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Inexpensive and simple, Hach’s new EZ Arsenic Test Kit is quickly becoming the method of choice in developing nations for monitoring drinking water supplies. Funded by the World Bank, five million test kits were sent to Bangledesh to alleviate the largest natural mass poisoning of water wells in history. 

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average with bolt-on’s frequently reaching this threshold more quickly and platform-establishing transactions taking a little longer, but not exceeding five years. Regardless of our businesses’ current rate of return we are always, in the spirit of kaizen , looking to increase it. And third, EPS accretion is important. 

A clear strategy in our markets, along with available funds and an improved acquisition process, contributed to the completion of a record number of acquisitions in 2001. We also announced two larger transactions – Viridor Instrumentation and Gilbarco – at the end of 2001 and closed early in 2002. Videojet, announced and closed early in 2002, establishes a fifth strategic platform in the attractive growth market of Product Identification. All transactions served to strengthen competitive positions, particularly in our Environmental and Electronic Test platforms. Our superior free cash flow, coupled with $505 million raised from the issuance of zero-coupon convertible bonds in January 2001 and $467 million raised from the sale of 6.9 million shares in March 2002, enabled us to complete these acquisitions and still provide sufficient capital to continue our successful acquisition program in 2002 and beyond. In aggregate, Viridor, Gilbarco, Videojet and the other acquisitions closed in 2001 will bring over $1 billion of incremental revenue to Danaher. 

DBS The bedrock of our company is the Danaher Business System (DBS). DBS tools give all of our operating executives the means with which to strive for world-class quality, delivery and cost benchmarks and deliver superior customer satisfaction and profitable sales growth. 

DBS continues to broaden and deepen its impact on our organization. We apply the kaizen mindset to all functions, from manufacturing to sales to human resources, to drive real improvements in all of our processes. But more than a mere set of manufacturing productivity tools, DBS really is a system in which exceptional people conceive superi- or business plans and execute them by sustainable processes. This is how Danaher has been able to produce superior financial performance year after year – performance, which serves to attract talented people to Danaher. 

COST REDUCTION While we were pleased with our relative performance in 2001, we knew this past year would be largely a cost game given the macroeconomic environment. Quickly sensing a protracted downturn, we started reducing our cost structure in late 2000 and were relentless throughout 2001. This effort was intense as expenses large and small were challenged and often reduced. We closed nine facilities and reduced total head count by twelve percent. In December, with all economic indicators signaling an equally difficult year in 2002, we decided to further reduce our cost structure, taking a $70 million charge to close an additional sixteen facilities. 

Our cost control and reduction actions enabled us to produce operating profit growth in 2001 while clearly positioning the company for substantial leverage when the economy recovers and our growth breakthroughs begin contributing to the top-line. 

