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 July 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, effective tax rate, tax provision, changes to the tax provision, cash flows, pension and benefit obligations and funding requirements, our liquidity position or other financial measures; management's plans and strategies for future operations, including statements relating to anticipated operating performance, cost reductions, new product and service developments, acquisitions and related synergies, divestitures, securities offerings, stock repurchases and executive compensation; growth, declines and other trends in markets we sell into; economic conditions and the anticipated duration of the current economic downturn; the anticipated impact of adopting new accounting pronouncements; the anticipated outcome of outstanding claims, legal proceedings, tax audits and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; anticipated restructuring activities, including estimates of the scope, type, timing and cost of such activities; assumptions underlying any of the foregoing; and any other statements that address events or developments that Danaher intends or believes 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" 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:

• Current general economic conditions and uncertainties in the global financial markets may further 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.

• Any inability to consummate acquisitions at our prior rate could negatively impact our growth rate.

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

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

• We may be required to recognize impairment charges for our goodwill or other 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 in the future 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 forward-looking statements are not guarantees of future performance and actual results 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

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, opportunities and trends in the markets and geographies served, including contraction in the world's major economies, reduced levels of funding available from the global capital markets, trends toward increased utilization of the global labor force, consolidation of competitors and the expansion of market opportunities in Asia and Latin America over the long-term. 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.

Beginning in 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 half of 2009 resulting in lower overall sales for the second quarter and first half of 2009 as compared to the comparable periods of 2008. As discussed below, in light of these sales declines and to improve future profitability, the Company has initiated several restructuring actions to reduce costs. The impact of these sales declines and restructuring costs on net earnings was partially mitigated by the benefit of reduced operating expenses resulting from the Company's 2008 restructuring actions and ongoing efforts to reduce material costs and other operating expenses. During the second quarter of 2009, demand in the majority of the Company's business continued to decline with the most significant declines experienced in the industrial and consumer oriented businesses. Geographically, while demand in most major regions declined on a year-over-year basis, Europe experienced the most significant decline in demand during the second quarter. Revenues in China were down compared to 2008 but at a lower rate than Europe. Emerging economies demand declined significantly. The current economic uncertainties suggest that global demand may continue to contract.

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.

Restructuring Activities

During the fourth quarter of 2008 the Company initiated and substantially completed restructuring actions to better position the Company's cost base for future periods. 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) in the fourth quarter 2008. The restructuring and other related charges are improving operational efficiency through targeted workforce reductions and manufacturing facility consolidations and closures. Approximately 93% of the total pre-tax charge required cash payments, which were funded with cash generated from operations. Through July 3, 2009, substantially all required cash payments had been made. For a full description of the Company's fourth quarter 2008 restructuring activities, please refer to Note 16 of the Company's 2008 Annual Report on Form 10-K.

In addition, on April 21, 2009, Danaher's Board of Directors approved a plan to implement further cost reductions in the Company's businesses. The plan resulted from management's assessment that significant additional actions were appropriate to adjust the Company's cost base in light of the continued weakness in demand in most of the Company's end markets resulting from the overall deterioration in global economic conditions. The Board approved plan, which authorized spending for actions of up to $120 million, is in addition to the Company's regular on-going restructuring actions which the Company has estimated will cost $40 to $60 million in 2009 as indicated in the Company's 2008 Annual Report on Form 10-K.

To date, the aggregate restructuring actions implemented or planned to be implemented in 2009 total approximately $160 million. These actions are being implemented under the Board-approved plan as well as pursuant to the Company's regular, ongoing restructuring activities noted above. These 2009 restructuring actions include employee-related and facility shut-down costs of approximately $155 million and non-cash asset write-offs of approximately $5 million. Cash expenditures for these restructuring activities are expected to be approximately $155 million and are being funded with cash generated from operations. In connection with these restructuring plans, the Company incurred a total of $46 million in charges during the three months ended July 3, 2009 of which approximately $34 million ($26 million net of tax or $0.08 per diluted share) were incurred in connection with the plan approved by the Board of Directors in April 2009 and $12 million were incurred in connection with the Company's on-going restructuring actions. During the six months ended July 3, 2009, the Company incurred a total of $56 million of restructuring charges of which approximately $34 million were incurred in connection with the plan approved by the Board of Directors in April 2009 and $22 million were incurred in connection with the Company's on-going restructuring actions. These restructuring activities are expected to generate annualized savings of $140 million. Refer to Note 9 to the Company's Consolidated Condensed Financial Statements as of July 3, 2009 for additional information related to these restructuring programs. The impact of these restructuring costs on each of the Company's reportable segments is discussed in the Result of Operations - Business Segment discussion.

Currency exchange rates

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 three and six months ended July 3, 2009 as compared to the comparable periods of 2008. As a result of the average stronger U.S. dollar during the periods, currency exchange rates decreased reported sales for both the three and six month periods by approximately 5.5% as compared to the comparable periods of 2008. If the exchange rates in effect as of July 3, 2009 prevail throughout the remainder of 2009, currency exchange rates will adversely impact total 2009 reported sales by approximately 3.0% 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 reported sales and results of operations. Any weakening of the U.S. dollar against other major currencies would benefit the Company's reported sales and results of operations on an overall basis.

RESULTS OF OPERATIONS

Consolidated sales for the three months ended July 3, 2009 decreased 18.5% as compared to the comparable period of 2008. Sales from existing businesses (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 effect) declined 15% on a year-over-year basis. The impact of currency translation on sales decreased reported sales by 5.5% as the U.S. dollar was stronger against other major currencies in the three months ended July 3, 2009 compared to the comparable period of 2008. Partially offsetting these declines was approximately 2.0% of sales growth provided by recently acquired businesses.

For the six months ended July 3, 2009, consolidated sales declined 16% as compared to the comparable period in 2008. Sales from existing businesses decreased 13% on a year-over-year basis. The impact of currency translation on sales decreased reported sales by 5.5%. Partially offsetting these declines was approximately 2.5% of sales growth provided by recently acquired businesses.

Operating profit margins for the Company were 12.9% for the three months ended July 3, 2009 compared to 15.5% in the comparable period of 2008. The decrease in operating profit margins is primarily a result of the lower sales volumes during the second quarter of 2009. Incremental costs incurred during the three months ended July 3, 2009 associated with restructuring activities also reduced operating profit margins by 125 basis points on a year-over-year basis. In addition, the dilutive effect of acquired businesses adversely impacted operating profit margins by 20 basis points on a year-over-year basis. Year-over-year cost savings attributable to the Company's restructuring activities that began in the fourth quarter 2008 as well as ongoing efforts to reduce material costs and other operating expenses partially offset these negative impacts on operating profit margins. In addition, fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the second quarter 2008 in connection with the November 2007 acquisition of Tektronix, net of the acquisition- related charges recorded in the second quarter 2009, favorably impacted year-over-year operating profit margin comparisons by 20 basis points.

Operating profit margins for six months ended July 3, 2009 were 12.9% compared to 14.6% in the comparable period of 2008. The decrease in operating profit margins during the first half of 2009 is also primarily a result of the lower sales volumes. Incremental restructuring costs incurred during the second quarter reduced operating profit margins by 65 basis points on a year-over-year basis. In addition, the dilutive effect of acquired businesses adversely impacted operating profit margins on a year-over-year basis by 20 basis points. Year-over-year cost savings attributable to the Company's restructuring activities that began in the fourth quarter 2008 as well as ongoing efforts to reduce material costs and other operating expenses partially offset these negative impacts on operating profit margins. In addition, the fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the first half of 2008 in connection with the November 2007 acquisition of Tektronix, net of the acquisition-related charges recorded in the second quarter 2009, favorably impacted year-over-year operating profit margin comparisons by 50 basis points.

Business Segments

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



                                              Three Months Ended                    Six Months Ended
                                        July 3, 2009      June 27, 2008      July 3, 2009      June 27, 2008
Professional Instrumentation           $    1,035,570    $     1,247,280    $    2,045,933    $     2,403,139
Medical Technologies                          737,540            839,985         1,454,599          1,598,197
Industrial Technologies                       647,873            869,065         1,298,000          1,667,700
Tools and Components                          252,626            327,565           502,821            643,733

Total                                  $    2,673,609    $     3,283,895    $    5,301,353    $     6,312,769

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                        Six Months Ended
                                       July 3, 2009        June 27, 2008        July 3, 2009        June 27, 2008
Sales                                 $    1,035,570      $     1,247,280      $    2,045,933      $     2,403,139
Operating profit                             155,955              250,475             335,074              441,194
Depreciation and amortization                 33,621               31,187              66,186               64,818
Operating profit as a % of sales                15.1 %               20.1 %              16.4 %               18.4 %
Depreciation and amortization as %
of sales                                         3.2 %                2.5 %               3.2 %                2.7 %




                                           Three Months Ended July 3,              Six Months Ended July 3,
                                            2009 vs. Comparable 2008               2009 vs. Comparable 2008
Components of Sales Growth                           Period                                 Period
Existing Businesses                                             (15.5 )%                              (13.5 )%
Acquisitions                                                      3.5 %                                 3.0 %
Impact of currency translation                                   (5.0 )%                               (4.5 )%

Total                                                           (17.0 )%                              (15.0 )%

Segment Overview

Sales from existing businesses declined for both the three and six months ended July 3, 2009 as compared to the comparable period of 2008, due principally to declines in the segment's test and measurement lines of business. Lower demand and the negative impact of foreign currency translation on reported sales during both periods more than offset sales growth from acquisitions and price increases of approximately 1.5% which is reflected in sales from existing businesses.

Operating profit margins decreased 500 basis points in the three months ended July 3, 2009 as compared to the comparable period of 2008. The year-over-year decrease in operating profit margins is primarily a result of the lower sales volumes during the second quarter 2009, as well as 240 basis points of incremental costs incurred during the quarter associated with restructuring activities. The dilutive effect of acquired businesses also adversely impacted operating profit margins on a year-over-year basis by 50 basis points. Year-over-year cost savings attributable to the Company's restructuring activities that began in the fourth quarter 2008 as well as 2009 restructuring activities and ongoing efforts to reduce material costs and other operating expenses partially offset these negative impacts on operating profit margins. In addition, the fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the second quarter 2008 in connection with the November 2007 acquisition of Tektronix, net of the acquisition-related charges recorded in the second quarter 2009, favorably impacted year-over-year operating profit margin comparisons by 60 basis points.

Operating profit margins decreased 200 basis points in the six months ended July 3, 2009 as compared to the comparable period of 2008. The decrease in operating profit margins is also primarily a result of the lower sales volumes during the first half of 2009, as well as 125 basis points of incremental year-over-year costs incurred during the six month period associated with restructuring activities. The dilutive effect of acquired businesses also adversely impacted operating profit margins on a year-over-year basis by 55 basis points. Year-over-year cost savings attributable to the Company's restructuring activities that began in the fourth quarter 2008 as well as 2009 restructuring activities and ongoing efforts to reduce material costs and other operating expenses partially offset these negative impacts on operating profit margins. In addition, the fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the first half of 2008 in connection with the November 2007 acquisition of Tektronix, net of the acquisition related charges in the first half 2009, favorably impacted year-over-year operating profit margin comparisons by 130 basis points.

Overview of Businesses within Professional Instrumentation Segment

Environmental. Sales from the segment's environmental businesses, representing 58% of segment sales for the three months ended July 3, 2009 declined 3.5% in the second quarter of 2009 compared to the comparable period of 2008. Sales from existing businesses decreased 1.0% and the impact of currency translation decreased reported sales by 6.5%. Partially offsetting these declines was 4.0% of sales growth related to recently acquired businesses.

. . .