This annual report on Form 10-K, including the following management's discussion and analysis, contains forward-looking information that you should read in conjunction with the consolidated financial statements and notes to consolidated financial statements that we have included elsewhere in this annual report on Form 10-K. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Words such as "believes," "plans," "anticipates," "expects," "will" and similar expressions are intended to identify forward-looking statements. Our actual results may differ materially from the plans, intentions or expectations we disclose in the forward-looking statements we make. We have included important factors above under the heading "Risk Factors" in Item 1A above that we believe could cause actual results to differ materially from the forward-looking statements we make. We are not obligated to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a leading provider of technology, services and solutions to the diagnostics, academic research, environmental monitoring and safety and security markets. We design, manufacture, market and service components, systems and products in two reporting segments:

• Life and Analytical Sciences. We are a leading provider of analysis tools, including instruments, reagents, software, and consumables, to the analytical sciences, genetic screening, bio-discovery and laboratory services markets.

• Optoelectronics. We provide a broad range of medical imaging, optical sensor and specialty lighting components used in medical, consumer products and other specialty end markets.

We recently announced a new alignment of our businesses effective for fiscal year 2009 that will allow us to prioritize our capabilities on two key strategic areas - Human Health and Environmental Health. Our new Human Health segment concentrates on developing diagnostics, tools and applications to detect disease earlier and more accurately and to accelerate the discovery and development of critical new therapies. The Human Health segment includes our products and services that address the genetic screening and bio-discovery markets, formerly in our Life and Analytical Sciences segment, and our technology serving the medical imaging market, formerly in our Optoelectronics segment. Our new Environmental Health segment provides technologies and applications to facilitate the creation of safer products, more secure surroundings and efficient energy resources. The Environmental Health segment includes our products and services that address the analytical sciences and laboratory service and support markets, formerly in our Life and Analytical Sciences segment, and our technology designed for the sensors and lighting markets, formerly in our Optoelectronics segment.

Accounting Period

Our fiscal year ends on the Sunday nearest December 31. We report fiscal years under a 52/53 week format. Under this method, certain years will contain 53 weeks. The fiscal years ended December 28, 2008, December 30, 2007 and December 31, 2006 each included 52 weeks. The fiscal year ended January 3, 2010 will include 53 weeks.

Consolidated Results of Continuing Operations

Sales

2008 Compared to 2007. Sales for fiscal year 2008 were $1,937.5 million, as compared to $1,702.4 million for fiscal year 2007, an increase of $235.1 million, or 14%, which includes an approximate 2% increase in sales attributable to favorable changes in foreign exchange rates and an approximate 4% increase from acquisitions. The analysis in the remainder of this paragraph compares segment sales for fiscal year 2008 as compared to fiscal year 2007 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects a $197.0 million, or 15%, increase in our Life and Analytical Sciences segment sales, due to increases in sales to genetic screening customers of $91.0 million, sales to analytical sciences customers of $36.9 million, sales to laboratory service customers of $36.8 million, and sales to bio-discovery customers of $32.5 million. Our Optoelectronics segment sales grew $38.1 million, or 10%, primarily due to increases in sales of our medical imaging products of $24.6 million, specialty lighting products of $7.2 million, and optical sensors of $5.4 million.

2007 Compared to 2006. Sales for fiscal year 2007 were $1,702.4 million, as compared to $1,477.7 million for fiscal year 2006, an increase of $224.7 million, or 15%. Changes in foreign exchange and acquisitions each contributed approximately 4% to the increase in revenue for fiscal year 2007, as compared to fiscal year 2006. The analysis in the remainder of this paragraph compares segment sales for fiscal year 2007 as compared to fiscal year 2006 and includes the effect of foreign exchange rate fluctuations and acquisitions. The total increase in sales reflects a $186.4 million, or 17%, increase in our Life and Analytical Sciences segment sales, due to increases in

sales to laboratory service customers of $51.3 million, sales to analytical sciences customers of $51.2 million, sales to genetic screening customers of $49.1 million, and sales to bio-discovery customers of $34.9 million. Our Optoelectronics segment sales grew $38.3 million, or 11%, primarily due to increases in sales of our medical imaging products of $29.3 million, specialty lighting products of $4.1 million, and optical sensors of $4.8 million.

Cost of Sales

2008 Compared to 2007. Cost of sales for fiscal year 2008 was $1,107.4 million, as compared to $996.4 million for fiscal year 2007, an increase of approximately $111.0 million, or 11%. As a percentage of sales, cost of sales decreased to 57.2% in fiscal year 2008 from 58.5% in fiscal year 2007, resulting in an increase in gross margin of 137 basis points to 42.8% in fiscal year 2008 from 41.5% in fiscal year 2007. Amortization of intangible assets increased due to the acquisitions completed in fiscal years 2008 and 2007 and was $37.4 million for fiscal year 2008 as compared to $34.4 million for fiscal year 2007. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions completed in fiscal year 2007 was approximately $2.5 million for fiscal year 2007. Stock option expense was $1.7 million and $1.2 million for fiscal years 2008 and 2007, respectively. The combined favorable impact of increased sales volume, productivity improvements, and growth in higher gross margin products such as ViaCord® increased gross margin; however, this increase was partially offset by increased freight costs.

2007 Compared to 2006. Cost of sales for fiscal year 2007 was $996.4 million, as compared to $868.9 million for fiscal year 2006, an increase of approximately $127.4 million, or 15%. As a percentage of sales, cost of sales decreased to 58.5% in fiscal year 2007 from 58.8% in fiscal year 2006, resulting in an increase in gross margin of 27 basis points to 41.5% in fiscal year 2007 from 41.2% in fiscal year 2006. Amortization of intangible assets increased due to the acquisitions completed in fiscal years 2007 and 2006 and was $34.4 million for fiscal year 2007 as compared to $29.2 million for fiscal year 2006. The amortization of purchase accounting adjustments to record the inventory from certain acquisitions completed in fiscal year 2007 was approximately $2.5 million for fiscal year 2007. Stock option expense was $1.2 million and $1.3 million for fiscal years 2007 and 2006, respectively. The combined impact of net productivity and capacity improvements within both segments increased gross margin, which was partially offset by pressures in our laboratory services business as a result of entering into several large new contracts requiring an increase in start-up investment in the first six months of fiscal year 2007.

Selling, General and Administrative Expenses

2008 Compared to 2007. Selling, general and administrative expenses for fiscal year 2008 were $522.9 million as compared to $439.8 million for fiscal year 2007, an increase of approximately $83.1 million, or 19%. As a percentage of sales, selling, general and administrative expenses were 27.0% in fiscal year 2008, compared to 25.8% in fiscal year 2007, an increase of 1.2%. Amortization of intangible assets was $16.1 million for fiscal year 2008 as compared to $7.9 million for fiscal year 2007. Stock option expense was $8.2 million and $7.3 million for fiscal years 2008 and 2007, respectively. This increase was primarily the result of increased sales and marketing expenses to support recent acquisitions, particularly the acquisition of ViaCell, increased employee-related expenses to support our sales initiatives, and foreign exchange.

2007 Compared to 2006. Selling, general and administrative expenses for fiscal year 2007 were $439.8 million as compared to $370.5 million for fiscal year 2006, an increase of approximately $69.3 million, or 19%. As a percentage of sales, selling, general and administrative expenses were 25.8% in fiscal year 2007, compared to 25.1% in fiscal year 2006, an increase of 0.7%. Amortization of intangible assets was $7.9 million for fiscal year 2007 as compared to $3.0 million for fiscal year 2006. Stock option expense was $7.3 million and $7.2 million for fiscal years 2007 and 2006, respectively. This increase was primarily the result of increased headcount and employee-related expenses to support our sales initiatives, increased sales and marketing expenses to support recent acquisitions, business development expenses, and foreign exchange.

Research and Development Expenses

2008 Compared to 2007. Research and development expenses for fiscal year 2008 were $108.1 million, as compared to $104.0 million for fiscal year 2007, an increase of $4.1 million, or 4%. As a percentage of sales, research and development expenses decreased to 5.6% in fiscal year 2008 from 6.1% in fiscal year 2007. Amortization of intangible assets was $2.1 million for fiscal year 2008 as compared to $1.7 million for fiscal year 2007. Research and development expenses also included stock option expense of $0.6 million each for fiscal years 2008 and 2007. We directed research and development efforts similarly during fiscal years 2008 and 2007, primarily toward genetic screening, bio-discovery, and analytical sciences markets within our Life and Analytical Sciences segment, and medical imaging and photonics markets within our Optoelectronics segment, in order to help accelerate our growth initiatives.

2007 Compared to 2006. Research and development expenses for fiscal year 2007 were $104.0 million, as compared to $93.4 million for fiscal year 2006, an increase of $10.5 million, or 11%. As a percentage of sales, research and development expenses decreased to 6.1% in fiscal year 2007 from 6.3% in fiscal year 2006. Amortization of intangible assets was $1.7 million for fiscal year 2007 as compared to $1.6 million for fiscal year 2006. Research and development expenses also included stock option expense of $0.6 million and $0.7 million for fiscal years 2007 and 2006, respectively. We directed our research and development efforts similarly during fiscal years 2007 and 2006, primarily toward genetic screening, bio-discovery, and analytical sciences markets within our Life and Analytical Sciences segment, and medical imaging and photonics markets within our Optoelectronics segment, in order to help accelerate our growth initiatives.

Restructuring and Lease Charges (Reversals), Net

We have undertaken a series of restructuring actions related to the impact of acquisitions, divestitures and the integration of our business units. Restructuring actions were recorded in accordance with Statement of Financial Accounting Standards ("SFAS") No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS No. 146"). Restructuring and lease charges, net, for fiscal year 2008 were a $6.2 million charge, as compared to a $12.2 million charge for fiscal year 2007.

The following table summarizes our restructuring accrual balances and related activity by restructuring plan during fiscal years 2008, 2007 and 2006:

                                                          2006
                                                        Charges
                                                          and             2006
                                                        Changes          Amounts                                     2007            2007                                        2008            2008
                                          Balance          in             paid           Balance                    Amounts         Changes          Balance                    Amounts         Changes          Balance
                                            at         Estimates,          and              at           2007      paid and           in                at           2008      paid and           in                at
                                         1/1/2006         net           incurred        12/31/2006     Charges     incurred        Estimates        12/30/2007     Charges     incurred        Estimates        12/28/2008
Previous Plans                           $  11,242    $     (3,640 )    $  (4,871 )    $      2,731    $  4,438    $  (3,517 )    $      (611 )    $      3,041    $     -     $    (794 )    $      (967 )    $      1,280
Q4 2007 Plan                                    -               -              -                 -        5,296       (1,028 )             -              4,268          -        (3,366 )           (279 )             623
Q3 2008 Plan                                    -               -              -                 -           -            -                -                 -        7,840       (4,029 )             -              3,811
ViaCell Plan (EITF 95-3 Charge)                 -               -              -                 -        1,184           -                -              1,184         710       (1,704 )             -                190

Restructuring                               11,242          (3,640 )       (4,871 )           2,731      10,918       (4,545 )           (611 )           8,493       8,550       (9,893 )         (1,246 )           5,904
Lease charges                                   -               -              -                 -        3,115           -                -              3,115          -          (377 )           (383 )           2,355

Total restructuring and lease charges    $  11,242    $     (3,640 )    $  (4,871 )    $      2,731    $ 14,033    $  (4,545 )    $      (611 )    $     11,608    $  8,550    $ (10,270 )    $    (1,629 )    $      8,259

The purpose of the restructuring plans approved in the third quarter of fiscal year 2008 and fourth quarter of fiscal year 2007, detailed below, was principally to shift resources into geographic regions and product lines that are more consistent with our growth strategy. The pre-tax restructuring activities associated with these plans have been reported as restructuring expenses as a component of operating expenses from continuing operations. We expect the impact of immediate and future cost savings from these restructuring activities on operating results and cash flows to be negligible, as we have incurred and will incur offsetting costs.

Q3 2008 Plan

During the third quarter of fiscal year 2008, our management approved a plan to shift resources into product lines that are more consistent with our growth strategy (the "Q3 2008 Plan"). As a result of the Q3 2008 Plan, we recognized a $7.5 million pre-tax restructuring charge in our Life and Analytical Sciences segment related to a workforce reduction from reorganization activities and the closure of excess facilities. We also recognized a $0.3 million pre-tax restructuring charge in our Optoelectronics segment related to a workforce reduction from reorganization activities.

As part of our Q3 2008 Plan, we reduced headcount by 107 employees. All actions related to the Q3 2008 Plan were completed by September 28, 2008. All employees have been severed and we anticipate that the remaining payments of $2.7 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2010. We also anticipate that the remaining payments of $1.2 million for the closure of the excess facilities will be paid through fiscal year 2011, in accordance with the terms of the applicable leases.

The following table summarizes the components of the Q3 2008 Plan activity recognized by segment:

                                    Life and Analytical Sciences          Optoelectronics          Total
                                                               (In thousands)
Severance                          $                        6,215        $             291        $ 6,506
Closure of excess facility                                  1,334                       -           1,334

Total                              $                        7,549        $             291        $ 7,840

Q4 2007 Plan

During the fourth quarter of fiscal year 2007, our management approved a plan to shift resources into geographic regions and product lines that are more consistent with our growth strategy (the "Q4 2007 Plan"). As a result of the Q4 2007 Plan, we recognized a $4.8 million pre-tax restructuring charge in our Life and Analytical Sciences segment related to a workforce reduction from these reorganization activities. We also recognized a $0.5 million pre-tax restructuring charge in our Optoelectronics segment related to a workforce reduction.

As part of our Q4 2007 Plan, we reduced headcount by 90 employees. All actions related to the Q4 2007 Plan were completed by December 30, 2007. During fiscal year 2008, we recorded a reversal of $0.3 million primarily due to lower than expected employee separation costs associated with our Life and Analytical Sciences segment. All employees have been severed and we anticipate that the remaining payments of $0.6 million for workforce reductions will be completed by the end of the fourth quarter of fiscal year 2009.

The following table summarizes the components of the Q4 2007 Plan activity recognized by segment:

ViaCell Plan

Following the ViaCell acquisition, we committed to a preliminary plan of integration of certain ViaCell activities that included workforce reductions and the partial closure of an excess facility (the "ViaCell Plan"). We finalized the integration plan and all actions related to this plan as of June 29, 2008, through which we recorded a $1.9 million liability for severance and the partial closure of an excess facility with a corresponding adjustment to goodwill in accordance with Emerging Issues Task Force ("EITF") Issue No. 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination" ("EITF 95-3"). As part of our ViaCell Plan, we reduced headcount by 11 employees. All employees have been severed and we anticipate that the remaining payments of approximately $0.2 million for workforce reductions will be completed by the end of the second quarter of fiscal year 2009.

                                    Life and Analytical Sciences         Optoelectronics          Total
                                                              (In thousands)
Severance                          $                        1,603        $             -         $ 1,603
Partial closure of excess
facility                                                      291                      -             291

Total                              $                        1,894        $             -         $ 1,894

Previous Restructuring and Integration Plans

The principal actions of the restructuring and integration plans from the fiscal years 2001 through the first quarter of fiscal year 2007 were workforce reductions related to the integration of our Life Sciences and Analytical Instruments businesses, which is now our Life and Analytical Sciences segment, in order to reduce costs and achieve operational efficiencies as well as workforce reductions in both our Life and Analytical Sciences and Optoelectronics segments by shifting resources into geographic regions and product lines that are more consistent with our growth strategy. During fiscal year 2008, we paid $0.8 million related to these plans and recorded a reversal of $1.0 million related to lower than expected costs associated with severance for several of these plans. As of December 28, 2008, we had approximately $1.3 million of remaining liabilities associated with restructuring and integration plans, primarily relating to remaining lease obligations related to those closed facilities in our Life and Analytical Sciences segment. The remaining terms of these leases vary in length and will be paid through fiscal year 2011.

Lease Charges

To facilitate the sale of a business in fiscal year 2001, we were required to guarantee the obligations that the buyer of the business assumed related to the lease for the building in which the business operates. The lease obligations continue through March 2011. While we assigned our interest in the lease to the buyer at the time of the sale of the business, in the event the buyer defaults under the lease, we are responsible for all remaining lease payments and certain other building related expenses. As an additional measure to facilitate the sale of the business, we obtained a letter of credit as partial security for a loan to the buyer, which could have been drawn upon by the buyer's lender in the event the buyer was delinquent in repayment of the loan. During the second quarter of fiscal year 2007, the lessor of the building began the process to evict the buyer as a result of unpaid lease payments and building expenses and sought reimbursement from us. As a result of this action, we recorded a charge of $4.5 million related to payments for this lease obligation and the potential drawdown of the letter of credit. During the third quarter of fiscal year 2007, the buyer completed a recapitalization of the business with another lender. The proceeds of the recapitalization were used to pay off the remaining balance on the original securitized loan, as well as to make certain payments to the landlord for back rent and other obligations arising under the lease. We were also released from our obligation under the letter of credit on the original securitized loan. As a result of these actions, we recorded a reversal of $1.4 million related to payments for this lease obligation and the release of the letter of credit in the third quarter of fiscal year 2007. The buyer made its required payments for lease obligations and building expenses through June 2008 and as a result, we recorded an additional reversal of $0.4 million.

The buyer filed for bankruptcy protection on October 27, 2008 and was delinquent in making both its lease payments and payments for certain building expenses in the third and fourth quarters of fiscal year 2008, requiring us to make payments of $0.4 million during fiscal year 2008 and $0.4 million to date in fiscal year 2009. As of December 28, 2008, we are still responsible for the remaining accrual of $2.4 million, which relates to the remaining lease and building obligations through March 2011, reduced by estimated sublease rentals reasonably expected to be obtained for the property.

Gains on Settlement of Insurance Claim

2008 Compared to 2007. During the second quarter of fiscal year 2007 we settled an insurance claim resulting from a fire that occurred within our Life and Analytical Sciences facility in Boston, Massachusetts in March 2005. As a result of that settlement, we recorded gains of $15.3 million during the second quarter of fiscal year 2007. We received the final settlement payment of $21.5 million in June 2007, and had previously received during fiscal years 2005 and 2006 a total of $35.0 million in advance payments towards costs incurred, and for building, inventory and equipment damages. Of the $56.5 million in total settlement proceeds received by us, $25.6 million related to reimbursement of costs incurred; $23.7 million related to damages to the building, inventory and equipment; and $7.2 million related to business interruption costs which were recorded as reductions to cost of sales and selling, general and administrative expenses. We accrued $9.7 million representing our management's estimate of the total cost for decommissioning the building, including environmental matters. We paid $1.6 million during fiscal year 2008 and $3.9 million during fiscal year 2007 towards decommissioning the building. We anticipate that the remaining payments of $4.2 million will be completed by the third quarter of fiscal year 2009.

2007 Compared to 2006. There were no gains on settlement of insurance claim in fiscal year 2006.

Impairment of Assets

2008 Compared to 2007. Impairment of assets was zero in fiscal years 2008 and 2007.

2007 Compared to 2006. Impairment of assets was zero in fiscal year 2007 and $3.2 million in fiscal year 2006. The fiscal year 2006 impairment was recorded within the Life and Analytical Sciences segment, which included a $2.8 million loss related to a manufacturing facility and a $0.4 million loss on impairment of a license agreement.

Gains on Dispositions

2008 Compared to 2007. There were no dispositions in fiscal years 2008 and 2007.

2007 Compared to 2006. There were no dispositions in fiscal year 2007 and dispositions resulted in a gain of $1.5 million in fiscal year 2006. Gains on dispositions in fiscal year 2006 included a $0.6 million gain from an insurance reimbursement due to fire damage in a certain manufacturing facility and a $0.9 million gain on disposal of certain fixed assets.

In-process Research and Development Charge

2008 Compared to 2007. We did not have an in-process research and development ("IPR&D") charge in fiscal year 2008. The IPR&D charge for fiscal year 2007 was $1.5 million, which related to the acquisitions of Evotec Technologies GmbH and Euroscreen Products S.A. in January 2007. In determining the value of the in-process projects, we considered, among other factors, the in-process projects' stage of completion, the complexity of the work completed as of the acquisition date, the costs already incurred, the projected costs to complete, the contribution of core technologies and other acquired assets, the expected introduction date, and the estimated useful life of the technology. We utilized the discounted cash flow method to value the IPR&D, using a discount rate equivalent to the relative risk of the asset, including the uncertainty of technological feasibility and successful launch. This approach determines fair . . .