Danaher 2011 Annual Report Download - page 52

Table of Contents
Capital Expenditures
Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information
technology systems. In addition, capital expenditures are made for the manufacture of instruments that are used in operating-type lease arrangements entered
into with customers by certain of the Company’s businesses. Capital expenditures totaled $334 million in 2011, $191 million in 2010 and $175 million in
2009. The increase in capital spending in 2011 is primarily due to the acquisition of Beckman Coulter and the associated capitalization of instruments subject
to operating-type leases through customer arrangements entered into in the second half of 2011. In 2012, the Company expects capital spending to approximate
$550 million, though actual expenditures will ultimately depend on business conditions. The expected increase in capital expenditures in 2012 is primarily
attributable to the acquisition of Beckman Coulter as the majority of the business’ customers enter into operating-type lease arrangements for use of its
instrumentation products.
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Cash flows from financing activities consist primarily of proceeds from the issuance of commercial paper, common stock and debt, excess tax benefits from
stock-based compensation, payments of principal on indebtedness, repurchases of common stock and payments of dividends to shareholders. Financing
activities provided cash of $2.1 billion during 2011 compared to $117 million of cash provided during 2010. The year-over-year change was primarily due to
the proceeds from the issuance of the 2011 Financing Notes (as defined below) in June 2011.
Total debt was $5.3 billion at December 31, 2011 compared to $2.8 billion at December 31, 2010. The Company’s debt as of December 31, 2011 was as
follows:
• $977 million of outstanding U.S. dollar denominated commercial paper;
• $647 million (€500 million) aggregate principal amount of 4.5% guaranteed Eurobond Notes due 2013 (the “Eurobond Notes”);
• $300 million aggregate principal amount of floating rate senior notes due 2013 (the “2013 Notes”);
• $400 million aggregate principal amount of 1.3% senior notes due 2014 (the “2014 Notes”);
• $500 million aggregate principal amount of 2.3% senior notes due 2016 (the “2016 Notes”);
• $500 million aggregate principal amount of 5.625% senior notes due 2018 (the “2018 Notes”);
• $750 million aggregate principal amount of 5.4% senior notes due 2019 (the “2019 Notes”);
• $600 million aggregate principal amount of 3.9% senior notes due 2021 (the “2021 Notes” and together with the 2013 Notes, 2014 Notes and
2016 Notes, the “2011 Financing Notes”);
• $380 million of zero coupon Liquid Yield Option Notes due 2021 (“LYONs”); and
• $251 million of other borrowings.
The 2011 Financing Notes, the Eurobond Notes, the 2018 Notes and the 2019 Notes are collectively referred to as the “Notes”.
Commercial Paper Program and Credit Facility
The Company primarily satisfies any short-term liquidity needs that are not met through operating cash flow and available cash through issuances of
commercial paper under its U.S. and Euro commercial paper programs. Under these programs, the Company or a subsidiary of the Company, as applicable,
may issue and sell unsecured, short-term promissory notes in an aggregate principal amount not to exceed $2.5 billion. Interest expense on the notes is paid at
maturity and is generally based on the ratings assigned to the Company by credit rating agencies at the time of the issuance and prevailing market rates
measured by reference to LIBOR. Borrowings under the program are available for general corporate purposes, including acquisitions. During 2011, the
Company issued commercial paper under its U.S. program to fund a portion of the purchase price for Beckman Coulter and the retirement of substantially all
of the Beckman Coulter debt (see below). As of December 31, 2011, borrowings outstanding under the Company’s U.S. commercial paper program had a
weighted average interest rate of 0.2% and a weighted average maturity of approximately 30 days. Commercial paper balances during the year carried interest at
rates ranging between 0.1% and 0.2% and original maturities between 1 and 67 days. There was no commercial paper outstanding under the Euro program as
of December 31, 2011 or at any other time during 2011. The Company classified its borrowings outstanding under the commercial paper programs at
December 31, 2011 as long-term debt in the Consolidated Balance Sheet as the Company had the intent and ability, as supported by availability under the
Credit Facility referenced below, to refinance these borrowings for at least one year from the balance sheet date.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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