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 and the audited financial statements included in the Company's 2008 Annual Report on Form 10-K, and our Consolidated Condensed Financial Statements and related Notes as of April 3, 2009.

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, our tax provision and changes to our tax provision, tax audits, 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, purchase commitments, potential acquisitions and synergies, potential offerings of securities, our stock repurchase program and executive compensation; growth and other trends in markets we sell into; economic conditions and the anticipated duration of the current economic downturn; the impact of adopting new accounting pronouncements; the outcome of outstanding claims, legal proceedings or other contingent liabilities; planned restructuring activities, including estimates of the scope, timing and cost of such activities; 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:

• Deteriorating general economic conditions and uncertainties in the global financial markets may adversely affect our operating results and financial condition.

• 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 revenues could decline further if the markets into which we sell our products continue to decline or do not grow as anticipated.

• Our acquisition of businesses could negatively impact our profitability and return on invested capital.

• The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and may result in unexpected liabilities.

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

• Our indebtedness may limit our operations and our use of our cash flow.

• We may be required to recognize impairment charges for our long-lived assets.

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

• If we do not or cannot adequately protect our intellectual property, or if third parties infringe our intellectual property rights, we may suffer competitive injury or expend significant resources enforcing our rights.

• Third parties may claim that we are infringing or misappropriating their intellectual property rights and we could suffer significant litigation expenses, losses or licensing expenses or be prevented from selling products or services.

• 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, 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.

• Our defined benefit pension plans are subject to financial market risks that could adversely affect our results of operations and cash flows.

• We have experienced and may continue to experience higher costs to produce our products as a result of rising prices for commodities.

• If we cannot adjust our purchases of materials, components and equipment required for our manufacturing activities to reflect changing market conditions or customer demand, our income and results of operations may suffer.

• If we cannot adjust our manufacturing capacity to reflect the demand for our products, our income and results of operations may suffer.

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

• 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 incremental costs.

• 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 qualified 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.

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

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. Forward-looking statements speak only as of the date of the report, press release, statement, document, webcast, call or other presentation in which they are made. The Company does not assume any obligation to update any forward-looking statement. See Part I - Item 1A of Danaher's 2008 Annual Report on Form 10-K 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

We strive to create shareholder value through:

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

• upper quartile financial performance compared to our peer companies; and

• upper quartile cash flow generation from operations compared to our peer companies.

To accomplish these goals, we use a set of tools and processes, known as the DANAHER BUSINESS SYSTEM, which are designed to continuously improve business performance in critical areas of quality, delivery, cost and innovation. Within the DBS framework, we pursue a number of ongoing strategic initiatives intended to improve our performance, including initiatives relating to manufacturing improvement, idea generation, product development and commercialization and global sourcing of materials and services. To further these objectives we also acquire businesses that either strategically fit within our existing business portfolio or expand our portfolio into a new and attractive business area. We believe that many acquisition opportunities remain available within our target markets. The extent to which appropriate acquisitions are made and effectively integrated can affect our overall growth and operating results. We also continually assess the strategic fit of our existing businesses and may divest businesses that are deemed not to fit with our strategic plan or are not achieving the desired return on investment.

Danaher is a multinational corporation with global operations. In 2008, approximately 53% 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. Danaher's geographic and industry diversity, as well as the diversity of its product sales and services, typically helps limit the impact of any one industry or the economy of any single country on the consolidated operating results although the breadth of the current economic downturn has affected most of Danaher's markets.

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 contraction in the world's major economies, 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 volatility 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.

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 indicative of the Company's revenue in the short term and thus a key measure of anticipated performance.

Business Performance

During the fourth quarter of 2008, worldwide credit markets and overall global economic conditions deteriorated significantly, resulting in a general decline in worldwide demand for the Company's products and services. While differences exist among the Company's businesses, demand for the Company's products and services continued to deteriorate through the first three months of 2009 resulting in lower overall sales for the first three months of 2009 as compared to the comparable period of 2008. Net earnings also declined as a result of the lower sales volumes, although not at the same rate as the decline in sales as operating profit margins in the first quarter 2009 benefited from fourth quarter 2008 restructuring actions and ongoing efforts to reduce material costs and other operating expenses. Moderate growth experienced in certain of the Company's medical technologies and environmental businesses was more than offset by weak demand in the Company's industrial and consumer oriented businesses. Geographically, demand in the U.S. and Europe remains generally soft, demand in China was down slightly compared to 2008, while emerging economies demand declined significantly. The current economic uncertainties suggest that global demand will continue to contract. In particular, the Company expects further contraction in the industrial technologies and tools and components segments as well as portions of its test and measurement business.

To minimize the impact of the recessionary economic conditions, during the fourth quarter of 2008 the Company initiated restructuring actions to better position the Company's cost base for future periods. These activities were substantially completed during the fourth quarter of 2008. In connection with these actions, the Company recorded pre-tax restructuring and other related charges totaling $82.0 million ($61.5 million, net of tax or $0.18 per diluted share). The restructuring and other related charges improved operational efficiency through targeted workforce reductions and manufacturing facility consolidations and closures. Approximately 93% of the total pre-tax charges required cash payments, which were funded with cash generated from operations. Through April 3, 2009, approximately $54 million of required cash payments had been made and substantially all activities associated with the announced actions are complete. As a result of the fourth quarter 2008 restructuring actions, the Company expects to realize annual pre-tax savings in excess of $100 million during 2009 and future years. Please refer to the Company's 2008 Annual Report on Form 10-K and associated Management Discussion and Analysis for further discussion regarding the fourth quarter 2008 restructuring activities.

In light of the continued weakness in demand in most of the Company's end markets, the Company has determined that significant additional restructuring actions are appropriate to further adjust the Company's ongoing cost structure. As a result, the Company has revised its estimate of pre-tax restructuring costs to be incurred during 2009 to a range of $150 to $170 million from the estimated range of $40 to $60 million indicated in the Company's 2008 Annual Report on Form 10-K. These actions are expected to include targeted workforce reductions and facility consolidations and closures resulting in a net workforce reduction of approximately 2,300 associates and the closure or consolidation of 16 sales and manufacturing facilities.

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. With limited exceptions, the Company has 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. Please refer to "Financial Instruments and Risk Management" section below for additional information.

On average, the U.S. dollar was stronger against other major currencies during the first quarter 2009 as compared to the first quarter 2008. As a result of the average stronger U.S. dollar during the quarter, currency exchange rates decreased reported sales for the first quarter of 2009 by approximately 5.5% as compared to the same period of 2008. If the exchange rates in effect as of April 3, 2009 prevail

throughout the remainder of 2009, currency exchange rates will adversely impact 2009 sales by approximately 4% relative to the Company's performance in 2008. Additional strengthening of the U.S. dollar against other major currencies would further adversely impact the Company's sales and results of operations. 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.

Although recent distress in the financial markets has not had a significant impact on the Company's financial position 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 cash flow from operations, available cash and existing committed credit facilities to provide short-term funding. Please refer to the "Liquidity and Capital Resources" section for additional discussion. Consistent with past practice, the Company will also continue to actively manage working capital with a view to maximizing cash flow.

RESULTS OF OPERATIONS

Consolidated sales for the first quarter of 2009 decreased approximately 13% as compared to the first quarter of 2008. Sales from existing businesses for the first quarter (references to "sales from existing businesses" in this report include sales from acquired businesses starting from and after the first anniversary of the acquisition, but exclude currency effects) declined approximately 10% on a year-over-year basis. The decline in sales from existing businesses includes the impact of four additional business days in the first quarter of 2009 as compared to the first quarter of 2008. The second and fourth quarters of 2009 will have fewer days than the comparable periods in 2008. The impact of currency translation on sales decreased reported sales by approximately 5.5% as the U.S. dollar was stronger against other major currencies in the first quarter of 2009 compared to the first quarter of 2008.

Partially offsetting these declines was approximately 2.5% of sales growth provided by recently acquired businesses. The growth in sales from acquisitions in the first quarter 2009 is related to seventeen acquisitions completed during 2008 to complement existing units of the Professional Instrumentation, Medical Technologies and Industrial Technologies segments.

Operating profit margins for the Company were 12.9% in the first quarter of 2009 compared to 13.6% in the comparable period of 2008. The decrease in operating profit margins in the first quarter of 2009 is primarily a result of the lower sales volumes during the first quarter 2009 partially offset by year-over-year cost savings attributable to the Company's fourth quarter 2008 restructuring actions and ongoing efforts to reduce material costs and other operating expenses. The dilutive effect of acquired businesses also adversely impacted operating profit margins on a year-over-year basis by 25 basis points. Year-over-year operating profit margin comparisons were favorably impacted by 85 basis points as a result of fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the first quarter 2008 in connection with the November 2007 acquisition of Tektronix. These charges were fully recognized in 2008 and will have no continuing impact on the Company's reported results of operations.

Business Segments

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



                                                 Three Months Ended
                                          April 3, 2009     March 28, 2008
          Professional Instrumentation   $     1,010,363   $      1,155,859
          Medical Technologies                   717,059            758,212
          Industrial Technologies                650,127            798,635
          Tools and Components                   250,195            316,168

                                         $     2,627,744   $      3,028,874

PROFESSIONAL INSTRUMENTATION

Businesses in the Professional Instrumentation segment offer professional and technical customers various products and services that are used to enable or enhance the performance of their work. The Professional Instrumentation segment encompasses two strategic lines of business: environmental, and test and measurement. These businesses produce and sell bench top and compact, professional electronic test tools and calibration equipment; a variety of video test and monitoring products, network management solutions, network diagnostic equipment and related services; 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
                                                  April 3, 2009       March 28, 2008
 Sales                                           $     1,010,363     $      1,155,859
 Operating profit                                        179,119              190,718
 Depreciation and amortization                            32,565               33,631
 Operating profit as a % of sales                           17.7 %               16.5 %
 Depreciation and amortization as a % of sales               3.2 %                2.9 %




                                                    % Change
                                              1st Quarter 2009 vs.
             Components of Sales Change         1stQuarter 2008
             Existing businesses                             (11.5 )%
             Acquisitions                                      3.5 %
             Impact of currency translation                   (4.5 )%

             Total                                           (12.5 )%

Segment Overview

Sales decreased in both of the segment's strategic lines of business during the first quarter 2009 as compared to the first quarter 2008. Lower demand and the negative impact of foreign currency translation on reported sales during the first quarter 2009 more than offset sales growth from acquisitions and price increases of approximately 2% which is reflected in the sales change from existing businesses.

Operating profit margins increased 120 basis points in the first quarter 2009 as compared to the first quarter 2008. Year-over-year comparisons for the first quarter 2009 were favorably impacted by 225 basis points as a result of fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the first quarter 2008 in connection with the November 2007 acquisition of Tektronix. These charges were fully recognized in 2008 and will have no continuing impact on the Company's reported results of operations. The dilutive effect of acquired businesses adversely impacted the year-over-year comparisons by approximately 60 basis points. The impact of lower sales levels in the first quarter 2009, partially offset by the year-over-year cost savings attributable to the Company's fourth quarter 2008 restructuring actions and ongoing efforts to reduce material costs and other operating expenses, also reduced operating profit margins in the quarter.

Overview of Businesses within the Professional Instrumentation Segment

Environmental. Sales from the Company's environmental businesses, representing 54% of segment sales in the quarter, declined 1.5% in the first quarter of 2009 compared to the comparable period of 2008. Sales growth from existing businesses of 1% and sales growth from acquisitions of 4.5% was more than offset by the impact of currency translation which reduced reported sales by 7%.

The Company's water quality businesses experienced low-single digit revenue growth from existing businesses for the first quarter 2009 as compared to the same period of 2008. This growth was primarily a result of increased sales in the ultraviolet water treatment product line reflecting strength in the municipal wastewater treatment and drinking water markets. Sales of specialty water treatment consumable products also increased. Sales in the businesses' laboratory and process instrumentation product lines were essentially flat on a year-over-year basis.

The retail petroleum equipment business' sales from existing businesses for the first quarter 2009 were essentially flat as compared to the same period of 2008. Sales growth in the first quarter 2009 was driven in part by the recent launch of an enhanced vapor recovery product in North America and strong sales of point-of-sale retail and payment solution product offerings in both North America and Europe. Vapor recovery sales are expected to moderate in the second half of the year due to the timing of regulatory requirements that are helping to drive these sales. Soft demand for the business' dispensing equipment, primarily in Europe, offset this growth as major oil companies delayed or canceled capital spending. In addition, the delivery of a large dispensing equipment order in India during the first quarter of 2008 that did not repeat in 2009 adversely impacted first quarter 2009 sales on a year-over-year basis.

Test and Measurement. Test and measurement sales, representing 46% of segment sales in the quarter, declined 23% during the first quarter of 2009 as compared to the first quarter of 2008. Sales from existing businesses accounted for a 22% sales decline and the impact of currency translation reduced reported sales by 3%. Acquisition related sales growth of 2% partially offset these declines.

Lower demand across all instrumentation related product lines, as well as continued reductions in inventory levels in the distribution channel, drove the majority of the sales decline. The decline in sales was driven primarily by weak . . .