<PAGE>

TO OUR FELLOW SHAREHOLDERS


Fiscal 1998 will be remembered as one of the most exciting and rewarding years
in Hach Company's 50-plus-year history.  During the year, Hach not only posted
record financial results, but also successfully recapitalized its financial
structure for the better while making significant capital investments for future
growth.  These achievements were made in conjunction with the following major
events, which are sure to mold the future of Hach Company.

- The repurchase of 6.4 million Hach common shares from Lawter International.
- The acquisition of Environmental Test System, Inc. (ETS).
- The creation and issuance of a second class of common stock.

Net sales for 1998 were an all-time record $128,058,000, a 5% increase from 1997
sales of $121,480,000.  Domestic sales increased nearly 7% while international
sales increased 4%.  International sales were adversely affected by the strong
US dollar and economic conditions in Asia.  Sales volume in Europe increased
nearly 12%, but the strong dollar had the effect of reducing 1998 European sales
by approximately $2,380,000 when compared to 1997.  Sales in Asia, which
represent approximately 8% of total sales, decreased 5%.  Over the past three
years, Asian sales had been growing at a compound annual rate of 20%.  Despite
the poor economic conditions in Asia, international sales outside of Europe
showed a healthy 7% increase from 1997 amounts.  For the year, net income per
share decreased 7%, reflecting higher interest expense, lower interest income,
and the write-off of purchased research and development associated with the ETS
acquisition.  Without this write-off, earnings per share increased 24% for the
year and 33% for the fourth quarter.  Economic Profit increased to $6,850,000
from $4,367,000 in 1997, thus yielding Economic Value Added of $2,483,000 for
1998.  Economic Profit is defined as net operating profit after taxes, in excess
of a computed capital charge for average capital employed.  Economic Value Added
represents the growth in Economic Profit from year to year.  We believe that
Economic Value Added is the single best measure of assessing our overall
performance.

The stock buyback from Lawter significantly improved the Company's capital
structure, and we are confident it will benefit our shareholders over the long
term.  Prior to the transaction, Hach had accumulated over $40 million in cash
and had no debt.  Since the transaction, cash balances have been reduced and $30
million in debt has been incurred.  Going forward, we believe that a certain
amount of debt financing is appropriate and will help lead to greater returns
for shareholders.

<PAGE>

To further enhance our capital structure, a second class of common stock was
created and issued.  These Class A shares, which are non-voting, offer the
Company greater flexibility to finance future growth, provide greater continuity
of ownership, and offer stockholders more flexibility and liquidity.  The Class
A shares carry a higher cash dividend rate and are traded on the NASDAQ National
Market under the symbol HACHA.  During fiscal year 1998, we continued to make
investments in the Company aimed at growing sales and profits.  Fiscal year 1998
capital spending totaled approximately $11.5 million, and the majority of this
spending was for two improvement projects.  We invested in a new building at our
main plant in Loveland, Colorado, and initiated upgrades to our information
systems.  Both projects are scheduled for completion in the first half of fiscal
year 1999 and should provide adequate capacity for several years.

In addition to capital investments, Hach closed on the acquisition of ETS on
April 30, 1998.  Together, scientists from both companies will redefine the term
"simplified chemistry."  ETS is an industry leader in developing, manufacturing
and marketing diagnostic reagent test strips for both consumer and industrial
applications.  Test strips are used for on-site testing in pools and spas, and
in the automotive, industrial, medical, soil, and consumer test markets.

                               [PHOTO]

                Kathryn Hach - Darrow and Bruce Hach

This investment is part of the company's strategy to grow through the
acquisition of complementary businesses.  In the future, we expect further
acquisitions to play a key role in our growth.

<PAGE>

Over the years, much of our success has been due to our exceptional customer
service and awareness of customers' needs.  To help assure we maintain this
level of service and awareness, we realigned our organization along lines of
business matched to the key products we sell.  The new organization will enable
us to focus on market solutions that will improve our ability to deliver
world-class products to customers.  It will also help to customize sales,
support and business programs for each key product line.

Looking ahead to 1999 and beyond, the opportunities before us position the
Company for continued growth.  While populations around the world continue to
grow exponentially, the supply of fresh water remains static.  These populations
and their growth rates cannot be sustained without a supply of clean water.

Let us share with you some startling statistics.  Currently, more than two
billion people on earth live without any kind of sanitation system.  Ninety-five
percent of all cities in the world discharge untreated sewage and wastes into
natural waterways.  The demand for clean water for drinking, modern industry and
recreation presents tremendous business opportunities.  This is where Hach comes
in.

Hach has established itself as a world leader in providing products for water
quality analysis.  Our products ensure that water is safe for its intended uses.
These products cover a wide range of technologies and their uses require
different skill levels.  From low-cost test kits to on-line process instruments,
our products fulfill the water quality testing needs of analysts around the
world.  Clean water is, and will continue to be, an important resource, and Hach
products will continue to provide reliable and cost-effective means for
analyzing its quality.

We would like to personally thank our employees, customers, shareholders,
suppliers and business partners for their commitment and contributions over the
past year.  We believe we have positioned the Company to benefit from the many
opportunities before us.  In our opinion, the future has never looked better.



/s/ Kathryn C. Hach-Darrow

Kathryn C. Hach-Darrow
Chairman of the Board
and Chief Executive Officer


/s/ Bruce J. Hach

Bruce J. Hach
President
and Chief Operating Officer


4

<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


RESULTS OF OPERATIONS: 1998 COMPARED TO 1997


Net sales were a record $128,058,000, an increase of 5.4% over 1997 net sales of
$121,480,000.  The Company's domestic and international net sales increased 6.5%
and 3.5% respectively, due primarily to unit volume increases in most of the
Company's major product lines.  Both the strong U.S. dollar and the economic
conditions in Asia adversely affected sales.  The company's European
subsidiary's sales increased 12% when measured in Belgium Francs, but the strong
U.S. dollar had the effect of reducing fiscal year 1998 European sales by 3%
compared with fiscal year 1997 sales.  Sales throughout Asia, which represent
approximately 8% of consolidated sales, decreased 5% from the prior year's
amount.

Cost of sales increased 4.0% to $64,854,000 from $62,342,000.  This cost item,
composed of material, labor and product overhead, increased because of unit
volume increases.  The gross margin was 49.4% and 48.7% of net sales for 1998
and 1997 respectively.  The gross margin increase was due primarily to the
geographic mix of products sold.  In general, international sales have lower
gross margins than domestic sales due to the higher discounting granted to the
Company's international distributors.

Selling, general and administrative expense increased 6.5% to $35,566,000 from
$33,385,000.  The increase was due primarily to normal wage and salary
increases, costs associated with the increased sales volume, and higher
advertising costs.

Research and development expense decreased 1.2% to $8,360,000 from $8,459,000.
The decrease was primarily due to lower expenditures for outside development
projects.

The Company also incurred a one-time charge of $3,000,000 for purchased research
and development costs associated with the acquisition of Environmental Test
Systems, Inc. (ETS).

Interest income decreased to $994,000 from $1,799,000.  The decrease was due to
lower average investments in the current period, due to the repurchase of $60
million of the Company's common stock.

Interest expense increased to $1,588,000 from $13,000.  The increase was due to
interest on a long-term loan used to repurchase Hach Company common stock owned
by Lawter International.

The effective income tax rate was 42.0%, compared to 34.5% in 1997.  The
increase in the effective income tax rate was due primarily to the write-off of
non-deductible research and development costs associated with the acquisition of
ETS.

Net dollar sales for the Company's European subsidiary decreased 2.5%  to
$16,122,000 from $16,531,000, due primarily to a stronger U.S. dollar.  The
actual sales volume increased by 12% from that of the prior year.  The operating
income decreased 78% to $519,000 from $2,380,000.  The decrease was due
primarily to increased costs for U.S. goods, brought about by a stronger dollar
on a weighted average basis in fiscal year 1998 as compared to fiscal year 1997.

RESULTS OF OPERATIONS: 1997 COMPARED TO 1996

Net sales were a record $121,480,000, an increase of 6.3% over 1996 net sales of
$114,285,000.  The Company's domestic and international net sales increased 5.7%
and 7.3% respectively, due primarily to unit volume increases in most of the
Company's major product lines.  Although sales measured in Belgium francs
increased, a strong U.S. dollar had the effect of reducing European sales by
approximately $1,300,000 when compared to the prior year.  International sales
outside of Europe increased 16%.

Cost of sales increased 7.8% to $62,342,000 from $57,839,000.  This cost item,
composed of material, labor and product overhead, increased because of unit
volume increases.  The gross margin was 48.7% and 49.4% of net sales for 1997
and 1996 respectively.  The gross margin decrease was due primarily to the
geographic mix of products sold.  In general, international sales have lower
gross margins than domestic sales due to the higher discounting granted to the
Company's international distributors.

Selling, general and administrative expense increased 1.2% to $33,385,000 from
$33,000,000.  The increase was due primarily to normal wage and salary increases
and costs associated with the increased sales volume, offset partially by
efficiency improvements throughout the administrative area.

Research and development expense increased 13.3% to $8,459,000 from $7,464,000.
The increase was primarily due to normal wage and salary increases and increased
emphasis on research and development efforts.

Interest income increased to $1,799,000 from $1,324,000.  The increase was the
result of higher average investments in the current period.

The effective income tax rate was 34.5%, compared to 35.0% in 1996.  The
decrease in the effective income tax rate was due primarily to foreign tax
credits.

Net dollar sales for the Company's European subsidiary decreased 4.6% to
$16,531,000 from $17,290,000, due primarily to a stronger U.S. dollar.  The
actual unit sales volume increased by 3.3% from that of the prior year.  The
operating income decreased 35% to $2,380,000 from $3,689,000.  The decrease was
due primarily to increased costs for U.S. goods, brought about by a stronger
U.S. dollar on a weighted average basis in fiscal year 1997 as compared to
fiscal year 1996.  In addition, during 1997 the Company increased the transfer
price for U.S. goods sold to its European subsidiary.

CAPITAL RESOURCES AND LIQUIDITY

The Company experienced substantial change in its capital structure during the
year ended April 30, 1998.  On July 8, 1997, the Company purchased 6,314,446
shares of its common stock from Lawter International.  The purchase price was
approximately $60 million.  The Company used $30 million of existing cash and
$30 million of bank borrowings to finance the stock purchase.  The bank
borrowings provide for a revolving line of credit of up to $40 million.

The Revolving Credit Agreement contains covenants and provisions that restrict,
among other things, the ability of the Company and its material subsidiaries to:
(i) create liens on any of its property or assets or assign any rights to
security interests in future revenues; (ii) engage in sale and leaseback
transactions; (iii) engage in mergers, consolidations and sales of all or
substantially all of their assets on a consolidated basis; (iv) enter into
agreements restricting dividends and advances by the subsidiaries; and, (v)
engage in transactions with affiliates other than those based on arm's-length
negotiations.  The Revolving Credit Agreement also limits the ability of the
Company and or subsidiaries to purchase capital items, incur indebtedness or
issue preferred stock.  The Revolving Credit Agreement also requires the Company
to satisfy certain financial performance criteria.

On April 30, 1998, the Company purchased privately held Environmental Test
Systems, Inc. (ETS).  The purchase price was approximately $16,320,000.  The
Company used $7,659,000 of existing cash and issued $8,661,000 worth of Common
Stock and Class A Common Stock from its existing treasury shares.

Company cash dividends paid in 1998, 1997 and 1996 were $2,142,000, $2,728,000
and $2,502,000, respectively.  The Company intends to continue to increase cash
dividend payments, provided long-term growth is not jeopardized.

The Company monitors cash flow and capital expenditures in great detail as part
of its total budgeting process.  During fiscal year 1998, the Company spent
approximately $14,500,000 on capital equipment, approximately $3,000,000 of
which was related to the ETS purchase.  During fiscal year 1999, the Company
expects to spend approximately $7,500,000 on capital items consisting primarily
of production equipment and computer and peripheral equipment to support
production, research and development and administration.  During fiscal year
1998, the Company began construction of a 66,350 square foot building at the
Loveland, Colorado site.  The Company expects to spend approximately $2,500,000
in fiscal year 1999 to complete the building.  The addition will provide more
manufacturing, research and development and office space.  Occupancy is
scheduled for late summer or early fall of 1998.

Throughout most of the world, the Company transacts business in U.S. dollars.
In Europe, the Company's foreign subsidiary, Hach Europe, transacts business
primarily in Belgium Francs.  The change in the cumulative currency translation
adjustment in 1998 was due primarily to a stronger U.S. dollar at April 30, 1998
compared to April 30, 1997.

                                                                              13

<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)


The Company intends to finance its capital projects and working capital needs
through existing cash and investments, projected cash flow from operations and
use of its revolving line of credit.

EFFECTS OF INFLATION ON THE COMPANY

The Company is affected by inflation to about the same degree as other American
companies.  The Company sells a great variety of products and has a relatively
small order size and short production runs.  This causes a higher ratio of
support or overhead personnel in the factory, research and selling functions.
Thus, the impact of wage increases is somewhat greater than would be typical.
As the rate of inflation has declined in recent years, the impact of inflation
on the Company has lessened.

YEAR 2000 COMPUTER SYSTEMS COMPLIANCE

The Company is in the process of the modification or conversion of Company
computer systems to provide for proper functioning beyond calendar year 1999.
It is anticipated that substantially all of these Year 2000 costs will be
incurred during fiscal 1998 and 1999.  Management believes that resources are
available to complete the modification and conversion and that its costs will
not materially affect the Company's operating results or financial condition.
Management believes that the Year 2000 compliance will be completed well before
the end of fiscal year 1999.  The Company cannot predict the nature or
materiality of the impact on its operations or operating results of
noncompliance by parties outside of its control.

NEW ACCOUNTING STANDARDS

In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements,
in order to measure all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners.  Comprehensive income, as defined by SFAS No. 130, is the total of
net income and other comprehensive income (all other non-owner changes in
equity).  The Company's foreign currency translation adjustment is categorized
as an element of other comprehensive income under this statement.  SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, and is
applicable for interim and annual periods.  As such, the Company will adopt this
statement in the first quarter of fiscal year 1999.  The result of adoption will
be a revised display of the Company's foreign currency translation adjustment.

In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION.  SFAS No. 131 requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise.  Reportable segments, as defined by
this statement, correspond to the way management organizes units and evaluates
performance internally, and may be based upon products, geography, legal entity,
management structure or combination of these methods.  SFAS No. 131 is effective
for years beginning after December 15, 1997.  Companies would be required to
restate prior period information upon adoption.  The Company will adopt SFAS No.
131 for the fiscal year ending April 30, 1999.  The adoption of SFAS No. 131 
will result in additional disclosures relating to the Company's reportable 
segments.

-------------------------------------------------------------------------------

HACH COMPANY AND SUBSIDIARIES

DESCRIPTION OF BUSINESS



GENERAL NATURE AND SCOPE OF BUSINESS

Hach Company is engaged predominantly in an industry that encompasses laboratory
instruments, process analyzers and test kits which are used to analyze the
chemical content and other properties of water and other aqueous solutions.
This industry encompasses the analytical reagents and chemicals manufactured and
sold by the Company.  The Company manufactures and sells a small amount of
chemicals for uses not associated with the Company's analytical systems for
water analysis.

<TABLE>
<CAPTION>

SALES BY PRINCIPAL PRODUCT GROUP
(PERCENT OF NET SALES)                  1998      1997      1996
-----------------------------------------------------------------
<S>                                     <C>       <C>       <C>
Analytical Reagents and Chemicals       32.2%     31.7%     30.9%
Laboratory and Portable Instruments     30.7%     29.5%     29.7%
Continuous Reading Process Analyzers    15.4%     17.4%     16.8%
Portable Test Kits and Replacements     12.2%     12.2%     13.2%
Other                                    9.5%      9.2%      9.4%
-----------------------------------------------------------------
Total                                    100%      100%      100%
-----------------------------------------------------------------
-----------------------------------------------------------------
</TABLE>

Analytical reagents and chemicals are manufactured and sold to support the Hach
testing systems of laboratory and portable instruments, process analyzers and
portable test kits.  More stringent water quality standards and a worldwide
direction toward better control of processes--exhibited by ISO (International
Organization for Standardization) 9000 registration of many industrial
companies--drive the demand for the Company's products and their continued use.

Laboratory and portable instruments consist of Hach-manufactured analytical
instruments in the following categories: spectrophotometers and colorimeters,
turbidimeters, Ion Selective Electrodes, COD (chemical oxygen demand) apparatus,
digestion apparatus, and precision reagent-dispensing devices.  These products
are sold to municipal water and wastewater utilities, chemical manufacturers,
industrial water conditioning firms and organizations, power utilities,
commercial analytical laboratories, and government agencies for the testing and
monitoring of controlled impurities in water systems.

Continuous-reading process analyzers consist of Hach-manufactured products in
the following categories:  colorimetric analyzers, process turbidimeters, pH
controllers and analyzer accessories.  These products are sold to municipalities
for monitoring and controlling drinking water quality and to ensure that
wastewater treatment procedures comply with government regulations.
Steam-generating plants, including operations at electrical utilities,
petrochemical processors, heavy industry installations, and pulp and paper
factories, use the Company's continuous-reading process analyzers for on-line
monitoring of cooling-tower and boiler-feedwater quality.  The microelectronics
industry uses the Company's trace silica analyzers to monitor ultrapure water
systems used in processing electronic components.

Hach offers more than 200 different test kits for 12 different application areas
ranging from agriculture to water quality.  These portable test kits are
recognized worldwide for ease of use, innovative chemistry, field-oriented
design and rugged construction.  Test kits are sold to municipalities for use in
monitoring drinking water distribution systems; to conservation groups to
monitor for influences impacting the environment; to educators for use in
teaching environmental awareness; to customers monitoring industrial processes;
to the water-conditioning industry to use in testing water quality; and to
environmental regulatory authorities for use in checking compliance
requirements.

No material part of the business of the Company is dependent upon a single
product or any customer or a small group of customers.

14

<PAGE>

HACH COMPANY AND SUBSIDIARIES

DESCRIPTION OF BUSINESS (CONTINUED)


DISTRIBUTION

Hach Company sells its analytical systems throughout the United States by direct
marketing.  The Company has Regional Sales Managers located across the country
and responsive telemarketing Customer Service Representatives in the Loveland
facility selling its products.  The Company directly distributes products to
customers in the United States through a modern distribution facility in Ames,
Iowa.

Independent distributors and sales representatives, who may handle complementary
and/or competitive product lines, are used to sell and distribute the Company's
products to international customers. Customers in Canada are supported directly
by a sales and service office in Winnipeg, Manitoba.

Hach Company operates a facility in Namur, Belgium, for the marketing and
distribution of its products to the European market.  The Namur facility
primarily services the Company's European independent distributors and, to a
lesser extent, distributors and sales agents in Mediterranean Africa, and the
Middle East.

AVAILABILITY OF MATERIALS

The Company has developed close working relationships with many of its key
vendors to assure an adequate and continuous supply of materials for the
Company's products.  There are some unique components that would cause temporary
stoppage of specific products if these components were not available.  However,
since the Company could obtain alternate sources of supply after a reasonable
period of time, the temporary stoppage would not have a material adverse effect
on the Company.

COMPETITION

The Company competes domestically with a fairly large number of companies.
These companies range in size from a few which are larger than Hach and sell,
primarily, laboratory and portable instruments, to numerous smaller companies
which sell products competitive with only a few of Hach's products.  The Company
is not aware of any company which competes with it across the full range of
products sold by it or which competes with it in all major product lines.

Different competitive factors are of greater or lesser importance with respect
to each of the Company's product lines although, overall, technical
sophistication, reliability, quality, relative ease of operation and price
probably are most important.  The Company believes that it has no competitive
disadvantages with respect to any of these factors.  In many instances the
Company has a competitive advantage due to the relative ease with which
individuals without technical backgrounds can use the Company's products to
perform analyses.  Hach Company's competition in international markets is
comparable to its competition in domestic markets.  However, the international
competition, particularly from Europe, appears to be growing more aggressive and
competes across a broader range of products.

RESEARCH

During fiscal 1998, 1997 and 1996, the Company spent $8,360,000, $8,459,00 and
$7,464,000, respectively, on Company-sponsored research and development
activities.  In fiscal 1998, the Company also incurred a one-time charge of
$3,000,000 for purchased research and development costs associated with the
acquisition of Environmental Test Systems Inc. (ETS).

PATENTS

The Company owns a number of patents.  While the company regards its patents as
valuable, it does not consider any of its business materially dependent upon any
single patent.

BACKLOG

The dollar amounts of backlogged orders at May 30, 1998 and May 30, 1997 were
$7,253,000 and $5,593,000, respectively.  During the current fiscal year the 
Company expects to fill all of the orders which were backlogged at May 30, 1998.

EMPLOYEES

At April 30, 1998, the Company employed approximately 955 people.  The Company
is not a party to any collective bargaining agreements.

-------------------------------------------------------------------------------

HACH COMPANY AND SUBSIDIARIES

COMMON STOCK PRICE RANGE AND DIVIDENDS

 
<TABLE>
<CAPTION>

                      COMMON STOCK            CASH     CLASS A COMMON STOCK       CASH
FISCAL                    SALE              DIVIDENDS          SALE             DIVIDENDS
YEAR     QUARTER     HIGH       LOW         PER SHARE    HIGH        LOW        PER SHARE
------------------------------------------------------------------------------------------
<S>      <C>         <C>        <C>         <C>          <C>         <C>        <C>
1998     Fourth      11         9              .03       10 5/8      8             .04
         Third       13 5/8     10             .03       10          8 7/8         .04
         Second      13 3/8     10 3/16        .03       12          9 1/8         .03
         First       21 1/2     14 1/2         .03       ---         ---           .03

1997     Fourth      19 3/4     14 1/2         .03       ---         ---           .03
         Third       19         16 1/4         .03       ---         ---           .03
         Second      20         14 7/8         .03       ---         ---           .03
         First       17 1/2     14 1/2         .03       ---         ---           .03
</TABLE>
 
The Company's Common Stocks trade on the Nasdaq Stock Market under the symbols
HACH and HACHA.  The preceding table sets forth the daily high and low last
sales prices for both classes of the Company's Common Stocks for the periods
indicated, as reported in the Wall Street Journal, together with the amounts of
dividends paid for the fiscal years ended April 30, 1998 and 1997.  These prices
represent quotations between dealers in securities, do not include retail
markdowns or commissions and do not necessarily represent "actual transactions."
The current quoted prices for both classes of the Company's stocks are listed
daily in the Wall Street Journal in the Nasdaq National Market System section.
On April 30, 1998 there were approximately 970 holders of record of the
Company's Common Stock and 960 holders of record of the Company's Class A Common
Stock.

                                                                              15

<PAGE>

HACH COMPANY AND SUBSIDIARIES

COMPARATIVE FINANCIAL DATA--10-YEAR SUMMARY
(IN THOUSANDS EXCEPT RATIO AND PER SHARE DATA)

<TABLE>
<CAPTION>

SUMMARY OF OPERATIONS        Years ended April 30,               1998            1997           1996
----------------------------------------------------------------------------------------------------
<S>                                                         <C>             <C>            <C>
Net sales:
 United States . . . . . . . . . . . . . . . . . .          $  82,740       $  77,688      $  73,472
 International . . . . . . . . . . . . . . . . . .             45,318          43,792         40,813
----------------------------------------------------------------------------------------------------
 Worldwide . . . . . . . . . . . . . . . . . . . .            128,058         121,480        114,285


Cost of sales. . . . . . . . . . . . . . . . . . .             64,854          62,342         57,839
Selling, general and administrative expense. . . .             35,566          33,385         33,000
Research and development expense . . . . . . . . .              8,360           8,459          7,464
Provision to reduce carrying value of
 electrochemical assets. . . . . . . . . . . . . .                ---             ---            ---
Purchased research and development expense . . . .              3,000             ---            ---
Interest income. . . . . . . . . . . . . . . . . .                994           1,799          1,324
Interest expense . . . . . . . . . . . . . . . . .              1,588              13              6
Income taxes . . . . . . . . . . . . . . . . . . .              6,584           6,585          6,046
Net income . . . . . . . . . . . . . . . . . . . .              9,100*         12,495         11,254
Per share data:+++
 Net income: basic . . . . . . . . . . . . . . . .               0.52*           0.55           0.50
 Net income: diluted . . . . . . . . . . . . . . .               0.51*           0.55           0.50
 Cash dividends per share--Common. . . . . . . . .               0.12            0.12           0.11
 Cash dividends per share--Class A . . . . . . . .               0.14            0.12           0.11

OTHER DATA
Current ratio. . . . . . . . . . . . . . . . . . .               2.71            4.71           4.59
Working capital. . . . . . . . . . . . . . . . . .          $  29,440       $  53,332      $  41,886
Property, plant and equipment, net . . . . . . . .             36,099          28,804         29,112
Total assets . . . . . . . . . . . . . . . . . . .            102,350         105,580         93,655
Long-term liabilities. . . . . . . . . . . . . . .             30,765           1,726          1,347
Stockholders' equity . . . . . . . . . . . . . . .             39,819          87,289         78,820
Equity per share at year end +++ . . . . . . . . .               2.26            3.84           3.47
Sales per employee . . . . . . . . . . . . . . . .                146             140            132
Weighted average shares outstanding: basic +++ . .             17,643          22,730         22,736
Weighted average shares outstanding: diluted +++               17,751          22,762         22,736
</TABLE>

 
16


<PAGE>

<TABLE>
<CAPTION>

 
                                                   1995         1994          1993        1992        1991       1990       1989
---------------------------------------------------------------------------------------------------------------------------------
<S>                                           <C>          <C>           <C>         <C>         <C>        <C>        <C>
Net sales:
 United States . . . . . . . . . . . . . . .  $  69,867    $  69,100     $  62,497   $  57,148   $  50,476  $  45,645  $  40,598
 International . . . . . . . . . . . . . . .     35,402       31,269        31,504      27,591      21,844     17,456     15,253
---------------------------------------------------------------------------------------------------------------------------------
 Worldwide . . . . . . . . . . . . . . . . .    105,269      100,369        94,001      84,739      72,320     63,101     55,851

Cost of sales. . . . . . . . . . . . . . . .     51,994       49,534        46,623      41,938      36,094     32,193     27,392
Selling, general and administrative expense.     32,240       30,802        28,685      25,936      22,360     18,912     17,619
Research and development expense . . . . . .      6,875        6,586         5,752       4,951       4,372      3,991      3,519
Provision to reduce carrying value of  . . .
 electrochemical assets. . . . . . . . . . .        775          ---           ---         ---         ---        ---        ---
Purchased research and development expense .        ---          ---           ---         ---         ---        ---        ---
Interest income. . . . . . . . . . . . . . .        661          467           427         312         296        311        332
Interest expense . . . . . . . . . . . . . .          1           12            48         119         177        244        283
Income taxes . . . . . . . . . . . . . . . .      4,775        4,842         4,700       4,357       3,648      3,007      2,815
Net income . . . . . . . . . . . . . . . . .      9,270+       9,508++       8,620       7,750       5,965      5,065      4,555
Per share data: +++
 Net income: basic . . . . . . . . . . . . .        .41+        0.42++        0.38        0.34        0.26       0.22       0.20
 Net income: diluted . . . . . . . . . . . .        .41+        0.42++        0.38        0.34        0.26       0.22       0.20
 Cash dividends per share--Common. . . . . .       0.09         0.07          0.06        0.05        0.05       0.04       0.03
 Cash dividends per share--Class A . . . . .       0.09         0.07          0.06        0.05        0.05       0.04       0.03

OTHER DATA
Current ratio. . . . . . . . . . . . . . . .       4.55         4.14          3.49        2.72        2.79       2.89       2.76
Working capital. . . . . . . . . . . . . . .  $  38,596    $  30,699     $  25,124   $  20,977   $  17,631  $  16,546  $  14,555
Property, plant and equipment, net . . . . .     29,128       28,903        29,270      28,094      25,024     21,678     18,221
Total assets . . . . . . . . . . . . . . . .     84,258       74,358        66,971      61,619      52,849     47,217     42,530
Long-term liabilities. . . . . . . . . . . .      2,070        2,081         2,246       2,104       2,593      3,131      3,629
Stockholders' equity . . . . . . . . . . . .     71,328       62,497        54,651      47,301      40,401     35,328     30,610
Equity per share at year end +++ . . . . . .       3.13         2.74          2.40        2.08        1.78       1.56       1.35
Sales per employee . . . . . . . . . . . . .        120          112           105          98          90         85         82
Weighted average shares outstanding:
 basic +++ . . . . . . . . . . . . . . . . .     22,771       22,772        22,724      22,697      22,639     22,623     22,610
Weighted average shares outstanding:
 diluted +++ . . . . . . . . . . . . . . . .     22,771       22,788        22,773      22,731      22,639     22,623     22,610
</TABLE>

 
*Includes a one-time charge of $3,000,000 or $.17 per share for purchased
research and development costs associated with the acquisition of Environmental
Test Systems, Inc. (ETS).
+Net income for 1995 includes a one-time pretax charge of $775,000 or $.03 per
share after tax for the provision to reduce carrying value of electrochemical
assets.
++Net income for 1994 includes a benefit of $448,000 or $.02 per share for the
cumulative effect of a change in accounting for income taxes.
+++All share and per share amounts have been restated to give effect to the
adoption of SFASNo. 128 in third quarter of fiscal year 1998, the two-for-one
stock split in October 1997, the five-for-four stock split in April 1994, the
three-for-two stock split in June 1992, and the five-for-four stock splits in
fiscal 1991, 1990 and 1989.

                                                                              17


<PAGE>

HACH COMPANY AND SUBSIDIARIES

MANAGEMENT'S REPORT AND REPORT OF INDEPENDENT ACCOUNTANTS


Stockholders of Hach Company:

The information presented in this Annual Report was prepared by your Company's
management.  The financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis.  These principles
require choices among alternatives and numerous estimates of financial matters.
We believe that the accounting principles chosen are appropriate in the
circumstances and the estimates and judgments involved in Hach's financial
reporting are reasonable.  All other financial and operating data included in
this Annual Report are presented to provide information we believe is useful to
investors.

Management recognizes its responsibility for the integrity and objectivity of
the information presented.  To meet this responsibility, management maintains a
system of internal accounting controls designed to provide reasonable assurance
that the financial reports are fairly presented and that our employees comply
with our stated policies and procedures, including policies on the ethical
conduct of business.

The Audit Committee recommended and the Board of Directors approved the
appointment of PricewaterhouseCoopers LLP as independent auditor for the
Company.  The PricewaterhouseCoopers LLP report on the financial statements is
presented in this Annual Report.

Audit and related activities of PricewaterhouseCoopers LLP are conducted
throughout the year for the purposes of the annual audit and reviews of interim
financial statements.  The audit of the financial statements is conducted in
accordance with generally accepted auditing standards and includes tests of
internal controls and accounting records as deemed necessary.

The Audit Committee of the Board of Directors, which is composed solely of
outside directors, performs an oversight role relating to Hach's public
financial reporting.  The Audit Committee meets at least two times a year with
management and PricewaterhouseCoopers LLP, both privately and collectively, to
discuss internal accounting control and financial reporting matters.
PricewaterhouseCoopers LLP has access to the Audit Committee to discuss any
matter.


KATHRYN HACH-DARROW
Chairman of the Board


GARY R. DREHER
Vice President and
Chief Financial Officer


To the Stockholders and Board of Directors of Hach Company:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, stockholders' equity, and cash flows present
fairly, in all material respects, the financial position of Hach Company and
Subsidiaries at April 30, 1998 and 1997, and the results of their operations and
their cash flows for each of the three years in the period ended April 30, 1998,
in conformity with generally accepted accounting principles.  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 audits.  We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the opinion expressed
above.


PRICEWATERHOUSECOOPERS LLP
Denver, Colorado
June 4, 1998

18

<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)

 
<TABLE>
<CAPTION>

                                                        1998           1997           1996
------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>
Net sales                                           $128,058       $121,480       $114,285
Cost of sales                                         64,854         62,342         57,839
------------------------------------------------------------------------------------------
   Gross profit                                       63,204         59,138         56,446
Selling, general and administrative expense           35,566         33,385         33,000
Research and development expense                       8,360          8,459          7,464
Purchased research and development expense             3,000            ---            ---
------------------------------------------------------------------------------------------
   Income from operations                             16,278         17,294         15,982
Interest income                                          994          1,799          1,324
Interest expense                                      (1,588)           (13)            (6)
------------------------------------------------------------------------------------------
   Income before income taxes                         15,684         19,080         17,300
Income tax expense                                     6,584          6,585          6,046
------------------------------------------------------------------------------------------
   Net income                                         $9,100        $12,495        $11,254
------------------------------------------------------------------------------------------
Net income per share: basic                           $ 0.52        $  0.55        $  0.50
Net income per share: diluted                         $ 0.51        $  0.55        $  0.50
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Weighted average shares outstanding: basic            17,643         22,730         22,736
Weighted average shares outstanding: diluted          17,751         22,762         22,736
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

                                                                             19
<PAGE>


HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
APRIL 30, 1998 AND 1997
(IN THOUSANDS EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                                     1998                1997
----------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>                 <C>
ASSETS
Current assets:
 Cash and cash equivalents                                                        $  4,358            $ 14,575
 Marketable securities, held to maturity                                               680              19,100
 Accounts receivable, less reserves of $305 and $249, respectively                  20,937              17,829
 Inventories, net                                                                   15,360              11,798
 Deferred tax assets and other current assets                                        5,282               4,416
----------------------------------------------------------------------------------------------------------------
Total current assets                                                                46,617              67,718
----------------------------------------------------------------------------------------------------------------

Property, plant and equipment, at cost:
 Buildings and improvements                                                         30,615              23,404
 Machinery and equipment                                                            52,412              46,555
----------------------------------------------------------------------------------------------------------------
                                                                                    83,027              69,959

 Less: allowance for depreciation and amortization                                  47,211              42,141
----------------------------------------------------------------------------------------------------------------
                                                                                    35,816              27,818

 Land                                                                                1,083                 986
----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment                                                   36,899              28,804
----------------------------------------------------------------------------------------------------------------

Marketable securities, held to maturity                                                836               7,406
Acquired product technology                                                         12,199                 ---
Goodwill                                                                             3,204                 ---
Other assets                                                                         2,595               1,652
----------------------------------------------------------------------------------------------------------------

Total assets                                                                      $102,350            $105,580
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------

LIABILITIES
Current liabilities:
 Current portion of long term debt                                                $  1,069            $    ---
 Accounts payable                                                                    4,591               4,044
 Accrued liabilities:
  Compensation                                                                       1,407               1,082
  Compensated absences                                                               3,933               3,655
  Profit sharing                                                                     3,483               3,473
  Income taxes payable                                                                 720                 753
  Other                                                                              1,974               1,379
----------------------------------------------------------------------------------------------------------------
  Total current liabilities                                                         17,177              14,386
----------------------------------------------------------------------------------------------------------------
Long term liabilities                                                                2,771               1,726
Long term debt                                                                      35,994                 ---
Deferred income taxes                                                                6,589               2,179
----------------------------------------------------------------------------------------------------------------
Total liabilities                                                                   62,531              18,291
----------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
Common stock, $1 par value; authorized 25,000,000 shares; issued 11,622,953 shares  11,623              11,623
Class A common stock, $1 par value; authorized 20,000,000 shares in 1998;
  issued 11,622,953 shares                                                          11,623                 ---
Capital contributed in excess of par value of common stock                             ---                 453
Retained earnings                                                                   72,714              76,944
Unearned ESOP shares                                                                (2,629)                ---
Cumulative currency translation adjustment                                            (437)                338
----------------------------------------------------------------------------------------------------------------

                                                                                    92,894              89,358

Less: shares held in treasury, at cost (2,667,001 Common, 3,123,074 Class A
 in 1998 and 254,356 Common, 254,356 Class A in 1997)                              (53,075)             (2,069)
----------------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                          39,819              87,289
----------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                        $102,350            $105,580
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


20
<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>


                                          COMMON       CAPITAL      RETAINED      UNEARNED   CUMULATIVE  SHARES HELD     TOTAL
                                         STOCK, $1  CONTRIBUTED IN  EARNINGS        ESOP      CURRENCY   IN TREASURY, STOCKHOLDERS'
                                         PAR VALUE  EXCESS OF PAR                  SHARES   TRANSLATION     AT COST      EQUITY
                                                      VALUE OF                               ADJUSTMENT
                                                     COMMON STOCK
----------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>        <C>             <C>           <C>       <C>          <C>          <C>
Balance April 30, 1995                     $11,623       $  148      $58,425          ---       $2,405      $(1,273)     $71,328

Net income                                     ---          ---       11,254          ---          ---          ---       11,254
Cash dividends,
 $.11 per share each class                     ---          ---       (2,502)         ---          ---          ---       (2,502)
Purchase of treasury
 stock (47,638 shares of each class)           ---          ---          ---          ---          ---         (736)        (736)
Stock options exercised, net
 (21,722 shares of each class)                 ---          168          ---          ---          ---           77          245
Foreign currency
 translation adjustment                        ---          ---          ---          ---         (769)         ---         (769)
----------------------------------------------------------------------------------------------------------------------------------
Balance April 30, 1996                     $11,623       $  316      $67,177          ---       $1,636      $(1,932)     $78,820

Net income                                     ---          ---       12,495          ---          ---          ---       12,495
Cash dividends,
 $.12 per share each class                     ---          ---       (2,728)         ---          ---          ---       (2,728)
Purchase of treasury
 stock (19,500 shares of each class)           ---          ---          ---          ---          ---         (326)        (326)
Shares purchased under
 employee stock purchase plan                  ---          137          ---          ---          ---          189          326
Foreign currency
 translation adjustment                        ---          ---          ---          ---       (1,298)         ---       (1,298)
----------------------------------------------------------------------------------------------------------------------------------
BALANCE APRIL 30, 1997                     $11,623       $  453      $76,944          ---        $ 338      $(2,069)     $87,289

NET INCOME                                     ---          ---        9,100          ---          ---          ---        9,100
CASH DIVIDENDS,
 $.14 PER SHARE CLASS A COMMON
 $.12 PER SHARE COMMON                         ---          ---       (2,142)         ---          ---          ---       (2,142)
STOCK SPLIT, CLASS A COMMON                 11,623         (453)     (11,121)         ---          ---          (49)         ---
PURCHASE OF TREASURY STOCK
 (3,173,355 SHARES COMMON,
 3,176,223 SHARES CLASS A COMMON)              ---          ---          ---          ---          ---      (60,642)     (60,642)
ISSUANCE OF TREASURY STOCK - ETS
 ACQUISITION (697,915 SHARES COMMON,
 246,602 SHARES CLASS A COMMON)                ---          ---          ---          ---          ---        8,661        8,661
STOCK OPTIONS EXERCISED, NET
 (62,795 SHARES COMMON,
 60,903 SHARES CLASS A COMMON)                 ---          ---          (67)         ---          ---        1,024          957
PURCHASE OF UNEARNED ESOP SHARES               ---          ---          ---       (2,629)         ---          ---       (2,629)
FOREIGN CURRENCY
 TRANSLATION ADJUSTMENT                        ---          ---          ---          ---         (775)         ---         (775)
----------------------------------------------------------------------------------------------------------------------------------
BALANCE APRIL 30, 1998                     $23,246       $  ---      $72,714      $(2,629)       $(437)    $(53,075)     $39,819
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.


                                                                              21
<PAGE>

HACH COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 1998, 1997 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>


                                                                                     1998           1997           1996
--------------------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>           <C>             <C>
Cash flows from operating activities:
 Net income                                                                        $ 9,100       $ 12,495        $11,254
 Adjustments to reconcile net income to net
  cash provided by operating activities:
 Depreciation                                                                        6,233          6,196          6,049
 Write-off of purchased research and development                                     3,000             --             --
 (Benefit) for deferred income taxes                                                (1,011)           (38)          (277)
 Loss on disposal of equipment                                                          54             40             63
Changes in current assets and liabilities, excluding effects of acquisition:
 (Increase) decrease in accounts receivable                                           (639)        (1,983)           490
 (Increase) decrease in inventories                                                 (2,024)           971         (1,038)
 (Increase) decrease in other current assets                                          (139)          (376)           798
  Increase (decrease) in accounts payable                                               (5)         1,218             (9)
  Increase in accrued liabilities                                                    1,387          1,873          2,170
--------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                                           15,956         20,396         19,500
--------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
 Acquisition, net of cash acquired                                                  (6,655)            --             --
 Proceeds from sale of equipment                                                        14             11            271
 Capital expenditures                                                              (11,528)        (6,163)        (6,488)
 Purchases of investments held-to-maturity                                          (2,601)       (21,727)       (23,397)
 Proceeds from maturities of short-term investments                                 27,591         17,341          9,587
 (Increase) decrease in other assets                                                  (647)            32           (395)
--------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by investing activities                                     6,174        (10,506)       (20,422)
--------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
 Capital lease obligations                                                             166             --             --
 Payments on capital lease obligations                                                 (32)            --             (6)
 Dividends paid                                                                     (2,142)        (2,728)        (2,502)
 Proceeds from borrowings                                                           30,000             --             --
 Purchases of treasury stock                                                       (60,642)          (326)          (736)
 Shares purchased under employee stock purchase plan                                   957            326            245
--------------------------------------------------------------------------------------------------------------------------
Net cash used by financing activities                                              (31,693)        (2,728)        (2,999)
Effects of exchange rate changes                                                      (654)        (1,074)          (642)
--------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                               (10,217)         6,088         (4,563)
Cash and cash equivalents at the beginning of the year                              14,575          8,487         13,050
--------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year                                   $ 4,358        $14,575        $ 8,487
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------

Supplemental disclosures of cash flow information:
 Income taxes paid during the year                                                 $ 7,686        $ 6,231        $ 5,028
 Interest paid during the year, net of amounts capitalized                         $ 1,553        $    --        $    --

Details of acquisition:
 Fair value of assets                                                              $26,845
 Liabilities                                                                        10,525
------------------------------------------------------------------------------------------
 Cash and equity paid                                                              $16,320
 Less equity transferred                                                             8,661
 Less cash acquired                                                                  1,004
------------------------------------------------------------------------------------------
 Net cash paid for acquisition                                                     $ 6,655
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.


22
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries.  All significant intercompany transactions and
account balances have been eliminated in consolidation.

Certain amounts in the financial statements for prior years have been
reclassified to conform with the current year's presentation.

CASH EQUIVALENTS AND CONCENTRATIONS OF CREDIT RISK
Cash and cash equivalents include currency on hand, demand deposits with banks
or other financial institutions, and other highly liquid securities purchased
with a maturity of three months or less.  Financial instruments which
potentially subject the Company to concentrations of credit risk consist
principally of cash and cash equivalents.  The Company places its cash and cash
equivalents with high-credit-quality financial institutions.  At times, these
deposits may exceed federally insured limits.  The Company has not experienced
any losses in such accounts.

The Company's concentration of credit risk with respect to accounts receivable
is limited due to a large customer base and its geographic dispersion.

INVESTMENTS
The Company accounts for investments in accordance with SFASNo. 115, "Accounting
for Certain Investments in Debt and Equity Securities."  This accounting
standard requires companies to classify securities as held-to-maturity, trading
or available-for-sale. Prior to July 1997, the majority of the Company's
marketable securities were classified as held to maturity.  In July 1997 the
Company sold approximately $23 million of investments that had been classified
as held-to-maturity to finance the repurchase of 6,314,446 shares of the
Company's common stock.  Upon the sale of these investments, the Company
realized losses totaling $44,000.  The cost of securities sold is based on the
specific identification method.  The carrying amount of securities approximated
the fair value at April 30, 1998, and 1997.

INVENTORIES
Inventories are valued at the lower of cost or market.  In general, cost is
determined on the basis of the last-in, first-out (LIFO), first-in, first-out
(FIFO) or the average cost methods.

PROPERTY, PLANT AND EQUIPMENT
The property, plant and equipment are stated at cost.  Depreciation and
amortization are computed by using the straight-line method based on estimated
useful lives of the related assets or the lease term.  Estimated useful lives
range from three to 30 years.

Maintenance and repairs are charged to expense as incurred while major renewals
and improvements are capitalized.

The Company capitalizes interest costs on certain assets that require a period
of time to prepare them for their intended use.  Total interest costs incurred
during fiscal year 1998 were $1,693,000, of which $105,000 were capitalized to
fixed assets.

The cost and related allowances for depreciation of assets sold or otherwise
disposed of are deducted from the related accounts and resulting gains or losses
are reflected in operations.

SOFTWARE COSTS
In March 1998, the American Institute of Certified Public Accountants issued a
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use."  This statement addresses
costs that are capitalizable and costs that must be expensed, and provides
guidance on amortization periods for internal use software.  This SOP is
required to be adopted for fiscal years beginning after December 15, 1998, with
early adoption encouraged.  The Company's existing accounting policy for
software development costs is in conformity with the provisions of this SOP.  As
such, the Company adopted this statement in the fourth quarter of fiscal year
1998, resulting in no financial statement impact.  Amounts of unamortized
software costs were $2,215,000 and $1,320,000 as of April 30, 1998 and 1997
respectively.

INCOME TAXES
The Company accounts for taxes using an asset and liability approach.  The asset
and liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of those assets and liabilities.

FOREIGN CURRENCY TRANSLATION
Foreign asset and liability accounts are converted into U.S. dollars using the
exchange rate in effect at the end of the year, and revenue and expense accounts
are converted at the average exchange rate in effect during the year.

The Company's European subsidiary occasionally enters into foreign exchange
forward contracts in an attempt to mitigate risk of currency fluctuations on a
portion of the anticipated inventory purchases to be made from Hach Company.
Gains and losses on these contracts are included in the determination of net
income.  As of April 30, 1998 and April 30, 1997, the Company had no forward
contracts.

REVENUE RECOGNITION
The Company sells a large number of different tangible products and the average
size of a customer order is relatively small.  Revenue is recognized upon
passage of title from the Company to customers.  Customers purchasing products
from the Company may return the products within a 30-day period if they are not
satisfied.  Estimated returns are charged against earnings in the period the
original sale occurred.

ADVERTISING
Costs associated with advertising are expensed in the year incurred except for
direct-response advertising costs.  Direct-response advertising costs, mainly
related to the Products for Analysis catalog, are recorded as prepaid and
amortized over the life of the associated program which is generally one year.
Advertising expense was $4,051,000, $3,741,000 and $4,352,000 in 1998, 1997 and
1996, respectively.

USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect amounts reported therein.  Due to the inherent uncertainty involved in
making estimates, actual results reported in future periods may be based upon
amounts which differ from those estimates.

NEW ACCOUNTING STANDARDS
In June 1997, the FASB issued SFAS No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements,
in order to measure all changes in equity of an enterprise that result from
transactions and other economic events of the period other than transactions
with owners.  Comprehensive income, as defined by SFAS No. 130, is the total of
net income and other comprehensive income (all other non-owner changes in
equity).  The Company's foreign currency translation adjustment is categorized
as an element of other comprehensive income under this statement.  SFAS No. 130
is effective for fiscal years beginning after December 15, 1997, and is
applicable for interim and annual periods.  As such, the Company will adopt this
statement in the first quarter of fiscal year 1999.  The result of adoption will
be a revised display of the Company's foreign currency translation adjustment.


                                                                              23
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION.  SFAS No. 131 requires certain financial and
supplementary information to be disclosed on an annual and interim basis for
each reportable segment of an enterprise.  Reportable segments, as defined by
this statement, correspond to the way management organizes units and evaluates
performance internally, and may be based upon products, geography, legal entity,
management structure or combination of these methods.  SFAS No. 131 is effective
for years beginning after December 15, 1997.  Companies would be required to
restate prior period information upon adoption.  The Company will adopt SFAS No.
131 for the fiscal year ending April 30, 1999.  The adoption of SFAS No. 131 
will result in additional disclosures relating to the Company's reportable 
segments.

2. BUSINESS COMBINATION

On April 30, 1998, the Company completed the acquisition of Environmental Test
Systems ("ETS").  ETS is engaged in the business of developing and manufacturing
chemical test strips measuring water quality for both consumer and industrial
applications.  The transaction has been accounted for as a purchase.  Under the
terms of the agreement, shares of the Company's common stock worth approximately
$8,661,000 and $7,659,000 in cash were exchanged for all outstanding shares of
ETS.  A one-time charge of $3,000,000 was recorded in the fourth quarter for
purchased research and development costs associated with the acquisition of ETS.
The amount of $3,000,000 allocated to purchased research and development was
determined through established valuation techniques in the water analysis
industry and was expensed upon acquisition, because technological feasibility
had not been established and no future alternative uses existed.  The Company
acquired product technology from ETS valued at $12,199,000.  This acquired
product technology, valued based on future cash flows, will be amortized on a
straight-line basis over twenty years.  Amounts allocated to goodwill and
intangibles will be amortized on a straight-line basis up to thirty years.

The purchase price allocated to the acquired assets and assumed liabilities
based on fair values was as follows (in thousands):

<TABLE>
-----------------------------------------------------------------------
<S>                                                            <C>
Cash                                                           $ 1,004
Accounts receivable                                              2,470
Inventory                                                        1,538
Other current assets                                               145
Property and equipment                                           2,990
Purchased research and development                               3,000
Acquired product technology                                     12,199
Goodwill and intangibles                                         3,499
Current and long-term liabilities                               (2,320)
Long-term debt                                                  (5,994)
Deferred income tax liabilities                                 (4,840)
Unearned ESOP shares                                             2,629
-----------------------------------------------------------------------
Total                                                          $16,320
-----------------------------------------------------------------------
-----------------------------------------------------------------------
</TABLE>

The following unaudited pro forma information presents a summary of consolidated
results of operations of the Company and ETS as if the acquisition had occurred
at the beginning of fiscal year 1997, with pro forma adjustments to give effect
to amortization of acquired technology and goodwill, interest expense on
acquisition debt and certain other adjustments, together with related income tax
effects.

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)      1998                1997
-----------------------------------------------------------------------
<S>                                       <C>                 <C>
Net sales                                 $138,900            $134,697
Net income                                  12,217              10,768
Net income per share--basic                    .66                 .45
Net income per share--diluted                  .65                 .45
</TABLE>

In management's opinion, the unaudited pro forma combined results of operations
are not indicative of the actual results that would have occurred had the
acquisition been consummated at the beginning of fiscal 1998 or at the beginning
of fiscal 1997 or of future operations of the combined companies under the
ownership and management of the Company.

3. INVENTORIES

Components of inventory at April 30 were:

<TABLE>
<CAPTION>
                                                     (THOUSANDS OF DOLLARS)
                                                        1998           1997
---------------------------------------------------------------------------
<S>                                                  <C>            <C>
Raw materials and purchased parts                    $ 4,545        $ 2,811
Work in process                                        1,555          1,534
Finished goods                                         8,882          7,031
Resale                                                   378            422
---------------------------------------------------------------------------
Inventories, net                                     $15,360        $11,798
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>

Inventory valuation allowances at April 30, 1998, 1997 and 1996 were $1,003,000,
$555,000 and $188,000 respectively.

Management believes the LIFO method, which results in better matching of current
costs with current revenues, minimizes inflation-induced inventory profits and
thus more clearly reflects the results of operations.  The cost of inventories
stated under the LIFO method for 1998, was approximately 75% and 1997 was
approximately 80% of the value of total inventories.

For purposes of comparison to companies not utilizing the LIFO method, the
following information is presented.  If all inventories had been determined
using the current replacement cost at April 30, 1998 and 1997, reported
inventories would have been $2,877,000 and $3,184,000 higher, respectively.
Reported net income would have been $190,000 ($.01 per common share) lower for
fiscal 1998, $226,000 ($.02 per common share) higher for fiscal 1997, and
$94,000 ($.004 per common share) higher for fiscal year 1996.  The impact on
reported net income utilizing LIFO, as opposed to the current replacement cost
method, has been computed by taking the change from year to year in the
difference between the inventory valuation under LIFO and the inventory
valuation under current replacement costs and tax affecting such difference by
38% for 1998, 1997 and for 1996, the approximate incremental tax rate for each
year.

4. LONG-TERM DEBT

Long-term debt consists of the following at April 30, 1998:
<TABLE>
<CAPTION>
(IN THOUSANDS)
---------------------------------------------------------------------------
<S>                                                                 <C>
Borrowings under revolving credit agreement                         $30,000
ESOP debt guarantee                                                   2,629
Subordinated notes payable                                            4,191
Bank note payable                                                       243
---------------------------------------------------------------------------
Total                                                                37,063
Less current portion                                                  1,069
---------------------------------------------------------------------------
Long-term debt                                                      $35,994
---------------------------------------------------------------------------
---------------------------------------------------------------------------
</TABLE>

During the first quarter of 1998, the Company entered into a revolving credit
agreement with a bank.  Under the Revolving Credit Agreement, the Company may
borrow up to $40,000,000 under a five-year unsecured revolving credit facility,
which matures on July 1, 2002.  The Agreement has restrictions on amounts
outstanding which consist of (i) $40,000,000 to June 30, 2000; (ii) $32,500,000
form July 1, to June 30, 2001; and (iii) $22,500,000 from July 1, 2001 to the
revolving Credit Maturity Date of July 1, 2002.  At April 30, 1998, the Company
had $30 million outstanding.  The Revolving Credit Agreement allows the Company
to borrow at interest rates that vary based on the Banks Reference Rate or the
London Interbank Offered Rate (LIBOR), at the option of the Company.  The
interest rate as of April 30, 1998, on the $30 million was 6.67%.  The interest
period for the loan is 90 days, which began on April 6, 1998.  The Company is
also required to pay a commitment fee of 12.5 or 25.0 basis points per annum,
depending on certain financial ratios, on the average daily amount of unused
funds.  The carrying value of the long-term debt approximates fair value.

ESOP debt guarantee represents borrowings by the ETS ESOP trust which have been
irrevocably guaranteed by the Company.  The subordinated notes payable represent
notes payable to former ETS shareholders.


24
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)


The revolving credit agreement, ESOP debt guarantee, subordinated note payable
and bank note payable contain similar restrictions relating to dividends,
investments, guarantees and other borrowings and maintenance of certain
financial ratios.

Subsequent to year-end the Company borrowed an additional $3,300,000 under the
revolving credit agreement.  The proceeds from the revolving credit agreement
were used to pay off subordinated notes payable.

5. INCOME TAXES

Income before income tax expense consisted of the following:

<TABLE>
<CAPTION>
                                               (THOUSANDS OF DOLLARS)
                                         1998           1997           1996
----------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>
Income before income taxes:
 Domestic                             $15,033        $16,559        $13,386
 Foreign                                  651          2,521          3,914
----------------------------------------------------------------------------
                                      $15,684        $19,080        $17,300
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income tax expense:
 Current:
  Federal                              $6,639        $ 4,852        $ 4,122
  State                                   703            775            631
  Foreign                                 253            997          1,570
----------------------------------------------------------------------------
                                        7,595          6,624          6,323
 Deferred:
  Federal                             $  (912)       $   (63)       $  (227)
  State                                   (95)            30            (46)
  Foreign                                  (4)            (6)            (4)
----------------------------------------------------------------------------
                                       (1,011)           (39)          (277)
----------------------------------------------------------------------------
Total                                 $ 6,584        $ 6,585        $ 6,046
----------------------------------------------------------------------------
----------------------------------------------------------------------------
</TABLE>

Components of the net deferred tax assets (liabilities) resulting from
differences in book and tax accounting methods are as follows:

<TABLE>
<CAPTION>


NET DEFERRED TAX ASSET (LIABILITY)                           (THOUSANDS OF DOLLARS)

                                                        1998           1997           1996
-------------------------------------------------------------------------------------------
<S>                                                  <C>            <C>            <C>
Deferred tax assets:
 Vacation pay                                        $ 1,171        $ 1,104        $ 1,087
 Inventory capitalization                                969            654            527
 Deferred compensation                                   909            652            376
 Intercompany profits                                    231            271            120
 Bad debt and sales return reserves                      132            ---            ---
 Marketable securities                                   ---            114            108
 Employee benefit plans                                  ---            ---             83
 Tax attribute carryovers                                114            ---            ---
 Other                                                   101            113            122
-------------------------------------------------------------------------------------------
Total deferred tax assets                              3,627          2,908          2,423

Deferred tax liabilities:

 Accelerated depreciation                             $1,875         $2,103         $1,749
 Foreign deferrals                                        35             86             91
 Employee benefit plans                                   74             97            ---
 Acquired product technology                           4,758            ---            ---
-------------------------------------------------------------------------------------------
Total deferred tax liabilities                         6,742          2,286          1,840

Net deferred tax asset (liability)                   $(3,115)        $  622         $  583
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------

Current deferred tax asset                             3,474          2,801          2,397
-------------------------------------------------------------------------------------------
Noncurrent deferred tax liability                      6,589          2,179          1,814
-------------------------------------------------------------------------------------------
Net deferred tax asset (liability)                   $(3,115)        $  622        $   583
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>


The Company believes, based upon past earnings, that all of the deferred tax
assets will be realized.  Accordingly, no valuation allowance has been provided.

Effective tax rates on income before income taxes for the years ended April 30,
1998, 1997 and 1996 were 42%, 35% and 35%, respectively.  The effective income
tax rate for the years ended April 30 varies from the statutory Federal income
tax rate as follows:

<TABLE>
<CAPTION>


                                                              (THOUSANDS OF DOLLARS)
                                                        1998           1997           1996
-------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>            <C>
Computed statutory expense                            $5,489         $6,487         $5,882
State income tax, net                                    379            512            443
Difference between U.S.
 statutory rates and foreign
 effective rates                                          22            135            235
Foreign sales corporation                               (274)          (212)          (136)
Tax credits, net                                        (300)          (352)          (306)
Purchased research and development                     1,125            ---            ---
Other, net                                               143             15            (72)
-------------------------------------------------------------------------------------------
                                                      $6,584         $6,585         $6,046
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>


Undistributed earnings intended to be reinvested indefinitely by the foreign
subsidiaries totaled $4,818,000 at April 30, 1998.  These earnings would become
taxable upon the sale or liquidation of the foreign subsidiaries or upon the
remittance of dividends.  The determination of the deferred tax liability
related to these undistributed earnings is not practicable and, accordingly, no
U.S. deferred tax has been recorded.

6. EMPLOYEE BENEFITS

EMPLOYEE PROFIT SHARING AND SAVINGS PLANS
The Company has an employee profit-sharing plan covering substantially all
regular employees of the Company with the maximum contribution limited to the
amount allowable for federal tax purposes.  Each year the Company's Board of
Directors approves an amount the Company will contribute to the plan.  The
Company has a savings plan which qualifies under Section 401(k) of the Internal
Revenue Code.  Eligible employees may contribute from 1% to 12% of their income
on a pretax basis to this savings plan.  The Company matches 50% of the first 4%
of the employee's contribution.  The Company's annual contributions under these
Plans were $2,591,000 in 1998, $2,638,000 in 1997, and $2,385,000 in 1996.

EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains two Employee Stock Ownership Plans (ESOP).  The Company
accounts for both plans in accordance with Employer's Accounting for Employee
Stock Ownership Plans (SOP 93-6).  The Hach Company ESOP is a noncontributing
plan established to acquire shares of the Company's common stocks for the
benefit of eligible employees.  Each year the Company's Board of Directors
approves an amount the Company will contribute to the plan.  The Company
contributions to the plan were $891,000 in 1998, $917,000 in 1997, and $829,000
in 1996.  As of April 30, 1998, all shares in the Hach Company ESOP were
allocated to participants.

As part of the acquisition of ETS, the Company assumed the Environmental Test
System ESOP.  The ETS ESOP was established in 1996 for the benefit of
ETS employees.  The ETS ESOP trust acquired shares of ETS with the proceeds of a
bank loan that is guaranteed by the Company and is recorded in the Company's
consolidated balance sheet at April 30, 1998.  All ETS shares were converted to
Hach Company Common shares at the time the acquisition was completed.

The Company's contributions to the ESOP, plus dividends paid on shares held by
the ESOP, are used to repay the loan principal and interest.  As the ESOP debt 
is repaid, shares held by the ESOP are released from collateral and allocated to
qualified ESOP participants.

At April 30, 1998, the ETS ESOP trust held 476,041 shares of Hach Company Common
stock of which 59,505 shares were allocated to participants, 7,934 shares were
committed to be released, and 408,602 shares were unreleased.


                                                                              25
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>


                                                      Common Shares                        Class A Common Shares
                                                Options        Weighted Average         Options        Weighted Average
                                              Outstanding       Exercise Price        Outstanding       Exercise Price
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>              <C>                    <C>              <C>
Balance at April 30, 1995                       278,202             $ 8.800             278,202             $ 8.800
Granted                                         245,000               8.075             245,000               8.075
Exercised                                       (33,827)              4.480             (33,827)              4.480
Expired                                         (20,000)              9.500             (20,000)              9.500
----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1996                       469,375             $ 8.705             469,375             $ 8.705
Granted                                          88,648               8.395              88,648               8.395
----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1997                       558,023             $ 8.655             558,023             $ 8.655
Granted                                          11,708              10.375             262,208               9.539
Exercised                                       (58,884)              8.467             (58,884)              8.467
Expired                                         (93,500)             10.719             (93,500)             10.719
Forfeited                                        (8,418)             10.719              (8,418)             10.719
----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1998                       408,929             $ 8.216             659,429             $ 8.704

Options exercisable at:
 April 30, 1997                                 332,016             $ 9.005             332,016             $ 9.005
 April 30, 1998                                 290,883               8.243             290,883               8.243
</TABLE>


STOCK OPTION PLANS
The Company has two active stock option plans.  Under the 1993 Stock Option Plan
the Company periodically grants certain officers and key employees incentive
stock options to purchase common stock.  A total of 625,000 Common shares and
625,000 Class A Common shares have been reserved for option at a price not less
than the market price on the date of grant.  Options granted under the plan may
not be exercised until one year after the date of grant.  Options are
exercisable in installments on a cumulative basis beginning  in the second year
after grant and expiring not later than ten years from the date of grant.  Under
the 1995 Non-Employee Director Stock Plan, 150,000 Common shares and 150,000
Class A Common shares have been reserved for option.  The option price per share
is equal to the fair market value of a company share on the date of grant.  The
term of each option may not exceed ten years, and an option first becomes
exercisable six months after the option grant date.  Options granted prior to
October, 1997 must be exercised with an equal number of Common and Class A
Common shares being purchased.

A summary of the status of the Company's stock options plans, adjusted for the
stock split in October, 1997, appears above.

EMPLOYEE STOCK PURCHASE PLAN
The Company has an Employee Stock Purchase Plan for all eligible employees.
Under the plan, shares of the Company's common stocks may be purchased at
six-month intervals at 85% of the lower of the fair market value on the first or
the last day of each six-month period.  Employees may purchase shares through
payroll deductions not exceeding 10% of their gross compensation during an
offering period.  During 1998, employees purchased 20,754 Common shares on June
30, 1997 at a price of $8.075 per share, adjusted for the two for one stock
split, and 10,118 Common shares at a price of $9.15 per share and 10,118 Class A
Common shares at a price of $9.17 per share on December 31, 1997.  At April 30,
1998, 441,970 shares of each class of stock were reserved for future issuance.

PRO FORMA INFORMATION
Statement of Financial Accounting Standard No. 123, "Accounting for Stock-Based
Compensation," requires companies to measure employee stock compensation plans
based on the fair value method of accounting.  However, the Statement allows the
alternative of continued use of Accounting Principles Board (APB) Opinion No.
25, "Accounting for Stock Issued to Employees," with pro forma disclosure of net
income and earnings per share determined as if the fair value based method had
been applied in measuring compensation cost.  The Company adopted the new
standard in 1997, using the disclosure method, and elected the continued use of
APB Opinion No. 25 for financial statement purposes.

Pro forma information regarding net income and earnings per share is required to
be determined as if the Company had accounted for its employee stock options
(including shares issued under the Employee Stock Purchase Plan, collectively
called "options") granted subsequent to April 30, 1995 under the fair value
based method of that statement.  The fair value of options granted in 1998, 1997
and 1996 reported below has been estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>


                                                                  Employee Stock
                                     Stock Options             Purchase Plan Shares
-------------------------------------------------------------------------------------------
                                    1998      1997      1996      1998      1997      1996
-------------------------------------------------------------------------------------------
<S>                                 <C>       <C>       <C>       <C>       <C>       <C>
Expected life                        4.0       4.0       4.0        .5        .5        .5
 (in years)
Risk-free interest rate             5.3%      6.2%      5.7%      5.3%      5.4%      5.5%
Volatility                          .330      .233      .233      .330      .233      .233
Dividend yield                      1.5%      1.5%      1.5%      1.5%      1.5%      1.5%
</TABLE>


The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable.  In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility.  Because
the Company's options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can
materially affect the fair value estimate, in the opinion of management, the
existing models do not necessarily provide a reliable single measure of the fair
value of its options.  The weighted average estimated fair value of employee
stock options granted during 1998, 1997 and 1996 was $2.96, $4.18 and $3.87  per
share, respectively.  The weighted average estimated fair value of shares
granted under the Employee Stock Purchase Plan during 1998, 1997 and 1996 was
$3.16, $3.88 and $3.40 respectively.

The majority of the company's stock options are classified as Incentive Stock
Options and therefore, provide no tax benefit for the Company.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period.  The Company's pro
forma information follows:


26
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                1998         1997        1996
------------------------------------------------------------------------------
<S>                                          <C>          <C>         <C>
Pro forma net income (in thousands)          $ 8,512      $12,067     $11,029
Pro forma earnings per share-basic            $  .48      $  .53+     $  .49+
Pro forma earnings per share-diluted          $  .48      $  .53+     $  .49+
</TABLE>

+Restated for the two-for-one stock split effected in the form of a stock
dividend.

Because SFAS No. 123 is applicable only to options granted subsequent to April
30, 1995, the resulting pro forma effect may not be representative of that to be
expected in future years.

At April 30, 1998 options with a weighted average remaining life of 3.41 years
covering 1,068,358 shares were outstanding at $8.063 to $10.375 per share.
Shares available for future grants amounted to 316,812 of  Common stock and
66,312 of Class A Common stock at April 30, 1998.  Adjusted for the two-for-one
stock split, 320,102 Common shares and 320,102 Class A Common shares were
available at April 30, 1997, and 408,750 Common shares and 408,750 Class A
Common shares were available at April 30, 1996.

DEFERRED COMPENSATION PLAN
The Company has a Deferred Compensation Plan which permits eligible employees to
defer a portion of their compensation.  The deferred compensation, together with
a Company contribution and accumulated earnings is accrued but unfunded.  At
April 30, 1998, 1997 and 1996 the liability for the deferred compensation is
$2,169,000, $1,507,000 and $1,087,000 respectively and is included with
long-term liabilities.

7. CAPITAL STOCK

On July 8, 1997, the Company repurchased the entire block of Hach Company Common
Stock which was owned by Lawter International.  This stock represented
approximately 28% ownership in Hach Company.  The Company purchased the
3,157,223 shares for $19.00 per share.  On June 26, 1997, the date the
transaction with Lawter was first announced, the Company's Common Stock price
closed at $18.25 per share.  The price paid to Lawter represented a 4% premium
to the closing price on June 26, 1997.  Among other factors, the Company's Board
of Directors reviewed numerous financial models and information, including the
impact on earnings per share, in arriving at the $19.00 per share price.

On May 19, 1997, the Board of Directors approved a proposal to amend the
Company's Certificate of Incorporation to allow for a second class of common
stock.  At the Company's annual meeting on September 9, 1997 the Company's
shareholders approved the amendment for a new class of stock designated as Class
A Common Stock.  On September 9, 1997, the Company's Board of Directors declared
a stock split effected in the form of a stock dividend, payable to all holders
of record of Common Stock on September 21, 1997, one share of Class A Common
Stock for each share of Common Stock outstanding.  The Class A stock is
non-voting except under certain limited circumstances.  All per share figures
and common stock amounts in the consolidated financial statements have been
restated to give effect to the stock split.

--------------------------------------------------------------------------------

8. EARNINGS PER SHARE

In Fiscal 1998, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings per Share " ("SFAS No. 128") which specifies the computation,
presentation and disclosure requirements for basic and diluted earnings per
share.  Basic earnings per share is calculated by dividing net income by the
weighted average number of common shares outstanding during the period.  Diluted
earnings per share includes the addition of potential common shares assuming the
conversion of all outstanding stock options using the treasury stock method.
The table below is a reconciliation of shares outstanding for basic and diluted
earnings per share.

<TABLE>
<CAPTION>


 FISCAL YEARS ENDED
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)           April 30, 1998              April 30, 1997                April 30, 1996

                                                                  Per                           Per                           Per
                                                                 Share                         Share                         Share
                                            Income    Shares    Amount    Income    Shares    Amount    Income    Shares    Amount
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>        <C>       <C>     <C>         <C>       <C>     <C>         <C>       <C>
Income available to common stockholders    $ 9,100    17,643    $ 0.52  $ 12,495    22,730    $ 0.55  $ 11,254    22,736    $ 0.50

Effective of dilutive securities
Stock options                                   --       108      0.01        --        32        --        --         0        --
-----------------------------------------------------------------------------------------------------------------------------------

Diluted earnings per share
Income available to common stockholders    $ 9,100    17,751    $ 0.51  $ 12,495    22,762    $ 0.55  $ 11,254    22,736    $ 0.50
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


Options to purchase shares of the Company's common stock of 11,708 in 1998,
121,606 in 1997, and 259,289 in fiscal 1996 were outstanding during the
respective periods but were not included in the computation due to the
antidilutive effect of the conversion.  Prior periods have been restated to give
effect to the adoption of SFAS No. 128 in fiscal year 1998 and the two-for-one
stock split in October 1997.

--------------------------------------------------------------------------------

9. SEGMENT INFORMATION

The Company operates primarily in an industry that encompasses laboratory
instruments, process analyzers and test kits which analyze the chemical content
and other properties of water and other aqueous solutions.  This industry also
encompasses the chemicals manufactured and sold by the Company, most of which
are used with the instruments and test kits manufactured by the Company.

Sales for the Company's European subsidiary are made to European dealers and to
customers in the Middle East and Mediterranean Africa in Belgium francs and U.S.
dollars, respectively.  Payments from the European subsidiary to the U.S. parent
are made in U.S. dollars and are subject to the exchange rate in effect at the
time of payment.  Export transactions made to all other parts of the world by
the international staff based in Loveland, Colorado, are conducted primarily in
U.S. dollars.

The amount of sales made into the international marketplace is influenced to
some degree by the strength of the U.S. dollar against other currencies.  Other
conditions which to some extent affect the sales of the Company's products in
international markets include restrictive tariff and trade policies imposed by
foreign countries, and domestic and foreign tax and economic policies.


                                                                              27
<PAGE>

HACH COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The table below summarizes certain financial information by geographic segments:

<TABLE>
<CAPTION>


GEOGRAPHIC SEGMENT INFORMATION (THOUSANDS OF DOLLARS)   1998           1997           1996
---------------------------------------------------------------------------------------------
<S>                                                 <C>            <C>            <C>
Net Sales to Unaffiliated Customers:
 United States:
  Domestic                                          $ 82,741       $ 77,688       $ 73,472
---------------------------------------------------------------------------------------------
Export:

   Canada                                              5,030          5,018          4,840
   Asia                                               10,294         10,875          9,388
   Australia/Oceania                                   1,786          1,360          1,496
   Mexico/Central America/Caribbean                    4,225          3,619          2,738
   South America                                       5,516          4,121          3,313
   Other                                               2,344          2,268          1,748
---------------------------------------------------------------------------------------------
                                                      29,195         27,261         23,523
---------------------------------------------------------------------------------------------
                                                     111,936        104,949         96,995
 Europe                                               16,122         16,531         17,290
---------------------------------------------------------------------------------------------
                                                     128,058        121,480        114,285
---------------------------------------------------------------------------------------------
Net Sales to European Subsidiaries:
 United States                                        12,844         11,402         10,140
 Eliminations                                        (12,844)       (11,402)       (10,140)
---------------------------------------------------------------------------------------------
                                                    $128,058       $121,480       $114,285
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Income from Operations:
 United States                                      $ 15,759       $ 14,914       $ 12,293
 Europe                                                  519          2,380          3,689
---------------------------------------------------------------------------------------------
                                                    $ 16,278       $ 17,294       $ 15,982
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Identifiable Assets:
 United States                                      $ 65,147       $ 51,244       $ 49,384
 Europe                                                8,050          7,186          8,342
---------------------------------------------------------------------------------------------
                                                      73,197         58,430         57,726
Corporate Assets                                      29,153         47,150         35,929
---------------------------------------------------------------------------------------------
                                                    $102,350       $105,580       $ 93,655
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>


10. UNAUDITED SUMMARY OF QUARTERLY FINANCIAL INFORMATION

(THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                  First         Second          Third         Fourth
                                                Quarter        Quarter        Quarter        Quarter
-----------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>            <C>            <C>
Fiscal Year 1998:
Net sales                                       $32,414        $31,542        $30,337        $33,765
Gross profit                                     15,863         15,533         14,784         17,024
Net income                                        3,320          2,755          2,600            425*
 Net income per share: basic                       0.16+ ++       0.16++         0.16           0.04*
 Net income per share: diluted                     0.16+ ++       0.16++         0.16           0.03*
Fiscal Year 1997:
Net sales                                       $28,910        $30,284        $29,481        $32,805
Gross profit                                     14,163         14,960         14,157         15,858
Net income                                        2,960          3,215          3,025          3,295
 Net income per share: basic+ ++                   0.13           0.14           0.13           0.15
 Net income per share: diluted+ ++                 0.13           0.14           0.13           0.15
</TABLE>


*Includes one-time charge of $3,000,000 or $.17 per share for purchased research
and development costs associated with the acquisition of Environmental Test
Systems, Inc.
+Restated for the two-for-one stock split effected in the form of a stock
dividend.
++Restated to give effect to the adoption of SFAS No. 128 in the third quarter 
of fiscal year 1998.


FORWARD LOOKING STATEMENTS
This annual report contains forward-looking statements, including without
limitation, statements regarding expected financial results.  Actual results may
materially differ from those in the forward-looking statements.  Factors that
may cause such differences include changes in customer demand and requirements,
delays in introducing new products, foreign exchange rate fluctuations, the
level of government funding, especially funding by municipalities for
water-related products, competition and conditions in the U.S. economy in
general, and worldwide economic conditions.  The Company undertakes no
obligation to publicly update or revise any forward-looking statements whether
as a result of new information, further events or otherwise.


28
<PAGE>

Hach Company and
Subsidiaries Corporate Data

WORLD HEADQUARTERS:

5600 Lindbergh Drive
Loveland, Colorado, U.S.A.

U.S.A. SALES

Davis, California
Corona, California
Loveland, Colorado
Daytona Beach, Florida
Snellville, Georgia
Roselle, Illinois
Fort Wayne, Indiana
Huxley, Iowa
Louisville, Kentucky
Westminster, Maryland
Preston, Mississippi
Auburn, New Hampshire
New York, New York
Mt. Laurel, New Jersey
Oklahoma City, Oklahoma
Columbus, Ohio
Sullivan's Island, South Carolina
Georgetown, Texas
Conroe, Texas
Mill Creek, Washington

INTERNATIONAL SALES

Headquarters: Loveland,
Colorado, U.S.A.
European Sales: Namur, Belgium
Overseas distributors and
 sales agents in principal cities
 throughout the world
Hach Sales & Service Canada Ltd.
 Winnipeg, Manitoba, Canada

WHOLLY OWNED SUBSIDIARIES

HACH EUROPE, S.A./N.V.
 Namur, Belgium
HACH (BARBADOS) FSC, INC.
 Loveland, Colorado
HACH SALES & SERVICE CANADA LTD.
 Winnipeg, Manitoba, Canada
ENVIRONMENTAL TEST SYSTEMS, INC.
 Elkhart, Indiana

BOARD OF DIRECTORS

KATHRYN HACH-DARROW
 Chairman of the Board
 and Chief Executive Officer

BRUCE J. HACH
 President and Chief
 Operating Officer

GARY R. DREHER
 Vice President
 and Chief Financial Officer

LINDA O. DOTY
 Partner
 Doty & Associates
 Denver, Colorado

JOHN N. MCCONNELL
 Chairman and President
 Labconco
 Kansas City, Missouri

JOSEPH V. SCHWAN
 Chief Operating Officer
 and Executive Vice President
 Standard Register
 Dayton, Ohio

FRED W. WENNINGER
 Independent Businessman
 Spokane, Washington

TRANSFER AGENT
AND STOCK REGISTRAR
HARRIS TRUST & SAVINGS BANK
 311 West Monroe Street
 Chicago, Illinois 60690

AUDITOR
PRICEWATERHOUSECOOPERS LLP
 370 17th Street
 Denver, Colorado 80202

CORPORATE OFFICERS
KATHRYN HACH-DARROW
 Chairman of the Board
 and Chief Executive Officer

BRUCE J. HACH
 President and Chief
 Operating Officer

ROBERT O. CASE
 Secretary and General Counsel

LOEL J. SIROVY
 Senior Vice President
 Operations

JERRY M. CHURCHILL
 Vice President
 Domestic Sales

GARY R. DREHER
 Vice President and
 Chief Financial Officer

KENNETH OGAN
 Vice President
 Research & Development
 and Chief Technical Officer

BRIAN BOWDEN
 Vice President
 Information Systems Technology

LARRY D. THOMPSON
 Vice President
 Ames Chemical Operations

MARK J. STEPHENSON
 Vice President
 Marketing and Customer
 Support Services
 President, ETS

FOR MORE INFORMATION
To learn more about Hach Company, visit our site on the World Wide Web
at www.hach.com.