- The Washington Times - Friday, October 18, 2002

Danaher Corp. said yesterday that profits for the third financial quarter rose about 32 percent, as sales increased from acquisitions it made earlier this year.

Meanwhile, the company and its analysts refuted a report published earlier this week questioning Danaher's accounting practices.

Net income for District-based Danaher, an industrial controls manufacturer best known as the maker of Craftsman tools, rose to $116 million (74 cents per share) from $87.7 million (59 cents) in the like quarter last year. Sales rose from $901.6 million to $1.15 billion.

Shares of Danaher yesterday rose 1 cent to close at $55.76 on the New York Stock Exchange. They had fallen about 7 percent on Monday, after a columnist for TheStreet.com suggested that the company was "spring-loading" or adjusting acquisitions to boost earnings artificially. Similar accusations have been leveled at embattled manufacturer Tyco International, also an aggressive acquirer of companies.

Danaher issued a statement on Tuesday disputing the report, and denounced accusations of accounting misconduct in its earnings conference call yesterday.

"Contrary to what some may be saying, we are the high-integrity, high-performing company our long-term shareholders believe us to be," said Danaher Chief Executive Officer H. Lawrence Culp Jr.

The company increased the number of disclosures on its earnings report, a move that Mr. Culp said confirmed Danaher's "commitment to conservative and consistent accounting practices."

Danaher has gained notice for acquiring several companies even as merger and acquisition activity dropped this year. The company said this year that it plans to expand into 18 markets. It bought the environmental testing and data systems segments of Marconi PLC and Viridor Instrumentation Ltd., a maker of sewage-testing equipment.

Analysts said that acquisitions make accounting more complicated. But they note that Danaher has been careful in examining the firms it buys and has generally erred on the side of caution in its accounting.

"I didn't put a whole lot of credence in the [TheStreet.com] report," said Matthew Summerville, an analyst with McDonald Investments, who rates Danaher an "aggressive buy" and does not own its shares. "I've always felt their accounting practices were on the conservative side rather than the reverse."

Among other area companies reporting earnings yesterday:

•SLM Corp., the Reston parent of Sallie Mae, the nation's largest provider of student loans, said losses were down for the third quarter ended Sept. 30 to $62.4 million (42 cents) from $194 million ($1.21) a year earlier.

• Visual Networks, a Rockville provider of network solutions, posted profits for the third quarter ended Sept. 30 of $665,000 (2 cents) compared with a loss of $3 million (9 cents) a year earlier.

• Cardinal Financial Corp., the Fairfax parent company of Cardinal Bank, announced first-ever profits for the third quarter ended Sept. 30 of $305,000 (3 cents) compared with a loss of $1.35 million (18 cents) in the previous year.


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