Danaher 2009 Annual Report Download - page 57

Table of Contents
Legal Proceedings
Please refer to Note 13 to the Consolidated Financial Statements included in this Annual Report for information regarding certain litigation matters.
In addition to the litigation matters noted under “Item 1. Business – Regulatory Matters – Environmental, Health & Safety,” the Company is, from time to
time, subject to a variety of litigation and similar proceedings incidental to its business. These lawsuits primarily involve claims for damages arising out of the
use of the Company’s products and services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes,
competition and sales and trading practices, personal injury, insurance coverage and acquisition related matters. The Company may also become subject to
lawsuits as a result of past or future acquisitions or as a result of liabilities retained from, or representations, warranties or indemnities provided in connection
with, divested businesses. Some of these lawsuits may include claims for punitive and consequential, as well as compensatory damages. Based upon the
Company’s experience, current information and applicable law, it does not believe that these proceedings and claims will have a material adverse effect on its
cash flows, financial position or results of operations.
While the Company maintains workers’ compensation, property, cargo, automobile, aviation, crime, fiduciary, product, general liability, and directors’ and
officers’ liability insurance (and has acquired rights under similar policies in connection with certain acquisitions) that it believes cover a portion of these
claims, this insurance may be insufficient or unavailable to cover such losses. In addition, while the Company believes it is entitled to indemnification from
third parties for some of these claims, these rights may also be insufficient or unavailable to cover such losses. The Company maintains third party insurance
policies up to certain limits to cover certain liability costs in excess of predetermined retained amounts. For general liability risk (which includes product
liability) and most other insured risks, the Company purchases outside insurance coverage only for severe losses (“stop loss” insurance) and must establish
and maintain reserves with respect to amounts within the self-insured retention.
The Company recognizes a liability for any contingency that is probable of occurrence and reasonably estimable. The Company periodically assesses the
likelihood of adverse judgments or outcomes for these matters, as well as potential amounts or ranges of probable losses, and if appropriate, recognizes a
reserve for these contingencies. These reserves consist of specific reserves for individual claims and additional amounts for anticipated developments of these
claims as well as for incurred but not yet reported claims. The specific reserves for individual known claims are quantified with the assistance of legal counsel
and outside risk insurance professionals where appropriate. In addition, outside risk insurance professionals assist in the determination of reserves for
incurred but not yet reported claims through evaluation of the Company’s specific loss history, actual claims reported, and industry trends among statistical
and other factors. Reserve estimates are adjusted as additional information regarding a claim becomes known. While the Company actively pursues financial
recoveries from insurance providers, it does not recognize any recoveries until realized or until such time as a sustained pattern of collections is established
related to historical matters of a similar nature and magnitude. The Company believes the liability recorded for such risk insurance reserves as of
December 31, 2009 is adequate, but due to judgments inherent in the reserve process it is possible the ultimate costs will differ from this estimate. If the risk
insurance reserves established are inadequate, the Company would be required to incur an expense equal to the amount of the loss incurred in excess of the
reserves, which would adversely affect the Company’s net earnings. Please see Note 8 to the Consolidated Financial Statements for information about the
amount of our accruals for self-insurance and litigation liability.
For a discussion of additional risks related to existing and potential legal proceedings, please refer to “Item 1A. Risk Factors.”
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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