10-QPeriod: Q3 FY2011

DANAHER CORP /DE/ Quarterly Report for Q3 Ended Jul 1, 2011

Filed July 27, 2011For Securities:DHR

Summary

Danaher Corporation's Q2 2011 10-Q filing reveals a period of significant transformation, primarily driven by the monumental acquisition of Beckman Coulter for approximately $5.5 billion. This acquisition, completed at the end of June 2011, was financed through a combination of cash, equity, and debt offerings, substantially increasing the company's assets, goodwill, and long-term debt. The deal significantly bolsters Danaher's Life Sciences & Diagnostics segment and is expected to drive future growth and cost synergies. Financially, the company reported strong sales growth across most segments, aided by existing business performance and favorable currency translations. However, the report also highlights the impact of acquisition-related costs, particularly for Beckman Coulter, which affected short-term earnings and operating profit margins. While the company successfully divested its Pacific Scientific Aerospace business for a notable gain, the overall financial narrative for this quarter is dominated by the strategic integration of Beckman Coulter and its implications for future financial performance.

Financial Highlights

51 data points
Beta

Revenue

$3.64B

52.7% Gross Margin

Net Income

$648.80M

17.8% Net Margin

EPS (Diluted)

$0.94

Total Assets

$30.62B

Cash & Equivalents

$484.37M

Free Cash Flow

$1.19B

Financial Statements
Beta
Revenue$3.64B
Cost of Revenue$2.26B
Gross Profit$1.92B
R&D Expenses$287.51M
SG&A Expenses$1.27B
Operating Income$610.00M
Interest Expense$42.36M
Net Income$648.80M
EPS (Basic)$0.97
EPS (Diluted)$0.94
Shares Outstanding (Basic)687.26M
Shares Outstanding (Diluted)710.40M

Key Highlights

  • 1Completed the transformative acquisition of Beckman Coulter, Inc. for approximately $5.5 billion in late June 2011.
  • 2Reported significant sales growth across most business segments, with notable strength in China and emerging markets.
  • 3Implemented a new reporting structure with five distinct business segments: Test & Measurement, Environmental, Life Sciences & Diagnostics, Dental, and Industrial Technologies.
  • 4Divested the Pacific Scientific Aerospace business, resulting in an after-tax gain of approximately $202 million.
  • 5Net cash used in investing activities surged to $5.5 billion, primarily due to the Beckman Coulter acquisition.
  • 6Financed the Beckman Coulter acquisition through a combination of cash ($2.3 billion), common stock offering ($966 million), senior unsecured notes ($1.8 billion), and commercial paper.
  • 7Increased long-term debt significantly due to debt assumed with the Beckman Coulter acquisition and new debt issuances, reaching $6.5 billion from $2.8 billion.
  • 8Total assets grew substantially to $31.5 billion from $22.2 billion, largely driven by the Beckman Coulter acquisition and associated goodwill.

Frequently Asked Questions

The most significant event was the acquisition of Beckman Coulter, Inc. for approximately $5.5 billion. This major transaction was completed at the end of June 2011 and is expected to be a primary driver of future growth for Danaher, particularly within its Life Sciences & Diagnostics segment.

The acquisition significantly increased Danaher's assets, with total assets rising to $31.5 billion from $22.2 billion. This increase was primarily due to the acquired assets, a substantial increase in goodwill (from $10.5 billion to $14.7 billion), and a significant rise in long-term debt (from $2.8 billion to $6.5 billion) used to finance the deal.

The acquisition of Beckman Coulter and other smaller businesses led to a substantial increase in investing activities cash outflow. The divestiture of the Pacific Scientific Aerospace business provided a significant gain of approximately $202 million, which was reported as discontinued operations. While acquisitions drove sales growth and increased assets, they also came with acquisition-related costs that impacted short-term profitability and margins.

The acquisition was financed through a combination of strategies: approximately $2.3 billion of available cash, net proceeds of $966 million from a common stock offering, net proceeds of $1.8 billion from a senior unsecured notes offering, and proceeds from commercial paper issuance. Additionally, Danaher assumed approximately $1.6 billion in debt from Beckman Coulter.