Danaher 2011 Annual Report Download - page 26

Table of Contents
Our current revolving credit facility and long-term debt obligations also impose certain restrictions on us; for more information please refer to the MD&A. If
we breach any of these restrictions and do not obtain a waiver from the lenders, subject to applicable cure periods the outstanding indebtedness (and any other
indebtedness with cross-default provisions) could be declared immediately due and payable, which would adversely affect our liquidity and financial
condition. In addition, any failure to maintain the credit ratings assigned to us by independent rating agencies would adversely affect our cost of funds and
could adversely affect our liquidity and access to the capital markets. If we add new debt, the risks described above could increase.


Certain of our businesses sell a significant amount of their products to key distributors and other channel partners that have valuable relationships with
customers and end-users. Some of these distributors and other partners also sell our competitors’ products, and if they favor our competitors’ products for
any reason they may fail to market our products effectively. Adverse changes in our relationships with these distributors and other partners, or adverse
developments in their financial condition, performance or purchasing patterns, could adversely affect our financial statements Changes in the levels of
inventory maintained by our distributors and other channel partners can also significantly impact our results of operations in any given period. In addition,
the consolidation of distributors in certain of our served industries, as well as the formation of large and sophisticated purchasing groups in industries such as
healthcare, could adversely impact our profitability.

As discussed in “Item 1. Business – Materials,” our manufacturing and other operations employ a wide variety of raw materials. Prices for and availability of
these raw materials have fluctuated significantly in the past. Due to the highly competitive nature of the industries that we serve, the cost-containment efforts of
our customers and the terms of certain contracts we are party to, if commodity prices rise we may be unable to pass along cost increases through higher prices.
If we are unable to fully recover higher raw material costs through price increases or offset these increases through cost reductions, or if there is a time delay
between the increase in costs and our ability to recover or offset these costs, we could experience lower margins and profitability and our financial statements
could be adversely affected.



We purchase materials, components and equipment from third parties for use in our manufacturing operations. Our income could be adversely impacted if we
are unable to adjust our purchases to reflect changes in customer demand and market fluctuations, including those caused by seasonality or cyclicality.
During a market upturn, suppliers may extend lead times, limit supplies or increase prices. If we cannot purchase sufficient products at competitive prices
and quality and on a timely enough basis to meet increasing demand, we may not be able to satisfy market demand, product shipments may be delayed or our
costs may increase. Conversely, in order to secure supplies for the production of products, we sometimes enter into non-cancelable purchase commitments
with vendors, which could impact our ability to adjust our inventory to reflect declining market demands. If demand for our products is less than we expect,
we may experience additional excess and obsolete inventories and be forced to incur additional charges and our profitability may suffer.
In addition, some of our businesses purchase certain requirements from sole or limited source suppliers for reasons of quality assurance, cost effectiveness,
availability or uniqueness of design. If these or other suppliers encounter financial, operating or other difficulties or if our relationship with them changes, we
might not be able to quickly establish or qualify replacement sources of supply. The supply chains for our businesses could also be disrupted by supplier
capacity constraints, decreased availability of key raw materials or commodities and external events such as natural disasters, pandemic health issues,
terrorist actions, governmental actions and legislative or regulatory changes. Any of these factors could result in production interruptions, delays, extended lead
times and inefficiencies.

Because we cannot always immediately adapt our production capacity and related cost structures to changing market conditions, our manufacturing capacity
may at times exceed or fall short of our production requirements. Any or all of these problems could result in the loss of customers, provide an opportunity for
competing products to gain market acceptance and otherwise adversely affect our profitability.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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