Management's Discussion and Analysis of Financial Condition and Results of Operations is designed to provide a reader of Danaher Corporation's ("Danaher," "Company," "we," "us," "our") financial statements with a narrative from the perspective of Company management. The Company's MD&A is divided into four main sections:

• Information Relating to Forward-Looking Statements

• Overview

• Results of Operations

• Liquidity and Capital Resources

For a full understanding of the Company's financial condition and results of operations, you should read this discussion along with Management Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K for the year ended December 31, 2007, and our Consolidated Condensed Financial Statements and related Notes as of September 26, 2008.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain information included or incorporated by reference in this report, written statements or other documents filed with or furnished by us to the SEC, in our press releases or in our communications and discussions through webcasts, conference calls and other presentations, may be deemed to be "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements regarding: projections of revenue, profit, profit margins, expenses and cost-reduction activities, our effective tax rate, tax provision and changes to our tax provision, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other financial measures; plans, strategies and objectives of management for future operations, including statements relating to anticipated operating performance, new product and service developments, potential acquisitions and synergies, our stock repurchase program, executive compensation and purchase commitments; growth and other trends in markets we sell into; future economic conditions or performance; the impact of adopting new accounting pronouncements; the outcome of outstanding claims, legal proceedings or other contingent liabilities; assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that Danaher intends, expects, projects, believes or anticipates will or may occur in the future. Forward-looking statements may be characterized by terminology such as "believe," "anticipate," "should," "would," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions. These statements are based on assumptions and assessments made by our management in light of their experience and perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties, including but not limited to the following:

• We face intense competition and if we are unable to compete effectively, we may face decreased demand or price reductions for our products.

• Our growth depends in part on the timely development and commercialization, and customer acceptance, of new products and product enhancements based on technological innovation.

• Our growth rate could decline if the markets into which we sell our products decline or do not grow as anticipated.

• Our acquisition of businesses could negatively impact our profitability and return on invested capital. Conversely, any inability to consummate acquisitions at our prior rate could negatively impact our growth rate. In addition, SFAS No. 141R, which revises the accounting rules for business combinations, will be effective for fiscal years beginning after December 15, 2008 and could have a material impact on the Company's profitability and results of operations.

• The resolution of contingent liabilities from businesses that we have sold could adversely affect our results of operations and financial condition.

• Our success depends on our ability to maintain and protect our intellectual property and avoid claims of infringement or misuse of third party intellectual property.

• We are subject to a variety of litigation in the course of our business that could adversely affect our results of operations and financial condition.

• Our operations expose us to the risk of environmental liabilities, compliance costs, litigation and violations that could adversely affect our financial condition, results of operations and reputation.

• Our businesses are subject to extensive regulation; failure to comply with those regulations could adversely affect our results of operations, financial condition and reputation.

• Our reputation and our ability to do business may be impaired by improper conduct by any of our employees, agents or business partners.

• Changes in our tax rates or exposure to additional income tax liabilities could affect our profitability. In addition, audits by tax authorities could result in additional tax payments for prior periods.

• Foreign currency exchange rates and commodity prices may adversely affect our results of operations and financial condition.

• If we cannot obtain sufficient quantities of materials, components and equipment required for our manufacturing activities at competitive prices and quality and on a timely basis, or if our manufacturing capacity does not meet demand, our business and financial results will suffer.

• Changes in governmental regulations may reduce demand for our products or increase our expenses.

• Adverse changes in our relationships with, or the financial condition or performance of, key distributors, resellers and other channel partners could adversely affect our results of operations.

• The inability to hire, train and retain a sufficient number of skilled officers and other employees could impede our ability to compete successfully.

• International economic, political, legal and business factors could negatively affect our results of operations, cash flows and financial condition.

• Cyclical economic conditions have affected and may continue to adversely affect our financial condition and results of operations.

• Work stoppages, union and works council campaigns, labor disputes and other matters associated with our labor force could adversely impact our results of operations and cause us to incur additional costs.

• Our defined benefit pension plans are subject to financial market risks that could adversely affect our operating results.

• If we suffer loss to our facilities or distribution system due to catastrophe, our operations could be seriously harmed.

• Our indebtedness may limit our use of our cash flow. In addition, further deterioration of the credit markets could adversely impact our ability to access the commercial paper market and other sources of financing.

Any such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. These forward-looking statements speak only as of the date of the report, press release, statement, document, webcast or oral discussion in which they are made. The Company does not assume any obligation, and does not intend, to update any forward-looking statement. See Part I - Item 1A of Danaher's Annual Report on Form 10-K for the year ended December 31, 2007, for a further discussion regarding some of the reasons that actual results may differ materially from the results contemplated by our forward-looking statements.

OVERVIEW

General

Danaher strives to create shareholder value through:

• delivering sales growth, excluding the impact of acquired businesses, in excess of the overall market growth for its products and services;

• upper quartile financial performance compared to Danaher's peer companies; and

• upper quartile cash flow generation from operations compared to Danaher's peer companies.

To accomplish these goals, the Company uses a set of tools and processes, known as the Danaher Business System ("DBS"), which are designed to continuously improve business performance in critical areas of quality, delivery, cost and innovation. Within the DBS framework, the Company also pursues a number of ongoing strategic initiatives intended to improve operational performance, including global sourcing of materials and services and innovative product development. The Company also acquires businesses that it believes can help it achieve the objectives described above, and believes that many acquisition opportunities remain available within its target markets. Certain of the Company's business acquisitions strategically fit with existing operations, while others are of such a nature and size as to establish a new strategic line of business. The extent to which appropriate acquisitions are made and effectively integrated can affect the Company's overall growth and operating results. The Company also continually assesses the strategic fit of its existing businesses and may divest businesses that are deemed not to fit with the Company's strategic plan or are not achieving the desired return on investment.

Danaher is a multinational corporation with global operations. In 2007, approximately 51% of Danaher's sales were derived outside the United States. As a global business, Danaher's operations are affected by worldwide, regional and industry-specific economic and political factors. For example, in those industry segments where the Company is a capital equipment provider, revenues depend on the capital expenditure budgets and spending patterns of the Company's customers, who may delay or accelerate purchases in reaction to changes in their businesses and in the economy. However, Danaher's geographic and industry diversity, as well as the diversity of its product sales and services, has helped limit the impact of any one industry or the economy of any single country on the consolidated operating results. Given the broad range of products manufactured and geographies served, management does not use any indices other than general economic trends to predict the overall outlook for the Company. The Company's individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and the outlook for the future. In addition, the Company's order rates are highly indicative of the Company's revenue in the short term and thus a key measure of anticipated performance.

Business Performance

While differences exist among the Company's businesses, the Company continued to experience overall growth during the three and nine months ended September 26, 2008 as compared to the comparable periods of the prior year, but at a slower rate than in 2007. Year-over-year growth rates for the third quarter of 2008 reflect strength in the Company's environmental, medical technologies and motion businesses. Partially offsetting the strength in those businesses was continued weak North American demand in certain of the Company's industrial businesses, primarily the integrated scanning system and network test businesses, as well as in the Company's consumer oriented businesses.

Although recent distress in the financial markets has not had a significant impact on the Company's financial position, results of operations or liquidity as of the filing date of this Report, management continues to monitor the financial markets and general global economic conditions. If further changes in financial markets or other areas of the economy adversely affect the Company's access to the commercial paper markets, the Company would expect to rely on a combination of available cash and existing committed credit facilities to provide short-term funding. Please refer to the "Liquidity and Capital Resources" section for additional discussion.

The Company continues to operate in a highly competitive business environment in most markets and geographies served. The Company's future performance will depend on its ability to address a variety of challenges and opportunities in the markets and geographies served, including slowing growth rates or contraction in certain major geographies, access to funding in the global capital markets, trends toward increased utilization of the global labor force, consolidation of competitors, the expansion of market opportunities in Asia and recent increases in raw material costs. The Company regularly evaluates market needs and conditions with the objective of positioning itself to provide superior products and services to its customers in a cost efficient manner. Consistent with this approach, during the remainder of 2008, the Company anticipates accelerating restructuring activities, including voluntary and involuntary separation programs as well as certain facility rationalizations, to better position the Company's businesses in light of the uncertain economic environment. Management currently anticipates incurring costs of approximately $75 million in connection with these activities during the fourth quarter of 2008. The restructuring charges that the Company expects to incur in the fourth quarter of 2008 are expected to have a favorable impact on operating profit margins in 2009.

Although the Company has a U.S. dollar functional currency for reporting purposes, a substantial portion of its sales and profits are generated in foreign currencies. Sales and profits generated by subsidiaries operating outside of the United States are translated into U.S. dollars using exchange rates effective during the respective period and as a result are affected by changes in exchange rates. The Company has generally accepted the exposure to exchange rate movements without using derivative financial instruments to manage this risk. Therefore, both positive and negative movements in currency exchange rates against the U.S. dollar will continue to affect the reported amount of sales, profit, and assets and liabilities in the Company's consolidated financial statements.

The impact of currency rate changes increased reported sales by approximately 2.5% and 4.0% during the three and nine month periods ended September 26, 2008, respectively, as compared to the comparable periods of 2007. Given the lower overall profit margins in the Company's European businesses, currency rate changes lowered both periods' year-over-year comparisons of reported operating profit margins.

Assuming exchange rates as of September 26, 2008 remain unchanged for the balance of 2008, the impact of currency translation would account for 3.0% revenue growth for 2008 as compared to 2007. Since September 26, 2008, the U.S. dollar has strengthened against many major currencies including the Euro. This strengthening of the U.S. dollar against other major currencies will adversely impact the Company's sales and results of operations on an overall basis. Any weakening of the U.S. dollar against other major currencies would benefit the Company's sales and results of operations on an overall basis but would erode operating profit margins.

RESULTS OF OPERATIONS

Consolidated sales for the three months ended September 26, 2008 increased 17.5% over the comparable period of 2007. Sales from existing businesses (references to "sales from existing businesses" in this report include sales from acquired businesses only starting from and after the first anniversary of the acquisition, and exclude currency effect) contributed 4.0% growth. Acquisitions accounted for 11.0% growth. The impact of currency translation on sales increased reported sales by 2.5% as the U.S. dollar was weaker against other major currencies in the three months ended September 26, 2008 compared to the comparable period of 2007.

For the nine months ended September 26, 2008, consolidated sales increased 20.5% over the comparable period in 2007. Sales from existing businesses contributed 4.0% growth. Acquisitions accounted for 12.5% growth and currency translation contributed 4.0% growth.

The growth in sales from acquisitions in the three and nine months ended September 26, 2008 is primarily related to acquisitions in the Company's Professional Instrumentation segment. The Company acquired twelve businesses during year ended December 31, 2007 and an additional eleven businesses through the nine months ended September 26, 2008. The acquisition of Tektronix in November 2007 contributed the majority

of the three month period year-over-year acquisition related revenue growth, while the combination of the Tektronix and ChemTreat acquisitions contributed the majority of the nine month period year-over-year acquisition related revenue growth.

Operating profit margins from continuing operations were 16.3% in the three months ended September 26, 2008 compared to 17.0% in the comparable period of 2007. Operating profit margins for the quarter were adversely impacted by $13 million ($10 million or $0.03 per diluted share, net of tax) as a result of the acquired inventory and acquired deferred revenue fair value charges recorded during the period related to the acquisition of Tektronix. These charges adversely impacted operating profit margins by 40 basis points. The same type of charges related to the Tektronix acquisition are expected to adversely impact the Company's operating profit margins through the balance of 2008, but at lower levels than experienced in the first nine months of 2008. In addition, the dilutive effect of acquired businesses adversely impacted operating profit margins by 25 basis points during the period.

Operating profit margins from continuing operations were 15.2% for nine months ended September 26, 2008 compared to 16.2% in the comparable period of 2007. Operating profit margins for the nine month period were adversely impacted by $53 million ($39 million or $0.12 per diluted share, net of tax) as a result of the acquired inventory and acquired deferred revenue fair value charges recorded during the period related to the acquisition of Tektronix. These charges adversely impacted operating profit margins by 55 basis points. In addition, the dilutive effect of acquired businesses adversely impacted operating profit margins by 25 basis points during the period. A gain recorded in the 2007 second quarter from the collection of indemnification proceeds related to a lawsuit adversely affected year-over-year comparisons of operating profit margins by 15 basis points.

The following table summarizes sales by business segment for each of the periods indicated ($ in thousands):

                                            Three Months Ended                   Nine Months Ended
                                      September 26,     September 28,     September 26,     September 28,
                                          2008              2007              2008              2007
Professional Instrumentation         $     1,213,676   $       880,003   $     3,616,815   $     2,440,401
Medical Technologies                         835,009           741,183         2,433,206         2,131,675
Industrial Technologies                      819,819           773,178         2,487,519         2,340,942
Tools and Components                         339,677           336,787           983,410           971,722

Total                                $     3,208,181   $     2,731,151   $     9,520,950   $     7,884,740

PROFESSIONAL INSTRUMENTATION

Businesses in the Professional Instrumentation segment offer professional and technical customers various products and services that are used in connection with the performance of their work. The Professional Instrumentation segment encompasses two strategic businesses: test and measurement and environmental. The test and measurement businesses produce and sell bench top and compact professional electronic test tools and calibration equipment. The environmental businesses produce and sell water quality instrumentation and consumables and ultraviolet disinfection systems; industrial water treatment solutions; and retail/commercial petroleum products and services, including dispensers, payment systems, underground storage tank leak detection and vapor recovery systems.

Professional Instrumentation Selected Financial Data ($ in thousands):



                                             Three Months Ended                        Nine Months Ended
                                     September 26,        September 28,        September 26,        September 28,
                                         2008                 2007                 2008                 2007
Sales                               $     1,213,676      $       880,003      $     3,616,815      $     2,440,401
Operating profit                            244,100              200,122              685,294              534,275
Depreciation and amortization                32,960               14,853               97,778               40,562
Operating profit as a % of sales               20.1 %               22.7 %               19.0 %               21.9 %
Depreciation and amortization as
a % of sales                                    2.7 %                1.7 %                2.7 %                1.7 %




                                    Three Months Ended         Nine Months Ended
                                  September 26, 2008 vs.     September 26, 2008 vs.
 Components of Sales Growth       Comparable 2007 Period     Comparable 2007 Period
 Existing Businesses                                 4.5 %                      4.5 %
 Acquisitions                                       30.5 %                     39.0 %
 Impact of currency translation                      3.0 %                      4.5 %

 Total                                              38.0 %                     48.0 %

Segment Overview

Sales from existing businesses increased in both of the segment's strategic lines of business. Price increases accounted for approximately 2.5% sales growth on a year-over-year basis for the three months ended September 26, 2008 and 2.0% sales growth for the nine month period then ended which is reflected in sales from existing businesses.

The dilutive effect of operating profit margins in recently acquired businesses adversely impacted operating profit margins in the Professional Instrumentation segment by 130 basis points and 180 basis points in the three and nine months ended September 26, 2008, respectively, compared to the comparable periods of 2007. Acquired inventory and acquired deferred revenue fair value charges recorded in connection with the November 2007 acquisition of Tektronix also adversely impacted operating profit margins. The effect of these charges on the three months ended September 26, 2008 was 105 basis points and the impact on the nine months then ended was 145 basis points. The same type of charges related to the Tektronix acquisition are expected to adversely impact the segment's operating profit margins through the balance of 2008, but at lower levels than experienced in the first nine months of 2008. Year-over-year operating margin comparisons for the three months ended September 26, 2008 were also adversely impacted by increased sales force investments in emerging markets for the water quality business and lower overall sales volumes in the segment's high margin network test business.

Depreciation and amortization as a percentage of sales increased in the three and nine months ended September 26, 2008 as compared to the prior year comparable periods primarily as a result of the increase in amortization expense associated with the intangible assets acquired in connection with the Tektronix acquisition.

Overview of Businesses within Professional Instrumentation Segment

Environmental. Sales from the segment's environmental businesses, representing 53% of segment sales for the three months ended September 26, 2008, increased 9.5% in the third quarter of 2008 compared to the comparable period of 2007. Sales from existing businesses accounted for 6.0% growth, acquisitions accounted for 0.5% growth and currency translation accounted for 3.0% growth.

For the nine months ended September 26, 2008, sales from the segment's environmental businesses increased 18.5% compared to the same period of 2007. Sales from existing businesses accounted for 6.5% growth, acquisitions accounted for 8.0% growth and currency translation accounted for 4.0% growth.

The segment's water quality businesses experienced mid-single digit revenue growth from existing businesses for the three months ended September 26, 2008 and high-single digit revenue growth for the nine month period then ended compared to the comparable periods of 2007. This growth was primarily a result of continued strong laboratory product sales, reflecting in part the results of increased sales force investments and penetration into emerging markets. Growth in sales was experienced in all major geographic regions with particular strength in Asia where sales increased at a double digit rate in both the three and nine month periods reflecting the businesses' continued focus on growing markets in developing countries. Also contributing to the overall growth in the three month period was the businesses' commercial water treatment product line which experienced low-double digit sales growth.

The retail petroleum equipment business experienced a high-single digit growth rate for the three months ended September 26, 2008 and a mid-single digit growth rate for the nine month period then ended compared to the comparable periods of 2007. This growth was primarily driven by strong sales of payment and point of sale retail solution product offerings offset by a decline in dispensing equipment sales primarily in North America and Europe. Increase in demand for the business' vapor recovery products in North America also contributed to the year-year over year sales growth.

Test & Measurement. The segment's test & measurement businesses' sales, representing 47% of segment sales in the third quarter of 2008, increased 94% during the three months ended September 26, 2008 over the comparable 2007 period. Sales from existing businesses accounted for 1.5% growth, acquisitions accounted for 89.5% growth and currency translation accounted for 3.0% growth.

Sales from the test and measurement businesses for the nine months ended September 26, 2008 grew 99.5% compared to the same period in 2007. Sales from existing businesses accounted for 1.5% growth, acquisitions accounted for 93.5% growth and currency translation accounted for 4.5% growth.

Sales growth from existing businesses during both the three and nine month periods was driven by continued strong demand for the business' thermography and precision measurement products. China and the Eastern European markets were strong contributors to the growth with more modest contributions from Western . . .