Danaher 2011 Annual Report Download - page 44

Table of Contents
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($ in millions)   
Sales $16,090.5 $12,550.0 $10,516.7
Selling, general and administrative (“SG&A”) expenses 4,607.7 3,603.7 3,115.3
Research and development (“R&D”) expenses 1,018.5 774.0 600.3
SG&A as a % of sales 28.6% 28.7% 29.6%
R&D as a % of sales 6.3% 6.2% 5.7%
Selling, general and administrative expenses as a percentage of sales decreased 10 basis points on a year-over-year basis for 2011 as compared to 2010.
Increased leverage of the Company’s cost base resulting from higher sales volumes during 2011 was partially offset by 60 basis points of incremental
restructuring costs incurred during 2011 compared to 2010 and continued investments in the Company’s sales growth initiatives. In addition, change in
control payments to Beckman Coulter employees in connection with the closing of the Beckman Coulter acquisition adversely impacted selling, general and
administrative expenses as a percentage of sales during 2011.
Selling, general and administrative expenses as a percentage of sales decreased 90 basis points on a year-over-year basis in 2010 as compared to 2009. The
decrease in selling, general and administrative expenses as a percentage of sales in 2010 reflects the benefit of increased leverage of the Company’s cost base
resulting from higher sales volumes during 2010 as compared to 2009, in addition to 70 basis points of incremental restructuring costs incurred during 2009
as compared to 2010. Incremental year-over-year investments in the Company’s sales growth initiatives, increased commission costs due to the higher sales
volumes and the dilutive effect of certain recently acquired businesses and those businesses’ higher relative operating expense structures partially offset these
year-over-year improvements.
Research and development expenses (consisting principally of internal and contract engineering personnel costs) as a percentage of sales increased 10 basis
points on a year-over-year basis during 2011. Recently acquired businesses with higher average research and development expenditures as well as continued
investment in the Company’s new product development initiatives primarily contributed to the increase. The increase also reflects the contribution of most of
the Company’s hand tools businesses to the Apex joint venture in the third quarter of 2010, as the contributed businesses had historically lower research and
development spending as a percentage of sales relative to the overall Company average.
Research and development expenses as a percentage of sales increased 50 basis points during 2010 on a year-over-year basis. The increase is primarily
attributable to the contribution of the Company’s hand tools businesses to the Apex joint venture. Overall research and development costs also increased in
2010 compared to 2009 due to recently acquired businesses, primarily AB Sciex and Molecular Devices, with higher average research and development
expenditures as well as continued investment in the Company’s new product development initiatives.
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In July 2010 the Company closed on the formation of the Apex joint venture. As of the closing of the transaction, the Company deconsolidated its contributed
businesses and commenced accounting for its investment in the joint venture based on the equity method of accounting. The equity in the earnings of Apex,
reflecting the Company’s 50% ownership position subsequent to the formation, is reflected in the earnings from unconsolidated joint venture caption in the
Consolidated Statements of Earnings.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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