The Form 10-Q for the quarterly period ended September 30, 2009 ("Form 10-Q") contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Many of the forward-looking statements are located in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section. Forward-looking statements reflect our current views with respect to future events and can also be identified by words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "estimate," "continue," "pursue," "plans," "should," "likely," "might," or the negative thereof or comparable terminology, and may include, without limitation, information regarding our expectations, goals or intentions regarding the future. Forward-looking statements involve certain risks and uncertainties, and our actual results may differ materially from those discussed in any forward-looking statement. Factors that could cause results to differ include, but are not limited to, those discussed in the section below entitled "Risk Factors" under Part II, Item 1A of this Form 10-Q. Additional factors that could cause actual results to differ are discussed in Part II, Item A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008 and in our other current and periodic reports filed from time to time with the SEC. All forward-looking statements in this Form 10-Q are made as of the date hereof and we assume no obligation to update any forward-looking statement, except as required by law.

The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements included in Part I, Item I of this Form 10-Q and in our Annual Report on Form 10-K. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

Overview

Beckman Coulter is the world's largest company devoted solely to biomedical testing, a market we estimate had about $37 billion in worldwide sales in 2008. We market our products in more than 130 countries, with approximately half of our revenue in 2008 coming from outside the United States. Our strategy is to extend the company's leadership in simplifying, automating and innovating customer's processes, by continuing to rollout new products, enhance our current product offerings and enter into new and growing market segments.

We design, manufacture, and sell systems, services, reagents and supplies to clinical and life science laboratories around the world. Our products combine sophisticated analytical instruments, user-friendly software and highly sensitive chemistries, integrated into complete and simple to use systems. Our product lines address nearly all blood tests routinely performed in hospital laboratories and a range of systems for life science and pharmaceutical research.

The majority of our revenue is generated from consumable supplies (including reagent test kits), service and operating-type lease ("OTL") payment arrangements. Approximately 83% of our total revenue for the first nine months in 2009 was generated by this type of revenue, which we refer to as "recurring revenue." A customer contract typically runs five years while the average customer relationship lasts more than 15 years. Switching instrument systems creates significant costs for labs: changing suppliers means re-training staff on new systems and performing validation studies to assure consistency of reported results. High retention rates have driven recurring revenue to approximately 83% of total revenue. Our remaining balance of revenue is derived from instrument sales.

Our instruments are mainly provided to customers under cash sales or OTL arrangements. Since mid-2005, most of our leases have been OTLs rather than sales-type leases ("STLs"), which we previously utilized. Our OTLs are provided under bundled lease arrangements, in which our customers pay a monthly amount for the equipment, consumable supplies (including reagent test kits), and service. Our lease arrangements primarily take the form of what are known as "reagent rentals" where an instrument is placed at a customer location and the customer commits to purchase a certain minimum volume of reagents annually. We also enter into "metered" contracts with customers where the instrument is placed at a customer location with a stock of reagents and the customer is billed monthly based on actual reagent usage.

Strategic Initiatives

Our strategic initiatives for 2009 focus on key growth drivers, quality and operating excellence:

• We are working to expand our test menu, particularly in our immunoassay and molecular diagnostics products and believe our focus on certain disease states will enable us to deliver enhanced testing capability to our customers, which are expected to improve patient health and reduce the cost of care.

• We are building on our industry-leading ability to help customers simplify, automate and innovate their work flow. Our unparalleled knowledge of customers' laboratory processes supports our expansion of automation and work cells, growing our installed base of instruments.

• From a geographic perspective, we are expanding resources in developing markets, including China and India, which we believe will improve our opportunities for long-term growth.

• We intend to continue to streamline our supply chain operations to improve our overall cost structure. We are expanding our use of "Lean Six Sigma" tools throughout the company as a result of our initial success with these tools.

• We continue to make progress on our plan to design and build an automated, fully integrated molecular diagnostic system to enable moderately complex testing in clinical diagnostic laboratories.

As part of our strategic initiatives, we expect to incur charges as we realign our manufacturing and distribution footprint and implement initiatives to improve productivity and reduce operating costs in the future.

Acquisition of Olympus Diagnostic Systems Business

We entered into a master purchase agreement with Olympus Corporation, which we also refer to as Olympus, dated February 27, 2009, to acquire the diagnostic systems portion of Olympus Corporation, ("Olympus Diagnostic Systems" or "ODS"). On August 3, 2009 (Tokyo time), we completed the acquisition through a cash payment of approximately 76 billion Japanese yen (approximately U.S. $800 million based on currency exchange rates as of August 3, 2009). The final purchase price is subject to, among other things, determination of the final closing net assets.

The Olympus Diagnostic Systems business encompasses the development, manufacturing, marketing, sale, distribution and use of clinical chemistry and immunoassay analyzers, blood transfusion testing systems, and the chemical reagents and other consumables used with them, and related laboratory automation equipment, for in vitro diagnostic testing of samples from humans and animals. The completion of this transaction adds considerable product depth and significantly expands our geographic reach and scale. We expect the ODS business to fill some important gaps in our product line, in both the high-throughput and low-throughput segments in chemistry and automation. We have announced our plan to discontinue ODS's immunoassay product line. We believe we have the opportunity to continue our above-market growth in immunoassay by selling our immunoassay products to an entirely new base of loyal ODS chemistry customers. Our strength in total lab automation should be complemented by ODS' strong pre-analytical automation position in Europe and Asia. Customers should benefit from the expanded range of products, particularly those large hospital and university laboratories where higher throughput systems are preferred. This acquisition is classified as part of our Clinical Diagnostics business segment.

On February 27, 2009, we also entered into forward contracts with various banks covering the full amount of the purchase price in order to hedge the risk of changes in the exchange rate of the Japanese yen versus the U.S. dollar between the signing and closing of the ODS acquisition. See Note 4, "Derivatives," for further discussion on derivative financial instruments.

The foregoing description of the ODS acquisition is qualified in its entirety by reference to the full text of the master purchase agreement, which is attached as Exhibit 2.1 to the 8-K filed with the SEC on August 4, 2009 and incorporated by reference.

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements are prepared in accordance with U.S. GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, our accounting policies, assumptions, estimates and judgments are reviewed by management to ensure that our financial statements are presented fairly in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ materially from our assumptions and estimates.

Both our accounting policies and estimates are essential in understanding MD&A and results of operations. We describe our significant accounting policies in Note 1, "Nature of Business and Summary of Significant Accounting Policies," of the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2008. In addition, we discuss our critical accounting estimates in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2008. There were no significant changes in our accounting policies or estimates since the end of 2008 except as described below.

As of January 1, 2009, we adopted new accounting guidance related to convertible debt, on a retroactive basis, to record the equity component of our convertible debt and non-cash interest expense related to our convertible debt obligation. As a result of the adoption of the new accounting guidance on Debt with Conversion and Other Options ("ASC 470-20"), at December 31, 2008 our long-term debt decreased by $77.3 million and our stockholders' equity increased by $46.3 million. Our interest expense increased by $3.6 million and $3.4 million for the three months ended September 30, 2009 and 2008, respectively, and by $10.7 million and $10.0 million for the nine months ended September 30, 2009 and 2008, respectively. Our diluted earnings per share decreased by $0.03 and $0.04 for the three months ended September 30, 2009 and 2008, respectively, and by $0.10 and $0.09 for the nine months ended September 30, 2009 and 2008, respectively, as a result of the adoption.

In September 2009, we reevaluated our core technology, which previously had an indefinite useful life. We considered current and expected future technological changes evolving in the marketplace, including the potential development of newer technologies by our competitors. We determined that over time these factors could make our core technology less valuable for our related products, and determined that it was appropriate to assign an estimated 20 year useful life to the technology. We determined in the current quarter that our core technology assets are not impaired. The incremental annual amortization of this change is approximately $3 million.

Change in Presentation

We have a hedging program to reduce the risk of foreign currency changes on cash flows generated from intercompany inventory purchases. In the first quarter of 2009, our results of operations were impacted more significantly by currency changes, a portion of which was offset by the results of our hedging program. To reflect this net currency impact on our operating results, we have reclassified our gains and losses related to cash flow hedging activities and foreign currency transactions to cost of sales from non-operating income or expense for all periods presented. The amounts reclassified for the prior periods were not material.

Results of Operations

We measure our business on the basis of two reportable segments - Clinical Diagnostics and Life Science. The Clinical Diagnostics segment represents approximately 86% of our consolidated revenue and includes products used to evaluate and analyze bodily fluids, cells and other patient samples. The three product areas within Clinical Diagnostics are Chemistry and Clinical Automation, Cellular Analysis and Immunoassay and Molecular Diagnostics. Our Life Science segment, on the other hand, includes systems used for disease research performed in academic centers and therapeutic research performed by biopharmaceutical companies.

To facilitate an understanding of our financial results, we review revenue on both a reported and constant currency basis (constant currency growth is not a U.S. GAAP defined measure of revenue growth). We define constant currency revenue as current period revenue in local currency translated to U.S. dollars at the prior year's foreign currency exchange rate for that period, computed monthly. Constant currency growth as presented herein represents:

Current period constant currency revenue less prior year reported revenue / Prior year reported revenue

This measure provides information on revenue growth assuming that foreign currency exchange rates have not changed between the prior year and the current period. We believe the use of this measure aids in the understanding of our operations without the impact of foreign currency fluctuations. Constant currency revenue and constant currency growth as defined or presented by us may not be comparable to similarly titled measures reported by other companies. Additionally, constant currency revenue is not an alternative measure of revenue on a U.S. GAAP basis.

Current Quarter Financial Highlights

Total revenue increased 8.4% to $822.8 million during the third quarter, when compared to the corresponding prior year period, including revenue of $65.1 million related to the recently acquired ODS business. However, excluding the effect of the acquisition, on a constant currency basis, revenue remained relatively flat as constant currency recurring revenue grew by 7.7%, but was partially offset by a 14.8% constant currency decline in hardware instrument sales. The recurring revenue gain was generated primarily from our Clinical Diagnostics products, driven in part by Access Immunoassay which grew 10.3% in constant currency. Our acquisition of Cogenics contributed about 100 basis points of recurring revenue growth. Excluding revenue from the ODS acquisition, instrument sales declined in all product areas when compared to the prior year quarter due primarily to weakness in the U.S. market and in Emerging Markets.

Gross profit margin decreased 10 basis points to 45.9% during the third quarter of 2009 as compared to the prior year quarter due primarily to an increase in cost of sales associated with ODS products as a result of an $8.8 million roll-out of fair value adjustment to inventory recorded in connection with the acquisition accounting and a charge of $1.6 million associated with the write-off of discontinued products. These factors were substantially offset by a favorable product mix, with recurring revenue comprising a larger percentage of our overall revenue.

Selling, general and administrative ("SG&A") expense increased $13.4 million or 6.4% during the current quarter as a result of the acquisition, offset by the benefit from our cost containment initiatives combined with the effect of a stronger dollar, which reduced SG&A expenses by approximately $4 million.

Research and development ("R&D") expense decreased by $3.1 million or 4.1% mainly due to reductions related to completion of certain Cellular Analysis R&D projects and reprioritization of other projects, offset by R&D spending related to the ODS acquisition, and continuing to fund significant R&D programs in Immunoassay and Molecular Diagnostics, including acquisition of a license for Molecular Diagnostics for $5.8 million as well as investments in new Flow Cytometry systems.

Restructuring and acquisition related costs increased by $71.4 million during the third quarter of 2009, when compared to the prior year quarter, in large part due to: 1) a $25.5 million increase in acquisition and integration related costs, such as outside legal and consulting fees primarily associated with the ODS acquisition, 2) $20.5 million related to severance costs associated with the ODS acquisition and related restructuring, and a 3) $14.2 million contract termination fee related to cancellation of our project to develop a lower throughput chemistry instrument since we acquired a similar instrument as part of our ODS acquisition. Additionally, we incurred $7.1 million in restructure related costs in connection with the closure and relocation of certain manufacturing and distribution sites as part of our plan to vacate our Fullerton, California facility and consolidate those operations to other existing facilities, comparable to the level incurred in the prior year.

Total non-operating expense decreased by $7.4 million mainly due to a $10.9 million hedging gain. This gain is associated with forward contracts to purchase Japanese yen as described under Acquisition of Olympus Diagnostic Systems Business." As a result of currency exchange rates, the U.S. dollar converted purchase price of approximately $780 million (based on the exchange rates as of February 27, 2009) was also increased by an amount approximating our cumulative hedging gain. We had additional currency gains of $2.2 million on Japanese yen held prior to settlement of the acquisition and $4.9 million on settlement of intercompany loans related to the acquisition. These gains were partially offset by a reduction of interest income of approximately $1 million, combined with additional net interest expense of $6.4 million as a result of the debt portion of our financing for the ODS acquisition being outstanding for the entire quarter.

Our effective tax rate changed from 6.9% during the third quarter of 2008 to a benefit of 400.0% during the current quarter due primarily to a decrease in the estimated annual effective tax rate applied in the current quarter coupled with a nominal pre-tax loss for the quarter resulting in the unusual tax rate for the quarter.

Revenue

The following tables compare revenue type, segment and geography for the three
and nine months ended September 30, 2009 and 2008 (dollar amounts in millions):




                                                 *Three Months                         Constant
                                              Ended September 30,       Reported       Currency
                                               2009          2008       Growth %     Growth % (a)
Total revenue:
Recurring revenue - supplies, service
and lease payments                           $   676.1      $ 594.6       13.7%           17.3%
Instrument sales                                 146.7        164.2     (10.7)%          (9.4)%

Total revenue                                $   822.8      $ 758.8        8.4%           11.6%


Segment revenue:
Clinical Diagnostics:
Chemistry and Clinical Automation            $   282.7      $ 220.4       28.3%           32.1%
Cellular Analysis                                229.0        233.1      (1.8)%            0.6%
Immunoassay and Molecular Diagnostics            199.3        182.4        9.3%           13.1%

Total Clinical Diagnostics                       711.0        635.9       11.8%           15.1%
Life Science                                     111.8        122.9      (9.0)%          (6.8)%

Total revenue                                $   822.8      $ 758.8        8.4%           11.6%


Revenue by geography:
United States                                $   402.2      $ 376.5        6.8%            6.8%
Europe                                           182.4        165.4       10.3%           19.6%
Emerging Markets (b)                              65.7         68.8      (4.6)%            3.1%
Asia Pacific                                     122.9         94.5       30.0%           27.5%
Other (c)                                         49.6         53.6      (7.4)%            2.5%

Total revenue                                $   822.8      $ 758.8        8.4%           11.6%

                                                 *Nine Months                          Constant
                                             Ended September 30,        Reported       Currency
                                             2009           2008        Growth %     Growth % (a)
Total revenue:
Recurring revenue - supplies, service
and lease payments                         $ 1,878.8      $ 1,792.6        4.8%           10.0%
Instrument sales                               392.2          495.0     (20.8)%         (18.3)%

Total revenue                              $ 2,271.0      $ 2,287.6      (0.7)%            3.8%


Segment revenue:
Clinical Diagnostics:
Chemistry and Clinical Automation          $   708.4      $   669.0        5.9%           10.7%
Cellular Analysis                              668.8          709.1      (5.7)%          (1.7)%
Immunoassay and Molecular Diagnostics          578.9          548.7        5.5%           10.9%

Total Clinical Diagnostics                   1,956.2        1,926.7        1.5%            6.2%
Life Science                                   314.9          361.0     (12.8)%          (8.7)%

Total revenue                              $ 2,271.0      $ 2,287.6      (0.7)%            3.8%


Revenue by geography:
United States                              $ 1,135.0      $ 1,133.4        0.1%            0.1%
Europe                                         493.4          511.8      (3.6)%            8.5%
Emerging Markets (b)                           178.8          205.1     (12.8)%          (2.9)%
Asia Pacific                                   322.5          279.2       15.5%           15.5%
Other (c)                                      141.3          158.1     (10.6)%            3.5%

Total revenue                              $ 2,271.0      $ 2,287.6      (0.7)%            3.8%

* Amounts in table above may not foot or recalculate due to rounding.

(a) Constant currency growth is not a U.S. GAAP defined measure of revenue growth.

(b) Emerging Markets includes Eastern Europe, Russia, Middle East, Africa and India.

(c) Other includes Canada and Latin America.

Revenue for the three and nine months ended September 30, 2009 includes the following amounts related to our ODS acquisition completed on August 3, 2009 (in millions):

         Total revenue:
         Recurring revenue - supplies, service and lease payments   $ 55.9
         Instrument sales                                              9.2

         Total revenue                                              $ 65.1


         Segment revenue:
         Clinical Diagnostics:
         Chemistry and Clinical Automation                          $ 62.6
         Immunoassay and Molecular Diagnostics                         2.5

         Total revenue                                              $ 65.1


         Revenue by geography:
         United States                                              $ 21.2
         Europe                                                       24.4
         Emerging Markets (b)                                          7.2
         Asia Pacific                                                 12.2
         Other (c)                                                     0.1

         Total revenue                                              $ 65.1

Revenue

Recurring revenue increased 13.7% (17.3% in constant currency) during the three months ended September 30, 2009 and increased 4.8% (10.0% increase in constant currency) in the nine months ended September 30, 2009 in comparison to the same periods in the prior year. The increase in constant currency recurring revenue was driven in part by the acquisition of ODS, which added approximately 9.6% and 3.2% to this growth during the three and nine months ended September 30, 2009, respectively. Strong growth in Immunoassay, continued growth in Cellular Analysis and the acquisition of Cogenics in April 2009 also contributed to the increase. Recurring revenue, which we believe is the best indicator of the overall strength of our business, represented 82.7% of our total revenue during the nine-month period.

Instrument sales decreased by 10.7% (9.4% in constant currency) during the three months ended September 30, 2009 and by 20.8% (18.3% in constant currency) during the nine months ended September 30, 2009, despite inclusion of $9 million of instrument sales from the ODS acquisition. Cash instrument sales pertaining to Cellular Analysis were most significantly impacted, declining by more than 18% in both the three and nine months ended September 30, 2009, compared to unusually strong instrument sales in 2008. We believe the overall decline in 2009 cash instrument sales is due to a number of factors, including the continued difficult economic environment, the tightening of the credit markets, constrained hospital operating environment and year to date 2009, the strengthening dollar. As a result, sales were negatively impacted as customers remain cautious in their capital spending and in some cases have delayed purchases. In addition, in the third quarter of 2008 we experienced an unusually strong increase of 26% in instrument sales in part due to a weak U.S. dollar, but also due to a production backlog issue that we resolved in 2008.

Clinical Diagnostics

Clinical Diagnostics revenue increased by 11.8% and 1.5% in the three and nine months ended September 30, 2009, respectively, when compared to the same period in 2008, primarily as a result of the acquisitions. In constant currency, Clinical Diagnostics realized an increase in revenue of 15.1% and 6.2% for the third quarter and first nine months of 2009, respectively, primarily driven by a 18.9% and 10.9% improvement in recurring revenue during the three and nine months ended September 30, 2009. The ODS acquisition accounted for $55.9 million, or 10.2% and 3.5% of growth in recurring revenue during the three and . . .