Danaher 2011 Annual Report Download - page 43

Table of Contents
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Price increases throughout the segment contributed 1.5% to sales growth during 2010 and are reflected as a component of the change in sales from existing
businesses.
Sales from existing businesses in the segment’s product identification businesses grew at a mid-teens rate during 2010 as compared to 2009 primarily due to
increased demand for core marking and coding equipment as customers released capital spending that had been delayed from prior years. Strong consumable
sales associated with the installed base of marking and coding equipment also contributed to year-over-year growth. Sales grew in all major geographies with
particular strength in Europe and the emerging markets.
Sales from existing businesses in the segment’s motion businesses grew at a double-digit rate during 2010 as compared to 2009 as demand was strong in the
majority of end markets served due primarily to the general economic recovery. While growth was generally broad-based, industrial automation led the growth
with strong sales of advanced motor and drive product offerings. Sales increased in all major geographies.
Sales from existing businesses in the segment’s other businesses grew collectively at a high-teens digit rate during 2010 as compared to 2009 due to generally
higher demand in most major end-markets.
Operating profit margins increased 620 basis points during 2010 as compared to 2009. The increase in operating profit margins reflects the impact of higher
sales volumes in 2010 compared to 2009 as well as cost savings attributable to the Company’s 2009 restructuring activities. Year-over-year operating margin
comparisons for 2010 also benefited from approximately 175 basis points of incremental restructuring costs incurred in 2009 as compared to 2010. The
divestiture of certain lower margin businesses and product lines in the fourth quarter 2009 in connection with the Company’s restructuring activities also
favorably impacted year-over-year operating profit margin comparisons by 50 basis points.
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($ in millions)   
Sales $16,090.5 $12,550.0 $10,516.7
Cost of sales 7,913.9 6,145.5 5,446.6
Gross profit 8,176.6 6,404.5 5,070.1
Gross profit margin 50.8% 51.0% 48.2%
Gross profit margins decreased 20 basis points during 2011 as compared to 2010. The combination of the acquisition of Beckman Coulter, which has lower
overall gross profit margins than the Company’s existing businesses, and 35 basis points of incremental restructuring costs incurred during 2011 compared
to 2010 adversely impacted gross profit margin comparisons. In addition, acquisition related charges associated with fair value adjustments to acquired
inventory and deferred revenue balances in connection with the acquisition of Beckman Coulter (net of comparable acquisition related charges in 2010 relating
primarily to the AB Sciex, Molecular Devices and certain other acquisitions) adversely impacted gross profit margin comparisons by 45 basis points. Higher
year-over-year sales volumes and continued productivity improvements partially offset these adverse impacts. The gross profit margin comparison also
reflects the benefit of 65 basis points from the contribution to the Apex joint venture at the beginning of the third quarter 2010 of certain of the Company’s
hand tools businesses, which had lower average gross profit margins than the remainder of the Company.
Gross profit margins for 2010 increased 280 basis points from 2009. The year-over-year increase reflects the impact of higher sales volumes as compared to
2009, year-over-year cost savings attributable to the Company’s 2009 restructuring activities and 90 basis points of incremental restructuring costs incurred
during 2009 as compared to 2010. Gross profit margins during 2010 also benefited from the contribution to the Apex joint venture at the beginning of the third
quarter of certain of the Company’s hand tools businesses. Acquisition related charges recorded in 2010 associated with fair value adjustments to acquired
inventory and deferred revenue balances in connection with the acquisition of AB Sciex, Molecular Devices and certain other acquisitions adversely impacted
gross profit margin comparisons by approximately 30 basis points.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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