Danaher 2011 Annual Report Download - page 34

Table of Contents
During 2010, the Company completed the acquisition of the Analytical Technologies division of MDS Inc., which included a 50% ownership position in the
Applied Biosystems/MDS Sciex joint venture (“AB Sciex”) and a 100% ownership position in the Molecular Devices business (“Molecular Devices”). In a
separate but related transaction, the Company simultaneously completed the acquisition of the remaining 50% ownership position in AB Sciex from Life
Technologies Corporation. In addition, during 2010, the Company entered into a joint venture with Cooper Industries, plc (“Cooper”), combining certain of the
Company’s hand tool manufacturing and distribution businesses with Cooper’s Tools business to form a new entity called Apex Tool Group, LLC (“Apex”).
For a full discussion of the Company’s 2010 acquisition activity and the Apex joint venture, refer “Liquidity and Capital Resources —Investing Activities”.
2011 Restructuring Activities
Consistent with the Company’s approach of positioning itself to provide superior products and services to its customers in a cost efficient manner, and in
light of the uncertain macro-economic environment, the Company incurred $179 million (including $120 million in the fourth quarter) of costs associated
with restructuring activities. Included in the total restructuring costs are costs associated with the integration and restructuring of the Beckman Coulter
business subsequent to the acquisition.
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Consolidated sales for the year ended December 31, 2011 increased 28.0% compared to 2010. Sales from existing businesses increased 7.0% on a year-over-
year basis. The impact of currency translation increased reported sales by 2.5% as the U.S. dollar was, on average, weaker against other major currencies
during 2011 as compared to exchange rate levels during 2010. The sales increase from acquired businesses more than offset the year-over-year sales decline
attributable to the 2010 contribution of businesses to the Apex joint venture and on a net basis increased reported sales by 18.5%.
In this report, references to sales from existing businesses refers to sales from continuing operations calculated according to generally accepted accounting
principles in the United States (“GAAP”) but excluding (1) sales from acquired businesses, (2) 2010 sales attributable to the businesses contributed to the
Apex joint venture, and (3) the impact of currency translation. References to sales or operating profit attributable to acquisitions or acquired businesses refer to
GAAP sales or operating profit, as applicable, from acquired businesses recorded prior to the first anniversary of the acquisition. The portion of revenue
attributable to currency translation is calculated as the difference between (a) the period-to-period change in revenue (excluding sales from acquired businesses
and 2010 sales attributable to the businesses contributed to the Apex joint venture) and (b) the period-to-period change in revenue (excluding sales from
acquired businesses and 2010 sales attributable to the businesses contributed to the Apex joint venture) after applying current period foreign exchange rates to
the prior year period. Sales from existing businesses should be considered in addition to, and not as a replacement for or superior to, sales, and may not be
comparable to similarly titled measures reported by other companies. Management believes that reporting sales from existing businesses provides useful
information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with
prior and future periods and to our peers. The Company excludes the effect of currency translation from sales from existing businesses because currency
translation is not under management’s control, is subject to volatility and can obscure underlying business trends, and excludes the effect of acquisitions
because the nature, size and number of acquisitions can vary dramatically from period to period and between the Company and its peers and can also obscure
underlying business trends and make comparisons of long-term performance difficult. The Company excludes the effect of the 2010 sales attributable to the
businesses contributed to the Apex joint venture because the Company did not recognize sales from those businesses in 2011.
Operating profit margins were 16.3% for each of the years ended December 31, 2011 and 2010. Year-over-year operating profit margin comparisons benefited
160 basis points from the favorable impact of higher sales volumes and continued productivity improvements net of the impact of costs associated with
various sales, marketing and product development growth investments. The dilutive effect of acquisitions (net of the favorable impact to operating profit
margin of contributing certain businesses to the Apex joint venture in July 2010) adversely impacted operating margin comparisons by 110 basis points. In
addition, acquisition related charges associated with the Beckman Coulter acquisition, including transaction costs, change in control charges and fair value
adjustments to acquisition related inventory and deferred revenue balances (net of comparable acquisition related charges in 2010) adversely impacted
operating profit margin comparisons by 50 basis points.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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