ACQUISITIONS

The Company continually evaluates potential acquisitions that either strategically fit with the Company’s existing portfolio or expand the Company’s portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for as purchases and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these businesses reflect a number of factors including the future earnings and cash flow potential of these businesses, the multiple to earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers, the competitive nature of the processes by which the Company acquired the businesses and the complementary strategic fit and resulting synergies these businesses bring to existing operations.

The Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities. The Company obtains this information during due diligence and through other sources. In the months after closing, as the Company obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, it is able to refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate certain pre-acquisition contingencies associated with certain of its 2012 acquisitions and is also in the process of obtaining valuations of acquired intangible assets and certain acquisition related liabilities in connection with these acquisitions. The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required. The Company evaluated whether any adjustments to the prior year purchase price allocations were material and concluded no retrospective adjustment to prior year financial statements was required.

The following briefly describes the Company’s acquisition activity for the three years ended December 31, 2012.

The Company acquired fourteen businesses during 2012 for total consideration of $1.8 billion in cash, net of cash acquired. The businesses acquired complement existing units of each of the Company's five segments. The aggregate annual sales of the fourteen businesses acquired at the time of their respective acquisitions, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were $666 million. The Company preliminarily recorded an aggregate of $1.0 billion of goodwill related to these acquisitions.

On June 30, 2011, following the successful completion of the Company’s tender offer for all of the outstanding shares of common stock of Beckman Coulter, Inc. (“Beckman Coulter”), the Company completed the acquisition of Beckman Coulter by merging one of its indirect, wholly-owned subsidiaries with and into Beckman Coulter such that Beckman Coulter became an indirect, wholly-owned subsidiary of the Company. Beckman Coulter develops, manufactures and markets products that simplify and automate complex biomedical testing. Beckman Coulter’s diagnostic systems are found in hospitals and other clinical settings around the world and produce information used by physicians to diagnose disease and make treatment decisions. Scientists use its life science research instruments to study complex biological problems including causes of disease and potential new therapies or drugs. Beckman Coulter had revenues of $3.7 billion in 2010, and is included in the Company’s Life Sciences & Diagnostics segment from the acquisition date. The Company recorded an aggregate of $3.7 billion of goodwill related to the acquisition of Beckman Coulter. The Company obtained control of Beckman Coulter on June 24, 2011 and, as a result, the earnings of Beckman Coulter are reflected in the Company’s results from June 25, 2011 forward.

The Company paid $5.5 billion in cash (net of $450 million of cash acquired) to acquire all of the outstanding shares of common stock of Beckman Coulter and assumed $1.6 billion of indebtedness in connection with the acquisition. The Company financed the acquisition of Beckman Coulter using (1) $2.3 billion of available cash, (2) net proceeds, after expenses and the underwriters’ discount, of $966 million from the underwritten public offering of the Company’s common stock on June 21, 2011, (3) net proceeds, after expenses and the underwriters’ discount, of $1.8 billion from the underwritten public offering of senior unsecured notes on June 23, 2011, and (4) net proceeds from the sale of additional commercial paper under the Company’s U.S. commercial paper program prior to the closing of the acquisition.

In addition to the acquisition of Beckman Coulter, during 2011, the Company completed the acquisition of thirteen other businesses (including the acquisition of EskoArtwork, a leading full service solutions provider for the digital packaging design and production market), for total consideration of $669 million in cash, net of cash acquired. The additional businesses acquired complement existing units of each of the Company's five segments. The aggregate annual sales of the businesses acquired at the time of their respective acquisitions, in each case based on the acquired company’s revenues for its last completed fiscal year prior to the acquisition, were $325 million. The Company recorded an aggregate of $419 million of goodwill related to these acquisitions.

On January 30, 2010, the Company completed the acquisition of the Analytical Technologies division of MDS Inc., which included a 50% ownership position in the AB Sciex joint venture and a 100% ownership position in 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. The aggregate purchase price for the combined transactions was $1.0 billion, including debt assumed and net of cash acquired. The aggregate sales of AB Sciex and Molecular Devices in their last completed fiscal year prior to the acquisition were $650 million and these businesses now operate within the Company's Life Sciences & Diagnostics segment.

In addition, during 2010, the Company completed the acquisition of seventeen other businesses for total consideration of $1.1 billion in cash, net of cash acquired. The additional businesses acquired complement existing units of each of the Company's five segments. The aggregate annual sales of these seventeen acquired businesses at the time of their respective acquisitions, in each case based on the company’s revenues for its last completed fiscal year prior to the acquisition, were $440 million. The Company recorded $1.2 billion of goodwill in connection with its 2010 acquisitions, including AB Sciex and Molecular Devices.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for all acquisitions consummated during 2012, 2011 and 2010 ($ in millions):



Total	2012			2011			2010
Trade accounts receivable	$	105.4		$	859.5		$	178.7
Inventories	97.0			812.4			171.2
Property, plant and equipment	87.5			1,042.1			84.8
Goodwill	1,015.7			4,164.7			1,157.8
Other intangible assets, primarily trade names, customer relationships and patents	768.3			2,772.4			870.9
In-process research and development	61.5			143.0			26.5
Trade accounts payable	(50.8		)	(278.2		)	(59.6		)
Other assets and liabilities, net	(287.7		)	(1,662.9		)	(238.4		)
Assumed debt	—			(1,640.4		)	(0.9		)
Non-controlling interest acquired	(0.1		)	(1.8		)	(61.3		)
Net cash consideration	$	1,796.8		$	6,210.8		$	2,129.7

The following tables summarize the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition for the individually significant acquisitions in 2011 and 2010 discussed above, and all of the other 2011 and 2010 acquisitions as a group ($ in millions):



2011 Acquisitions
	Beckman Coulter			Others			Total
Trade accounts receivable	$	783.3		$	76.2		$	859.5
Inventories	774.0			38.4			812.4
Property, plant and equipment	1,036.2			5.9			1,042.1
Goodwill	3,745.8			418.9			4,164.7
Other intangible assets, primarily customer relationships, trade names and patents	2,518.0			254.4			2,772.4
In-process research and development	143.0			—			143.0
Trade accounts payable	(257.3		)	(20.9		)	(278.2		)
Other assets and liabilities, net	(1,561.0		)	(101.9		)	(1,662.9		)
Assumed debt	(1,640.4		)	—			(1,640.4		)
Attributable to non-controlling interest	—			(1.8		)	(1.8		)
Net cash consideration	$	5,541.6		$	669.2		$	6,210.8



2010 Acquisitions
	AB Sciex & Molecular Devices			Others			Total
Trade accounts receivable	$	102.7		$	76.0		$	178.7
Inventories	104.3			66.9			171.2
Property, plant and equipment	54.5			30.3			84.8
Goodwill	496.9			660.9			1,157.8
Other intangible assets, primarily customer relationships, trade names and patents	342.0			528.9			870.9
In-process research and development	7.4			19.1			26.5
Trade accounts payable	(37.9		)	(21.7		)	(59.6		)
Other assets and liabilities, net	(30.7		)	(207.7		)	(238.4		)
Assumed debt	(0.9		)	—			(0.9		)
Attributable to non-controlling interest	—			(61.3		)	(61.3		)
Net cash consideration	$	1,038.3		$	1,091.4		$	2,129.7

During 2011 and 2010, in connection with completed acquisitions, the Company incurred $57 million and $36 million, respectively, of pre-tax transaction related costs, primarily banking fees, legal fees, amounts paid to other third party advisers and change in control costs. In addition, the Company’s earnings for 2011 and 2010 reflect the impact of additional pre-tax charges totaling $117 million and $54 million, respectively, associated with fair value adjustments to acquired inventory and acquired deferred revenue related to significant acquisitions. Transaction related costs and acquisition related fair value adjustments were not material to 2012 earnings.

Pro Forma Financial Information (Unaudited)

The unaudited pro forma information for the periods set forth below gives effect to the 2012 and 2011 acquisitions as if they had occurred as of January 1, 2011. The pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that actually would have been achieved had the acquisitions been consummated as of that time ($ in millions except per share amounts):



	2012		2011
Sales	$	18,623.8	$	18,635.6
Net earnings from continuing operations	$	2,304.8	$	2,038.9
Diluted net earnings per share from continuing operations	$	3.24	$	2.88

The 2011 unaudited pro forma revenue and earnings set forth above were adjusted to exclude the impact of approximately $117 million in non-recurring acquisition date fair value adjustments to inventory and deferred revenue related to the Beckman Coulter acquisition. Acquisition-related transaction costs associated with the Beckman Coulter transaction incurred by both the Company and Beckman Coulter of approximately $60 million were also excluded from the 2011 pro-forma earnings.