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" or "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 October 2, 2009.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Certain information included or incorporated by reference in this report, in other documents filed with or furnished by us to the SEC, in our press releases or in our other communications 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, expenses, profit, profit margins, tax rates, tax provisions, 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, restructuring activities (including estimates of the scope, type, timing and cost of such activities) 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; 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 perceptions 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 and services.

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

• Our revenues could decline further if the markets into which we sell our products and services 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, including as a result of changes in legislation or regulations, 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 operates 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 first half of 2009 as compared to the comparable periods of 2008. During the third quarter 2009, sales declined on a year-over-year basis but to a lesser degree than in the second quarter of 2009 particularly in the Company's test and measurement, motion and product identification businesses. Geographically, while still down on a year-over-year basis, demand in North America improved on a sequential basis from the second quarter 2009 to the third quarter 2009. Demand in Europe and the emerging economies of Latin America and Eastern Europe remained soft, while demand in China grew modestly in the third quarter 2009 compared with the third quarter 2008. The Company expects revenues for the fourth quarter of 2009 to decline from 2008 levels due to the continued weakness in demand, but at a more moderate rate than experienced in the third quarter of 2009.

As discussed below, in light of sales declines during the first nine months of 2009 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 during the quarter was partially mitigated by the benefit of reduced operating expenses resulting from the Company's 2008 and early 2009 restructuring actions, lower commodity costs, and ongoing efforts to reduce material costs and other operating expenses.

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 improved 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. Substantially all required cash payments related to the actions have 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, in April and August 2009, the Company approved plans to implement further restructuring activities throughout its businesses. The plan approved in April 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 since

the beginning of 2009. The plan approved in August resulted from management's assessment that additional actions were appropriate to adjust the Company's on-going cost structure to reflect lower demand levels experienced to date in 2009 resulting from the global recession. The April plan, which authorized spending for actions of up to $120 million, and the August plan, which authorized spending for actions of up to $80 million, are in addition to the Company's regular on-going restructuring actions that are expected to result in charges of $40 to $60 million in 2009, resulting in approximately $250 million of aggregate expected restructuring and related costs for 2009. Completion of some of these actions may be delayed until the first half of 2010.

These 2009 restructuring actions include employee-related and facility shut-down costs of approximately $230 million and non-cash asset write-offs of approximately $20 million. Cash expenditures for these restructuring activities are expected to be approximately $230 million and are being funded with cash generated from operations. In connection with these restructuring plans, the Company incurred a total of $45 million in charges during the three months ended October 2, 2009 of which approximately $33 million ($25 million net of tax or $0.07 per diluted share) were incurred in connection with the plans approved by the Board of Directors and $12 million were incurred in connection with the Company's on-going restructuring actions. During the nine months ended October 2, 2009, the Company incurred a total of $101 million of restructuring charges of which approximately $67 million ($51 million net of tax or $0.15 per diluted share) were incurred in connection with the plans approved by the Board of Directors and $34 million were incurred in connection with the Company's on-going restructuring actions. These restructuring activities are expected to generate annualized savings of $220 million. Refer to Note 10 to the Company's Consolidated Condensed Financial Statements as of October 2, 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.

Settlement of Litigation

During the third quarter of 2009, Ormco Corporation, a wholly owned subsidiary of the Company, settled certain litigation pending between Ormco and Align Technology, Inc. (Align). Among other provisions, as part of the settlement, Align paid $13 million in cash to Ormco and issued to the Company 7.6 million shares of Align common stock which, following issuance, represented an approximately ten percent ownership interest in Align. The Company recorded a pre-tax gain of $85 million ($53 million after tax or $0.16 per share) related to the settlement representing the cash received and the value of the shares received on the date the shares were issued to the Company, net of $13 million of related legal and direct settlement costs incurred. This gain is reflected as "other (income) expense" in the accompanying Consolidated Condensed Statement of Earnings.

Acquisitions

During the third quarter of 2009, the Company signed a definitive agreement with MDS Inc. to acquire the Analytical Technologies division of MDS, which includes a 50% ownership position in Applied Biosystems/MDS Sciex joint venture ("AB SCIEX") and a 100% ownership position in the former Molecular Devices Corporation. In a separate, but related transaction, the Company also signed a definitive agreement with Life Technologies Corporation to acquire the remaining 50% ownership position in AB SCIEX. AB SCIEX is a leading designer and manufacturer of mass spectrometers, highly sensitive and sophisticated instruments used by researchers and clinicians to identify and quantify specific molecules in complex samples. Molecular Devices supplies high-performance bio-analytical instrumentation and consumable products that accelerate and improve research productivity and effectiveness in life science research and drug discovery. The businesses to be acquired are expected to expand the Medical Technologies segment's annual revenues by approximately $650 million.

The aggregate purchase price for the combined transactions is $1.1 billion, including debt assumed and net of cash acquired. The Company expects to use available cash to fund the purchase of these businesses. Both transactions are subject to regulatory approval and customary closing conditions and are expected to close in the fourth quarter of 2009. Upon completion of the transactions, the businesses acquired will operate within the Company's Medical Technologies segment. AB SCIEX is expected to provide additional sales and earnings growth opportunities in the Company's Medical Technologies segment, both through the growth of existing products and services and through the potential acquisition of complementary businesses. Company management and other personnel are devoting significant resources to the successful integration of the AB SCIEX business into Danaher.

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 nine months ended October 2, 2009 as compared to the comparable periods of 2008. As a result, currency exchange rates decreased reported sales for the three and nine month periods by approximately 2.0% and 4.5%, respectively, as compared to the comparable periods of 2008. Due to the recent strengthening of other major currencies against the U.S. dollar, however, U.S. dollar exchange rates at the end of the third quarter 2009 were lower compared to other major currencies than they were at the end of the third quarter 2008. If the exchange rates in effect as of October 2, 2009 prevail throughout the remainder of 2009, currency exchange rates will favorably impact fourth quarter 2009 reported sales by approximately 3.5%. However, on a full year basis, currency exchange rates would still have an adverse impact on annual 2009 reported sales of approximately 2.5% relative to the Company's performance in the comparable period of 2008 due to the adverse impact of rates in the first nine months of 2009. Additional 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. Any strengthening of the U.S. dollar against other major currencies would further adversely impact the Company's reported sales and results of operations.

RESULTS OF OPERATIONS

Consolidated sales for the three months ended October 2, 2009 decreased 14.5% 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 14% on a year-over-year basis. The impact of currency translation on sales decreased reported sales by 2.0% as the U.S. dollar was stronger against other major currencies in the three months ended October 2, 2009 compared to the comparable period of 2008. Sales growth of approximately 1.5% provided by recently acquired businesses partially offset these declines.

For the nine months ended October 2, 2009, consolidated sales declined 15.5% as compared to the comparable period in 2008. Sales from existing businesses decreased 13.0% on a year-over-year basis. The impact of currency translation on sales decreased reported sales by 4.5%. Sales growth of approximately 2.0% provided by recently acquired businesses partially offset these declines.

Operating profit margins for the Company were 16.9% for the three months ended October 2, 2009 compared to 16.3% in the comparable period of 2008. The third quarter 2009 operating profit margins reflect a 310 basis point year-over-year increase resulting from the settlement of litigation between the Company and Align as described above, and also benefitted from year-over-year cost savings attributable to the Company's fourth quarter 2008 restructuring activities as well as 2009 restructuring activities and ongoing efforts to reduce material costs and other operating expenses. Partially offsetting these positive factors were reduced sales volumes during the third quarter as compared to the comparable period of 2008 as well as 150 basis points of incremental costs incurred during the third quarter 2009 associated with the Company's restructuring activities described above. In addition, acquisition-related charges recorded in the third quarter 2009, net of the acquired inventory and acquired deferred revenue fair value accounting charges that were recorded in the third quarter 2008 in connection with the November 2007 acquisition of Tektronix, adversely impacted year-over-year operating profit margin comparisons by 15 basis points. Acquisition-related charges recorded in the third quarter 2009 include fair value accounting charges associated with current year acquired inventory and acquired deferred revenue as well as the impact of expensing transaction costs

related to pending and completed acquisitions after December 31, 2008 as required by the new business combination accounting standard. Transaction costs related to acquisitions prior to January 1, 2009 were considered a component of purchase consideration and were not expensed unless the acquisition was not completed. The dilutive effect of acquired businesses also adversely impacted operating profit margins by 15 basis points on a year-over-year basis.

Operating profit margins for nine months ended October 2, 2009 were 14.3% compared to 15.2% in the comparable period of 2008. The decrease in operating profit margins during the first nine months of 2009 is primarily a result of the lower sales volumes as compared to the comparable period of 2008. Incremental restructuring costs incurred during the nine month period reduced operating profit margins by 90 basis points on a year-over-year basis and the dilutive effect of recently acquired businesses adversely impacted operating profit margins on a year-over-year basis by 25 basis points. The Align litigation settlement favorably impacted year-over-year operating profit margin comparisons by 105 basis points and partially offset these reductions in operating profit margins. Fair value accounting charges associated with acquired inventory and acquired deferred revenue that were recorded in the first nine months of 2008 in connection with the November 2007 acquisition of Tektronix (net of the acquisition-related charges recorded in the first nine months of 2009) also favorably impact year-over-year operating profit margin comparisons by 30 basis points.

Business Segments

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



                                             Three Months Ended                             Nine Months Ended
                                  October 2, 2009       September 26, 2008       October 2, 2009       September 26, 2008
Professional Instrumentation     $       1,060,076     $          1,213,676     $       3,106,009     $          3,616,815
Medical Technologies                       766,267                  835,009             2,220,866                2,433,206
Industrial Technologies                    654,925                  819,819             1,952,925                2,487,519
Tools and Components                       269,425                  339,677               772,246                  983,410

Total                            $       2,750,693     $          3,208,181     $       8,052,046     $          9,520,950

PROFESSIONAL INSTRUMENTATION

Businesses in the Professional Instrumentation segment offer professional and technical customers various products and services to enable or enhance the performance of their work. The Professional Instrumentation segment includes two strategic lines of business: test and measurement and environmental. The test and measurement 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. The environmental businesses 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
                                     October 2, 2009          September 26, 2008          October 2, 2009          September 26, 2008
Sales                               $       1,060,076        $          1,213,676        $       3,106,009        $          3,616,815
. . .