to declining investment returns on the Company’s plan assets, the Company recorded a $76,941,000 minimum pension liability adjustment (net of tax benefit of $39,637,000). In accordance with SFAS No. 87, “Employers’ Accounting for Pensions”, the Company recorded the charge as a direct adjustment to stockholders’ equity and thus, does not impact net income, but is included in comprehensive income. For 2003, the Company anticipates lowering the expected long-term rate of return assumption from 9% to 8.5% for the Company’s defined benefit pension plans. The Company anticipates there will be no funding requirements for the defined benefit plans in 2003.

(10)    STOCK TRANSACTIONS:

On July 1, 2002, the Company amended its certificate of incorporation to increase its authorized number of shares of common stock from 300,000,000 to 500,000,000 shares. This amendment was approved by the Company’s shareholders at its May 7, 2002 annual meeting.

On March 8, 2002, the Company completed the issuance of 6.9 million shares of the Company’s common stock for net proceeds to the Company of $467 million.

On March 1, 2001, the Company’s Board of Directors authorized an increase in the number of common shares to be issued under the Company’s non-qualified stock option plan to 22.5 million from 15.0 million. The Company’s stockholders approved this increase in May 2001. Under the plan, options are granted at not less than existing market prices, expire ten years from the date of grant and generally vest ratably over a five-year period.

Changes in stock options were as follows:

	Number of Shares Under Option
	(in thousands, except per share data)
Outstanding at December 31, 1999 (average $20.48 per share)	10,217
Granted (average $52.56 per share)	3,268
Exercised (average $12.95 per share)	(1,615	)
Cancelled (average $23.59 per share)	(1,119	)
Outstanding at December 31, 2000 (average $31.65 per share)	10,751
Granted (average $48.21 per share)	1,546
Exercised (average $14.13 per share)	(1,677	)
Cancelled (average $49.17 per share)	(597	)
Outstanding at December 31, 2001 (average $38.28 per share)	10,023
Granted (average $62.37 per share)	1,524
Exercised (average $22.38 per share)	(1,872	)
Cancelled (average $47.24 per share)	(275	)
Outstanding at December 31, 2002 (at $7.97 to $69.98 per share, average $45.09 per share)	9,400

36

As of December 31, 2002, options with a weighted average remaining life of 5.0 years covering 3,581,927 shares were exercisable at $7.97 to $68.31 per share (average $32.80 per share) and options covering 5,864,000 shares remain available to be granted.

Options outstanding at December 31, 2002 are summarized below:

	Outstanding				Exercisable
Exercise Price	Shares (thousands)	Average Exercise Price		Average Remaining Life	Shares (thousands)	Average Exercise Price
$  7.97 to $11.75	397	$	10.49	1 year	397	$	10.49
$15.63 to $20.88	333		16.53	3 years	333		16.53
$21.25 to $32.22	1,466		25.33	4 years	1,466		25.33
$35.19 to $59.59	4,926		46.89	8 years	1,104		46.65
$60.38 to $69.98	2,278		64.11	9 years	282		68.02

Nonqualified options have been issued only at fair market value exercise prices as of the date of grant during the periods presented herein, and the Company’s policy does not recognize compensation costs for options of this type. The pro-forma costs of these options granted have been calculated using the Black-Scholes option pricing model and assuming a 3.3% risk-free interest rate, a 8-year life for the option, a 33.79% expected volatility and dividends at the current annual rate. The weighted-average grant date fair market value of options issued was $28 per share in 2002, $27 per share in 2001, and $32 per share in 2000. Had this method been used in the determination of income, net earnings would have decreased by approximately $21.0 million in 2002, $20.3 million in 2001, and $17.9 million in 2000 and diluted earnings per share would have decreased by $.13 in 2002, $.13 in 2001, and $.12 in 2000. These proforma amounts may not be representative of the effects on proforma net earnings for future years.

During 2002, the Company issued approximately 400,000 shares of the Company’s common stock to a former officer of the Company pursuant to a previously existing employment contract, earned in prior years. These amounts are included as a component of common stock issued for options exercised in the Consolidated Statement of Stockholders’ Equity.

In the third and fourth quarters of 2001, the Company repurchased 375,500 shares of the Company’s common stock for total consideration of $17.3 million. In the first quarter of 2000, the Company repurchased 2,042,300 shares of the Company’s common stock for total consideration of $82.2 million.

(11)    LEASES AND COMMITMENTS:

The Company’s leases extend for varying periods of time up to 10 years and, in some cases, contain renewal options. Future minimum rental payments for all operating leases having initial or remaining noncancelable lease terms in excess of one year are $54,000,000 in 2003, $43,000,000 in 2004, $35,000,000 in 2005, $30,000,000 in 2006, $26,000,000 in 2007, and $73,000,000 thereafter. Total rent expense charged to income for all operating leases was $56,000,000, $42,000,000, and $35,000,000, for the years ended December 31, 2002, 2001, and 2000, respectively.

(12)    LITIGATION AND CONTINGENCIES:

Certain of the Company’s operations are subject to environmental laws and regulations in the jurisdictions in which they operate, which impose limitations on the discharge of pollutants into the ground, air and water and establish standards for the generation, treatment, use, storage and disposal of solid and hazardous wastes. The Company must also comply with various health and safety regulations in both the United States and abroad in connection with its operations. The Company believes that it is in substantial compliance with applicable environmental, health and safety laws and regulations. Compliance with these laws and regulations has not had and, based on current information and the applicable laws and regulations currently in effect, is not expected to have a material adverse effect on the Company’s capital expenditures, earnings or competitive position.

In addition to environmental compliance costs, the Company may incur costs related to alleged environmental damage associated with past or current waste disposal practices or other hazardous materials handling practices. For example, generators of hazardous substances found in disposal sites at which environmental problems are alleged to exist, as well as the owners of those sites and certain other classes of persons, are subject to claims brought by state and federal regulatory agencies pursuant to statutory authority. In addition to clean-up actions brought by governmental authorities, private parties could bring personal injury or other claims due to the presence of or exposure to hazardous substances. The Company has received notification from the U.S. Environmental Protection Agency, and from state and foreign environmental agencies, that conditions at a number of sites where

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the Company and others disposed of hazardous wastes require clean-up and other possible remedial action and may be the basis for monetary sanctions, including sites where the Company has been identified as a potentially responsible party under federal and state environmental laws and regulations. The Company has projects underway at several current and former manufacturing facilities, in both the United States and abroad, to investigate and remediate environmental contamination resulting from past operations. In particular, Joslyn Manufacturing Company (“JMC”), a subsidiary of the Company, previously operated wood treating facilities that chemically preserved utility poles, pilings and railroad ties. All such treating operations were discontinued or sold prior to 1982. These facilities used wood preservatives that included creosote, pentachlorophenol and chromium-arsenic-copper. While preservatives were handled in accordance with then existing law, environmental law now imposes retroactive liability, in some circumstances, on persons who owned or operated wood-treating sites. JMC is remediating some of its former sites and will remediate other sites in the future.

The Company has made a provision for environmental remediation; however, there can be no assurance that estimates of environmental liabilities will not change. The Company generally makes an assessment of the costs involved for its remediation efforts based on environmental studies as well as its prior experience with similar sites. If the Company determines that it has potential liability for properties currently owned or previously sold, it accrues the total estimated costs, including investigation and remediation costs, associated with the site. While the Company actively pursues appropriate insurance recoveries, it does not recognize any insurance recoveries for environmental liability claims until realized. The ultimate cost of site cleanup is difficult to predict given the uncertainties of the Company’s involvement in certain sites, uncertainties regarding the extent of the required cleanup, the availability of alternative cleanup methods, variations in the interpretation of applicable laws and regulations, the possibility of insurance recoveries with respect to certain sites and the fact that imposition of joint and several liability with right of contribution is possible under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 and other environmental laws and regulations. As such, there can be no assurance that the Company’s estimates of environmental liabilities will not change. In view of the Company’s financial position and reserves for environmental matters, the Company believes that its liability, if any, for past or current waste disposal practices and other hazardous materials handling practices will not have a material adverse effect on its results of operation, financial condition and cash flow.

The Company has been engaged in product liability litigation related to an air tool product line that was disposed in 1987. The Company has accepted an agreement, in principle, to settle the claims related to this litigation. The Company believes that completion of this settlement will not result in a material adverse effect on the Company’s results of operations or financial condition.

In addition to the litigation noted above, the Company is, from time to time, subject to routine litigation incidental to its business. These lawsuits primarily involve claims for damages arising out of the use of the Company’s products, allegations of patent and trademark infringement, and litigation and administrative proceedings involving employment matters and commercial disputes. Some of these lawsuits include claims for punitive as well as compensatory damages. The Company estimates its exposure for product liability and accrues for this estimated liability up to the limits of the deductibles under available insurance coverage. All other claims and lawsuits are handled on a case-by-case basis. The Company believes that the results of the above-noted litigation and other pending legal proceedings will not have a materially adverse effect on the Company’s results of operations or financial condition, notwithstanding any related insurance recoveries.

The Company’s Matco subsidiary has sold, with recourse, or provided credit enhancements for certain of its accounts receivable and notes receivable. Amounts outstanding under this program approximated $93 million, $92 million and $70 million as of December 31, 2002, 2001 and 2000, respectively. The subsidiary accounts for such sales in accordance with Statement of Financial Accounting Standards (SFAS) No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities—a replacement of FASB Statement No. 125.” A provision for estimated losses as a result of the recourse has been included in accrued expenses. No gain or loss arose from these transactions.

As of December 31, 2002, the Company had no known probable but inestimable exposures that are expected to have a material effect on the Company’s financial position and results of operations.

(13)    INCOME TAXES:

The provision for income taxes for the years ended December 31 consists of the following (in thousands):

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	2002		2001		2000
Federal:
Current	$	—	$	76,666	$	85,955
Deferred		160,302		60,601		67,150
State and local		15,315		12,483		12,645
Foreign		47,710		28,849		32,961
Income tax provision	$	223,327	$	178,599	$	198,711

Deferred income taxes are reflected in prepaid expenses and other current assets and in other assets. Deferred tax assets consist of the following (in thousands):

	Year Ended December 31,
	2002			2001
Bad debt allowance	$	13,394		$	20,784
Inventories		33,207			7,929
Property, plant and equipment		(32,317	)		(48,655	)
Postretirement benefits		66,823			39,053
Insurance, including self—insurance		21,846			22,860
Basis difference in LYONs Notes		(20,614	)		(9,374	)
Environmental compliance		14,667			25,239
Other accruals		(26,073	)		(26,166	)
Deferred service income		(126,806	)		(61,702	)
All other accounts		40,993			(25,844	)
Net deferred tax liability	$	(14,880	)	$	(55,876	)

The effective income tax rate for the years ended December 31 varies from the statutory federal income tax rate as follows:

	Percentage of Pre-tax Earnings
	2002		2001		2000
Statutory federal income tax rate	35.0	%	35.0	%	35.0	%
Increase (decrease) in tax rate resulting from:
Permanent differences in amortization of goodwill	—		2.9		3.1
State income taxes (net of Federal income tax benefit)	1.5		1.6		1.6
Taxes on foreign earnings	(2.5	)	(2.0	)	(1.7	)
Effective income tax rate	34.0	%	37.5	%	38.0	%

The Company provides income taxes for unremitted earnings of foreign subsidiaries which are not considered permanently reinvested in that operation. As of December 31, 2002, the approximate amount of earnings from foreign subsidiaries that the Company considers permanently reinvested and for which deferred taxes have not been provided was approximately $410 million. It is not practical to estimate the additional Federal income taxes, if any, that might be payable on the remittance of such earnings.

The Company made income tax payments of $98,773,000, $52,048,000 and $40,102,000 in 2002, 2001 and 2000, respectively. The Company recognized a tax benefit of approximately $28,267,000, $12,562,000, and $9,165,000 in 2002, 2001, and 2000, respectively, related to the exercise of employee stock options, which has been recorded as an increase to additional paid-in capital.

In connection with the completion of a federal income tax audit, the Company adjusted certain income tax related reserves established related to the sale of a previously discontinued operation and recorded a $30 million credit to its fourth quarter 2002 income statement. This credit has been classified separately below net earnings from continuing operations since the tax reserves related to a previously discontinued operation.

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(14)    SEGMENT DATA:

Operating profit represents total revenues less operating expenses, excluding other expense, interest and income taxes. The identifiable assets by segment are those used in each segment’s operations. Intersegment amounts are eliminated to arrive at consolidated totals.

Detailed segment data is presented in the following table (in thousands):

Operations in Different Industries Year Ended December 31

	2002			2001			2000
Total Sales:
Process/Environmental Controls	$	3,385,154		$	2,616,797		$	2,441,986
Tools and Components		1,192,078			1,165,647			1,335,791
	$	4,577,232		$	3,782,444		$	3,777,777
Operating Profit:
Process/Environmental Controls	$	540,457		$	388,616		$	382,354
Tools and Components		181,359			131,810			189,062
Other		(20,694	)		(18,415	)		(19,267	))
	$	701,122		$	502,011		$	552,149
Identifiable Assets:
Process/Environmental Controls	$	4,691,604		$	3,180,092		$	2,863,930
Tools and Components		811,803			967,983			987,207
Other		525,738			672,408			180,542
	$	6,029,145		$	4,820,483		$	4,031,679
Liabilities:
Process/Environmental Controls	$	1,149,800		$	1,092,012		$	1,026,463
Tools and Components		311,106			337,512			347,484
Other		1,558,640			1,162,373			715,399
	$	3,019,546		$	2,591,897		$	2,089,346
Depreciation and Amortization:
Process/Environmental Controls	$	93,176		$	124,194		$	101,605
Tools and Components		36,389			54,196			48,116
	$	129,565		$	178,390		$	149,721
Capital Expenditures, Net:
Process/Environmental Controls	$	26,887		$	59,832		$	51,067
Tools and Components		12,077			20,753			37,436
	$	38,964		$	80,585		$	88,503

Operations in Geographical Areas

Year Ended December 31

	2002		2001		2000
Total Sales:
United States	$	3,304,796	$	2,622,077	$	2,883,392
Germany		256,131		292,712		199,064
United Kingdom		209,954		143,404		154,731
All other		806,351		724,251		540,590
	$	4,577,232	$	3,782,444	$	3,777,777
Long-lived assets:
United States	$	3,104,370	$	2,596,063	$	2,418,590
Germany		147,790		95,512		29,405
United Kingdom		169,676		54,951		22,134

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All other		220,043		199,342		87,244
Less: Deferred Taxes		—		—		(778	)
	$	3,641,879	$	2,945,868	$	2,556,595
Sales outside the United States:
Direct Sales	$	1,272,436	$	1,160,367	$	894,385
Exports		384,000		324,000		298,000
	$	1,656,436	$	1,484,367	$	1,192,385

Sales by Major Product Group:

	2002		2001		2000
	(in thousands)
Analytical and physical instrumentation	$	1,784,955	$	1,204,683	$	1,140,633
Motion and industrial automation controls		869,820		902,664		801,400
Mechanics and related hand tools		760,533		747,605		784,332
Product identification		285,857		—		—
Aerospace and defense		278,066		259,395		196,443
Power quality and reliability		251,783		325,072		376,374
All other		346,218		343,025		478,595
Total	$	4,577,232	$	3,782,444	$	3,777,777

(15)    QUARTERLY DATA-UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA):

	2002
	1st Quarter			2nd Quarter		3rd Quarter		4th Quarter
Net sales	$	1,004,207		$	1,146,326	$	1,151,721	$	1,274,978
Gross profit		376,023			444,418		460,073		505,543
Operating profit		137,221			169,575		187,430		206,896
Net earnings, before change in accounting principle and reduction of income tax reserves		82,735			103,665		116,029		131,712
Net earnings		(91,015	)		103,665		116,029		161,712
Earnings per share:
Basic—before change in accounting principle and reduction in income tax reserves	$	.57		$	.69	$	.76	$	.87
Diluted—before change in accounting principle and reduction in income tax reserves	$	.55		$	.66	$	.74	$	.84
Basic	$	(.63	)	$	.69	$	.76	$	1.07
Diluted	$	(.58	)	$	.66	$	.74	$	1.03
	2001
	1st Quarter			2nd Quarter		3rd Quarter		4th Quarter
Net sales	$	1,005,283		$	956,641	$	901,588	$	918,932
Gross profit		376,885			375,341		353,958		338,233
Operating profit		138,418			156,613		147,640		59,340
Net earnings		82,577			94,230		87,746		33,112
Earnings per share:
Basic	$	.58		$	.65	$	.61	$	.23
Diluted	$	.56		$	.63	$	.59	$	.23

(16)    NEW ACCOUNTING PRONOUNCEMENTS:

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.” This statement requires that goodwill and intangible assets deemed to have an indefinite life not be amortized. Instead of amortizing goodwill and intangible assets deemed to have an indefinite life, the statement requires a test for impairment to be

41

performed annually, or immediately if conditions indicate that such an impairment could exist. The Company adopted the statement effective January 1, 2002 and will no longer record goodwill amortization. The Company has recorded an impairment from the implementation of SFAS No. 142 as a change in accounting principle in the first quarter of 2002 of $200 million ($173.8 million after tax). The evaluation of goodwill of reporting units on a fair value basis from the implementation of SFAS No. 142, indicated that an impairment existed at the Company’s power quality business unit. In accordance with SFAS No. 142, once impairment is determined at a reporting unit, SFAS No. 142 requires that the amount of goodwill impairment be determined based on what the balance of goodwill would have been if purchase accounting were applied at the date of impairment. Under SFAS No. 142, if the carrying amount of goodwill exceeds its fair value, an impairment loss must be recognized in an amount equal to that excess. Once an impairment loss is recognized, the adjusted carrying amount of goodwill will be its new accounting basis.

The following table provides the comparable effects of adoption of SFAS No. 142 for the two years ended December 31, 2001  and 2000 (in thousands, except per share data).

	2001		2000
Reported Net Earnings	$	297,665	$	324,213
Add back: Goodwill Amortization (net of tax)		54,978		45,995
Adjusted Net Earnings	$	352,643	$	370,208
Basic Earnings per Share	2001		2000
Reported Net Earnings	$	2.07	$	2.28
Add back: Goodwill Amortization (net of tax)		.39		.32
Adjusted Net Earnings per Basic Share	$	2.46	$	2.60
Diluted Net Earnings per Share	2001		2000
Reported Net Earnings	$	2.01	$	2.23
Add back: Goodwill Amortization (net of tax)		.36		.31
Adjusted Net Earnings per Diluted Share	$	2.37	$	2.54

The carrying amount of goodwill changed by approximately $600.0 million in 2002. The components of the change were $834 million of additional goodwill associated with business combinations completed in the year ended December 31, 2002, a net decrease of $34 million in other adjustments, primarily related to adjustments to goodwill associated with acquisitions consummated in prior years and foreign currency translation adjustments, and lastly, a $200 million reduction of goodwill related to the impairment charge recorded in connection with the adoption of SFAS No. 142.

There were no dispositions of businesses with related goodwill during the year ended December 31, 2002. Both the acquired goodwill change in the period and the impairment charge related to the Company’s Process/Environmental Controls segment. The carrying value of goodwill, at December 31, 2002, for the Tools and Components segment and Process/Environmental Controls segment is $211.9 million, and $2,564.9 million, respectively. Danaher has nine reporting units closely aligned with the Company’s strategic platforms and specialty niche businesses. They are as follows: Tools, Motion, Electronic Test, Power Quality, Environmental, Aerospace and Defense, Industrial Controls, Level/Flow, and Product Identification.

The following table shows the rollforward of goodwill reflected in the financial statements resulting from the Company’s acquisition activities for 2000, 2001 and 2002 (in millions).

Balance January 1, 2000	$	1,189
Attributable to 2000 acquisitions		608
Amortization		(47	)
Other Changes, including adjustments to purchase price, purchase allocations and the effect of foreign currency translations		12
Balance December 31, 2000		1,762
Attributable to 2001 acquisitions		369
Amortization		(62	)
Other Changes, including adjustments to purchase price, purchase allocations and the effect of foreign currency translations		108
Balance December 31, 2001		2,177
Attributable to 2002 acquisitions		834
Other Changes, including adjustments to purchase price, purchase allocations and the effect of foreign currency translations		(34	)
Write down associated with Power Quality Business		(200	)
Balance December 31, 2002	$	2,777

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Included in other changes in goodwill for 2001 are changes made to the preliminary purchase price allocations made in 2000 for acquired assets and liabilities ($58.3 million) related to finalization of estimated fair market values associated with these acquisitions as well as accruals for direct costs related to exiting certain acquired operations ($53.9 million) arising from the Company’s integration plan with respect to these businesses. In 2002, the Company recorded a reduction of goodwill related to certain acquisitions that occurred in 2000 of approximately $27 million related to reserves that were not necessary and reserves associated with facilities that were not closed due to unexpected delays in commencing certain planned integration activities.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 addresses accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement is effective for fiscal years beginning after June 15, 2002. The Company does not believe that implementation of this SFAS will have a material impact on its financial statements.

In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-lived Assets,” which supersedes SFAS No. 121. Though it retains the basic requirements of SFAS No. 121 regarding when and how to measure an impairment loss, SFAS No. 144 provides additional implementation guidance. SFAS No. 144 applies to long-lived assets to be held and used or to be disposed of, including assets under capital leases of lessees; assets subject to operating leases of lessors; and prepaid assets. SFAS No. 144 also expands the scope of a discontinued operation to include a component of an entity, and eliminates the current exemption to consolidation when control over a subsidiary is likely to be temporary. This statement was effective January 1, 2002. Implementation of this SFAS did not have a material impact on its financial statements.

In April 2002, the FASB approved SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections. SFAS No. 145 rescinds previous accounting guidance, which required all gains and losses from extinguishment of debt be classified as an extraordinary item. Under SFAS No. 145, classification of debt extinguishment depends on the facts and circumstances of the transaction. SFAS No. 145 is effective for fiscal years beginning after May 15, 2002. The Company does not expect this SFAS to have a material impact on its financial statements.

In July 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring).” SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred, rather than at the date of the entity’s commitment to an exit plan. This statement is effective for exit and disposal activities that are initiated after December 31, 2002. Since adoption of this SFAS is prospective, the Company does not believe that the implementation of this SFAS will have a material impact on the Company’s financial statements.

In December 2002, the FASB issued Statement No. 148 (FAS 148), “Accounting for Stock-Based Compensation-Transition and Disclosure” which amends FASB No. 123 (FAS 123), “Accounting for Stock-Based Compensation.” FAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements of FAS 123 to require disclosures in both the annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The transition guidance and disclosure provisions of FAS 148 will be effective for the Company’s financial statements issued for the first quarter of 2003. As allowed by FAS 123, the Company follows the disclosure requirements of FAS 123, but continues to account for its employee stock option plans in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, which results in no charge to earnings when options are issued at fair market value. Therefore, at this time, adoption of this statement will not have a material impact on the Company’s financial position or results of operations.

In December 2002, the FASB issued Interpretation No. 45 (FIN 45), “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires a guarantor to make additional disclosures in its interim and annual financial statements regarding the guarantor’s obligations. In additions, FIN 45 requires, under certain circumstances, that a guarantor recognize, at the inception of the guarantee, a liability for the fair value of the obligation undertaken when issuing the guarantee. The Company has adopted the disclosure requirements for the fiscal year ended December 31, 2002. The adoption of this interpretation did not have a material impact on the Company’s financial statements.

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Report of Independent Auditors

To the Board of Directors and Shareholders of Danaher Corporation and subsidiaries

We have audited the consolidated balance sheet of Danaher Corporation and subsidiaries as of December 31, 2002 and the related consolidated statements of earnings, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of Danaher Corporation and subsidiaries as of December 31, 2001 and for each of the years in the two year period then ended were audited by other auditors who have ceased operations and whose report dated January 23, 2002, (except with respect to the matters discussed in Note 17 as to which the date is March 8, 2002) expressed an unqualified opinion on those financial statements, prior to the disclosures related to the adoption of Statement of Financial Accounting Standards (Statement) No. 142, “Goodwill and Other Intangible Assets”, discussed in Note 16.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Danaher Corporation and subsidiaries at December 31, 2002 and the consolidated results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

As discussed in Note 16 to the financial statements the Company adopted Statement No.142, “Goodwill and Other Intangible Assets” as of January 1, 2002.

As discussed above, the financial statements of Danaher Corporation and subsidiaries as of December 31, 2001 and for each of the years in the two year period then ended were audited by other auditors who have ceased operations. As described in Note 16, these financial statements have been revised to include disclosures required by Statement No. 142. Our procedures with respect to the disclosures in Note 16 included (a) agreeing the previously reported goodwill and net income to the previously issued financial statements and agreeing the changes in goodwill and the adjustments to reported net income representing amortization expense, net of tax, recognized in those periods related to goodwill to the Company’s underlying records obtained from management, (b) testing the mathematical accuracy of (i) the reconciliation of adjusted net income to reported net income, and the related earnings-per-share amounts and (ii) the roll forward of goodwill balances. In our opinion, the disclosures for 2001 and 2000 in Note 16 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 or 2000 financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 or 2000 financial statements taken as a whole.

Ernst & Young LLP

Baltimore, Maryland

January 29, 2003

44

REPORT OF INDEPENDENT ACCOUNTANTS

The following report is a copy of a report previously issued by Arthur Andersen LLP (“Andersen”), which report has not been reissued by Andersen. Certain financial information for each of the two years in the period ended December 31, 2001 was not reviewed by Andersen and includes: (i) reclassifications to conform to our fiscal 2002 financial statement presentation and (ii) additional disclosures to conform with new accounting pronouncements and SEC rules and regulations issued during such fiscal year. The reference to Note 17 in the dating of their opinion refers to a footnote regarding certain acquisition and divestiture events that occurred subsequent to December 31, 2001, which is not repeated in the current year financial statements.

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF DANAHER CORPORATION

We have audited the accompanying consolidated balance sheets of Danaher Corporation (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of earnings, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2001. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Danaher Corporation and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Baltimore, Maryland

January 23, 2002

(except with respect to the

matter discussed in Note 17,

as to which the date is

March 8, 2002)

45

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

NONE

PART III

I T EMS 10 THROUGH 13.

The information required under Items 10 through 13 is included in the Registrant’s Proxy Statement for its 2003 annual meeting, and is incorporated herein by reference.

ITEM 14.    CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the required evaluation, the Company’s President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer, have concluded that the Company’s disclosure controls and procedures are effective.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

a) Financial Statements and Schedules

The financial statements are set forth under Item 8 of this report on Form 10-K. An index of Exhibits and Schedules is on page 47 of this report. Schedules other than those listed below have been omitted from this Annual Report because they are not required, are not applicable or the required information is included in the financial statements or the notes thereto.

b) Reports on Form 8-K filed in the fourth quarter of 2002.

NONE

46

DANAHER CORPORATION

INDEX TO FINANCIAL STATEMENTS, SUPPLEMENTARY DATA AND FINANCIAL STATEMENT SCHEDULES

Schedules:	Page Number in Form 10K
Report of Independent Auditors on Schedule	52
Report of Independent Public Accountants on Schedule	53
Valuation and Qualifying Accounts	54

47

DANAHER CORPORATION

EXHIBIT INDEX

Exhibit Number	Description
3.1	Articles of Incorporation of Danaher Corporation, as amended	Incorporated by reference from Exhibit 3 to Danaher Corporation’s Form 10-Q for the quarter ended June 28, 2002
3.2	By-laws of Danaher Corporation	Incorporated by reference from Exhibit 3 to Danaher Corporation’s Form 10-Q for the quarter ended June 26, 1998
10.1	Note Agreement dated as of April 1, 1993 by and among Danaher Corporation and the lenders referenced therein.	Incorporated by reference from Exhibit 10(d) to Danaher Corporation’s Form 10-Q for the quarter ended June 26, 1998
10.2	Danaher Corporation 1998 Stock Option Plan*	Incorporated by reference from Exhibit A to Danaher Corporation’s 1998 Proxy Statement on Schedule 14A filed with the Commission on March 17, 1998
10.3	Danaher Corporation 1987 Stock Option Plan	Incorporated by reference from Danaher Corporation’s Registration Statement on Form S-8 (File No. 033-54669) filed with the Commission on July 21, 1994
10.4	Indenture Agreement dated as of October 28, 1998 by and between Danaher Corporation and The First National Bank of Chicago, as trustee	Incorporated by reference from Exhibit 4 to Danaher Corporation’s Registration Statement on Form S-3 (File No. 333-63591) filed with the Commission on September 17, 1998.
10.5	Fiscal Agency Agreement dated as of July 25, 2000 by and between Danaher Corporation and Deutsche Bank AG London	Incorporated by reference from Exhibit 10(h) to Danaher Corporation’s Form 10-K for the year ended December 31, 2000
10.6	Employment Agreement dated as of July 18, 2000 by and between Danaher Corporation and H. Lawrence Culp, Jr.*	Incorporated by reference from Exhibit 10(i) to Danaher Corporation’s Form 10-K for the year ended December 31, 2000
10.7	Amendment to Employment Agreement by and between Danaher Corporation and H. Lawrence Culp, Jr., dated as of November 19, 2001*	Incorporated by reference from Exhibit 10(k) to Danaher Corporation’s Form 10-K for the year ended December 31, 2001
10.8	Letter agreement as of May 4, 2000 by and between Danaher and Philip W. Knisely*
10.9	Letter agreement as of March 8, 1996 by and between Danaher and Steven Simms*
10.10	Letter agreement as of October 31, 2000 by and between Danaher and Daniel A. Pryor*
10.11	Letter agreement as of July 11, 2002 by and between Danaher and Robert S. Lutz*
10.12	Letter agreement as of July 15, 1998 by and between Danaher and Christopher C. McMahon*
10.13	Indenture Agreement dated as of January 22, 2001 by and between Danaher Corporation and SunTrust Bank, as trustee	Incorporated by reference from Exhibit 4.1 to Danaher Corporation’s Registration Statement on Form S-3 (File No. 333-56406) filed with the Commission on March 1, 2001
10.14	Credit Agreement dated as of June 28, 2001 by and between Danaher Corporation and Bank of America	Incorporated by reference from Exhibit 6.1 to Danaher Corporation’s Form 10-Q for the quarter ended June 29, 2001
10.15	Danaher Corporation & Subsidiaries Executive Deferred Incentive Program*
10.16	Agreement as of November 1, 1990 between Danaher Corporation, Easco Hand Tools, Inc. and Sears, Roebuck & Co.	Incorporated by reference from Exhibit 10(c) to Danaher Corporation’s Form 10-Q for the quarter ended June 26, 1998
21.1	Subsidiaries of Registrant
23.1	Consent of Independent Auditors
23.2	Notice regarding consent of Arthur Andersen LLP
99.1	Certification of Chief Executive Officer, Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2	Certification of Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Indicates management contract or compensatory plan, contract or arrangement.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DANAHER CORPORATION
By:	/s/    H. LAWRENCE CULP, JR.
	H. Lawrence Culp, Jr. President and Chief Executive Officer

Date: March 28, 2003

/s/    H. LAWRENCE CULP, JR.         H. Lawrence Culp, Jr.	President, Chief Executive Officer and Director
/s/    STEVEN M. RALES         Steven M. Rales	Chairman of the Board
/s/    MITCHELL P. RALES         Mitchell P. Rales	Chairman of the Executive Committee
/s/    WALTER G. LOHR, JR.         Walter G. Lohr, Jr.	Director
/s/    DONALD J. EHRLICH         Donald J. Ehrlich	Director
/s/    MORTIMER M. CAPLIN         Mortimer M. Caplin	Director
/s/    ALAN G. SPOON         Alan G. Spoon	Director
/s/    A. EMMET STEPHENSON, JR.         A. Emmet Stephenson, Jr.	Director
/s/    PATRICK W. ALLENDER         Patrick W. Allender	Executive Vice President - Chief Financial Officer and Secretary
/s/    CHRISTOPHER C. MCMAHON         Christopher C. McMahon	Vice President and Controller
/s/    ROBERT S. LUTZ         Robert S. Lutz	Vice President and Chief Accounting Officer

49

CERTIFICATIONS

I, H. Lawrence Culp, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Danaher Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 28, 2003	By:	/s/    H. Lawrence Culp, Jr.
	Name: Title:	H. Lawrence Culp, Jr. President and Chief Executive Officer

50

I, Patrick W. Allender, certify that:

1. I have reviewed this annual report on Form 10-K of Danaher Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b. evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and

c. presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: March 28, 2003	By:	/s/    PATRICK W. ALLENDER
	Name: Title:	Patrick W. Allender Executive Vice President—Chief Financial Officer and Secretary

51

REPORT OF INDEPENDENT AUDITORS

We have audited the consolidated financial statements of Danaher Corporation as of December 31, 2002, and for the year then ended and have issued our report thereon dated January 29, 2003 (included elsewhere in this Form 10-K). Our audit also included the financial statement schedule listed in Item 15 of this Registration Statement. The schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits. The consolidated financial statements of Danaher Corporation and subsidiaries as of December 31, 2001 and for each of the years in the two year period then ended were audited by other auditors who have ceased operations and whose report dated January 23, 2002, (except with respect to the matters discussed in Note 17 as to which the date is March 8, 2002) expressed an unqualified opinion on those financial statements, prior to the disclosures related to the adoption of Statement of Financial Accounting Standards (Statement) No. 142, “Goodwill and Other Intangible Assets”, discussed in Note 16.

In our opinion, the 2002 financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

Ernst & Young LLP

Baltimore, Maryland

January 29, 2003

52

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON THE FINANCIAL STATEMENT SCHEDULE

The following report is a copy of a report previously issued by Arthur Andersen LLP (“Andersen”), which report has not been reissued by Andersen. Certain financial information for each of the two years in the period ended December 31, 2001 was not reviewed by Andersen and includes: (i) reclassifications to conform to our fiscal 2002 financial statement presentation and (ii) additional disclosures to conform with new accounting pronouncements and SEC rules and regulations issued during such fiscal year. The reference to Note 17 in the dating of their opinion refers to a footnote regarding certain acquisition and divestiture events that occurred subsequent to December 31, 2001, which is not repeated in the current year financial statements.

To Danaher Corporation:

We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Danaher Corporation and Subsidiaries included in this registration statement and have issued our report thereon dated January 23, 2002 (except with respect to the matter discussed in Note 17, as to which the date is March 8, 2002). Our audit was made for the purpose of forming an opinion on the consolidated financial statements taken as a whole. The schedules listed in the index are the responsibility of the Company’s management and are presented for purposes of complying with the securities and exchange commission’s rules and are not a part of the consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the consolidated financial statements taken as a whole.

ARTHUR ANDERSEN LLP

Baltimore, Maryland

January 23, 2002

53

DANAHER CORPORATION AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

	Additions
Classification	Balance at Beginning of Period		Charged to Costs & Expenses		Charged to other Accounts			Write Offs, Write Downs & Deductions		Balance at End of Period
	(in thousands)
Year Ended December 31, 2002
Allowances deducted from asset account:
Allowance for doubtful accounts:	$	44,000	$	26,436	$	10,808	(a)	$	17,244	$	64,000
Year Ended December 31, 2001
Allowances deducted from asset accounts:
Allowance for doubtful accounts:	$	37,000	$	18,542	$	3,571	(a)	$	15,113	$	44,000
Year Ended December 31, 2000
Allowances deducted from asset accounts:
Allowance for doubtful accounts	$	28,000	$	11,723	$	4,302	(a)	$	7,025	$	37,000

Notes: (a)—Amounts related to businesses acquired, net of amounts related to businesses disposed.

54

EX-10.8

                                                                    Exhibit 10.8

                              DANAHER CORPORATION
                              1250 24TH STREET NW
                                   SUITE 800
                          WASHINGTON, DC, USA 20037


   GEORGE M. SHERMAN                                    TELEPHONE (202) 828-0850
        PRESIDENT                                       FACSIMILE (202) 828-0860
CHIEF EXECUTIVE OFFICER

                        -STRICTLY PRIVATE & CONFIDENTIAL-

                                   May 4, 2000

Mr. Philip W. Knisely
8305 River Road
Richmond, VA 25229

Dear Phil:

Thank you very much for the time spent during our recent series of discussions.
Along with the Danaher Business System, our culture is the key to Danaher's
recent and future success. We share the enthusiasm you have expressed for our
organization, and look forward to you becoming a part of the Danaher team. Your
initial responsibilities will include approximately $1 billion in revenue,
including full P&L and operating responsibility for our Motion Control, Power
Quality & Reliability and Industrial Control companies. As discussed, Danaher's
growth orientation is supported by our focus on both organic growth and growth
through acquisition. It is our intention that you will be integral in driving
this growth activity and, as a result, you will take on significantly greater
revenue and operating responsibility during your Danaher career.

I'd like to document the offer of employment extended to you, and your
acceptance.

     Title:                Executive Vice President, Danaher Corporation
                           (Corporate Officer)
     Start Date:           6/19/00
     Annual Compensation:  Base Salary:                $ 360,000.00
                           Target Bonus $ (%):         $ 252,000.00 (70%)
                                                       ------------
                           Target Total Compensation:  $ 612,000.00

You will participate in the Danaher Employee Stock Option Program. The Danaher
Corporation Board of Directors has approved an initial stock option grant of
500,000 shares. Two hundred and fifty thousand shares of this option grant will
vest 100% on the 4/th/ year anniversary of the effective date of this grant, and
two hundred and fifty thousand shares will vest 100% on the 5/th/ year
anniversary of the effective date of this grant. The price of these share
options will be established by the NYSE closing price on the effective date of
this grant. You will receive further details and confirmation of this stock
option grant shortly hereafter. You will be eligible for additional option
grants, beginning in 2005.

You will participate, in our "Executive Deferred Incentive Program" (EDIP); an
exclusive executive benefit designed to provide you with long term earnings
based on the continued appreciation of Danaher Corporation stock. Based on your
target total cash compensation of $612,000.00, this program will initially
provide you with approximately $40,000.00 worth of "phantom" stock annually.
Your EDIP participation will begin on May 1, 2000. You will receive further
information on EDIP from Dennis Longo. You will also be provided with a Country
Club Membership and a Level I Company Car. Once you begin the car lease program,
you will expense gas, oil, and maintenance, and the company will provide
insurance for this vehicle. This program is considered taxable income and will
be treated as such.



                                                                          Page 2
                                                               Philip W. Knisely
                                                                Employment Offer


You will be provided with personalized estate, tax and retirement income
planning services as well as reimbursement of estate execution and tax
preparation expenses. You will have a personal advisor through Danaher's
established provider, Asset Management Group, for your retirement income and
estate planning. Arthur Andersen is our recommended tax preparation provider.
The detail of this benefit will be provided by Dennis Longo.

It is agreed that you will initially be based out of a Virginia location.
Complete relocation benefits will be provided at some point in the future if
required, based on mutual understanding and sound business needs.

You will be eligible for all regular exempt associate benefits and will be
eligible for comprehensive medical, dental and life insurance benefits
immediately upon your first day of employment. Brochures on our various benefit
programs including the Danaher Retirement and Savings Plan are enclosed. If you
would like to review them, or have any questions on benefits, please feel free
to call Dennis Longo at your convenience.

Phil, this offer of employment is contingent upon:

     .    Completion of the company's Employment Agreement, which outlines
          specifics pertaining to non-competition, non-solicitation of
          customers, non-piracy of company employees and confidentiality.

     .    Completion prior to employment, and as requested thereafter, of our
          Inventions, Trademarks and Copyrights Agreement, Code of Business
          Conduct Certification, and Conflict of Interest Questionnaire (copies
          enclosed) and,

     .    Successfully passing our pre-employment physical.

In order to confirm your understanding and acceptance of these terms and
conditions please sign the original copy of this letter as well as the
enclosures listed above in the spaces indicated and return it to me. Additional
copies are enclosed for your personal records.

Thank you very much Phil for accepting our offer. I look forward to working with
you on Danaher's "Journey to Excellence" as we strive to achieve our vision and
long term objectives. Should you have any questions in the meantime, please do
not hesitate to call me or Dennis.

Best Regards,

                                        Sincerely yours,

                                        /s/ George M. Sherman

                                        George M. Sherman

cc D. Longo
Enclosures

 I understand and accept the terms and conditions of this offer of employment.


                        /s/ Philip W. Knisely / 4/14/00
                        -------------------------------
                            Philip W. Knisely / Date

EX-10.9

                                                                    Exhibit 10.9

                              DANAHER CORPORATION
                             1250 24TH STREET, N.W.
                                   SUITE 800
                             WASHINGTON, D.C. 20037
                                 (202) 828-0850

   GEORGE M. SHERMAN
     PRESIDENT AND
CHIEF EXECUTIVE OFFICER

                                  March 8, 1996

         Mr. Steven Simms
         207 Lambeth Road
         Baltimore, MD 21218

         Dear Steve:

                Thank you very much for the time spent during our recent series
         of discussions. I hope the opportunity to meet with some of our key
         executives, review some of our strategies and tour a few factories
         helped you see first-hand the positive and highly effective culture we
         enjoy at Danaher. We share your enthusiasm and look forward to your
         becoming a part of the Danaher team.

                I am pleased to present you with the following offer of
         employment.

                Title:                  Group Executive & Corporate Vice
                                        President
                Start Date:             March 18, 1996
                Annual Compensation:    Base Salary:           $265,000.00
                                        Target Bonus $ (%)     $140,450.00 (53%)
                                                               -----------
                                        Target Total:          $405,450.00

                Your initial Group Executive assignment will include more than
         $400 million in revenue, including full P&L and operational
         responsibility for the Professional Tool Division, Matco Tools and
         Hennessy Industries. You will take direct management control of the
         Professional Tool Division in the capacity of President, with
         Matco/Hennessy reporting to you through a President.

                You will participate in the 1996 Executive Incentive
         Compensation Plan (ICP) on a full year basis. Normally, ICP payments
         are made during the first quarter of the following year. In addition,
         you will participate, in our "Executive Deferred Incentive Program"
         (EDIP), an exclusive executive benefit designed to



Mr. Steven Simms
March 8, 1996
Page 2

provide you with long term earnings based on the continued appreciation of
Danaher Corporation stock. You will also be provided with a company car as well
as a country club membership.

        You will participate in the Danaher Associate Stock Option Program. This
offer includes an initial grant of 100,000 shares. The option price of these
shares will be established by the NYSE closing price on your first day of
employment. You will receive further details shortly thereafter from Pat
Allender's office.

        You will also receive an outright grant of 15,000 shares of Danaher
Corporation stock based on a three year vesting schedule. While the vesting
schedule will provide you with ownership rights equal to 5,000 shares per year
on each of your first three anniversary dates, the actual transfer of ownership
will occur following your third anniversary.

        You will be eligible for all regular exempt associate benefits (with the
exception of severance benefits as noted below), and you will be eligible for
comprehensive medical, dental and life insurance benefits immediately upon your
first day of employment. With respect to severance benefits, should your
employment be involuntarily terminated for other than malfeasance, you will be
entitled to one year continuation of your base salary, medical benefits and
company car benefits. Brochures on our various benefit programs, including the
Danaher Retirement and Savings Plan, are enclosed. If you would like to review
them or have any questions on benefits, please feel free to call Dennis Longo at
your convenience.

        Steve, this offer of employment is contingent upon:

        **   your completing and signing, prior to employment and yearly
             thereafter, our Inventions, Trademarks and Copyrights Agreement,
             Code of Business Conduct Certification, and Conflict of Interest
             Questionnaire (copies enclosed) and,

        **   successfully passing our pre-employment physical.



Mr. Steven Simms
March 8, 1996
Page 3


     In order to confirm your understanding and acceptance of these terms and
conditions, please sign the original copy of this letter in the space indicated
below and return it to me. An additional copy is enclosed for your personal
records.

     I look forward to working with you on our "journey to excellence" as we
strive to achieve our vision and long-term objectives. Should you have any
questions in the meantime, please don't hesitate to call.

                                                Best Regards,


                                                /s/ George M. Sherman
                                                    George M. Sherman

GMS/ljg

cc: Dennis Longo


I understand and accept the terms and conditions of this offer of employment.


                                        /s/ Steven Simms
                                        -------------------
                                        Steven Simms

EX-10.10

                                                                   Exhibit 10.10

                                     [LOGO]
                              DANAHER CORPORATION

                           INTER-OFFICE COMMUNICATION

                        -STRICTLY PRIVATE & CONFIDENTIAL-


DATE:      September 11, 2000

TO:        Dan Pryor

FROM:      Larry Culp

SUBJECT:   Promotional Opportunity, Vice President - Strategic Development

COPIES:    George Sherman, Dennis Longo






Dan,

We're genuinely excited about the career growth opportunity that the Vice
President - Strategic Development position presents for you.

I'd like to document this promotional opportunity, and your acceptance. This
promotional offer is contingent upon completion and signing of our Employment
Agreement (copy enclosed).

Title:                            Vice President - Strategic Development;
                                  Corporate Officer, Danaher Corporation
Start Date:                       TBD
Compensation:
     Annual Base Salary:          $180,000.00
     Annual Target Bonus ($/%):   $ 81,000.00 / 45%
                                  -----------
     Annual Target Total:         $261,000.00


Your next regularly scheduled performance and salary review will be twelve
months from your start date. Your participation in the Executive Incentive
Compensation Plan (ICP) will increase to the 45% target level. For 2000, your
ICP will be pro-rated based on the EWQ financial factor at your previous base
salary and target percentage, and the corporate financial factor and new base
salary and target percentage effective with your start date as VP - Strategic
Development. You will continue to participate in the Danaher Executive Deferred
Incentive Plan (EDIP).

Also, your participation in the company's auto lease program will now provide
you with a Level I car (Lexus LS400 or equivalent). Under the lease program you
will expense gas, oil, and maintenance, while the company will provide insurance
for the leased vehicle. This program is considered taxable income and will be
treated as such.



                                                                          Page 2
                                                         Promotional Opportunity

You will continue to participate in the Danaher Employee Stock Option Program. A
recommendation will be made to the Danaher Corporation Board of Directors to
grant you an option of 10,000 shares. This option award is scheduled to be
formally approved by the Board at the December 2000 meeting. The price of these
share options will be established by the NYSE closing price on the day of that
board meeting. You will be eligible for additional annual option grants
beginning in 2001.

As a Corporate Officer of Danaher Corporation, you will be provided with
reimbursement of personal tax preparation expenses. This benefit provides
reimbursed expenses to a maximum of $3,000.00 annually using our preferred
provider, Arthur Anderson. Should you choose an alternative provider for tax
preparation, these expenses will be reimbursed to a maximum of $1,500.00
annually. Again, this is a taxable benefit and will be treated as such.

Should you have any questions, please don't hesitate to discuss them with Dennis
Longo or me at your convenience. In order to confirm your acceptance and
understanding of these terms and conditions, please sign the original copy of
this memo in the space indicated below and return it to me. An additional copy
is enclosed for your personal records.

/s/ Larry

H. Lawrence Culp, Jr.
Chief Operating Officer

HLC:cq
cc: D.A. Longo
    G.M. Sherman
Enclosure - Employment Agreement

       I understand and accept the conditions of this offer of employment.

                      /s/ Daniel A. Pryor      10/31/00
                     -----------------------------------
                            Daniel A. Pryor / Date

As amended per discussion with Dennis Longo (new base salary and ICP to be
effective 7/1/00)

/s/ DL             /s/ DAP

EX-10.11

                                                                   Exhibit 10.11

                               DANAHER CORPORATION
                           2099 PENNSYLVANIA AVENUE NW
                           WASHINGTON, D.C. 20006, USA

   PATRICK W. ALLENDER                                 PHONE (202) 419-7606
   EXECUTIVE VICE PRESIDENT                          FACSIMILE (202) 419-7661
CHIEF FINANCIAL OFFICER & SECRETARY              E-MAIL pat.allender@danaher.com

                        -STRICTLY PRIVATE & CONFIDENTIAL-

Via e-mail: rslutz@hotmail.com

July 9, 2002

Mr. Robert S. Lutz
1180 Sir William Lane
Lake Forest, IL 60045

Dear Bob,

Thank you very much for the time spent during our recent series of discussions.
Our culture, along with the Danaher Business System and our organizational
talent, are the keys to Danaher's past and future success. We share your
enthusiasm for our organization and look forward to you becoming a part of the
Danaher team.

Please allow this letter to serve as documentation of the employment offer being
extended to you and your acceptance.

         Title:                  Vice President, Finance - Auditing & Reporting
         Start Date:             July 15, 2002
         Reporting to:           Pat Allender, Executive Vice President and
                                 Chief Financial Officer
         Compensation:           Base Annual Salary:          $200,000.00
         Target Bonus $ (%):                                  $ 80,000.00 (40%)
                                                              -----------
         Target Total Compensation:                           $280,000.00


As of July 15/th/ you will be considered an active associate however because of
your limited availability you will only receive the minimum amount of payroll
(no benefits) until August 1/st/. As of August 1/st/ you will be available for a
full time schedule and will receive full payroll and be eligible for benefits.

You will participate in our Executive Incentive Compensation Plan (ICP) at the
40% target level for 2002 on a pro-rated basis. Normally, ICP payments are made
during the first quarter of the following year. We will also provide you with an
interest-free loan in the amount of $20,000.00 (subject to the normal payroll
deductions) within 30 days of your start date. This loan will be forgiven on the
second anniversary of your start date. Should you leave Danaher voluntarily
within two years of your start date, you agree that the entire $20,000.00 is to
be paid back to the corporation within thirty days of your last day worked.

You will participate in the company's automobile allowance program, providing
you with monthly car allowance of $1,500.00. This program is considered taxable
income and will be treated as such. You will also be provided with a country
club membership, including initiation fees and monthly dues.

You will participate in our "Executive Deferred Incentive Program" (EDIP); an
exclusive executive benefit designed to provide you with long-term earnings
based on the continued appreciation of Danaher Corporation stock. You will
receive further details and information on EDIP from Rick King, our Corporate
Director of Benefits.

You have been selected to participate in the Danaher Employee Stock Option
Program. A recommendation will be made to the Danaher Corporation Board of
Directors for a stock option grant of 15,000 shares. This option award is
scheduled to be formally approved by the Board at its July 16, 2002. The date of
that Board Meeting will establish the effective date of the grant and the price
of these share options will be established by the NYSE closing price on the day
of that Board meeting. 5,000 shares of this grant will vest at the rate of 20%
per year from the effective date of the grant; and 10,000 shares of this grant
will vest 33% each on the 3/rd/, 4/th/ and 5/th/ anniversaries of the effective
date of the grant. You will receive further details and confirmation of this
stock option grant shortly after the board meeting. You will be eligible for
additional option grants, beginning with our annual grant in 2003.



                                                                          Page 2
                                                                  Robert S. Lutz
                                                             Offer of Employment


Danaher will allow appropriate time to maintain, and pay the costs associated
with, your professional status as a Certified Public Accountant including
reimbursement of applicable licensing fees, AICPA membership dues, and the costs
of complying with continuing professional education requirements.

You will be provided with reimbursement of personal income tax preparation
expenses. This benefit provides reimbursed expenses to a maximum of $3,000.00
annually. This is a taxable benefit.

Danaher is pleased to provide relocation benefits through Cornerstone Relocation
Group, our third party relocation services company. Upon receipt of your signed
offer letter, we will have our Cornerstone representative contact you to explain
the services provided, and to answer any questions you may have. Please do not
initiate any steps in the relocation process prior to speaking with Cornerstone.

Cornerstone will manage the details of your relocation according to our policy,
which includes:
    .  Reimbursement for realtor fees (up to 6%)
    .  Closing costs on your current home
    .  House hunting trips
    .  Packing, moving, storage, and unpacking of your household goods
       (including associated insurance)
    .  Temporary living expenses
    .  Dual housing expenses
    .  Closing costs on your new home (if you are currently a homeowner)
    .  A "soft goods" allowance
    .  Assistance with mortgage interest differential
    .  Equity loan

You will be eligible for all regular exempt employee benefits and will be
eligible for our comprehensive medical, dental and life insurance benefits
immediately upon your first day of employment. You will be eligible for three
weeks vacation beginning in 2003. Information on our various benefit programs,
including the Danaher Retirement and Savings Plan, are enclosed. If you would
like to review them, or have any questions on benefits or relocation, please
feel free to call Maryanne O'Neil, our Manager of Human Resource Programs
(Telephone: 860/843-7303), at your convenience.

With respect to severance benefits should your employment be involuntarily
terminated, for other than malfeasance, prior to the first anniversary of your
start date you will be entitled to one year's continuation of your base salary,
company car and other benefits. You will be entitled to six months' continuation
should termination be prior to the second anniversary of your start date. This
benefit will not include continuation in our 401(k) program, as our plan
strictly states that you must be an active associate to participate.

This offer of employment is contingent upon completion and signing, prior to
employment, our Employment Agreement, and within our Standards of Conduct -
Addendum D, the Certification of Receipt and Understanding of our Standards of
Conduct, and Addendum C, the Conflict of Interest Questionnaire. You must also
successfully pass our pre-employment physical.

In order to confirm your understanding and acceptance of these terms and
conditions please sign the original copy of this letter in the space indicated
below and return it to me. An additional copy is enclosed for your personal
records.

Thank you very much Bob for considering our offer. We look forward to your
acceptance, and working with you on Danaher's "Journey to Excellence" as we
strive to achieve our vision and long term objectives. Should you have any
questions in the meantime, please do not hesitate to call Dennis Longo or me.

                                                  Sincerely yours,

                                                  /s/ Patrick W. Allender

                                                  Patrick W. Allender

PWA:cq
cc D. Longo
   M. O'Neil
Enclosures

  I understand and accept the terms and conditions of this offer of employment.

                   /s/ Robert S. Lutz      July 11, 2002
                  ---------------------------------------
                              Robert S. Lutz / Date

EX-10.12

                                                                   Exhibit 10.12

                                     [LOGO]
                              DANAHER CORPORATION

                           INTER-OFFICE COMMUNICATION

                       - STRICTLY PRIVATE & CONFIDENTIAL -


DATE:           July 2, 1998

TO:             Chris McMahon

FROM:           Pat Allender

SUBJECT:        Promotional Opportunity


Chris:

Thank you for accepting the opportunity to become Vice President, Controller,
and a Corporate Officer, effective on or before September, 1999. We're genuinely
excited about this next step in your career growth with Danaher, as well as the
expected contributions you'll make in Danaher's overall financial management.

The compensation package for your position as Vice President, Controller will
commence effective with your start date in this position. The intended start
date is on or before September, 1999, however the actual date will, of course,
be dependent upon Scott Brannan's actual resignation date.

I'd like to document this promotional opportunity, reporting directly to me, and
your acceptance.

        Title:          Vice President, Controller - Danaher Corporation
        Compensation:   Annual Base Salary:             $172,500.00
                        Annual Target Bonus ($1%):      $ 77,625.00 / 45%
                                                        -----------
                        Annual Target Total:            $250,125.00

Your participation in the Executive Incentive Compensation Plan (ICP) will be
increased to the 45% target level. You will, of course, continue to participate
in the Danaher Executive Deferred Incentive Plan (EDIP), designed to provide you
with long term earnings based on the continued appreciation of Danaher stock.
You will also be provided with a car allowance of $833.33 per month as well as a
country club membership, including initiation fee and annual dues.

This offer includes a promotional stock option grant of 10,000 shares of Danaher
stock. This option award is scheduled to be formally approved by the Board of
Directors at the December 1, 1998 meeting. The price of these share options will
be established by the NYSE closing price on the day of that board meeting. The
next regularly scheduled date on which you will receive consideration for
additional stock options will be December, 1999. The number of shares granted at
that time will be relatively consistent with your performance and the number of
share granted to other similarly situated corporate officers as approved by the
Board of Directors.



                                      -2-

The company will provide relocation benefits, inclusive of reimbursement for
realtor fees (up to 6%) and closing costs on your current home, "house hunting"
trips, packing, moving and unpacking of your household goods, temporary living
expenses, and dual housing expenses as may be required and agreed to, and
"settling in expenses" equal to 6% of your annual base salary. In addition, the
Company will reimburse closing costs incurred on your new home, including
service charges made by the lending institution for establishing a new mortgage
(points not to exceed 2%). If your current home should sell for less than "fair
market value", (average of two independent appraisals, with no greater than a 5%
difference) the company will provide a payment to you equal to the difference
between the actual selling price and the "fair market value", to a maximum of
$10,000,00. As you may request, the company will provide an interest free
"bridge loan" equal to one - hundred percent of the equity in your current home,
to be used at the time of closing on your new home, in the event you have not
closed on the sale of your current home. You have indicated a concern about the
relative housing prices between Simsbury and the D.C. area. As such, we have
agreed that you will assess the housing market in more detail and that the
company will consider providing a loan to you, details of which will be agreed
upon as appropriate. All relocation benefits subject to federal and state income
tax (with the exception of "settling in expenses") will be "grossed up".

Chris, your performance at all your assignments for Danaher has been superior
and I'm confident in your ability to perform at the same level in this new
assignment, helping to lead the continued development and attainment of our
strategic and operating objectives.

Should you have any questions, please don't hesitate to discuss them with me or
Dennis Longo at your convenience.


/s/ Patrick W. Allender
- -------------------------------
Patrick W. Allender
Chief Financial Officer


cc:     G. Sherman
        D. Longo


/s/ C. McMahon    7/15/98
- -------------------------------

EX-10.15

                                                                  Exhibit 10.15

                       DANAHER CORPORATION & SUBSIDIARIES

                      EXECUTIVE DEFERRED INCENTIVE PROGRAM








                         ADOPTED EFFECTIVE MARCH 1, 1995








                                  Prepared by:

                                ELROD & THOMPSON
                        1500 Peachtree Center-South Tower
                           225 Peachtree Street, N.E.
                             Atlanta, Georgia 30303



                                  INDEX TO THE
                       DANAHER CORPORATION & SUBSIDIARIES
                      EXECUTIVE DEFERRED INCENTIVE PROGRAM




                                                                           PAGE
                                                                            NO.
                                                                        
              PREAMBLE ..................................................     1

ARTICLE I     DEFINITIONS ...............................................     2

ARTICLE II    PARTICIPATION .............................................     9

ARTICLE III   ACCOUNTS AND VESTING ......................................    10

ARTICLE IV    DISTRIBUTION OF BENEFITS ..................................    20

ARTICLE V     CLAIMS AND ADMINISTRATION .................................    23

ARTICLE VI    STATUS OF PLAN AND TRUST AGREEMENT ........................    27

ARTICLE VII   PLAN AMENDMENT AND TERMINATION ............................    28

ARTICLE VIII  MISCELLANEOUS .............................................    29

              SIGNATURES ................................................    31

              APPENDIX A       APPLICABLE PERCENTAGE

              APPENDIX B       EMPLOYMENT POSITIONS OF ELIGIBLE EMPLOYEES

              APPENDIX C       INITIAL PARTICIPANTS

              APPENDIX D       PRESENT VALUE FACTORS


                                       -i-



                       DANAHER CORPORATION & SUBSIDIARIES
                      EXECUTIVE DEFERRED INCENTIVE PROGRAM


     WHEREAS, the Plan Sponsor desires to establish this Plan to further the
long-term growth of the Plan Sponsor and its subsidiary Employers by offering
deferred compensation in addition to current compensation to a select group of
management and highly compensated employees of the Plan Sponsor and its
subsidiary Employers who will be involved in such growth.

     NOW, THEREFORE, in order to accomplish such purpose, the Plan Sponsor has
adopted, by appropriate resolutions, this Plan as hereinafter stated to be
effective as of March 1, 1995. It is intended that this Plan, together with the
Trust Agreement, shall be unfunded for purposes of the Code and shall constitute
an unfunded pension plan maintained for a select group of management and highly
compensated employees for purposes of Title I of ERISA.

                                       -1-



                                    ARTICLE I

                                   DEFINITIONS

     As used in this Plan, each of the following terms shall have the respective
meaning set forth below unless a different meaning is plainly required by the
content.

     1.1    Administrator. The individual or committee appointed by the Plan
Sponsor to administer the Plan pursuant to Article V.

     1.2    Applicable Percentage. With respect to a Participant for a
Performance Cycle, the applicable percentage determined from the table in
Appendix A depending on (a) the Participant's Target Compensation for the
Performance Cycle and (b) the Participant's exact age on the Cycle Beginning
Date or, if later, the Participant's Participation Date.

     1.3    Beneficiary. An individual or entity entitled to receive any
benefits under this Plan that are payable upon a Participant's death.

     1.4    Benefit Account. With respect to a Participant, the bookkeeping
account maintained on behalf of the Participant to record any Benefit Amounts
credited thereto or forfeited therefrom, any earnings credited thereto and any
losses debited therefrom in accordance with the terms of this Plan.

     1.5    Benefit Amount. With respect to a Participant for a Performance
Cycle, a dollar amount calculated pursuant to Section 3.3 based on the balance
in the Participant's Performance Shares Account as of the earlier of the
Participant's Eligibility Termination Date during the Performance Cycle or the
Cycle Beginning Date of the next succeeding Performance Cycle.

     1.6    Bonus. With respect to a Participant for a Plan Year, the amount (if
any) of the Participant's Target Bonus for the Plan Year that shall be
determined to have been earned by the Participant in accordance with the Plan
Sponsor's bonus program, excluding any amount thereof that shall be contributed
on the Participant's behalf as a Salary Deferral Contribution to the 401(k)
Plan.

     1.7    Bonus Deferral Amount. With respect to a Participant for a Plan
Year, an amount of the Participant's Target Bonus or Bonus for the last
preceding Plan Year that the Participant has elected to defer pursuant to
Section 3.2.

                                       -2-



     1.8    Code. The Internal Revenue Code of 1986, as it may be amended from
time to time.

     1.9    Common Stock. The common stock of the Plan Sponsor.

     1.10   Common Stock Price. With respect to a specified date as of which the
price of shares of Common Stock shall be determined, the closing price on the
New York Stock Exchange of one (1) share of Common Stock on the business day
last preceding the specified date.

     1.11   Cycle Beginning Date. With respect to a Performance Cycle, the first
(1st) day of the Performance Cycle.

     1.12   Cycle Ending Date. With respect to a Performance Cycle, the last day
of the Performance Cycle or, if earlier, the date during the Performance Cycle
as of which this Plan shall terminate.

     1.13   Deferral Account. With respect to a Participant, the bookkeeping
account (if any) maintained on behalf of the Participant to record the Salary
Deferral Amounts (if any) and Bonus Deferral Amounts (if any) that have been
credited on the Participant's behalf and any earnings credited thereto in
accordance with the terms of this Plan.

     1.14   Distributable Amount. With respect to any specified date coincident
with or subsequent to the Eligibility Termination Date of a Participant or a
deceased Participant, the balance (if any) as of the specified date in the
Participant's Distribution Account (subsequent to any crediting thereof pursuant
to Section 3.4(a) as of such Eligibility Termination Date).

     1.15   Distribution Account. With respect to a Participant, the bookkeeping
account (if any) maintained on behalf of the Participant to record the amounts
to be distributed to the Participant or his or her Beneficiary or Beneficiaries
and any earnings credited thereto in accordance with the terms of this Plan.

     1.16   Distribution Date. With respect to a Participant or a deceased
Participant whose Employment Termination Date has occurred, the date as of which
the Distributable Amount shall be paid in a lump-sum distribution to the
Participant or the deceased Participant's Beneficiary or Beneficiaries, as
applicable, or the date as of which the first (1st) installment of the
Distributable Amount shall be paid to the Participant.

                                       -3-



     1.17   ERISA. The Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.

     1.18   Effective Date. March 1, 1995.

                                       -4-



     1.19   Eligible Compensation. With respect to a Participant for a
Performance Cycle:

            (a)  Eligible Employee on Cycle Beginning Date. If the Participant's
Participation Date occurs on or before the Cycle Beginning Date of the
Performance Cycle and the Participant is an Eligible Employee on such Cycle
Beginning Date, the product (rounded to two (2) decimal places) of (i) the
Applicable Percentage, (ii) PV Factor 1+2+3, and (iii) the Participant's Target
Compensation.

            (b)  Eligible Employee After Cycle Beginning Date. If the
Participant's Participation Date occurs after the Cycle Beginning Date of the
Performance Cycle but during the Performance Cycle, the product (rounded to two
(2) decimal places) of the Applicable Percentage and the amount determined in
accordance with Paragraphs (i) through (iii) below, as applicable, depending on
the Plan Year in the Performance Cycle during which the Participant's
Participation Date occurs:

                 (i)   First Plan Year. If the Participant's Participation Date
occurs during the first (1st) Plan Year in the Performance Cycle, such amount
shall equal the sum of (A) the product of (I) PV Factor 0 based on the Months
Factor, (II) the Participant's Target Compensation, (III) the Months Factor, and
(IV) one-twelfth (1/12) and (B) the product of (I) PV Factor 1+2 and (II) the
Participant's Target Compensation.

                 (ii)  Second Plan Year. If the Participant's Participation Date
occurs during the second (2nd) Plan Year in the Performance Cycle, such amount
shall equal the sum of (A) the product of (I) PV Factor 0 based on the Months
Factor, (II) the Participant's Target Compensation, (III) the Months Factor, and
(IV) one-twelfth (1/12) and (B) the product of (I) PV Factor 1 and (II) the
Participant's Target Compensation.

                 (iii) Third Plan Year. If the Participant's Participation Date
occurs during the third (3rd) Plan Year in the Performance Cycle, such amount
shall equal the product of (A) PV Factor 0 based on the Months Factor, (B) the
Participant's Target Compensation, (C) the Months Factor, and (D) one-twelfth
(1/12).

     1.20   Eligible Employee. (a) An Employee who was hired on or before
January 1, 1995, and who is an Initial Participant or (b) an Employee who was
hired after January 1, 1995, and whose employment position is listed in Appendix
B. Notwithstanding the foregoing sentence, the Administrator, in his or her sole
discretion, may determine that an Employee who was hired on or before January 1,

                                       -5-



1995, and who is not an Initial Participant shall become an Eligible Employee
under such circumstances as the Administrator, in his or her sole discretion,
may deem appropriate so long as the Employee has an employment position that is
listed in Appendix B.

     1.21   Eligibility Termination Date. With respect to a Participant who is
an Eligible Employee, the earliest of (a) the Participant's Employment
Termination Date, (b) the date that the Participant no longer has an employment
position listed in Appendix B, or (c) the last day of the Plan Year in which the
Administrator receives written notice from the Participant that he or she
declines to continue participating in the Plan as an Eligible Employee.

     1.22   Employee. An individual who performs services for an Employer.

     1.23   Employer. (a) The Plan Sponsor or (b) an employer that is a member
of the Plan Sponsor's "controlled group of corporations," as such term shall be
defined in Code Section 1563(a), and that has adopted this Plan by executing an
adoption agreement with the Plan Sponsor, the terms of which shall thereupon be
incorporated by reference as a part of the Plan.

     1.24   Employment Termination Date. With respect to a Participant, the
earlier of the date that the Participant ceases being an Employee or the date as
of which this Plan is terminated.

     1.25   Initial Participant. An Employee who is named in Appendix C.

     1.26   Long-term Rate. With respect to a Performance Cycle, the closing
price of the ten (10)-year Treasury bond rate on the business day last preceding
the Cycle Beginning Date of the Performance Cycle or such other long-term
interest rate as shall be determined for the remainder of the Performance Cycle
by the Administrator in his or her sole discretion.

     1.27   Months Factor. With respect to a Performance Cycle and a Participant
whose Participation Date occurs after the Cycle Beginning Date of the
Performance Cycle but during the Performance Cycle, the number of months between
the Participant's Participation Date and the last day of the Plan Year during
such Performance Cycle in which his or her Participation Date occurred.

     1.28   PV Factor 0. With respect to a Performance Cycle and a Participant
whose Participation Date occurs after the Cycle Beginning Date of the
Performance Cycle but during the Performance

                                       -6-



Cycle, a present value factor applicable in determining the Participant's
Eligible Compensation for the Performance Cycle, which shall be (a) the factor
provided in Appendix D based on the applicable Months Factor and an interest
rate of eight percent (8%) per annum, compounded annually, or (b) such other
factor as shall be similarly calculated based on an interest rate that shall be
determined by the Administrator in his or her sole discretion.

     1.29   PV Factor 1. With respect to a Performance Cycle and a Participant
whose Participation Date occurs after the Cycle Beginning Date of the
Performance Cycle but during the second (2nd) Plan Year during the Performance
Cycle, a present value factor applicable in determining the Participant's
Eligible Compensation for the Performance Cycle, which shall be (a) the factor
provided in Appendix D based on an interest rate of eight percent (8%) per
annum, compounded annually, or (b) such other factor as shall be similarly
calculated based on an interest rate that shall be determined by the
Administrator in his or her sole discretion.

     1.30   PV Factor 1+2. With respect to a Performance Cycle and a Participant
whose Participation Date occurs after the Cycle Beginning Date of the
Performance Cycle but during the first (1st) Plan Year during the Performance
Cycle, a present value factor applicable in determining the Participant's
Eligible Compensation for the Performance Cycle, which shall be (a) the factor
provided in Appendix D based on an interest rate of eight percent (8%) per
annum, compounded annually, or (b) such other factor as shall be similarly
calculated based on an interest rate that shall be determined by the
Administrator in his or her sole discretion.

     1.31   PV Factor 1+2+3. With respect to a Performance Cycle and a
Participant whose Participation Date occurs on or before the Cycle Beginning
Date of the Performance Cycle, a present value factor applicable in determining
the Participant's Eligible Compensation for the Performance Cycle, which shall
be (a) the factor provided in Appendix D based on an interest rate of eight
percent (8%) per annum, compounded annually, or (b) such other factor as shall
be similarly calculated based on an interest rate that shall be determined by
the Administrator in his or her sole discretion.

     1.32   Participant. An Eligible Employee or former Eligible Employee who is
participating in this Plan pursuant to Article II.

     1.33   Participation Date. With respect to an Eligible Employee, the date
(if any) as of which the Eligible Employee shall become a Participant as
determined pursuant to Section 2.1.

                                       -7-



     1.34   Payroll Period. With respect to an Eligible Employee, a period with
respect to which the Eligible Employee receives a pay check or otherwise is paid
for services that he or she performs during the period for an Employer.

     1.35   Performance Cycle. The three (3) consecutive Plan Years beginning on
the Effective Date or any successive period of three (3) consecutive Plan Years.

     1.36   Performance Share. One (1) phantom share of Common Stock.

     1.37   Performance Shares Account. With respect to a Participant, the
bookkeeping account maintained on behalf of the Participant to record the
Performance Shares (if any) that have been credited on the Participant's behalf
for a Performance Cycle.

     1.38   Plan. Danaher Corporation & Subsidiaries Executive Deferred
Incentive Program, as it is set forth herein and as it may be amended from time
to time.

     1.39   Plan Sponsor. Danaher Corporation.

     1.40   Plan Year. The period beginning on the Effective Date and ending on
December 31, 1995, or a calendar year beginning on or after January 1, 1996.

     1.41   Salary. With respect to a Participant for a Payroll Period, the
total cash compensation (if any) that is payable to the Participant by any
Employer during the Payroll Period and that would be reportable on the
Participant's federal income tax withholding statement (Form W-2), including,
but not limited to, salary and overtime pay, but excluding any Bonus that is
payable to the Participant during the Payroll Period and any amount of such cash
compensation that shall be contributed on the Participant's behalf as a Salary
Deferral Contribution to the 401(k) Plan.

     1.42   Salary Deferral Amount. With respect to a Participant for a Plan
Year, an amount of the Participant's Salary for a Payroll Period during the Plan
Year that the Participant has elected to defer pursuant to Section 3.2.

     1.43   Salary Deferral Contribution. The term "Salary Deferral
Contribution" shall be defined in this Plan as it shall be defined in the 401(k)
Plan.

     1.44   Target Bonus. With respect to a Participant for a Plan Year, the
target bonus (if any) that may be earned by the

                                       -8-



Participant for the Plan Year as determined in accordance with the Plan
Sponsor's bonus program applicable to such Participant as from time to time in
effect.

         1.45 Target Compensation. With respect to a Participant for a
Performance Cycle, the sum of (a) the Participant's annual base salary for the
first (1st) Plan Year in the Performance Cycle or, if later, the Plan Year in
the Performance Cycle during which the Participant's Participation Date occurs
and (b) the Participant's Target Bonus for the same such Plan Year.

         1.46 Trust Agreement. Trust Agreement for the Danaher Corporation &
Subsidiaries Executive Deferred Incentive Program, as it may be amended from
time to time.

         1.47 Vesting Percentage. With respect to a Benefit Amount credited to a
Participant's Benefit Account, the percentage to be applied to such Benefit
Amount to determine the amount thereof to which the Participant shall have a
nonforfeitable right, subject to any provision to the contrary in Section 3.3 or
5.9 or the Trust Agreement.

         1.48 Year of Service. With respect to a Participant, a twelve
(12)-consecutive month period beginning on the Participant's employment date
with an Employer or an anniversary thereof during which the Participant remains
an Employee; provided, however, that, in the case of a Participant who shall be
absent from employment with an Employer for any reason for more than six (6)
consecutive weeks, unless otherwise determined by the Administrator in his or
her sole discretion, the Participant shall not be deemed to have remained an
Employee for purposes of this Section and the date as of which any future Years
of Service shall be determined for the Participant shall begin on the date of
his or her return (if any) from such absence.

         1.49 401(k) Plan. Danaher Corporation & Subsidiaries Retirement &
Savings Plan or any successor thereto, as it may be amended from time to time.

                                      -9-



                                   ARTICLE II

                                  PARTICIPATION

         2.1  Commencement of Participation. An Eligible Employee who is an
Initial Participant may become a Participant as of the Effective Date, and any
other Eligible Employee may become a Participant as of the date that is the
first (1st) day of a month and that coincides with or follows the later of the
Effective Date or the date that the individual became an Eligible Employee;
provided that the Eligible Employee completes an enrollment form and files it
with the Administrator within the time period specified by the Administrator.

         2.2  Termination of Participation.

              (a)  Participant Ceases Being an Eligible Employee. A Participant
who ceases being an Eligible Employee but remains an Employee shall cease being
a Participant as of his or her Eligibility Termination Date if the Participant's
Distributable Amount as of such date (as determined subsequent to any crediting
of his or her Distribution Account pursuant to Section 3.4(a) as of such date)
equals zero (0).

              (b)  Participant Ceases Being an Employee. A Participant who
ceases being an Employee shall cease being a Participant as of the earlier of
the Participant's date of death or the date as of which the Participant's
Distributable Amount (as determined subsequent to any crediting of his or her
Distribution Account pursuant to Section 3.4(a) as of his or her Eligibility
Termination Date) equals zero (0).

                                      -10-



                                   ARTICLE III

                              ACCOUNTS AND VESTING

         3.1  Performance Share Accounts.

              (a)  Award of Performance Shares. With respect to each Performance
Cycle, the Administrator shall credit Participants' Performance Shares Accounts
with Performance Shares in accordance with the following:

                  (i)   Eligible Employee on Cycle Beginning Date. With respect
to each Participant whose Participation Date occurred on or before the Cycle
Beginning Date of the Performance Cycle, if the Participant shall be an Eligible
Employee on the Cycle Beginning Date, the Administrator shall credit the
Participant's Performance Shares Account as of the Cycle Beginning Date (but
subsequent to any zeroing of such account pursuant to Section 3.3(a)(ii)) with a
number of Performance Shares equal to the quotient (rounded to the nearer whole
number) of (A) the Participant's Eligible Compensation and (B) the Common Stock
Price as of the Cycle Beginning Date.

                  (ii)  Eligible Employee After Cycle Beginning Date. With
respect to each Participant whose Participation Date occurs after the Cycle
Beginning Date of the Performance Cycle but during the Performance Cycle, the
Administrator shall credit the Participant's Performance Shares Account as of
his or her Participation Date with a number of Performance Shares equal to the
quotient (rounded to the nearer whole number) of (A) the Participant's Eligible
Compensation and (B) the Common Stock Price as of the Participant's
Participation Date.

              (b)  Limitations With Respect To Performance Shares.

                   (i)   No Shareholder Rights. A Performance Share has no legal
relation to a share of Common Stock and, accordingly, no Participant who has a
balance in his or her Performance Shares Account shall be entitled to any
dividend, voting, or other rights of a shareholder of Common Stock with respect
to the Performance Shares in his or her Performance Shares Account.

                   (ii)  No Right to Payment. No payment shall be made for any
one (1) or more of the Performance Shares in a Participant's Performance Shares
Account except as provided in Section 4.2.

                                      -11-



                   (iii) Cancellation of Performance Shares. The Administrator
may cancel all or any number of the Performance Shares in a Participant's
Performance Shares Account with the written consent of the Participant.

                   (iv)  Adjustments to Performance Shares. In the event of any
change in the outstanding shares of Common Stock by reason of any stock dividend
or split, recapitalization, merger, consolidation, spin-off, reorganization,
combination or exchange of shares, or other similar corporate change, if the
Administrator shall determine, in his or her sole discretion, that such change
requires adjustments in the number of Performance Shares then credited to
Participants' Performance Shares Accounts, the Administrator shall make such
adjustments.

         3.2  Deferral Accounts.

              (a)  Election to Defer. Subject to this Section:

                   (i)   Bonus Deferral Amounts. A Participant who is an
Eligible Employee may elect to have an amount of his or her Target Bonus for a
Plan Year, a percentage of his or her Bonus for a Plan Year, or any amount of
his or her Bonus as exceeds a specified amount deferred as a Bonus Deferral
Amount for the next succeeding Plan Year; provided that the actual amount
deferred shall not exceed the Participant's Bonus.

                   (ii)  Salary Deferral Amounts. A Participant who is an
Eligible Employee may elect to have a percentage or an amount of his or her
Salary for each Payroll Period in a Plan Year during which he or she shall be an
Eligible Employee deferred as a Salary Deferral Amount.

              (b)  Election Procedures. Subject to any further procedures
established by the Administrator pursuant to Article V, any election made by a
Participant pursuant to Subsection (a) above shall be subject to the procedures
described in Paragraphs (i) through (iv) below:

                   (i)   Initial Opportunity to Defer.

                         (A)  Bonus Deferral Amounts. The Participant may elect
to have a Bonus Deferral Amount deferred on his or her behalf with respect to
the Participant's Target Bonus or Bonus for the Plan Year in which the
Participant's Participation Date occurs by so indicating on the enrollment form
required pursuant to Section 2.1.

                                      -12-



                         (B)  Salary Deferral Amounts. The Participant may elect
to have Salary Deferral Amounts deferred on his or her behalf with respect to
the Participant's Salary for the Plan Year in which the Participant's
Participation Date occurs by so indicating on the enrollment form required
pursuant to Section 2.1. Such election shall be effective for Payroll Periods
during such Plan Year or the remainder of such Plan Year, as applicable,
beginning as soon as administratively possible on or after the latest of (I)
April 1, 1995, (II) the Participant's Participation Date, or (III) the date that
the Participant files the properly completed enrollment form with the
Administrator.

                   (ii)  Subsequent Opportunities to Defer.

                         (A)  Bonus Deferral Amounts. The Participant may elect
to have a Bonus Deferral Amount deferred on his or her behalf with respect to
the Participant's Target Bonus or Bonus for a Plan Year subsequent to the Plan
Year in which the Participant's Participation Date occurs by properly completing
an election form and filing the form with the Administrator prior to the first
(1st) day of such subsequent Plan Year.

                         (B)  Salary Deferral Amounts. The Participant may elect
to have Salary Deferral Amounts deferred on his or her behalf with respect to
the Participant's Salary for a Plan Year subsequent to the Plan Year in which
the Participant's Participation Date occurs by properly completing an election
form and filing the form with the Administrator prior to the first (1st) day of
such subsequent Plan Year. Such election shall be effective for Payroll Periods
during the respective Plan Year beginning as soon as administratively possible
on or after the first (1st) day of the Plan Year.

                   (iii) No Revocations. A Participant may not, at any time,
revoke a previous election with respect to a Bonus Deferral Amount or Salary
Deferral Amounts.

                   (iv)  Termination of Election. A Participant's election
concerning a Bonus Deferral Amount or Salary Deferral Amounts shall terminate on
the earlier of (A) the date as of which the last amount or the only amount, as
applicable, designated to be withheld under such election shall be withheld or
(B) the Participant's Eligibility Termination Date.

              (c)  Withholding by Employer.

                   (i)   Bonus Deferral Amounts. The Employer of a Participant
who has in effect an election with respect to a Bonus

                                      -13-




Deferral Amount pursuant to Subsection (b) above shall withhold the designated
Bonus Deferral Amount from the Participant's Bonus and shall notify the
Administrator that such amount was withheld as soon as administratively possible
after the withholding thereof.

                   (ii)  Salary Deferral Amounts. The Employer of a Participant
who has in effect an election with respect to Salary Deferral Amounts pursuant
to Subsection (b) above for a Payroll Period shall withhold the designated
Salary Deferral Amount from the Participant's Salary for the Payroll Period and
shall notify the Administrator that such amount was withheld as soon as
administratively possible after the withholding thereof; provided, however,
that, after the first such notice by the Employer to the Administrator, the
Employer shall only notify the Administrator of any change in the withholding of
Salary Deferral Amounts.

                   (iii) Suspension of Withholding. Notwithstanding Paragraphs
(i) and (ii) above, with respect to a Participant who received a hardship
distribution of Salary Deferral Contributions made on the Participant's behalf
under the 401(k) Plan, no Bonus Deferral Amount or Salary Deferral Amount shall
be withheld for twelve (12) months following the Participant's receipt of the
hardship distribution under the 401(k) Plan.

              (d)  Crediting of Deferral Amounts. As soon as administratively
possible after the Administrator shall have received notice (or shall be deemed
to have received notice pursuant to Subsection (c)(ii) above) that a Bonus
Deferral Amount or a Salary Deferral Amount has been withheld on behalf of a
Participant, the Administrator shall credit the Participant's Deferral Account
by such amount.

              (e)  Crediting of Additional Amounts.

                   (i)   In General. As of the last day of each Plan Year and as
soon as administratively possible thereafter, the Administrator shall credit to
the Deferral Account of each Participant with respect to whom the requirements
in Paragraph (ii) below shall be met an amount (if any) that shall be determined
by the Administrator in his or her sole discretion and that shall be intended to
compensate for employer contributions that may have been foregone by the
Participant under the 401(k) Plan or any other qualified plan maintained by an
Employer due to the fact that a Bonus Deferral Amount and/or Salary Deferral
Amounts were credited to the Participant's Salary Deferral Account for the Plan
Year.

                   (ii)  Requirements for Additional Amount. A Participant shall
be eligible to have an amount credited to his or

                                      -14-



her Deferral Account for a Plan Year in accordance with Paragraph (i) above if
the following requirements are met with respect to the Participant:


                         (A)  A Bonus Deferral Amount and/or Salary Deferral
Amounts were credited to the Participant's Salary Deferral Account for the Plan
Year;

                         (B)  The Participant had completed at least one (1) One
Year of Service uninterrupted by a One-year Break in Service as of July 1 of the
Plan Year;

                         (C)  The Participant's Eligibility Termination Date had
not occurred as of the last day of the Plan Year; and

                         (D)  The Participant's Basic Compensation for the Plan
ear does not exceed the Compensation Limitation for the Plan Year;

where, for purposes of this Paragraph, the terms "One Year of Service," "One-
year Break in Service," "Basic Compensation" and "Compensation Limitation" shall
be as defined in the 401(k) Plan.

                  (f) Crediting of Earnings.

                      (i)   Annual Accounting. Subject to Paragraph (iii) below,
as of the last day of each Plan Year, the Administrator shall credit earnings to
each Deferral Account that has a balance as of such last day, where the amount
of such earnings shall equal the product (rounded to two (2) decimal places) of
(A) the Long-term Rate for the Performance Cycle in which the Plan Year occurs,
(B) the sum of the monthly balances in the Deferral Account during the Plan
Year, and (C) the quotient (rounded to four (4) decimal places) of (I) the
number of whole months during the Plan Year in which the Deferral Account had a
balance, and (II) twelve (12).

                      (ii)  Accounting at Eligibility Termination Date. Subject
to Paragraph (iii) below, as of the Eligibility Termination Date of a
Participant, if the Participant's Eligibility Termination Date does not coincide
with the last day of a Plan Year, the Administrator shall credit earnings to the
Participant's Deferral Account (if any), where the amount of such earnings shall
equal the product (rounded to two (2) decimal places) of (A) the Long-term Rate
for the Performance Cycle in which the Participant's Eligibility Termination
Date occurred, (B) the sum of the monthly balances in the Participant's Deferral
Account during the Plan Year in which his or her Eligibility Termination Date
occurred, and (C) the quotient (rounded to four (4) decimal places) of (I) the
number

                                      -15-



of whole months during such Plan Year in which the Participant's Deferral
Account had a balance, and (II) twelve (12).

                   (iii) Requested Change in Earnings Crediting Rate. At the
beginning of a Plan Year or at any other such time during a Plan Year as the
Administrator shall permit, a Participant may request in writing to the
Administrator that, for the Plan Year to which the request relates, the
Administrator modify the application of Paragraph (i) above for such Plan Year
either by crediting earnings to the Participant's Deferral Account at a
specified rate or by crediting earnings to specified percentages of the
Participant's Deferral Account at specified rates. Upon receiving any such
request, the Administrator may, in his or her sole discretion, agree to all,
some, or none of the requested earnings crediting rates, and, consistently with
any such agreement, the Administrator shall modify the application of Paragraph
(i) above to the Participant's Deferral Account for the Plan Year to which the
request relates; provided, however, that the Administrator may, in his or her
sole discretion, permit a Participant's request as to the earnings crediting
rate(s) to apply for two (2) or more consecutive Plan Years; and further
provided, however, that, if a Participant's Eligibility Termination Date occurs
during a Plan Year to which such a request relates, the Administrator may, but
shall not be required to, modify the application of Paragraph (ii) above to the
Participant's Deferral Account consistently with any agreement as to the
earnings crediting rate(s) made with respect to Paragraph (i).

         3.3  Benefit Accounts.

              (a)  Cyclical Accounting. As of each Cycle Beginning Date later
than the Effective Date, with respect to a Participant who has a balance in his
or her Performance Shares Account on the Cycle Ending Date last preceding such
Cycle Beginning Date, the Administrator shall take consecutively the actions in
Paragraphs (i) and (ii) below:

                   (i)   Crediting of Benefit Amounts. The Administrator shall
credit the Participant's Benefit Account with a Benefit Amount for the
Performance Cycle ending on such last preceding Cycle Ending Date, where such
Benefit Amount shall equal the product (rounded to two (2) decimal places) of
(i) the number of Performance Shares in the Participant's Performance Shares
Account and (ii) the Common Stock Price as of such Cycle Beginning Date;
provided that the Administrator shall account separately for each Benefit Amount
credited to a Participant's Account pursuant to this Subsection.

                                      -16-



                   (ii)  Effect on Performance Shares Account. The Administrator
shall reduce the number of Performance Shares in the Participant's Performance
Shares Account to zero (0).

              (b)  Annual Accounting. As of the last day of each Plan Year
coincident with or subsequent to the first (1st) Plan Year in the first (1st)
Performance Cycle beginning after the Effective Date, with respect to each
Benefit Amount (if any) in a Participant's Benefit Account as of the first (1st)
day of such Plan Year, the Administrator shall credit earnings on fifty percent
(50%) of such Benefit Amount to the Participant's Benefit Account, where the
amount of such earnings shall equal the product (rounded to two (2) decimal
places) of (i) the Long-term Rate for the Performance Cycle in which the Plan
Year occurs and (ii) the sum of (A) fifty percent (50%) of such Benefit Amount
and (B) the aggregate amount (if any) of earnings thereon previously credited to
the Participant's Benefit Account pursuant to this Subsection.

              (c)  Accounting at Eligibility Termination Date. As of the
Eligibility Termination Date of a Participant, the Administrator shall take
consecutively the actions in Paragraphs (i) through (v) below, as applicable,
which such actions shall be taken subsequently to the actions to be taken by the
Administrator pursuant to Subsection (a) above in the case of a Participant
whose Eligibility Termination Date coincides with the Cycle Ending Date of a
Performance Cycle and Subsection (b) above in the case of a Participant whose
Eligibility Termination Date coincides with the last day of a Plan Year:

                   (i)   Discretionary Crediting of Benefit Amounts. If the
Participant's Eligibility Termination Date precedes the Cycle Ending Date of a
Performance Cycle, the Administrator may, in his or her sole discretion, credit
the Participant's Benefit Account with a Benefit Amount for the Performance
Cycle in which such Eligibility Termination Date occurs, where such Benefit
Amount shall equal the product (rounded to two (2) decimal places) of (A) the
number of Performance Shares in the Participant's Performance Shares Account and
(B) the Common Stock Price as of the Participant's Eligibility Termination Date;
provided that the Administrator shall account separately for such Benefit
Amount.

                   (ii)  Effect on Performance Shares Account. Unless the
Participant's Eligibility Termination Date coincides with the Cycle Ending Date
of a Performance Cycle, the Administrator shall reduce the number of Performance
Shares in the Participant's Performance Shares Account to zero (0).

                                      -17-



                   (iii) Determination of Vesting Percentages. The Administrator
shall determine the Vesting Percentage applicable to each Benefit Amount (if
any) in the Participant's Benefit Account, plus the aggregate amount (if any) of
earnings on fifty percent (50%) of such Benefit Amount previously credited to
the Participant's Benefit Account pursuant to Subsection (b) above, in
accordance with the following:

                         (A)  Age and Service Vesting. If the Participant has
both attained age fifty-five (55) and completed at least five (5) Years of
Service, the Participant's Vesting Percentage applicable to each such Benefit
Amount plus any such earnings thereon shall be one hundred percent (100%).

                         (B)  Vesting at Death. If the Participant has died, the
Participant's Vesting Percentage applicable to each such Benefit Amount plus any
such earnings thereon shall be one hundred percent (100%).

                         (C)  Partial Vesting for Initial Participants. If the
Participant is an Initial Participant and neither Subparagraph (A) nor
Subparagraph (B) above applies to the Participant, the Participant's Vesting
Percentage applicable to the Benefit Amount (if any) that was credited for the
Performance Cycle beginning on the Effective Date plus any such earnings thereon
shall be sixty-six and two-thirds percent (66-2/3%).

                         (D)  No Vesting. Except as otherwise provided in
Subparagraph (C) above, if neither Subparagraph (A) nor Subparagraph (B) above
applies to the Participant, the Participant's Vesting Percentage applicable to
each such Benefit Amount plus any such earnings thereon shall be zero percent
(0%).

                         (E)  Gross Misconduct Exception to Vesting.
Notwithstanding Subparagraph (A), (B) or (C) above, if the Administrator
determines, in his or her sole discretion, that the circumstances of and/or
surrounding the Participant's ceasing to be an Eligible Employee constitute
gross misconduct on the part of the Participant, the Administrator may, in his
or her sole discretion, determine that the Participant's Vesting Percentage
applicable to each such Benefit Amount plus any such earnings thereon shall be
zero percent (0%).

                   (iv)  Forfeiture and Reduction of Benefit Amounts. If the
Administrator determines pursuant to Paragraph (iii) above that the
Participant's Vesting Percentage with respect to any Benefit Amount in his or
her Benefit Account, plus the aggregate amount (if any) of earnings on fifty
percent (50%) of such Benefit

                                      -18-



Amount previously credited to the Benefit Account pursuant to Subsection (b)
above, is less than one hundred percent (100%), the Administrator shall forfeit
all or a portion of such Benefit Amount plus any such earnings thereon by (A)
reducing the Benefit Amount by the product (rounded to two (2) decimals) of (I)
the Benefit Amount and (II) the difference between one hundred percent (100%)
and the applicable Vesting Percentage and (B) reducing any such earnings by the
product (rounded to two (2) decimals) of (I) the amount of such earnings and
(II) the difference between one hundred percent (100%) and the applicable
Vesting Percentage.

                   (v)   Crediting of Earnings or Debiting of Losses. With
respect to each Benefit Amount remaining in the Participant's Benefit Account
after any reduction thereof pursuant to Paragraph (iv) above, other than any
Benefit Amount that was credited to the Participant's Benefit Account pursuant
to Paragraph (i) above, the Administrator shall credit earnings on such Benefit
Amount to, or debit losses on such Benefit Amount from, the Participant's
Benefit Account, where:

                         (A)  The Administrator shall calculate the amount of
earnings or losses as (I) the product (rounded to two (2) decimal places) of (1)
fifty percent (50%) of such Benefit Amount and (2) the Price Change, plus (II)
unless the Participant's Eligibility Termination Date coincides with the last
day of a Plan Year, the product (rounded to two (2) decimal places) of (1) the
Long-term Rate for the Performance Cycle in which the Participant's Eligibility
Termination Date occurred, (2) the sum of (a) fifty percent (50%) of such
Benefit Amount and (b) the aggregate amount (if any) of earnings thereon
previously credited to the Participant's Benefit Account pursuant to Subsection
(b) above, after any reduction thereof pursuant to Paragraph (iv) above, and (3)
the quotient (rounded to four (4) decimal places of (a) the number of whole
months between the first (1st) day of the Plan Year in which the Participant's
Eligibility Termination Date occurred and such Eligibility Termination Date, and
(b) twelve (12).

                         (B)  If the amount calculated in Subparagraph (A) above
is positive, the Administrator shall credit the Participant's Benefit Account
with such amount, and if the amount calculated in Subparagraph (A) above is
negative, the Administrator shall debit the Participant's Benefit Account with
such amount; and

                         (C)  For purposes of this Paragraph, (I) the term
"Price Change" shall mean the quotient (expressed as a percentage rounded to two
(2) decimal places) of (1) the difference between the Final Price and the
Beginning Price and (2) the Beginning Price; (II) the term "Final Price" shall
mean the Common

                                      -19-



Stock Price as of the Participant's Eligibility Termination Date; and (III) the
term "Beginning Price" shall mean the Common Stock Price as of the Cycle
Beginning Date as of which the Benefit Amount was credited to the Participant's
Benefit Account.

     3.4  Distribution Accounts.

          (a)  Accounting at Eligibility Termination Date. As of the Eligibility
Termination Date of a Participant, the Administrator shall take consecutively
the actions in Paragraphs (i) and (ii) below, as applicable, which such actions
shall be taken subsequently to the actions to be taken by the Administrator
pursuant to Sections 3.2(f)(2) and 3.3(c):

               (i)    Crediting of Distributable Amount. The Administrator shall
credit to the Participant's Distribution Account the sum of (A) the balance (if
any) in his or her Benefit Account and (B) the balance (if any) in his or her
Deferral Account (if any).

               (ii)   Effect on Benefit Account and Deferral Account. The
Administrator shall reduce the balance (if any) in the Participant's Benefit
Account and the balance (if any) in the Participant's Deferral Account (if any)
to zero dollars ($0).

          (b)  Crediting of Earnings.

               (i)    Annual Accounting Before Employment Termination Date. As
of the last day of each Plan Year, the Administrator shall credit earnings to
the Distribution Account (if any) of each Participant whose Employment
Termination Date has not occurred by the last day of the Plan Year, where the
amount of such earnings shall equal the product (rounded to two (2) decimal
places) of (A) the Long-term Rate for the Performance Cycle in which the Plan
Year occurs, (B) the sum of the monthly balances in the Distribution Account
during the Plan Year, and (C) the quotient (rounded to four (4) decimal places)
of (I) the number of whole months during the Plan Year in which the Distribution
Account had a balance, and (II) twelve (12).

               (ii)   Accounting at Employment Termination Date. As of the
Employment Termination Date of a Participant, if such date is later than the
Participant's Eligibility Termination Date, the Administrator shall credit
earnings to the Participant's Distribution Account, where the amount of such
earnings shall equal the product (rounded to two (2) decimal places) of (A) the
Long-term Rate for the Performance Cycle in which the Participant's Employment
Termination Date occurred, (B) the sum of the monthly

                                       -20-



balances in the Participant's Distribution Account during the Plan Year in which
his or her Employment Termination Date occurred, and (C) the quotient (rounded
to four (4) decimal places) of (I) the number of whole months during such Plan
Year in which the Participant's Distribution Account had a balance, and (II)
twelve (12).

               (iii)  Annual Accounting Following Employment Termination Date.
With respect to a Participant whose Employment Termination Date has occurred but
who is receiving, or a deceased Participant whose Beneficiary or Beneficiaries
are receiving, installment distributions of the Participant's Distributable
Amount pursuant to Section 4.2, as of each anniversary date of the Participant's
Employment Termination Date, the Administrator shall credit earnings to the
Participant's Distribution Account, where the amount of such earnings shall
equal the product (rounded to two (2) decimal places) of (A) the Long-term Rate
for the Performance Cycle in which such anniversary date occurs and (B) the
balance in the Participant's Distribution Account as of such anniversary date.

                                       -21-



                                   ARTICLE IV

                            DISTRIBUTION OF BENEFITS

     4.1  Election of Form and Medium of Distribution to Participant. At the
time a Participant completes the enrollment form required by Section 2.1 and at
any other such times as the Administrator, in his or her sole discretion, may
prescribe, a Participant may elect, by filing a distribution election form with
the Administrator, to receive any Distributable Amount that may become payable
to the Participant upon his or her Employment Termination Date either in the
form of a lump-sum distribution or in the form of annual installments over two
(2), five (5) or ten (10) years and, with respect to any election of a lump-sum
distribution, may elect to receive any such distribution in cash, in shares of
Common Stock, or partially in cash and partially in shares of Common Stock.

     4.2  Distributions Upon Termination of Employment. Subject to Article V:

          (a)  Available Benefits. Upon the Employment Termination Date of a
Participant, the Participant or his or her Beneficiary or Beneficiaries, if the
Participant has died, shall be eligible to receive payment of the Distributable
Amount.

          (b)  Form and Medium of Payment.

               (i)    Payment to Participant. A Participant who is eligible for
payment of the Distributable Amount pursuant to Subsection (a) above shall
receive the Distributable Amount in the form and medium elected by the
Participant on the most recent election form filed by the Participant pursuant
to Section 4.1 prior to the Plan Year in which his or her Employment Termination
Date occurs; provided, however, that, if no such election form was filed with
the Administrator, the Distributable Amount shall be paid as a lump-sum
distribution in cash; and further provided, however, that the Administrator may,
in his or her sole discretion, determine that all or part of the Distributable
Amount shall be paid in cash notwithstanding the Participant's election to
receive all or such part of the Distributable Amount in shares of Common Stock.

               (ii) Payment to Beneficiary. A Beneficiary of a deceased
Participant who is eligible for payment of all or part of the Distributable
Amount pursuant to Subsection (a) above shall

                                       -22-



receive all or such part, as applicable, of the Distributable Amount as a
lump-sum distribution in cash.

                                       -23-



          (c)  Timing of Payment. The Distribution Date for payment of the
Distributable Amount in accordance with Subsections (a) and (b) above shall be
the earliest date administratively possible within the sixty (60)-day period
following the respective Participant's Employment Termination Date.

          (d)  Payment in Common Stock. If all or part of a Participant's
Distributable Amount shall be paid in shares of Common Stock (treasury shares,
authorized and unissued shares, or both), the Administrator shall calculate the
number of such shares of Common Stock as the quotient (rounded to two (2)
decimals) of (i) all or such part of the Distributable Amount and (ii) the
Common Stock Price as of the Distribution Date.

          (e)  Payment of Installment Distributions. After the Distribution Date
of a Participant who shall receive installment distributions of the
Distributable Amount, with respect to each subsequent installment distribution
that shall be due: (i) the installment distribution shall be paid as of an
anniversary of the Participant's Employment Termination Date to the Participant,
if he or she is then living, or (ii) all or part, as applicable, of the
installment distribution shall be paid as of an anniversary of the Participant's
Employment Termination Date to the Participant's Beneficiary or Beneficiaries,
if the Participant has died.

          (f)  Administrative Matters. The Administrator may, in his or her sole
discretion, delay the Distribution Date for the benefits payable to or on behalf
of a Participant to the extent necessary to determine the benefits properly.

     4.3  In-service Distribution from Deferral Accounts. The Administrator may,
but shall not be required to, establish procedures under which an in-service
distribution may be made to a Participant of Bonus Deferral Amounts or Salary
Deferral Amounts in his or her Deferral Account (if any) in the event that the
Participant has an unforeseeable emergency, as described in Subsection (a)
below, and the distribution is reasonably needed to satisfy the unforeseeable
emergency, as described in Subsection (b) below:

          (a)  Unforeseeable Emergency. With respect to a Participant, an
unforeseeable emergency is severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the Participant or
of a "dependent" of the Participant, as such term shall be defined in Code
Section 152(a); loss of the Participant's property due to casualty; or another
similar extraordinary and unforeseeable set of circumstances

                                       -24-



arising as a result of events beyond the control of the Participant.

                                       -25-



          (b)  Distribution Reasonably Necessary to Satisfy Emergency. A
distribution shall be deemed to be reasonably necessary to satisfy a
Participant's unforeseeable emergency if the following requirements are met:

               (i)    The distribution does not exceed the amount of the
Participant's financial need plus amounts necessary to pay any income taxes or
penalties reasonably anticipated to result from the distribution;

               (ii)   The Participant's financial need cannot be relieved:

                      (A) Through reimbursement or compensation by insurance or
otherwise,

                      (B) By liquidation of the Participant's assets, to the
extent that such liquidation would not itself cause severe financial hardship,
or

                      (C) By the termination of the Participant's election (if
any) with respect to a Bonus Deferral Amount or Salary Deferral Amounts.

     4.4  Beneficiaries. The Administrator shall provide to each new Participant
a form on which he or she may designate (a) one or more Beneficiaries who shall
receive all or a portion of the Distributable Amount upon the Participant's
death, including any Beneficiary who shall receive any such amount only in the
event of the death of another Beneficiary; and (b) the percentages to be paid to
each such Beneficiary (if there is more than one). A Participant may change his
or her or her Beneficiary designation from time to time by filing a new form
with the Administrator. No such Beneficiary designation shall be effective
unless and until the Participant has properly filed the completed form with the
Administrator, and a Beneficiary designation form that designates the spouse of
a Participant as his Beneficiary (whether or not any other Beneficiary is also
designated) shall be void with respect to the designation of the spouse upon the
divorce of the Participant and the spouse with the result that the Participant's
former spouse shall not be a Beneficiary unless the Participant files a new form
with the Administrator and designates his or her former spouse as a Beneficiary.

     If a deceased Participant is not survived by a designated Beneficiary or if
no Beneficiary was effectively designated, upon the Participant's death, any
benefit to which the Participant was then entitled shall be paid in a lump-sum
distribution in cash to the Participant's spouse and, if there is no spouse, to
the Participant's estate. If a designated Beneficiary is living at the death of
the Participant but dies before receiving any or all of

                                       -26-



the benefit to which the Beneficiary was entitled, such benefit or the remaining
portion of such benefit shall be paid in a lump-sum distribution in cash to the
estate of the deceased Beneficiary.

                                       -27-



                                    ARTICLE V

                            CLAIMS AND ADMINISTRATION

     5.1  Applications. A Participant or the Beneficiary of a deceased
Participant who is or may be entitled to benefits under this Plan shall apply
for such benefits in writing if and as required by the Administrator, in his or
her sole discretion.

     5.2  Information and Proof. A Participant or the Beneficiary of a deceased
Participant shall furnish all information and proof required by the
Administrator for the determination of any issue arising under the Plan
including, but not limited to, proof of marriage to a Participant or a certified
copy of the death certificate of a Participant. The failure by a Participant or
the Beneficiary of a deceased Participant to furnish such information or proof
promptly and in good faith, or the furnishing of false or fraudulent information
or proof by the Participant or Beneficiary, shall be sufficient reason for the
denial, suspension, or discontinuance of benefits thereto and the recovery of
any benefits paid in reliance thereon.

     5.3  Notice of Address Change. Each Participant and any Beneficiary of a
deceased Participant who is or may be entitled to benefits under this Plan shall
notify the Administrator in writing of any change of his or her address.

     5.4  Claims Procedure.

          (a)  Claim Denial. The Administrator shall provide adequate notice in
writing to any Participant or Beneficiary of a deceased Participant whose
application for benefits, made in accordance with Section 5.1 of this Plan, has
been wholly or partially denied. Such notice shall include the reasons for
denial, including references, when appropriate, to specific Plan or Trust
Agreement provisions; a description of any additional information necessary for
the claimant to perfect the claim, if applicable; and a description of the
claimant's right to appeal under Subsection (b) below.

     The Administrator shall furnish such notice of a claim denial within ninety
(90) days after the date that the Administrator received the claim. If special
circumstances require an extension of time for deciding a claim, the
Administrator shall notify the claimant in writing thereof within such ninety
(90)-day period and shall specify the date a decision on the claim shall be
made, which shall not be more than one hundred eighty (180) days after the date

                                       -28-



that the Administrator received the claim. Then, the Administrator shall furnish
any denial notice on the claim by the later date so specified.

          (b)  Appeal Procedure. A claimant or his or her duly authorized
representative shall have the right to file a written request for review of a
claim denial within sixty (60) days after receipt of the denial, to review
pertinent documents, and to submit comments in writing.

          (c)  Decision Upon Appeal. In considering an appeal made in accordance
with Subsection (b) above which shall not be more than one hundred twenty (120)
days after the date the Administrator receives the appeal, the Administrator
shall review and consider any written comments by the claimant or his or her
duly authorized representative. The claimant or his or her representative shall
not be entitled to appear in person before the Administrator.

     The Administrator shall issue a written decision on an appeal within sixty
(60) days after the date the Administrator receives the appeal together with any
written comments relating thereto. If special circumstances require an extension
of time for a decision upon appeal, the Administrator shall notify the claimant
in writing thereof within such sixty (60)-day period. Then, the Administrator
shall furnish a written decision on the appeal no later than one hundred twenty
(120) days after the Administrator received the appeal. The decision on appeal
shall be written in a manner calculated to be understood by the claimant and
shall include specific references to the pertinent Plan provisions on which the
decision is based.

     5.5  Status, Responsibilities, Authority and Immunity of Administrator.

          (a)  Appointment and Status of Administrator. The Plan Sponsor shall
appoint the Administrator. The Plan Sponsor may remove the Administrator and
appoint another Administrator or, if the Administrator is a committee, the Plan
Sponsor may remove any or all members of the committee and appoint new members.
The Administrator shall be the "administrator" of the Plan, as such term shall
be defined in Section 3(16)(A) of ERISA.

          (b)  Responsibilities and Discretionary Authority. The Administrator
shall have absolute and exclusive discretion to manage the Plan and to determine
all issues and questions arising in the administration, interpretation, and
application of the Plan and the Trust Agreement, including, but not limited to,
issues and questions relating to a Participant's eligibility for Plan benefits

                                       -29-



and to the nature, amount, conditions, and duration of any Plan benefits.
Furthermore, the Administrator shall have absolute and exclusive discretion to
formulate and to adopt any and all standards for use in calculations required in
connection with the Plan and rules, regulations, and procedures that he or she
deems necessary or desirable to effectuate the terms of the Plan; provided,
however, that the Administrator shall not adopt a rule, regulation, or procedure
that shall conflict with this Plan or the Trust Agreement. Subject to the terms
of any applicable contract or agreement, any interpretation or application of
this Plan or the Trust Agreement by the Administrator, or any rules,
regulations, and procedures duly adopted by the Administrator, shall be final
and binding upon Employees, Participants, Beneficiaries, and any and all other
persons dealing with the Plan.

            (c)  Delegation of Authority and Reliance on Agents. The
Administrator may, in his or her discretion, allocate ministerial duties and
responsibilities for the operation and administration of the Plan to one or more
persons, who may or may not be Employees, and employ or retain one or more
persons, including accountants and attorneys, to render advice with regard to
any responsibility of the Administrator.

            (d)  Reliance on Documents. The Administrator shall incur no
liability in relying or in acting upon any instrument, application, notice,
request, letter, telegram, or other paper or document believed by the
Administrator to be genuine, to contain a true statement of facts, and to have
been executed or sent by the proper person.

            (e)  Immunity and Indemnification of Administrator. The
Administrator shall not be liable for any of his or her acts or omissions, or
the acts or omissions of any employee or agent authorized or retained pursuant
to Subsection (c) above by the Administrator, except any act of the
Administrator or any such person as constitutes gross negligence or wilful
misconduct. The Plan Sponsor shall indemnify the Administrator, to the fullest
extent permitted by law, if the Administrator is ever made a party or is
threatened to be made a party to any threatened, pending, or completed action,
suit, claim, or proceeding, whether civil, criminal, administrative, or
investigative (including, but not limited to, any action by or in the right of
the Plan Sponsor), by reason of the fact that the Administrator is or was, or
relating to the Administrator's actions as, the Administrator, against any
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement that the Administrator incurs as a result of, or in connection with,
such action, suit, claim, or proceeding,

                                       -30-



provided that the Administrator had no reasonable cause to believe that his or
her conduct was unlawful.

     5.6    Enrollment, Deferral Election and Other Procedures. The
Administrator shall adopt and may amend procedures to be followed by Eligible
Employees and Participants in electing to participate in this Plan, in electing
to have Bonus Deferral Amounts and Salary Deferral Amounts made on their behalf,
in selecting a form of distribution of any Distributable Amount, and in taking
any other actions required thereby under this Plan.
                                       -31-



     5.7    Correction of Prior Incorrect Allocations. Notwithstanding any other
provisions of this Plan, in the event that an adjustment to a Performance Shares
Account, Benefit Account, Deferral Account, or Distribution Account shall be
required to correct an incorrect allocation to such account, the Administrator
shall take such actions as he or she deems, in his or her sole discretion, to be
necessary or desirable to correct such prior incorrect allocation.

     5.8    Facility of Payment. If the Administrator shall determine that a
Participant or the Beneficiary of a deceased Participant to whom a benefit is
payable is unable to care for his or her affairs because of illness, accident or
other incapacity, the Administrator may, in his or her discretion, direct that
any payment otherwise due to the Participant or Beneficiary be paid to the legal
guardian or other representative of the Participant or Beneficiary. Furthermore,
the Administrator may, in his or her discretion, direct that any payment
otherwise due to a minor Participant or Beneficiary of a deceased Participant be
paid to the guardian of the minor or the person having custody of the minor. Any
payment made in accordance with this Section to a person other than a
Participant or the Beneficiary of a deceased Participant shall, to the extent
thereof, be a complete discharge of the Plan's obligation to the Participant or
Beneficiary.

     5.9    Unclaimed Benefits. If the Administrator cannot locate a Participant
or the Beneficiary of a deceased Participant to whom payment of benefits under
this Plan shall be required, following a diligent effort by the Administrator to
locate the Participant or Beneficiary, such benefit shall be forfeited.

                                       -32-



                                   ARTICLE VI

                       STATUS OF PLAN AND TRUST AGREEMENT

     6.1    Unfunded Status of Plan. The Plan constitutes a mere promise by the
Plan Sponsor to pay benefits in accordance with the terms of the Plan, and, to
the extent that any person acquires a right to receive benefits from the Plan
Sponsor under this Plan, such right shall be no greater than any right of any
unsecured general creditor of the Plan Sponsor. Subject to Section 6.2, nothing
contained in this Plan and no action taken pursuant to the provisions of this
Plan shall create or be construed so as to create a trust of any kind, or a
fiduciary relationship between the Plan Sponsor and any Participant,
Beneficiary, or other person.

     6.2    Existence and Purposes of Trust Agreement.

            (a)  Existence of Trust Agreement. In accordance with Section 6.1,
the Plan Sponsor has entered into a Trust Agreement with a trustee to hold a
trust fund that may become the source of Plan benefits as provided in the Trust
Agreement. In such event, the trustee would have such powers to hold, invest,
reinvest, control, and disburse such trust fund as shall, at such time and from
time to time, be set forth in the Trust Agreement or this Plan.

            (b)  Integration of Trust Agreement. The Trust Agreement shall be
deemed to be a part of this Plan, and all rights of Participants and
Beneficiaries of deceased Participants under this Plan shall be subject to the
provisions of the Trust Agreement, if and as applicable.

            (c)  Rights to Any Trust Fund Assets. No Participant or Beneficiary
of a deceased Participant, nor any other person, shall have any right to, or
interest in, any assets of the trust fund maintained under the Trust Agreement
upon termination of such Participant's employment or otherwise, except as may be
specifically provided from time to time in this Plan, the Trust Agreement, or
both, and then only to the extent so specifically provided.

                                       -33-



                                   ARTICLE VII

                          PLAN AMENDMENT OR TERMINATION

     7.1    Right to Amend. The Plan Sponsor reserves the right to amend the
Plan, by action duly taken by its Board of Directors, at any time and from time
to time to any extent that the Plan Sponsor may deem advisable, and any such
amendment shall take the form of an instrument in writing duly executed by one
or more individuals duly authorized by the Board of Directors. Without limiting
the generality of the foregoing, the Plan Sponsor specifically reserves the
right to amend the Plan retroactively as may be deemed necessary.
Notwithstanding the foregoing sentences, the Plan Sponsor shall not amend the
Plan so as to change the method of calculating the Benefit Amount attributable
to any Performance Shares in any Participant's Performance Shares Account as of
the date that such an amendment would otherwise be effective; so as to reduce
the balance in the Deferral Account, Benefit Account, or Distribution Account of
any Participant as of such otherwise effective date; or so as to reduce the
Vesting Percentage applicable to any Benefit Amount of any Participant that
shall have been credited to the Participant's Benefit Account (plus any earnings
credited thereon) prior to such otherwise effective date (whether or not such
Vesting Percentage shall have been determined pursuant to Section 3.3 as of such
date).

     7.2    Right to Terminate. The Plan Sponsor reserves the right to terminate
the Plan, by action duly taken by its Board of Directors, at any time as the
Plan Sponsor may deem advisable. Upon termination of the Plan, (a) if the trust
fund maintained under the Trust Agreement has not become the source for Plan
benefits, the Plan Sponsor shall pay or provide for the payment of all
liabilities with respect to Participants and Beneficiaries of deceased
Participants by distributing amounts to and on behalf of such Participants and
Beneficiaries; and (b) if the trust fund maintained under the Trust Agreement
has become the source for Plan benefits, the Plan Sponsor shall direct the
trustee thereof to pay to or provide for the payment of all reasonable
administrative expenses of the Plan and trust fund, and thereafter the Plan
Sponsor shall direct such trustee to use and apply the remaining assets of the
trust fund to provide for liabilities thereof with respect to Participants and
Beneficiaries of deceased Participants by continuing the trust fund and making
provision under the Trust Agreement for the payment of such liabilities or by
distributing amounts from the trust fund to and on behalf of such Participants
and Beneficiaries; provided that, if, after payment or provision for payment of
all reasonable administrative expenses of the Plan and trust fund maintained
under the Trust Agreement and satisfaction of all liabilities of such trust fund
with respect to Participants and Beneficiaries of deceased Participants, there

                                       -34-



shall be excess assets remaining, the trustee thereof shall pay such excess
assets to the Plan Sponsor.

                                       -35-



                                  ARTICLE VIII

                                  MISCELLANEOUS

     8.1    No Guarantee of Employment. Nothing contained in this Plan shall be
construed as a contract of employment between any Employee and the Plan Sponsor
or any Employer, as a right of any Employee to be continued in any employment
position with, or the employment of, the Plan Sponsor or any Employer, or as a
limitation of the right of the Plan Sponsor or any Employer to discharge any
Employee.

     8.2    Nonalienation of Benefits. Any benefits or rights to benefits
payable under this Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary,
including any such liability that is for alimony or other payments for the
support of a Beneficiary or former Beneficiary, or for the support of any other
relative, before payment thereof is received by the Participant, Beneficiary of
a deceased Participant, or other person entitled to the benefit under the Plan;
and any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge, or otherwise dispose of any right to benefits payable under
this Plan shall be void; provided, however, that this Section shall not prohibit
the Administrator from offsetting, pursuant to Section 8.3 of this Plan, any
payments due to a Participant, the Beneficiary of a deceased Participant, or any
other person who may be entitled to receive a benefit under this Plan.

     8.3    Offset of Benefits. Notwithstanding anything in this Plan to the
contrary, in the event that a Participant or the Beneficiary of a deceased
Participant owes any amount to the Plan, the Plan Sponsor, or any other
Employer, whether as a result of an overpayment or otherwise, the Administrator
may, in his or her discretion, offset the amount owed or any percentage thereof
in any manner against any payments due from the Plan to the Participant or
Beneficiary.

     8.4    No Tax Representations. Neither the Plan Sponsor nor any Employer
represents or guarantees that any particular federal, state, or local income,
payroll, personal property or other tax consequence will result from
participation in this Plan or payment of benefits under this Plan.

     8.5    Not Compensation Under Other Benefit Plans. No amounts in a
Participant's Benefit Account or Deferral Account shall be

                                       -36-



deemed to be salary or compensation for purposes of the 401(k) Plan or any other
employee benefit plan of the Plan Sponsor or any Employer except as and to the
extent otherwise specifically provided in any such plan.

     8.6    Merger or Consolidation of Plan Sponsor. If the Plan Sponsor is
merged or consolidated with another organization, or another organization
acquires all or substantially all of the Plan Sponsor's assets, such
organization may become the "Plan Sponsor" hereunder by action of its board of
directors and by action of the board of directors of the Plan Sponsor if still
existent. Such change in plan sponsors shall not be deemed to be a termination
of this Plan.

     8.7    Savings Clause. If any term, covenant, or condition of this Plan, or
the application thereof to any person or circumstance, shall to any extent be
held to be invalid or unenforceable, the remainder of this Plan, or the
application of any such term, covenant, or condition to persons or circumstances
other than those as to which it has been held to be invalid or unenforceable,
shall not be affected thereby, and, except to the extent of any such invalidity
or unenforceability, this Plan and each term, covenant, and condition hereof
shall be valid and shall be enforced to the fullest extent permitted by law.

     8.8    Governing Law. This Plan shall be construed, regulated and
administered under the laws of the District of Columbia to the extent not
pre-empted by ERISA or any other federal law.

     8.9    Construction. As used in this Plan, the masculine and feminine
gender shall be deemed to include the neuter gender, as appropriate, and the
singular or plural number shall be deemed to include the other, as appropriate,
unless the context clearly indicates to the contrary.

     8.10   Headings No Part of Agreement. Headings of articles, sections and
subsections of this Plan are inserted for convenience of reference; they
constitute no part of the Plan and are not to be considered in the construction
of the Plan.

                                       -37-



     IN WITNESS WHEREOF, the Plan Sponsor has executed this Plan, this 15/th/
day of May, 1995.



                                                Plan Sponsor:

                                                DANAHER CORPORATION


                                                By: /s/ C. Scott Brannan
                                                    ----------------------------

                                                    Name:  C. Scott Brannan
                                                          ----------------------
                                                         Duly Authorized Officer

ATTEST:


By: /s/ Patrick W. Allender
    -----------------------------

   Name: Patrick W. Allender
         ------------------------
        Duly Authorized Officer

                                       -38-




                                 FIRST AMENDMENT
                                       TO
      DANAHER CORPORATION & SUBSIDIARIES EXECUTIVE DEFERRED INCENTIVE PLAN

         This is the First Amendment to Danaher Corporation & Subsidiaries
Executive Deferred Incentive Plan (the "First Amendment"). The Danaher
Corporation & Subsidiaries Executive Deferred Incentive Plan (the "Plan") was
adopted effective as of March 1, 1995. Under Section 7.1 of the Plan, Danaher
Corporation (the "Plan Sponsor") has reserved unto itself the right to amend the
Plan. Accordingly, pursuant to Section 7.1, the Plan Sponsor hereby amends the
Plan in the following particulars, to be effective January 1, 1997, except as
otherwise specifically provided:

                                       1.

         Delete Section 1.16 of the Plan and substitute the following Section
1.16 therefor:

                  1.16  Distribution Date. With respect to a Participant or a
         deceased Participant whose Employment Termination Date has occurred,
         the date as of which the Distributable Amount and the Participant's
         Option Shares Account shall be paid to the Participant or the deceased
         Participant's Beneficiary or Beneficiaries, as applicable, or the date
         as of which the first (1st) installment of the Distributable Amount and
         the Participant's Option Shares Account shall be paid to the
         Participant.

                                       2.

         Add the following Section 1.16A to the Plan:

                  1.16A Dividend Share. One (1) phantom share of Common Stock
         credited to a Participant's Option Shares Account pursuant to Section
         3.1A(e).

                                       3.

         Add the following Section 1.24A to the Plan:

                  1.24A Gain Share. One (1) phantom share of Common Stock
         credited to a Participant's Option Shares Account pursuant to Section
         3.1A(c).



                                       4.

         Add the following Sections 1.27A, 1.27B, 1.27C, and 1.27D to the Plan:

                  1.27A Option. With respect to a Participant, a nonqualified
         stock option in which the Participant is vested under the 1987 Danaher
         Corporation Nonqualified Stock Option Plan.

                  1.27B Option Exercise Date. With respect to Options held by a
         Participant, the date (if any) as of which the Participant exercises
         the Options.

                  1.27C Option Gain. With respect to the Options exercised by a
         Participant as of an Option Exercise Date, the product of (a) the
         number of Options exercised and (b) the difference between (i) the
         Common Stock Price on the Option Exercise Date and (ii) the exercise
         price per share of Common Stock.

                  1.27D Option Shares Account. With respect to a Participant,
         the bookkeeping account (if any) maintained on behalf of the
         Participant to record any Gain Shares and any Dividend Shares that have
         been credited on his or her behalf under this Plan.

                                       5.

         Add the following phrase to the end of both Subsection (a) and
Subsection (b) of Section 2.2 of the Plan: "and his or her Option Shares Account
(if any) has a zero (0) balance."

                                       6.

         Add the following Section 3.1A to the Plan:

                  3.1A  Option Share Accounts.

                        (a) Election to Defer. Subject to this Section, a
         Participant who is an Eligible Employee (i) may elect prior to the last
         day of a Plan Year to defer any Option Gain realized as a result of any
         exercise by the Participant of any Options during the last six (6)
         months of the next succeeding Plan Year, or (ii) may elect prior to the
         last day of the sixth (6th) month of a Plan Year to defer any Option
         Gain realized as a result of any exercise by the Participant of any
         Options during the first six (6) months of the next succeeding Plan
         Year.

                                       -2-



                           (b) Election Procedures. Subject to any further
         procedures established by the Administrator pursuant to Article V, a
         Participant shall make any deferral election that he or she desires to
         make pursuant to Subsection (a) above by properly completing an
         election form and filing the form with the Administrator. A Participant
         may not, at any time, revoke a deferral election made pursuant to this
         Section.

                           (c) Crediting of Gain Shares. Subject to Subsection
         (d) below, with respect to each Participant who exercises Options
         subject to a deferral election made pursuant to Subsection (a) above,
         if the Participant shall be an Eligible Employee on the respective
         Option Exercise Date, as soon as administratively possible after the
         Administrator shall have received notice that the Options have been
         exercised, the Administrator shall credit the Participant's Option
         Shares Account with a number of Gain Shares equal to the quotient
         (rounded to the nearer hundredth) of (i) the Participant's Option Gain
         from the exercise of the Options and (ii) the Common Stock Price as of
         the Option Exercise Date.

                           (d) No Crediting of Gain Shares. Notwithstanding
         Subsection (c) above, Gain Shares shall be credited to a Participant's
         Option Shares Account with respect to the Participant's exercise of
         Options subject to a deferral election made pursuant to Subsection (a)
         above only in the event that: (i) the Participant delivers to the
         Administrator shares of Common Stock that the Participant has held for
         at least six (6) months with an aggregate value equal to the aggregate
         exercise price of the Options exercised (or proof that the Participant
         owns such shares), plus a check for any federal employment taxes
         applicable to the deferral of the Option Gain on the exercise of the
         Options; (ii) the Participant exercises at least 1,000 Options; (iii)
         the Participant has not already exercised any Options in the same
         calendar month; and (iv) the Option Gain is at least $25,000.

                           (e) Crediting of Dividend Shares. With respect to
         each Participant who has an Option Shares Account, as soon as
         administratively possible after any dividend payment date with respect
         to the Common Stock, the Administrator shall credit the Participant's
         Option Shares Account with a number of Dividend Shares equal to the
         quotient (rounded to the nearer hundredth) of (i) the product of (A)
         the dividend price per share of Common Stock and (B) the number of
         Option Shares credited to his or her Option Shares Account and (ii) the
         Common Stock Price as of the dividend payment date.

                           (f) Limitations With Respect to Option Shares.

                                   (i) No Shareholder Rights. No Option Share
         shall have any legal relation to a share of Common Stock and,
         accordingly, no Participant who has a balance in his or her Option
         Shares Account shall be entitled to any dividend, voting, or other
         rights of a shareholder of Common Stock with respect to the Option
         Shares in his or her Option Shares Account except as otherwise provided
         in Subsection (e) above.

                                       -3-



                                   (ii)  No Right to Payment. No payment shall
         be made for any of the Option Shares in a Participant's Option Shares
         Account except as provided in Section 4.2A.

                                   (iii) Adjustments to Option Shares. In the
         event of any change in the outstanding shares of Common Stock by reason
         of any stock dividend or split, recapitalization, merger,
         consolidation, spin-off, reorganization, combination or exchange of
         shares, or other similar corporate change, if the Administrator shall
         determine, in his or her sole discretion, that such change requires
         adjustments in the number of Option Shares then credited to
         Participants' Option Shares Accounts, the Administrator shall make such
         adjustments.

                           (g) Administrative Matters. In the event that a
         Participant has delivered shares of Common Stock to the Administrator
         pursuant to Subsection (d) above, the Administrator shall return an
         equal number of shares of Common Stock to the Participant.

                                       7.

         Delete Section 4.1 of the Plan and substitute the following Section 4.1
therefor:

                  4.1      Election of Form and Medium of Distribution to
         Participant. At the time a Participant completes the enrollment form
         required by Section 2.1 and at any other such times as the
         Administrator, in his or her sole discretion, may prescribe:

                           (a) The Participant may elect, in accordance with
         procedures established by the Administrator, to receive the
         Participant's Distributable Amount (if any) and/or any shares of Common
         Stock representing a distribution of the Participant's Option Shares
         Account (if any) payable upon his or her Employment Termination Date
         either in the form of a lump-sum distribution or in the form of annual
         installments over two (2), five (5) or ten (10) years.

                           (b) If the Participant has elected to receive the
         Participant's Distributable Amount (if any) payable upon his or her
         Employment Termination Date as a lump-sum distribution, the Participant
         may elect, in accordance with procedures established by the
         Administrator, to receive any such lump-sum distribution in cash, in
         shares of Common Stock, or partially in cash and partially in shares of
         Common Stock.

                                       8.

         Delete Section 4.1(e) of the Plan and substitute the following Section
4.1(e) therefor:

                  (e) Payment of Installment Distributions. After the
         Distribution Date of a Participant who shall receive installment
         distributions of the Distributable

                                       -4-



         Amount, each subsequent installment distribution that shall be due
         shall be paid to the Participant as of the next succeeding anniversary
         of the Participant's Employment Termination Date; provided, however,
         that, in the event of the death of the Participant before all such
         installment distributions shall be made, all or part, as applicable, of
         the total of the remaining installment distributions shall be paid as
         of the next succeeding anniversary of the Participant's Employment
         Termination Date to the Participant's Beneficiary or each of his or her
         Beneficiaries, as applicable.

                                       9.

         Add the following Section 4.2A to the Plan:

                  4.2A     Distribution of Option Shares Accounts. Subject to
         Article V:

                           (a) Available Benefits. Upon the Employment
         Termination Date of a Participant, the Participant or his or her
         Beneficiary or Beneficiaries, if the Participant has died, shall be
         eligible to receive payment of the Option Shares in the Participant's
         Option Shares Account in accordance with this Section.

                           (b) Form of Payment.

                                   (i)  Payment to Participant. A Participant
         who is eligible for payment of the Option Shares in the Participant's
         Option Shares Account pursuant to Subsection (a) above shall receive,
         as of the Distribution Date determined therefor in accordance with
         Section 4.2(c), either (A) one (1) payment of a number of shares of
         Common Stock equal to the whole number of Option Shares in the
         Participant's Option Shares Account and cash equal to the value of any
         fractional Option Shares, or (B) one (1) installment payment of a
         number of shares of Common Stock equal to the quotient of: (1) the
         number of Option Shares in the Participant's Option Shares Account and
         (2) the number of installment payments elected by the Participant on
         the most recent election form filed by the Participant pursuant to
         Section 4.1 prior to the Plan Year in which his or her Employment
         Termination Date occurs; provided, however, that, if no such election
         form was filed with the Administrator, a lump-sum distribution shall be
         paid.

                                   (ii) Payment to Beneficiary. A Beneficiary of
         a deceased Participant who is eligible for payment of all or some of
         the Option Shares in the Participant's Option Shares Account pursuant
         to Subsection (a) above shall receive, as of the Distribution Date
         determined therefor in accordance with Section 4.2(c), the
         Beneficiary's share of the number of shares of Common Stock as equals
         the number of Option Shares in the Participant's Option Shares Account
         and cash equal to the value of any fractional Option Shares.

                           (c) Payment of Installment Distributions. After the
         Distribution Date of a Participant who shall receive installment
         distributions of the Option Shares in the Participant's Option Shares
         Account, each subsequent installment

                                       -5-



         distribution that shall be due shall be paid to the Participant as of
         the next succeeding anniversary of the Participant's Employment
         Termination Date, where the amount of each installment distribution
         shall be equal to the amount of the first such installment
         distribution, as calculated pursuant to Subsection (b)(i) above, except
         that an installment distribution due after any additional Dividend
         Shares are credited to a Participant's Option Shares Account pursuant
         to Section 3.1A(e) shall include such Dividend Shares and a cash
         payment shall be made of the value of any fractional Option Shares
         remaining when the final installment distribution shall be paid;
         provided, however, that, in the event of the death of the Participant
         before all such installment distributions shall be made, all or part,
         as applicable, of the total of the remaining installment distributions
         shall be paid as of the next succeeding anniversary of the
         Participant's Employment Termination Date to the Participant's
         Beneficiary or each of his or her Beneficiaries, as applicable.

                           (d) Cash for Withholding Taxes. Notwithstanding
         Subsections (b) and (c) above, a Participant or a Beneficiary of a
         deceased Participant may request, in accordance with procedures
         established by the Administrator, that a distribution in cash be made
         to the extent required for him or her to pay any withholding taxes
         attributable thereto.

                           (e) Administrative Matters. The Administrator may, in
         his or her sole discretion, delay the distribution date for the
         benefits payable to or on behalf of a Participant to the extent
         necessary to determine the benefits properly, and the Administrator
         may, in his or her sole discretion, determine that all or part of the
         Option Shares otherwise payable in shares of Common Stock shall be paid
         in cash.

                                       10.

         Delete the first sentence of Section 4.4 of the Plan and substitute the
following therefor:

         The Administrator shall provide to each new Participant a form on which
         he or she may designate (a) one or more Beneficiaries who shall receive
         all or a portion of the Participant's Distributable Amount (if any)
         and/or all or some of the shares of Common Stock payable as a
         distribution of the Participant's Option Shares Account (if any) upon
         the Participant's death, including any Beneficiary who shall receive
         any such amount and/or shares only in the event of the death of another
         Beneficiary; and (b) the percentages of such amount and/or shares to be
         paid to each such Beneficiary (if there is more than one).

                                       11.

         Add the term "Option Shares Account" after the term "Deferral Account"
in Section 5.7 of the Plan.

                                       -6-



                                       12.

         Add the term "Option Shares Account" before the term "Distribution
Account" in the third (3rd) sentence of Section 7.1 of the Plan.

                                       13.

         Effective January 1, 1996, delete Appendix B to the Plan and substitute
therefor the Appendix B attached to this First Amendment.

                                       14.

         All other parts of the Plan not inconsistent herewith are hereby
ratified and confirmed.

         IN WITNESS WHEREOF, the Plan Sponsor has caused this First Amendment to
be executed this 4/th/ day of August, 1997.

                                              Plan Sponsor:

                                              DANAHER CORPORATION

                                              By: /s/ C. Scott Brannan
                                                 -----------------------------
                                                 Duly Authorized Officer

ATTEST:

By: /s/ James H. Ditkoff
   ------------------------
   Duly Authorized Officer

                                       -7-

EX-21.1

                                                                    Exhibit 21.1

    DANAHER CORPORATION & SUBSIDIARIES

 Jurisdiction of incorporation
   or organization ("#" denotes
        non-U.S. entity)             Name
        ----------------             ----

             SW#              AB Qualitrol AKM
             DE               Abek LLC
             OH               AC Intermediate Company
             OH               Acme-Cleveland Corp.
             OH               Acme-Cleveland Laser Systems Inc.
             SW#              Advanced Motion Controls AB
             DE               The Allen Manufacturing Company (d/b/a DBS Co-op)
             NY               Altek Industries Corp.
             DE               American Precision Industries Inc.
             NY               Anderson Instrument Co.Inc.
             NY               API Development Corporation
             SW#              API Elmo AB
             SC#              API Harowe (St.Kitts) Ltd.
             SZ#              API Portescap SA
             GM#              API Portescap Deutschland GmbH
             FR#              API Portescap France SA
             SZ#              API Portescap International
             JA#              API Portescap Japan Ltd.
             PL#              API Portescap Polska Sp.zoo
             SW#              API Portescap Scandinavia AB
             UK#              API Portescap UK Ltd.
             UK#              API Positran Ltd.
             GM#              API Schmidt-Bretten Beteiligungs GmbH
             GM#              API Schmidt-Bretten Verwaltungs GmbH
             WI               API Wisconsin Inc.
             SW#              Apogeum AB
             DE               Armstrong Tools Inc.
             CA               Art Instruments Inc.
             FR#              Artus SAS
             VM#              Artus Vietnam Co.Ltd.
             DE               Assembly Technologies LLC
             CA               Ball Screws and Actuators Co.Inc.
             WI               Beamco Inc.
             CH#              Beijing Chang Gi Service Equipment Co.Ltd.
             CH#              Beijing Raytek Photoelectric Technology Co.Ltd.
             NL#              Bio-Tek Instruments Europe BV
             MX#              Bobinas del Sur SA/CV
             FR#              Buhler Montec Group SA
             IT#              Calzoni Srl
             UK#              CGF Automation Ltd.
             GM#              Cleveland Precision Systems GmbH
             CI#              Codificadora y Etiquetadora Willett Ltda.
             CA               Communications Technology Corp.
             MX#              Communications Technology Mexico SA/CV
             UK#              Contents Measuring Systems Ltd.
             NL#              Cyberex BV
             NY               Dale Technology Inc.
             CA#              Danaher Canada Partners Inc.
             CA#              Danaher Canadian Finance LP



             CA#                   Danaher Canadian Holdings Inc.
             DE                    Danaher Corporation
             DE                    Danaher Finance Company
             SW#                   Danaher Finance Company AB
             DE                    Danaher Finance Company LLC
             GM#                   Danaher GbR
             GM#                   Danaher Holdings GmbH
             VT                    Danaher Insurance Company
             LU#                   Danaher Luxembourg Sarl
             GM#                   Danaher Motion GmbH
             DE                    Danaher Motion LLC
             SZ#                   Danaher Motion SA
             SW#                   Danaher Motion Saro AB
             IT#                   Danaher Motion Srl
             SW#                   Danaher Motion Stockholm AB
             DE                    Danaher Motion Technology LLC
             DE                    Danaher Power Solutions LLC
             DE                    Danaher Service Company of Illinois Inc.
             CA#                   Danaher Tool Group LP
             CH#                   Danaher Tool (Shanghai) Ltd.
             UK#                   Danaher UK Industries Ltd.
             UK#                   Danaher UK Partners
             DE                    Data Recorders Inc.
             DE                    DCI Consolidated Industries Inc.
             AR                    Delta Consolidated Industries Inc.
             DE                    DH Holdings Corp.
             CA#                   DHR Nova Scotia ULC
             DE                    Diesel Engine Retarders Inc.
             DE                    DMG Plastics Inc.
             NL#                   Dolan-Jenner Europe BV
             MA                    Dolan-Jenner Industries Inc.
             MA                    Dover Instrument Corporation
             SZ#                   Dr.Bruno Lange AG
             AU#                   Dr.Bruno Lange Gesellschaft mbH
             GM#                   Dr.Bruno Lange GmbH & Co.KG
             IT#                   Dr.Bruno Lange Srl
             UK#                   Dr.Bruno Lange UK Ltd.
             GM#                   Dr.Bruno Lange Verwaltungs GmbH
             SW#                   Dr.Lange AB
             BE#                   Dr.Lange Belgie BV/SA
             DA#                   Dr.Lange Danmark A/S
             NL#                   Dr.Lange Nederland BV
             PL#                   Dr.Lange Sp.zoo
             UK#                   Dr.Lange U.K. Ltd.
             IL                    Dynapar Corporation
             DE                    Easco Hand Tools Inc.
             GM#                   ELE International GmbH
             DE                    ELE International LLC
             UK#                   ELE International Ltd.
             UK#                   Environmental Instrumentation Group Ltd.
             DE                    Environmental Test Systems Inc.
             UK#                   EPIC Products Ltd.
             DE                    EXE International Inc.
             CA                    Fisher Pierce Company



            DE                    FJ 900 Inc.
            DE                    Flow Measurement Corporation
            AS#                   Fluke Australia Pty.Ltd.
            BE#                   Fluke Belgium NV/SA
            NV                    Fluke Biomedical Corporation
            HK#                   Fluke China (Hong Kong) Ltd.
            BR#                   Fluke do Brasil Ltda.
            WA                    Fluke Corporation
            DA#                   Fluke Danmark A/S
            GM#                   Fluke Deutschland GmbH
            CA#                   Fluke Electronics Canada LP
            DE                    Fluke Electronics Corporation
            MY#                   Fluke Electronics (Malaysia) And.Bhd.
            NL#                   Fluke Europe BV
            CJ#                   Fluke Finance Company Ltd.
            FI#                   Fluke Finland Oy
            FR#                   Fluke France SA
            UK#                   Fluke (G.B.) Ltd.
            NL#                   Fluke Holding BV
            SW#                   Fluke Holding Company AB
            CJ#                   Fluke Holding Company Ltd.
            SP#                   Fluke Iberica SL
            NL#                   Fluke Industrial BV
            WA                    Fluke International Corporation
            IT#                   Fluke Italia Srl
            JA#                   Fluke Japan KK
            NL#                   Fluke Nederland BV
            NO#                   Fluke Norge A/S
            UK#                   Fluke Precision Measurements Ltd.
            CH#                   Fluke Shanghai Corporation
            SN#                   Fluke Singapore Pte.Ltd.
            SW#                   Fluke Sverige AB
            SZ#                   Fluke Switzerland AG
            UK#                   Fluke (UK) Ltd.
            AU#                   Fluke Vertriebsgesellschaft mbH
            DE                    Fotec LLC
            DE                    Gasboy International LLC
            GM#                   Gems Sensors GmbH
            DE                    Gems Sensors Inc.
            UK#                   Gems Sensors Ltd.
            FR#                   Gems Sensors Sarl
            IT#                   Gems Sensors Srl
            DE                    GID Acquisition Company
            AS#                   Gilbarco Australia Ltd.
            CA#                   Gilbarco Canada Ltd.
            GM#                   Gilbarco GmbH & Co.KG
            UK#                   Gilbarco Holdings Ltd.
            DE                    Gilbarco Inc.
            DE                    Gilbarco International Inc.
            AR#                   Gilbarco Latin America SA
            UK#                   Gilbarco Ltd.
            NZ#                   Gilbarco (NZ) Ltd.
            IT#                   Gilbarco SpA
            GM#                   Gilbarco Technology GmbH



            GM#                Gilbarco Verwaltungs GmbH
            AS#                Gilbert & Barker Australia Pty.Ltd.
            NZ#                Gilbert & Barker (NZ) Pty.Ltd.
            DE                 GLI International LLC
            UK#                GLI International Ltd.
            UK#                Gwendolene Holdings Ltd.
            CO                 Hach Company
            BE#                Hach Europe SA
            CA#                Hach Sales & Service Canada Ltd.
            DE                 Hand Tool Design Corporation
            DE                 Hart Scientific LLC
            DE                 Heat Transfer Guarantee Co.LLC
            NJ                 Hecon Properties Inc.
            FR#                Hengstler Controle Numerique Sarl
            SP#                Hengstler Espana SA
            GM#                Hengstler GmbH
            IT#                Hengstler Italia Srl
            JA#                Hengstler Japan Corp.
            DE                 Hennessy Canada LLC
            CA#                Hennessy Industries Canada LP
            DE                 Hennessy Industries Inc.
            DE                 Holo-Krome Company
            UK#                Holo-Krome Ltd.
            DE                 Hydrolab LLC
            IT#                ICG Holdings Srl
            DE                 IDC Acquisition LLC
            DE                 Industrial Fasteners Inc.
            DE                 Industrial Sensors Inc.
            AR#                Intervest SA
            HK#                Jacobs Chuck (Hong Kong) Ltd.
            DE                 Jacobs Chuck Manufacturing Company
            CH#                Jacobs Chuck Manufacturing (Suzhou) Co.Ltd.
            CH#                Jacobs Chuck Trading (Shanghai) Co.Ltd.
            UK#                Jacobs Holding Company
            DE                 Jacobs Japan Inc.
            UK#                Jacobs Manufacturing Company Ltd.
            MX#                Jacobs Mexico SA/CV
            DE                 Jacobs Vehicle Systems Inc.
            DE                 Jennings Land Company
            DE                 Jennings Technology Company LLC
            HK#                Jessie & J Company Ltd.
            DE                 Joslyn Clark Controls LLC
            DE                 Joslyn Company LLC
            DE                 Joslyn Electronic Systems Company LLC
            DE                 Joslyn Hi-Voltage Company LLC
            DE                 Joslyn Holding Company
            CA#                Joslyn Industries
            DE                 Joslyn Manufacturing Company LLC
            MD                 Joslyn Sunbank Company LLC
            DE                 JS Technology Inc.
            GM#                KACO Elektrotechnik GmbH
            LO#                KACO Elektrotechnika sro
            SW#                KB Instrumate
            DE                 K-D Tools of Puerto Rico Inc.



             DE                    Kingsley Tools Inc.
             DE                    Kistler-Morse Corporation
             DE                    Kollmorgen Asia Investment Company
             NL#                   Kollmorgen Asia Investment Company BV
             NY                    Kollmorgen Corporation
             SW#                   Kollmorgen Holding Company AB
             IN#                   Kollmorgen India
             MP#                   Kollmorgen India Investment Company
             DE                    Kollmorgen International LLC
             DE                    Kollmorgen Overseas Development Corp.
             FR#                   Kollmorgen SAS
             MA                    Kollmorgen Securities Corp.
             GM#                   Kollmorgen Seidel GmbH & Co.KG
             IS#                   Kollmorgen Servotronix Ltd.
             UK#                   Launchchange Holding Company
             UK#                   Launchchange Instrumentation Ltd.
             UK#                   Launchchange Ltd.
             TW#                   Lea Way Hand Tool Corporation
             DE                    Light Controls Corp.
             DE                    Linear Motion LLC
             SF#                   LogiAfrica Pty.
             LU#                   Logitron International SA
             NL#                   Marley Pump Europe BV
             JM#                   Marsh Interex Ltd.
             MO                    Marsh Label Technologies LLC
             IL                    Marsh Stencil Machine Company
             DE                    Master Gears Corp.
             NJ                    Matco Tools Corporation
             DE                    McCrometer Inc.
             DE                    Mechanics Custom Tools Corporation
             UK#                   Microtest Europe Ltd.
             GM#                   Microtest GmbH
             DE                    Microtest LLC
             OH                    M & M de France Inc.
             OH                    M & M Precision Systems Corp.
             OH                    Namco Controls Corp.
             GM#                   Namco Controls GmbH
             EZ#                   NDC Automation Praha sro
             SW#                   NDC CIM Engineering AB
             SP#                   Neurtek Medio Ambiente SA
             CT                    Newtown Manufacturing Company Inc.
             DE                    NMTC Inc.
             GM#                   NOGLIA Vermogensverwaltung GmbH
             NY                    Norcim LLC
             OH                    Northstar Technologies Inc.
             SZ#                   Orbilasers SA
             FR#                   Orbisphere France Sarl
             GM#                   Orbisphere GmbH
             SZ#                   Orbisphere GVE SA
             DE                    Orbisphere Laboratories Japan LLC
             DE                    Orbisphere Laboratories Overseas LLC
             UK#                   Orbisphere Ltd
             SZ#                   Orbisphere Management Holdings SA
             SZ#                   Orbisphere Neuchatel SA



            SF#            Orbisphere South Africa Pty.Ltd.
            FR#            OTT France Sarl
            SP#            OTT Hidrometria SL
            SZ*            OTT Hydrometrie AG
            UK#            OTT Hydrometry Ltd.
            VE#            OTT Latinoamerica CA
            GM#            OTT Messtechnik GmbH & Co.KG
            GM#            OTT Messtechnik Verwaltungs GmbH
            SF#            OTT South Africa Pty.Ltd.
            CA             Pacific Scientific Company
            DE             Pacific Scientific Energetic Materials Company
            GM#            Pacific Scientific GmbH
            CA             Pacific Scientific Instruments Company
            CA             Pacific Scientific International Holding Company
            EI#            Pacific Scientific Ireland Ltd.
            UK#            Pacific Scientific Ltd.
            FR#            Pacific Scientific Sarl
            MA             PacSci Motion Control Inc.
            DE             PacSci Quantic LLC
            NY             Partlow Corporation
            DE             Petroleum Industry Controls Inc.
            AL             Phoenix Microsystems Inc.
            UK#            Piccadilly Precision Engineering Ltd.
            GM#            PMI Motion Technologies GmbH
            GM#            PMI Verwaltungs GmbH
            FR#            Polymetron SA
            NY             Portescap US Inc.
            DE             Power Tool Holders Incorporated
            DE             Power Transformer Controls Company
            DE             Precision Gauges Inc.
            DE             Precision Specialties Inc.
            MI             Pressure Devices, Inc.
            UK#            Printos Ltd.
            DA#            Proces-Styring APS
            NO#            Prosess-Styring A/S
            DE             PS/EMC West LLC
            CA#            Qualitrol Canada LP
            NY             Qualitrol Corporation
            GM#            Qualitrol GmbH
            UK#            Qualitrol Instruments Ltd.
            LU#            Qualitrol Luxembourg Sarl
            DE             Qualitrol Power Products LLC
            DE             Quality Wire Processing Inc.
            UK#            Quiz Systems Ltd.
            FR#            Radiometer Analytical SA
            CA             Raytek Corporation
            BR#            Raytek do Brasil Ltda.
            GM#            Raytek GmbH
            MP#            Raytek Investments (Mauritius) Ltd.
            JA#            Raytek Japan KK
            MX#            Raytek Mexico SA/CV
            CA             Raytek Subsidiary Inc.
            CA             Raytek Technologies Inc.
            CA             Reliable Power Meters Inc.



            DE                RMS Thailand Inc.
            UK#               Robin Electronics Ltd.
            UK#               Royce Thompsen Ltd.
            FR#               SA Aeronautique Systems BIP
            FR#               SA Cryla
            CH#               SAFA
            CH#               SAFE
            CH#               SAFU
            CH#               SATA
            AZ                Securaplane Technologies Inc.
            DE                Service Station Products Company
            IS#               Servotech Control Technology Ltd.
            CH#               Setra Sensing Technology (Tianjin) Co.Ltd.
            MA                Setra Systems Inc.
            CH#               Shanghai Shilu Instrument Co.Ltd.
            GM#               SMB GmbH
            EZ#               SMB sro
            FR#               Societe Civile Immobiliere
            VA                Sonix Inc.
            MY#               Sonix Technologies Sdv.Bhd.
            UK#               Spline Gauges Ltd.
            MX#               Sunbank de Mexico, S de RL de CV
            CA                Sunbank Family of Companies LLC
            DE                Superior Electric Holding Group LLC
            DE                Swiss Precision Parts Corp.
            IT#               Techna Srl
            DE                Thomson 60 Case LLC
            DE                Thomson Airpax Mechatronics LLC
            SN#               Thomson Airpax Mechatronics Pte.Ltd.
            MY#               Thomson Airpax Mechatronics Sdn.Bhd.
            UK#               Thomsom Airpax (UK) Ltd.
            UK#               Thomson Barnstable Ltd.
            DE                Thomson Bay Company LLC
            UK#               Thomson IBL Company
            NY                Thomson Industries Inc.
            MX#               Thomson Industries S de RL de CV
            DE                Thomson International Holdings LLC
            NY                Thomson Micron LLC
            CH#               Tianjin Kollmorgen Industrial Drives Ltd.
            DE                Truck Storage Incorporated
            DE                Utica Holding Company
            DE                Veeder-Root Company
            BR#               Veeder-Root do Brasil Ltda.
            UK#               Veeder-Root Environmental Systems Ltd.
            UK#               Veeder-Root Finance Company
            GM#               Veeder-Root GmbH
            UK#               Veeder-Root Ltd.
            FR#               Veeder-Root Sarl
            DE                Veeder-Root Service Company
            DE                Videojet China LLC
            NL#               Videojet Technologies BV
            CA#               Videojet Technologies Canada LP
            UK#               Videojet Technologies CP Ltd.
            NL#               Videojet Technologies Europe BV



            AU#          Videojet Technologies Gesellschaft mbH
            GM#          Videojet Technologies GmbH
            DE           Videojet Technologies Inc.
            JA#          Videojet Technologies Japan Inc.
            UK#          Videojet Technologies Ltd.
            FR#          Videojet Technologies SA
            CH#          Videojet Technologies (Shanghai) Trading Co.Ltd.
            SN#          Videojet Technologies (Singapore) Pte.Ltd.
            SP#          Videojet Technologies SL
            SW#          Warner Electric AB
            GM#          Warner Electric GmbH
            SZ#          Warner Electric SA
            IT#          Warner Electric Srl
            TX           Wermex Corporation
            UK#          West Instruments Ltd.
            DE           Western Pacific Industries Inc. (d/b/a Iseli Co.)
            SW#          Willett AB
            DE           Willett America Inc.
            RS#          Willett A/O
            AR#          Willett (Argentina) SA
            HK#          Willett Asia Ltd.
            NL#          Willett BV
            PO#          Willett Codificacoa e Etiqetagem Ltda.
            SN#          Willett Coding and Labelling Pte.Ltd.
            UK#          Willett Coding Ltd.
            DA#          Willett (Denmark) A/S
            UK#          Willett Electro-Optics Ltd.
            BR#          Willett Fluidos Ltda.
            SN#          Willett Global Sourcing Pte.Ltd.
            GM#          Willett Gmbh
            NL#          Willett Holdings BV
            SP#          Willett Iberia SA
            IN#          Willett India Pvt.Ltd.
            AU#          Willett Industriessysteme Handelsges.mbH
            UK#          Willett Information Solutions Ltd.
            UK#          Willett International Ltd.
            JA#          Willett Japan KK
            KS#          Willett Korea Co.Ltd.
            BR#          Willett Ltda.
            UK#          Willett Ltd.
            HU#          Willett Magyarorszag Nyomtatas es Kodo.Kft.
            NO#          Willett (Norway) A/S
            BE#          Willett NV
            UK#          Willett Overseas Ltd.
            FI#          Willett Oy
            FR#          Willett Sarl
            IT#          Willett SpA
            PL#          Willett Sp.zoo
            SZ#          Willett Systeme AG
            UK#          Willett Systems Ltd.
            TH#          Willett (Thailand) Ltd.
            UP#          Willett (Ukraine) Ltd.
            UY#          Willett (Uruguay) SA
            TU#          Willett Urun Kodlama Ve Etiketleme Ltd.Sti.



            DE                    Willett Veritec LLC
            NT#                   Wil NV
            CH#                   Zhuhai SEZ Willett Electronics Ltd.

EX-23.1

                                                                    Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the following Registration
Statements of Danaher Corporation of our reports dated January 29, 2003, with
respect to the consolidated financial statements and schedule of Danaher
Corporation included in the Annual Report on Form 10-K for the year ended
December 31, 2002: File Nos. 333-83186, 333-56406, 333-59269, 333-14781 and
333-43772.

Baltimore, Maryland
March 27, 2003

EX-23.2

                                                                    Exhibit 23.2

                 NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP

On May 29, 2002, the Company filed a Current Report on Form 8-K reporting that
on May 28, 2002, the Company discontinued the engagement of Arthur Andersen LLP
as its independent accountant and engaged Ernst & Young LLP as its independent
accountant for fiscal year 2002. This Annual Report on Form 10-K, which includes
the reports of Arthur Andersen on the Company's consolidated balance sheets as
of December 31, 2001 and December 31, 2000, and the related consolidated
statements of operations, shareholders' equity and cash flows for each of the
three years in the period ended December 31, 2001 and on the Company's financial
statement schedule, are incorporated by reference into our previously filed
Registration Statements, File Nos. 333-83186, 333-56406, 333-59269, 333-14781
and 333-43772 (collectively, the "Registration Statements"). After reasonable
efforts, the Company has been unable to obtain Arthur Andersen's consent to
incorporate by reference into the Registration Statements its audit report with
respect to the financial statements of the Company as of December 31, 2001 and
the three years then ended. Under these circumstances, Rule 437(a) under the
Securities Act of 1933, as amended, permits the Company to file this Form 10-K
without such consent from Arthur Andersen. The absence of such consent may limit
recovery by investors on certain claims, including the inability of investors to
assert claims against Arthur Andersen under Section 11 of the Securities Act of
1933, as amended, for any untrue statements of a material fact contained, or any
omissions to state a material fact required to be stated, in those audited
financial statements. In addition, the ability of Arthur Andersen to satisfy any
claims (including claims arising from Arthur Andersen's provision of auditing
and other services to the Company) may be limited as a practical matter due to
recent events regarding Arthur Andersen.

EX-99.1

                                                                    Exhibit 99.1

              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

                             18 U.S.C. SECTION 1350,

                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, H. Lawrence Culp, Jr., certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge, Danaher Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that information contained in
such Annual Report on Form 10-K fairly presents in all material respects the
financial condition and results of operations of Danaher Corporation.

Date: March 28, 2003                 By:    /s/ H. Lawrence Culp, Jr.
                                            -------------------------
                                            Name:    H. Lawrence Culp, Jr.
                                            Title:   President and Chief
                                                     Executive Officer


A signed original of this written statement required by Section 906 has been
provided to Danaher Corporation and will be retained by Danaher Corporation and
furnished to the Securities and Exchange Commission or its Staff upon request.

EX-99.2

                                                                         Exhibit
                                                                         99.2

              CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

                             18 U.S.C. SECTION 1350,

                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Patrick W. Allender, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge,
Danaher Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 and that information contained in such
Annual Report on Form 10-K fairly presents in all material respects the
financial condition and results of operations of Danaher Corporation.

Date: March 28, 2003             By:    /s/ Patrick W. Allender
                                        -----------------------
                                        Name:    Patrick W. Allender
                                        Title:   Executive Vice President, Chief
                                                 Financial Officer and Secretary

A signed original of this written statement required by Section 906 has been
provided to Danaher Corporation and will be retained by Danaher Corporation and
furnished to the Securities and Exchange Commission or its Staff upon request.