Danaher 2011 Annual Report Download - page 39

Table of Contents
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 
Existing businesses 7.0% 9.0%
Acquisitions 91.0% 46.0%
Currency exchange rates 3.5% —
Total 101.5% 55.0%

Price increases in the segment contributed 0.5% to sales growth on a year-over-year basis during 2011 as compared to 2010 and are reflected as a component of
the change in sales from existing businesses.
The significant growth related to acquisitions was primarily attributable to the acquisition of Beckman Coulter in June 2011 which significantly expanded the
segment’s product and service offerings, as further described below.
Sales from existing businesses in the segment’s acute care diagnostics business grew at a high single-digit rate during 2011 as compared to 2010 primarily due
to continued strong consumable sales related to the business’ installed base of acute care diagnostic instrumentation and new instrument placements, primarily
in Europe, China and other Asian markets. Demand for the business’ compact blood gas analyzer also remained strong, particularly in emerging markets.
Increased European and emerging market demand for the business’ cardiac care instruments also contributed to year-over-year sales growth. Sales from
existing businesses in the segment’s pathology diagnostics business also grew at a high single-digit rate during 2011 as compared to 2010 as a result of
increased demand for advanced staining instruments and consumables, as well as higher sales of core histology systems and consumables, primarily in
North America and emerging markets, and to a lesser extent, Europe. The acquisition of Beckman Coulter has significantly expanded the segment’s product
portfolio in the area of clinical diagnostics through the addition of new and complementary product and service offerings.
Sales from existing businesses in the segment’s microscopy businesses grew at a mid single-digit rate during 2011 as compared to 2010 as a result of strong
demand for confocal and compound instrumentation serving the life sciences research and industrial markets, particularly in China and the emerging
markets, and to lesser extent, Europe. A difficult prior year comparison resulting from first quarter 2010 sales associated with Japanese economic stimulus
funding partially reduced the reported sales growth for 2011. Strong demand for the business’ broad range of mass spectrometers serving both the academic
and proteomic research markets as well as the applied markets resulted in a low double-digit growth rate from sales from existing businesses in the segment’s
mass spectrometry business during 2011 as compared to 2010. Sales from existing businesses in the mass spectrometry business grew in all major
geographies during 2011 led by strong performance in the Asia Pacific region and North America and to a lesser extent Europe. The acquisition of Beckman
Coulter has also expanded the segment’s product portfolio in the area of life sciences research through the addition of new and complementary product and
service offerings.
Operating profit margins decreased 120 basis points during 2011 as compared to 2010. The dilutive effect of acquisitions, primarily related to costs associated
with Beckman Coulter’s restructuring and integration activities, adversely impacted segment operating profit margins by 295 basis points. Acquisition related
charges associated with the Beckman Coulter acquisition, including transaction costs, change in control charges and fair value adjustments to inventory and
deferred revenue balances (net of comparable acquisition related charges in 2010) also adversely impacted operating profit margins by 95 basis points. Higher
sales volumes and continued productivity improvements, net of the impact of costs associated with various sales, marketing and product development growth
investments, favorably impacted year-over-year comparisons by 270 basis points. The Company expects to realize significant cost synergies through the
application of the Danaher Business System to Beckman Coulter and the combined purchasing power of the Company and Beckman Coulter.
Depreciation and amortization as a percentage of sales increased during 2011 primarily as a result of the increase in amortization expense associated with the
intangible assets acquired in connection with the Beckman Coulter acquisition. In addition, as a majority of the Beckman Coulter customers enter into
operating-type lease arrangements for the use of the business’ instrumentation, depreciation expense increased on a year-over-year basis. Depreciation and
amortization expense in the segment is expected to continue to be higher than the segment’s historical depreciation and amortization expense levels for these same
reasons.
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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