BECKMAN COULTER INC - FORM 10-Q

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EX-31 - RULE 13A-14(A)/15D-14(A) CERTIFICATION - BECKMAN COULTER INC	dex31.htm
EX-32 - SECTION 1350 CERTIFICATION - BECKMAN COULTER INC	dex32.htm
EX-15.2 - LETTER OF ACKNOWLEDGEMENT OF USE OF REPORT - BECKMAN COULTER INC	dex152.htm
EX-15.1 - REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - BECKMAN COULTER INC	dex151.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-10109

BECKMAN COULTER, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-104-0600

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

250 S. Kraemer Boulevard,

Brea, California

92821

(Address of principal executive offices)

(Zip Code)

(714) 993-5321

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x		Accelerated filer ¨

Non-accelerated filer ¨	(Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x.

The number of outstanding shares of the registrant’s common stock as of April 19, 2011 was 71,132,961 shares.

TABLE OF CONTENTS


Part I—Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Earnings	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

Part II—Other Information
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	37
Signatures		38

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets

(in millions, except amounts per share)

(unaudited)


	March 31, 2011		December 31, 2010
Assets
Current assets
Cash and cash equivalents	$	584.8	$	376.2
Short-term investment available for sale, at fair value		-		135.3
Certificates of deposit		13.1		28.6
Trade and other receivables, net		795.7		796.2
Inventories		650.3		630.5
Deferred income taxes		90.9		94.6
Prepaids and other current assets		97.3		78.4

Total current assets		2,232.1		2,139.8

Property, plant and equipment, net		623.0		632.4
Customer leased instruments, net		500.4		492.9
Goodwill		1,052.5		1,048.9
Other intangible assets, net		503.0		515.7
Other assets		46.2		53.1

Total assets	$	4,957.2	$	4,882.8

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	265.5	$	267.9
Accrued expenses		496.5		493.5
Income taxes payable		-		3.5
Short-term borrowings		-		0.5
Current maturities of long-term debt		777.1		230.1

Total current liabilities		1,539.1		995.5

Long-term debt, less current maturities		568.5		1,111.4
Deferred income taxes		41.4		41.1
Other liabilities		573.5		603.3

Total liabilities		2,722.5		2,751.3

Commitments and contingencies (see Note 13)

Temporary equity
Convertible notes subject to redemption		45.6		-
Stockholders’ equity
Preferred stock, $0.10 par value; authorized 10.0 shares; none issued		-		-
Common stock, $0.10 par value; authorized 300.0 shares; shares issued 73.9 at March 31, 2011 and December 31, 2010, respectively, shares outstanding 71.1 and 70.3 at March 31, 2011 and December 31, 2010, respectively		7.4		7.4
Additional paid-in capital		864.5		902.2
Retained earnings		1,658.5		1,662.2
Accumulated other comprehensive loss		(156.5)		(214.2)
Treasury stock, at cost: 2.4 and 3.2 common shares at March 31, 2011 and December 31, 2010, respectively		(184.8)		(226.1)
Common stock held in grantor trust, at cost: 0.4 common shares at March 31, 2011 and December 31, 2010		(22.8)		(23.4)
Grantor trust liability		22.8		23.4

Total stockholders’ equity		2,189.1		2,131.5

Total liabilities and stockholders’ equity	$	4,957.2	$	4,882.8

See accompanying Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Earnings

(in millions, except amounts per share)

(unaudited)


	Three Months Ended March 31,
	2011		2010
Recurring revenue – supplies, service and lease payments	$	751.4	$	731.3
Instrument sales		144.0		149.8

Total revenue		895.4		881.1


Cost of recurring revenue		397.1		354.5
Cost of instrument sales		135.8		121.6

Total cost of sales		532.9		476.1


Operating costs and expenses
Selling, general and administrative		243.1		222.9
Research and development		61.5		70.1
Amortization of intangible assets		14.0		13.9
Restructuring and acquisition related costs		13.3		18.2


Total operating costs and expenses		331.9		325.1


Operating income		30.6		79.9


Non-operating expense (income)
Interest income		(1.9)		(1.3)
Interest expense		25.1		24.1
Other, net		0.4		(0.3)

Total non-operating expense		23.6		22.5


Earnings before income taxes		7.0		57.4
Income tax (benefit) provision		(3.3)		18.7


Net earnings	$	10.3	$	38.7


Basic earnings per share	$	0.14	$	0.55


Diluted earnings per share	$	0.14	$	0.54

Weighted average number of shares outstanding
Basic		71,183		70,321
Diluted		72,831		71,534

See accompanying Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Cash Flows

(in millions)

(unaudited)


	Quarter Ended March 31,
	2011		2010
Cash flows from operating activities
Net earnings		$ 10.3		$ 38.7
Adjustments to reconcile net earnings from operations to net cash provided by operating activities
Depreciation and amortization		89.8		89.1
Provision for doubtful accounts receivable		1.4		1.6
Share-based compensation expense		11.8		10.3
U.S. pension trust contributions		(21.4)		(20.0)
Accreted interest on convertible debt		4.0		3.7
Amortization of pension and postretirement costs		9.7		4.8
Deferred income taxes		(4.6)		16.8
Changes in assets and liabilities, net of acquisitions
Trade and other receivables		17.8		2.5
Prepaid and other current assets		(23.6)		(16.6)
Inventories		(8.2)		(12.9)
Accounts payable and accrued expenses		(16.0)		(2.8)
Income taxes payable		2.2		(5.4)
Long-term lease receivables		6.8		(0.5)
Other		(4.9)		(11.1)

Net cash provided by operating activities		75.1		98.2


Cash flows from investing activities
Additions to property, plant and equipment		(13.7)		(34.3)
Additions to customer leased instruments		(42.5)		(36.9)
Purchase of investments		(17.7)		(15.1)
Proceeds from sales and maturities of investments		169.9		-
Payments for business acquisitions and technology licenses		(1.4)		(2.5)

Net cash provided by (used in) investing activities		94.6		(88.8)


Cash flows from financing activities
Dividends to stockholders		(14.0)		(12.9)
Proceeds from issuance of common stock		39.1		25.0
Repurchase of common stock as treasury stock		-		(14.8)
Repurchase of common stock held in grantor trust		(0.6)		-
Excess tax benefits from share-based payment transactions		4.8		2.2
Net (payments) borrowings on lines of credit		(2.3)		3.6
Debt repayments		(0.2)		-

Net cash provided by financing activities		26.8		3.1

Effect of exchange rates on cash and cash equivalents		12.1		(4.8)
Change in cash and cash equivalents		208.6		7.7
Cash and cash equivalents-beginning of period		376.2		288.8

Cash and cash equivalents-end of period		$ 584.8		$ 296.5

See accompanying Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements

(tabular dollar amounts in millions, except amounts per share)

(unaudited)

Note 1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business

Beckman Coulter, Inc. (“Beckman Coulter,” the “Company,” “we,” “our”) is a leading manufacturer of biomedical testing instrument systems, tests and supplies that simplify and automate laboratory processes. Spanning the biomedical testing continuum—from pioneering medical research and clinical trials to laboratory diagnostics and point-of-care testing—our installed base of systems provides essential biomedical information to enhance health care around the world. We are dedicated to improving patient health and reducing the cost of care.

Our revenue is about evenly distributed inside and outside of the United States (“U.S.”). Clinical Diagnostics sales represented 87.6% of our total revenue in 2010, with the balance coming from the Life Science markets. Approximately 81% of our total revenue in 2010 was generated by recurring revenue from consumable supplies (including reagent test kits), services and operating type lease (“OTL”) payments. Central laboratories of mid-to large-size hospitals represent our most significant customer group.

On February 6, 2011, Beckman Coulter, Danaher Corporation, a Delaware corporation (“Danaher”), and Djanet Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Danaher (“Purchaser”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Danaher, through the Purchaser, commenced an offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock, par value $0.10 per share, for $83.50 per share in cash, without interest. The Offer is scheduled to expire at 12:00 midnight, New York City time, at the end of June 6, 2011, unless further extended. Following the consummation of the Offer, Purchaser will be merged with and into the Company (the “Merger”), and the Company will become an indirectly, wholly-owned subsidiary of Danaher. The consummation of the transaction is subject to several conditions, including regulatory approvals.

Basis of Presentation

We prepared the accompanying Condensed Consolidated Financial Statements following the requirements of the United States Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes or other financial information normally required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted.

Our financial statements include all normal and recurring adjustments that we consider necessary for the fair presentation of our financial position and operating results. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2010.

Revenue, expenses, assets and liabilities can vary between the quarters and our results of operations for the quarter ended March 31, 2011 do not necessarily indicate our operating results to be expected for the full year or any future period.

In the first quarter of 2011, we recorded a $14.1 million out-of-period adjustment to correct for the understatement of cost of sales associated with inventory originating primarily in 2010. This adjustment had a negative 160 basis point impact to our cost of sales as a percentage of revenue for the quarter ended March 31, 2011. The impact of the errors on previously-issued annual and interim financial statements was not material and the out-of-period correction is not expected to be material to our 2011 full year results.

Use of Estimates

We follow U.S. GAAP, which requires us to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets, liabilities, revenue and expenses, and disclosures about contingent assets and liabilities. Such estimates include the valuation of accounts receivable, inventories, long-lived assets, lives of customer leased instruments, lives of plant and equipment, lives of intangible assets, and assumptions used in the calculation of warranty accruals, employee benefit plan obligations, environmental and litigation obligations, legal contingencies, income taxes, share-based compensation and others. These estimates and assumptions are based on management’s best estimates and judgment and affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in those estimates will be reflected in the financial statements in future periods.

Income Taxes

At the end of each interim reporting period, an estimate is made of the effective tax rate expected to apply to the full year. The estimated annual effective tax rate is used to determine the income tax rate for each applicable interim reporting period. The tax effect of any tax law changes, final settlement of examinations with tax authorities and certain other events are reflected as discrete items in the interim reporting period in which they occur.

The effective tax rate for the quarter ended March 31, 2011 was a benefit of 47.1% and was impacted by discrete events which decreased tax expense for the quarter by $5.0 million. Discrete events arising in the first quarter of 2011 that reduced tax expense by $5.0 million related primarily to the effects of statutes of limitations expiring in an international subsidiary and correction of prior year state deferred taxes for the effect of federal bonus depreciation on state taxes. The impact of the correction of previously issued financial statements was not material.

The total amount of unrecognized tax benefits as of March 31, 2011 was $41.0 million, which if recognized, would affect our effective tax rate in future periods.

A number of years may elapse before an uncertain tax position is finally resolved. It is difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position. We reevaluate and adjust our reserves for income taxes, as well as the related interest, in light of changing facts and circumstances. Settlement of any particular position would usually require the use of cash and result in the reduction of the related reserve. The resolution of a matter would be recognized as an adjustment to the provision for income taxes and effective tax rate in the period of resolution. It is reasonably possible that our liability for uncertain tax positions could be reduced by as much as $13.8 million over the next 12 months as a result of the settlement of tax positions with various tax authorities.

Recently Adopted Accounting Standards

In December 2010, the Financial Accounting Standards Board (“FASB”) issued ASU 2010-28, —Intangibles — Goodwill and Other (Topic 350). This ASU modifies the first step of the goodwill impairment test to include reporting units with zero or negative carrying amounts. For these reporting units, the second step of the goodwill impairment test shall be performed to measure the amount of impairment loss, if any, when it is more likely than not that a goodwill impairment exists. In considering whether it is more likely than not that a goodwill impairment exists, qualitative factors should be considered such as those used to determine whether a triggering event would require an interim goodwill impairment test. This ASU is effective for fiscal years and interim periods beginning after December 15, 2010. The Company has evaluated the ASU and determined it will not have an impact on our consolidated financial position, results of operations or cash flows.

Note 2. Restructuring Activities and Acquisition Related Charges

Restructuring Activities

Restructuring actions and exit activities generally include significant actions involving employee-related severance charges, contract termination costs, and impairment of assets associated with such actions.

Employee-related severance charges are largely based upon employment policies that have been distributed to the employees and severance plans. These charges reflected in the quarter in which management approves the associated actions and the amount of the severance is probable and estimable. Severance amounts for which affected employees were required to render service in order to receive benefits at their termination dates were measured at the date such benefits were communicated to the applicable employees and recognized as expense over the employees’ remaining service periods.

Contract termination and other charges primarily reflect costs to terminate a contract before the end of its term (measured at fair value at the time the Company provided notice to the counterparty) or costs that will continue to be incurred under the contract for its remaining term without economic benefit to the Company. Asset impairment charges related to property, plant and equipment reflect the excess of the assets’ carrying values over their fair values.

Total Restructuring Charges

We reversed $1.5 million of restructure related severance accruals during the quarter ended March 31, 2011, as we determined that certain positions had been vacated without requiring previously estimated severance charges. Our restructure activities were substantially completed by June 30, 2010. We recorded restructuring charges of $6.6 million in the quarter ended March 31, 2010. These charges related to severance, relocation, asset impairment and other exit costs and were included within the restructuring and acquisition related costs line of our Condensed Consolidated Statement of Earnings. From January 2007, the beginning period for the restructure activities, through March 31, 2011, we incurred a total of $140.5 million of net restructuring charges of which $49.3 million relates to severance costs.

Following is a detailed description of charges included in restructuring activities:

Supply Chain Initiatives

As part of our previously announced closure and relocation of certain manufacturing and distribution sites, during the quarter ended March 31, 2011 we reversed $1.5 million of restructure related accruals and during the quarter ended March 31, 2010 we incurred severance and other relocation charges of $1.5 million.

Clinical Diagnostics Business

In connection with the Olympus acquisition, we incurred severance costs during the quarter ended March 31, 2010, of $2.2 million due to redundancies as part of combining the two entities. We did not incur any severance costs related to the Olympus acquisition or clinical diagnostics business during the quarter ended March 31, 2011.

Asset Impairment Charges and Employee Severance

During the quarter ended March 31, 2010, we incurred asset impairment charges of $2.9 million associated with our consolidation effort to close and relocate facilities and operations. We did not incur any asset impairment charges during the quarter ended March 31, 2011.

The following is a reconciliation of the accrual for employee severance and other related costs included in accrued expenses in the Condensed Consolidated Balance Sheet at March 31, 2011:


Balance at December 31, 2010	$	10.6
Reversal of amounts previously accrued		(1.5)
Utilization		(2.5)

Balance at March 31, 2011	$	6.6

Acquisition Related Costs

In connection with the Danaher Offer, we incurred investment banking and legal expenses of $14.8 million in the quarter ended March 31, 2011. These charges are included within the restructuring and acquisition related costs line of our Condensed Consolidated Statement of Earnings.

In connection with the acquisitions of Olympus and Cogenics, the Genomics division of Clinical Data, Inc, we incurred acquisition related and integration costs of $11.6 million during the quarter ended March 31, 2010. These charges are included within the restructuring and acquisition related costs line of our Condensed Consolidated Statement of Earnings.

Note 3. Cash Equivalents and Investments

We purchased investments in marketable securities designated as available-for-sale in June 2010. All of these investments were sold in March 2011.

A summary of proceeds from the sales and maturities of available-for-sale securities and certificates of deposit as well as associated gains and losses for the quarter ended March 31, 2011 follows:


	Proceeds		Net Realized Gain (Loss)
Debt securities
U.S. government and agency securities	$	39.7	$	0.1
Corporate bonds		90.7		0.6
Asset backed securities		23.5		-
Certificates of deposit		16.0		-

Total Investments	$	169.9	$	0.7

The cost of securities sold is determined based on the specific identification method for purposes of recording realized gains and losses.

Note 4. Derivatives

We use derivative financial instruments to hedge foreign currency and interest rate exposures. Our objectives for holding derivatives are to minimize currency and interest rate risks using the most effective methods to eliminate or reduce the impacts of these exposures. We do not speculate in derivative instruments to profit from foreign currency exchange fluctuations nor do we enter into trades for which there are no underlying exposures. We have minimal exposure to interest rate fluctuations. The following discusses in more detail our foreign currency exposures and related derivative instruments.

Foreign Currency

We manufacture our products principally in the U.S., but generated approximately 57% of our revenue during the first quarter of 2011 from sales made outside the U.S. by our international subsidiaries. Revenues generated by our international subsidiaries generally are denominated in the subsidiary’s local currency, thereby exposing us to the risk of foreign currency fluctuations. To mitigate the impact of changes in foreign currency exchange rates, we use derivative financial instruments (or “foreign currency contracts”) to hedge the foreign currency exposure resulting from intercompany cash flows associated with intercompany inventory purchases by our international subsidiaries through their anticipated cash settlement date. These foreign currency contracts include forward and option contracts and are designated as cash flow hedges. The major currencies against which we hedge are the Euro, Japanese yen, Australian dollar, British Pound Sterling and Canadian dollar. As of March 31, 2011 and December 31, 2010, the notional amounts of all derivative foreign exchange contracts were $391.5 million and $483.1 million, respectively.

Hedge ineffectiveness associated with our cash flow hedges was immaterial and no cash flow hedges were discontinued in the quarters ended March 31, 2011 and 2010. Derivative gains and losses on effective hedges included in accumulated other comprehensive loss are reclassified into cost of sales upon the recognition of the hedged transaction. We estimate that substantially all of the $11.1 million of unrealized gain included in accumulated other comprehensive loss at March 31, 2011 will be reclassified to cost of sales within the next twelve months. The actual amounts that will be reclassified to earnings over the next twelve months may vary from this amount as a result of changes in market rates. We have cash flow hedges at March 31, 2011, which settle as late as January 2012.

We also use foreign currency forward contracts to offset the effect of changes in the value of loans between subsidiaries and do not designate these derivative instruments as accounting hedges, therefore the changes in the value of these derivative instruments are included within the non-operating (income) expense section of the Consolidated Statement of Earnings.

The following table presents the fair value of derivative instruments within the Condensed Consolidated Balance Sheet:

Balance
Sheet
Location

Asset Derivatives

Balance
Sheet
Location

Liability Derivatives

March 31,
2011

December 31,
2010

March 31,
2011

December 31,
2010

Derivatives designated as hedging instruments

Foreign exchange forwards and options

Other current
assets

2.9

8.6

Other current
liabilities

7.2

5.8

The following tables present the amounts affecting the consolidated financial statements:


	Amount of (Loss) Gain Recognized in Other Comprehensive Income (Loss) on Derivatives					Location of Loss Reclassified From Accumulated Other Comprehensive Loss into Net Earnings		Amount of Loss Reclassified From Accumulated Other Comprehensive Loss into Net Earnings
	Quarter Ended March 31,							Quarter Ended March 31,
	2011			2010				2011			2010
Derivatives in Cash Flow Hedging Relationships

Foreign exchange forwards and options	$	(7.4	)	$	5.0		Cost of sales	$	(0.3	)		$ (2.3)

Location of Loss Recognized in
Net
Earnings on Derivatives

Amount of Loss in Net
Earnings on Derivatives

Quarter Ended March 31,

2011

2010

Derivatives not designated as hedging instruments

Foreign exchange forwards

Other non-operating expense

0.2

The bank counterparties to the foreign exchange contracts expose us to credit-related losses in the event of their nonperformance. To help mitigate that risk, we only contract with counterparties that meet certain minimum requirements under our counterparty risk assessment process. The Company monitors ratings and potential downgrades on at least a quarterly basis. Based on our on-going assessment of counterparty risk, we will adjust our exposure to various counterparties as deemed necessary.

Note 5. Fair Value Measurements

The following table presents information about our financial assets and liabilities that are measured at fair value on a recurring basis at March 31, 2011 and December 31, 2010, and indicates the fair value hierarchy of the valuation techniques we utilize to determine such fair value:


Description of assets (liabilities)	Fair Value at March 31, 2011		Fair Value Measurements at Reporting Date Using
Description of assets (liabilities)	Fair Value at March 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Derivatives
Forward contracts		$ (0.7)		$ -		$ (0.7)		$ -
Option contracts		$ (3.6)		$ -		$ (3.6)		$ -

	Fair Value at December 31, 2010		Fair Value Measurements at Reporting Date Using
Description of assets (liabilities)	Fair Value at December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Derivatives
Forward contracts		$ (0.1)		$ -		$ (0.1)		$ -
Option contracts		$ 2.9		$ -		$ 2.9		$ -
Cash Equivalents
Money market mutual funds		$ 0.4		$ 0.4		$ -		$ -
Investments
Mortgage and asset-backed securities		$ 14.7		$ 14.7		$ -		$ -
U.S government and agency securities		$ 37.1		$ 37.1		$ -		$ -
Corporate bonds		$ 83.5		$ 83.5		$ -		$ -

Our financial liabilities, which consist of derivatives contracts, have been classified as Level 2. These derivative contracts have been initially valued at the transaction price and subsequently valued using market data including quotes, benchmark yields, spot rates, and other industry and economic events. See Note 4, “Derivatives,” for further discussion on derivative financial instruments. When necessary, we validate our valuation techniques by understanding the models used and obtaining market values from pricing sources.

The carrying values of our financial instruments approximate their fair value at March 31, 2011, except for long-term debt. Quotes from financial institutions are used to determine market values of our debt and derivative financial instruments. The carrying value and fair value of our current maturities of long-term debt and long-term debt at March 31, 2011 was $1,345.6 million and $1,596.7 million, respectively.

Note 6. Comprehensive Income (Loss)

The reconciliation of net earnings to comprehensive income is as follows:


	Quarter Ended March 31,
	2011		2010
Net earnings	$	10.3	$	38.7


Other comprehensive income
Foreign currency translation adjustments		50.8		(40.4)
Net actuarial gains associated with pension and other postretirement benefits, net of income taxes of $(3.0) and $(0.9) for the quarter ended March 31, 2011 and 2010, respectively		5.5		2.6
Amortization of prior service cost and unrecognized gains and losses included in net periodic benefit cost, net of income taxes of $(3.7) and $(2.8) for the quarter ended March 31, 2011 and 2010, respectively		6.0		4.8
Net change in unrealized gain on available for sale securities, net of income taxes of $0.2 for the quarter ended March 31, 2011		(0.3)		-
Derivatives qualifying as hedges:
Net derivative (loss) gain, net of income taxes of $2.9 and $(1.9) for the quarter ended March 31, 2011 and 2010, respectively		(4.5)		3.1
Reclassifications to cost of sales, net of income taxes of $(0.1) and $(0.9) for the quarter ended March 31, 2011 and 2010, respectively		0.2		1.4

Other comprehensive income (loss)		57.7		(28.5)

Total comprehensive income	$	68.0	$	10.2

The components of accumulated other comprehensive loss (“AOCI”), net of income taxes, are as follows:


	March 31, 2011		December 31, 2010
Cumulative currency translation adjustments	$	146.6	$	95.8
Pension and other postretirement plan liability adjustments		(296.4)		(307.9)
Net unrealized loss on derivative instruments		(6.7)		(2.4)
Net unrealized gain on available-for-sale securities		-		0.3

Total accumulated other comprehensive loss	$	(156.5)	$	(214.2)

Note 7. Earnings Per Share

The following is a reconciliation of the numerators and denominators used in computing basic and diluted earnings per share (“EPS”):


	Quarter Ended March 31,
	2011						2010
	Net Earnings		Shares		Per Share Amount		Net Earnings		Shares		Per Share Amount
Basic EPS:
Net earnings	$	10.3		71.183	$	0.14	$	38.7		70.321	$	0.55
Effect of dilutive stock options, non-vested equity shares, share units outstanding and convertible notes		-		1.648		-		-		1.213		(0.01)

Diluted EPS:
Net earnings	$	10.3		72.831	$	0.14	$	38.7		71.534	$	0.54

For the quarter ended March 31, 2011, there were 0.5 million shares relating to the possible exercise of outstanding stock options not included in the computation of diluted EPS as their effect would have been antidilutive.

The principal amount of the convertible notes issued in December 2006, due in 2036 and callable in 2013 is expected to be settled in cash. Any conversion spread over the principal amount would be settled in our common shares. Since the average stock price during the quarter ended March 31, 2011 was greater than the conversion price of the Convertible Notes, 0.5 million shares associated with the convertible notes have been assumed to be outstanding in computing diluted EPS. Since the average stock price during the quarter ended March 31, 2010 was less than the conversion price of the Convertible Notes, no shares associated with the convertible notes have been assumed to be outstanding in computing diluted EPS.

Note 8. Sale of Assets

During the quarters ended March 31, 2011 and 2010, we sold certain receivables (“Receivables”). The net book value of the Receivables sold during these periods was $24.4 million and $24.5 million, respectively, for which we received cash proceeds for nearly the same amounts. Substantially all of these sales took place in Japan. These transactions were accounted for as sales and as a result, the Receivables have been excluded from the accompanying Condensed Consolidated Balance Sheets.

Note 9. Composition of Certain Financial Statement Items

Inventories consisted of the following:


	March 31, 2011		December 31, 2010
Raw materials, parts and assemblies	$	205.2	$	192.1
Work in process		28.9		25.7
Finished products		416.2		412.7

	$	650.3	$	630.5

Changes in the product warranty obligation included in accrued expenses were as follows:


	Quarter ended March 31, 2011
Beginning Balance	$	12.6
Current period warranty charges		11.9
Current period utilization		(4.9)

Ending Balance	$	19.6

Note 10. Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill for the quarter ended March 31, 2011 were as follows:


	Clinical Diagnostics		Life Sciences		Total
Goodwill at December 31, 2010	$	940.5	$	108.4	$	1,048.9
Currency translation and other adjustments		2.1		1.5		3.6

Goodwill at March 31, 2011	$	942.6	$	109.9	$	1,052.5

Other intangible assets consisted of the following:


	March 31, 2011								December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Amortization Period
Amortized intangible assets:
Customer/dealer relationships	$	301.1	$	(127.0)	$	174.1		17 years	$	302.4	$	(122.0)	$	180.4		17 years
Technology		239.4		(89.4)		150.0		11 years		229.2		(83.0)		146.2		11 years
Core technology		66.6		(5.2)		61.4		20 years		66.6		(4.4)		62.2		20 years
Other		80.2		(48.7)		31.5		9 years		74.9		(46.7)		28.2		10 years

		687.3		(270.3)		417.0		14 years		673.1		(256.1)		417.0		15 years
Non-amortizing intangible assets:
Tradename		73.5		-		73.5				73.5		-		73.5
IPR&D		-		-		-				10.2		-		10.2
Other (a)		12.5		-		12.5				15.0		-		15.0

	$	773.3	$	(270.3)	$	503.0			$	771.8	$	(256.1)	$	515.7

(a)

Other includes intangible assets related to products that have not been commercially released.

Estimated future intangible asset amortization expense consists of the following:


2011 (remaining nine months)	$	42.4
2012		53.1
2013		51.9
2014		49.8
2015		46.4
Thereafter		173.4

Total	$	417.0

Note 11. Debt

Certain of our borrowing agreements contain covenants that we must comply with, including a debt to earnings ratio and a minimum interest coverage ratio. At March 31, 2011, we were in compliance with such covenants.

In December 2006, we issued $600.0 million aggregate principal amount of 2.50% unsecured convertible senior notes due 2036 (the “Convertible Notes”). Upon consummation of the Danaher Offer, the Company will be required to make an offer to repurchase the outstanding Convertible Notes at a date specified by the Company under the applicable indenture (the “Repurchase Date”) at a price equal to 100% of the principal amount of such notes plus any interest accrued but unpaid on such Repurchase Date. Furthermore, in connection with the Danaher Offer, the Convertible Senior Notes are convertible from 30 trading days prior to the anticipated closing date of the Danaher Offer until the Repurchase Date, with the conversion obligation to be settled in cash and, if applicable, shares of common stock. As a result, the Convertible Notes carrying value of $554.4 million is classified as current maturities of long-term debt as of March 31, 2011. Additionally, the excess of the cash that will be paid over the carrying amount of the liability is presented within temporary equity in the amount of $45.6 million as of March 31, 2011.

Our wholly owned subsidiary, Beckman Coulter Finance Company, LLC (“BCFC”), a Delaware limited liability company, had previously entered into an accounts receivable securitization program with several financial institutions. The securitization facility was on a 364-day revolving basis. As part of the securitization program, we had transferred our interest in a defined pool of accounts receivable to BCFC. In turn, BCFC had sold an ownership interest in the underlying receivables to the multi-seller conduits administered by a third party bank. Sale of receivables under the program was accounted for as a secured borrowing. On April 13, 2011, we voluntarily terminated the securitization program and the underlying facility. We did not have any amounts drawn on the facility on the date of the termination.

We entered into Waiver No. 1, effective February 6, 2011, and Extension to Waiver No. 1, effective April 18, 2011, to the Credit Facility pursuant to which the requisite lenders under the Credit Facility (i) permanently waived any event of default under the Credit Facility resulting from our entry into the Merger Agreement with Danaher and Purchaser and (ii) temporarily waived until the earlier of June 30, 2011 and one business day after the date of the consummation of the proposed merger with Purchaser any event of default under the Credit Facility that may result from (x) any acquisition of less than 100% of our outstanding shares by Purchaser or Danaher or (y) any change in the composition of our board of directors.

Note 12. Retirement Benefits

In March 2011, we received the final valuations for our U.S. pension plans and other postretirement benefit plans to reflect actual census data as of January 1, 2011. These valuations resulted in an increase in our pension and postretirement obligations of $3.3 million and $1.8 million, respectively. Additionally, other comprehensive income increased by $3.1 million and long-term deferred tax assets decreased by $2.0 million.

For the quarters ended March 31, 2011 and 2010, the pension and postretirement benefit costs were comprised of:


	Pensions								U.S. Postretirement Benefit Plans
	U.S. Plans				Non-U.S. Plans				U.S. Postretirement Benefit Plans
	Quarters Ended March 31,
	2011		2010		2011		2010		2011		2010
Service cost-benefits earned during the period	$	4.1	$	3.8	$	2.6	$	1.9	$	0.3	$	0.3
Interest cost on benefit obligation		10.6		10.7		3.2		3.2		1.6		1.8
Expected return on plan assets		(12.6)		(13.1)		(2.9)		(2.8)		-		-
Amortization:
Prior service cost (credit)		0.2		0.2		(0.2)		(0.2)		(0.1)		(0.1)
Actuarial loss (gain)		8.6		6.7		1.2		1.0		-		-

Net periodic benefit costs	$	10.9	$	8.3	$	3.9	$	3.1	$	1.8	$	2.0

We contributed $21.4 million and $20.0 million to our U.S. pension plan during the quarters ended March 31, 2011 and March 31, 2010, respectively. We expect to make additional contributions of $25.4 million to our U.S. and international pension plans and $7.0 million to our postretirement plan during 2011. Our pension plans are currently underfunded and we may decide to make additional pension plan contributions in the future.

Note 13. Commitments and Contingencies

Environmental Matters

We are subject to federal, state, local and foreign environmental laws and regulations. Although we continue to incur expenditures for environmental protection, we do not anticipate any expenditure to comply with such laws and regulations that would have a material impact on our consolidated operations or financial position except as discussed below. We believe that our operations comply in all material respects with applicable federal, state and local environmental laws and regulations.

In connection with our Orange County consolidation project and closure of our Fullerton, California site, we began conducting environmental studies at our Fullerton site. The data generated by these studies indicates that soils under and around several of the buildings contain chemicals previously used in operations at the facility. Some of these chemicals also have been found in groundwater underlying the site. Studies to determine the source and extent of these chemicals are underway and are expected to continue for several months. We have notified the State Department of Toxic Substances Control of the presence of these chemicals at the site and expect that agency to oversee determination of any remediation requirements. We recorded a liability of $19.0 million in 2008, representing our best estimate of the future expenditures for investigation and remediation at the site; however, it is possible that the ultimate costs incurred could range from $10 million to $30 million. Our estimates are based upon the results of our investigation to date and comparison to our prior experience with environmental remediation at another site. Therefore, it is possible that additional activities not contemplated at this time could be required and that the actual costs could differ materially from the amount we have recorded as a liability or our estimated range. Through March 31, 2011, we have spent $2.1 million in relation to investigation and remediation activities.

To address contingent environmental costs, we establish reserves when the costs are probable and can be reasonably estimated. We believe that, based on current information and regulatory requirements, the reserves established by us for environmental expenditures are adequate. Based on current knowledge, to the extent that additional costs may be incurred that exceed the reserves, the amounts are not expected to have a material adverse effect on our operations, consolidated financial condition or liquidity.

Legal Proceedings

On September 3, 2010 and September 7, 2010, respectively, two securities class action complaints were filed in the U.S. District Court in the Central District of California (collectively, the “Securities Action”) against the Company, Scott Garrett (the Company’s former Chairman of the Board of Directors, former President and former Chief Executive Officer) and Charles P. Slacik (the Company’s Senior Vice President and Chief Financial Officer) alleging violations of Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 against all defendants, and violation of Section 20(a) of the Exchange Act of 1934 against the individual defendants. The Securities Action asserts that the defendants issued allegedly materially false and misleading statements including statements related to the Company’s troponin test kits, FDA compliance, product quality and assurance, customer loyalty, and earnings guidance for fiscal year 2010. On December 8, 2010, the Honorable Josephine Staton Tucker issued an order consolidating the two cases under the caption In re Beckman Coulter, Inc. Securities Litigation, Case No. 8:10-CV-01327-JST (RNBx), and appointing Arkansas Teacher Retirement System and Iron Workers District Council of New England Pension Fund as Lead Plaintiff. On February 7, 2011, Lead Plaintiff filed a Consolidated Class Action Complaint asserting claims on behalf of an alleged class of stock purchasers between July 31, 2009 and July 22, 2010, claiming that the stock price was artificially inflated during the alleged class period due to the alleged misrepresentations and omissions. The Securities Action seeks unspecified damages based on declines in the stock price after disclosures regarding FDA matters, troponin test kits and downward guidance for 2010. The Company intends to vigorously defend against the Securities Action.

On September 8, 2010, and December 13, 2010, respectively, shareholder derivative suits were filed in the Superior Court of the State of California in the County of Orange (collectively, the “California Shareholder Actions”) purportedly on behalf of the Company, which was named as nominal defendant. The California Shareholder Actions asserted claims against all members of the Board of Directors and certain of its former and current officers and asserted that the defendants are liable to the Company based on allegations similar to those alleged in the Securities Action, including that the defendants breached their fiduciary duties by allegedly failing to reasonably oversee FDA compliance with respect to troponin tests, product quality and disclosure of 2010 guidance. The second derivative suit filed on December 13 also alleged that the Company Board was considering entering into a merger transaction at an inadequate price. The Court entered an Order on January 26, 2011, consolidating for all purposes the two California Shareholder Actions under the caption In re Beckman Coulter, Inc. Shareholder Litigation, Lead Case No. 30-2010-00406352. On February 9, 2011, the plaintiffs filed a Consolidated Shareholder Derivative and Class Action Complaint adding direct claims based on the Company’s February 7, 2011 announcement that the Company and Danaher signed an Agreement and Plan of Merger. In the Consolidated Shareholder Derivative and Class Action Complaint, plaintiffs continue to assert derivative causes of action on behalf of the Company for breaches of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, and to seek unspecified damages, restitution and disgorgement of alleged profits, injunctive relief and corrective action. In the direct claims, plaintiffs assert that each member of the Company Board breached his or her fiduciary duties to the Company’s stockholders, that the Company aided and abetted in those breaches of fiduciary duty, that the Merger Agreement between the Company and Danaher involves an unfair price and an inadequate sales process, and that defendants agreed to the Merger to benefit themselves personally. On February 25, 2011, the Court granted plaintiffs in the California Shareholder Actions leave to file a proposed First Amended Consolidated Shareholder Derivative and Class Action Complaint adding allegations on behalf of an alleged class of Company stockholders that the Company’s Schedule 14D-9 omitted material information necessary for the Company’s stockholders to be fully informed about the Contemplated Transactions. In particular, the proposed First Amended Consolidated Shareholder Derivative and Class Action Complaint alleges that (i) the opinion that Goldman Sachs rendered to the Company Board omits information necessary for the Company’s stockholders to understand the methodology of Goldman Sachs in reaching its opinion, (ii) the Schedule 14D-9 fails to adequately address potential conflicts of interest between Goldman Sachs, the Company and Danaher, and (iii) the disclosure found in the section entitled “Background of the Offer” in the Schedule 14D-9 omits material information necessary for the Company’s stockholders to understand why the Contemplated Transaction was reached. Plaintiffs in the California Shareholder Actions seek a declaration that the merger agreement was entered into in breach of the individual defendants’ fiduciary duties, and damages and to enjoin the transaction, and other equitable relief. Plaintiffs in the California Shareholder Actions also allege that the damages recoverable on the derivative claims asserted on behalf of the Company against the individual defendants include the damages allegedly recoverable by the stockholders from the Company in the Securities Action.

On February 18, 2011, an alleged class action complaint was filed in the Superior Court of the State of California in the County of Orange on behalf of an alleged class of Company stockholders against all members of the Company Board, the Company and Danaher, captioned City of Royal Oak Retirement System v. Beckman Coulter, Inc. et al., Case No. 30-2011-00451801-CU-BT-CXC (the “Second California Shareholder Action”). Based on largely the same allegations as the California Shareholder Actions, the plaintiff in the Second California Shareholder Action asserts that the defendants breached their fiduciary duties to the Company’s stockholders, and that the Company and Danaher aided and abetted the individual defendants’ alleged breaches of their fiduciary duties, with respect to the Contemplated Transactions, including allegations that the proposed sale involves an unfair price, that there was an inadequate sales process, that the defendants agreed to the

Merger to benefit themselves personally, that Goldman Sachs had conflicts of interest in issuing a fairness opinion due to the disclosed facts that Goldman Sachs also advises Danaher on other matters, and that the Schedule 14D-9 omitted or misrepresented material information necessary for the Company’s stockholders to make an informed decision whether to tender their Shares in the Offer. The complaint in the Second California Shareholder Action seeks a declaration that the merger agreement was entered into in breach of the individual defendants’ fiduciary duties, and seeks damages and to enjoin the transaction, and other equitable relief.

On February 23, 2011, an alleged class action complaint was filed in the Court of Chancery of the State of Delaware on behalf of an alleged class of Company stockholders against all members of the Company Board, the Company, Danaher and Purchaser, captioned Yuri Levin v. Beckman Coulter, Inc., et al., Case No. 6213-VCS (the “Initial Delaware Shareholder Action”). On March 23, 2011, a second alleged class action complaint was filed in the Court of Chancery of the State of Delaware on behalf of an alleged class of Company stockholders against all members of the Company Board, the Company, Danaher and Purchaser, captioned Richard Cox v. Beckman Coulter, Inc., et al., Case No. 6306-VCS (together with the Initial Delaware Shareholder Action, the “Delaware Shareholder Actions”). The plaintiffs in the Delaware Shareholder Actions assert that the defendants breached their fiduciary duties to the Company’s stockholders, or aided and abetted the other defendants’ breaches of their fiduciary duties to the Company’s stockholders, based on allegations similar to those alleged in the consolidated California Shareholder Actions and the Second California Shareholder Action, including that the Merger Agreement between the Company and Danaher involves an unfair price, that there was an inadequate sales process, that the defendants agreed to the Merger to benefit themselves personally, and that the Schedule 14D-9 omitted or misrepresented material information necessary for the Company’s stockholders to make an informed decision whether to tender their Shares in the Offer. The complaints in the Delaware Shareholder Actions seek a declaration that the merger agreement was entered into in breach of the individual defendants’ fiduciary duties, and seek damages and to enjoin the transaction, and other equitable relief.

On February 25, 2011, an alleged class action complaint was filed in the United States District Court for the Central District of California on behalf of an alleged class of Company stockholders against the Company, all members of the Company Board, Danaher, and Djanet Acquisition Corp., captioned Astor BK Realty Trust v. Beckman Coulter, Inc., et al., Case No. CV11-01695 GAF (SSx) (the “Federal Shareholder Action”). The plaintiff in the Federal Shareholder Action asserts that the defendants violated Sections 14(d)(4) and 14(e) of the Exchange Act by making inadequate disclosures or material misstatements in the Schedule 14D-9 and also either breached their fiduciary duties to the Company’s stockholders, or aided and abetted the other defendants’ breaches of their fiduciary duties to the Company’s stockholders, based on allegations similar to those alleged in the consolidated California Shareholder Actions, the Second California Shareholder Action, and the Delaware Shareholder Actions, including that the Merger Agreement between the Company and Danaher involves an unfair price, that there was an inadequate sales process, that the defendants agreed to the Merger to benefit themselves personally, and that the Schedule 14D-9 omitted or misrepresented material information necessary for the Company’s stockholders to make an informed decision whether to tender their Shares in the Offer. The complaint in the Federal Shareholder Action seeks a declaration that the Schedule 14D-9 is materially misleading and contains material omissions, and seeks damages and to enjoin the transaction, and other equitable relief.

On April 14, 2011, the parties to the California Shareholder Actions and the Initial Delaware Shareholder Action entered into a memorandum of understanding (the “MOU”) regarding a proposed settlement of all claims asserted therein. In connection with the MOU, the Company has agreed to further amend the Schedule 14D-9, previously filed with the SEC, to include certain supplemental disclosures. The settlement is contingent upon, among other items, the execution of a formal stipulation of settlement and court approval, as well as the Merger becoming effective under applicable law. Subject to satisfaction of the conditions set forth in the MOU, the defendants will be released by the plaintiffs and all members of the relevant class of Company stockholders from all claims arising out of the Offer, the Merger and transactions contemplated by the Merger Agreement, upon which occurrence defendants will seek termination of any and all continuing shareholder actions in which the released claims are asserted. In the event the settlement is not approved or such conditions are not satisfied, the Company will continue to vigorously defend the California Shareholder Actions, the Initial Delaware Shareholder Action and all other actions described above.

The Company gave notice of all of the foregoing litigation matters to its directors and officers liability insurance carriers. The Company has not accrued for any loss contingency in connection with the Securities Action or any of the other foregoing litigation matters.

We are also involved in a number of other lawsuits, which we consider ordinary and routine in view of our size and the nature of our business. We accrue for our best estimate within the range of the loss or the minimum probable liability if no best estimate can be determined. Such accruals at March 31, 2011 were immaterial. We do not believe any ultimate liability resulting from any of these other lawsuits will have a material adverse effect on our results of operations, financial position or liquidity. We cannot, however give any assurances regarding the ultimate outcome of these lawsuits, and their resolution could be material to our operating results for any particular period.

Note 14. Business Segment Information

We are engaged primarily in the design, manufacture and sale of laboratory instrument systems and related products with two operating segments, Clinical Diagnostics and Life Science. The Clinical Diagnostics segment, which includes products used to evaluate and analyze bodily fluids, cells and other patient samples, represents approximately 90% of our consolidated revenue for the quarter ended March 31, 2011. The product areas within Clinical Diagnostics are chemistry and clinical automation, cellular analysis, and immunoassay and molecular diagnostics. Our Life Science segment includes systems used in disease research performed in academic centers and therapeutic research performed by biopharmaceutical companies as well as certain industrial applications for scientific instrumentation.

Management evaluates business segment performance on a revenue and operating income basis. Operating income for segment reporting, disclosed below, is revenue less operating costs. Certain costs, such as corporate overhead and other charges which are not directly related to our segments are not allocated to the segments financial results. Therefore, the financial results of our segments exclude these costs for performance assessment by our chief operating decision maker. Unallocated corporate overhead costs include employee benefits, occupancy, information systems, accounting services, internal legal staff, and human resources administration expenses related to our corporate function, while other items excluded from our segment results include restructuring charges, technology license fees and other charges. Non-operating income (expense) and interest income and expense are not allocated to the segments. We do not discretely allocate assets to our operating segments, nor does our chief operating decision maker evaluate operating segments using discrete asset information.

The following table sets forth revenue and operating income data with respect to our two operating segments and a reconciliation of our segments’ operating income to consolidated earnings before income taxes:


	*Quarter Ended March 31,
	2011		2010
Segment revenues:
Clinical Diagnostics
Chemistry and Clinical Automation		$ 326.7		$ 323.0
Cellular Analysis		248.2		239.1
Immunoassay and Molecular Diagnostics		226.7		213.7

Total Clinical Diagnostics		801.6		775.8
Life Science		93.9		105.3

Total revenues		$ 895.4		$ 881.1


Segment operating income:
Clinical Diagnostics		$ 121.8		$ 142.6
Life Science		9.0		18.9

Total segment operating income		130.8		161.5
Unallocated corporate overhead and other costs		(81.2)		(57.9)
Restructuring and acquisition related costs		(13.3)		(18.2)
Olympus intangibles asset amortization related to Clinical Diagnostics		(5.7)		(5.5)

Total operating income		30.6		79.9

Non-operating (income) expense:
Interest income		(1.9)		(1.3)
Interest expense		25.1		24.1
Other		0.4		(0.3)

Total non-operating expense		23.6		22.5

Earnings before income taxes		$ 7.0		$ 57.4

*	Amounts may not foot due to rounding.

Our principal markets are the U.S. and international markets. The U.S. information is presented separately since we are headquartered in the U.S. Revenues in the U.S. represented 43% and 46% of our total consolidated revenues for the quarters ended March 31, 2011 and 2010, respectively. No other country accounts for greater than 10% of revenues.

The following table sets forth revenue and long-lived asset data by geography:


	*Quarter Ended March 31,
	2011		2010
Revenue by geography:
United States	$	387.6	$	402.1
Europe		197.0		205.6
Emerging Markets (a)		74.5		71.6
Asia Pacific		174.2		149.3
Other (b)		62.2		52.5

Total revenues	$	895.4	$	881.1


	March 31, 2011		December 31, 2010
Long-lived assets:
United States	$	2,169.6	$	2,198.3
International		555.5		544.7

Total long lived assets	$	2,725.1	$	2,743.0

*	Amounts may not foot due to rounding.

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

(b)	Other includes Canada and Latin America

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Form 10-Q for the quarterly period ended March 31, 2011 (“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, the Risk Factors discussed in Part I, Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2010 and in our other current and periodic reports filed from time to time with the SEC, including the Risk Factors discussed in Part II, Item 1A of this Form 10-Q. Therefore, the reader is cautioned not to rely on these forward-looking statements. 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. Unless expressly noted to the contrary, all forward-looking statements that follow in this section relate to us on a stand-alone basis and are not reflective of the impact of the proposed transaction with Danaher.

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 1 of this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2010. 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.

In the accompanying analysis of our financial condition and results of operation, we sometimes use information derived from consolidated financial information but not presented in our financial statements prepared in accordance with

generally accepted accounting principles in the United States of America, (“U.S. GAAP”). Certain of these data are considered “non-GAAP financial measures” under SEC rules. For such measures, we have provided supplemental explanations and reconciliations below under “Supplemental Information”.

Overview

Beckman Coulter is the world’s largest company devoted solely to biomedical testing; a market we estimate had approximately $43 billion in worldwide sales in 2010. We market our products in more than 160 countries, with more than half of our revenue in 2010 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 central laboratories and a range of scientific instrumentation 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 84% of our total revenue for the first quarter of 2011 was generated by this type of revenue, which we refer to as “recurring revenue.” A customer contract typically runs five to seven years. Switching instrument systems creates significant costs for laboratories. Changing suppliers means re-training staff on new systems and performing validation studies to assure consistency of reported results resulting in high retention rates. The remaining balance of revenue is derived from instrument sales.

Our instruments are mainly provided to customers under cash sales or OTL arrangements. 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 OTL 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.

On February 6, 2011, the Company, Danaher Corporation, a Delaware corporation (“Danaher”), and Djanet Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Danaher (“Purchaser”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Danaher, through the Purchaser, commenced an offer (the “Offer”) to acquire all of the outstanding shares of the Company’s common stock, par value $0.10 per share, (the “Shares”) for $83.50 per share in cash, without interest (the “Offer Price”). The Offer is scheduled to expire at 12:00 midnight, New York City time, at the end of June 6, 2011, unless further extended.

Completion of the Offer is subject to several conditions, including (i) that a majority of the Shares outstanding (determined on a fully diluted basis) be validly tendered and not validly withdrawn prior to the expiration of the Offer; (ii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and the receipt of other required government approvals; (iii) the absence of a material adverse effect on the Company and (iv) certain other customary conditions. On March 9, 2011, we announced that we received notification of early termination of the waiting period under the HSR Act.

The Merger Agreement also provides that following consummation of the Offer and satisfaction of certain customary conditions, Purchaser will be merged with and into the Company (the “Merger”), with the Company surviving as a wholly-owned indirect subsidiary of Danaher. Upon completion of the Merger, each Share outstanding immediately prior to the effective time of the Merger (excluding those Shares that are held by (i) Danaher, Purchaser, the Company or their respective subsidiaries and (ii) stockholders of the Company who properly exercised their appraisal rights under the Delaware General Corporation Law) will be converted into the right to receive the Offer Price.

If Purchaser holds 90% or more of the outstanding Shares following the completion of the Offer, the parties will effect the Merger as a short-form merger without the need for approval by the Company’s stockholders. Otherwise, the Company may hold a special stockholders’ meeting to obtain stockholder approval of the Merger. Subject to the terms of the Merger Agreement, applicable law and the number of authorized Shares available under the Company’s certificate of incorporation, the Company has granted Purchaser an irrevocable option (the “Top-Up Option”), exercisable after completion of the Offer, to purchase additional Shares from the Company as necessary so that Danaher, Purchaser or their subsidiaries own one Share more than 90% of the total Shares outstanding immediately after the issuance of the Top-Up Shares on a fully diluted basis. Purchaser will pay the Offer Price for each Share acquired upon exercise of the Top-Up Option.

The Company has agreed not to solicit, initiate or knowingly facilitate, or engage in discussions concerning, alternative proposals for the acquisition of the Company. However, subject to the satisfaction of certain conditions, the Company and its board of directors, as applicable, would be permitted to take certain actions which may, as more fully described in the Merger Agreement, include terminating the Merger Agreement or changing the board of directors’ recommendation, following receipt of an unsolicited proposal or the occurrence of certain intervening events, if the board of directors of the Company has concluded in good faith after consultation with its advisors that failure to do so would be inconsistent with its fiduciary duties.

The Merger Agreement can be terminated by Danaher or the Company under certain circumstances, and the Company will be required to pay Danaher a termination fee of $165.0 million in connection with certain terminations.

Subject to the conditions set forth in the Merger Agreement and in the Offer, the Merger is expected to be completed in the first half of 2011. See “Risk Factors” in Item 1A of this Form 10-Q. All forward-looking statements in this Form 10-Q do not take into account the impact of, or give any effect to, the pending transaction with Danaher.

Strategic Initiatives

Our core strategy is to simplify, automate and innovate biomedical testing processes. Our primary strategic initiatives for 2011 focus on improving and enhancing quality in all core aspects, including our quality system, our product quality and our service quality. In addition, our strategic initiatives for 2011 include the following:

•

We are working to expand our test menu, particularly in our immunoassay, flow cytometry and molecular diagnostics products and believe our focus on certain disease states will enable us to deliver enhanced testing capability to our customers, which will ultimately 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 workflow. Our unparalleled knowledge of customers’ laboratory processes supports our sales of clinical information systems, automation and work cell products and growing our installed base of instruments.

•

From a geographic perspective, we are increasing resources in emerging markets, including China, which we believe will improve our opportunities for long-term growth.

•

We are designing an automated, fully integrated molecular diagnostic sample-to-result system to enable moderately complex testing in clinical diagnostic laboratories. Product development costs for the project are anticipated to be about $44 million per year at least through 2012, excluding any test menu licensing fees.

Quality Systems and Product Quality Matters

As previously reported, FDA indicated to us early in 2010 that it believed certain modifications to our AccuTnI troponin test kits as used on our UniCel DxI immunoassay systems and our Access immunoassay systems were made without obtaining appropriate product clearances from FDA. Below is the status to date:

•

In the United States, customers who were using our troponin test kits on our DxI system were notified that we have removed the troponin assay from use with the DxI system as of August 1, 2010. Affected customers switched from running troponin on DxI systems to an alternate method. FDA also indicated that it would allow us to continue to provide the troponin test kits to customers who were already using Access instruments for troponin testing on or before March 23, 2010. As was previously reported, we believe that we will not be able to provide troponin test kits to new U.S. immunoassay customers until we obtain updated 510(k) clearances.

•

As part of the process for obtaining updated 510(k) clearances, we are required to perform clinical trials for the troponin test. We completed the review of the clinical study design with FDA in late May 2010. Subsequently, we identified and entered into agreements with enrollment sites that met the requirements for patient recruitment. Study execution, has been underway since late 2010 and we have accumulated the targeted number of enrolled patients and suspected myocardial infarctions. We currently anticipate submitting two separate 510(k) submissions for our troponin test in the third quarter of 2011– one for Access instruments and one for DxI instruments. The actual timing of these submissions will depend on the impact of the previously disclosed thermal sensitivity issue on the clinical trials as well as our ability to achieve expected trial results and actions required in connection with our ongoing compliance and quality system improvement initiative.

As previously reported, in early 2010, we initiated a compliance and quality system improvement initiative. As part of this initiative, we undertook improvements to certain products, including our sensor based tests used for sodium testing and for glucose testing on our DxC and LX chemistry systems. The improvements to our sodium testing included providing customers with directions for performing additional cleaning procedures and initiation of a comprehensive service plan intended to ensure that the systems are performing optimally. To address the performance issues with our glucose testing, we made changes to the software and redesigned some of the systems covers. We expect these actions to be fully implemented by mid-2011, and plan to continue looking for additional ways to improve the performance of these tests.

In August 2010, we began notifying customers using our AU clinical chemistry systems of the potential for incorrect results caused by overflow of the cuvette where the analyses are performed and that they should take additional steps to review the quality of the results generated by their instrument. The flooding has a number of causes, and we are in the process of making corrections by modifying instrument software. Once validated, these modifications are expected to be deployed to the installed base of instruments by the end of 2011.

In addition, in light of our discussions with FDA regarding the agency’s belief that we failed to obtain appropriate clearances for modifications made to our AccuTnI troponin test, we have initiated a review of other product modifications where a decision was made not to seek clearance or approval from FDA. This review is expected to continue through 2011 and potentially into 2012. During this review, we may identify other products for which additional clearance or approval may be needed. We intend to discuss the results of this review with FDA to ensure that appropriate clearances and approvals have been obtained for all products.

We are also continuing to evaluate our internal processes and procedures regarding quality systems and product quality matters. We have identified corrections and corrective actions needed as part of that process, and it is possible that other products could be impacted resulting in corrective actions that might adversely affect our operating results. See “Risk Factors- We are subject to various federal, state, local and foreign regulations, and compliance with these laws or any new laws or regulations could cause us to incur substantial costs and adversely affect our business and results of operations” in Item 1A of this Form 10-Q.

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, 2010. 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, 2010. There were no significant changes in our accounting policies or estimates since the end of 2010.

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 90% 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 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

We create value for customers and shareholders by understanding the process and impact of clinical testing and applying our skills and experience to simplify, automate and innovate complex laboratory processes. Through these activities, we believe we can improve patient health and reduce the cost of care.

Following is a summary of key first quarter 2011 financial and nonfinancial information compared to the prior year’s same period:

•

Recurring revenue of $751.4 million, increased by $20.1 million. We experienced growth in recurring revenue of 1.7% in constant currency, lower than previous periods, as such growth rate was negatively impacted by the continuing trend of depressed healthcare utilization rates in the United States and continuing austerity measures in Europe as a result of the general softness in the global economy;

•

Instrument sales of $144.0 million decreased by $5.8 million from 2010. Sales of life science instruments decreased as a result of weak demand due to economic conditions, pressure on pricing and particularly less government spending in international pharmaceutical research and development (“R&D”) markets;

•

Incremental cost of sales of $30.1 million related to our product quality improvement initiatives and $14.1 million in out-of-period costs related to inventory adjustments for prior periods. The incremental costs are expected to substantially diminish as the quality improvement initiatives are completed through the end of 2011 and first half of 2012.

•

Reported operating income of $30.6 million decreased by $49.3 million largely as a result of the incremental cost of sales increase and out-of-period inventory adjustments discussed above. The increased cost of sales was partially offset by a decrease in R&D costs and restructuring and acquisition related costs;

•

Capital expenditures in 2011 and 2010 were $13.7 million and $34.3 million for property, plant and equipment, respectively, and $42.5 million and $36.9 million for customer leased instruments on OTLs, respectively.

Recurring revenue, which we believe is the best indicator of our business’ overall strength, grew 2.7% (1.7% in constant currency) during the first quarter of 2011. The recurring revenue growth was primarily driven by continued growth in our automated immunoassay products in Emerging Markets and Asia Pacific, offset by weakness in the U.S. and in Europe. We expect our gains in recurring revenue, which represents approximately 84% of our total revenue, to provide a predictable source of earnings expansion and cash flow. Recurring revenue allows us to generate substantial operating cash flows, which we use to facilitate growth in our business by developing, marketing and launching new products through internal development and business and technology acquisitions, licenses and alliances.

Operating income decreased as a result of an increase in cost of sales due to additional costs incurred for our compliance and quality system improvement initiatives, $14.1 million in cost of sales related to prior periods (which were not material to prior periods), additional selling costs incurred as a result of infrastructure to support our growth in Asia Pacific, and increased costs associated with customer retention efforts.

Non-operating expense increased slightly during the first quarter of 2011 compared to 2010 as a result of an increase in interest expense and an increase in currency exchange losses due to a weakening dollar against the Euro and other foreign currencies.

Our effective tax rate decreased to a 47.1% benefit from a 32.6% expense during the first quarter of 2010, due primarily to favorable discrete items in the first quarter of 2011 compared to a reduction of a deferred tax asset in the first quarter 2010 related to Medicare drug subsidies.

Revenue

The following table compares revenue type, segment and geography for the quarters ended March 31, 2011 and 2010 (dollar amounts in millions):


	*Quarter Ended March 31,				Reported Growth %		Constant Currency Growth % (a)
	2011		2010		Reported Growth %		Constant Currency Growth % (a)
Total revenue:
Recurring revenue – supplies, service and lease payments	$	751.4	$	731.3		2.7%		1.7%
Instrument sales		144.0		149.8		(3.9)%		(5.4)%

Total revenue		895.4		881.1		1.6%		0.5%


Segment revenue:
Clinical Diagnostics:
Chemistry and Clinical Automation		326.7		323.0		1.1%		0.3%
Cellular Analysis		248.2		239.1		3.8%		2.3%
Immunoassay and Molecular Diagnostics		226.7		213.7		6.1%		5.0%

Total Clinical Diagnostics		801.6		775.8		3.3%		2.2%
Life Science		93.9		105.3		(10.9)%		(12.3)%

Total revenue	$	895.4	$	881.1		1.6%		0.5%


Revenue by geography:
United States	$	387.6	$	402.1		(3.6)%		(3.6)%
Europe		197.0		205.6		(4.2)%		(3.2)%
Emerging Markets (b)		74.5		71.6		4.0%		2.6%
Asia Pacific		174.2		149.3		16.7%		11.2%
Other (c)		62.2		52.5		18.5%		12.6%

Total revenue	$	895.4	$	881.1		1.6%		0.5%

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.

Recurring revenue increased 2.7% (1.7% in constant currency) during the quarter ended March 31, 2011 in comparison to the same period in the prior year. Growth in automated immunoassay in both Asia Pacific and Emerging Markets as well as continued growth in cellular analysis contributed to the increase. The increases in these product areas were offset by declines in immunoassay and molecular diagnostics in the U.S. Recurring revenue, which we believe is the best indicator of the overall strength of our business, represented 83.9% of our total revenue during the quarter.

Instrument sales decreased by 3.9% (5.4% in constant currency) to $144.0 million during the quarter ended March 31, 2011, as a result of the constrained economic environment which particularly impacted sales to life science customers. In developed markets, hospitals continue to be cautious with their capital spending in the current economic environment and are more frequently choosing OTLs over capital purchases.

Clinical Diagnostics

Clinical Diagnostics revenue increased by 3.3% (2.2% in constant currency) in the quarter ended March 31, 2011 when compared to the same period in 2010, primarily as a result of organic growth in recurring revenue in automated immunoassay and flow cytometry. Recurring revenue growth largely reflects an expanding installed base, particularly in Asia Pacific and other emerging markets, and increased test kit utilization. This growth is partially offset by a decline in revenue in developed markets, including Europe and the U.S due to a decrease in healthcare utilization.

Revenue by Product Area – Clinical Diagnostics

Chemistry and Clinical Automation

Revenue from chemistry and clinical automation increased by 1.1% (0.3% in constant currency) for the quarter ended March 31, 2011 compared to the same period in 2010. Clinical automation sales were up in part due to growth in Asia Pacific

offset by weakness in Europe and the U.S. While clinical automation can be sold as part of an OTL, automation sales are often associated with other capital projects within a hospital, such as facility build-outs. Therefore, automation tends to be a product area within Clinical Diagnostics that is more sensitive to restricted capital spending trends.

Cellular Analysis

Revenue from cellular analysis increased 3.8% (2.3% in constant currency) for the quarter ended March 31, 2011 as compared to the same period in 2010. The growth was driven by an increase in instrument sales in hematology and recurring revenue growth in hemostasis and flow cytometry.

Immunoassay and Molecular Diagnostics

Revenue in immunoassay and molecular diagnostics increased by 6.1% (5.0% in constant currency) for the quarter ended March 31, 2011 when compared to the same period in the prior year. The growth was primarily from a 9.2% increase in automated immunoassay recurring revenue, particularly in Asia Pacific and Emerging Markets offset by a decrease in the U.S.

Life Science

Revenue from our Life Science products decreased by 10.9% (12.3% in constant currency) for the quarter ended March 31, 2011 as compared to the prior year period. Instrument sales were weak across all geographies due to customers continuing to be cautious with their capital spending in the current economic environment and lower levels of stimulus spending by governments.

Revenue by Major Geography

Overall, revenue in the U.S. decreased 3.6% for the quarter ended March 31, 2011 versus the quarter ended March 31, 2010. The current economic environment has contributed to the lower revenue growth. Healthcare utilization has decreased with physician office visits down 5% in comparison to prior year which has impacted laboratory testing volumes. Physician office visits continue to be weak in the first quarter despite weak comparisons in 2010, mainly due to the continuing impact of loss of COBRA coverage and higher deductibles and copays. Recurring revenue was also constrained in the U.S. by the limitations on expanding our customer base due to our inability to provide our troponin test to new customers and by quality issues described previously.

Revenue in Europe decreased by 4.2% (3.2% in constant currency) for the quarter ended March 31, 2011 versus the same period in 2010 due to a decrease in chemistry and Life Science revenues. The main contributor to the decrease was a result of reduced spending by pharmaceutical companies and governments for Life Science research.

Revenue from Emerging Markets increased by 4.0% (2.6% in constant currency) for the quarter ended March 31, 2011 versus the same period in 2010, primarily from recurring revenue growth in automated immunoassay and cellular, due in part to efforts to expand the installed base of instruments and stronger demand in India, Russia, and Africa.

Sales in Asia Pacific increased by 16.7% (11.2% in constant currency) for the quarter ended March 31, 2011 versus the same period in 2010. The increase was primarily due to an increase in recurring revenue from an expanded installed base particularly in our immunoassay and molecular diagnostics product area. China led robust growth in Asia Pacific, up more than 22% for the quarter. However, Japan sales were lower due to reduced government spending on Life Science research. The recent earthquake and tsunami in Japan had minimal effect on revenue in the first quarter 2011. However, production of our AU chemistry and PKK immunohematology instruments in our Mishima Japan plant has been impacted by the disaster with an expectation that we will not be back to full production until the third quarter of 2011.

Cost of Sales


	Quarter Ended
	March 31, 2011		March 31, 2010		Percent Change
(in millions)
Cost of recurring revenue	$	397.1	$	354.5		12.0%
As a percentage of recurring revenue		52.8%		48.5%		4.3%

Cost of instrument sales	$	135.8	$	121.6		11.7%
As a percentage of instrument sales		94.3%		81.2%		13.1%


	Quarter Ended
	March 31, 2011			March 31, 2010			Percent Change
Total cost of sales	$	532.9		$	476.1			11.9%
As a percentage of total revenue		59.5	%		54.0	%		5.5%

Cost of sales increased 11.9% during the quarter ended March 31, 2011 as compared to the corresponding prior year period only partially related to the overall revenue increase of 1.6%. Cost of sales was negatively impacted by $14.4 million in service costs, $7.5 million of warranty expense, and higher line engineering costs of $8.2 million due to the ongoing product quality improvement initiatives in 2011. Additionally, we recorded an out-of-period adjustment to increase cost of sales by $14.1 million to correct for the understatement of cost of sales in prior periods associated with inventory. The impact on previously issued annual and interim financial statements was not material. Cost of sales was further impacted by increased costs associated with customer retention efforts. In summary, the first quarter included incremental cost of sales of $30.1 million related to our product quality improvement initiatives and $14.1 million in out-of-period costs related to inventory adjustments for prior periods. The incremental costs are expected to substantially diminish as the quality improvement initiatives are completed through the end of 2011 and first half of 2012.

Operating Expenses

Selling, General and Administrative


	Quarter Ended
	March 31, 2011		March 31, 2010		Percent Change
(in millions)
Selling, general and administrative	$	243.1	$	222.9		9.1%
As a percentage of total revenue		27.2%		25.3%		1.9%

Selling, general and administrative (“SG&A”) expense for the quarter ended March 31, 2011 increased by $20.2 million compared to the first quarter of 2010, primarily due to increased spending on selling and marketing activities to support our revenue growth, an additional $7.8 million related to quality system improvement initiatives that began in 2010 and $6.4 million due to additional incentive compensation and merit increases. Selling expenses also increased due to added infrastructure to support growth in Asia Pacific.

Research and Development


	Quarter Ended
	March 31, 2011			March 31, 2010			Percent Change
(in millions)
Research and development	$	61.5		$	70.1			(12.3)%
As a percentage of total revenue		6.9	%		8.0	%		(1.1)%

The decrease in R&D of $8.6 million for the quarter ended March 31, 2011 was primarily due to a reduction in R&D spending as technical resources were shifted to improve quality on current products and charged to cost of sales instead of R&D.


	Quarter Ended
	March 31, 2011		March 31, 2010		Percent Change
(in millions)
Amortization of intangibles	$	14.0	$	13.9		0.7%
Restructuring and acquisition related costs	$	13.3	$	18.2		(26.9)%

Amortization of intangibles

Amortization of intangibles increased by $0.1 million during the first quarter of 2011. Amortization of intangible assets is related primarily to assets for acquired technology, customer and dealer relationships.

Restructuring and Acquisition Related Costs

We incurred acquisition related costs of $14.8 million for investment banking and legal costs associated with the Merger Agreement with Danaher that was signed in February 2011. This was offset by a reversal of $1.5 million associated with restructure accruals previously recorded. We incurred $18.2 million during the quarter ended March 31, 2010 related to our restructuring and integration initiatives. The majority of the restructuring and acquisition related costs incurred during the first quarter of 2010 related to costs to integrate the Olympus acquisition.

Operating Income

Management evaluates business segment performance based on revenue and operating income exclusive of certain adjustments, which are not allocated to our segments for performance assessment by our chief operating decision maker. The following table presents operating income for each reportable segment for the quarter ended March 31, 2011 and 2010 and a reconciliation of our segment operating income to consolidated earnings before income taxes (dollar amounts in millions):


	Quarter Ended March 31,
	2011		2010
Operating income:
Clinical Diagnostics	$	121.8	$	142.6
Life Science		9.0		18.9

Total segment operating income		130.8		161.5
Unallocated corporate overhead and other costs		(81.2)		(57.9)
Restructuring and acquisition related costs		(13.3)		(18.2)
Olympus intangibles asset amortization related to Clinical Diagnostics		(5.7)		(5.5)

Total operating income		30.6		79.9


Non-operating (income) expense:
Interest income		(1.9)		(1.3)
Interest expense		25.1		24.1
Other		0.4		(0.3)

Total non-operating expense		23.6		22.5

Earnings before income taxes	$	7.0	$	57.5

Amounts may not foot due to rounding

The decrease in operating income generated from the Clinical Diagnostics and Life Science segments is primarily due to current economic conditions, the costs of remediating our quality issues, and weak demand within the industry.

Non-Operating (Income) Expense


	Quarter Ended March 31,
	2011		2010		Percent Change
(in millions)
Interest income	$	(1.9)	$	(1.3)		46.2%
Interest expense		25.1		24.1		4.1%
Other non-operating expense (income)		0.4		(0.3)		>(100.0)%

Other non-operating expense increased by $0.7 million over the prior year quarter as a result of currency transaction exchange losses as a result of a weakening dollar against the Euro and other foreign currencies.

Income Tax

At the end of each interim reporting period, an estimate is made of the effective income tax rate expected to be applicable for the full year. The effective income tax rate determined is used to provide for income taxes on a year-to-date basis. The tax effect of any tax law changes and certain other discrete events are reflected in the period in which they occur.

The effective tax rate for the quarters ended March 31, 2011 and 2010 was a benefit of 47.1% and an expense of 32.6%, respectively. The difference in tax rates is primarily attributable to favorable tax discrete items in the first quarter 2011, related primarily to the effects of statutes of limitations expiring in an international subsidiary and recognition of state deferred taxes for the effect of federal bonus depreciation on state taxes, compared to the unfavorable discrete item for a reduction of a deferred tax asset in the first quarter 2010 related to Medicare drug subsidies.

Our effective tax rate for the full year 2011 could be impacted by a number of factors such as new tax laws, interpretations of existing tax laws, rulings by and settlements with taxing authorities, expiration of the statute of limitations for open years, our use of tax credits and our geographic profit mix. We expect our effective tax rate for the year to be approximately 23% compared to 25.3% for 2010. The decrease in tax rate is primarily attributable to the absence in 2011 of the reduction of a deferred tax asset related to Medicare drug subsidies which occurred in the first quarter 2010, partially offset by lower foreign tax credits in 2011 than in 2010.

Liquidity and Capital Resources

Liquidity is our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate financing and to convert those assets that are no longer required in meeting existing strategic and financing objectives into cash. Therefore, for purposes of achieving long-range business objectives and meeting our commitments, liquidity cannot be considered separately from capital resources that consist of current and potentially available funds.

Our business model, in particular recurring revenue comprised of consumable supplies (including reagent test kits), service, and OTL payments, allows us to generate substantial operating cash flows. We continue to invest a substantial portion of this cash flow in instruments leased to customers. We expect operating cash flows to increase as our revenue and depreciation from new OTLs increase year over year. We anticipate our operating cash flows together with the funds available through our credit facilities will continue to satisfy our working capital requirements. During the next twelve months, we anticipate using our operating cash flows or other sources of liquidity to:

•

Facilitate growth in the business by developing, marketing and launching new products. We expect new product offerings to come from new technologies gained through licensing arrangements, existing R&D projects, and business acquisitions,

•

Invest in additional customer leased equipment which will remain on our balance sheet.

•

Make pension and postretirement plan contributions of $32.4 million,

•

Pay the cash settlement portion of the conversion obligations for our convertible notes that are duly converted, and

•

Repurchase our notes.

On March 13, 2011 we paid a quarterly dividend of $0.19 per share to stockholders of record on March 3, 2011. We do not expect to pay any further dividend payments in accordance with the Danaher Merger Agreement entered into on February 6, 2011.

We expect payments associated with the environmental clean up of our Fullerton facility to become more significant in 2011 and beyond. Proceeds from the potential sale of the Fullerton facility are not anticipated in the near term.

We expect to retire $235.0 million of 6.875% unsecured Senior Notes due November 15, 2011 with available cash in 2011.

We have $600.0 million of 2.50% unsecured Convertible Senior Notes due December 15, 2036 outstanding. Upon consummation of the Danaher Offer, the Company will be required to make an offer to purchase the outstanding Convertible Senior Notes at a date specified by the Company under the applicable indenture (the “Repurchase Date”) at a price equal to 100% of the principal amount of such notes plus any interest accrued but unpaid on such Repurchase Date. Furthermore, in connection with Offer, the Convertible Senior Notes have become convertible until the Repurchase Date, with the conversion obligation to be settled in cash and, if applicable, shares of the Company’s stock. We expect to use existing cash on hand to settle or repurchase the Convertible Senior Notes. If necessary, we will utilize our existing lines of credit to supplement our existing cash on hand.

Following is a summary of our cash flow from operating, investing and financing activities, as reflected in our Condensed Consolidated Statements of Cash Flows (in millions):


	Quarter Ended March 31,
	2011		2010
Cash provided by (used in):
Operating activities	$	75.1	$	98.2
Investing activities		94.6		(88.8)
Financing activities		26.8		3.1
Effect of exchange rates on cash and cash equivalents		12.1		(4.8)

Change in cash and cash equivalents	$	208.6	$	7.7

Cash provided by operating activities for the first quarter of 2011 decreased by $23.1 million due primarily to the decrease in net earnings and the payment of $9.0 million related to investment banking expenses associated with the Danaher Offer. Cash provided by investing activities was $94.6 million in the first quarter of 2011, compared with cash used in investing activities of $88.8 million in the same period of 2010. The increase in cash provided by investing activities is due to proceeds received from the sale of investments and a reduction in spending for property plant and equipment.

Cash flows provided by financing activities increased by $23.7 million compared to the same period in the prior year due primarily to our increase in proceeds from issuance of stock of $14.1 million in 2011 and no repurchases of common stock.

Financing Arrangements

At March 31, 2011 $191.1 million of unused, uncommitted, short-term lines of credit were available to our subsidiaries outside the U.S. at various interest rates. In the U.S., $40.0 million in unused, uncommitted, short-term lines of credit at prevailing market rates were available, excluding the accounts receivable securitization program described below.

At March 31, 2011, we also had $22.8 million of letters of credit outstanding with availability to issue an additional $8.2 million of letters of credit.

We entered into an Amended and Restated Credit Agreement, dated December 28, 2009 (the “Credit Facility”), with a maturity date of May 2012. The Credit Facility provides us with a $350.0 million revolving line of credit, which may be increased in $50.0 million increments up to a maximum line of credit of $450.0 million. In connection with the Credit Facility, we incurred issuance costs of $5.3 million which are being amortized over the term of the Credit Facility. Interest on advances is determined using formulas specified in the agreement, generally, an approximation of LIBOR plus 2.25% to 2.875% margin with the precise margin determinable based on our long-term senior unsecured non-credit-enhanced debt rating. We also must pay a facility fee of 0.50% per annum on the aggregate average daily amount of each lender’s commitment with the precise margin determinable based on our long-term senior unsecured non-credit-enhanced debt rating. At March 31, 2011 no amounts were outstanding under the Credit Facility.

In December 2006, we issued $600.0 million aggregate principal amount of 2.50% unsecured convertible senior notes due 2036 (the “Convertible Notes”). Upon consummation of the Offer, the Company will be required to make an offer to purchase the outstanding Convertible Notes at a date specified by the Company under the applicable indenture (the “Repurchase Date”) at a price equal to 100% of the principal amount of such notes plus any interest accrued but unpaid on such Repurchase Date. Furthermore, in connection with Offer, the Convertible Senior Notes are convertible from 30 trading days prior to the anticipated closing date of the Offer until the Repurchase Date, with the conversion obligation to be settled in cash and, if applicable, shares of the common stock. As a result, the Convertible Notes are classified as current maturities of long-term debt as of March 31, 2011. With respect to any Convertible Notes that are converted or repurchased, we expect to use our available cash and available credit to fund any cash settlement obligation that becomes due prior to the consummation of the pending transaction with Danaher.

Recent Accounting Developments

See Note 1, “Nature of Business and Summary of Significant Accounting Policies,” of the Notes to the Condensed Consolidated Financial Statements in this filing for a description of recently adopted accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks, see Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Except as noted below, there have been no significant changes in our market risk exposures from the amounts and descriptions disclosed therein.

We have significant foreign currency exposures related to the Euro, Japanese yen, Australian dollar, British Pound Sterling and Canadian dollar. As of March 31, 2011 and December 31, 2010, the notional amounts of all derivative foreign exchange contracts were $391.5 million and $483.1 million, respectively. Notional amounts are stated in U.S. dollar equivalents at the spot exchange rate at the respective dates. The net fair values of all derivative foreign exchange contracts as of March 31, 2011 and December 31, 2010 resulted in the recognition of a net liability of $4.3 million and a net asset of $2.8 million. We estimated the sensitivity of the fair value of all derivative foreign exchange contracts to a hypothetical 10% strengthening and 10% weakening of the spot exchange rates for the U.S. dollar against the foreign currencies at March 31, 2011. The analysis showed that a 10% strengthening of the U.S. dollar would result in a gain from a fair value change of $13.7 million and a 10% weakening of the U.S. dollar would result in a loss from a fair value change of $15.7 million in these instruments. Losses and gains on the underlying hedged transactions would largely offset any gains and losses on the fair value of the derivative contracts. These offsetting gains and losses are not reflected in the above analysis. Significant foreign currency exposures at March 31, 2011 were not materially different than those at December 31, 2010.

Additional information with respect to our foreign currency and interest rate exposures is discussed in Note 4 “Derivatives”and Note 5, “Fair Value Measurements” of the Notes to Condensed Consolidated Financial Statements included in Part I “Financial Information,” Item 1 “Financial Statements” of this filing.

Item 4. Controls and Procedures

Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Act of 1934, as amended, as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report, at the reasonable level of assurance.

Changes in Internal Control Over Financial Reporting.

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of any changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that there has not been any change in our internal control over financial reporting during that quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1A. Risk Factors

The consummation of the proposed merger with Danaher Corporation, and the completion of the tender offer for all of our outstanding shares, is subject to risks and uncertainties, including the satisfaction of specified conditions.

Beckman Coulter, Danaher and Djanet Acquisition Corp., a Delaware corporation and an indirect wholly-owned subsidiary of Danaher (“Purchaser”), entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Danaher, through the Purchaser, commenced an offer (the “Offer”) to acquire all of the outstanding shares of our common stock, par value $0.10 per share, for $83.50 per share in cash, without interest. The consummation of the transaction is subject to several conditions, including regulatory approvals.

We cannot predict whether the closing conditions to the Offer and those set forth in the Merger Agreement will be satisfied, and the transactions contemplated by the Merger Agreement may be delayed or even abandoned before completion if certain events occur. If the conditions to the Offer or the Merger Agreement are not satisfied or waived, or if the transactions are not completed for any other reason, (i) the market price of our common stock could significantly decline, (ii) we will remain liable for expenses that we have incurred related to the transaction, including financial advisor and legal fees, and may be required to pay the approximately $165 million termination fee and (iii) we may experience substantial disruption in our sales, research and development, and operating activities, and the loss of key personnel, customers, suppliers and other third-party relationships, any of which could materially and adversely affect us and our business, operating results and financial condition.

We face significant competition, and our failure to compete effectively could adversely affect our sales and results of operations.

We face significant competition from many domestic and international manufacturers, with many of these companies participating in one or more parts of each of our markets. Some of these competitors are divisions or subsidiaries of corporations with substantial resources. We also compete with several companies that offer reagents, supplies and service for laboratory instruments that are manufactured by us or others. Our sales and results of operations may be adversely affected by loss of market share through aggressive competition, our customers’ perception of the comparative quality of our competitor’s products, the rate at which new products are introduced by us and our competitors and the extent to which new products displace existing technologies and competitive pricing especially in areas where currency has an effect.

Soft global economic conditions resulting in continued lower healthcare utilization rates and reimbursement rates would adversely affect our sales and results of operations.

Our customers and our business have been negatively impacted by a material softness in global economic conditions, including high unemployment rates, lower healthcare utilization rates by patients and budgeting constraints by government entities. Such economic conditions may continue, and we are unable to predict the strength and duration of any economic recovery. Continuing softness in economic conditions or slow economic recovery may adversely impact our customers and our business resulting in reduced healthcare utilization rates by patients, reduced reimbursement rates by government agencies to our customers, reduced demand for our products, and increased price pressure for our products and services.

We are subject to various federal, state, local and foreign regulations, and compliance with these laws or any new laws or regulations could cause us to incur substantial costs and adversely affect our business and results of operations.

Our products and operations are subject to a number of federal, state, local and foreign laws and regulations. A determination that our products or operations are not in compliance with these laws and regulations could subject us to civil and criminal penalties, prevent us from manufacturing or selling certain of our products and cause us to incur substantial costs in order to be in compliance. To varying degrees, compliance with these laws and regulations may:

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Take a significant amount of time

•

Require the expenditure of substantial resources

•

Involve extensive clinical and pre-clinical testing

•

Involve modifications, repairs or replacements of our products

•

Result in limitations on the proposed uses of our products

•

Limit our abilities to manufacture, introduce or sell our products

Our compliance costs include addressing our ongoing responsibilities under FDA regulations that apply to our products both before and after they are cleared or approved for distribution. Any material delays in obtaining clearance for distribution of our new or modified products could have a material adverse effect on our results of operations. Furthermore, if FDA were

to conclude that any of our products are ineffective or pose an unreasonable health risk even after obtaining clearance for distribution, or if we are not in compliance with applicable regulations, FDA could:

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Ban the product

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Seize adulterated or misbranded products

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Order a recall, repair or replacement of such product or a refund to the purchaser of the product

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Require us to notify health professionals and others that the products present unreasonable risks of substantial harm to the public health

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Impose operating restrictions

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Enjoin and restrain certain violations of applicable law pertaining to the products

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Assess civil penalties against our company, officers or employees

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Recommend criminal prosecution to the Department of Justice

For information regarding our quality systems and product quality matters, see “Part II-Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Quality Systems and Quality Matters.”

As we have previously disclosed in other filings, we are currently working to obtain updated product 510(k) clearances for our troponin test kits available on our Dxl and Access immunoassay instruments. Our ability to obtain in a timely manner any necessary 510(k) clearances for troponin or any of our other applicable products will depend on many factors, including our ability to identify and locate qualified test sites, recruit patients meeting the necessary criteria, and obtain the necessary trial results. Therefore, we can provide no assurance that the necessary clearance or approvals will be obtained within the timeframe anticipated, if at all.

Furthermore, the process for 510(k) clearances for any of our new or modified products could be lengthy and costly, could change over time and may require the withdrawal of products from the market until such clearances are obtained as well as the imposition of recalls or the initiation of enforcement actions against us by FDA, including warning letters, fines, seizures, consent orders or injunctions. The loss of revenue from our products that are the subject of FDA inquiries could be more than we estimate and our foreign sales could also be adversely affected. These issues could cause us to lose customers and there could be unanticipated costs associated with these matters or other discussions with FDA and similar regulatory agencies in other jurisdictions.

Given the issues pertaining to our troponin test kits as well as our recent recalls relating to sodium and glucose testing on our DxC chemistry systems, we are continuing to evaluate our internal processes and procedures regarding our quality systems and product quality matters. It is possible that more of our products could be affected and the actions with respect to those products could adversely affect our business and operating results. Our internal review of our products could reveal failures in our processes and systems which could be significant.

In addition, foreign governmental regulations have become more common and stringent. We may become subject to more rigorous regulation by foreign governmental authorities in the future. Penalties for noncompliance with foreign regulation could be severe, including revocation or suspension of the ability to sell products in that country and criminal sanctions. An adverse regulatory action in the U.S. or in other countries could restrict us from effectively marketing and selling our products.

Recent and future healthcare reform changes may have a material adverse effect on our operating results.

Changes to existing laws or regulations, including the effect of potential health care reforms, also could limit our ability to manufacture or sell our products, reduce funding for government and academic research and cause us to incur substantial compliance costs and increase our tax liabilities.

The recently enacted Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”), institutes substantial changes to the way health care is financed by both governmental and private insurers and contains several provisions that could have a material impact on our business. With limited exceptions, the PPACA, among other things, imposes a 2.3% deductible excise tax on any entity that manufactures or imports medical devices offered for sale in the United States beginning in 2013. The PPACA also imposes new reporting and disclosure requirements on device manufacturers for any “transfer of value” made or distributed to prescribers and other healthcare providers, effective March 30, 2013. Such information will be made publicly available in a searchable format beginning September 30, 2013. In addition, device manufacturers will also be required to report and disclose any investment interests held by physicians and their immediate family members during the preceding calendar year. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000 per year (and up to an aggregate of $1 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests not reported in an annual submission. We cannot predict at this time the full impact of the PPACA on

our business. Nor can we predict whether or the extent to which other proposed changes will be adopted, if any, or how these or future changes will affect the demand for our services. The PPACA as well as other health care reform measures that may be adopted in the future could have a material adverse effect on us and our industry.

We must deliver products and services that meet customers’ and patients’ needs and expectations or our business and results of operations will be adversely impacted.

Our ability to retain customers, attract new customers, grow our business and enhance our brand depends on our success in delivering products and services that meet our customers’ needs and expectations. If we are unable to deliver reliable products in a timely and prompt manner, promptly respond to and address quality issues, provide expected levels of customer service, develop and maintain cross-functional communication within our company, and comply with applicable regulations and rules, our ability to deliver products that meet our customers’ and patients’ needs and expectations, our competitive position, our branding, and our results of operations may be adversely and materially affected. Furthermore, any improvement in the perception of the quality of our competitors’ products or services relative to the quality of our product and services could adversely and materially affect our ability to retain our customers and attract new customers.

If we do not develop and introduce successful new products in a timely manner our competitive position and our results of operations will be negatively impacted.

The process of developing new products is complex, costly and uncertain, and requires us to successfully integrate hardware, computer science biological and chemistry components. Furthermore, developing and manufacturing new products require us to anticipate customers’ needs and requirements and emerging technology trends accurately. In addition, our ability to introduce new products may be affected by patents and other intellectual property rights of others, protection of our intellectual property from others, integration of acquired technologies or products, results of our clinical studies, sufficient allocation of resources, and receipt of regulatory approvals or clearance. Any delay in the successful development, production, marketing or distribution of a new product in a timely manner could adversely and materially affect our competitive position, our branding, and our results of operations. Furthermore, we have been realigning and allocating resources to focus on improving our quality system, our product quality and our service quality, including resources that may otherwise have been dedicated to research and development for new products. Such allocation of our resources may negatively affect the timing for the release of new products.

We are subject to laws regulating fraud and abuse in the healthcare industry and any failure to comply with such laws could materially and adversely affect our business and our results of operations.

We are subject to various federal, state and local laws regulating fraud and abuse in the relevant industries, including the healthcare industry, such as anti-kickback and false claims laws. The Federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the furnishing or arranging for a good or service, for which payment may be made under a federal health care program, such as Medicare or Medicaid. The definition of “remuneration” has been broadly interpreted to include anything of value, including, for example, gifts, discounts, the furnishing of free supplies, equipment or services, credit arrangements, payments of cash and waivers of payment. The recently enacted PPACA, among other things, amends the intent requirement of the federal anti-kickback and criminal health care fraud statutes. Arguably, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, the PPACA provides that the government may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a false or fraudulent claim for purposes of the false claims statutes. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration could be subject to scrutiny if they do not qualify for an exemption or safe harbor. Many states have also adopted laws similar to the Anti-Kickback Statute. Some of these state prohibitions apply to referral of patients for health care items or services reimbursed by any payor, not only the Medicare and Medicaid programs, and do not contain identical safe harbors. In addition, some states, such as California, Massachusetts and Vermont, mandate implementation of comprehensive compliance programs to ensure compliance with these laws.

The Health Insurance Portability and Accountability Act of 1996 also created two new federal crimes: health care fraud and false statements relating to health care matters. The health care fraud statute prohibits knowingly and willfully executing a scheme to defraud any health care benefit program, including private payors. The false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for health care benefits, items or services.

Another development affecting the health care industry is the increased use of the federal civil False Claims Act and, in particular, actions brought pursuant to the False Claims Act’s “whistleblower” or “qui tam” provisions. The False Claims Act

imposes liability on any person or entity that, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for payment by a federal health care program. The qui tam provisions of the False Claims Act allow a private individual to bring actions on behalf of the federal government alleging that the defendant has submitted a false claim to the federal government, and to share in any monetary recovery. In addition, various states have enacted false claim laws analogous to the False Claims Act. Our future activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. We are unable to predict whether we would be subject to actions under the False Claims Act or a similar state law, or the impact of such actions. However, the costs of defending any such claims, as well as any sanctions imposed, could significantly adversely affect our results of operations.

Compliance with the requirements of federal and state laws pertaining to the privacy and security of health information may be time consuming, difficult and costly, and if we are unable to or fail to comply with such laws, our financial condition, results of operations and cash flows may be adversely affected.

We are subject to various privacy and security regulations, including but not limited to the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”). HIPAA mandates, among other things, the adoption of standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. Moreover, HITECH requires us to report certain breaches of unsecured, individually identifiable health information to the extent such breaches occur. In addition, many states have enacted comparable laws addressing the privacy and security of health information, some of which are more stringent than and are not preempted by HIPAA. Failure to comply with these laws can result in the imposition of significant civil and criminal penalties. The costs of compliance with these laws and the potential liability associated with the failure to comply with these laws could adversely affect our financial condition, results of operations and cash flows.

Our business could be adversely affected if we do not prevail in present or future third party intellectual property litigation adverse to our products or if our patents or other intellectual property rights are challenged, invalidated, circumvented or expire.

We cannot assure you that our products will be free of intellectual property rights of others or that a court will not find such products to infringe third party rights. Patent disputes are frequent, costly and may preclude or delay product commercialization. We may have to pay significant licensing fees to obtain access to third party intellectual property rights to make and sell current products or to introduce new products and cannot guarantee that such licenses will be available on terms acceptable to us, or at all. We also cannot assure you that our issued patents will include claims sufficiently broad to prevent competitors from developing competing products or that pending patent applications will result in issued patents. Obtaining and maintaining patents is an iterative process with patent offices worldwide. Our patents may not protect us against competitors with similar products or technologies, because competing products or technologies may not infringe our patents. The enforcement of our issued patents requires the filing and prosecution of legal actions in countries around the world, and we cannot assure you that we will prevail in such actions.

We rely on certain suppliers and manufacturers for raw materials, products and services, and fluctuations in the availability and price of such materials, products and services may interfere with our ability to meet our customers’ needs.

Difficulty in obtaining raw materials and components for our products, especially in the rapidly evolving electronic components market, could affect our ability to achieve anticipated production levels. For some of our products we are dependent on a sole source or a small number of suppliers of finished products and of critical raw materials and components and our ability to obtain, enter into and maintain contracts with these suppliers. We cannot assure you that we will be able to obtain, enter into or maintain all such contracts in the future. On occasion, we have been forced to redesign portions of products when a supplier of critical raw materials or components terminated its contract or no longer made the materials or components available. If we are unable to achieve anticipated production levels and meet our customers needs, our operating results could be adversely affected. In addition, our results of operations may be significantly impacted by unanticipated increases in the costs of labor, raw materials, freight, utilities and other items needed to develop, manufacture and maintain our products and operate our business. Suppliers also may deliver components or materials that do not meet specifications preventing us from manufacturing products that meet our design specifications or customer requirements.

Consolidation of our customer base and the formation of group purchasing organizations could adversely affect our sales and results of operations.

Consolidation among health care providers and the formation of buying groups and, with respect to our international operations, government-sponsored tendering processes have put pressure on pricing and sales of our products, and in some instances, required payment of fees to group purchasing organizations or providing lower pricing in the tendering process. Our success in these areas depends partly on our ability to enter into contracts with integrated health networks and group purchasing organizations. If we are unable to enter into contracts with these group purchasing organizations and integrated health networks on terms acceptable to us or fail to have our pricing terms accepted in the tendering process, our sales and results of operations may be adversely affected. Even if we are able to enter into these contracts, or have our pricing terms accepted in the tendering process, they may be on terms that negatively affect our current or future profitability.

Reductions in government funding and reimbursement to our customers could negatively impact our sales and results of operations.

Many of our customers rely on government funding and on prompt and full reimbursement by Medicare and equivalent programs outside of the United States. In addition, our sales are affected by factors such as:

•

Level of government funding for clinical testing, biomedical research, bioterrorism, forensics, and food safety

•

Pharmaceutical company spending policies

•

Access to capital by biotechnology start ups

A reduction in the amount or types of government funding or reimbursement that affect our customers, as well as the unavailability of capital to our Clinical Diagnostics and Life Science customers, could have a negative impact on our sales. Global economic uncertainty can result in lower levels of government funding or reimbursement.

Our international operations expose us to foreign currency exchange fluctuations.

We operate a substantial portion of our business outside of the United States and are therefore exposed to fluctuations in the exchange rate between the U.S. dollar and the currencies in which our foreign subsidiaries and dealers receive revenue and pay expenses. With a strengthening U.S. dollar, this exposure includes a negative impact on margins on sales of our products in foreign countries that are manufactured in the United States. We may enter into currency hedging arrangements in an effort to stabilize certain of these fluctuations. There are certain costs associated with these currency hedging arrangements, and we cannot be certain that such arrangements will have the full intended effect. Our currency exposures may not be hedged exposing us to losses on our assets and cash flows denominated in these currencies. Our dealers may experience slower payment terms from their customers or have trouble paying for the purchases due to a stronger U.S. dollar. Further, we are exposed to counter party risks in the event that our counterparties do not perform in accordance with the contract terms.

Global market, economic and political conditions and natural disasters may adversely affect our operations and performance.

Our operations and performance depend significantly on worldwide market economic and political conditions and their impact on levels of certain customer spending, which may deteriorate significantly in many countries and regions, including the United States, particularly in light of the current worldwide market disruptions and economic downturn, and may remain depressed for the foreseeable future. For example, global political conditions and general economic conditions in foreign countries where we do significant business, such as the United States, France, Germany, India, Japan and China, could negatively impact our sales. These disruptions could adversely affect our customer’s ability to pay for products or purchase additional products. These conditions also may adversely affect our suppliers, which could cause disruptions in our ability to produce our products. In addition, economic and market volatility and disruption, such as the current worldwide market disruptions and economic downturn, may adversely affect the cost and availability of credit. Concern about market stability and counterparty strength may lead lenders and institutional investors to reduce or cease to provide funding to borrowers. Natural disasters could adversely affect our customers and our ability to manufacture and deliver products. Any of these market, economic, political factors, acts of terrorism, or natural disasters could have a material adverse effect on demand for our products, our ability to manufacture, support and distribute products, our financial condition and operating results, and the terms of equity and debt capital and our ability to issue them.

On March 11, 2011, a magnitude 9.0 earthquake and tsunami occurred in the northeast region of Japan, resulting in numerous casualties and extensive damage throughout the region. As a result of the disasters, nuclear power plants were damaged causing radiation leakage and an evacuation zone to be established near the Fukushima power plant. Furthermore, as a result of the disasters, power supply throughout Japan has been interrupted at various times. The Company maintains commercial operations in Japan, a manufacturing plant in Mishima, a city near Tokyo, and arrangements with third-party manufacturers in Japan for the supply of parts for certain of our products. Although, the recent earthquake, tsunami and radiation leakage in Japan had minimal effect on our revenues in the first quarter of 2011, these events have impacted our sales

operations and manufacturing capabilities and the supply of parts for certain of our products from third-party manufacturers in Japan. As a result, we can provide no assurances that the recent disasters in Japan will not have an adverse material impact on demand for our products in Japan, our ability to manufacture of our products, and our financial condition and operating results in future periods.

We are subject to risks associated with our global operations.

We are a global business that generates approximately 57% of our total revenue outside the United States. This subjects us to a number of risks, including international economic, political and labor conditions, tax laws (including U.S. taxes on foreign subsidiaries), increased financial accounting and reporting burdens and complexities, unexpected changes in, or impositions of, legislative or regulatory requirements, failure of laws to protect our intellectual property rights adequately, inadequate local infrastructure and difficulties in managing and staffing international operations, delays resulting from difficulty in obtaining export licenses for certain technology, tariffs, quotas and other trade barriers and restrictions, transportation delays, operating in locations with a higher incidence of corruption and fraudulent business practices; and other factors beyond our control, including terrorism, war, natural disasters and diseases.

By conducting a global business in the United States and many other countries, we must continually interpret, and then comply with, the income tax rules and regulations in these countries. Any failure to comply with, or to interpret correctly, such applicable rules and regulations could subject us to civil or criminal liabilities. In particular different interpretations of income tax rules and regulations as applied to our facts by applicable tax authorities throughout the world could result, either historically or prospectively, in adverse impacts to our worldwide effective income tax rates and income tax liabilities. Other factors that could impact our worldwide effective tax rates and income tax liabilities are:

•

Amount of taxable income in the various countries in which we conduct business

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Tax rates in those countries

•

Income tax treaties between countries

•

Extent to which income is repatriated between countries

•

Changes in income tax rules and regulations

•

Adoption of new types of taxes such as consumption, sales and value added taxes

Moreover, as a global company, we are subject to varied and complex laws, regulations and customs domestically and internationally. These laws and regulations relate to a number of aspects of our business, including trade protection, import and export control, data and transaction processing security, records management, gift policies, employment and labor relations laws, and other regulatory requirements affecting our foreign operations. The application of these laws and regulations to our business is often unclear and may at times conflict. Compliance with these laws and regulations may involve significant costs or require changes in our business practices that result in reduced revenue and profitability. Non-compliance could also result in fines, damages, criminal sanctions against us, our officers, or our employees, prohibitions on the conduct of our business, and damage to our reputation. We incur additional legal compliance costs associated with our global operations and could become subject to legal penalties in foreign countries if we do not comply with local laws and regulations, which may be substantially different from those in the United States. In many foreign countries, particularly in those with developing economies, it may be common to engage in business practices that are prohibited by U.S. regulations applicable to us such as the Foreign Corrupt Practices Act. Although we implement policies and procedures designed to ensure compliance with these laws, there can be no assurance that all of our employees, contractors and agents, as well as those companies to which we outsource certain aspects of our business operations, including those based in foreign countries where practices which violate such U.S. laws may be customary, will comply with our internal policies. Any such non-compliance, even if prohibited by our internal policies, could have an adverse effect on our business and result in significant fines or penalties.

Our investment of our pension plan assets in marketable securities is significant and is subject to market, interest rate and credit risk that may reduce its value and increase our liabilities.

Within the pension plan assets, we maintain a significant portfolio of marketable securities as well as other assets subject to market fluctuations. Our earnings and stockholder’s equity could be adversely affected by changes in the value of this portfolio. In particular, the value of our investments may be adversely affected by general economic conditions, changes in interest rates, defaults and downgrades in the corporate bonds included in the portfolio and other factors. Each of these events may cause us to reduce the carrying value of our investment portfolio and may result in higher pension expense or our pension plans being further under-funded.

Acquisitions and divestitures pose financial and other risks and challenges.

We routinely explore acquiring other businesses and assets. From time to time, we also may consider disposing of certain assets, subsidiaries or lines of business. Potential acquisitions or divestitures present financial, managerial and operational challenges, including diversion of management attention, difficulty with integrating different corporate cultures or separating personnel and financial and other systems, increased expenses, assumption of unknown liabilities, indemnities and potential disputes with the buyers or sellers. There can be no assurance that we will engage in any acquisitions or divestitures or that we will be able to do so on terms that will result in any expected benefits. Acquisitions financed with borrowings could put financial stress on our earnings resulting in materially higher interest rates.

If we are unable to recruit and retain key personnel our business may be materially and adversely impacted.

Our business is also dependent on our ability to retain, hire and motivate talented, highly skilled personnel, including members of our management. Experienced personnel in our industry are in high demand and competition for their talents is intense. If we are unable to successfully attract and retain key personnel, our business may be harmed. Effective succession planning is also a key factor for our long-term success. Our failure to effectively transfer knowledge and effectuate smooth transitions with respect to our key employees could adversely affect our results and prospects.

We are engaged in ongoing litigation and may be the subject of additional proceedings, which could materially and adversely affect our business and results of operations.

We are currently involved in lawsuits initiated by our shareholders and similar litigation may be initiated against us. Additionally, we are subject to other legal and tax claims that arise from time to time. We cannot predict the outcome of any such proceedings or the likelihood that further proceedings will be instituted against us. We may not be successful in the defense of our current or future legal proceedings, which could result in settlements or damages that could adversely impact our business, financial condition and results of operations. Regardless of the merits of any claim, the continued maintenance of these legal proceedings may result in substantial legal expense and could also result in the diversion of our management’s time and attention away from our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES


Period	Total Number of Shares Purchased		Weighted Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
January 1 through 31, 2011		44,524	$	74.40		—		—
February 1 through 28, 2011		577		75.40		—		—
March 1 through 31, 2011		584		68.67		—		—

Total		45,685	$	74.52		—		—

45,685 of the shares purchased are attributable to shares surrendered to us by employees in payment of tax obligations related to the vesting of restricted stock.

Item 6. Exhibits

A list of exhibits filed with this Form 10-Q is set forth in the Exhibit Index and is incorporated by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BECKMAN COULTER, INC.
	(Registrant)

Date: May 10, 2011	By	/s/ J. Robert Hurley
		J. Robert Hurley
		President and Chief Executive Officer

Date: May 10, 2011	By	/s/ Charles P. Slacik
		Charles P. Slacik
		Senior Vice President & Chief Financial Officer

Date: May 10, 2011	By	/s/ Carolyn D. Beaver
		Carolyn D. Beaver
		Corporate Vice President, Controller and Chief Accounting Officer

INDEX TO EXHIBITS


Exhibit No.		Exhibit Description

2.1		Agreement and Plan of Merger, dated as of February 6, 2011, by and among Danaher Corporation, Djanet Acquisition Corp. and Beckman Coulter, Inc. (incorporated by reference to Exhibit 2.1 to Beckman Coulter, Inc.’s Current Report on Form 8-K filed on February 10, 2011)

10.1		Waiver, dated February 15, 2011, by and among Beckman Coulter, Inc., Beckman Coulter Finance Company, LLC, Jupiter Securitization Company LLC, and JPMorgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to Beckman Coulter, Inc.’s Current Report on Form 8-K filed on February 22, 2011)

10.2		Waiver No. 1 to the Amended And Restated Credit Agreement, dated February 6, 2011, by and among Beckman Coulter, Inc., Bank of America, N.A., JPMorgan Chase Bank, N.A., Citibank, N.A., Banc of America Securities, LLC, J.P. Morgan Securities Inc., Citigroup Global Markets Inc., and the other lenders party thereto (incorporated by reference to Exhibit 10.2 to Beckman Coulter, Inc.’s Current Report on Form 8-K filed on February 22, 2011)

15.1		Report of Independent Registered Public Accounting Firm

15.2		Letter of Acknowledgement of Use of Report on Unaudited Interim Financial Information dated May 10, 2011

31		Rule 13a-14(a)/15d-14(a) Certification

32*		Section 1350 Certification

101*		The following financial statements are from Beckman Coulter, Inc.’s Report on Form 10-Q for the Quarter ended March 31, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Condensed Consolidated Statements of Earnings; (ii) Unaudited Condensed Consolidated Balance Sheets; (iii) Unaudited Condensed Consolidated Statements of Cash Flows; and (iv) Notes to Unaudited Condensed Consolidated Financial Statements, tagged as blocks of text.

*	Furnished herewith and not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

BECKMAN COULTER INC - FORM 10-Q - May 10, 2011

Attached files

BECKMAN COULTER INC Reports

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