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Danaher Management Discusses Q2 2012 Results - Earnings Call Transcript

We continue to focus our efforts on capturing market share, driven by DBS, as well as our investments in innovation. Videojet, ChemTreat, Leica Biosystems, Esko, Kerr, Arbor Networks and Radiometer are among the businesses where we believe we have taken market share during the quarter.

Geographically, the U.S. largely continued its strong start to 2012, their Q2 revenues growing mid-single digits, though we did see some pockets of weakness as we exited the quarter. In Western Europe, our sales were flat in the quarter, which, by and large, resonates with the headlines. China was mixed but flat in the quarter. The bright spot in China for us has been healthcare with both our Dental and Life Sciences & Diagnostics businesses growing double digits in the quarter. The rest of the emerging markets remained strong and also grew at a double-digit rate.

We remain active and optimistic on the M&A front. Through the first 6 months, we've deployed nearly $1 billion of capital on 8 acquisitions, primarily in our Industrial, Environmental and Test & Measurement segments. Even taking into account the capital we deployed on these transactions, we still expect to have more than $5 billion of M&A capacity over the next 2 years.

Turning to details of the quarter. Today, we reported record second quarter diluted net earnings per share of $0.84, a 31% increase as compared to our diluted net EPS last year. The current period includes a $0.03 benefit from a lower-than-anticipated income tax rate and a gain from resolving a contingency related to a prior asset disposal.

Revenues for the quarter increased 25% to $4.6 billion, with core revenues up 3.5%. The impact of acquisitions, primarily the addition of Beckman Coulter, increased revenues by 25% while currency translation reduced sales by 3.5%. Our gross margin for the second quarter was 51.7%. Our reported operating margin expanded 100 basis points year-over-year to 17.8%.

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