Danaher 2009 Annual Report Download - page 44

Table of Contents
OPERATING EXPENSES


  
Sales $11,184.9 $12,697.5 $11,025.9
Selling, general and administrative expenses 3,190.2 3,345.3 2,713.1
Research and development expenses 632.7 725.4 601.4
SG&A as a % of sales 28.5% 26.3% 24.6%
R&D as a % of sales 5.7% 5.7% 5.5%
The year-over-year increases in selling, general and administrative expenses as a percentage of sales from 2008 to 2009 is primarily due to reduced leverage of
the Company’s cost base caused by lower sales volumes during 2009 as compared to 2008. Incremental year-over-year costs associated with 2009
restructuring activities adversely impacted selling, general and administrative expenses as a percent of sales by 50 basis points on a year-over-year basis,
although the 2008 and 2009 restructuring actions have generated year-over-year cost savings that partially offset these negative factors.
Research and development expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales were flat during 2009
as compared to 2008. The Company continues to invest in new product development within all of its businesses, with particular emphasis on the medical
technologies, test and measurement, environmental and product identification businesses.
Selling, general and administrative expenses as a percentage of sales for 2008 increased 170 basis points from 2007. Included in the 2008 selling, general and
administrative expenses is $49 million (40 basis points) of restructuring and other related costs. Other increases in selling, general and administrative expenses
as a percentage of sales are primarily associated with recently acquired businesses and their higher relative operating expense structures. Increased spending to
fund growth opportunities throughout the Company, particularly in emerging markets, also contributed to the growth as a percentage of sales.
Research and development expenses as a percentage of sales were approximately 20 basis points higher in 2008 as compared to 2007. The 2007 charge for
acquired in-process research and development related to the Tektronix acquisition, as described below, impacted year-over-year comparisons by 75 basis
points. The relatively higher research and development cost structures of recently acquired businesses, primarily Tektronix, and higher investment in research
and development in the Medical Technologies segment were the primary drivers of these year-over-year increases.
INTEREST EXPENSE AND INCOME
For a description of the Company’s outstanding indebtedness, please refer to “–Liquidity and Capital Resources – Financing Activities and Indebtedness”
below.
Interest expense of $123 million in 2009 was $7.5 million lower than 2008 primarily as a result of lower average debt levels during 2009 as the Company
deployed cash flows to repay a portion of its commercial paper borrowings. Interest attributable to the $750 million principal amount of 5.40% senior
unsecured notes issued in March 2009 (as discussed below) partially offset the positive impact of the reduction in outstanding commercial paper borrowings.
Interest expense of $130 million in 2008 was approximately $20 million higher than 2007 as a result of higher average debt levels during 2008, primarily as a
result of borrowings incurred in the fourth quarter 2007 to fund the acquisition of Tektronix.
The Company recognized interest income of $5 million, $10 million and $6 million in 2009, 2008 and 2007, respectively. Interest income in 2009 was lower
than interest income in 2008 as the lower interest rates on deposits
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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