SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

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

Commission file number: 0-25317

 

LIFE TECHNOLOGIES CORPORATION

Delaware		33-0373077
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
5791 Van Allen Way, Carlsbad, CA		92008
(Address of principal executive offices)		(Zip 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 þ No o

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 (§232.405 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 þ No o

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. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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

As of May 2, 2011, 178,765,816 shares of the Registrant’s common stock were outstanding.

 

 

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements			3
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk			35
ITEM 4. Controls and Procedures			37
PART II. OTHER INFORMATION			37
ITEM 1. Legal Proceedings			37
ITEM 1A. Risk Factors			37
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds			38
ITEM 3. Defaults Upon Senior Securities			38
ITEM 4. Removed and Reserved			38
ITEM 5. Other Information			38
ITEM 6. Exhibits			38
SIGNATURES			39
INDEX TO EXHIBITS			40
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

LIFE TECHNOLOGIES CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value and share data)

		March 31,				December 31,
		2011				2010
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	693,695			$	813,569
Short-term investments			23,809				23,079
Restricted cash and investments			17,743				18,153
Trade accounts receivable, net of allowance for doubtful accounts of $9,412 and $10,389, respectively			618,756				587,456
Inventories, net			340,400				323,318
Deferred income tax assets			22,716				90,947
Prepaid expenses and other current assets			175,918				190,003
Total current assets			1,893,037				2,046,525
Long-term investments			22,368				22,448
Property and equipment, net			840,087				847,984
Goodwill			4,393,841				4,372,073
Intangible assets, net			1,966,396				2,040,175
Deferred income tax assets			25,161				26,752
Other assets			134,907				130,242
Total assets		$	9,275,797			$	9,486,199
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt		$	783,395			$	347,749
Accounts payable			156,876				174,449
Deferred compensation and related benefits			140,302				202,229
Deferred revenues and reserves			112,434				109,981
Contingent considerations			263,906				—
Accrued expenses and other current liabilities			257,921				257,987
Accrued income taxes			74,147				53,990
Total current liabilities			1,788,981				1,146,385
Long-term debt			2,298,841				2,727,624
Pension liabilities			141,680				145,298
Deferred income tax liabilities			477,912				557,982
Income taxes payable			81,231				114,726
Other long-term obligations			101,777				356,155
Total liabilities			4,890,422				5,048,170
Commitments and contingencies
Stockholders’ equity:
Preferred stock; $0.01 par value, 6,405,884 shares authorized; no shares issued or outstanding			—				—
Common stock; $0.01 par value, 400,000,000 shares authorized; 208,573,976 and 207,243,588 shares issued, respectively			2,086				2,072
Additional paid-in-capital			5,287,557				5,222,859
Accumulated other comprehensive income			119,240				96,612
Retained earnings			626,186				532,499
Less cost of treasury stock; 29,345,894 shares and 24,992,450 shares, respectively			(1,653,807	)			(1,419,966	)
Total Life Technologies stockholders’ equity			4,381,262				4,434,076
Non-controlling interest			4,113				3,953
Total equity			4,385,375				4,438,029
Total liabilities and equity		$	9,275,797			$	9,486,199

See accompanying Notes to unaudited Consolidated Financial Statements.

LIFE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

		For the three months
		ended March 31,
(Unaudited)		2011				2010
Revenues		$	895,893			$	884,943
Cost of revenues			300,703				281,754
Purchased intangibles amortization			76,150				70,086
Gross profit			519,040				533,103
Operating expenses:
Selling, general and administrative			252,841				259,685
Research and development			92,775				86,353
Business integration costs			14,683				25,266
Total operating expenses			360,299				371,304
Operating income			158,741				161,799
Other income (expense):
Interest income			887				1,347
Interest expense			(43,146	)			(41,518	)
Loss on early extinguishment of debt			—				(54,185	)
Gain on divestiture of equity investments			—				45,137
Other expense			(1,351	)			(3,997	)
Total other expense, net			(43,610	)			(53,216	)
Income before provision for income taxes			115,131				108,583
Income tax provision			(21,552	)			(17,076	)
Net income			93,579				91,507
Net loss attributable to non-controlling interests			108				—
Net income attributable to Life Technologies		$	93,687			$	91,507
Earnings per common share attributable to Life Technologies:
Basic		$	0.52			$	0.51
Diluted		$	0.50			$	0.48
Weighted average shares used in per share calculations:
Basic			180,365				180,867
Diluted			186,266				189,834

See accompanying Notes to unaudited Consolidated Financial Statements.

LIFE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		For the three months
		ended March 31,
		2011				2010
		(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	93,579			$	91,507
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired and divested:
Depreciation			30,317				31,479
Amortization of intangible assets			77,436				72,129
Amortization of deferred debt issuance costs			1,893				57,830
Amortization of inventory fair market value adjustments			528				209
Amortization of deferred revenue fair market value adjustment			930				2,535
Share-based compensation expense			19,262				18,599
Incremental tax benefits from stock options exercised			(4,414	)			(11,500	)
Deferred income taxes			(15,160	)			(92,321	)
Loss on disposal of assets			120				25
Gain on sale of equity investment			—				(45,137	)
Debt discount cost amortization			8,904				11,191
Other non-cash adjustments			(1,560	)			14,931
Changes in operating assets and liabilities:
Trade accounts receivable			(16,795	)			(17,384	)
Inventories			(16,429	)			(26,096	)
Prepaid expenses and other current assets			732				8,262
Other assets			8,907				(7,237	)
Accounts payable			(17,303	)			(43,670	)
Accrued expenses and other liabilities			(61,468	)			(79,056	)
Income taxes			21,107				84,527
Cash impact of hedging activities			(15,535	)			—
Net cash provided by operating activities			115,051				70,823
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments			(128	)			(2,536	)
Net cash paid for business combinations			(28	)			(34,594	)
Net cash paid for asset purchases			—				(1,300	)
Purchases of property and equipment			(16,576	)			(30,285	)
Net cash (paid) received for divestiture of equity investment			(34,131	)			462,792
Net cash (used in) provided by investing activities			(50,863	)			394,077
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term obligations			—				1,496,693
Principal payments on long-term obligations			—				(1,972,512	)
Issuance cost payments on long-term obligations			(910	)			(14,424	)
Incremental tax benefits from stock options exercised			4,414				11,500
Proceeds from sale of common stock			36,111				39,932
Capital lease payments			(494	)			(512	)
Purchase of treasury stock			(233,841	)			(15,034	)
Net cash used in financing activities			(194,720	)			(454,357	)
Effect of exchange rate changes on cash			10,658				2,023
Net (decrease) increase in cash and cash equivalents			(119,874	)			12,566
Cash and cash equivalents, beginning of period			813,569				596,587
Cash and cash equivalents, end of period		$	693,695			$	609,153

See accompanying Notes to unaudited Consolidated Financial Statements.

LIFE TECHNOLOGIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

Financial Statement Preparation

     The unaudited consolidated financial statements have been prepared by Life Technologies Corporation according to the rules and regulations of the Securities and Exchange Commission (SEC) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted. The Company has evaluated subsequent events through the date the financial statements were issued.

     In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments, which are normal and recurring, necessary to fairly state the financial position, results of operations and cash flows. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed with the SEC on February 25, 2011.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation

     The consolidated financial statements include the accounts of Life Technologies Corporation and its majority owned or controlled subsidiaries, collectively referred to as Life Technologies (the Company). All significant intercompany accounts and transactions have been eliminated in consolidation. When there is a portion of equity in an acquired subsidiary not attributable, directly or indirectly, to the parent, the Company records the fair value of the noncontrolling interests at the acquisition date and classifies the amounts attributable to noncontrolling interests separately in equity in the Company’s Consolidated Financial Statements. Any subsequent changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary are accounted for as equity transactions. For details on the noncontrolling interests, refer to Note 2 “Reconciliation of Equity”.

     For purposes of these Notes to Consolidated Financial Statements, gross profit is defined as revenues less cost of revenues and purchased intangibles amortization and gross margin is defined as gross profit divided by revenues. Operating income is defined as gross profit less operating expenses and operating margin is defined as operating income divided by revenues.

Long-Lived Assets

     The Company periodically re-evaluates the original assumptions and rationale utilized in the establishment of the carrying value and estimated lives of its long-lived assets. The criteria used for these evaluations include management’s estimate of the asset’s continuing ability to generate income from operations and positive cash flow in future periods as well as the strategic significance of any intangible asset to the Company’s business objectives. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets, which is determined by applicable market prices, when available. The Company did not recognize a significant impairment during the period.

Fair Value of Financial Instruments

     We account for our financial instruments at fair value based on ASC Topic 820, Fair Value Measurements and Disclosures and ASC Topic 815, Derivatives and Hedging. In determining fair value, we consider both the credit risk of our counterparties and our own creditworthiness. ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value and establishes a framework for measuring fair value. The framework requires the valuation of investments using a three tiered approach. The Company applies the valuation techniques consistently, and reviews and evaluates the adequacy of the valuation techniques periodically.

     A derivative is an instrument whose value is derived from an underlying instrument or index, such as interest rates, equity securities, currencies, commodities or credit spreads. Derivatives include futures, forwards, swaps, or option contracts, or other financial instruments with similar characteristics. Derivative contracts often involve future commitments to exchange interest payment streams or currencies based on a notional or contractual amount (e.g., interest rate swaps or currency forwards).

     The accounting for changes in fair value of a derivative instrument depends on the nature of the derivative and whether the derivative qualifies as a hedging instrument in accordance with ASC Topic 815, Derivatives and Hedging. Those hedging instruments that qualify for hedge accounting are included as an adjustment to revenue or interest expense, depending upon the underlying transactions the Company is hedging for. Those hedges that do not qualify for hedge accounting are included in non-operating income. The Company does not engage in speculative hedging.

     For further details on the assets and liabilities subject to fair value measurements and the related valuation techniques used, and for details on derivative instruments, refer to Note 10 of the Notes to Consolidated Financial Statements.

Computation of Earnings Per Share

     Basic earnings per share was computed by dividing net income attributable to Life Technologies by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect the potential dilution that could occur from the following items:

	•		Convertible senior notes where the effect of those securities is dilutive;
	•		Dilutive stock options and restricted stock units;
	•		Dilutive performance awards; and
	•		Dilutive Employee Stock Purchase Plan (ESPP).

     Computations for basic and diluted earnings per share are as follows:

		Net Income
		Attributable to
		Life
		Technologies				Shares				Earnings
(in thousands, except per share data) (unaudited)		(Numerator)				(Denominator)				Per Share
Three Months Ended March 31, 2011
Basic earnings per share:
Net income attributable to Life Technologies		$	93,687				180,365			$	0.52
Diluted earnings per share:
Dilutive stock options and restricted stock units			—				4,858
Employee Stock Purchase Plan			—				24
1 1/2% Convertible Senior Notes due 2024			33				454
3 1/4% Convertible Senior Notes due 2025			—				565
Net income attributable to Life Technologies plus assumed conversions		$	93,720				186,266			$	0.50
Potentially dilutive securities not included above since they are antidilutive:
Antidilutive stock options							2,018
Three Months Ended March 31, 2010
Basic earnings per share:
Net income attributable to Life Technologies		$	91,507				180,867			$	0.51
Diluted earnings per share:
Dilutive stock options and restricted stock units			—				4,823
Dilutive performance awards			—				266
Employee Stock Purchase Plan			—				159
2% Convertible Senior Notes due 2023			20				3,408
1 1/2% Convertible Senior Notes due 2024			31				69
3 1/4% Convertible Senior Notes due 2025			—				242
Net income attributable to Life Technologies plus assumed conversions		$	91,558				189,834			$	0.48
Potentially dilutive securities not included above since they are antidilutive:
Antidilutive stock options							3,889

Share-Based Compensation

     Under the Life Technologies Corporation 2009 Equity Incentive Plan (the “2009 Plan”), the Company has the ability to grant stock options, stock appreciation rights, restricted stock units, restricted stock awards, performance awards, and deferred stock awards with 11.0 million shares of the Company’s common stock reserved for granting of new awards. Stock option awards are granted to eligible employees and directors at an exercise price equal to the fair market value of such stock on the date of grant, generally vest over four years, and are exercisable in whole or in installments and expire ten years from the date of grant. Restricted stock awards and restricted stock units are granted to eligible employees and directors and represent rights to receive shares of common stock at a future date, generally vesting over three or four years. An exercise price and monetary payment are not required for receipt or issuance of restricted stock awards and restricted stock units, instead, consideration is furnished in the form of the participant’s services to the Company. The compensation cost for these awards is valued based on the estimated fair value of such award on the date of grant.

     Effective February 1, 2010 the Company’s qualified employee stock purchase plan (the 2010 Plan) covers all eligible employees of the Company. Eligible employees may elect to withhold up to 15% of their compensation to purchase shares of the Company’s stock on a quarterly basis at a discounted price equal to 85% of the lower of the employee’s offering price or the closing price of the stock on the date of purchase. The 2010 Plan replaced the 1999 Plan acquired as a result of the AB acquisition and the 2004 Plan. Prior to February 1, 2010, the Company had a qualified (the 2004 Plan) employee stock purchase plan (purchase rights) whereby eligible employees of Life Technologies (previously known as Invitrogen Corporation) could elect to withhold up to 15% of their compensation to purchase shares of the Company’s stock on a quarterly basis at a discounted price equal to 85% of the lower of the employee’s offering price or the closing price of the stock on the date of purchase. The Company also had a qualified (the 1999 Plan) employee stock purchase plan whereby eligible legacy Applied Biosystems Inc. (AB) employees could elect to withhold up to 10% of their compensation to purchase shares of the Company’s stock on a quarterly basis at a discounted price equal to 85% of the lower of the employee’s offering price or the closing price of the stock on the date of purchase.

     The Company uses the Black-Scholes option-pricing model (Black-Scholes model) to value share-based employee stock option and purchase right awards. The determination of fair value of stock-based payment awards using an option-pricing model requires the use of certain estimates and assumptions that affect the reported amount of share-based compensation cost recognized in the Consolidated Statements of Operations. Among these include the expected term of options, estimated forfeitures, expected volatility of the Company’s stock price, expected dividends and the risk-free interest rate.

     The expected term of share-based awards represents the weighted-average period the awards are expected to remain outstanding and is an input in the Black-Scholes model. In determining the expected term of options, the Company considered various factors including the vesting period of options granted, employees’ historical exercise and post-vesting employment termination behavior, expected volatility of the Company’s stock and aggregation by homogeneous employee groups. The Company used a combination of the historical volatility of its stock price and the implied volatility of market-traded options of the Company’s stock with terms of up to approximately one year to estimate the expected volatility assumption input to the Black-Scholes model in accordance with ASC Topic 718, Compensation—Stock Compensation. The Company’s decision to use a combination of historical and implied volatility was based upon the availability of actively traded options of its stock and its assessment that such a combination was more representative of future expected stock price trends. The risk-free interest rate is based upon United States Treasury securities with remaining terms similar to the expected term of the share-based awards. The expected dividend yield assumption is based on the Company’s expectation of future dividend payouts. The Company has never declared or paid any cash dividends on its common stock and currently does not anticipate paying such cash dividends.

Stock Options and Purchase Rights

     The underlying assumptions used to value employee stock options and purchase rights granted during the three months ended March 31, 2011 and 2010 were as follows:

		Three months ended
		March 31,
(unaudited)		2011				2010
Stock Options
Weighted average risk free interest rate			2.06	%			1.99	%
Expected term of share-based awards		4.3 yrs				4.4 yrs
Expected stock price volatility			31	%			31	%
Expected dividend yield			0	%			0	%
Weighted average fair value of share-based awards granted		$	15.93			$	14.77
Purchase Rights
Weighted average risk free interest rate			0.70	%			0.59	%
Expected term of share-based awards		1.5 yrs				0.8 yrs
Expected stock price volatility			36	%			44	%
Expected dividend yield			0	%			0	%
Weighted average fair value of share-based awards granted		$	9.73			$	9.06

     The Company is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods on a cumulative basis in the period the estimated forfeiture rate changes. The Company considered its historical experience of pre-vesting option forfeitures as the basis to arrive at its estimated annual pre-vesting option forfeiture rate of 5.7% and 5.7% per year for the three months ended March 31, 2011 and 2010, respectively. All option awards, including those with graded vesting, were valued as a single award with a single average expected term and are amortized on a straight-line basis over the requisite service period of the awards, which is generally the vesting period. At March 31, 2011, there was $42.7 million remaining in unrecognized compensation cost related to employee stock options, which is expected to be recognized over a weighted average period of 1.6 years. No compensation cost was capitalized in inventory during the three months ended March 31, 2011 as the amounts involved were not material.

     Total share-based compensation expense for employee stock options and purchase rights for the three months ended March 31, 2011 and 2010 was comprised of the following:

		Three months ended
		March 31,
(in thousands, except per share amounts) (unaudited)		2011				2010
Cost of revenues		$	1,147			$	1,305
Selling, general and administrative			7,218				7,581
Research and development			1,207				1,622
Share-based compensation expense before taxes			9,572				10,508
Related income tax benefits			3,249				2,840
Share-based compensation expense, net of taxes		$	6,323			$	7,668
Net share-based compensation expense per common share:
Basic		$	0.04			$	0.04
Diluted		$	0.03			$	0.04

Restricted Stock Units

     Restricted stock units represent a right to receive shares of common stock at a future date determined in accordance with the participant’s award agreement. An exercise price and monetary payment are not required for receipt of restricted stock units or the shares issued in settlement of the award. Instead, consideration is furnished in the form of the participant’s services to the Company. Restricted stock units have cliff vesting terms which range from one to five years; however, these units generally vest over three to four years. Compensation cost for these awards is based on the estimated fair value on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period. There were no pre-vesting forfeitures estimated for the three months ended March 31, 2011 and 2010, respectively. At March 31, 2011, there was a $63.9 million amount remaining in unrecognized compensation cost related to these awards, which is expected to be recognized over a weighted average period of 1.8 years. The weighted average fair value of restricted stock units granted during the three months ended March 31, 2011 and 2010 was $55.69 and $51.99, respectively.

     Total share-based compensation expense for restricted stock units for the three months ended March 31, 2011 and 2010 was composed of the following:

		Three months ended
		March 31,
(in thousands, except per share amounts) (unaudited)		2011				2010
Cost of revenues		$	782			$	631
Selling, general and administrative			7,840				6,555
Research and development			1,036				905
Share-based compensation expense before taxes			9,658				8,091
Related income tax benefits			3,510				3,127
Share-based compensation expense, net of taxes		$	6,148			$	4,964
Net share-based compensation expense per common share:
Basic		$	0.03			$	0.03
Diluted		$	0.03			$	0.03

Deferred Stock Awards and Restricted Stock Awards

     Deferred stock awards are fully vested and expensed when issued, but shares are placed in a deferral account under the Life Technologies Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”), at an eligible employee’s or director’s discretion, until distributed to the employee or director at a future date. The Deferred Compensation Plan allows eligible directors and employees to defer, on a pre-tax basis, a portion or all of their compensation, bonuses, or director’s fees in the form of cash or deferred stock awards. The deferred compensation plan provides matching contributions by the Company to the participants, based on the deferred compensation plan agreement, in the form of restricted stock awards. During the three months ended March 31, 2011, the Company granted restricted stock awards with a total deferred compensation value of $1.4 million, which will be recognized over the requisite service period of 3 years. The restricted stock awards, issued but unvested, are also held in the deferral account, and are subject to a three year cliff vesting. Refer to Note 10 “Fair Value of Financial Instruments” for further information on the fair market valuation of the deferred compensation plan assets.

Recent Accounting Pronouncements

     In October 2009, FASB issued ASU 2009-14, Revenue Arrangements Containing Software Elements, updating ASC Topic 605, Revenue Recognition. This guidance amends ASU 2009-13 to exclude from its scope all tangible products containing both software and non-software components that operate together to deliver the product’s essential functionality. This guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted; therefore, the Company has adopted this pronouncement in the fiscal year beginning January 1, 2010 along with other related pronouncements. Upon adoption, the pronouncement did not have a material impact on its consolidated financial statements and is not expected to have a material impact on our future operating results.

     In October 2009, FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements a Consensus of the FASB Emerging Issues Task Force, updating ASC Topic 605, Revenue Recognition. ASU 2009-13 requires multiple-deliverable arrangements to be separated using a selling price hierarchy for determining the selling price of a deliverable and significantly expands disclosure requirements of such arrangements. The selling price for each deliverable will be based on vendor-specific objective evidence (VSOE) if available, the third-party evidence if VSOE is not available, or estimated selling price if VSOE and third-party evidence are not available. Arrangement consideration will be allocated at the inception of the arrangement to all deliverables using the relative selling price method. The relative selling price method allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable’s estimated selling price. This guidance is effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted; therefore, the Company has adopted this pronouncement in the fiscal year beginning January 1, 2010 along with other related pronouncements. Upon adoption, the pronouncement did not have a material impact on its consolidated financial statements and is not expected to have a material impact on our future operating results.

2. Composition of Certain Financial Statement Items

Inventories

     Inventories consisted of the following:

		March 31,				December 31,
		2011				2010
(in thousands)		(unaudited)
Raw materials and components		$	95,284			$	87,557
Work in process (materials, labor and overhead)			69,535				63,772
Finished goods (materials, labor and overhead)			175,581				171,989
Total inventories, net		$	340,400			$	323,318

Prepaid Expenses and Other Current Assets

     Prepaid expenses and other current assets consisted of the following:

		March 31,				December 31,
		2011				2010
(in thousands)		(unaudited)
Hedge assets		$	7,378			$	15,189
Prepaid expenses			75,243				70,395
Other current assets			93,297				104,419
Total prepaid expenses and other current assets		$	175,918			$	190,003

Property and Equipment

     Property and equipment consisted of the following:

		Estimated useful				March 31,				December 31,
		life				2011				2010
(in thousands)						(unaudited)
Land			—			$	139,770			$	139,638
Building and improvements		1-50 years					464,833				449,962
Machinery and equipment		1-10 years					434,600				413,004
Internal use software		1-10 years					211,526				207,904
Construction in process			—				60,122				59,236
Total property and equipment							1,310,851				1,269,744
Accumulated depreciation and amortization							(470,764	)			(421,760	)
Total property and equipment, net						$	840,087			$	847,984

Goodwill and Other Intangible Assets

     The $21.8 million increase in goodwill on the Consolidated Balance Sheet from December 31, 2010 to March 31, 2011 was primarily the result of $23.2 million in foreign currency translation adjustments, offset by $1.4 million in recent immaterial business combination activities.

     Intangible assets consisted of the following:

		March 31, 2011										December 31, 2010
		Weighted										Weighted
		average		Gross carrying				Accumulated				average				Gross carrying				Accumulated
		Life		Amount				Amortization				Life				Amount				Amortization
(in thousands)				(unaudited)
Amortized intangible assets:
Purchased technology		7 years		$	1,230,358			$	(826,870	)		7 years				$	1,227,942			$	(797,694	)
Purchased tradenames and trademarks		9 years			326,220				(129,038	)		9 years					323,863				(120,573	)
Purchased customer base		11 years			1,445,872				(338,433	)		12 years					1,441,781				(305,865	)
Other intellectual property		6 years			301,106				(125,170	)		6 years					299,586				(111,216	)
Total intangible assets				$	3,303,556			$	(1,419,511	)						$	3,293,172			$	(1,335,348	)
Intangible assets not subject to amortization:
Purchased tradenames and trademarks				$	7,451											$	7,451
In-process research and development					74,900												74,900

     Amortization expense related to purchased intangible assets for the three months ended March 31, 2011 and 2010 was $76.2 million and $70.1 million, respectively. Estimated aggregate amortization expense is expected to be $227.7 million for the remainder of fiscal year 2011. Estimated aggregate amortization expense for fiscal years 2012, 2013, 2014 and 2015 is $288.3 million, $275.8 million, $234.2 million, and $217.0 million, respectively. During the three months ended March 31, 2011, there were no assets identified for impairment.

     The Company capitalized $74.9 million of acquired in-process research and development and assigned it an indefinite life according to ASC Topic 805, Business Combinations. Such assets are accounted for as indefinite life intangible assets subject to annual impairment testing, or earlier if an event or circumstance indicates that impairment may have occurred, until completion or abandonment of the acquired projects. Upon reaching the end of the research and development project, the Company will amortize the acquired in-process research and development over its estimated useful life, or expense the acquired in-process research and development should the research and development project be unsuccessful with no future alternative use.

Accrued Expenses and Other Current Liabilities

     Accrued expenses and other current liabilities consisted of the following:

		March 31,				December 31,
		2011				2010
(in thousands)		(unaudited)
Accrued hedge liabilities		$	47,202			$	46,290
Accrued royalties			63,769				64,552
Accrued warranty			6,261				7,177
Accrued other			140,689				139,968
Total accrued expenses and other current liabilities		$	257,921			$	257,987

Reconciliation of Equity

     The following table provides a reconciliation of the beginning and ending carrying amounts of total equity, equity attributable to the Company, and equity attributable to noncontrolling interests:

																		Accumulated
																		Other								Non-
						Common				Additional				Treasury				Comprehensive				Retained				Controlling
(in thousands)(unaudited)		Total				Stock				Paid-in-Capital				Stock				Income				Earnings				Interests
Balance at December 31, 2010		$	4,438,029			$	2,072			$	5,222,859			$	(1,419,966	)		$	96,612			$	532,499			$	3,953
Business combinations			(28	)			—				(28	)			—				—				—				—
Amortization of stock based compensation			19,262				—				19,262				—				—				—				—
Common stock issuance under employee stock plans			35,282				12				35,297				(27	)			—				—				—
Tax benefit on employee stock plans			4,414				—				4,414				—				—				—				—
Issuance of restricted shares, net of repurchased for minimum tax liability			(47	)			1				—				(48	)			—				—				—
Issuance of deferred stock			5,754				1				5,753				—				—				—				—
Purchase of treasury stock			(233,766	)			—				—				(233,766	)			—				—				—
Realized loss on hedging transactions, reclassed into earnings, net of related tax effects			14,069				—				—				—				14,069				—				—
Unrealized loss on hedging transactions, net of related tax effects			(10,448	)			—				—				—				(10,448	)			—				—
Pension liability, net of deferred taxes			2,484				—				—				—				2,484				—				—
Foreign currency translation adjustment, net of related tax effects			16,791				—				—				—				16,523				—				268
Net income / (loss)			93,579				—				—				—				—				93,687				(108	)
Balance at March 31, 2011		$	4,385,375			$	2,086			$	5,287,557			$	(1,653,807	)		$	119,240			$	626,186			$	4,113

     There was no change in the Company’s ownership interest in its subsidiaries during the three months ended March 31, 2011 or 2010.

Comprehensive Income

     Total comprehensive income consisted of the following and is shown net of related tax effects:

		Three months ended
		March 31,
(in thousands)(unaudited)		2011				2010
Net income, as reported		$	93,579			$	91,507
Realized loss on hedging transactions, reclassed into earnings			14,069				2,481
Unrealized gain (loss) on hedging transactions			(10,448	)			13,974
Pension liability adjustment			2,484				(2,523	)
Foreign currency translation adjustment			16,791				(5,228	)
Total comprehensive income		$	116,475			$	100,211
Less comprehensive income attributable to noncontrolling interest			(160	)			—
Total comprehensive income attributable to the Company		$	116,315			$	100,211

3. Business Combinations and Divestitures

Business Combinations

     The Company completed several acquisitions that were not individually or collectively considered material to the overall consolidated financial statements and the results of the Company’s operations. These acquisitions have been included in the consolidated financial statements from the respective dates of the acquisitions. Certain acquisitions, including Ion Torrent which was consummated in October 2010, contained contingent consideration arrangements that require the Company to continuously assess and adjust the fair value of the contingent consideration liabilities, if necessary, until the settlement or expiration of the contingency occurs.

     In October 2010, the Company acquired all outstanding equity shares of Ion Torrent with an upfront payment of $375.0 million, and time and technology based milestones of $350.0 million. The merger agreement stipulates that payments are made in a combination of cash and the Company’s common stock for the upfront payment and any milestone payments. During 2010, the Company issued, as part of the upfront payment and satisfaction of the $50.0 million milestone, which was earned and paid in November 2010, 3.4 million shares of common stock, or the equivalent of $159.3 million, and paid cash in the aggregate of $263.2 million. If earned, the technology based milestone of $300.0 million will be paid in January 2012 with a combination of cash and Company common stock. Under ASC Topic 805, Business Combinations, the Company is required to fair value contingent consideration at the date of acquisition. The Company considered the $300.0 million milestone a contingent consideration and fair valued this contingent consideration at $260.8 million at the date of acquisition by applying a weighted average probability on the achievement of the technological milestones based on the assessment developed during the valuation process, then deriving the present value of the outcome from the time at which the obligation is settled by applying a discount rate that incorporated a market participant’s view of the risk associated with the expected milestone payment. The Company will assess the fair value of contingent consideration periodically with subsequent revisions reflected in the Consolidated Statement of Operations. The $50.0 million milestone was assessed at 100% probability of occurring, and therefore considered a financing arrangement and accrued at the acquisition date. Refer to Note 10 “Fair Value of Financial Instruments” for additional information on the fair market valuation of the contingent consideration liabilities and subsequent adjustments.

Divestiture of Equity Investment

     In January 2010, the Company completed the sale of its 50% ownership stake in the Applied Biosystems/MDS Analytical Technologies Instruments joint venture and selected assets and liabilities directly attributable to the joint venture for $435.9 million in cash, excluding transactions costs, and recorded a gain of $45.1 million in other income in the Consolidated Statement of Operations for the three months ended March 31, 2010.

     The Company finalized the transaction during the second quarter of 2010, and received total cash of $428.1 million, excluding taxes and transaction costs, and recorded a gain of $37.3 million as result of conventional working capital adjustments. Included in the sale was the carrying value of the equity investment of $330.4 million, accounts receivable of $71.3 million, net inventory of $55.1 million, other current assets of $17.6 million, long-term assets of $13.7 million, accounts payable of $9.8 million, other current liabilities of $80.8 million, and long-term liabilities of $6.7 million.

Business Consolidation Costs

     The Company continues to integrate recent and pending acquisitions and divestitures into its operations and recorded approximately $14.7 million and $25.3 million for the three months ended March 31, 2011 and 2010, respectively. The expenses were primarily related to severance and other costs associated with the integration of acquired and existing businesses.

4. Long-Term Debt

     Long-term debt consisted of the following:

		March 31,				December 31,
		2011				2010
(in thousands)		(unaudited)
3.375% Senior Notes (principal due 2013), net of unamortized discount		$	249,924			$	249,914
4.400% Senior Notes (principal due 2015), net of unamortized discount			498,669				498,592
3.500% Senior Notes (principal due 2016), net of unamortized discount			399,389				399,360
6.000% Senior Notes (principal due 2020), net of unamortized discount			748,595				748,565
5.000% Senior Notes (principal due 2021), net of unamortized discount			398,258				398,224
1 1/2% Convertible Senior Notes (principal due 2024), net of unamortized discount			433,230				428,356
3 1/4% Convertible Senior Notes (principal due 2025), net of unamortized discount			347,663				345,360
Capital leases			6,508				7,002
Total debt			3,082,236				3,075,373
Less current portion			(783,395	)			(347,749	)
Total long-term debt		$	2,298,841			$	2,727,624

Senior Notes

     On February 10, 2010, the Company filed a prospectus that allows the Company to issue in one or more offerings, senior or subordinated debt securities covered by the prospectus by filing a prospectus supplement that contains specific information about the securities and specific terms being offered. In aggregate, the Company has issued a principal amount of $2,300.0 million of fixed unsecured and unsubordinated Senior Notes (the “Notes”) as of March 31, 2011, of which $1,500.0 million were offered in February 2010 and $800.0 million were offered in December 2010. During February 2010, the Company issued $1,500.0 million of fixed rate unsecured notes which consisted of an aggregate principal amount of $250.0 million of 3.375% Senior Notes due 2013 (the “2013 Notes”) at an issue price of 99.95%, an aggregate principal amount of $500.0 million of 4.40% Senior Notes due 2015 (the “2015 Notes”) at an issue price of 99.67% and an aggregate principal amount of $750.0 million of 6.00% Senior Notes due 2020 (the “2020 Notes”) at an issue price of 99.80%. During December 2010, the Company issued an additional $800.0 million of fixed rate unsecured notes which consisted of an aggregate principal amount of $400.0 million of 3.50% Senior Notes due 2016 (the “2016 Notes”) at an issue price of 99.84% and an aggregate principal amount of $400.0 million of 5.00% Senior Notes due 2021 (the “2021 Notes”) at an issue price of 99.56%.

     As a result, the Company recorded an aggregate $3.3 million of debt discounts for the 2013 Notes, 2015 Notes and 2020 Notes at the time of issuance in February 2010, and an aggregate $2.4 million of debt discounts for the 2016 Notes and 2021 Notes at the time of issuance in December 2010. At March 31, 2011, the unamortized debt discount balance was $2.8 million for the 2013 Notes, 2015 Notes, and 2020 Notes, and $2.4 million for the 2016 Notes and 2021 Notes. The debt discounts are amortized over the lives of the associated Notes using the effective interest method.

     The aggregate net proceeds from the offering in February 2010 were $1,484.8 million after deducting the debt discount as well as an underwriting discount of $11.9 million. Total deferred financing costs associated with the issuance of these senior notes were $14.4 million, including the $11.9 million underwriting discount and $2.5 million of legal and accounting fees. The aggregate net proceeds from the offering in December 2010 were $791.6 million after deducting the debt discount as well as underwriting discounts of $6.0 million. Total deferred financing costs were $7.4 million, including the $6.0 million underwriting discount and $1.4 million of legal and accounting fees.

     At March 31, 2011, the unamortized issuance costs for the Senior Notes were $12.2 million for the February 2010 offering, which are expected to be recognized over a weighted average period of 6.7 years, and $7.0 million for the December 2010 offering, which are expected to be recognized over a weighted average period of 7.5 years. The Company recognized aggregate interest expense, net of hedging transactions, of $18.9 million and $8.5 million for the February 2010 offering and December 2010 offering, respectively, for the three months ended March 31, 2011 based on the effective interest rates of 3.39%, 4.47%, 3.53%, 6.03%, and 5.06% for the 2013, 2015, 2016, 2020 and 2021 Notes, respectively, with interest payments due semi-annually. The Company recognized total interest expense of $8.4 million for the three months ended March 31, 2010 for the February 2010 offering.

     The Company, at its option, may redeem the Notes (prior to October 15, 2020 for the 2021 Notes) in whole or in part at any time at a redemption price equal to the greater of 100% of the principal amount of the notes to be redeemed and the sum of the present values of the remaining scheduled payments of the notes to be redeemed discounted on a semi-annual basis at a treasury rate equal to a comparable United States Treasury Issue at the redemption date plus 25 basis points for the 2016 Notes, 30 basis points for the 2013 Notes, the 2015 Notes, and the 2021 Notes, and 35 basis points for the 2020 Notes, plus accrued and unpaid interest through the date of redemption, if any. Commencing on October 15, 2020, the Company may redeem the 2021 Notes, in whole or in part, at any time, at a redemption price equal to 100% of the principal amount of the notes being redeemed plus accrued and unpaid interest through the redemption date. Upon the occurrence of a change of control of the Company that results in a downgrade of the notes below an investment grade rating, the indenture requires under certain circumstances that the Company makes an offer to purchase then outstanding Senior Notes equal to 101% of the principal amount plus any accrued and unpaid interest to the date of repurchase.

     The indentures governing the Senior Notes contain certain covenants that, among other things, limit the Company’s ability to create or incur certain liens and engage in sale and leaseback transactions. In addition, the indenture limits the Company’s ability to consolidate, merge, sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets. These covenants are subject to certain exceptions and qualifications.

     During the year ended December 31, 2010, the Company entered into forward interest rate swap agreements for a notional amount totaling $1,500.0 million for a certain part of Senior Notes issuances. These agreements were to hedge the variability in future probable interest payments attributable to changes in the benchmark interest rate from the date the Company entered into the forward interest rate swap agreements to the date the Company issued the Senior Notes. These agreements effectively hedged a series of semi-annual future interest payments to the fixed interest rates for forecasted debt issuances. The Company recorded total proceeds of $4.3 million from the forward interest rate swaps in accumulated other comprehensive income, which will be reclassified to interest expense in the same period during which the hedged transactions affect interest expense.

     The entire net proceeds from the 2013, 2015, and 2020 Notes offering in February 2010 were used to repay the outstanding balance of term loan A and term loan B, together with the net of tax proceeds from the sale of our 50% ownership stake in the Applied Biosystems/MDS Analytical Technologies Instruments joint venture and selected assets and liabilities directly attributable to the joint venture, and cash on hand. The net proceeds from the 2016 and 2021 Notes offering in December 2010 will be used for general corporate purposes, which may include the repayment of existing indebtedness.

The Credit Agreement

     In November 2008, the Company entered into a $2,650.0 million credit agreement (the Credit Agreement) consisting of a revolving credit facility of $250.0 million, a term loan A facility of $1,400.0 million, and a term loan B facility of $1,000.0 million to fund a portion of the cash consideration paid for the AB merger. During February 2010, the Company used the proceeds from the issuance of the Senior Notes, the net of tax proceeds from the sale of its 50% ownership stake in the Applied Biosystems/MDS Analytical Technologies Instruments joint venture and selected assets and liabilities directly attributable to the joint venture, along with cash on hand to pay off the entire outstanding term loan principal of $1,972.5 million, which consisted of the carrying value of $1,330.0 million of term loan A and $642.5 million of term loan B, plus respective accrued interest due on the date of repayment. The Company recognized a loss of $54.2 million on unamortized deferred financing costs associated with the repayments of term loan A and term loan B during the three months ended March 31, 2010. After the repayment of the term loans, the Credit Agreement was amended and restated related to the revolving credit facility. For details on the revolving credit facility, refer to Note 5 “Lines of Credit”.

     The Company entered into interest rate swaps with a $1,000.0 million notional amount in January 2009 to convert a portion of variable rate interest payments of term loan A to fixed rate interest payments. As a result of the repayment of term loan A in February 2010, the Company de-designated and terminated the interest rate swaps in accordance with ASC Topic 815, Derivatives and Hedging, as the underlying transaction was no longer probable of occurring. The Company recognized a $12.9 million loss in conjunction with the termination of the interest rate swaps during the three months ended March 31, 2010.

     The contractual interest rates the Company made the interest payments on from the inception of the loan to the date of retirement were from 2.75% to 3.91% on term loan A based on LIBOR plus 2.5%, and from 5.25% to 6.00% on term loan B based on the base rate plus 2.0%. The Company recognized aggregate interest expense, net of hedging transactions, of $11.0 million during the three months ended March 31, 2010 on the term loans.

Convertible Senior Notes

     Effective January 1, 2009, the Company adopted a bifurcation requirement prescribed by ASC Topic 470-20, Debt with Conversion and Other Options, with the retrospective application for our then outstanding $1,150.0 million of Convertible Senior Notes, which consisted of $350.0 million related to the 2% Convertible Senior Note (2023 Note), $450.0 million related to the 1 1/2% Convertible Senior Note (2024 Note) and $350.0 million related to the 3 1/4% Convertible Senior Note (2025 Note). Upon adoption of the provision, the Company retroactively recognized the carrying amount of $100.0 million, $129.8 million, and $47.6 million for the equity components of the 2023, 2024 and 2025 Notes, respectively, with deferred tax impacts of $39.1 million, $50.7 million and $18.6 million for the 2023, 2024 and 2025 Notes, respectively, and a liability component classified in long-term debt of $250.0 million, $320.2 million and $302.4 million for the 2023, 2024 and 2025 Notes, respectively. The terms of the 2023 Notes, 2024 Notes, and 2025 Notes require the Company to settle the par value of such notes in cash and deliver shares only for the excess, if any, of the notes’ conversion value based on conversion prices of $34.12, $51.02, and $49.13 per share, respectively, over their par values.

     In conjunction with the adoption of the provision, the Company applied the guidance to the Company’s debt issuance costs. As a result, the Company allocated the underlying issuance costs associated with the Convertible Senior Notes to equity in the same ratio as when determining the appropriate debt discount. The Company allocated $6.9 million to equity with a deferred tax impact of $2.7 million, and reduced the amount of the debt issuance costs by $6.9 million.

     At March 31, 2011, the Company carried unamortized debt discounts of $16.8 million and $2.3 million for the 2024 and 2025 Notes, respectively, which are expected to be recognized over a weighted average period of 1.0 year. At December 31, 2010 the Company carried unamortized debt discounts of $21.6 million and $4.6 million for the 2024 and 2025 Notes, respectively. The Company recognized total interest cost of $11.7 million for the three months ended March 31, 2011 based on the effective interest rates of 6.10% and 5.95% for the 2024 and 2025 Notes, respectively. The Company recognized total interest cost of $17.4 million for the three months ended March 31, 2010 based on the effective interest rates of 7.21%, 6.10% and 5.95% for the 2023, 2024 and 2025 Notes, respectively. The interest expense consisted of $4.5 million and $6.3 million of contractual interest based on the stated coupon rate and $7.2 million and $11.1 million of amortization of the discount on the liability component for the three months ended March 31, 2011 and 2010, respectively.

     The indenture allowed holders of our 2023 Notes to require the Company to purchase all or a portion of the 2023 Notes at par plus accrued and unpaid interest at the earliest on August 1, 2010 and it also permitted the Company to redeem, in whole or in part, the 2023 Notes at the Company’s option on or after August 1, 2010. During July 2010, the Company notified the holders of 2023 Notes its intention to redeem all of the outstanding 2023 Notes on August 6, 2010 at par value. In response to the Company’s announcement and prior to the August 6, 2010 redemption date, Note holders holding a total principal value of $347.8 million exercised their option to exercise the redemption and conversion feature. As a result, total cash consideration of $347.8 million and 2.4 million shares of the Company’s common stock was issued to settle the par value and the excess of the Notes’ conversion value based on a conversion price of $34.12 per share. On August 6, 2010, the Company redeemed all of the remaining outstanding 2023 Notes for cash at par value. The amortization of debt discount and the issuance cost for the 2023 Notes was completed in July 2010, commensurate with the holder conversion option date. The Company did not recognize any gain or loss on the settlement of the 2023 Notes.

     At March 31, 2011, the Company held the carrying value of $433.2 million of 2024 Notes and $347.7 million of 2025 Notes in current liabilities. The respective indenture allows our holders of the 2024 Notes and the 2025 Notes to require the Company to purchase all or a portion of the Notes at par plus any accrued and unpaid interest at the earliest on February 15, 2012 or June 15, 2011, respectively. In the event that the holders do not exercise such rights, the remaining balance of the Notes will be reclassified back to long-term debt. The indenture also permits the Company to redeem, in whole or in part, 2024 Notes and the 2025 Notes at the Company’s option on or after February 15, 2012 or June 15, 2011, respectively.

5. Lines of Credit

     Under the Credit Agreement, the Company entered into a revolving credit facility of $250.0 million (the Revolving Credit Facility) with Bank of America, N.A. in November 2008. In May 2010, the Company amended and restated the Credit Agreement, expanding the Revolving Credit Facility to $500.0 million for the purpose of general working capital, capital expenditures, and/or other capital needs. Fees associated with the Revolving Credit Facility include a commitment fee for unused funds ranging from 25.0 to 50.0 basis points; letter of credit fees ranging from 150.0 to 250.0 basis points; and interest on borrowings accrued at the Company’s election based on base rate borrowing or Eurocurrency rate borrowing. The base rate borrowing rate is a margin of 50.0 to 150.0 basis points plus the higher of a) the Federal Funds Rate plus 50.0 basis points, b) Bank of America’s prime rate, or c) the Eurocurrency rate plus 100.0 basis points. The Eurocurrency borrowing rate is a margin of 150.0 to 250.0 basis points plus the Eurocurrency borrowing rate.

Margins and fees are based on a rate table specified in the agreement and determined by the Company’s consolidated leverage ratio for the period. As of March 31, 2011, the Company has issued $12.7 million of letters of credit under the Revolving Credit Facility and accordingly, the remaining available credit is $487.3 million. The applicable borrowing rate would have been 2.55% and 1.80% at March 31, 2011 and December 31, 2010, respectively.

     As of March 31, 2011 foreign subsidiaries in China, India, Mexico and Japan had available bank lines of credit denominated in local currency to meet short-term working capital requirements. The credit facilities bear interest at fixed rates or based on the TIBOR rate. Under these lines of credit, the United States dollar equivalent of these facilities totaled $13.0 million at March 31, 2011, of which $0.5 million was outstanding at March 31, 2011.

6. Commitments and Contingencies

Letters of Credit

     The Company had outstanding letters of credit totaling $37.4 million at March 31, 2011, of which $20.8 million was to support performance bond agreements, $9.5 million was to support liabilities associated with the Company’s self-insured worker’s compensation programs, $3.5 million was to support its building lease requirements, and $3.6 million was to support duty on imported products.

Executive Employment Agreements

     The Company has employment contracts with key executives that provide for the continuation of salary if terminated for reasons other than cause, as defined in those agreements. At March 31, 2011, future employment contract commitments for such key executives were approximately $31.3 million. In certain circumstances, the employment agreements call for the acceleration of equity vesting. The non-cash financial impact of the acceleration of equity vesting is not reflected in the above information.

Acquisition-Related Contingent Obligations

     The Company may have future payment obligations due to the contingent consideration arrangements agreed to between the Company and the respective sellers in conjunction with business combinations entered into. Such payments are based on certain technological milestones, patent milestones or the achievement of targeted sales milestones. According to the ASC Topic 805, Business Combinations, the Company records these obligations at fair value at the time of acquisition with subsequent fair value adjustments to the contingent consideration reflected in the line items of the Consolidated Statement of Operations commensurate with the nature of the contingent consideration. At March 31, 2011 and December 31, 2010, the total amount accrued for contingent consideration liabilities were $264.5 million and $263.3 million, respectively, of which $263.9 million and zero were included in current liabilities, respectively. During the three months ended March 31, 2011, a $1.9 million favorable adjustment to contingent consideration liabilities was recorded in cost of revenues, offset by a $3.1 million time value accretion recorded in interest expense on previously recognized contingent consideration. The Company could be required to make additional contingent payments based on currently existing purchase agreements through 2012. For more information on business combination accounting, refer to Note 3 “Business Combinations”.

     For the acquisitions the Company accounted for as asset purchases, contingent consideration liabilities are recorded and become an additional element of cost of the acquired assets when the contingency is resolved.

Environmental Liabilities

     As a result of previous mergers and acquisitions, the Company assumed certain environmental exposure liabilities. At March 31, 2011, aggregate undiscounted environmental reserves were $8.0 million, including current reserves of $3.3 million. Based upon currently available information, the Company believes that it has adequately provided for these environmental exposures and that the outcome of these matters will not have a material adverse effect on its Consolidated Statement of Operations.

Litigation

     We are subject to potential liabilities under government regulations and various claims and legal actions that are pending or may be asserted. These matters arise in the ordinary course and conduct of our business, and, at times, as a result of our acquisitions and dispositions. They include, for example, commercial, intellectual property, environmental, securities, and employment matters. Some are expected to be covered, at least partly, by insurance. We intend to continue to defend ourselves vigorously in such matters. We

regularly assess contingencies to determine the degree of probability and range of possible loss for potential accrual in our financial statements. An estimated loss contingency is accrued in our financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on our assessment, we currently have accrued an immaterial amount in our financial statements for contingent liabilities associated with these legal actions and claims. Litigation is inherently unpredictable, and unfavorable resolutions could occur. As a result, assessing contingencies is highly subjective and requires judgment about future events. The amount of ultimate loss may exceed our current accruals, and it is possible that our cash flows or results of operations could be materially affected in any particular period by the unfavorable resolution of one or more of these contingencies.

Indemnifications

     In the normal course of business, we enter into some agreements under which we indemnify third-parties for intellectual property infringement claims or claims arising from breaches of representations or warranties. In addition, from time to time, we provide indemnity protection to third-parties for claims relating to past performance arising from undisclosed liabilities, product liabilities, environmental obligations, representations and warranties, and other claims. In these agreements, the scope and amount of remedy, or the period in which claims can be made, may be limited. It is not possible to determine the maximum potential amount of future payments, if any, due under these indemnities due to the conditional nature of the obligations and the unique facts and circumstances involved in each agreement. Historically, payments made related to these indemnifications have not been material to our consolidated financial position.

Guarantees

     The Company is a guarantor of a pension plan benefit that was assumed in conjunction with the AB merger, that is accounted for under the ASC Topic 460, Guarantees. As part of the divestiture of the Analytical Instruments business in 1999 by AB, the purchaser of the Analytical Instruments business has agreed to pay for the pension benefits for employees of a former German subsidiary. However, the Company was required to guarantee payment of these pension benefits should the purchaser fail to do so, because these payment obligations were not transferable to the buyer under German law. The guaranteed payment obligation is not expected to have a material adverse effect on the Consolidated Financial Statements.

7. Pension Plans and Postretirement Health and Benefit Program

     The Company has several defined benefit pension plans covering its United States employees and employees in several foreign countries.

     The components of net periodic pension cost (income) for the Company’s pension plans and postretirement benefits plans for the three months ended March 31, 2011 and 2010 were as follows:

		Domestic Plans
		Three months ended March 31
(in thousands) (unaudited)		2011				2010
Service cost		$	261			$	—
Interest cost			9,958				8,861
Expected return on plan assets			(10,798	)			(8,558	)
Amortization of prior service cost			15				15
Amortization of actuarial loss			437				477
Settlement gain*			—				(5,473	)
Net periodic pension income		$	(127	)		$	(4,678	)

		Postretirement Plans
		Three months ended March 31
(in thousands) (unaudited)		2011				2010
Service cost		$	16			$	46
Interest cost			451				329
Expected return on plan assets			(119	)			(98	)
Amortization of prior service cost (benefit)			(474	)			60
Amortization of actuarial loss			183				197
Total periodic pension cost		$	57			$	534

		Foreign Plans
		Three months ended March 31
(in thousands) (unaudited)		2011				2010
Service cost		$	861			$	986
Interest cost			1,342				1,419
Expected return on plan assets			(1,153	)			(1,094	)
Amortization of actuarial loss			46				58
Settlement (gain)/loss			(43	)			18
Net periodic pension cost		$	1,053			$	1,387

8. Income Taxes

     Income taxes are determined using an estimated annual effective tax rate applied against income, and then adjusted for the tax impacts of certain significant and discrete items. For the three months ended March 31, 2011, the Company treated the tax impact related to the following as discrete events for which the tax effect was recognized separately from the application of the estimated annual effective tax rate: (i) expenses related to foreign return to provision adjustments and reduced Medicare subsidies; offset by (ii) benefits related to the release of reserves for uncertain tax positions and disqualifying dispositions of qualified stock grants. The Company’s effective tax rate recorded for the three months ended March 31, 2011 was 18.7%. Excluding the impact of the discrete items discussed above, the effective tax rate would have been 20.3%.

     In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, the Company has classified uncertain tax positions as non-current income tax liabilities, or a reduction in non-current deferred tax assets, unless expected to be paid in one year. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. It is reasonably possible that there will be a reduction to the balance of unrecognized tax benefits up to $46.0 million in the next twelve months.

9. Stock Repurchase Programs

     In December 2010, the Board of Directors of the Company approved a program (the December 2010 program), authorizing management to repurchase up to $500.0 million of common stock. During the three months ended March 31, 2011, the Company repurchased 2.9 million shares of its common stock under the December 2010 program at a total cost of approximately $150.4 million. The cost of repurchased shares is included in treasury stock and reported as a reduction in total equity when a repurchase occurs. No shares were repurchased under this program in 2010.

     In July 2010, the Board of Directors of the Company approved a program (the July 2010 program) authorizing management to repurchase up to $520.0 million of common stock over the next two years. As of December 31, 2010, the Company completed repurchasing 8.4 million shares at a total cost of $436.6 million which was included in treasury stock and reported as a reduction in total equity. During the three months ended March 31, 2011, the Company repurchased an additional 1.5 million shares of its common stock at a total cost of $83.4 million, thereby completing the July 2010 program by repurchasing an aggregate of 9.9 million shares at a total cost of $520.0 million, the maximum amount authorized.

10. Fair Value of Financial Instruments

Cash and Cash Equivalents and Marketable Securities

     The carrying amounts of financial instruments such as cash equivalents, foreign cash accounts, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses, and other current liabilities approximate the related fair values due to the short-term maturities of these instruments. The Company invests its excess cash into financial instruments which are readily convertible into cash, such as marketable securities, money market funds, corporate notes, government securities, highly liquid debt instruments, time deposits, and certificates of deposit with original maturities of three months or less at the date of purchase. The

Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. The Company has established guidelines to maintain safety and liquidity for our financial instruments, and the cost of securities sold is based on the specific identification method.

     Investments consisted of the following:

		March 31,				December 31,
		2011				2010
(in thousands)		(unaudited)
Short-term
Bank time deposits		$	20,973			$	20,425
Foreign bonds			2,836				2,654
Total short-term investments			23,809				23,079
Long-term
Equity securities			22,368				22,448
Total long-term investments			22,368				22,448
Total investments		$	46,177			$	45,527

     ASC Topic 820, Fair Value Measurements and Disclosures has redefined fair value and has required the Company to establish a framework for measuring fair value and expand disclosures about fair value measurements. The framework requires the valuation of assets and liabilities subject to fair value measurements using a three tiered approach and fair value measurement be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity).

     The following table represents the financial instruments measured at fair value on a recurring basis in the financial statements of the Company subject to ASC Topic 820, Fair Value Measurements and Disclosures and the valuation approach applied to each class of financial instruments:

						Fair Value Measurements at Reporting Date Using
						Quoted Prices in
		Balance at				Active Markets				Significant Other				Significant
(in thousands)(unaudited)		March 31,				for Identical Assets				Observable Inputs				Unobservable Inputs
Description		2011				(Level 1)				(Level 2)				(Level 3)
Bank time deposits		$	20,973			$	20,973			$	—			$	—
Foreign bonds			2,836				2,836				—				—
Money market funds			332,459				332,459				—				—
Deferred compensation plan assets			29,068				29,068				—				—
Assets-derivative forward exchange contracts			7,378				—				7,378				—
Total assets		$	392,714			$	385,336			$	7,378			$	—
Liabilities-derivative forward exchange contracts			47,202				—				47,202				—
Contingent considerations			264,506				—				—				264,506
Total liabilities		$	311,708			$	—			$	47,202			$	264,506

     At March 31, 2011, the carrying value of the financial instruments measured and classified within Level 1 was based on quoted prices and marked to market.

     The Company held foreign bonds which were classified as available-for-sale securities with a fair value of $2.8 million as of March 31, 2011. During the three months ended March 31, 2011, there was no material gain or loss recorded in accumulated other comprehensive income, and there were no gains or losses reclassified out of accumulated other comprehensive income to earnings as a result of the sales of available-for-sale securities.

     The Company manages the Life Technologies Corporation Deferred Compensation Plan (the “Deferred Compensation Plan”) which allows eligible directors and employees to defer, on a pre-tax basis, a portion or all of their compensation, bonuses, or director’s fees. As of March 31, 2011, the Company held $29.1 million in deferred compensation plan assets which was invested in mutual funds. The fair market value of the assets held in the Deferred Compensation Plan was based on unadjusted quoted prices in active markets. The Company carries a corresponding deferred compensation liability of $29.1 million as of March 31, 2011 in other long-term liabilities in its Consolidated Balance Sheet.

     Exchange traded derivatives are valued using quoted market prices and classified within Level 1 of the fair value hierarchy. Level 2 derivatives include foreign currency forward contracts for which fair value is determined by using observable market spot rates and forward points adjusted by risk-adjusted discount rates. The risk-adjusted discount rate is derived by United States dollar zero coupon yield bonds for the corresponding duration of the maturity of derivatives, then adjusted with a counter party default risk for the value of our derivative assets or our credit risk for the value of our derivative liabilities. Credit risk is derived by observable credit default swaps (CDS) spreads. Because CDS spreads information is not available for our Company, our credit risk is determined by analyzing CDS spreads of similar size public entities in the same industry with similar credit ratings. The value of our derivatives discounted by risk-adjusted discount rates represents the present value of amounts estimated to be received for the assets or paid to transfer the liabilities at the measurement date from a marketplace participant in settlement of these instruments.

     Contingent consideration arrangements obligate the Company to pay former owners of an acquired entity if specified future events occur or conditions are met such as the achievement of certain technological milestones, patent milestones or the achievement of targeted revenue milestones. The Company measures such liabilities using level 3 unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probability-weighted scenario method. The Company used various key assumptions, such as the probability of achievement on the agreed milestones arrangement and the discount rate, to represent the non-performing risk factors and time value when applying the income approach. The Company continuously monitors the fair value of the contingent considerations, with subsequent revisions reflected in the Statement of Operations in the line items commensurate with the underlying nature of milestone arrangements. For a further discussion on contingent consideration accounting, refer to Note 3 “Business Combinations” and Note 6 “Commitments and Contingencies”.

     For financial instrument liabilities with significant Level 3 inputs, the following table summarizes the activity for the three months ended March 31, 2011:

		Fair Value Measurements Using Significant
		Unobservable Inputs (Level 3)
		Contingent
(in thousands) (unaudited)		Considerations				Total
Beginning balance at January 1, 2011		$	263,311			$	263,311
Total unrealized losses included in earnings			1,195				1,195
Ending balance at March 31, 2011		$	264,506			$	264,506
Total amount of unrealized losses for the period included in other comprehensive loss attributable to the change in fair market value of related liabilities still held at the reporting date		$	—			$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

     Non-financial assets and liabilities are recognized at fair value subsequent to initial recognition when they are deemed to be other-than-temporarily impaired. There were no material non-financial assets and liabilities deemed to be other-than-temporarily impaired and measured at fair value on a nonrecurring basis for the three months ended March 31, 2011.

     The Company evaluates its investments in equity and debt securities that are accounted for using the equity method or cost method to determine whether an other-than-temporary impairment or a credit loss exists at period end. At March 31, 2011, the Company held an aggregate $22.4 million of long-term investments in non-publicly traded companies that are accounted for under the cost method. The Company assesses these investments for impairment each quarter, but does not calculate a fair value. Due to the nature of these investments, mainly non-public and early stage companies, the Company believes calculating a fair value not to be practicable. In the event the Company identified an indicator of impairment, the assessment of fair value would be based on all available factors, and may include valuation methodologies using level 3 unobservable inputs, which include discounted cash flows, estimates of sales proceeds and appraisals, as appropriate. At March 31, 2011, the Company determined that there was no event or change in

circumstances that occurred which had a significant adverse effect on the fair value of the cost method investments during the three months ended March 31, 2011, and accordingly no material impairment charges were recorded during the period.

Foreign Currency and Derivative Financial Instruments

     The Company translates the financial statements of its foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. Net gains or losses resulting from the translation of foreign financial statements and the effect of exchange rate changes on intercompany receivables and payables of a long-term investment nature are recorded as a separate component of stockholders’ equity. These adjustments will affect net income only upon sale or liquidation of the underlying investment in a foreign subsidiary.

     Some of the Company’s reporting entities conduct a portion of their business in currencies other than the entity’s functional currency. These transactions give rise to receivables and payables that are denominated in currencies other than the entity’s functional currency. The value of these receivables and payables is subject to changes in currency exchange rates from the point in which the transactions are originated until the settlement in cash. Both realized and unrealized gains and losses in the value of these receivables and payables are included in the determination of net income. Net currency exchange gains (losses) recognized on business transactions, net of hedging transactions, were $(2.1) million and $3.8 million for the three months ended March 31, 2011 and March 31, 2010, respectively, and such gains and losses are included in other income/(expense) in the Consolidated Statements of Operations.

     To manage the foreign currency exposure risk, the Company uses derivatives for activities in entities that have receivables and payables denominated in a currency other than the entity’s functional currency. Realized and unrealized gains or losses on the value of financial contracts entered into to hedge the exchange rate exposure of these receivables and payables are also included in the determination of net income as they have not been designated for hedge accounting under ASC Topic 815, Derivatives and Hedging. These contracts, which settle in April 2011 through January 2012, effectively fix the exchange rate at which these specific receivables and payables will be settled in, so that gains or losses on the forward contracts offset the gains or losses from changes in the value of the underlying receivables and payables. At March 31, 2011, the Company had a notional principal amount of $957.1 million in foreign currency forward contracts outstanding to hedge currency risk relative to our foreign receivables and payables.

     The Company’s international operating units conduct business in, and have functional currencies that differ from the parent entity, and therefore, the ultimate conversion of these sales to cash in United States dollars is subject to fluctuations in foreign currency. The Company’s intent is to limit this exposure on the Company’s Consolidated Statements of Operations and Consolidated Statements of Cash Flows from changes in currency exchange rates through hedging. Upon entering derivative transactions, when the United States dollar strengthens significantly against foreign currencies, the decline in the United States dollar value of future foreign currency revenue is offset by gains in the value of the forward contracts designated as hedges. Conversely, when the United States dollar weakens, the opposite occurs. The Company’s currency exposures vary, but are primarily concentrated in the euro, British pound sterling, Japanese yen and Canadian dollar. The Company uses foreign currency forward contracts to mitigate foreign currency risk on forecasted foreign currency intercompany sales that are expected to be settled through July 2011. The change in fair value prior to their maturity is accounted for as cash flow hedges, and recorded in other comprehensive income, net of tax, in the Consolidated Balance Sheets according to ASC Topic 815, Derivatives and Hedging. To the extent any portion of the forward contracts is determined to not be an effective hedge, the increase or decrease in value prior to the maturity is recorded in other income/(expense) in the Consolidated Statements of Operations.

     At March 31, 2011, the Company had a notional principal amount of $280.6 million in foreign currency forward contracts outstanding to hedge foreign currency revenue risk under ASC Topic 815, Derivatives and Hedging. During the three months ended March 31, 2011, the Company did not have any material losses or gains related to the ineffective portion of its hedging instruments in other expense in the Consolidated Statements of Operations. No hedging relationships were terminated as a result of ineffective hedging or forecasted transactions no longer probable of occurring for foreign currency forward contacts. The Company continuously monitors the probability of forecasted transactions as part of the hedge effectiveness testing. The Company reclasses deferred gains or losses reported in accumulated other comprehensive income into revenue when the consolidated earnings are impacted, which for intercompany sales are when the inventory is sold to a third party. For intercompany sales hedging, the Company uses an inventory turnover ratio for each international operating unit to align the timing of a hedged item and a hedging instrument to impact the Consolidated Statements of Operations during the same reporting period. At March 31, 2011, the Company expects to recognize $36.0 million of net losses on derivative instruments currently classified under accumulated other comprehensive income to revenue, offsetting the change in revenue due to foreign currency translation, during the next twelve months.

     In January of 2009, the Company entered into interest rate swap agreements that effectively converted variable rate interest payments to fixed rate interest payments for a notional amount of $1,000.0 million (a portion of term loan A) of which $300.0 million of swap payment arrangements would have expired in January of 2012 and $700.0 million of swap payment arrangements would have expired in January of 2013. During February 2010, term loan A and term loan B were fully repaid in conjunction with the new senior notes issuance. As a result, the Company de-designated the hedging relationship due to the forecasted transactions no longer being probable of occurring and recognized a $12.9 million loss during the three months ended March 31, 2010 as a discontinuance of the cash flow hedges in accordance with ASC Topic 815, Derivatives and Hedging. During the three months ended March 31, 2011 and 2010, respectively, the Company recognized de minimus gain or loss related to the ineffective portion of its designated hedging instruments in other expense in the Consolidated Statements of Operations.

     During the year ended December 31, 2010, the Company entered into forward interest rate swap agreements for a notional amount totaling $1,500.0 million for a certain part of Senior Notes issuances. These agreements were to hedge the variability in future probable interest payments attributable to changes in the benchmark interest rate from the date the Company entered into the forward interest rate swap agreements to the date the Company issued the Senior Notes. These agreements effectively hedged a series of semi-annual future interest payments to the fixed interest rates for forecasted debt issuances. The Company recorded total proceeds of $4.3 million from the forward interest rate swaps in accumulated other comprehensive income, which will be reclassified to interest expense in the same period during which the hedged transactions affect interest expense.

     The following table summarizes the fair values of derivative instruments at March 31, 2011 and December 31, 2010:

		Asset Derivatives										Liability Derivatives
				Fair Value										Fair Value
		Balance Sheet		March 31,				December 31,				Balance Sheet		March 31,				December 31,
		Location		2011				2010				Location		2011				2010
(in thousands)				(unaudited)										(unaudited)
Derivatives instruments designated and qualified as cash flow hedges
Forward exchange contracts		Other current assets		$	—			$	—			Other current liabilities		$	32,298			$	41,558
Total				$	—			$	—					$	32,298			$	41,558
Derivatives instruments not designated as cash flow hedges
Forward exchange contracts		Other current assets		$	7,378			$	15,189			Other current liabilities		$	14,904			$	4,732
Total				$	7,378			$	15,189					$	14,904			$	4,732
Total derivatives				$	7,378			$	15,189					$	47,202			$	46,290

     The following table summarizes the effect of derivative instruments on the Consolidated Statements of Operations for the three months ended March 31, 2011 and 2010, respectively:

Three months ended March 31,

Three months ended March 31,

2011

2010

Amount of

Amount of

Location of

Gain/(Loss)

Location of

Gain/(Loss)

Amount of

(Gain)/Loss

Reclassified

Amount of

(Gain)/Loss

Reclassified

(Gain)/Loss

Reclassified from

from

(Gain)/Loss

Reclassified from

from

Recognized in

AOCI into

AOCI

Recognized in

AOCI into

AOCI

OCI

Income

into Income

OCI

Income

into Income

(in thousands)(unaudited)

Effective Portion

Effective Portion

Derivatives instruments designated and qualified as cash flow hedges

Foreign exchange contracts

$

14,027

Revenue

$

(22,678

)

$

(22,229

)

Revenue

$

(1,161

)

Interest rate swap contracts

—

Interest expense

146

7,772

**

Interest expense

—

Total derivatives

$

14,027

$

(22,532

)

$

(14,457

)

$

(1,161

)

Three months ended March 31,

Three months ended March 31,

2011

2010

Amount of

Amount of

Location of

(Gain)/Loss

Location of

(Gain)/Loss

(Gain)/Loss

recognized in

(Gain)/Loss

recognized in

Recognized in Income

Income

Recognized in Income

Income

(in thousands)(unaudited)

Ineffective Portion

Ineffective Portion

Derivatives instruments designated and qualified as cash flow hedges

Foreign exchange contracts

Other (income) expense

$

*

Other (income) expense

$

*

Interest rate swap contracts

Other (income) expense

—

Other (income) expense

—

Total derivatives

$

*

$

*

Three months ended March 31,

Three months ended March 31,

2011

2010

Location of

Amount of

Location of

Amount of

(Gain)/Loss

(Gain)/Loss

(Gain)/Loss

(Gain)/Loss

Recognized in

Recognized in

Recognized in

Recognized in

(in thousands)(unaudited)

Income

Income

Income

Income

Derivatives instruments not designated as cash flow hedges

Forward exchange contracts

Other (income) expense

$

28,059

Other (income) expense

$

(20,986

)

Total Derivatives

$

28,059

$

(20,986

)

Concentration of Credit Risk

     Financial instruments that potentially subject us to concentrations of credit risk are cash and cash equivalents, investments, and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents and investments by using highly-rated financial institutions that invest in a broad and diverse range of financial instruments. We have established guidelines relative to credit ratings and maturities intended to maintain safety and liquidity. Concentration of credit risk with respect to accounts receivable is limited due to our large and diverse customer base, which is dispersed over different geographic areas. Allowances are maintained for potential credit losses and such losses have historically been within our expectations. Our investment portfolio is maintained in accordance with our investment policy that defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer.

     Our derivatives instruments have an element of risk in that the counterparties may be unable to meet the terms of the agreements. We attempt to minimize this risk by limiting the counterparties to a diverse group of highly-rated domestic and international financial institutions. In the event of non-performance by these counterparties, the asset position carrying values of our financial instruments represent the maximum amount of loss we could incur as of March 31, 2011. However, we do not expect to record any losses as a result of counterparty default in the foreseeable future. We do not require and are not required to pledge collateral for these financial instruments. The Company does not use derivative financial instruments for speculation or trading purposes or for activities other than risk management and we are not a party to leveraged derivatives. In addition, we do not carry any master netting arrangements to mitigate the credit risk. The Company continually evaluates the costs and benefits of its hedging program.

Debt Obligations

     The Company has certain financial instruments in which the carrying value does not equal the fair value. The estimated fair value of the senior notes and the convertible senior notes was determined by using observable market information.

     The fair value and carrying amounts of the Company’s debt obligations were as follows:

		Fair Value								Carrying Amounts
		March 31,				December 31,				March 31,				December 31,
		2011				2010				2011				2010
(in thousands)		(unaudited)								(unaudited)
3.375% Senior Notes (principal due 2013)		$	257,385			$	254,663			$	249,924			$	249,914
4.400% Senior Notes (principal due 2015)			524,845				520,380				498,669				498,592
3.500% Senior Notes (principal due 2016)			400,832				396,492				399,389				399,360
6.000% Senior Notes (principal due 2020)			812,190				805,815				748,595				748,565
5.000% Senior Notes (principal due 2021)			402,144				396,664				398,258				398,224
1 1/2% Convertible Senior Notes (principal due 2024)			518,625				545,909				433,230				428,356
3 1/4% Convertible Senior Notes (principal due 2025)			387,464				413,000				347,663				345,360

     For details on the carrying amounts of the debt obligations, refer to Note 4 “Long-Term Debt”.

11. Subsequent Events

     In April 2011, the Company repurchased 1.0 million shares of its common stock under the December 2010 share repurchase program at a total cost of $52.6 million. The cost of all repurchased shares is included in treasury stock and reported as a reduction in total equity when a repurchase occurs.

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

     The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes thereto included elsewhere in this report and the Consolidated Financial Statements and Notes thereto included in our annual report on Form 10-K for the fiscal year ended December 31, 2010.

Forward-Looking Statements

     Any statements in this Quarterly Report on Form 10-Q about our expectations, beliefs, plans, objectives, prospects, financial condition, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect(s),” “estimate(s),” “project(s),” “positioned,” “strategy,” “outlook” and similar expressions. Additionally, statements concerning future matters, such as the development of new products, enhancements of technologies, sales levels and operating results and other statements regarding matters that are not historical facts are forward-looking statements. Accordingly, all such forward-looking statements involve estimates, assumptions and relate to uncertainties that could cause our actual results to differ materially from the results expressed in the statements. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. Among the key factors that could cause our actual results to differ materially from those projected in our forward-looking statements, include our ability to:

	•		continually develop and offer new products and services that are commercially successful;
	•		successfully compete and maintain the pricing of its products and services;
	•		maintain our revenue and profitability during periods of adverse economic and business conditions;
	•		successfully integrate and develop acquired businesses and technologies;

	•		successfully acquire new products, services, and technologies through additional acquisitions;
	•		Successfully procure our products and supplies from our existing supply chain;
	•		successfully secure and deploy capital;
	•		satisfy our debt obligations; and
	•		the additional risks and other factors described under the caption “Risk Factors” under Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Securities and Exchange Commission on February 25, 2011.

     Because the factors referred to above could cause our actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after such date to reflect the occurrence of unanticipated events.

OVERVIEW

     Revenues for the three months ended March 31, 2011 were $895.9 million, with net income attributable to the Company of $93.7 million. Revenues for the three months ended March 31, 2010 were $884.9 million, with net income attributable to the Company of $91.5 million.

Our Business

     We are a global life sciences company dedicated to improving the human condition. Our systems, reagents, and services enable scientific researchers to accelerate scientific exploration, leading to discoveries and developments that improve the quality of life. Life Technologies customers do their work across the biological spectrum, working to advance genomic medicine, regenerative science, molecular diagnostics, agricultural and environmental research, and 21^st century forensics. The Company had a workforce of approximately 11,000 people, had a presence in more than 160 countries, and possessed a rapidly-growing intellectual property estate of over 4,000 patents and exclusive licenses.

     The Company’s systems and reagents enable, simplify and improve a broad spectrum of biological research of genes, proteins and cells within academic and life science research and commercial applications. Our scientific know-how is making biodiscovery research techniques more effective and efficient to pharmaceutical, biotechnology, agricultural, government and academic researchers with backgrounds in a wide range of scientific disciplines.

     The Company offers many different products and services, and is continually developing and/or acquiring others. Some of our specific product categories include the following:

	•		Capillary electrophoresis, SOLiDtm, and Ion Torrenttm DNA sequencing systems and reagents, which are used to discover sources of genetic and epigenetic variation, to catalog the DNA structure of organisms de novo, to verify the composition of genetic research material, and to apply these genetic analysis discoveries in markets such as forensic human identification.
	•		“High-throughput” gene cloning and expression technology, which allows customers to clone and expression-test genes on an industrial scale.
	•		Pre-cast electrophoresis products, which improve the speed, reliability and convenience of separating nucleic acids and proteins.
	•		Antibodies, which allow researchers to capture and label proteins, visualize their location through use of Molecular Probes dyes and discern their role in disease.
	•		Magnetic beads, which are used in a variety of settings, such as attachment of molecular labels, nucleic acid purification, and organ and bone marrow tissue type testing.
	•		Molecular Probes fluorescence-based technologies, which facilitate the labeling of molecules for biological research and drug discovery.

	•		Transfection reagents, which are widely used to transfer genetic elements into living cells enabling the study of protein function and gene regulation.
	•		PCR and Real Time PCR systems and reagents, which enable researchers to amplify and detect targeted nucleic acids (DNA and RNA molecules) for a host of applications in molecular biology.
	•		Cell culture media and reagents used to preserve and grow mammalian cells, which are used in large scale cGMP bio-production facilities to produce large molecule biologic therapies.
	•		RNA Interference reagents, which enable scientists to selectively “turn off” genes in biology systems to gain insight into biological pathways.

     The Company aligns our products and services into the following three divisions: Molecular Biology Systems (MBS), Genetic Systems (GS) and Cell Systems (CS). The MBS division includes the molecular biology based technologies including basic and real-time PCR, RNAi, DNA synthesis, thermo-cycler instrumentation, cloning and protein expression profiling and protein analysis. The CS division includes all product lines used in the study of cell function, including cell culture media and sera, stem cells and related tools, cellular imaging products, antibodies, drug discovery services, and cell therapy related products. The GS division includes sequencing systems and reagents, including capillary electrophoresis, the SOLiD^tm system, and Ion Torrent^tm sequencing systems, as well as reagent kits developed specifically for applied markets, such as forensics, food safety and pharmaceutical quality monitoring.

     The principal arenas for our products include the life sciences research industry and the biopharmaceutical production industry. We divide our customer base into three principal categories:

     Life science researchers. The life sciences research market consists of laboratories generally associated with universities, medical research centers, government institutions (such as the United States National Institutes of Health, or the NIH), and other research institutions as well as biotechnology, pharmaceutical, diagnostic, energy, agricultural, and chemical companies. Researchers at these institutions are using our products and services in a broad spectrum of scientific activities, such as searching for pharmaceutical or other techniques to combat a wide variety of diseases (including, cancer and viral and bacterial diseases); researching diagnostics for disease identification or for improving the efficacy of drugs to targeted patient groups; and assisting in vaccine design, bioproduction, and agriculture. Our products and services provide the research tools needed for genomics studies, proteomics studies, gene splicing, cellular analysis, and other key research applications that are required by these life science researchers. In addition, our research tools are important in the development of diagnostics for disease determination as well as identification of patients for more targeted therapy.

     Commercial producers of biopharmaceutical and other high valued proteins. The Company serves industries that apply genetic engineering to the research and commercial production of useful but otherwise rare or difficult to obtain substances, such as proteins, interferons, interleukins, t-PA and monoclonal antibodies. Once a discovery has been proven, the manufacturers of these materials require larger quantities of the same sera and other cell growth media that the Company provides in smaller quantities to researchers. Industries involved in the commercial production of genetically engineered products include the biotechnology, pharmaceutical, food processing and agricultural industries.

     Users who apply our technologies to enable or improve particular activities. We provide tools that apply our technology to enable or improve activities in particular markets, which we refer to as applied markets. The current focus of our products for these industries is in the areas of: forensic analysis, which is used to identify individuals based on their DNA; quality and safety testing, such as testing required to measure food, beverage, or environmental quality, and pharmaceutical manufacturing quality and safety; and biosecurity, which refers to products needed in response to the threat of biological terrorism and other malicious, accidental, and natural biological dangers. The Applied Biosystems branded forensic testing and human identification products and services are innovative and market-leading tools that have been widely accepted by investigators and laboratories in connection with criminal investigations, the exoneration of individuals wrongly accused or convicted of crimes, identifying victims of disasters, and paternity testing.

CRITICAL ACCOUNTING POLICIES

     Our critical accounting policies are those that require significant judgment. There have been no material changes to the critical accounting policies previously reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010. In 2010 we adopted ASU 2009-14, Revenue Arrangements Containing Software Elements, and ASU 2009-13, Multiple-Deliverable Revenue Arrangements a Consensus of the FASB Emerging Issues Task Force. For additional information on the recent accounting pronouncements impacting our business, see Note 1 of the Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

First Quarter of 2011 Compared to the First Quarter of 2010

     The following table compares revenues and gross margin for the first quarter of 2011 and 2010:

		Three months ended
		March 31,								$ Increase/				% Increase/
(in millions) (unaudited)		2011				2010				(Decrease)				(Decrease)
Molecular Biology Systems		$	425.7			$	431.5			$	(5.8	)			(1	)%
Cell Systems			237.7				213.8				23.9				11	%
Genetic Systems			227.6				237.6				(10.0	)			(4	)%
Corporate and other			4.9				2.0				2.9			NM
Total revenues		$	895.9			$	884.9			$	11.0				1	%
Total gross profit		$	519.0			$	533.1			$	(14.1	)			(3	)%
Total gross profit margin %			57.9	%			60.2	%