RESULTS OF OPERATIONS
The following table sets forth our sales and income from operations
by segment for the years ended December 31 (in millions):
SALES
Sales increased 12.4 percent to $3,238.4 million in 2002 from
$2,880.0 million in 2001. Excluding the effect of foreign exchange,
sales increased 11.9 percent in 2002 compared with 2001. Sales
increased 9.8 percent to $2,880.0 million in 2001 from $2,622.3
million in 2000. Excluding the effect of foreign exchange, sales
increased 10.5 percent in 2001 compared with 2000. The increase
in the growth rate in 2002 compared with 2001 was attributable
to sales from our Cole-Parmer acquisition and an increase in
our base business. The increase in the 2001 growth rate was
primarily attributable to the four acquisitions completed during
2001. Excluding the effect of foreign exchange, we are forecasting
sales growth to range between 5 percent and 6 percent for 2003.
Sales in the domestic distribution segment increased 13.8 percent
to $2,776.0 million in 2002 from $2,439.9 million in 2001. Domestic
distribution sales increased 11.6 percent to $2,439.9 million
in 2001 from $2,187.3 million in 2000. The 2002 sales growth
in our domestic distribution segment is attributable to the
effect of the Cole-Parmer acquisition completed in November
2001 and an increase in our base business growth rate to approximately
6 percent for 2002 from approximately 5 percent in 2001. Excluding
the effect of foreign exchange, we are forecasting domestic
distribution sales growth to range between 5.5 percent and 6.5
percent for 2003, primarily reflecting growth in our base business.
Sales in the international distribution segment increased 5.4
percent to $448.4 million in 2002 from $425.4 million in 2001.
Excluding the effect of foreign exchange, sales increased 2.4
percent in 2002. International distribution sales increased
1.6 percent to $425.4 million in 2001 from $418.5 million in
2000. Excluding the effect of foreign exchange, sales increased
5.5 percent in 2001. The decrease in the 2002 growth rate, excluding
the effect of foreign exchange, was primarily due to our strategy
to focus on higher-margin sales in our international distribution
segment. Excluding the effect of foreign exchange, the increase
in the 2001 growth rate from 1.6 percent in 2000 was attributable
to increased volume in Europe and Asia-Pacific. We are forecasting
international distribution growth to range between 4 percent
and 5 percent for 2003, excluding the effect of foreign exchange,
reflecting a focus on profitable sales growth in 2003.
Sales in the laboratory workstations segment increased 8.6 percent
to $193.9 million in 2002 from $178.6 million in 2001. Included
in the 2002 sales was $12.3 million related to a homeland security
order awarded to us in the fourth quarter that we do not anticipate
to repeat in 2003. Laboratory workstations’ sales increased
8.1 percent to $178.6 million in 2001 from $165.2 million in
2000. Backlog in this segment remained relatively stable at
$108 million compared with $110.1 million a year ago. We are
forecasting sales growth in our laboratory workstations segment
to slow to 1 percent in 2003, primarily due to the effect of
the homeland security order in 2002.
GROSS PROFIT
Gross profit increased 16.0 percent to $855.1 million, or 26.4
percent of sales, in 2002 from $737.2 million, or 25.6 percent
of sales, in 2001. Gross profit increased 13.7 percent to $737.2
million in 2001 from $648.3 million, or 24.7 percent of sales,
in 2000. The increase in 2002 gross profit as a percentage of
sales was primarily attributable to the impact of the Cole-Parmer
acquisition completed in 2001. The increase in gross profit
as a percentage of sales from 2000 to 2001 was attributable
to acquisitions completed in 2001. We are forecasting a small
increase in gross profit as a percentage of sales in 2003 due
to our acquisitions completed in 2002 and our continued strategy
to increase sales of our higher-margin proprietary products.
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