Danaher 2009 Annual Report Download - page 35

Table of Contents
2009 COMPARED TO 2008
The year-over-year decline in sales during 2009 is principally attributable to declines in the segment’s test and measurement lines of business. Price increases
contributed 1.5% sales growth during 2009 and are reflected as a component of the changes in sales from existing businesses.
Operating profit margins decreased 190 basis points in 2009 as compared to 2008. The decrease in operating profit margins resulted primarily from lower
sales volumes during 2009, as well as 145 basis points of incremental restructuring costs incurred during 2009 compared to 2008. The dilutive effect of
recently acquired businesses also adversely impacted operating profit margins on a year-over-year basis by 45 basis points. Accounting charges incurred in
2008 associated with recording the fair value of inventory and deferred revenue acquired in connection with the November 2007 acquisition of Tektronix (net of
comparable acquisition-related charges recorded in 2009) favorably impacted year-over-year operating profit margin comparisons by 70 basis points. Cost
savings realized in 2009 attributable to the Company’s 2008 and 2009 restructuring activities and ongoing efforts to reduce material costs and other operating
expenses also partially offset the reductions in operating profit margins.
Overview of Businesses within Professional Instrumentation Segment
Environmental. Sales from the segment’s environmental businesses, representing 57% of segment sales for 2009, were essentially flat as compared to 2008.
Sales from existing businesses decreased reported sales by 1.0% and the impact of currency translation decreased reported sales by 2.5%. Growth of 3.5%
related to recently acquired businesses offset these sales declines.
Sales from existing businesses in the segment’s water quality businesses during 2009 were essentially flat as compared to 2008. A mid-teens growth rate in the
business’ ultraviolet water treatment product line and a mid-single digit growth rate in the industrial water treatment product line offset low-single digit sales
declines in the business’ laboratory and process instrumentation product line. Growth rates in the ultraviolet water treatment product line reflect strength in
demand for municipal wastewater applications, as well as shipments related to a significant drinking water treatment plant project that commenced in 2009
and is expected to be substantially completed during 2010. In the business’ laboratory and process instrumentation product line and associated consumables,
general economic conditions adversely impacted demand in all major geographies with the exception of China, where revenues grew at a low double-digit rate
during 2009.
Sales from existing businesses in the retail petroleum equipment business during 2009 declined at a low-single digit rate as compared to 2008. Strong North
American sales of the business’ point-of-sale retail and payment solution product offerings that are being driven in part by regulatory requirements were more
than offset by lower demand for dispensing equipment, primarily in Europe, and service offerings. Lower demand for the business’ automatic tank gauge
product offerings and leak detection systems also adversely impacted year-over-year comparisons. The decline in demand for the business’ leak detection
systems was partially attributable to a significant project in 2008 that did not repeat in 2009.
Test & Measurement. Sales in the segment’s test and measurement businesses, representing 43% of segment sales for 2009, declined 22.0% as compared to
2008. Sales from existing businesses decreased reported sales by 24.0%, while the impact of currency translation decreased reported sales by 1.0%. Sales
growth of 3.0% related to recently acquired businesses partially offset these declines.
Soft demand across all instrumentation related product lines, attributable to general economic conditions and inventory reductions by distributors, drove sales
declines during 2009. While year-over-year sales declined during each quarter during 2009, the rate of decline during the fourth quarter of 2009 improved
compared to the first three quarters of the year primarily due to the adverse impact of inventory level reductions in the distribution channel that were largely
completed by the end of the third quarter. Year-over-year comparisons for the fourth quarter were also favorably impacted by the decline in demand that
commenced in the fourth quarter 2008 resulting in an easier comparison. Sales declined in all significant geographic regions. Year-over-year sales in the
network and communication businesses declined at a lower rate than the instrumentation business primarily as a result of positive performance in the network
management solutions businesses which benefited from the competition among mobile telecommunication providers to expand coverage, services and
performance of their networks.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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