Danaher 2009 Annual Report Download - page 49

Table of Contents
• The Company’s restructuring activities used approximately $190 million in cash during 2009.
• In March 2009, the Company completed an underwritten public offering of $750 million aggregate principal amount of 5.40% senior unsecured
notes due 2019. The net proceeds, after expenses and the underwriters’ discount, were approximately $745 million. A portion of the net proceeds
was used to repay a portion of the Company’s outstanding commercial paper and the balance of the net proceeds is being used for general
corporate purposes, including acquisitions.
• As of December 31, 2009, the Company held $1.7 billion of cash and cash equivalents. As discussed below in “–Recent Acquisition Activity,”
subsequent to December 31, 2009, the Company utilized $1.1 billion of cash on hand in connection with the completion of the AB Sciex and
Molecular Devices acquisitions.
Operating Activities
The Company continues to generate substantial cash from operating activities and remains in a strong financial position, with resources available for
reinvestment in existing businesses, strategic acquisitions and managing its capital structure on a short and long-term basis. Cash flows from operating
activities can fluctuate significantly from period to period as working capital needs and the timing of payments for items such as income taxes, restructuring
activities, pension funding and other items impact reported cash flows.
Operating cash flow from continuing operations was approximately $1.8 billion for 2009, a decrease of $58 million, or approximately 3% as compared to
2008. The decrease in operating cash flow was primarily attributable to the decrease in earnings in 2009 as compared to 2008 and to a lesser extent attributable
to the year-over-year incremental amount of cash paid related to the Company’s restructuring activities. In addition, the Company voluntarily contributed $60
million to the Company’s U.S. defined benefit pension plan in 2009 while it made no contribution in 2008. The declines in operating cash flow were partially
offset by improvements in operating working capital (defined by the Company as trade accounts receivable plus inventory less accounts payable) which
contributed $228 million of cash flow during 2009 as compared to contributing $108 million of cash flow during 2008. Operating working capital in 2009
benefited from increased collections of accounts receivable and reduced inventory levels associated with lower levels of business activity, partially offset by
reductions in accounts payable as compared to 2008. A decline of approximately $100 million in tax payments during 2009 as compared to 2008 also partially
offset the decline in operating cash flow.
Operating cash flow from continuing operations was approximately $1.9 billion for 2008, an increase of $160 million, or approximately 9.5% as compared
to 2007. Earnings growth of $104 million in addition to an increase of approximately $39 million in contributions from operating working capital as compared
to 2007 contributed to the overall year-over-year increase in operating cash flows. The 2008 operating working capital contribution increased primarily due to
strong collections of accounts receivable. Operating cash flows during 2008 also benefited approximately $83 million from year-over-year increases in stock
compensation, depreciation and amortization charges which did not require the use of cash. In addition, non-cash acquisition related charges incurred related
to acquired inventory and acquired deferred revenue in connection with the 2007 acquisition of Tektronix had a positive impact on operating cash flow
comparisons. Approximately $100 million of additional income tax payments made in 2008 related to continuing operations as compared to 2007 partially
offset these positive factors.
In connection with the Company’s restructuring activities, the Company records appropriate accruals for the costs of closing facilities, severing personnel
and, in connection with acquisitions, integrating the acquired businesses into existing Company operations. Cash flows from operating activities are reduced
by the amounts expended against the various accruals. During 2009, the Company paid approximately $161 million related to its 2009 and 2008
restructuring activities and approximately $28 million related to restructuring activities associated with acquisitions completed prior to December 31, 2008.
Please refer to Note 2 and Note 17 to the Consolidated Financial Statements for additional information about these expenditures.
47
Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,
except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.