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Press release from PR Newswire

Danaher Reports Record Second Quarter 2011 Results

Thursday, July 21, 2011

Danaher Reports Record Second Quarter 2011 Results06:00 EDT Thursday, July 21, 2011WASHINGTON, July 21, 2011 /PRNewswire/ -- Danaher Corporation (NYSE: DHR) announced today that net earnings from continuing operations for the quarter ended July 1, 2011 were $449.6 million, or $0.65 per share on a diluted basis, a 23% increase as compared to diluted net earnings per share from continuing operations for the second quarter 2010.  On a non-GAAP basis, which reflects the adjustments identified in the attached reconciliation schedule, second quarter 2011 adjusted diluted net earnings per share from continuing operations, excluding the impact of the acquisition of Beckman Coulter, were $0.69, a 28% increase over 2010 second quarter adjusted diluted net earnings per share from continuing operations. Sales from continuing operations for the 2011 second quarter were $3.7 billion, 15.5% higher than the $3.2 billion reported sales from continuing operations for the 2010 second quarter. Core revenues increased 7.5% in the quarter compared to the second quarter of 2010.H. Lawrence Culp, Jr., President and Chief Executive Officer, stated, "We've been very pleased by our strong start to 2011 and our team's execution led to yet another quarter of solid core revenue and earnings growth.  Our investments in new product development and go-to-market initiatives continued to drive organic growth and margin expansion and with our increasing exposure to higher growth emerging markets and the addition of Beckman Coulter to the portfolio, we believe we are well positioned to continue to outperform for the remainder of 2011 and beyond."Danaher will discuss its results during its investor conference call today starting at 8:00 a.m. EDT.  The call and an accompanying slide presentation will be webcast on the "Investors" section of Danaher's website at www.danaher.com.  A replay of the webcast can be accessed on the "Investors" section of Danaher's website (under the subheading "Investor Events") shortly after the conclusion of the presentation, and the webcast will remain available until the next quarterly earnings call.  The conference call can be accessed by dialing 800-946-0785 within the U.S. or 719-325-2155 outside the US a few minutes before the 8:00 a.m. EDT start and telling the operator that you are dialing in for Danaher's investor conference call, access code 4214214.  A replay of the conference call will be available shortly after the conclusion of the call and through Thursday, July 28, 2011. You can access the replay by dialing 888-203-1112 within the U.S. or 719-457-0820 outside the U.S. with the access code 4214214. In addition, presentation materials relating to Danaher's results have been posted to the "Investors" section of Danaher's website under the subheading "Earnings."Danaher is a science and technology leader that designs, manufactures, and markets innovative products and services to professional, medical, industrial, and commercial customers.  Our premier brands are among the most highly recognized in each of the markets we serve.  The Danaher Business System provides a foundation to our 59,000 associates around the world, serving customers in more than 125 countries.  In 2010, we generated $12.8 billion of revenue.  For more information please visit our website: www.danaher.com.In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings announcement also contains non-GAAP financial measures.  The reasons why we believe these measures provide useful information to investors, a reconciliation of these measures to the most directly comparable GAAP measures and other information relating to these measures are included in the supplemental reconciliation schedule attached.Statements in this release that are not strictly historical, including the statements regarding the Company's investments in new product development and go-to-market initiatives, business in emerging economies and positioning and expectations for 2011 and future periods and any other statements regarding events or developments that we believe or anticipate will or may occur in the future, may be "forward-looking" statements within the meaning of the federal securities laws.   There are a number of important factors that could cause actual results, developments and business decisions to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include, among other things, uncertainty in the economy and financial markets, the impact of our restructuring activities on our ability to grow, contractions or growth rates and cyclicality of markets we serve, competition, our ability to develop and successfully market new products and technologies and expand into new markets, our ability to successfully identify, consummate and integrate appropriate acquisitions (including our acquisition of Beckman Coulter, Inc. and our ability to effectively integrate the business and realize the anticipated benefits from the acquisition), contingent liabilities relating to acquisitions (including our acquisition of Beckman Coulter), risks relating to potential impairment of goodwill and other long-lived assets, currency exchange rates, our compliance with applicable laws and regulations (including regulations relating to medical devices and the healthcare industry) and changes in applicable laws and regulations, our ability to effectively address cost reduction and other changes in the healthcare industry, tax audits and changes in our tax rate and income tax liabilities, litigation and other contingent liabilities including intellectual property and environmental matters, risks relating to product defects and recalls, the impact of our debt obligations on our operations, pension plan costs, commodity costs and surcharges, our ability to adjust purchases and  manufacturing capacity to reflect market conditions, labor matters, our relationships with and the performance of our channel partners, risks relating to man-made and natural disasters, our ability to achieve projected cost reductions and growth, and international economic, political, legal and business factors.  Additional information regarding the factors that may cause actual results to differ materially from these forward-looking statements is available in our SEC filings, including our 2010 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the first quarter of 2011. These forward-looking statements speak only as of the date of this release and the Company does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.DANAHER CORPORATIONCONSOLIDATED CONDENSED BALANCE SHEETS($ in thousands)(unaudited)ASSETSJuly 1, 2011December 31, 2010Current Assets:Cash and equivalents$           551,583$        1,632,980Trade accounts receivable, net3,099,4182,159,503Inventories:Finished goods1,115,452582,331Work in process314,060185,658Raw material and supplies635,537412,194Total inventories2,065,0491,180,183Prepaid expenses and other current assets838,7501,070,215Total current assets6,554,8006,042,881Property, plant and equipment, net of accumulated depreciation of $1,583,010 and $1,462,686, respectively2,226,1191,160,886Investment in joint venture533,136511,283Other assets1,247,548696,498Goodwill 14,741,00410,482,998Other intangible assets, net6,210,7693,322,584Total assets$      31,513,376$      22,217,130LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Notes payable and current portion of long-term debt$        47,932$             40,761Trade accounts payable1,515,1131,169,185Accrued expenses and other liabilities2,718,2512,110,756Total current liabilities4,281,2963,320,702Other long-term liabilities 4,151,6302,339,755Long-term debt6,524,9312,783,907Stockholders' equity:Common stock - $0.01 par value7,5857,295Additional paid-in capital3,746,9952,412,401Retained earnings11,997,07710,945,928Accumulated other comprehensive income737,839345,386Total Danaher stockholders' equity16,489,49613,711,010Non-controlling interest66,02361,756Total stockholders' equity16,555,51913,772,766Total liabilities and stockholders' equity$      31,513,376$      22,217,130A complete copy of Danaher's Form 10-Q financial statements will be available when filed with the Securities and Exchange Commission on the Company's website (www.danaher.com)DANAHER CORPORATIONCONSOLIDATED CONDENSED STATEMENTS OF EARNINGS($ and shares in thousands, except per share amounts)(unaudited)Three Months EndedSix Months EndedJuly 1, 2011July 2, 2010July 1, 2011July 2, 2010Sales$     3,711,674$   3,217,428$   7,057,376$   6,225,257Cost of sales1,768,4791,611,8753,350,7933,150,992Gross profit1,943,1951,605,5533,706,5833,074,265Operating costs and other:    Selling, general and administrative expenses1,095,749896,5882,065,4511,762,919    Research and development expenses235,803191,199453,376372,035    Earnings from unconsolidated joint venture(14,460)--(28,935)--Operating profit626,103517,7661,216,691939,311Non-operating income (expense):     Interest expense(31,709)(28,944)(62,434)(58,988)     Interest income2,2801,0394,3952,592Earnings from continuing operations before income taxes596,674489,8611,158,652882,915Income taxes(147,028)(127,738)(288,760)(228,046)Earnings from continuing operations449,646362,123869,892654,869Earnings from discontinued operations, net of income taxes199,11810,353208,23017,840Net earnings$       648,764$      372,476$   1,078,122$      672,709Earnings per share from continuing operations:      Basic $         0.67$         0.55$         1.31$         1.01      Diluted$         0.65$         0.53$         1.26$         0.97Earnings per share from discontinued operations:      Basic $         0.30$         0.02$         0.31$         0.03      Diluted$         0.29$         0.02$         0.30$         0.03Net earnings per share:      Basic $         0.97$         0.57$        1.62   $         1.03*      Diluted$         0.94$         0.55$        1.56$         1.00Average common stock and common equivalent shares outstanding (in thousands):      Basic667,207652,478664,403650,723      Diluted694,599682,338691,464681,230* Earnings per share amounts do not add due to rounding.A complete copy of Danaher's Form 10-Q financial statements will be available when filed with the Securities and Exchange Commission on the Company's website (www.danaher.com)DANAHER CORPORATIONCONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS($ in thousands)(unaudited)Six Months EndedJuly 1, 2011July 2, 2010Cash flows from operating activities:Net earnings$      1,078,122$      672,709Less: earnings from discontinued operations, net of tax208,23017,840Net earnings from continued operations869,892654,869Non-cash items: Depreciation106,62896,364Amortization 118,67394,362Stock compensation expense45,96640,882Earnings from unconsolidated joint venture, net of cash dividends received(16,586)--Change in trade accounts receivable, net(14,850)(63,664)Change in inventories(32,280)(157,413)Change in accounts payable36,658174,265Change in prepaid expenses and other assets54,345123,737Change in accrued expenses and other liabilities(11,733)(47,252)Total operating cash flows from continuing operations1,156,713916,150Total operating cash flows from discontinued operations(57,581)15,652Net cash flows from operating activities1,099,132931,802Cash flows from investing activities:Payments for additions to property, plant and equipment(108,094)(89,119)Proceeds from disposals of property, plant and equipment3,431627Cash paid for acquisitions(6,056,279)(1,398,526)Total investing cash flows from continuing operations(6,160,942)(1,487,018)Investing cash flows from discontinued operations(1,521)(3,219)Proceeds from sale of discontinued operations680,105--Net cash used in investing activities(5,482,358)(1,490,237)Cash flows from financing activities:Proceeds from issuance of common stock1,050,32292,850Payment of dividends(26,973)(26,012)Net proceeds of borrowings (maturities of 90 days or less)462,14721,543Proceeds of borrowings (maturities greater than 90 days)1,785,764--Repayments of borrowings (maturities greater than 90 days)(2,021)--Net cash provided by financing activities3,269,23988,381Effect of exchange rate changes on cash and equivalents32,590(18,930)Net change in cash and equivalents(1,081,397)(488,984)Beginning balance of cash and equivalents1,632,9801,721,920Ending balance of cash and equivalents$         551,583$      1,232,936Supplemental disclosures:Cash interest payments$         38,439$         39,192Cash income tax payments (including $53 million related to the gain on sale of the discontinued Pacific Scientific Aerospace business ? refer to Note 3)$       162,696$       114,440A complete copy of Danaher's Form 10-Q financial statements will be available when filed with the Securities and Exchange Commission on the Company's website (www.danaher.com)DANAHER CORPORATION AND SUBSIDIARIESSEGMENT INFORMATION($ in millions, unaudited)SalesThree Months EndedSix Months EndedJuly 1, 2011July 2, 2010July 1, 2011July 2, 2010Test & Measurement$       848.2$       682.2$    1,678.7$    1,334.3Environmental730.6696.01,398.61,307.7Life Sciences & Diagnostics704.8540.11,331.41,056.6Dental504.7428.3968.2860.1Industrial Technologies923.4698.51,680.51,351.0Businesses contributed to Apex JV attributable to periods prior to contribution--172.3--315.6Total Company$    3,711.7$    3,217.4$    7,057.4$    6,225.3Operating ProfitTest & Measurement$       190.2$       145.3$       362.4$       269.1Environmental158.4150.6287.3254.6Life Sciences & Diagnostics34.532.4124.969.2Dental55.046.2104.582.8Industrial Technologies200.5144.8362.1270.0Businesses contributed to Apex joint venture:Attributable to periods prior to contribution--22.7--41.5Equity method earnings subsequent to JV formation 14.5--28.9--Other(27.0)(24.2)(53.4)(47.9)Total Company$       626.1$       517.8$    1,216.7$       939.3Operating MarginsTest & Measurement22.4%21.3%21.6%20.2%Environmental21.7%21.6%20.5%19.5%Life Sciences & Diagnostics4.9%6.0%9.4%6.5%Dental10.9%10.8%10.8%9.6%Industrial Technologies21.7%20.7%21.6%20.0%Total Company16.9%16.1%17.2%15.1%This information is presented for reference only.  Final unaudited financial statements will include footnotes, which should be referenced when available, to more fully understand the contents of this informationDANAHER CORPORATION AND SUBSIDIARIESSALES GROWTH INFORMATIONComponents of Sales ChangeThree Months  Ended July 1, 2011:Existing BusinessesAcquisitionsImpact of Currency TranslationTotalTest & Measurement9.5%11.0%4.0%24.5%Environmental-0.5%0.5%5.0%5.0%Life Sciences & Diagnostics8.0%15.0%7.5%30.5%Dental6.5%4.5%7.0%18.0%Industrial Technologies14.5%13.0%4.5%32.0%Total Company7.5%3.0%5.0%15.5%Components of Sales ChangeSix Months  Ended July 1, 2011:ExistingBusinessesAcquisitionsImpact of Currency TranslationTotalTest & Measurement11.5%12.0%2.5%26.0%Environmental3.0%1.0%3.0%7.0%Life Sciences & Diagnostics8.5%12.5%5.0%26.0%Dental6.0%2.5%4.0%12.5%Industrial Technologies14.5%7.5%2.5%24.5%Total Company8.5%1.5%3.5%13.5%This information is presented for reference only.  Final unaudited financial statements will include footnotes, which should be referenced when available, to more fully understand the contents of this informationDANAHER CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES($ in 000's except per share data)Three Months EndedSix Months EndedAdjusted Net Earnings from Continuing OperationsJuly 1, 2011July 2, 2010% ChangeJuly 1, 2011July 2, 2010% ChangeNet Earnings from Continuing Operations (GAAP)$                 449,646$            362,12324.2%$   869,892$   654,86932.8%Acquisition-related transaction costs deemed significant ($26 million pre-tax for each of the three and six months ended July 1, 2011 and $8 million pre-tax for the six months ended July 2, 2010) and fair value adjustments to acquisition related inventory and deferred revenue balances and change-in-control payments ($29 million pre-tax for each of the three and six months ended July 1, 2011 and $9 million and $38 million pre-tax, respectively, for the three and six months ended July 2, 2010) ("Acquisition Related Costs")41,3486,33141,34834,894Gains from net reduction in income tax reserves, other discrete tax items and reduction of effective tax rate ("Income Tax Items")(4,109)-(4,109)(4,027)Adjusted Net Earnings from Continuing Operations (Non-GAAP)$                 486,885$            368,45432.1%$   907,131$   685,73632.3%Adjusted Diluted Net Earnings Per Share from Continuing OperationsDiluted Net Earnings Per Share from Continuing Operations (GAAP)$                       0.65$                  0.5322.6%$         1.26$         0.9729.9%Acquisition Related Costs0.060.010.060.05Income Tax Items(0.01)-(0.01)(0.01)Adjusted Diluted Net Earnings Per Share from Continuing Operations (Non-GAAP)$                       0.70$                  0.5429.6%$         1.31$         1.0129.7%Adjusted Diluted Net Earnings Per Share Provided by Beckman Coulter, Inc. from June 25 to July 1, 2011 ($12 million pre-tax for the three months and six months ended July 1, 2011)(0.01)-(0.01)-Adjusted Diluted Net Earnings Per Share from Continuing Operations Excluding Beckman Coulter, Inc. (Non-GAAP)$                       0.69$                  0.5427.8%$         1.30$         1.0128.7%Core Revenue GrowthComponents of Revenue GrowthThree Months Ended July 1,2011 vs. Comparable 2010 PeriodSix MonthsEnded July 1, 2011 vs. Comparable 2010 PeriodCore (non-GAAP)7.5%8.5%Acquisitions (net of reduction in revenues relating to Apex JV) (non-GAAP)3.0%1.5%Impact of currency translation (non-GAAP)5.0%3.5%Total Revenue Growth (GAAP)15.5%13.5%Adjusted Net Earnings from Continuing Operations and Adjusted Diluted Net Earnings Per Share from Continuing OperationsWe disclose the non-GAAP measures of adjusted net earnings from continuing operations and adjusted diluted net earnings per share from continuing operations, which refer to GAAP net earnings from continuing operations and GAAP diluted net earnings per share from continuing operations, respectively, excluding the items identified in the reconciliation schedule above.  We also present these measures on a basis which excludes Beckman Coulter.  These non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies.Management believes that these measures provide useful information to investors by reflecting additional ways of viewing aspects of Danaher's operations that, when reconciled to the corresponding GAAP measures, help our investors to better understand the long-term profitability trends of our business, and facilitate easier comparisons of our profitability to prior and future periods and to our peers.  The items described above have been excluded from these measures because items of this nature and/or size occur with inconsistent frequency, occur for reasons that may be unrelated to Danaher's commercial performance during the period and/or we believe are not indicative of Danaher's ongoing operating costs or gains in a given period, which we believe may obscure underlying business trends and make comparisons of long-term performance difficult.  We excluded the results attributable to Beckman Coulter to identify the impact of that acquisition on our business during the brief period during the quarter that we owned the business.  The Company deems acquisition-related transaction costs incurred in a given period to be significant (generally relating to the Company's larger acquisitions) if it determines that such costs exceed the range of acquisition-related transaction costs that Danaher typically incurs in a given period.The Company estimates the tax effect of the items identified in the reconciliation schedule above by applying the Company's overall estimated effective tax rate to the pre-tax amount, unless the nature of the item and/or the tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.Core Revenue and Core Revenue GrowthWe use the term "core revenue" or "sales from existing businesses" to refer to GAAP revenue excluding (1) sales from acquired businesses recorded prior to the first anniversary of the acquisition ("acquisition sales"), (2) first half 2010 sales attributable to the businesses contributed to the Apex joint venture, and (3) the impact of currency translation.  The portion of GAAP revenue attributable to currency translation is calculated as the difference between (a) the period-to-period change in GAAP revenue (excluding acquisition sales and first half 2010 sales attributable to the businesses contributed to the Apex joint venture) and (b) the period-to-period change in revenue (excluding acquisition sales and first half 2010 sales attributable to the businesses contributed to the Apex joint venture) after applying current period foreign exchange rates to the prior year period.  We use the term "core revenue growth" to refer to the measure of comparing current period core revenue with the corresponding period of the prior year.  These non-GAAP measures should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies.Management believes that these measures provide useful information to investors by reflecting additional ways of viewing aspects of Danaher's operations that, when reconciled to the corresponding GAAP measures, help our investors to better identify underlying growth trends in our business and facilitate easier comparisons of our revenue performance with prior and future periods and to our peers.  We exclude the effect of currency translation from these measures because currency translation is not under management's control, is subject to volatility and can obscure underlying business trends. We exclude the effect of acquisitions because the nature, size and number of acquisitions can vary dramatically from period to period and between us and our peers, which we believe may obscure underlying business trends and make comparisons of long-term performance difficult.  We exclude the effect of the first half 2010 sales attributable to the businesses contributed to the Apex joint venture because as a result of application of the equity method of accounting beginning with the formation of the joint venture on July 4, 2010, the Company did not recognize sales from those businesses in the first half of 2011.SOURCE Danaher CorporationFor further information: Matt R. McGrew, Vice President, Investor Relations, Danaher Corporation, +1-202-828-0850, Fax: +1-202-828-0860