Danaher 2009 Annual Report Download - page 73

Table of Contents
acquisition costs as incurred, and does not permit restructuring activities to be recorded as a component of purchase price as was required under prior
business combination accounting standards. The revised business combination accounting standard is applicable to all acquisitions completed after
December 31, 2008.
The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio
into a new and attractive business area. The Company has completed a number of acquisitions during the years ended December 31, 2009, 2008 and 2007.
All of these acquisitions have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This
goodwill arises because the purchase prices for these businesses reflect a number of factors including the future earnings and cash flow potential of these
businesses; the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers; the competitive nature
of the process by which the Company acquired the business; and the complementary strategic fit and resulting synergies these businesses bring to existing
operations.
The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets
and assumed liabilities. The Company obtains this information during due diligence and through other sources. In the months after closing, as the Company
obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly
acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date
are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with certain of its 2009
acquisitions and is also in the process of obtaining valuations of acquired intangible assets and certain acquisition related liabilities in connection with these
acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.
The following briefly describes the Company’s acquisition activity for the three years ended December 31, 2009.
The Company acquired fifteen businesses during 2009 for consideration of approximately $704 million in cash, net of cash acquired. Each company
acquired manufactures products and/or provides services in the test and measurement, environmental, product identification, dental and sensors and controls
markets. These companies were acquired to complement existing units of the Professional Instrumentation, Medical Technologies and Industrial Technologies
segments. The aggregate annual sales of these acquired businesses at the time of their respective acquisitions, in each case based on the company’s revenues
for its latest completed fiscal year prior to the acquisition, were approximately $425 million. The Company recorded an aggregate of $423 million of goodwill
related to these acquisitions reflecting the strategic fit and revenue and earnings growth potential of these businesses.
The Company acquired seventeen businesses during 2008 for consideration of approximately $423 million in cash, including transaction costs and net of
cash acquired and $8 million of debt assumed. Each company acquired manufactures products and/or provides services in the life sciences, dental, product
identification, environmental or test and measurement markets. These companies were acquired to complement existing units of the Medical Technologies,
Industrial Technologies or Professional Instrumentation segments. The aggregate annual sales of these seventeen acquired businesses at the time of their
respective acquisitions, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were approximately $325
million. The Company recorded an aggregate of $265 million goodwill related to these acquisitions reflecting the strategic fit and revenue and earnings growth
potential of these businesses.
In November 2007, the Company acquired all of the outstanding shares of Tektronix, Inc. (Tektronix) for total cash consideration of approximately $2.8
billion including transaction costs and net of cash and debt acquired. The Company initially financed the acquisition of Tektronix through the issuance of
commercial paper and available cash (including proceeds from the underwritten public offering of 6.9 million shares of Danaher common stock completed on
November 2, 2007 – refer to Note 16). Subsequent to the acquisition, the Company issued $500 million of 5.625% senior notes due 2018 in an underwritten
public offering (refer to Note 9) and used the net proceeds from this offering to repay a portion of the commercial paper issued to finance the Tektronix
acquisition. Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services for the communications, computer,
consumer electronics, and education industries – as well as military/aerospace, semiconductor, and a broad range of other industries worldwide and had
revenues of $1.1 billion in its most recent completed fiscal year prior to
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Source: DANAHER CORP /DE/, 10-K, February 24, 2010 Powered by Morningstar® Document Research℠
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