Table	of	Contents

# UNITED	STATES

# SECURITIES	AND	EXCHANGE	COMMISSION

(Mark	One)

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

For	the	fiscal	year	ended:	September	26,	2009

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

# Hologic,	Inc.

(Exact	Name	of	Registrant	as	Specified	in	Its	Charter)

Delaware

(State	or	Other	Jurisdiction	of	Incorporation	or	Organization)

(IRS	Employer	Identification	No.)

35	Crosby	Drive,	Bedford,	Massachusetts	01730

(Address	of	Principal	Executive	Offices)	(Zip	Code)

# Registrant's	Telephone	Number,	Including	Area	Code	(781)	999-7300

# Securities	registered	pursuant	to	Section	12(b)	of	the	Act:

Title	of	Each	Class

Common	Stock,	$.01	par	value

Name	of	Each	Exchange	on	which	Registered

Nasdaq	Global	Select	Market

Securities	registered	pursuant	to	Section	12(g)	of	the	Act:	Rights	to	Purchase	Preferred	Stock

Indicate	by	check	mark	if	the	registrant	is	a	well-known	seasoned	issuer,	as	defined	in	Rule	405	of	the	Securities	Act.				Yes		x				No		¨

Indicate	by	checkmark	if	the	registrant	is	not	required	to	file	reports	pursuant	to	Section	13	or	Section	15(d)	of	the	Act.				Yes		¨				No		x

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

Indicate	by	check	mark	whether	the	registrant	has	submitted	electronically	and	posted	on	its	corporate	Web	site,	if	any,	every	Interactive	Data	File	required	to	be submitted	and	posted	pursuant	to	Rule	405	of	Regulation	S-T	(§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		x				No		¨

Indicate	by	check	mark	if	disclosure	of	delinquent	filers	pursuant	to	Item	405	of	Regulation	S-K	is	not	contained	herein,	and	will	not	be	contained,	to	the	best	of registrant's	knowledge,	in	definitive	proxy	or	information	statements	incorporated	by	reference	in	Part	III	of	this	Form	10-K	or	any	amendment	to	this	Form	10-K.		x

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

Large	accelerated	filer 		 x

		 Accelerated	filer 	 ¨

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

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

The	aggregate	market	value	of	the	registrant's	Common	Stock	held	by	non-affiliates	of	the	registrant	as	of	March	27,	2009	was	$3,448,132,346	based	on	the	price of	the	last	reported	sale	on	the	Nasdaq	Global	Select	Market	on	that	date.

# DOCUMENTS	INCORPORATED	BY	REFERENCE

Portions	of	the	registrant's	Proxy	Statement	for	the	registrant's	annual	meeting	of	stockholders	to	be	filed	within	120	days	of	the	end	of	its	fiscal	year	ended September	26,	2009	are	incorporated	into	Part	III	(Items	10,	11,	12,	13	and	14)	of	this	Annual	Report	on	Form	10-K	where	indicated.

# SPECIAL	NOTE	REGARDING	FORWARD-LOOKING	STATEMENTS

Some	of	the	statements	contained	in	this	report	are	forward-looking	statements	within	the	meaning	of	Section	27A	of	the	Securities	Act	of	1933	and	Section	21E of	the	Securities	Exchange	Act	of	1934.	These	statements	involve	known	and	unknown	risks,	uncertainties	and	other	factors	which	may	cause	our	or	our	industry's actual	results,	performance	or	achievements	to	be	materially	different	from	any	future	results,	performance	or	achievements	expressed	or	implied	by	the	forward-looking statements.	Forward-looking	statements	include,	but	are	not	limited	to,	statements	regarding:

•the	effect	of	the	worldwide	macroeconomic	downturn	on	our	business	and	results	of	operation;

•the	coverage	and	reimbursement	decisions	of	third	party	payors	relating	to	the	use	of	our	products	and	treatments;

•the	uncertainty	of	the	impact	of	healthcare	reform	proposals,	including	a	potential	excise	tax	on	medical	device	companies	in	the	U.S.,	on	our	business	and results	of	operation;

•the	impact	and	anticipated	benefits	of	recently	completed	acquisitions	and	acquisitions	we	may	complete	in	the	future;

•	 our	goal	of	expanding	our	market	positions;

•the	development	of	new	competitive	technologies	and	products;

•regulatory	approval	and	clearances	for	our	products;

•	 production	schedules	for	our	products;

•the	anticipated	development	of	our	markets	and	the	success	of	our	products	in	these	markets;

•the	anticipated	performance	and	benefits	of	our	products;

•	 business	strategies;

•	 dependence	on	significant	or	sole	source	suppliers;

•the	impact	and	costs	and	expenses	of	any	litigation	we	may	be	subject	to	now	or	in	the	future;

•compliance	with	covenants	contained	in	our	credit	facility	and	long-term	leases;

•anticipated	trends	relating	to	our	financial	condition	or	results	of	operations;	and

•	 our	capital	resources	and	the	adequacy	thereof.

In	some	cases,	you	can	identify	forward-looking	statements	by	terms	such	as	"may,"	"will,"	"should,"	"could,"	"would,"	"expects,"	"plans,"	"anticipates," "believes,"	"estimates,"	"projects,"	"predicts,"	"potential"	and	similar	expressions	intended	to	identify	forward-looking	statements.	These	statements	are	only	predictions and	involve	known	and	unknown	risks,	uncertainties,	and	other	factors	that	may	cause	our	actual	results,	levels	of	activity,	performance,	or	achievements	to	be materially	different	from	any	future	results,	levels	of	activity,	performance,	or	achievements	expressed	or	implied	by	such	forward-looking	statements.	Given	these uncertainties,	you	should	not	place	undue	reliance	on	these	forward-looking	statements.	Also,	these	forward-looking	statements	represent	our	estimates	and	assumptions only	as	of	the	date	of	this	report.	Except	as	otherwise	required	by	law,	we	expressly	disclaim	any	obligation	or	undertaking	to	release	publicly	any	updates	or	revisions	to any	forward-looking	statement	contained	in	this	report	to	reflect	any	change	in	our	expectations	or	any	change	in	events,	conditions	or	circumstances	on	which	any	of our	forward-looking	statements	are	based.	Factors	that	could	cause	or	contribute	to	differences	in	our	future	financial	results	include	those	discussed	in	the	Risk	Factors set	forth	in	Part	I	Item	1A	below	as	well	as	those	discussed	elsewhere	in	this	report.	We	qualify	all	of	our	forward-looking	statements	by	these	cautionary	statements.

# PART	I

# Item	1. Business

# Overview

We	are	a	developer,	manufacturer	and	supplier	of	medical	imaging	systems	and	diagnostic	and	surgical	products	focused	on	the	healthcare	needs	of	women.	Our core	business	segments	are	focused	on	breast	health,	diagnostics,	GYN	surgical	and	skeletal	health.	We	have	historically	focused	our	resources	on	developing	systems and	subsystems	offering	superior	image	quality	and	diagnostic	accuracy,	which	has	enabled	us	to	capture	significant	market	share	and	customer	loyalty,	despite	the presence	of	large	competitors.

Our	breast	health	products	include	a	broad	portfolio	of	breast	imaging	and	related	products	and	accessories,	including	digital	and	film-based	mammography systems,	computer-aided	detection	("CAD"),	minimally	invasive	breast	biopsy	and	tissue	extraction	devices,	breast	biopsy	guidance	systems,	breast	imaging	comfort pads,	and	breast	brachytherapy	products.	We	have	also	developed	a	new	breast	imaging	platform,	"Dimensions",	which	utilizes	a	new	technology,	tomosynthesis,	to produce	three	dimensional	("3D")	images,	as	well	as	conventional	two	dimensional	("2D")	full	field	digital	mammography	(FFDM)	images.	In	the	United	States,	our Dimensions	product	has	been	approved	by	the	Food	and	Drug	Administration	("FDA")	for	providing	conventional	2D	images,	and	we	are	conducting	further	clinical trials	to	support	our	pre-market	approval	("PMA")	application	for	the	3D	configuration.	Our	Dimensions	platform	has	received	CE	mark	approval	in	Europe	in	fiscal 2008	and	Canadian	registration	in	March	2009,	both	for	2D	and	3D	modes	of	imaging.	Within	our	breast	brachytherapy	related	products	is	our	MammoSite	system, which	provides	accelerated	partial	breast	irradiation	technology.	We	received	FDA	clearance	for	our	MammoSite	ML	radiation	therapy	system,	a	multi-lumen	device that	provides	the	oncologist	with	additional	flexibility	in	specifically	targeting	radiation	in	the	tissue	with	cancer	cells,	on	August	27,	2009.

Our	diagnostics	products	include	the	ThinPrep	System	("ThinPrep"),	which	is	primarily	used	in	cytology	applications,	such	as	cervical	cancer	screening,	and	the Rapid	Fetal	Fibronectin	Test,	which	assists	physicians	in	assessing	the	risk	of	pre-term	birth.	In	July	2008,	we	acquired	Third	Wave	Technologies,	Inc.	("Third	Wave"), a	company	that	develops	and	markets	molecular	diagnostic	reagents	for	a	wide	variety	of	DNA	and	RNA	analysis	applications	based	on	its	proprietary	Invader chemistry.	Our	current	clinical	diagnostic	offerings	based	upon	this	Invader	chemistry	include	products	to	assist	in	the	diagnosis	of	human	papillomavirus	("HPV"), Cystic	Fibrosis,	cardiovascular	risk	and	other	diseases.	We	received	FDA	approval	of	Cervista	HPV	High	Risk	("HR")	and	Cervista	HPV	16/18	tests	in	March	2009	as well	as	CE	mark	approval	in	Europe	in	January	2009	for	Cervista	HPV	HR	and	in	May	2009	for	Cervista	HPV	16/18.

Our	GYN	surgical	products	include	the	NovaSure	Impedance	Controlled	RF	Ablation	System	("NovaSure	System")	and	the	Adiana	Permanent	Contraception System	("Adiana	System").	The	NovaSure	System	enables	physicians	to	treat	women	suffering	from	excessive	menstrual	bleeding	in	a	minimally	invasive	manner.	The Adiana	System	is	a	form	of	permanent	female	contraception	intended	as	an	alternative	to	tubal	ligation.	We	received	FDA	approval	of	the	Adiana	System	in	July	2009 and	CE	mark	approval	for	the	system	in	Europe	in	December	2008.

Our	skeletal	health	products	include	dual-energy	X-ray	bone	densitometry	systems,	an	ultrasound-based	osteoporosis	assessment	product,	our	Fluoroscan	mini	C- arm	imaging	products,	and	our	Esaote	line	of	extremity	Magnetic	Resonance	Imaging	("MRI")	systems	that	were	manufactured	by	an	original	equipment	manufacturer.

We	were	incorporated	in	Massachusetts	in	October	1985	and	reincorporated	in	Delaware	in	March	1990.	Unless	the	context	otherwise	requires,	references	to	us, Hologic	or	our	company	refer	to	Hologic,	Inc.	and	each	of	its	consolidated	subsidiaries.

# Trademark	Notice

Hologic	is	a	trademark	of	Hologic,	Inc.	Other	trademarks,	logos,	and	slogans	registered	or	used	by	Hologic	and	its	divisions	and	subsidiaries	in	the	United	States and	other	countries	include,	but	are	not	limited	to,	the	following:

Adiana,	AEG,	ATEC,	BioLucent,	Celero,	Cervista,	Cytyc,	Dimensions,	DirectRay,	Eviva,	FAST	Paddle,	Fluoroscan,	Gestiva,	HTC,	Invader,	LORAD, MammoPad,	MammoSite,	M-IV,	MultiCare,	NovaSure,	PreservCyt,	QDR,	R2,	Rapid	FFN,	Sahara,	SecurView,	Selenia,	StereoLoc,	Suros,	TechMate,	ThinPrep,	Third Wave,	TLI	IQ.

# Available	Information

Our	Internet	website	address	is	http://www.hologic.com.	Through	our	website,	we	make	available,	free	of	charge,	our	annual	report	on	Form	10-K,	quarterly reports	on	Form	10-Q,	current	reports	on	Form	8-K	and	any	amendments	to	those	reports,	as	soon	as	reasonably	practicable	after	we	electronically	file	such	material with,	or	furnish	it	to,	the	Securities	and	Exchange	Commission	("SEC").	These	SEC	reports	can	be	accessed	through	the	investor	relations	section	of	our	website.	The information	found	on	our	website	is	not	part	of	this	or	any	other	report	we	file	with	or	furnish	to	the	SEC.

You	may	read	and	copy	any	materials	we	file	with	the	SEC	at	the	SEC's	Public	Reference	Room	at	100	F	Street,	NE,	Washington,	DC	20549.	You	may	obtain information	on	the	operation	of	the	Public	Reference	Room	by	calling	the	SEC	at	1-800-SEC-0330.	The	SEC	also	maintains	an	Internet	website	that	contains	reports, proxy	and	information	statements,	and	other	information	regarding	the	Company	and	other	issuers	that	file	electronically	with	the	SEC.	The	SEC's	Internet	website address	is	http://www.sec.gov.

# Products

We	view	our	operations	and	manage	our	business	in	four	principal	reporting	segments:	Breast	Health,	Diagnostics,	GYN	Surgical	and	Skeletal	Health.	Financial information	concerning	these	segments	is	provided	in	Note	13	of	the	Notes	to	our	Consolidated	Financial	Statements	included	in	this	report.

# Breast	Health	Products

Our	breast	health	products	include	a	broad	portfolio	of	breast	imaging	and	related	products	and	accessories,	including	digital	and	film-based	mammography systems,	computer-aided	detection	("CAD"),	minimally	invasive	breast	biopsy	and	tissue	extraction	devices,	breast	biopsy	guidance	systems,	breast	imaging	comfort pads,	and	breast	brachytherapy	products.	We	have	also	developed	a	new	breast	imaging	platform,	Dimensions,	which	utilizes	a	new	technology,	tomosynthesis,	to produce	3D	images.	In	fiscal	2009,	our	breast	health	segment	also	included	the	sale	of	digital	detectors	to	an	original	equipment	manufacturer,	and	our	organic photoconductor	coating	business	acquired	in	connection	with	the	acquisition	of	our	selenium	coating	capabilities	for	our	mammography	digital	detectors.	Commencing in	fiscal	2010,	we	do	not	expect	to	generate	revenues	from	these	two	sources,	which	contributed	approximately	$17.6	million	of	revenue	in	fiscal	2009.

# Selenia	Full	Field	Digital	Mammography	System

The	Selenia	full	field	digital	mammography	system	is	based	on	our	proprietary,	amorphous	selenium	DirectRay	digital	detector,	which	preserves	image	quality	by using	amorphous	selenium	to	directly	convert	x-rays	to	electronic	signals.	Many	other	digital	technologies	employ	an	indirect	two-step	process	by	first	converting	x-ray energy	into	light	and	then	converting	the	light	energy	into	electrical	signals.	We	believe	that	digital	x-ray	imaging	technologies	that	require	light	conversion	may compromise	image	resolution,	lessening	detection	capability.	Our	DirectRay	flat	panel	detector	technology	employs	an	amorphous	selenium	("a-Se")	photoconductor	to directly	convert	x-ray	photons	into	an	electrical	signal.	No	intensifying	screens	or	additional	processes	are	required	to	capture	and	convert	the	x-ray	energy,	enabling high	imaging	resolution	and	contrast	sensitivity.

The	Selenia	product	family	has	a	number	of	other	features	designed	to	improve	image	quality	and	patient	throughput.	The	open	architecture	of	the	system's design	provides	for	full	integration	with	existing	enterprise	Picture	Archiving	and	Communications	Systems	("PACS")	and	Radiology	Information	Systems	("RIS").	The Selenia	product	family	includes	the	Selenia	base	configuration,	the	Selenia	S	configuration	(a	screening-only	configuration),	the	Selenia	Value	(a	lower	cost	alternative	to the	Selenia	base	configuration)	and	the	Selenia	Encore	(refurbished	units),	each	of	which	offer	customers	varying	performance	capabilities	and	product	costs.

# Breast	Tomosynthesis

Our	Dimensions	platform	includes	a	mammography	gantry	capable	of	performing	both	2D	and	3D	image	acquisition	and	display.	When	operating	in	3D	mode,	the system	acquires	a	series	of	low	dose	x-ray	images	taken	in	a	scanning	motion	at	various	angles.	The	images	are	mathematically	processed	into	a	series	of	small	slices, revealing	breast	tissue	from	a	3D	perspective.	We	believe	that	by	allowing	the	clinician	to	review	breast	tissue	in	three	dimensional	space,	the	more	subtle	architecture	of various	types	of	suspicious	lesions	may	be	able	to	be	better	interpreted,	which	may	ultimately	increase	cancer	detection	and	reduce	unnecessary	patient	callbacks.	In	the United	States,	our	Dimensions	product	has	been	approved	by	the	Food	and	Drug	Administration	("FDA")	for	providing	conventional	2D	images,	and	we	are	conducting further	clinical	trials	to	support	our	pre-market	approval	("PMA")	application	for	the	3D	configuration.	Our	Dimensions	3D	configuration	received	CE	mark	approval	in Europe	in	fiscal	2008	and	Canadian	registration	in	March	2009.

# Screen-Film	Mammography	Systems

Our	screen-film	mammography	systems	include	our	LORAD	M-IV	and	M-IV	Platinum	systems.	The	M-IV	Platinum	system	incorporates	our	Fully	Automatic Self-adjusting	Tilt	("FAST")	Paddle,	and	our	High	Transmission	Cellular	("HTC")	Grid.

# SecurView	Workstation

The	images	captured	by	digital	mammography	systems	are	typically	transmitted	electronically	for	review	by	a	radiologist	at	a	work	station.	Early	product development	activities	focused	on	improving	digital	workflow	in	the	breast-imaging	suite	due	to	limited	PACS	mammography	functionality.	To	this	end,	we	developed the	SecurViewDX	breast	imaging	softcopy	workstation,	approved	for	interpretation	of	digital	mammograms	from	most	vendors	as	well	as	images	from	other	diagnostic breast	modalities.	To	complement	this	product,	we	also	developed	the	SecurViewRT	workstation,	a	technologist	workstation	enabling	bi-directional	exchange	of electronic	communications	between	the	reviewer	and	the	technologist.	An	additional	configuration	was	added	to	the	Selenia	acquisition	workstation	to	allow incorporation	of	a	second	monitor	and	computer,	providing	all	functionalities	of	the	SecurViewRT	workstation	within	the	exam	room.	This	configuration	is	called	the "Selenia	with	TechMate"	digital	mammography	system.

# CAD	Systems

We	have	developed	CAD	software	tools	for	a	variety	of	imaging	modalities	and	disease	states.	CAD	is	used	by	an	increasing	number	of	radiologists	as	"a	second pair	of	eyes"	when	reading	a	woman's	mammogram.	Use	of	this	technology	provides	reviewers	with	the	potential	to	detect	findings	that	might	otherwise	be	overlooked during	the	review	process,	thus	increasing	cancer	detection.	We	have	integrated	our	mammography	applications	CAD	software	tools	into	our	line	of	multi-modality breast	imaging	workstations.

# Stereotactic	Breast	Biopsy	Systems

We	provide	clinicians	with	the	flexibility	of	choosing	upright	or	prone	systems	for	breast	biopsy	by	offering	two	minimally	invasive	stereotactic	breast	biopsy guidance	systems,	the	MultiCare	Platinum	dedicated,	prone	breast	biopsy	table	and	the	StereoLoc	II	upright	attachment.	The	StereoLoc	II	attachment	is	used	in conjunction

with	our	M-IV	series	of	screen-film	mammography	systems	and	our	Selenia	full	field	digital	mammography	system.	These	systems	provide	an	alternative	to	open surgical	biopsy,	and	can	be	performed	as	an	outpatient	procedure	under	local	anesthesia,	allowing	shorter	recovery	times.

# Breast	Biopsy	Products

We	offer	minimally	invasive	interventional	products	for	breast	biopsy,	tissue	removal	and	biopsy	site	marking.	The	biopsy	technology,	which	includes	a	patented fluid	management	system,	allows	the	removal	of	tissue	or	biopsy	samples	using	stereotactic	x-ray,	ultrasound	and	MRI	guidance	systems.	Our	Automated	Tissue Excision	and	Collection	("ATEC")	product	line	includes	percutaneous,	automatic	vacuum-assisted	breast	biopsy	collection	systems,	a	disposable	device	used	to	collect samples,	and	biopsy	site	markers.	The	ATEC	line	of	products	is	designed	to	accommodate	a	broad	range	of	clinical	and	patient	presentations.	In	2007,	we	began	offering the	Celero	vacuum-assisted,	spring-loaded,	large-core	biopsy	device	designed	for	use	under	ultrasound	guidance	to	access	hard-to-reach	lesions	in	the	axilla,	near	the chest	wall,	near	implants	or	behind	the	nipple.	In	November	2008,	we	began	offering	the	Eviva	stereotactic	vacuum-assisted	breast	biopsy	device.	This	premium	device offers	several	new	features,	including	improved	compatibility	with	the	MultiCare	Platinum	prone	breast	biopsy	table,	an	integrated	firing	mechanism,	and	an	integrated, end-ploy	site	marking	system.

# MammoSite	Radiation	Therapy	System

The	MammoSite	Radiation	Therapy	System	accelerated	partial	breast	irradiation	(APBI)	is	comprised	of	an	inflatable	balloon	catheter	in	which	a	radioactive source	is	introduced	for	therapy	delivery.	The	inflatable	balloon	is	inserted	into	the	surgical	cavity	remaining	after	a	lumpectomy.	The	catheter	portion	of	the	system allows	the	radioactive	source	to	be	added	or	withdrawn	over	the	course	of	the	therapy.	This	local	placement	of	the	balloon	provides	for	therapeutic	delivery	of	a	5-day course	of	radiation	to	the	tissue	most	likely	to	contain	residual	cancerous	cells	following	surgery,	while	reducing	radiation	exposure	to	adjacent	healthy	tissue.	We recently	introduced	the	MammoSite	ML	radiation	therapy	system,	for	which	we	received	FDA	clearance	on	August	27,	2009.	The	MammoSite	ML	system	is	a	multi- lumen	device	that	provides	radiation	oncologists	the	ability	to	shape	the	radiation	dose	for	typical	cases	and	treat	patients	who	are	otherwise	not	appropriate	candidates for	traditional	brachytherapy.	The	MammoSite	ML	device	has	a	central	lumen,	similar	to	the	original	MammoSite	device,	and	three	offset	lumens	parallel	to	the	central lumen.	In	addition	to	allowing	greater	flexibility	in	radiation	treatment	planning,	the	use	of	a	multiple-lumen	device	typically	results	in	a	higher	reimbursement	rate.

# MammoPad	Breast	Cushion

Our	mammography	related	products	include	a	proprietary	MammoPad	breast	cushion.	The	MammoPad	cushion	is	designed	to	reduce	the	discomfort	women often	experience	during	mammography.	The	cushion's	grip-like	surface	also	holds	breast	tissue	in	place	to	improve	breast	positioning.	The	radiolucent	cushion	does	not interfere	with	image	quality	and	can	be	used	with	both	digital	and	analog	mammography.

# Photoconductor	Coatings

Our	AEG	Elektrofotografie	GmbH	("AEG")	subsidiary	is	our	sole	supplier	of	the	amorphous	selenium	photoconductor	coatings	employed	in	our	Selenia	and Dimensions	full-field	digital	mammography	detectors.	AEG	also	develops,	manufactures,	and	sells	non-medical	selenium	and	organic	photoconductor	materials	for	use in	a	variety	of	other	electro	photographic	applications,	including	copying	and	printing.	During	the	fourth	quarter	of	fiscal	2009,	we	closed	our	organic	photoconductor drum	coatings	manufacturing	operations	in	Shanghai,	China.

# Diagnostic	Products

Our	diagnostic	product	offerings	include	the	ThinPrep	System	used	primarily	for	cytology	applications,	such	as	cervical	cancer	screening,	and	the	Rapid	Fetal Fibronectin	Test	for	pre-term	birth	risk	assessment.	Our	Third	Wave	acquisition	enables	us	to	develop	and	market	molecular	diagnostic	reagents	for	a	wide	variety	of DNA	and	RNA	analysis	applications	based	on	Third	Wave's	proprietary	Invader	chemistry,	including	our	two	recently	approved	HPV	tests.

# ThinPrep	System

The	ThinPrep	System	is	the	most	widely	used	method	for	cervical	cancer	screening	in	the	United	States.	If	detected	in	the	pre-cancerous	stage,	most	cervical cancer	cases	are	preventable.	The	ThinPrep	System	consists	of	any	one	or	more	of	the	following:	the	ThinPrep	2000	Processor,	ThinPrep	3000	Processor,	ThinPrep Imaging	System,	and	related	reagents,	filters	and	other	supplies,	such	as	the	ThinPrep	Pap	Test	and	our	proprietary	ThinPrep	PreservCyt	Solution.

The	ThinPrep	Process.	The	ThinPrep	process	begins	with	the	patient's	cervical	sample	being	taken	by	the	physician	using	a	cervical	sampling	device	that,	rather than	being	smeared	on	a	microscope	slide	as	in	a	conventional	Pap	smear,	is	rinsed	in	a	vial	filled	with	our	proprietary	PreservCyt	Solution.	This	enables	most	of	the patient's	cell	sample	to	be	preserved	before	the	cells	can	be	damaged	by	air	drying.	The	ThinPrep	specimen	vial	is	then	labeled	and	sent	to	a	laboratory	equipped	with	a ThinPrep	Processor	for	slide	preparation.	At	the	laboratory,	the	ThinPrep	specimen	vial	is	inserted	into	a	ThinPrep	Processor,	a	proprietary	sample	preparation	device which	automates	the	process	of	preparing	cervical	slides	for	staining	and	microscopic	examination.

In	the	case	of	manual	screening,	the	cytotechnologist	screens	each	Pap	test	slide	with	a	microscope	to	first	determine	the	adequacy	of	the	slide	and	to	then examine	the	entire	slide	to	differentiate	diseased	or	abnormal	cells	from	normal	cells.	With	the	ThinPrep	Imaging	System,	the	screening	process	has	been	automated	to combine	the	power	of	computer	imaging	technology	and	human	interpretive	skills.	Prior	to	human	review,	the	ThinPrep	Imaging	System	rapidly	scans	and	locates	areas of	interest	for	review.	By	directing	the	cytotechnologist	to	areas	of	interest	on	a	slide,	the	system	may	increase	a	cytology	laboratory's	screening	productivity	and diagnostic	accuracy.

In	September	2009,	we	announced	CE	marking	approval	for	our	ThinPrep	Integrated	Imager.	The	Integrated	Imager	represents	the	latest	innovation	in	cervical screening	by	combining	proven	ThinPrep	imaging	technology	and	slide	review	into	a	single,	convenient	stand-alone	device.	This	new	product	offering	allows laboratories	of	all	sizes	to	benefit	from	clinical	advantages	of	ThinPrep	imaging	for	cervical	screening.	CE	marking	approval	allows	Hologic	to	market	the	ThinPrep integrated	imager	in	the	27	countries	of	the	European	Union	(EU)	and	three	of	the	four	member	states	of	the	European	Free	Trade	Association	(EFTA).	Marketing	of	this product	in	the	U.S.	will	require	FDA	approval.

Additional	Applications.	In	addition	to	serving	as	a	replacement	for	the	conventional	Pap	smear,	the	ThinPrep	System	can	also	be	used	for	non-gynecological cytology	screening	applications.	Non-gynecological	cytology	applications	include	fine-needle	aspiration	specimens	(e.g.,	breast,	thyroid,	lung	or	liver),	lavage specimens	(e.g.,	breast,	gastrointestinal),	body	fluids	(e.g.,	urine,	pleural	fluid,	ascitic	fluid,	pericardial	fluid),	respiratory	specimens	(e.g.,	sputum,	brushing	of respiratory	tracts)	and	ancillary	testing	(e.g.,	cell	blocks,	immunocytochemistry,	special	stains).

# Rapid	Fetal	Fibronectin	Test

The	Rapid	Fetal	Fibronectin	Test	is	a	patented	single-use	disposable	test	used	to	determine	a	woman's	risk	of	preterm	birth	by	detecting	the	presence	of	a	specific protein,	fetal	fibronectin,	in	vaginal	secretions	during	pregnancy.	This	test	is	approved	by	the	FDA	for	use	in	assessing	the	risk	of	preterm	birth.	The	test	utilizes	a single-use,	disposable	cassette	and	is	analyzed	on	our	patented	instrument,	the	TLiIQ	System.

# Human	Papillomavirus	(HPV)	Offering	and	InVitro	Diagnostics

HPV	is	the	most	common	sexually	transmitted	disease	in	the	U.S.	and	is	recognized	as	the	cause	of	most	cervical	cancer.	In	March	2009,	we	received	FDA approval	for	both	our	Cervista	HPV	HR	and	Cervista	HPV	16/18	tests	for	the	following	intended	uses:

The	Cervista	HPV	HR	test	has	been	approved	for	two	uses:

•	 To	screen	patients	with	atypical	squamous	cells	of	undetermined	significance	(ASC-US)	cervical	cytology	results	to	determine	the	need	for	referral	to colposcopy,	and

•	 Used	adjunctively	with	cervical	cytology	to	screen	women	30	years	and	older	to	assess	the	presence	or	absence	of	high-risk	HPV	types.

The	Cervista	HPV	16/18	test	has	been	approved	for	two	uses:

•In	women	30	years	and	older,	the	test	may	be	used	adjunctively	with	the	Cervista	HPV	HR	test	in	combination	with	cervical	cytology	to	assess	the	presence or	absence	of	specific	high-risk	HPV	types,	and

•	 Used	adjunctively	with	the	Cervista	HPV	HR	test	in	patients	with	ASC-US	cervical	cytology	results	to	assess	the	presence	or	absence	of	specific	high-risk HPV	types.	The	results	of	this	test	are	not	intended	to	prevent	women	from	proceeding	to	colposcopy.

These	tests	employ	Third	Wave's	Invader	technology	and	are	performed	out	of	the	ThinPrep	PreservCyt	collection	vial.	The	Cervista	HPV	HR	test	is	an	in	vitro diagnostic	test	for	the	quantitative	detection	of	DNA	from	the	fourteen	high-risk	HPV	types	responsible	for	most	cervical	disease.	The	Cervista	HPV	16/18	test	is	an	in vitro	diagnostic	test	for	the	qualitative	detection	of	DNA	from	HPV	types	16	and	18,	the	types	that	cause	approximately	70%	of	cervical	disease.

The	Invader	UGT1A1	Molecular	Assay,	a	molecular	diagnostic	acquired	as	part	of	our	recent	acquisition	of	Third	Wave,	is	cleared	for	use	to	identify	patients who	may	be	at	increased	risk	of	adverse	reaction	to	the	chemotherapy	drug	Camptosar	(irinotecan)	by	detecting	and	identifying	specific	mutations	in	the	UGT1A1	gene that	have	been	associated	with	that	risk.	Camptosar,	marketed	in	the	U.S.	by	Pfizer,	Inc.,	is	used	to	treat	colorectal	cancer	and	was	relabeled	in	2005	to	include	dosing recommendations	based	on	a	patient's	genetic	profile.

Our	other	current	clinical	diagnostic	offerings	based	upon	our	Invader	chemistry	include	products	to	assist	in	the	diagnosis	of	Cystic	Fibrosis,	cardiovascular	risk and	other	diseases.

# GYN	Surgical	Products

Our	surgical	product	offerings	include	the	NovaSure	System,	and	the	Adiana	System.

# NovaSure	System

The	NovaSure	System	is	a	minimally-invasive	procedure	that	allows	physicians	to	treat	women	suffering	from	excessive	menstrual	bleeding.	The	system	consists of	a	disposable	device	and	a	controller	that	delivers	radio	frequency,	or	RF,	energy	to	ablate	the	endometrial	lining	of	the	uterus.	The	NovaSure	disposable	device	is	a hand-held,	single-use	device	that	incorporates	a	flexible	gold-plated	mesh	electrode	used	to	deliver	the	RF	energy	during	the	NovaSure	procedure.	The	NovaSure	RF Controller	generates	and	delivers	the	RF	energy	customized	for	each	patient,	monitors	several	critical	treatment	and	safety	parameters,	and	automatically	controls	other aspects	of	the	procedure.

The	NovaSure	System	is	a	"second	generation"	endometrial	ablation	therapy	approved	by	the	FDA	to	be	performed	without	drug	or	surgical	pre-treatment.	Pre- treatment	can	be	time-consuming,	expensive	and	inconvenient	for	both	patients	and	physicians	and	can	result	in	uncomfortable	or	painful	side	effects	and	complications. In	contrast,	the	NovaSure	procedure	is	typically	performed	as	an	outpatient	procedure	in	the	hospital,	ambulatory	surgery	center	or	physician's	office	and	often	does	not require	the	use	of	general	anesthesia.

# Adiana	System

The	Adiana	System	is	a	minimally	invasive	procedure	that	requires	no	incisions	and	can	be	performed	in	the	comfort	of	the	doctor's	office	using	local	anesthesia. Patients	are	often	able	to	return	to	work	or	resume	their	daily	activities	within	one	day.	In	contrast,	tubal	ligation,	a	traditional	method	of	female	permanent contraception,	requires	more	invasive	surgical	procedures,	is	usually	conducted	in	a	hospital	under	general	anesthesia	and	typically	requires	several	days	of	recovery.

During	the	Adiana	System	procedure,	a	slender,	flexible	instrument	is	passed	through	the	body's	natural	openings	to	deliver	a	low	level	of	radiofrequency	(RF) energy	to	a	small	section	of	each	fallopian	tube.	A	tiny,	soft	insert,	about	the	size	of	a	grain	of	rice,	is	then	placed	in	each	fallopian	tube	in	the	location	where	the	energy was	applied.	During	the	three	months	following	the	procedure,	the	patient	continues	to	use	temporary	birth	control	while	new	tissue	grows	in	and	around	the	Adiana System	inserts,	eventually	blocking	the	fallopian	tubes.	At	three	months,	a	special	x-ray	test	(called	a	hysterosalpingogram	or	HSG)	is	performed	to	confirm	the	fallopian tubes	are	completely	blocked	and	the	patient	may	begin	relying	on	the	Adiana	System	for	permanent	contraception.	Because	the	Adiana	insert	is	fully	contained	within the	fallopian	tube	and	does	not	use	metal,	the	procedure	leaves	nothing	in	the	uterus	that	could	interfere	with	future	intra-uterine	procedures	such	as	endometrial	ablation.

# Skeletal	Health	Products

Our	skeletal	health	products	include	a	family	of	QDR	dual	energy	x-ray	bone	densitometers	and	the	Sahara	Clinical	Bone	Sonometer,	our	mini	C-arm	imaging products	and	our	Esaote	line	of	extremity	MRI	systems,	which	are	manufactured	by	an	original	equipment	manufacturer.

# QDR	X-Ray	Bone	Densitometers

Bone	densitometry	is	the	measurement	of	bone	density	to	assist	in	the	diagnosis	and	monitoring	of	osteoporosis	and	other	metabolic	bone	diseases	that	can	lead	to debilitating	bone	fractures.	Osteoporosis	is	a	disease	that	is	most	prevalent	in	post-menopausal	women.	Our	proprietary	QDR	x-ray	bone	densitometers	incorporate	dual- energy	x-ray	technology	to	precisely	assess	bone	density	of	the	most	important	fracture	sites,	the	spine	and	hip.	Since	our	commercial	introduction	of	the	first	bone densitometer	employing	dual-energy	x-ray	technology	in	1987,	we	have	continually	improved	upon	our	technology,	and	the	use	of	dual-energy	x-ray	technology	has become	and	remains	a	leading	bone	densitometry	assessment	tool.	We	offer	a	range	of	bone	densitometers	with	various	features	and	options	to	address	the	requirements of	our	diverse	customer	base.

# Sahara	Clinical	Bone	Sonometers

We	have	developed	and	sell	a	relatively	low-cost,	lightweight,	portable	ultrasound	bone	analyzer,	called	Sahara,	that	assesses	the	bone	density	of	the	heel	that	can assist	in	initial	screening	for	osteoporosis.

# Mini	C-arm	Imaging

We	manufacture	and	distribute	Fluoroscan	mini	C-arm	imaging	systems.	Mini	C-arms	provide	low	intensity,	real-time	x-ray	imaging,	with	high-resolution	images at	radiation	levels	and	at	a	cost	below	those	of	conventional	x-ray	and	fluoroscopic	equipment.	Mini	C-arm	systems	are	used	primarily	by	orthopedic	surgeons	to perform	minimally	invasive	surgical	procedures	on	a	patient's	extremities,	such	as	the	hand,	wrist,	knee,	foot	and	ankle.

# Extremity	MRI

We	distribute	extremity	MRI	systems	manufactured	by	Esaote.	The	target	markets	for	these	products	are	rheumatology,	with	specific	emphasis	on	the	early detection	of	rheumatoid	arthritis	and	orthopedics,	with	an	emphasis	on	orthopedic	interventions	and	surgical	planning.

# Marketing,	Sales	and	Service

We	sell	and	service	our	products	through	a	combination	of	direct	sales	and	service	forces	and	a	network	of	independent	distributors	and	sales	representatives.	In fiscal	2009,	2008	and	2007,	no	customer	accounted	for	more	than	10%	of	our	consolidated	revenues.

As	of	October	25,	2009,	our	direct	sales	and	service	force	consisted	of	approximately	1,527	people.

During	fiscal	year	2009,	our	U.S.	Breast	Health	and	Skeletal	Health	sales	force	was	comprised	of	full	line	modality	account	managers	selling	mammography	and bone	densitometry	products,	assisted	by	women's	health	product	specialists.	The	radiology	sales	specialists	worked	together	with	modality	account	managers	leveraging our	strong	market	presence	in	women's	health,	calling	on	radiologists	and	breast	surgeons,	and	focused	on	the	sale	of	breast	biopsy	devices.	Our	breast	surgery	sales specialists	focused	on	breast	surgeons	and	radiation	oncologists	to	sell	our	MammoSite	technology	and	breast	biopsy	products.	Our	U.S.	sales	efforts	also	included	the use	of	national	account	managers	focused	on	obtaining	purchasing	contracts	from	large	purchasing	entities,	such	as	managed	care	organizations,	integrated	delivery networks	("IDNs")	and	government	healthcare	facilities.	In	addition,	in	certain	regions	of	the	U.S.,	we	use	a	limited	number	of	independent	dealers	or	distributors	to	sell and	service	our	product.	These	relationships	enable	us	to	sell	into	accounts	where	we	might	not	otherwise	have	access.

During	fiscal	year	2009,	we	sold	our	breast	health	and	skeletal	health	products	in	international	markets	through	a	network	of	independent	distributors	and	sales representatives,	as	well	as	a	direct	sales	and	service	force	in	Belgium	(and	Germany	for	AEG	products).	We	offer	our	products	in	Europe,	Latin	America,	including Argentina,	Brazil,	Chile	and	Mexico	and	into	Pacific	Rim	countries,	including	Japan,	Australia,	South	Korea,	Thailand	and	Taiwan,	by	working	with	local	sales representatives	and	distributors	or	entering	into	strategic	marketing	alliances	in	those	territories.	In	fiscal	2009,	2008	and	2007	foreign	sales	accounted	for	approximately 20%,	20%	and	25%	of	our	product	sales,	respectively.	See	Note	13	in	our	Consolidated	Financial	Statements	contained	in	Item	15	of	this	Annual	Report	for geographical	information	concerning	those	sales.

Our	worldwide	Diagnostics	and	GYN	Surgical	sales	force	consists	of	more	than	335	persons	focused	on	healthcare	providers,	clinical	laboratories	and	third-party payors.	A	critical	element	of	our	strategy	in	the	United	States	has	been	to	utilize	the	results	of	our	clinical	trials	and	expanded	FDA	labeling	to	demonstrate	safety, efficacy	and	productivity	improvements	to	our	target	customers.	Our	Diagnotics'	sales	force	focuses	on	selling	to	clinical	laboratories	and	OB/GYN	offices,	while	our GYN	Surgical	sales	force	targets	GYN	surgeons	in	both	hospital	and	office	settings.

Our	Diagnostics	and	GYN	Surgical	products	are	marketed	outside	of	the	United	States	by	maintaining	a	presence	in	Canada,	Europe,	Australia	and	Hong	Kong. We	established	these	operations	to	manage	sales,	service,	training	and	distribution	in	the	Canadian,	European	and	Asia/Pacific	markets.	We	have	also	utilized	a	network of	third-party	distributors	in	various	other	countries	throughout	the	world,	including	Japan	and	China.	We	believe	that	in	order	to	effectively	market	our	current	products and	any	other	new	products	and	applications	on	a	worldwide	basis,	we	will	need	to	continue	to	increase	our	international	marketing,	sales,	and	service	capabilities.

Our	service	organization	is	responsible	for	installing	our	products,	providing	warranty	and	repair	services,	applications	training	and	biomedical	training.	Products sold	by	our	direct	sales	force	typically	carry	limited	warranties	covering	parts	and	labor	for	twelve	months.	Products	sold	through	dealers	also	carry	limited

warranties	that	typically	last	for	twelve	months	and	cover	only	parts	or	components.	We	also	offer	service	contracts	to	our	customers	that	generally	last	one	to	five	years after	the	original	warranty	period.	We	provide	both	repair	services	and	routine	maintenance	services	under	these	arrangements,	and	also	offer	repair	and	maintenance services	on	a	time	and	materials	basis	to	customers	that	do	not	have	service	contracts.	Internationally,	we	primarily	use	distributors,	sales	representatives	and	third parties	to	provide	maintenance	service	for	our	products.

As	of	October	25,	2009,	we	employed	approximately	627	people	as	field	service	engineers,	internal	technical	support	personnel	and	related	administrative personnel.

# Competition

The	healthcare	industry,	in	general,	and	the	markets	in	which	our	products	compete	are	highly	competitive	and	characterized	by	continual	change	and improvement	in	technology.	A	number	of	companies	have	developed,	or	are	expected	to	develop	products	that	compete	or	will	compete	with	our	products.	Many	of	these competitors	offer	a	range	of	products	in	areas	other	than	those	in	which	we	compete,	which	may	make	these	competitors	more	attractive	to	hospitals,	radiology	clients, group	purchasing	organizations,	laboratories,	physicians	and	other	potential	customers.	In	addition,	many	of	our	competitors	and	potential	competitors	are	larger	and have	greater	financial	resources	than	we	do	and	offer	a	range	of	competitive	products	broader	than	our	products.	Some	of	the	companies	with	whom	we	compete	have	or may	have	more	extensive	research,	sales,	marketing	and	manufacturing	capabilities	and	significantly	greater	technical	and	personnel	resources	than	we	do,	and	may	be better	positioned	to	continue	to	improve	their	technology	in	order	to	compete	in	an	evolving	industry.	Competitors	may	develop	superior	products	or	products	of	similar quality	for	sale	at	the	same	or	lower	prices.	Moreover,	our	products	could	be	rendered	obsolete	by	new	industry	standards	or	changing	technology.	We	cannot	assure that	we	will	be	able	to	compete	successfully	with	existing	or	new	competitors.

Our	mammography	and	related	products	and	subsystems	compete	on	a	worldwide	basis	with	products	offered	by	a	number	of	competitors,	including	GE, Siemens,	Philips,	PlanMed,	Agfa,	Carestream	Health,	Fuji,	IMS	Giotto,	Sectra	and	Toshiba.	Our	Selenia	full	field	digital	mammography	system	competes	with	products such	as	GE's	and	Siemens'	full	field	digital	mammography	systems,	as	well	as	Fuji's	Computed	Radiography	("CR")	mammography	system,	a	lower-priced	alternative to	digital	mammography.	Agfa,	Carestream	Health,	Cedara	and	Sectra	have	introduced	mammography	workstations	and	are	marketing	these	in	competition	with	our	line of	radiologist	review	stations.	Other	companies	are	marketing	digital	mammography	systems	or	technologies	in	Europe	and	other	international	markets	and	have	or	are expected	to	apply	for	FDA	clearance	in	the	U.S.	The	FDA	has	announced	its	intent	to	reclassify	full	field	digital	mammography	systems	from	Class	III	to	Class	II devices.	A	FDA	panel	meeting	was	held	on	November	17,	2009	to	review	public	comments	on	the	proposed	FFDM	guidance.	As	a	result,	these	systems	are	expected	to become	eligible	for	clearance	for	commercialization	through	the	FDA's	510(k)	process	rather	than	the	more	rigorous	pre-market	approval	process,	which	may	increase the	number	of	competitors	entering	the	United	States	market.	We	anticipate	that	competition	in	the	digital	mammography	market	will	intensify.

While	we	offer	a	broad	product	line	of	breast	imaging	and	related	products,	we	compete	most	effectively	in	the	high-end	segment	of	the	mammography	market. We	believe	that	our	continued	success	will	depend	upon	the	continued	success	of	our	Selenia	full	field	digital	mammography	system,	as	well	as	our	ability	to	maintain our	technology	leadership	through	product	enhancements	and	the	development	of	new	products	and	technologies,	such	as	our	Dimensions	breast	tomosynthesis (3D)	product,	which	we	recently	introduced	in	Europe	and	Canada.	We	have	also	introduced	this	product	for	2D	applications	in	the	United	States.	We	are	continuing	our clinical	trials	to	support	our	PMA	application	to	market	the	3D	configuration	of	this	product	in	the	United	States.

The	primary	competitor	for	our	biopsy	and	tissue	extraction	product	line	is	Ethicon,	a	Johnson	&	Johnson	company.	While	there	are	many	companies	in	the biopsy	device	market,	other	principal	competitors	include	SenoRx,	Bard	and	Cardinal.	In	addition,	emerging	companies	like	Sanarus	and	Intact	Medical	all	share	some 11

smaller	portion	of	the	biopsy	device	market.	We	believe	that	competition	for	our	biopsy	and	tissue	extraction	product	line	is	based	largely	on	tissue	sampling	quality, product	features,	ease	of	use,	product	reliability	and	price.

Our	MammoSite	system	faces	competition	from	more	commonly-known	alternatives,	such	as	treatments	using	external	beam	whole	breast	radiation,	which	has longer-term	data	on	patient	outcomes,	and	recent	market	entrants	such	as	SenoRx,	Inc.	and	Cianna	Medical,	which	offer	multi-lumen	products	that	may	support	higher reimbursement	rates	for	radiation	oncology	users.	We	believe	that	we	will	be	able	to	compete	more	effectively	against	these	multi-lumen	products	with	the	introduction of	our	multi-lumen	MammoSite	ML	product.	Internationally,	our	MammoSite	product	faces	competition	from	traditional	mastectomy,	whole	breast	radiation	therapy after	lumpectomy,	and	a	more	radical	breast-conserving	procedure	called	a	quadrantectomy.	Additional	radiation	therapy	methods,	such	as	intraoperative	radiation therapy,	are	being	used	in	Europe	by	some	institutions;	however,	such	alternative	methods	have	not	yet	achieved	widespread	commercial	use.

Our	ThinPrep	liquid-based	slide	preparation	faces	direct	competition	in	the	United	States	primarily	from	Becton,	Dickinson	and	Company,	which	manufactures liquid-based	slide	preparation	systems	and	slide	imaging	systems.	We	also	compete	with	the	conventional	Pap	smear	and	other	alternative	methods	for	detecting	cervical cancer	and/or	its	precursors.	Our	products	compete	on	the	basis	of	a	number	of	factors,	including	clinical	performance,	product	quality,	marketing	and	sales	capabilities, manufacturing	efficiency,	price	and	customer	service	and	support.	Internationally,	our	ThinPrep	product	competes	with	a	variety	of	companies	and	other	"off-market" (non-FDA-approved)	tests,	since	fewer	regulatory	barriers	exist	in	Europe	as	compared	to	the	United	States.

With	our	Rapid	Fetal	Fibronectin	Test,	we	are	currently	the	only	provider	of	a	molecular	test	for	predicting	the	risk	of	preterm	birth.	However,	this	product	could experience	competition	from	companies	that	manufacture	and	market	pregnancy-related	diagnostic	products	and	services.	In	addition,	healthcare	providers	use diagnostic	techniques	such	as	clinical	examination	and	ultrasound	to	diagnose	the	likelihood	of	preterm	birth.	Healthcare	providers	may	choose	to	continue	using	these techniques	to	assess	their	patients,	rather	than	use	the	Rapid	Fetal	Fibronectin	Test.	They	may	also	choose	to	use	these	techniques	in	conjunction	with	our	Rapid	Test	to predict	preterm	birth.

In	the	molecular	diagnostics	market,	our	Invader	products	compete	with	many	companies	in	the	U.S.	and	abroad	engaged	in	the	development,	commercialization and	distribution	of	similar	products	intended	for	clinical	molecular	diagnostic	applications.	These	companies	may	have	or	develop	products	competitive	with	the products	offered	by	us.	Clinical	laboratories	also	may	offer	testing	services	that	are	competitive	with	our	products.	Clinical	laboratories	may	use	reagents	purchased from	us	or	others	to	develop	their	own	diagnostic	tests.	Such	laboratory-developed	tests	may	not	be	subject	to	the	same	requirements	for	clinical	trials	and	FDA submission	requirements	that	may	apply	to	our	products.

In	the	clinical	market,	we	compete	with	several	companies	offering	alternative	technologies	to	the	Invader	chemistry	including	Abbott	Laboratories,	Siemens, Becton,	Dickinson	and	Company,	Qiagen,	Roche	Diagnostics	Corporation,	Gen-Probe,	Applera	Corporation,	Applied	Biosystems,	Celera,	Innogenetics,	Inc.,	and Luminex	Corporation.	Our	Cervista	HPV	tests,	which	were	approved	by	the	FDA	in	March	2009,	compete	with	a	test	marketed	by	Qiagen,	which	received	FDA approval	in	1999.	We	believe	the	primary	competitive	factors	of	our	Invader	products	are	their	performance,	reliability,	cost	and	ease	of	use,	standardization	and	our market	position.	However,	we	believe	the	successful	completion	of	our	initiative	of	automating	our	laboratory	products,	including	our	Cervista	HPV	tests,	will	be essential	to	securing	the	higher	volume	laboratories	as	customers.

Our	NovaSure	System	currently	faces	direct	competition	from	Johnson	&	Johnson,	Boston	Scientific,	and	American	Medical	Systems,	Inc.,	each	of	which currently	markets	an	FDA-approved	"second	generation"	endometrial	ablation	device	for	the	treatment	of	excessive	menstrual	bleeding.	In	addition	to	these	devices, there	exist	alternative	treatments	to	our	NovaSure	System,	such	as	drug	therapy,	hysterectomy,	dilation	and	curettage

and	rollerball	ablation.	Internationally	our	products	compete	with	drug	therapy,	as	well	as	other	endometrial	ablation	devices,	including	Johnson	&	Johnson's Thermachoice,	Boston	Scientific's	HTA,	and	two	other	relatively	small	companies	that	market	products	that	are	not	FDA	approved.	Because	drug	therapy	is	an alternative	to	our	NovaSure	procedure,	NovaSure's	competitors	also	include	many	major	pharmaceutical	companies	that	manufacture	hormonal	drugs	for	women.	We believe	that	the	initial	success	of	our	NovaSure	product	has	been	primarily	based	upon	its	efficacy,	ease	of	use,	including	limited	patient	pre-treatment	requirements,	and patient	recovery.

Our	Adiana	System	is	the	only	non-incisional,	non-hormonal	permanent	contraception	method	available	that	does	not	leave	metal	in	the	uterus	that	might	limit future	options	for	gynecological	tests	or	procedures.	Our	Adiana	product	will	compete	directly	with	Conceptus,	Inc.'s	Essure	product,	which	is	the	only	other	option	for hysteroscopic	sterilization	on	the	market.	We	believe	the	Adiana	System	has	significant	advantages	in	safety	and	ease	of	use.	In	addition,	the	Adiana	System	will compete	with	traditional	permanent	contraception	methods,	such	as	tubal	ligation	and	vasectomy,	as	well	as	with	other	products	used	for	temporary	birth	control methods,	such	as	diaphragms,	condoms,	spermicides,	birth	control	pills	and	IUDs.

GE	is	the	primary	competitor	for	our	skeletal	health	products.	We	believe	that	competition	in	our	skeletal	health	markets	is	based	upon	product	versatility	and features,	price,	precision,	speed	of	measurement,	reputation,	cost	and	ease	of	operation,	product	reliability	and	quality	of	service.

# Manufacturing

We	have	historically	purchased	many	of	the	components	and	raw	materials	used	in	our	products	from	numerous	suppliers	worldwide.	For	reasons	of	quality assurance,	sole	source	availability	or	cost	effectiveness,	certain	components	and	raw	materials	used	in	the	manufacture	of	our	products	are	available	only	from	a	sole supplier.	We	have	worked	closely	with	our	suppliers	to	develop	contingency	plans	to	assure	continuity	of	supply	while	maintaining	high	quality	and	reliability,	and	in some	cases,	we	have	established	long-term	supply	contracts	with	our	suppliers.	In	certain	instances,	we	have	developed	the	in-house	capability	necessary	to	offset potential	shortages	caused	by	sole	source	suppliers.	Due	to	FDA	requirements	applicable	to	the	manufacturing	of	our	products,	we	may	not	be	able	to	quickly	establish additional	or	replacement	sources	for	certain	components	or	materials.	In	the	event	that	we	are	unable	to	obtain	sufficient	quantities	of	raw	materials	or	components	on commercially	reasonable	terms	or	in	a	timely	manner,	our	ability	to	manufacture	our	products	on	a	timely	and	cost-competitive	basis	may	be	compromised,	which	may have	a	material	adverse	effect	on	our	business,	financial	condition	and	results	of	operations.

We	manufacture	our	direct	radiography	detectors	at	our	manufacturing	facilities	in	Newark,	Delaware	and	Warstein,	Germany.	We	manufacture	substantially	all of	our	mammography	and	certain	of	our	breast	biopsy	systems	at	our	manufacturing	facilities	in	Danbury,	Connecticut.	We	manufacture	our	CAD	line	of	products,	the SecurView	Work	Stations,	our	osteoporosis	assessment	and	our	mini	C-arm	imaging	systems	at	our	headquarters	in	Bedford,	Massachusetts.	We	continue	to	develop	our software	for	our	CAD	products	at	our	Santa	Clara,	California	facility.	The	MammoPad	breast	cushion	is	manufactured	by	third	parties	and	drop-shipped	from	our suppliers	directly	to	our	customers.	Our	breast	biopsy	disposable	products	are	manufactured	in	Indianapolis,	Indiana.	Our	ATEC	control	consoles	for	breast	biopsy	are manufactured	by	a	third	party,	with	quality	control	performed	by	our	employees.

Our	ThinPrep	Processors	and	ThinPrep	Imaging	Systems	are	assembled	at	our	facility	in	Marlborough,	Massachusetts.	Our	ThinPrep	PreservCyt	vials	are	filled at	our	facility	in	Londonderry,	New	Hampshire.	Our	ThinPrep	System	filters	are	manufactured	at	both	our	Marlborough	and	Londonderry	facilities.	The	manufacture	of our	NovaSure	disposable	devices	has	been	transferred	to	our	new	facility	in	Coyol,	Costa	Rica.	We	also	transferred	production	of	the	RF	Controller	component	of	our NovaSure	System	from	an	electronics	contract	manufacturer	to	our	Marlborough	facility.	We	contract	with	several	third-parties	to	manufacture	certain	components	of our	MammoSite	System,	and	we	complete	the	manufacturing	process	at	our	Costa	Rica	and/or

Marlborough	locations,	depending	on	the	configuration.	We	recently	transferred	the	manufacturing	of	our	Adiana	System	to	our	new	manufacturing	facility	in	Coyol, Costa	Rica,	and	we	are	in	the	process	of	ramping	up	production	to	support	the	full	scale	launch	of	this	product.	We	could	incur	delays	and	unanticipated	costs	in connection	with	our	transfer	and	ramping	up	these	manufacturing	operations	to	our	new	facility	that	could	delay	our	full	scale	launch	of	the	Adiana	System.

We	manufacture	our	molecular	diagnostics	products	at	our	facility	in	Madison,	Wisconsin	and	source	certain	components	from	various	contract	manufacturers.

# Backlog

Our	backlog	as	of	November	7,	2009	totaled	$304.8	million	and	as	of	November	9,	2008	totaled	$356.7	million.	Backlog	consists	of	customer	orders	for	which	a delivery	schedule	within	the	next	twelve	months	has	been	specified.	Orders	included	in	backlog	may	be	canceled	or	rescheduled	by	customers	without	significant penalty.	Backlog	as	of	any	particular	date	should	not	be	relied	upon	as	indicative	of	our	net	revenues	for	any	future	period.

# Research	and	Development

Our	research	and	development	efforts	are	focused	on	the	further	development	and	improvement	of	our	existing	products	as	well	as	the	engineering	and	design	of new	innovative	medical	diagnostic	and	interventional	devices,	therapeutic	applications	and	end	use	systems	focused	on	women's	health.	During	fiscal	2009,	our development	projects	included	the	ongoing	development,	clinical	trials	and	other	support	for	the	FDA	clearance	or	approval	process	for	our	Dimensions,	Adiana	System, Cervista	HPV	HR	and	Cervista	HPV	16/18	and	MammoSite	ML	products	as	well	as	the	development	of	improvements	to,	or	next	generation	products,	for	our	other product	lines.	We	anticipate	continuing	research	and	development	to	support	these	ongoing	efforts.

In	addition	to	product	development,	our	research	and	development	personnel	play	an	active	role	in	the	review	of	product	specifications,	clinical	protocols	and FDA	submissions,	as	well	as	ensuring	that	certain	of	our	products	conform	to	European	health,	safety	and	environmental	requirements	(CE	marking).	Our	research	and development	expenses	were	$94.3	million	in	fiscal	2009,	$81.4	million	in	fiscal	2008	and	$44.4	million	in	fiscal	2007.

# Patents	and	Proprietary	Rights

We	rely	primarily	on	a	combination	of	trade	secrets,	patents,	copyright	and	trademark	laws,	and	confidentiality	procedures	to	protect	our	technology.	Due	to	the rapid	technological	changes	that	characterize	the	markets	we	operate	in,	we	believe	that	the	improvement	of	existing	products,	reliance	upon	trade	secrets	and	unpatented proprietary	know-how	and	the	development	of	new	products	are	generally	as	important	as	patent	protection	in	establishing	and	maintaining	a	competitive	advantage. Nevertheless,	we	have	obtained	patents	and	will	continue	to	make	efforts	to	obtain	patents,	when	available,	in	connection	with	our	product	development	program.

We	own	numerous	U.S.	patents	and	have	applied	for	numerous	additional	U.S.	patents	relating	to	our	technologies.	We	also	own	or	have	applied	for corresponding	patents	in	selected	foreign	countries.	These	patents	relate	to	various	aspects	of	most	of	our	products.	We	do	not	know	if	current	or	future	patent applications	will	be	issued	with	the	scope	of	the	claims	sought,	if	at	all,	or	whether	any	patents	issued	will	be	challenged	or	invalidated.	There	is	a	risk	that	our	patent applications	will	not	be	granted	or	that	the	patent	or	patent	application	will	not	provide	significant	protection	for	our	products	and	technology.	Unauthorized	third	parties may	infringe	our	intellectual	property	rights,	copy	or	reverse	engineer	portions	of	our	technology.	Our	competitors	may	independently	develop	similar	technology	that our	patents	do	not	cover.	In	addition,	because	patent	applications	in	the	U.S.	are	not	generally	publicly	disclosed	until	eighteen	months	after	the	application	is	filed, applications	may	have	been	filed	by	third	parties	that	relate	to	our	technology.	Moreover,	there	is	a	risk	that	foreign

intellectual	property	laws	will	not	protect	our	intellectual	property	rights	to	the	same	extent	as	intellectual	property	laws	in	the	U.S.	The	rights	provided	by	a	patent	are finite	in	time.	Over	the	coming	years,	certain	patents	relating	to	current	products	will	expire	in	the	U.S.	and	abroad	thus	allowing	third	parties	to	utilize	certain	of	our technologies.	In	the	absence	of	significant	patent	protection,	we	may	be	vulnerable	to	competitors	who	attempt	to	copy	our	products,	processes	or	technology.

In	addition	to	the	patents	we	have	been	issued	or	we	have	acquired,	we	license	patents	from	others	on	a	variety	of	terms	and	conditions.

We	are	engaged	in	intellectual	property	litigation	as	described	in	Item	3,	Legal	Proceedings,	and	may	be	notified	in	the	future	of	claims	that	we	may	be	infringing intellectual	property	rights	possessed	by	other	third	parties.	In	connection	with	any	such	litigation	or	if	any	claims	are	asserted	against	us	or	our	products,	we	may	seek	to enter	into	settlement	and/or	licensing	arrangements.	There	is	a	risk	in	these	situations	that	no	license	will	be	available	or	that	a	license	will	not	be	available	on	reasonable terms.	Alternatively,	we	may	decide	to	litigate	such	claims	or	to	design	around	the	patented	technology.	These	actions	could	be	costly	and	would	divert	the	efforts	and attention	of	our	management	and	technical	personnel.	As	a	result,	any	infringement	claims	by	third	parties	or	other	claims	for	indemnification	by	customers	resulting from	infringement	claims,	whether	or	not	proven	to	be	true,	may	harm	our	business	and	prospects.

# Regulation

The	manufacture,	sale,	lease	and	service	of	medical	diagnostic	and	surgical	devices	and	pharmaceutical	products	intended	for	commercial	use	are	subject	to extensive	governmental	regulation	by	the	FDA	in	the	United	States	and	by	a	variety	of	regulatory	agencies	in	other	countries.	Under	the	Federal	Food,	Drug	and Cosmetic	Act,	known	as	the	FD&C	Act,	manufacturers	of	medical	products	and	devices	must	comply	with	certain	regulations	governing	the	design,	testing, manufacturing,	packaging,	servicing	and	marketing	of	medical	products.	Some	of	our	products	are	also	subject	to	the	Radiation	Control	for	Health	and	Safety	Act, administered	by	the	FDA,	which	imposes	performance	standards	and	record	keeping,	reporting,	product	testing	and	product	labeling	requirements	for	devices	that	emit radiation,	such	as	x-rays.

The	FDA	generally	must	clear	the	commercial	sale	of	new	medical	devices.	Commercial	sales	of	our	medical	devices	within	the	United	States	must	be	preceded by	either	a	pre-market	notification	filing	pursuant	to	Section	510(k)	of	the	FD&C	Act	or	the	granting	of	a	pre-market	approval	("PMA").	A	510(k)	pre-market notification	filing	must	contain	information	establishing	that	the	device	to	be	sold	is	substantially	equivalent	to	a	device	commercially	distributed	prior	to	May	28,	1976.

The	PMA	procedure	involves	a	complex	and	lengthy	testing	and	review	process	by	the	FDA	and	may	require	several	years	to	obtain.	We	may	need	to	first	obtain an	investigational	device	exemption,	known	as	an	IDE,	in	order	to	conduct	extensive	clinical	testing	of	the	device	to	obtain	the	necessary	clinical	data	for	submission	to the	FDA.	The	FDA	will	grant	a	PMA	only	if	after	evaluating	clinical	data	it	finds	that	the	safety	and	effectiveness	of	the	product	has	been	sufficiently	demonstrated.	This approval	may	restrict	the	number	of	devices	distributed	or	require	additional	patient	follow-up	for	an	indefinite	period	of	time.	In	fiscal	2009,	we	received	PMA's	for Cervista	HPV	HR,	Cervista	HPV	16/18,	and	the	Adiana	System,	and	we	received	510(k)	clearance	for	MammoSite	ML.	In	addition,	we	are	conducting	additional clinical	trials	to	support	our	PMA	application	for	our	Dimensions	3D	system	configuration	for	tomosynthesis.	We	cannot	assure	when	we	will	complete	these	additional clinical	trails,	whether	the	results	of	the	clinical	trials	will	be	viewed	as	sufficient	by	the	FDA	to	support	our	application,	whether	or	when	the	FDA	may	approve	our PMA,	if	at	all,	or	the	conditions	for	use	that	may	be	imposed	by	the	FDA	if	and	when	the	application	is	approved.

Sales	of	medical	devices	outside	of	the	United	States	are	subject	to	foreign	regulatory	requirements	that	vary	widely	from	country	to	country.	The	time	required	to obtain	approval	from	a	foreign	country	to	market	and	sell	our	products	may	be	longer	or	shorter	than	that	required	for	FDA	approval	and	the	requirements	may	differ.	In addition,	we	may	be	required	to	meet	the	FDA's	export	requirements	or	receive	FDA	export	approval	for	export	of	our	products	to	foreign	countries.	Moreover,	some	of our	technology	is	governed	by	the	International	Traffic	in	Arms	Regulations	of	the	United	States	Department	of	State.	As	a	result,	the	export	of	some	of	our	systems	to some	countries	may	be	limited	or	prohibited.

On	May	23,	2006,	the	FDA	Radiological	Devices	Panel	recommended	the	reclassification	of	full	field	digital	mammography	systems	from	Class	III	to	Class	II devices.	The	reclassification	would	result	in	these	systems	being	cleared	for	commercialization	through	the	510(k)	process.	This	may	result	in	more	competitors	entering the	United	States	market.	The	FDA	has	issued	a	guidance	document	on	full	field	digital	mammography	for	public	comment.	It	is	not	possible	to	predict	if	and	when	the reclassification	will	occur.	A	FDA	panel	meeting	was	held	on	November	17,	2009	to	review	public	comments	on	the	proposed	FFDM	guidance.

Our	manufacturing	processes	and	facilities	are	subject	to	continuing	review	by	the	FDA	and	foreign	governments	or	their	representatives.	Adverse	findings	could result	in	various	actions	against	us,	including	withdrawal	of	approvals	and	product	recall.

The	laboratories	that	purchase	our	ThinPrep	System,	ThinPrep	Imaging	System	and	the	Rapid	Fetal	Fibronectin	Test	are	subject	to	extensive	regulation	under	the Clinical	Laboratory	Improvement	Amendments	of	1988	("CLIA"),	which	requires	laboratories	to	meet	specified	standards	in	the	areas	of	personnel	qualifications, administration,	participation	in	proficiency	testing,	patient	test	management,	quality	control,	quality	assurance	and	inspections.	We	believe	that	the	ThinPrep	System (including	the	ThinPrep	Imaging	System)	and	the	Rapid	Test	operate	in	a	manner	that	will	allow	laboratories	purchasing	these	products	to	comply	with	CLIA requirements.	However,	we	cannot	assure	that	adverse	interpretations	of	current	CLIA	regulations	or	future	changes	in	CLIA	regulations	would	not	have	an	adverse effect	on	sales	of	the	ThinPrep	System,	ThinPrep	Imaging	System	and	the	Rapid	Fetal	Fibronectin	Test.

The	majority	of	the	current	clinical	diagnostic	products	we	acquired	as	part	of	the	Third	Wave	acquisition	were	sold	as	Analyte	Specific	Reagents,	known	as ASRs.	The	FDA	restricts	the	sale	of	these	products	to	clinical	laboratories	certified	under	CLIA	to	perform	high	complexity	testing	and	also	restricts	the	types	of products	that	can	be	sold	as	ASRs.	In	2006,	followed	by	additional	clarification	in	2007,	the	FDA	issued	guidance	concerning	acceptable	examples	of	reagents	that	meet the	threshold	of	the	ASR	regulations.	In	this	guidance,	the	FDA	outlined	examples	of	products	and	marketing	practices	that	go	beyond	the	scope	of	the	ASR	regulations making	the	reagent	part	of	a	test	system	potentially	subject	to	premarket	review.	These	examples	include	combining,	or	promoting	for	use,	a	single	ASR	with	another product	such	as	other	ASRs,	general	purpose	reagents,	controls,	laboratory	equipment,	software,	etc.,	or	promoting	an	ASR	with	specific	analytical	or	performance claims,	instructions	for	use	in	a	particular	test,	or	instructions	for	validation	of	a	specific	test	using	the	ASR.	As	a	result	of	this	recent	guidance	we	have	taken	steps	to comply	with	the	guidance.	This	resulted	in	discontinuing	certain	Third	Wave	products	that	were	previously	sold	as	ASRs.	We	have	applied	for	investigational	device exemptions	for	the	remaining	products	which	will	permit	continued	commercialization.	There	is	no	assurance	that	the	FDA	will	grant	such	exemptions,	in	which	case	we may	be	required	to	discontinue	sales	of	the	product	if	it	does	not	otherwise	qualify	for	use	as	an	ASR.

We	cannot	assure	that	the	FDA	or	foreign	regulatory	agencies	will	give	the	requisite	approvals	or	clearances	for	any	of	our	medical	devices	under	development	on a	timely	basis,	if	at	all.	Moreover,	after	clearance	is	given,	these	agencies	can	later	withdraw	the	clearance	or	require	us	to	change	the	device	or	its	manufacturing	process or	labeling,	to	supply	additional	proof	of	its	safety	and	effectiveness,	or	to	recall,	repair,	replace	or	refund	the	cost	of	the	medical	device,	if	it	is	shown	to	be	hazardous	or defective.	The	process	of	obtaining	clearance	to	market	products	is	costly	and	time-consuming	and	can	delay	the	marketing	and	sale	of	our	products.

We	are	subject	to	various	federal	and	state	laws	pertaining	to	healthcare	fraud	and	abuse,	including	federal	and	state	anti-kickback	laws,	as	well	as	the	Foreign Corrupt	Practices	Act.	Anti-kickback	laws	make	it	illegal	for	an	entity	to	solicit,	offer,	receive,	or	pay	remuneration	or	anything	of	value	in	exchange	for,	or	to	induce, the	referral	of	business	or	the	purchasing,	leasing,	ordering,	or	arranging	for	or	recommending	the	purchase,	lease	or	order	of	any	item	or	service	paid	for	by	Medicare, Medicaid	or	certain	other	federal	healthcare	programs.	The	statute	has	been	broadly	interpreted	to	cover	a	wide	array	of	practices.	Some	states	have	passed	similar	laws. The	federal	government	has	published	regulations	that	identify	"safe	harbors,"	which	if	applicable	will	assure	that	certain	arrangements	will	not	be	found	to	violate	the federal	anti-kickback	statutes.	Our	activities	relating	to	the	sale	and	marketing	of	our	products	may	be	subject	to	scrutiny	under	these	laws.	While	we	make	every	effort to	comply	with	the	regulations,	it	is	possible	that	our	practices	might	be	challenged	under	federal	anti-kickback	or	similar	laws	due	to	the	breadth	of	the	statutory provisions	and	the	absence	of	extensive	guidance	regarding	compliance.	Violations	of	these	laws	may	be	punishable	by	criminal	and/or	civil	sanctions,	including	fines and	civil	monetary	penalties,	as	well	as	the	possibility	of	exclusion	from	federal	healthcare	programs	(including	Medicare	and	Medicaid).	If	the	government	were	to	raise questions	about	our	behavior	or	find	that	we	have	violated	these	laws,	there	could	be	a	material	adverse	effect	on	our	business.	Our	activities	could	be	subject	to challenge	for	the	reasons	discussed	above,	due	to	the	broad	scope	of	these	laws	and	the	increasing	attention	being	given	to	them	by	law	enforcement	authorities.

We	are	also	subject	to	numerous	federal,	state	and	local	laws	relating	to	safe	working	conditions,	manufacturing	practices,	environmental	protection,	fire	hazard control	and	disposal	of	hazardous	or	potentially	hazardous	substances,	among	others.	We	may	be	required	to	incur	significant	costs	to	comply	with	these	laws	and regulations	in	the	future,	and	complying	with	these	laws	may	result	in	a	material	adverse	effect	upon	our	business,	financial	condition	and	results	of	operations.

Federal,	state	and	foreign	regulations	regarding	the	manufacture	and	sale	of	medical	devices	and	pharmaceuticals	are	subject	to	future	change.	We	cannot	predict what	impact,	if	any,	such	changes	might	have	on	our	business.

# Reimbursement

In	the	U.S.,	the	Centers	for	Medicare	&	Medicaid	Services,	known	as	CMS,	establishes	policies	for	the	coverage	and	reimbursement	of	Medicare	and	Medicaid beneficiaries.	Under	current	CMS	policies,	varying	reimbursement	levels	have	been	established	for	bone	density	assessment,	endometrial	ablations,	mammography	and other	imaging,	diagnostic	tests	and	surgical	procedures	performed	using	our	products.	Coverage	policies	for	Medicare	patients	may	vary	by	regional	Medicare	carrier	in the	absence	of	a	National	Coverage	Decision	and	reimbursement	rates	for	procedures	will	vary	based	on	the	geographic	price	index.	Coverage	and	reimbursement	for patients	with	private	insurance	is	dependent	on	the	individual	private	payer's	decisions	and	may	not	follow	the	policies	and	rates	established	by	CMS	for	Medicare. Moreover,	private	insurance	carriers	may	choose	not	to	follow	the	CMS	reimbursement	policies.	The	use	of	our	products	outside	the	U.S.	is	similarly	affected	by reimbursement	policies	adopted	by	foreign	regulatory	and	insurance	carriers.

In	October	2009,	CMS	announced	2010	reimbursement	rates	for	physician,	hospital	and	ambulatory	surgical	center	payments.	CMS	also	implemented	provisions of	the	Deficit	Reduction	Act	of	2005	related	to	certain	medical	imaging	procedures.	For	2010,	the	downward	adjustments	that	affect	our	products	include	an approximate	11%	decline	in	reimbursement	for	CAD,	and	an	approximate	14%	reduction	in	bone	density	assessments	for	osteoporosis	rates.	The	CMS	reductions	that would	affect	the	reimbursement	for	the	use	of	our	products	also	include	a	general	reduction	of	21%	in	the	Sustainable	Growth	Rate	("SGR")	factor.	This	factor	is	used by	CMS	in	a	formula	to	determine	doctor	reimbursements.	Congress	has,	from	time	to	time,	overridden	some	or	all	of	the	proposed	reductions	in	reimbursement,	and there	is	pending	legislation	to	freeze	the	SGR	for	2010	which	would	eliminate	this	potential	decrease.	However,	we	cannot	assure	that	Congress	will	override	any	part	of the	recent	proposed	reductions.	Significant	reductions	in	reimbursement	rates	proposed	or	implemented	for	the	use	of	any	our	products	has	had	and	may	continue	to have	a	material	adverse	affect	on	the	sales	of	those	products.

Political,	economic	and	regulatory	influences	may	subject	the	healthcare	industry	to	fundamental	changes.	We	anticipate	that	the	current	administration,	Congress and	certain	state	legislatures	will	continue	to	review	and	assess	alternative	healthcare	delivery	systems	and	payment	methods	with	an	objective	of	ultimately	reducing healthcare	costs	and	expanding	access.	The	uncertainties	regarding	the	ultimate	features	of	reform	initiatives	and	their	enactment	and	implementation	may	have	an adverse	effect	on	our	customers'	purchasing	decisions	regarding	our	products.	At	this	time,	we	cannot	predict	which,	if	any,	healthcare	reform	proposals	will	be	adopted, when	they	may	be	adopted	or	what	impact	they	may	have	on	our	business.

# Employees

As	of	October	25,	2009,	we	had	approximately	3,959	full-time	employees,	including	1,473	in	manufacturing	operations,	390	in	research	and	development,	1,631 in	marketing,	sales	and	support	services,	and	465	in	finance	and	administration.	The	non-management	employees	of	our	subsidiary,	AEG,	are	represented	by	a	union. AEG's	approximate	236	non-management	German	employees	were	subject	to	collective	bargaining	agreements	negotiated	on	a	national	and	regional	basis	between Unternehmens-Verband	Südöstliches	Westfalen	e.V.,	the	Employers	Association	of	North	Rhine-Westphalia,	and	the	German	Metal	Workers	Union,

IndustrieGewerkschaft	Metall.	In	addition,	AEG's	German	employees	are	represented	by	a	works	council,	a	Betriebsrat,	with	respect	to	various	shop	agreements	for social	matters	and	working	conditions.	By	Chinese	law,	all	labor	contracts	of	the	non-management	employees	of	AEG's	Chinese	subsidiary	are	registered	at	the	labor department	of	the	local	authorities,	but	are	currently	not	members	of	the	labor	union.	During	the	fourth	quarter	of	fiscal	2009,	the	majority	of	these	employees	were terminated	in	connection	with	the	closure	of	our	manufacturing	facility	in	China.	We	believe	that	our	relationship	with	our	employees	is	good.	Except	as	described herein,	none	of	our	other	employees	are	represented	by	a	union.

# Item	1A. Risk	Factors

This	report	contains	forward-looking	information	that	involves	risks	and	uncertainties,	including	statements	regarding	our	plans,	objectives,	expectations	and intentions.	Such	statements	made	in	this	report	should	be	read	as	applicable	to	all	forward-looking	statements	wherever	they	appear	in	this	report.	Our	actual	results could	differ	materially	from	those	discussed	herein.	Factors	that	could	cause	or	contribute	to	such	differences	include	those	discussed	below,	as	well	as	those	discussed elsewhere	in	this	report.

# Risks	Related	to	our	Business

# The	worldwide	macroeconomic	downturn	may	adversely	affect	our	business	and	prospects.

Market	acceptance	of	our	medical	products	in	the	United	States	and	other	countries	is	dependent	upon	the	medical	equipment	purchasing	and	procurement practices	of	our	customers,	patient	demand	for	our	products	and	procedures	and	the	reimbursement	of	patient's	medical	expenses	by	government	healthcare	programs and	third-party	payors.	Since	the	end	of	calendar	2008,	the	uncertainty	surrounding	world	financial	markets	and	deteriorating	worldwide	macroeconomic	conditions have	caused	and	may	continue	to	cause	the	purchasers	of	medical	equipment	to	decrease	their	medical	equipment	purchasing	and	procurement	activities.	Additionally, constrictions	in	world	credit	markets	have	caused	and	may	continue	to	cause	our	customers	to	experience	increased	difficulty	securing	the	financing	necessary	to purchase	our	products.	Economic	uncertainty	has	and	may	result	in	cost-conscious	consumers	making	fewer	elective	trips	to	their	physicians	and	specialists,	which	in turn	would	adversely	affect	demand	for	our	products	and	procedures.	Furthermore,	governments	and	other	third	party	payors	around	the	world	facing	tightening	budgets could	move	to	further	reduce	the	reimbursement	rates	or	the	scope	of	coverage	offered,	which	could	adversely	affect	sales	of	our	products.	If	the	current	adverse macroeconomic	conditions	continue,	our	business	and	prospects	may	be	adversely	affected.

# Sales	and	market	acceptance	of	our	products	is	dependent	upon	the	coverage	and	reimbursement	decisions	made	by	third	party	payors.	The	failure	of	third party	payors	to	provide	appropriate	levels	of	coverage	and	reimbursement	for	the	use	of	our	products	and	treatments	facilitated	by	our	products	could	harm our	business	and	prospects.

Sales	and	market	acceptance	of	our	medical	products	and	the	treatments	facilitated	by	our	products	in	the	United	States	and	other	countries	is	dependent	upon	the coverage	decisions	and	reimbursement	policies	established	by	government	healthcare	programs	and	private	health	insurers.	The	costs	of	our	products	and	treatments	to customers	are	substantial,	and	market	acceptance	of	our	products	and	treatments	will	continue	to	depend	upon	our	customers'	ability	to	obtain	an	appropriate	level	of coverage	for,	and	reimbursement	from	third-party	payors	for,	these	products	and	treatments.	In	the	U.S.,	the	Centers	for	Medicare	&	Medicaid	Services,	known	as	CMS, establish	coverage	and	reimbursement	policies	for	healthcare	providers	treating	Medicare	and	Medicaid	beneficiaries.	Under	current	CMS	policies,	varying reimbursement	levels	have	been	established	for	our	products	and	treatments.	Coverage	policies	for	Medicare	patients	may	vary	by	regional	Medicare	carriers	in	the absence	of	a	National	Coverage	Decision	and	reimbursement	rates	for	treatments	may	vary	based	on	the	geographic	price	index.	Coverage	and	reimbursement	policies and	rates	applicable	to	patients	with	private	insurance	are	dependent	upon	individual	private	payor	decisions	which	may	not	follow	the	policies	and	rates	established	by CMS.	The	use	of	our	products	and	treatments	outside	the	United	States	is	similarly	affected	by	coverage	and	reimbursement	policies	adopted	by	foreign	governments and	private	insurance	carriers.

These	reductions	in	CMS	reimbursement	rates,	any	further	reductions	in	reimbursement	rates	established	by	CMS	or	other	third	party	payors,	and	any	decision	to cease	providing	coverage	for	any	of	our	products	or	treatments	by	CMS	or	other	third	party	payors	could	adversely	affect	our	business	and	prospects.

# The	uncertainty	of	healthcare	reform	could	harm	our	business	and	prospects.

In	recent	years,	the	healthcare	industry	has	undergone	significant	change	driven	by	various	efforts	to	reduce	costs,	including	efforts	at	national	healthcare	reform, trends	toward	managed	care,	cuts	in	Medicare,	consolidation	of	healthcare	distribution	companies	and	collective	purchasing	arrangements	by	office-based	healthcare practitioners.	We	anticipate	that	the	current	administration,	Congress	and	certain	state	legislatures	will	continue	to	review	and	assess	alternative	healthcare	delivery systems	and	payment	methods	with	an	objective	of	ultimately	reducing	healthcare	costs	and	expanding	access.	Public	debate	of	these	issues	will	likely	continue	in	the future.	At	this	time,	we	cannot	predict	which,	if	any,	healthcare	reform	proposals	will	be	adopted,	when	they	may	be	adopted	or	what	impact	they	may	have	on	our business.	Healthcare	reform	proposals	and	medical	cost	containment	measures	in	the	United	States	and	in	many	foreign	countries	could:

•limit	the	use	of	our	products	and	treatments;

•reduce	reimbursement	available	for	such	use;	or

•adversely	affect	the	use	of	new	therapies	for	which	our	products	may	be	targeted.

These	reforms	or	cost	containment	measures,	including	the	uncertainty	in	the	medical	community	regarding	their	nature	and	effect,	could	have	an	adverse	effect on	our	customers'	purchasing	decisions	regarding	our	products	and	treatments	and	could	harm	our	business	and	prospects.

# Changes	in	laws	affecting	the	healthcare	industry	could	adversely	affect	our	revenues	and	profitability.

We	operate	in	a	highly	regulated	industry.	As	a	result,	governmental	actions	may	adversely	affect	our	business,	operations	or	financial	condition,	including:

•	 new	laws,	regulations	or	judicial	decisions,	or	new	interpretations	of	existing	laws,	regulations	or	decisions,	related	to	health	care	availability,	method	of delivery	and	payment	for	health	care	products	and	services;

•changes	in	the	FDA	and	foreign	regulatory	approval	processes	that	may	delay	or	prevent	the	approval	of	new	products	and	treatments	and	result	in	lost market	opportunity;

•changes	in	FDA	and	foreign	regulations	that	may	require	additional	safety	monitoring,	labeling	changes,	restrictions	on	product	distribution	or	use,	or	other measures	after	the	introduction	of	our	products	and	treatments	to	market,	which	could	increase	our	costs	of	doing	business,	adversely	affect	the	future permitted	uses	of	approved	products	or	treatments,	or	otherwise	adversely	affect	the	market	for	our	products	and	treatments;

•	 new	laws,	regulations	and	judicial	decisions	affecting	pricing	or	marketing	practices;	and

•changes	in	the	tax	laws	relating	to	our	operations,	such	as	the	tax	proposal	included	in	the	health-care	reform	bill	recently	approved	the	Finance	Committee of	the	U.S.	Senate	which	would	assess	an	annual	tax	on	the	revenue	of	medical	device	manufacturers	based	upon	market	share.

# Guidelines,	recommendations	and	studies	published	by	various	organizations	can	reduce	the	use	of	our	products.

Professional	societies,	practice	management	groups,	private	health/science	foundations,	and	organizations	involved	in	healthcare	issues	may	publish	guidelines, recommendations	or	studies	to	the	healthcare	and	patient	communities	from	time	to	time.	Recommendations	of	government	agencies	or	these	other	groups/organizations may	relate	to	such	matters	as	usage,	cost-effectiveness,	and	use	of	related	therapies.	Organizations	like	these	have	in	the	past	made	recommendations	about	our	products and	those	of	our	competitors.	Recommendations,	guidelines	or	studies	that	are	followed	by	patients	and	healthcare	providers	could	result	in	decreased	use	of	our products.	For	example,	recently,	the	American	College	of	Obstetricians	and	Gynecologists	changed	their	recommendations	for	pap	smear	screening,	and	the	United States	Preventive	Services	Task	Force	changed	their	recommendations	for	mammography	screening.	These	new	recommendations,	if	implemented,	could	significantly reduce	the	amount	of	screening	using	our	ThinPrep,	mammography	and	related	products	and	adversely	affect	the	sale	of	those	products.	Moreover,	the	perception	by	the investment	community	or	stockholders	that	recommendations,	guidelines	or	studies	will	result	in	decreased	use	of	our	products	could	adversely	affect	prevailing	market price	for	our	common	stock.

# Our	long-term	success	will	depend	upon	our	ability	to	successfully	develop	and	commercialize	new	products	and	treatments	and	enhance	our	existing	products and	treatments.

We	are	expending	significant	resources	on	our	continuing	research	and	development	programs	which	are	designed	to	develop	new	products	and	treatments	and	to enhance	and	improve	our	existing	products	and	treatments.	The	successful	development	of	our	products	and	product	enhancements	is	subject	to	numerous	risks,	both known	and	unknown,	including:

•	 unanticipated	delays	in	development	or	the	FDA's	approval	or	clearance	process;

•access	to	capital;

# •	 budget	overruns;

•third	party	intellectual	property;

# •technical	problems;	and

•	 other	difficulties	that	could	result	in	the	abandonment	or	substantial	change	in	the	design,	development	and	commercialization	of	these	new	products, including,	for	example,	changes	requested	by	the	FDA	in	connection	with	pre-market	approval	applications	for	products	or	510(k)	clearance.

Given	the	uncertainties	inherent	with	product	development,	introduction,	and	enhancement	our	efforts	may	not	be	completed	on	a	timely	basis	or	within	budget,	if at	all.	Our	failure	to	develop	new	products	and	product	enhancements,	such	as	our	digital	mammography	tomosynthesis	product,	on	a	timely	basis	or	within	budget,	if	at all,	could	harm	our	business	and	prospects.

# If	we	fail	to	achieve	and	maintain	the	high	manufacturing	standards	that	our	products	require,	we	may	not	be	successful	in	developing	and	marketing	those products.

The	manufacture	of	many	of	our	products	is	highly	complex	and	requires	precise	high	quality	manufacturing	that	is	difficult	to	achieve.	We	have	in	the	past	and may	in	the	future	experience	difficulties	in	manufacturing	our	products	in	sufficient	quantities.	These	difficulties	have	primarily	related	to	delays	and	difficulties associated	with	ramping	up	production	of	newly	introduced	products.	Our	difficulties	may	lead	to	increased	delivery	lead-times	and	increased	costs	of	manufacturing these	products.	Our	failure,	including	the	failure	of	our	contract	manufacturers,	to	achieve	and	maintain	the	required	high	manufacturing	standards	could	result	in	further delays	or	failures	in	product	testing	or	delivery,	cost	overruns,	product	recalls	or	withdrawals,	increased	warranty	costs	or	other	problems	that	could	harm	our	business and	prospects.

# Problems	with	manufacturing	could	result	in	our	inability	to	deliver	products,	inventory	shortages,	product	recalls	and	increased	costs.

We	manufacture	our	own	commercial	requirements	for	all	of	our	products	except	the	Mammopad.	Certain	of	our	products	are	difficult	to	manufacture	and problems	in	our	manufacturing	processes	can	occur,	resulting	in	product	defects	or	contamination,	shipment	delays	and	recalls.	These	events	could	result	in	lower revenues	and	loss	of	market	share	as	well	as	result	in	inventory	write-offs	and	impair	our	ability	to	expand	into	new	markets	or	supply	products	in	existing	markets.

# Our	delay	or	inability	to	obtain	any	necessary	United	States	or	foreign	regulatory	clearances	or	approvals	for	our	newly	developed	products	and	treatments	or product	enhancements	could	harm	our	business	and	prospects.

Our	products	and	treatments	are	subject	to	a	high	level	of	regulatory	oversight.	Our	delay	or	inability	to	obtain	any	necessary	United	States	or	foreign	regulatory clearances	or	approvals	for	our	newly	developed	products	or	product	enhancements,	such	as	our	Dimensions	digital	mammography	tomosynthesis	product,	could	harm our	business	and	prospects.	The	process	of	obtaining	clearances	and	approvals	can	be	costly	and	time-consuming.	Recently	we	have	encountered	delays	in	the	FDA approval	process	relating	to	the	3D	configuration	of	our	Dimensions	digital	mammography	tomosynthesis	product	and	are	conducting	additional	clinical	trials	in	support of	our	application	to	for	a	PMA	for	that	product.	We	cannot	assure	that	the	additional	clinical	trials	will	be	successful,	that	we	will	be	able	to	obtain	FDA	approval	to market	the	product,	or	the	scope	of	any	such	approval,	if	and	when	obtained.	Additionally,	there	is	a	risk	that	any	approvals	or	clearances,	once	obtained,	may	be withdrawn	or	modified.

Medical	devices	cannot	be	marketed	in	the	United	States	without	clearance	or	approval	by	the	FDA.	Any	modifications	to	a	device	that	has	received	a	pre-market approval	that	affect	its	safety	or	effectiveness	require	a

pre-market	approval	supplement	or	possibly	a	separate	pre-market	approval,	either	of	which	is	likely	to	be	time-consuming,	expensive	and	uncertain	to	obtain.	If	the FDA	requires	us	to	seek	one	or	more	pre-market	approval	supplements	or	new	pre-market	approvals	for	any	modification	to	a	previously	approved	device,	we	may	be required	to	cease	marketing	or	to	recall	the	modified	device	until	we	obtain	approval,	and	we	may	be	subject	to	significant	criminal	and/or	civic	sanctions,	including	but not	limited	to,	regulatory	fines	or	penalties.

Medical	devices	sold	in	the	United	States	must	also	be	manufactured	in	compliance	with	FDA	Good	Manufacturing	Practices,	which	regulate	the	design, manufacture,	packing,	storage	and	installation	of	medical	devices.	Moreover,	medical	devices	are	required	to	comply	with	FDA	regulations	relating	to	investigational research	and	labeling.	States	may	also	regulate	the	manufacture,	sale	and	use	of	medical	devices,	particularly	those	that	employ	x-ray	technology.	Our	products	are	also subject	to	approval	and	regulation	by	foreign	regulatory	and	safety	agencies.

# The	markets	for	our	newly	developed	products	and	treatments	and	newly	introduced	enhancements	to	our	existing	products	and	treatments	may	not	develop as	expected.

During	fiscal	2009,	we	received	FDA	approval	for	our	Cervista	HPV	HR	and	16/18	tests,	our	Adiana	System,	and	FDA	clearance	of	our	MammoSite	ML radiation	therapy	system.	The	successful	commercialization	of	our	newly	developed	products	and	treatments	and	newly	introduced	enhancements	to	our	existing products	and	treatments	are	subject	to	numerous	risks,	both	known	and	unknown,	including:

•	 uncertainty	of	the	development	of	a	market	for	such	product	or	treatment;

•trends	relating	to,	or	the	introduction	or	existence	of,	competing	products,	technologies	or	alternative	treatments	or	therapies	that	may	be	more	effective,

safer	or	easier	to	use	than	our	products,	technologies,	treatments	or	therapies;

•	 perceptions	of	our	products	or	treatments	as	compared	to	other	products	and	treatments;

•recommendation	and	support	for	the	use	of	our	products	or	treatments	by	influential	customers,	such	as	hospitals,	radiological	practices,	breast	surgeons	and radiation	oncologists	and	treatment	centers;

•the	availability	and	extent	of	data	demonstrating	the	clinical	efficacy	of	our	products	or	treatments;

•competition,	including	the	presence	of	competing	products	sold	by	companies	with	longer	operating	histories,	more	recognizable	names	and	more	established distribution	networks;	and

•	 other	technological	developments.

Often,	the	development	of	a	significant	market	for	a	product	or	treatment	will	depend	upon	the	establishment	of	a	reimbursement	code	or	an	advantageous reimbursement	level	for	use	of	the	product	or	treatment.	Moreover,	even	if	addressed,	such	reimbursement	codes	or	levels	frequently	are	not	addressed	until	after	a product	or	treatment	is	developed	and	commercially	introduced,	which	can	delay	the	successful	commercialization	of	a	product	or	treatment.

If	we	are	unable	to	successfully	commercialize	and	create	a	significant	market	for	our	products	and	treatments,	such	as	those	noted	above-,	as	well	as	our Dimensions	digital	mammography	tomosynthesis	product,	due	to,	among	other	things,	the	lack	of	reimbursement	codes	or	disadvantageous	reimbursement	levels	for such	products	or	treatments,	our	sales	growth,	business	and	prospects	could	be	harmed.

# Our	business	may	be	harmed	by	recently	completed	acquisitions	or	acquisitions	we	may	complete	in	the	future.

We	have	acquired	a	number	of	businesses,	technologies,	product	lines,	and	products	in	our	recent	past,	including	Third	Wave	and	Cytyc	in	fiscal	2008,	and	may make	additional	acquisitions	in	the	future.	The	long-term	success	of	our	recently	completed	acquisitions	and	any	additional	acquisitions	we	may	complete	in	the

future	will	depend	upon	our	ability	to	realize	the	anticipated	benefits	from	combining	the	acquired	businesses	with	our	business.	We	may	fail	to	realize	anticipated benefits	for	a	number	of	reasons,	including	the	following:

•	 problems	may	arise	with	our	ability	to	successfully	integrate	the	acquired	businesses,	which	may	result	in	us	not	operating	as	effectively	and	efficiently	as expected,	and	may	include:

•	 diversion	of	management	time,	as	well	as	a	shift	of	focus	from	operating	the	businesses	to	issues	related	to	integration	and	administration	or inadequate	management	resources	available	for	integration	activity	and	oversight;

•failure	to	retain	and	motivate	key	employees;

•failure	to	successfully	obtain	FDA	approval	or	clearance	for	products	under	development;

•failure	to	successfully	manage	relationships	with	customers,	distributors	and	suppliers;

•failure	of	customers	to	accept	new	products;

•failure	to	effectively	coordinate	sales	and	marketing	efforts;

•failure	to	combine	product	offerings	and	product	lines	quickly	and	effectively;

•failure	to	effectively	enhance	acquired	technology	and	products	or	develop	new	products	relating	to	the	acquired	businesses;

•	 potential	difficulties	and	inefficiencies	in	managing	and	operating	businesses	in	multiple	locations	or	operating	businesses	in	which	we	have	either limited	or	no	direct	experience;

•	 potential	difficulties	integrating	financial	reporting	systems;

•	 potential	difficulties	in	the	timely	filing	of	required	reports	with	the	SEC;	and

•	 potential	difficulties	in	implementing	controls,	procedures	and	policies,	including	disclosure	controls	and	procedures	and	internal	controls	over financial	reporting,	appropriate	for	a	larger	public	company	at	companies	that,	prior	to	the	acquisition	of	such	companies,	had	lacked	such	controls, procedures	and	policies,	which	may	result	in	ineffective	disclosure	controls	and	procedures	or	material	weaknesses	in	internal	controls	over	financial reporting;

•	 we	may	not	be	able	to	achieve	the	expected	synergies	from	an	acquisition	or	it	may	take	longer	than	expected	to	achieve	those	synergies;

•an	acquisition	may	result	in	future	impairment	charges	related	to	diminished	fair	value	of	businesses	acquired	as	compared	to	the	price	we	paid	for	them;

•an	acquisition	may	involve	restructuring	operations	or	reductions	in	workforce	which	may	result	in	substantial	charges	to	our	operations;

•an	acquisition	may	involve	unexpected	costs	or	liabilities,	or	the	effects	of	purchase	accounting	may	be	different	from	our	expectations;	and

•the	acquired	businesses	may	be	adversely	affected	by	future	legislative,	regulatory,	or	tax	decisions	and/or	changes	as	well	as	other	economic,	business and/or	competitive	factors.

Our	failure	to	realize	the	anticipated	benefits	from	combining	acquired	businesses	could	harm	our	business	and	prospects	and	adversely	affect	the	market	price	of our	common	stock.

If	we	are	successful	in	pursuing	future	acquisitions,	we	will	be	required	to	expend	significant	funds,	incur	additional	debt	or	issue	additional	securities,	which	may negatively	affect	our	results	of	operations	and	be	dilutive	to	our	stockholders.	If	we	spend	significant	funds	or	incur	additional	debt,	our	ability	to	obtain	financing	for working	capital	or	other	purposes	could	decline,	and	we	may	be	more	vulnerable	to	economic	downturns	and	competitive	pressures.	We	cannot	guarantee	that	we	will	be able	to	finance	additional	acquisitions	or	that	we	will	realize	any	anticipated	benefits	from	acquisitions	that	we	complete.

# The	historical	levels	of	sales	growth	experienced	by	our	newly	introduced	products	may	not	be	indicative	of	future	growth	as	the	markets	for	our	products mature.

Historically,	the	demand	for	our	products	and	treatments	is	greatest	upon	their	initial	introduction.	However,	once	markets	mature,	growth	in	the	market	may abruptly	stop	or	significantly	slow	or	demand	may	decline.	During	fiscal	2009,	the	demand	for	certain	of	our	products,	such	as	our	direct-to-digital	full-field mammography	products	that	had	previously	experienced	rapid	growth,	declined.	We	often	cannot	predict	when,	or	at	what	rate,	the	demand	for	any	of	our	products	may decline.	Slackening	demand	or	reduced	growth	rates-for	our	products	could	adversely	affect	our	operating	results	and	profitability.

# We	are	dependent	upon	a	relatively	small	number	of	large	clinical	laboratory	customers	in	the	United	States	for	a	significant	portion	of	our	sales	of	the ThinPrep	System	and	our	molecular	diagnostic	products.

We	are	dependent	upon	a	relatively	small	number	of	large	clinical	laboratory	customers	in	the	United	States	for	a	significant	portion	of	our	sales	of	the	ThinPrep System	and	our	molecular	diagnostic	products	that	were	added	with	the	Third	Wave	acquisition.	Due	in	part	to	a	trend	toward	consolidation	of	clinical	laboratories	in recent	years	and	the	relative	size	of	the	largest	United	States	laboratories,	it	is	likely	that	a	significant	portion	of	these	sales	will	continue	to	be	concentrated	among	a relatively	small	number	of	large	clinical	laboratories.	Our	business	and	prospects	may	be	harmed	if	we	are	unable	to	increase	sales	to,	or	maintain	pricing	levels	with	our existing	customers	and	establish	new	customers	both	within	and	outside	the	United	States.

# Our	business	could	be	harmed	if	we	infringe	upon	the	intellectual	property	rights	of	others.

There	has	been	substantial	litigation	regarding	patent	and	other	intellectual	property	rights	in	the	medical	device	and	related	industries.	We	have	been	involved	in patent	litigation,	and	may	in	the	future	be	subject	to	claims	of	infringement	of	intellectual	property	rights	possessed	by	third	parties.

As	examples,	we	are	currently	defending	ourselves	against	infringement	complaints	filed	by	Ethicon	Endo-Surgery,	Inc.,	a	Johnson	&	Johnson	operating	company and	Conceptus,	Inc.	For	further	information	regarding	these	complaints,	please	refer	to	Item	3.	Legal	Proceedings.

In	connection	with	claims	of	patent	infringement,	we	may	seek	to	enter	into	settlement	and/or	licensing	arrangements.	There	is	a	risk	in	these	situations	that	no license	will	be	available	or	that	a	license	will	not	be	available	on	reasonable	terms.	Alternatively,	we	may	decide	to	litigate	such	claims	or	to	design	around	the	patented technology.	These	actions	could	be	costly	and	would	divert	the	efforts	and	attention	of	our	management	and	technical	personnel.	As	a	result,	any	infringement	claims	by third	parties	or	claims	for	indemnification	by	customers	resulting	from	infringement	claims,	whether	or	not	proven	to	be	true,	may	harm	our	business	and	prospects.

# Our	business	could	be	harmed	if	we	are	unable	to	protect	our	proprietary	technology.

We	have	relied	primarily	on	a	combination	of	trade	secrets,	patents,	copyright	and	trademark	laws	and	confidentiality	procedures	to	protect	our	products	and technology.	Despite	these	precautions,	unauthorized	third	parties	may	infringe	our	intellectual	property,	copy	or	reverse	engineer	portions	of	our	technology.	We	do	not know	if	current	or	future	patent	applications	will	be	issued	with	the	scope	of	the	claims	sought,	if	at	all,	or	whether	any	patents	issued	will	be	challenged	or	invalidated. In	addition,	we	have	obtained	or	applied	for	corresponding	patents	and	patent	applications	in	several	foreign	countries	for	some	of	our	patents	and	patent	applications. There	is	a	risk	that	these	patent	applications	will	not	be	granted	or	that	the	patent	or	patent	application	will	not	provide	significant	protection	for	our	products	and technology.	The	rights	provided	by	a	patent	are	finite	in	time.	Over	the	coming	years,	certain	patents	relating	to	current	products	will	expire	in	the	U.S.	and	abroad	thus allowing	third	parties	to	utilize	certain	of	our	technologies.	Our	competitors	may	independently	develop	similar	technology	that	our	patents	do	not	cover.	In	addition, because	patent	applications	in	the	United

States	are	not	generally	publicly	disclosed	until	eighteen	months	after	the	application	is	filed,	applications	may	have	been	filed	by	third	parties	that	relate	to	our technology.	Moreover,	there	is	a	risk	that	foreign	intellectual	property	laws	will	not	protect	our	intellectual	property	rights	to	the	same	extent	as	intellectual	property laws	in	the	U.S.	Even	if	we	believed	our	proprietary	information	is	protected	by	patents	or	otherwise,	the	initiation	of	actions	to	protect	our	proprietary	information	could be	costly	and	divert	the	efforts	and	attention	of	our	management	and	technical	personnel,	and	the	outcome	of	such	litigation	is	often	uncertain.	As	a	result	of	these uncertainties,	we	could	also	elect	to	forego	such	litigation	or	settle	such	litigation	without	fully	enforcing	our	proprietary	rights.	In	the	absence	of	significant	patent protection,	we	may	be	vulnerable	to	competitors	who	attempt	to	copy	our	products,	processes	or	technology.

# Our	international	operations	expose	us	to	additional	operational	challenges	that	we	might	not	otherwise	face.

We	are	subject	to	a	number	of	additional	risks	and	expenses	due	to	our	international	operations.	Any	of	these	risks	or	expenses	could	have	a	material	adverse effect	on	our	operating	results.	These	risks	and	expenses	include:

•	 difficulties	in	staffing	and	managing	operations	in	multiple	locations	as	a	result	of,	among	other	things,	distance,	language	and	cultural	differences;

•	 protectionist	laws	and	business	practices	that	favor	local	companies;

•	 greater	difficulties	in	trade	accounts	receivable	collection;

•	 difficulties	and	expenses	related	to	implementing	internal	controls	over	financial	reporting	and	disclosure	controls	and	procedures;

•expenses	associated	with	customizing	products	for	clients	in	foreign	countries;

•	 possible	adverse	tax	consequences;

•the	inability	to	obtain	favorable	third-party	reimbursements;

•the	inability	to	obtain	required	regulatory	approvals;

•	 governmental	currency	controls;

•	 multiple,	conflicting	and	changing	government	laws	and	regulations	(including,	among	other	things,	antitrust	and	tax	requirements,	international	trade regulations	and	the	Foreign	Corrupt	Practices	Act);

•reduced	protection	for	intellectual	property	rights	in	some	countries;

•	 political	and	economic	changes	and	disruptions;

•clone	or	"knock	off"	products;

•the	inability	to	effectively	obtain	or	enforce	intellectual	property	rights;

•export/import	controls;	and

•tariff	regulations.

# We	utilize	distributors	for	a	portion	of	our	sales,	the	loss	of	which	could	harm	our	revenues	in	the	territory	serviced	by	these	distributors.

We	have	strategic	relationships	with	a	number	of	key	distributors	for	sales	and	service	of	our	products,	principally	in	foreign	countries.	If	these	strategic relationships	are	terminated	and	not	replaced,	our	revenues	and/or	ability	to	service	our	products	in	the	territories	serviced	by	these	distributors	could	be	adversely affected.

# Fluctuations	in	the	exchange	rates	of	European	currencies	and	the	other	foreign	currencies	in	which	we	conduct	our	business,	in	relation	to	the	U.S.	dollar, could	harm	our	business	and	prospects.

We	maintain	sales	and	service	offices	outside	the	United	States,	have	manufacturing	facilities	in	Germany	and	Costa	Rica	and	conduct	business	worldwide.	The expenses	of	our	international	offices	are	denominated	in	local	currencies,	except	at	our	Costa	Rica	subsidiary,	where	the	majority	of	business	is	conducted	in	U.S. dollars.	Our	foreign	sales	may	be	denominated	in	local	currencies,	the	Euro	or	U.S.	dollar,	with	a	majority	of	our	sales	to	international	dealers	denominated	in	U.S. dollars.

Fluctuations	in	foreign	currency	exchange	rates	could	affect	our	revenues,	cost	of	goods	and	operating	margins	and	could	result	in	exchange	losses.	In	addition, currency	devaluation	can	result	in	a	loss	if	we	hold	deposits	of	that	currency.	We	have	historically	hedged,	and	may	in	the	future	hedge,	our	foreign	currency	exposure by	borrowing	funds	in	local	European	currencies	to	pay	the	expenses	of	our	foreign	offices.	There	is	a	risk	that	any	hedging	activities	will	not	be	successful	in	mitigating our	foreign	exchange	risk	exposure.

# Interruptions,	delays,	shutdowns	or	damage	at	our	manufacturing	facilities	could	harm	our	business.

We	manufacture	our	products	at	a	number	of	different	facilities	located	throughout	the	world.	An	interruption	in	manufacturing	capabilities	at	any	of	these facilities,	as	a	result	of	equipment	failure	or	other	reasons,	could	reduce,	delay	or	prevent	the	production	of	our	products.	Our	manufacturing	facilities	are	subject	to	the risk	of	catastrophic	loss	due	to	unanticipated	events,	such	as	fires,	earthquakes,	explosions,	floods	or	weather	conditions.	Our	manufacturing	facilities	may	experience plant	shutdowns,	strikes	or	other	labor	disruptions,	or	periods	of	reduced	production	as	a	result	of	equipment	failures,	loss	of	power,	gray	outs,	delays	in	deliveries	or extensive	damage	to	any	of	our	facilities,	which	could	harm	our	business	and	prospects.	Because	some	of	our	manufacturing	operations	are	located	in	Germany	and Costa	Rica,	those	manufacturing	operations	are	also	subject	to	additional	challenges	and	risks	associated	with	international	operations	described	below.

# Our	business	could	be	harmed	if	products	contain	undetected	errors	or	defects	or	do	not	meet	customer	specifications.

We	are	continuously	developing	new	products	and	improving	our	existing	products.	Our	existing	and	newly	introduced	products	can	contain	undetected	errors	or defects.	In	addition,	these	products	may	not	meet	their	performance	specifications	under	all	conditions	or	for	all	applications.	If,	despite	internal	testing	and	testing	by customers,	any	of	our	products	contain	errors	or	defects	or	fail	to	meet	customer	specifications,	then	we	may	be	required	to	enhance	or	improve	those	products	or technologies.	We	may	not	be	able	to	do	so	on	a	timely	basis,	if	at	all,	and	may	only	be	able	to	do	so	at	considerable	expense.	In	addition,	any	significant	reliability problems	could	result	in	adverse	customer	reaction,	negative	publicity,	mandatory	or	voluntary	recall	or	legal	claims	and	could	harm	our	business	and	prospects.

# We	rely	on	one	or	only	a	limited	number	of	suppliers	for	some	key	components	or	subassemblies	for	our	products.	This	reliance	could	harm	our	business	and prospects.

We	rely	on	one	or	only	a	limited	number	of	suppliers	for	some	key	components	or	subassemblies	for	our	products.	Obtaining	alternative	sources	of	supply	of	these components	could	involve	significant	delays	and	other	costs	and	regulatory	challenges,	and	may	not	be	available	to	us	on	reasonable	terms,	if	at	all.	The	failure	of	a component	supplier	or	contract	assembler	to	provide	sufficient	quantities,	acceptable	quality	and	timely	components	or	assembly	service	at	an	acceptable	price,	or	an interruption	of	supplies	from	such	a	supplier	could	harm	our	business	and	prospects.	Any	disruption	of	supplies	of	key	components	could	delay	or	reduce	shipments, which	could	result	in	lost	or	deferred	sales.

# Our	success	depends	on	our	ability	to	manage	growth	effectively.

Our	failure	to	manage	the	growth	of	our	business	and	scope	of	our	operations	effectively	could	harm	our	business	and	prospects.	Such	growth	may	significantly strain	our	managerial,	operational	and	financial	resources	and	systems.	To	manage	such	growth	effectively,	it	is	expected	that	we	will	continue	to	implement	and improve	additional	management	and	financial	systems	and	controls,	and	to	effectively	retain,	expand,	train	and	manage	our	employee	base.

# We	face	intense	competition	from	other	companies	and	may	not	be	able	to	compete	successfully.

A	number	of	companies	have	developed,	or	are	expected	to	develop,	products	that	compete	or	will	compete	with	our	products.	Some	of	our	competitors	are	large companies	that	may	enjoy	significant	competitive	advantages	over	us,	including:

•significantly	greater	name	recognition;

•established	distribution	networks;

•additional	lines	of	products,	and	the	ability	to	offer	rebates	or	bundle	products	to	offer	discounts	or	incentives	to	gain	competitive	advantage;

•	 more	extensive	research,	development,	sales,	marketing,	manufacturing	and	financial	capabilities;	and

•	 greater	financial	resources	allowing	them	to	continue	to	improve	their	technology	in	order	to	compete	in	an	evolving	industry.

The	markets	in	which	we	sell	our	products	are	intensely	competitive,	subject	to	rapid	change	and	may	be	significantly	affected	by	new	product	introductions	and other	market	activities	of	industry	participants.	Other	companies	may	develop	products	that	are	superior	to	or	less	expensive,	or	both,	than	our	products.	Improvements in	existing	competitive	products	or	the	introductions	of	new	competitive	products	may	reduce	our	ability	to	compete	for	sales,	particularly	if	those	competitive	products demonstrate	better	safety	or	effectiveness,	clinical	results,	ease	of	use	or	lower	costs.

If	we	are	unable	to	compete	effectively	against	existing	and	future	competitors	and	existing	and	future	alternative	treatments,	our	business	and	prospects	could	be

# harmed.

# Our	success	depends	upon	our	ability	to	adapt	to	rapid	changes	in	technology	and	customer	requirements.

The	markets	for	our	products	have	been	characterized	by	rapid	technological	change,	frequent	product	introductions	and	evolving	customer	requirements.	These trends	will	likely	continue	into	the	foreseeable	future.	Our	success	depends,	in	part,	upon	our	ability	to	enhance	our	existing	products,	successfully	develop	new	products that	meet	increasing	customer	requirements	and	gain	market	acceptance.	If	we	fail	to	do	so	our	products	may	be	rendered	obsolete	or	uncompetitive	by	new	industry standards	or	changing	technology.

# Our	results	of	operations	are	subject	to	significant	quarterly	variation	and	seasonal	fluctuation.

Our	results	of	operations	have	been	and	may	continue	to	be	subject	to	significant	quarterly	variation.	Our	results	for	a	particular	quarter	may	also	vary	due	to	a number	of	factors,	including:

•the	overall	state	of	healthcare	and	cost	containment	efforts;

•the	timing	and	level	of	reimbursement	for	our	products	domestically	and	internationally;

•the	development	status	and	demand	for	our	products;

•the	development	status	and	demand	for	therapies	to	treat	the	health	concerns	addressed	by	our	products	and	treatments;

# •economic	conditions	in	our	markets;

•foreign	exchange	rates;

•the	timing	of	orders;

•the	timing	of	expenditures	in	anticipation	of	future	sales;

•the	mix	of	products	we	sell;

•regulatory	approval	of	products;

•the	introduction	of	new	products	and	product	enhancements	by	us	or	our	competitors;

•	 pricing	and	other	competitive	conditions;

•	 unanticipated	expenses;	and

•complex	revenue	recognition	rules	pursuant	to	U.S.	generally	accepted	accounting	principles	("U.S.	GAAP").

Customers	may	also	cancel	or	reschedule	shipments.	Production	difficulties	could	also	delay	shipments.	Any	of	these	factors	also	could	harm	our	business	and prospects.

# Recent	proposed	changes	to	reclassify	full-field	digital	mammography	to	permit	510(k)	clearance	could	increase	competition	for	our	digital	mammography products.

On	May	23,	2006,	the	FDA	Radiological	Devices	Panel	recommended	the	reclassification	of	full-field	digital	mammography	systems	from	Class	III	to	Class	II devices.	The	FDA	has	issued	guidance	on	full	field	digital	mammography	for	public	comment	during	2008.	If	the	FDA	implements	the	panel's	recommendation,	the reclassification	would	allow	full-field	digital	mammography	systems	to	be	cleared	for	commercialization	through	the	510(k)	process,	which	is	less	rigorous	than	the present	pre-market	approval	process.	If	and	when	implemented,	the	reclassification	for	full-field	digital	mammography	systems	from	Class	III	to	Class	II	devices	may lower	barriers	of	entry	into	the	digital	mammography	market,	may	result	in	more	competitors	entering	the	United	States	market	and	could	harm	sales	of	our	digital mammography	systems.	A	FDA	panel	meeting	was	held	on	November	17,	2009	to	review	public	comments	on	the	proposed	FFDM	guidance.

# Our	products	may	be	subject	to	recalls	even	after	receiving	FDA	clearance	or	approval,	which	could	harm	our	business	and	prospects.

The	FDA	and	similar	governmental	bodies	in	other	countries	have	the	authority	to	require	the	recall	of	medical	products	in	the	event	of	material	deficiencies	or defects	in	design	or	manufacture.	A	government	mandated	or	voluntary	recall	by	us	could	occur	as	a	result	of	component	failures,	manufacturing	errors	or	design	defects, including	defects	in	labeling.	Any	recall	could	harm	the	reputation	of	our	products	and	adversely	affect	our	business	and	prospects.

# Some	of	our	activities	may	subject	us	to	risks	under	federal	and	state	laws	prohibiting	"kickbacks"	and	false	or	fraudulent	claims.

We	are	subject	to	the	provisions	of	a	federal	law	commonly	known	as	the	Medicare/Medicaid	anti-kickback	law,	and	several	similar	state	laws,	which	prohibit payments	intended	to	induce	physicians	or	others	either	to	refer	patients	or	to	acquire	or	arrange	for	or	recommend	the	acquisition	of	healthcare	products	or	services. While	the	federal	law	applies	only	to	referrals,	products	or	services	for	which	payment	may	be	made	by	a	federal	healthcare	program,	state	laws	often	apply	regardless	of whether	federal	funds	may	be	involved.	These	laws	constrain	the	sales,	marketing	and	other	promotional	activities	of	manufacturers	of	medical	devices	by	limiting	the kinds	of	financial	arrangements,	including	sales	programs,	with	hospitals,	physicians,	laboratories	and	other

potential	purchasers	of	medical	devices.	Other	federal	and	state	laws	generally	prohibit	individuals	or	entities	from	knowingly	presenting,	or	causing	to	be	presented, claims	for	payment	from	Medicare,	Medicaid,	or	other	third-party	payors	that	are	false	or	fraudulent,	or	are	for	items	or	services	that	were	not	provided	as	claimed.	Anti- kickback	and	false	claims	laws	prescribe	civil	and	criminal	penalties	(including	fines)	for	noncompliance	that	can	be	substantial.	Similarly,	we	are	subject	to	the provisions	of	the	U.S.	Foreign	Corrupt	Practices	Act,	which	prohibits	payments	to	foreign	officials.	While	we	continually	strive	to	comply	with	these	complex requirements,	interpretations	of	the	applicability	of	these	laws	to	marketing	practices	is	ever	evolving	and	even	an	unsuccessful	challenge	could	cause	adverse	publicity and	be	costly	to	respond	to,	and	thus	could	harm	our	business	and	prospects.

# We	are	subject	to	the	risk	of	product	liability	claims	relating	to	our	products.

Our	business	involves	the	risk	of	product	liability	and	other	claims	inherent	to	the	medical	device	business.	If	even	one	of	our	products	is	found	to	have	caused	or contributed	to	injuries	or	deaths,	we	could	be	held	liable	for	substantial	damages.	We	maintain	product	liability	insurance	subject	to	deductibles	and	exclusions.	There	is a	risk	that	the	insurance	coverage	will	not	be	sufficient	to	protect	us	from	product	and	other	liability	claims,	or	that	product	liability	insurance	will	not	be	available	to	us at	a	reasonable	cost,	if	at	all.	An	under-insured	or	uninsured	claim	could	harm	our	business	and	prospects.	In	addition,	claims	could	adversely	affect	the	reputation	of	the related	product,	which	could	damage	that	product's	competitive	position	in	the	market.

The	sale	and	use	of	one	of	our	diagnostic	products	could	also	lead	to	the	filing	of	product	liability	claims	if	someone	were	to	allege	that	one	of	our	products contained	a	design	or	manufacturing	defect	that	resulted	in	the	failure	to	detect	a	disorder	for	which	it	was	being	used	to	screen,	inaccurate	test	results	or	caused	injuries to	a	patient.	Any	product	liability	claim	brought	against	us,	with	or	without	merit,	could	result	in	the	increase	of	our	product	liability	insurance	rates	or	the	inability	to secure	additional	coverage	in	the	future.	Also,	even	a	meritless	or	unsuccessful	product	liability	claim	could	be	time	consuming	and	expensive	to	defend,	which	could result	in	a	diversion	of	management's	attention	from	our	business	and	could	adversely	affect	the	perceived	safety	and	efficacy	of	our	products,	and	could	harm	our business	and	prospects.

# We	use	hazardous	materials	and	products.

Our	research	and	development	and	manufacturing	processes	involve	the	controlled	use	of	hazardous	materials,	such	as	toxic	and	carcinogenic	chemicals	and various	radioactive	compounds.	Although	we	believe	that	our	safety	procedures	for	handling	and	disposing	of	such	materials	comply	with	the	standards	prescribed	by federal,	state	and	local	regulations,	the	risk	of	accidental	contamination	or	injury	from	these	materials	cannot	be	eliminated.	In	the	event	of	this	type	of	accident,	we could	be	held	liable	for	any	resulting	damages,	and	any	such	liability	could	be	extensive.	We	are	also	subject	to	substantial	regulation	relating	to	occupational	health	and safety,	environmental	protection,	hazardous	substance	control,	and	waste	management	and	disposal.	The	failure	to	comply	with	such	regulations	could	subject	us	to, among	other	things,	fines	and	criminal	liability.

# Our	future	success	depends	on	the	continued	services	of	key	personnel.

The	loss	of	any	of	our	key	personnel,	particularly	key	research	and	development	personnel,	could	harm	our	business	and	prospects	and	could	impede	the achievement	of	our	research	and	development,	operational	or	strategic	objectives.	Our	success	also	depends	upon	our	ability	to	attract	and	retain	other	qualified managerial	and	technical	personnel.	Competition	for	such	personnel,	particularly	software	engineers	and	other	technical	personnel,	is	intense.	We	may	not	be	able	to attract	and	retain	personnel	necessary	for	the	development	of	our	business.

# Our	failure	to	manage	current	or	future	alliances	or	joint	ventures	effectively	may	harm	our	business	and	prospects.

We	have	entered	into	alliances,	joint	ventures	or	other	business	relationships.	Alliances	with	certain	partners	or	companies	could	make	it	more	difficult	for	us	to enter	into	advantageous	business	transactions	or	relationships	with	others.	Moreover,	we	may	not	be	able	to:

•identify	appropriate	candidates	for	alliances	or	joint	ventures;

•assure	that	any	alliance	or	joint	venture	candidate	will	provide	us	with	the	support	anticipated;

•successfully	negotiate	an	alliance	or	joint	venture	on	terms	that	are	advantageous	to	us;	or

•successfully	manage	any	alliance	or	joint	venture.

Furthermore,	any	alliance	or	joint	venture	may	divert	management	time	and	resources.	Entering	into	a	disadvantageous	alliance	or	joint	venture,	failing	to	manage an	alliance	or	joint	venture	effectively,	or	failing	to	comply	with	obligations	in	connection	therewith,	could	harm	our	business	and	prospects.

An	adverse	change	in	the	projected	cash	flows	from	our	acquired	businesses	or	the	business	climate	in	which	they	operate,	including	the	continuation	of	the current	financial	and	economic	downturn,	could	require	us	to	incur	an	impairment	charge	which	would	have	an	adverse	impact	on	our	operating	results.

We	periodically	review	the	carrying	value	of	our	goodwill	and	other	long-lived	assets	to	determine	if	any	adverse	conditions	exist	or	a	change	in	circumstances has	occurred	that	would	indicate	impairment	of	the	value	of	these	assets.	Conditions	that	would	indicate	impairment	and	necessitate	a	revaluation	of	these	assets	include, but	are	not	limited	to,	a	significant	adverse	change	in	the	business	climate	or	the	legal	or	regulatory	environment	within	which	we	operate.	In	addition,	the	deterioration of	a	company's	market	capitalization	significantly	below	its	net	book	value	is	an	indicator	of	impairment.	If	the	carrying	value	of	an	asset	is	determined	to	be	impaired we	will	write-down	the	carrying	value	of	the	asset	or	asset	group	to	its	fair	value	in	the	period	identified.	We	generally	calculate	fair	value	as	the	present	value	of estimated	future	cash	flows	to	be	generated	by	the	asset	or	asset	group	using	a	risk-adjusted	discount	rate.

During	the	first	quarter	of	fiscal	2009,	based	upon	a	combination	of	factors,	including	the	deteriorating	macro-economic	environment,	declines	in	the	stock	market and	the	decline	of	our	market	capitalization	significantly	below	the	book	value	of	our	net	assets,	we	concluded	that	potential	goodwill	impairment	indicators	existed	as	of December	27,	2008.	As	a	result,	we	performed	an	interim	goodwill	impairment	analysis	as	of	December	27,	2008.	The	Step	1	impairment	analysis	indicated	that	the carrying	value	of	the	net	assets	of	three	of	the	Company's	reporting	units,	acquired	in	connection	with	the	Cytyc	acquisition,	exceeded	the	estimated	fair	value	of	those reporting	units.	As	a	result,	the	Company	was	required	to	perform	Step	2	of	the	goodwill	impairment	test	to	determine	the	amount,	if	any,	of	goodwill	impairment charges	for	each	of	the	applicable	reporting	units.	Due	to	the	complexities	and	time	involved	in	preparing	the	Step	1	analysis,	the	Company	had	not	commenced	the	Step 2	analysis	as	of	February	5,	2009,	the	date	it	filed	its	Form	10-Q	for	the	quarter	ended	December	27,	2008.	As	a	result	of	the	fact	that	the	Company	had	not	commenced the	Step	2	analysis	and	the	complexity	of	the	analysis	required	to	complete	the	Step	2	analysis,	the	Company	was	unable	to	determine	that	an	impairment	loss,	in accordance	with	ASC	450	(formerly	SFAS	No.	5,	Accounting	for	Contingencies),	was	both	probable	and	reasonably	estimable	at	December	27,	2008.	The	Company completed	the	Step	2	analysis	during	its	second	quarter	of	fiscal	2009,	which	resulted	in	an	aggregate	goodwill	impairment	charge	of	$2.34	billion.	This	impairment charge	is	comprised	of	$1.17	billion	for	GYN	Surgical,	$908.3	million	for	Diagnostics,	and	$265.9	million	for	Breast	Health.	For	further	information	of	these	charges, please	refer	to	Note	2	in	our	Consolidated	Financial	Statements	contained	in	Item	15	of	this	Annual	Report.

During	the	fourth	quarter	of	fiscal	2009,	we	performed	our	annual	impairment	test	of	goodwill,	and	no	additional	impairment	charges	were	required.	It	is	possible that	the	continuation	of	the	current	global	financial	and	economic	turmoil	could	negatively	affect	our	anticipated	cash	flows,	or	the	discount	rates	used	to	value	the	cash flows	for	each	reporting	unit,	to	such	an	extent	that	we	could	be	required	to	perform	an	interim	impairment	test	in	fiscal	2010.	Such	a	requirement	could	result	in	a material	impairment	charge	that	would	have	an	adverse	impact	on	our	operating	results.

# Our	effective	tax	rate	may	fluctuate	and	we	may	incur	obligations	in	tax	jurisdictions	in	excess	of	amounts	that	have	been	accrued.

As	a	global	medical	devices	company,	we	are	subject	to	taxation	in	numerous	countries,	states	and	other	jurisdictions.	As	a	result,	our	effective	tax	rate	is	derived from	a	combination	of	applicable	tax	rates	in	the	various	countries,	states	and	other	jurisdictions	in	which	we	operate.	In	preparing	our	financial	statements,	we	estimate the	amount	of	tax	that	will	become	payable	in	each	of	the	countries,	states	and	other	jurisdictions	in	which	we	operate.	Our	effective	tax	rate,	however,	may	be	lower	or higher	than	experienced	in	the	past	due	to	numerous	factors,	including	a	change	in	the	mix	of	our	profitability	from	country	to	country,	changes	in	accounting	for	income taxes	and	changes	in	tax	laws.	Any	of	these	factors	could	cause	us	to	experience	an	effective	tax	rate	significantly	different	from	previous	periods	or	our	current expectations,	which	could	have	an	adverse	effect	on	our	business	and	results	of	operations.	In	addition,	unfavorable	results	of	audits	of	our	tax	filings,	our	inability	to secure	or	sustain	arrangements	with	tax	authorities,	and	previously	enacted	and	future	changes	in	tax	laws	in	jurisdictions	in	which	we	operate,	among	other	things,	may cause	us	to	be	obligated	to	accrue	for	future	tax	payments	in	excess	of	amounts	accrued	in	our	financial	statements.

Several	proposals	to	reform	U.S.	tax	rules	are	being	considered	by	U.S.	law	makers,	including	proposals	that	may	reduce	or	eliminate	the	deferral	of	U.S.	income tax	on	our	unrepatriated	earnings,	potentially	requiring	those	earnings	to	be	taxed	at	the	U.S.	federal	income	tax	rate,	reduce	or	eliminate	our	ability	to	claim	foreign	tax credits,	and	eliminate	various	tax	deductions	until	foreign	earnings	are	repatriated	to	the	U.S.	Our	future	reported	financial	results	may	be	adversely	affected	by	tax	rule changes	which	restrict	or	eliminate	our	ability	to	claim	foreign	tax	credits	or	deduct	expenses	attributable	to	foreign	earnings,	or	otherwise	affect	the	treatment	of	our unrepatriated	earnings.

# We	are	exposed	to	potential	risks	and	will	continue	to	incur	significant	costs	as	a	result	of	the	internal	control	testing	and	evaluation	process	mandated	by Section	404	of	the	Sarbanes-Oxley	Act.

We	assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	September	26,	2009	and	assessed	all	deficiencies	on	both	an	individual	basis and	in	combination	to	determine	if,	when	aggregated,	they	constitute	a	material	weakness.	As	a	result	of	this	evaluation,	no	material	weaknesses	were	identified.

We	expect	to	continue	to	incur	significant	costs	to	maintain	compliance	with	Section	404	of	the	Sarbanes-Oxley	Act.	We	continue	to	monitor	controls	for	any weaknesses	or	deficiencies.	No	evaluation	can	provide	complete	assurance	that	our	internal	controls	will	detect	or	uncover	all	failures	of	persons	within	the	company	to disclose	material	information	otherwise	required	to	be	reported.	The	effectiveness	of	our	controls	and	procedures	could	also	be	limited	by	simple	errors	or	faulty judgments.	In	addition,	as	we	continue	to	expand	globally,	the	challenges	involved	in	implementing	appropriate	internal	controls	will	increase	and	will	require	that	we continue	to	improve	our	internal	controls	over	financial	reporting.

In	the	future,	we	or	our	independent	registered	public	accounting	firm	may	identify	material	weaknesses	in	internal	controls	over	financial	reporting	which	may result	in	a	loss	of	public	confidence	in	our	internal	controls	and	adversely	impact	the	market	price	of	our	common	stock.	In	addition,	any	failure	to	implement	required, new	or	improved	controls,	or	difficulties	encountered	in	their	implementation,	could	harm	our	operating	results	or	cause	us	to	fail	to	meet	our	reporting	obligations.

# Risks	Related	to	our	Indebtedness

# We	have	incurred	significant	indebtedness	that	limits	our	operating	flexibility,	and	could	adversely	affect	our	operations	and	financial	results	and	prevent	us from	fulfilling	our	obligations.

On	December	10,	2007,	we	issued	$1.725	billion	of	2.0%	convertible	notes	due	2037	(the	"Convertible	Notes"),	which	are	unsecured	and	subordinated	to	our secured	indebtedness.	These	notes	may	be	put	to	us	at	par	on	December	13,	2013	and	each	fifth	anniversary	thereafter	beginning	December	15,	2017.	In	addition,	at September	26,	2009,	we	had	$174.2	million	outstanding	under	our	senior	secured	credit	facility,	which	bears	interest	at	variable	rates.	Additionally,	certain	other	of	our indebtedness	may	remain	outstanding.	Our	level	of	indebtedness	may:

•	 make	it	more	difficult	for	us	to	satisfy	our	obligations	with	respect	to	our	outstanding	indebtedness;

•increase	our	vulnerability	to	general	adverse	economic	and	industry	conditions,	including	increases	in	interest	rates;

•require	us	to	dedicate	a	substantial	portion	of	our	cash	flow	from	operations	to	interest	and	principal	payments	on	our	indebtedness,	which	would	reduce	the availability	of	our	cash	flow	to	fund	working	capital,	capital	expenditures,	expansion	efforts	and	other	general	corporate	purposes;

•limit	our	flexibility	in	planning	for,	or	reacting	to,	changes	in	our	business	and	the	industry	in	which	we	operate;

•	 place	us	at	a	competitive	disadvantage	compared	to	our	competitors	that	have	less	debt;	and

•limit	our	ability	to	borrow	additional	funds	for	working	capital,	capital	expenditures,	general	corporate	purposes	or	acquisitions.

In	addition,	the	terms	of	our	credit	facility	contains	covenants	that	restrict	our	ability,	and	that	of	our	subsidiaries,	to	engage	in	certain	transactions	and	may impair	our	ability	to	respond	to	changing	business	and	economic	conditions,	including,	among	other	things,	limitations	on	the	ability	to:

•incur	additional	indebtedness	and	additional	liens	on	our	assets;

•engage	in	mergers	or	acquisitions	or	dispose	of	assets;

•enter	into	sale-leaseback	transactions;

•	 pay	dividends	or	make	other	distributions;

•	 voluntarily	prepay	other	indebtedness;

•enter	into	transactions	with	affiliated	persons;

•	 make	investments;	and

•change	the	nature	of	our	businesses.

Our	credit	facility	also	requires	us	to	satisfy	certain	financial	covenants.

Our	ability	to	comply	with	these	provisions	may	be	affected	by	general	economic	conditions,	political	decisions,	industry	conditions	and	other	events	beyond	our control.	Our	failure	to	comply	with	the	covenants	contained	in	our	credit	facilities,	including	financial	covenants,	could	result	in	an	event	of	default,	which	could materially	and	adversely	affect	our	results	of	operation	and	financial	condition.

If	there	were	an	event	of	default	under	one	of	our	debt	instruments	or	a	change	of	control,	the	holders	of	the	defaulted	debt	may	be	permitted	to	cause	all	amounts outstanding	with	respect	to	that	debt	to	be	due	and	payable	immediately	and	may	be	cross-defaulted	to	other	debt.	Our	assets	or	cash	flow	may	not	be	sufficient	to	fully repay	borrowings	under	our	outstanding	debt	instruments	if	accelerated	upon	an	event	of	default,	and	there	is	no	guarantee	that	we	would	be	able	to	repay,	refinance	or restructure	the	payments	on	those	debt	securities.

# We	may	not	be	able	to	generate	sufficient	cash	flow	to	service	all	of	our	obligations,	including	our	obligations	under	our	credit	facilities.

Our	ability	to	make	payments	on	and	to	refinance	the	indebtedness	under	our	credit	facilities	and	the	Convertible	Notes	or	any	other	of	our	obligations	or indebtedness,	and	to	fund	planned	capital	expenditures,	strategic	transactions	and	expansion	efforts	will	depend	on	our	ability	to	generate	cash	in	the	future.	This,	to	a certain	extent,	is	subject	to	general	economic,	financial,	competitive,	legislative,	regulatory	and	other	factors	that	are	beyond	our	control.

Our	business	may	not	be	able	to	generate	sufficient	cash	flow	from	operations,	and	we	cannot	assure	that	future	borrowings	will	be	available	to	us	in	amounts sufficient	to	enable	us	to	pay	our	indebtedness	as	such	indebtedness	matures	and	to	fund	our	other	liquidity	needs.	If	this	is	the	case,	we	will	need	to	refinance	all	or	a portion	of	our	indebtedness	on	or	before	maturity,	and	there	can	be	no	assurance	that	we	will	be	able	to	refinance	any	of	our	indebtedness	on	commercially	reasonable terms,	or	at	all.	We	may	need	to	adopt	one	or	more	alternatives,	such	as	reducing	or	delaying	planned	expenses	and	capital	expenditures,	selling	assets,	restructuring debt,	or	obtaining	additional	equity	or	debt	financing.	These	financing	strategies	may	not	be	affected	on	satisfactory	terms,	if	at	all.	Our	ability	to	refinance	our indebtedness	or	obtain	additional	financing,	or	to	do	so	on	commercially	reasonable	terms,	will	depend	on,	among	other	things,	our	financial	condition	at	the	time, restrictions	in	agreements	governing	our	indebtedness,	and	other	factors,	including	the	condition	of	the	financial	markets	and	the	markets	in	which	we	compete.

If	we	do	not	generate	sufficient	cash	flow	from	operations,	and	additional	borrowings,	refinancings	or	proceeds	of	asset	sales	are	not	available	to	us,	we	may	not have	sufficient	cash	to	enable	us	to	meet	all	of	our	obligations.

# The	accounting	for	convertible	debt	securities	such	as	our	Convertible	Notes	is	subject	to	change	that	will	result	in	a	significant	increase	in	the	accrual	of interest	expense	under	those	notes.

The	accounting	for	convertible	debt	securities	such	as	our	Convertible	Notes	is	subject	to	frequent	scrutiny	by	the	accounting	regulatory	bodies	and	is	subject	to change.	In	May	2008,	the	Financial	Accounting	Standards	Board	("FASB")	issued	FASB	Staff	Position	("FSP")	No.	APB	14-1,	Accounting	for	Convertible	Debt Instruments	That	May	Be	Settled	in	Cash	upon	Conversion	(Including	Partial	Cash	Settlement)	(codified	within	Accounting	Standards	Codification	("ASC")	470,	Debt). This	accounting	guidance	applies	to	convertible	debt	instruments	(such	as	our	Convertible	Notes)	that,	by	their	stated	terms,	may	be	settled	in	cash	(or	other	assets)	upon conversion,	including	partial	cash	settlement,	unless	the	embedded	conversion	option	is	required	to	be	separately	accounted	for	as	a	derivative	under	ASC	815, Derivatives	and	Hedging	(formerly	SFAS	No.	133,	Accounting	for	Derivative	Instruments	and	Hedging	Activities).	As	a	result	of	the	issuance	of	this	FSP,	the	liability and	equity	components	of	our	Convertible	Notes	must	be	separately	accounted	for	in	a	manner	that	will	reflect	our	nonconvertible	debt	borrowing	rate	when	interest	cost is	recognized	in	subsequent	periods.	The	excess	of	the	principal	amount	of	the	debt	over	the	amount	ultimately	allocated	to	the	liability	component	is	required	to	be amortized	to	interest	expense	using	the	interest	method.	This	FSP	is	effective	for	financial	statements	issued	for	fiscal	years	beginning	after	December	15,	2008,	and interim	periods	within	those	fiscal	years.	As	a	result,	we	will	adopt	this	standard	at	the	beginning	of	fiscal	2010.	This	FSP	must	be	applied	retrospectively	to	all	periods presented.	The	retrospective	adoption	of	this	FSP	will	increase	our	historical	reported	interest	expense	from	December	10,	2007	(issuance	date	of	the	Convertible	Notes) forward.	Upon	adoption,	we	expect	to	revise	prior	periods	by	reclassifying	approximately	$470.0	million	of	our	Convertible	Notes	to	additional	paid-in	capital,	resulting in	a	debt	discount.	As	a	result,	our	fiscal	2009	and	fiscal	2008	non-cash	interest	expense	will	increase	by	approximately	$65.5	million	and	$48.1	million,	respectively, resulting	in	a	restated	diluted	net	loss	per	share	of	approximately	$(8.64)	and	$(1.69),	respectively.	Future	periods	would	be	similarly	affected	by	amortization	of	the	debt discount	as	an	interest	expense.	In	fiscal	2010,	we	expect	to	record	approximately	an	additional	$71.1	million	of	non-cash	interest	expense.

# Risks	Related	to	our	Common	Stock	and	Convertible	Notes

# Future	issuances	of	common	stock	and	hedging	activities	may	depress	the	trading	price	of	our	common	stock	and	our	Convertible	Notes.

Any	future	issuance	of	equity	securities,	including	the	issuance	of	shares	upon	conversion	of	our	Convertible	Notes,	could	dilute	the	interests	of	our	existing stockholders,	including	holders	who	have	received	shares	upon	conversion	of	our	Convertible	Notes,	and	could	substantially	decrease	the	trading	price	of	our	common stock	and	our	Convertible	Notes.	We	may	issue	equity	securities	in	the	future	for	a	number	of	reasons,	including	to	finance	our	operations	and	business	strategy (including	in	connection	with	acquisitions,	strategic	collaborations	or	other	transactions),	to	adjust	our	ratio	of	debt	to	equity,	to	satisfy	our	obligations	upon	the	exercise of	outstanding	warrants	or	options	or	for	other	reasons.

In	addition,	the	price	of	our	common	stock	could	also	be	affected	by	possible	sales	of	our	common	stock	by	investors	who	view	our	Convertible	Notes	as	a	more attractive	means	of	equity	participation	in	our	company	and	by	hedging	or	arbitrage	trading	activity	that	we	expect	to	develop	involving	our	common	stock.	The	hedging or	arbitrage	could,	in	turn,	affect	the	trading	price	of	our	Convertible	Notes,	or	any	common	stock	that	note	holders	receive	upon	conversion	of	their	notes.

Future	sales	of	our	common	stock	in	the	public	market	or	the	issuance	of	securities	senior	to	our	common	stock	could	adversely	affect	the	trading	price	of	our common	stock	and	the	value	of	our	Convertible	Notes	and	our	ability	to	raise	funds	in	new	securities	offerings.

Future	sales	of	our	common	stock,	the	perception	that	such	sales	could	occur	or	the	availability	for	future	sales	of	shares	of	our	common	stock	or	securities convertible	into	or	exercisable	for	our	common	stock	could	adversely	affect	the	market	prices	of	our	common	stock	and	the	value	of	our	Convertible	Notes	prevailing from	time	to	time	and	could	impair	our	ability	to	raise	capital	through	future	offerings	of	equity	or	equity-related	securities.	In	addition,	we	may	issue	common	stock	or equity	securities	senior	to	our	common	stock	in	the	future	for	a	number	of	reasons,	including	to	finance	our	operations	and	business	strategy,	to	adjust	our	ratio	of	debt	to equity,	satisfy	our	obligations	upon	the	exercise	of	options	or	for	other	reasons.

# Provisions	in	our	charter	and	bylaws	and	our	stockholder	rights	plan	may	have	the	effect	of	discouraging	advantageous	offers	for	our	business	or	common stock	and	limit	the	price	that	investors	might	be	willing	to	pay	in	the	future	for	shares	of	our	common	stock.

Our	charter,	bylaws	and	the	provisions	of	the	Delaware	General	Corporation	Law	include	provisions	that	may	have	the	effect	of	discouraging	or	preventing	a change	in	control.	In	addition,	we	have	a	stockholder	rights	plan	that	may	have	the	effect	of	discouraging	or	preventing	a	change	in	control.	These	provisions	could	limit the	price	that	our	stockholders	might	receive	in	the	future	for	shares	of	our	common	stock.

# Our	stock	price	is	volatile.

The	market	price	of	our	common	stock	has	been,	and	may	continue	to	be,	highly	volatile.	We	believe	that	a	variety	of	factors	could	cause	the	price	of	our common	stock	to	fluctuate,	perhaps	substantially,	including:

•	 new,	or	changes	in,	recommendations,	guidelines	or	studies	that	could	affect	the	use	of	our	products;

•announcements	and	rumors	of	developments	related	to	our	business,	including	changes	in	reimbursement	rates	or	regulatory	requirements,	proposed	and completed	acquisitions,	or	the	industry	in	which	we	compete;

•	 published	studies	and	reports	relating	to	the	comparative	efficacy	of	products	and	markets	in	which	we	participate;

•	 quarterly	fluctuations	in	our	actual	or	anticipated	operating	results	and	order	levels;

•	 general	conditions	in	the	worldwide	economy;

•announcements	of	technological	innovations;

•	 new	products	or	product	enhancements	by	us	or	our	competitors;

•	 developments	in	patents	or	other	intellectual	property	rights	and	litigation;

•	 developments	in	relationships	with	our	customers	and	suppliers;	and

•	 pending	healthcare	reform	and	proposed	legislation.

The	price	of	our	common	stock	also	may	be	adversely	affected	by	the	amount	of	common	stock	issuable	upon	conversion	of	our	Convertible	Notes.	In	addition, in	recent	years	the	stock	market	in	general	and	the	markets	for	shares	of	"high-tech"	companies,	have	experienced	extreme	price	fluctuations	which	have	often	been unrelated	to	the	operating	performance	of	affected	companies.	Any	such	fluctuations	in	the	future	could	adversely	affect	the	market	price	of	our	common	stock,	and	the market	price	of	our	common	stock	may	decline.

# Conversion	of	our	Convertible	Notes	will	dilute	the	ownership	interest	of	existing	stockholders,	including	holders	who	had	previously	converted	their	notes.

To	the	extent	we	issue	any	shares	of	our	common	stock	upon	conversion	of	our	Convertible	Notes,	the	conversion	of	some	or	all	of	our	Convertible	Notes	will dilute	the	ownership	interests	of	existing	stockholders,	including	holders	who	have	received	shares	of	our	common	stock	upon	prior	conversion	of	our	Convertible Notes.	Any	sales	in	the	public	market	of	the	common	stock	issuable	upon	such	conversion	could	adversely	affect	prevailing	market	prices	of	our	common	stock.	In addition,	the	existence	of	our	Convertible	Notes	may	encourage	short	selling	by	market	participants	because	the	conversion	of	our	Convertible	Notes	could	depress	the price	of	our	common	stock.

# Item	1B. Unresolved	Staff	Comments

# Item	2. Properties

We	own	and	lease	the	real	property	identified	below.	We	believe	that	we	have	adequate	space	for	our	anticipated	needs	and	that	suitable	additional	space	will	be available	at	commercially	reasonable	prices	as	needed.	See	the	Business	and	Manufacturing	sections	above	for	a	description	of	the	products	manufactured	at	the	facilities described	below.

# Owned	Real	Property

We	own	an	approximately	164,000	square	foot	research	and	development,	manufacturing	and	administrative	site	in	Newark,	Delaware	at	which	we	conduct	our DirectRay	digital	detector	research	and	development	and	plate	manufacture.	We	currently	occupy	approximately	59,000	square	feet	of	this	building,	which	houses	our plate	manufacturing	facility,	including	both	a	Class	1	and	a	Class	2	clean	room.	We	lease	approximately	105,000	square	feet	of	the	facility	to	Siemens	under	a	lease which	expires	in	April	2015.	Our	AEG	subsidiary	owns	an	approximately	201,000	square	foot	facility	in	Warstein,	Germany	which	is	used	for	its	headquarters, manufacturing	and	research	and	development.	Cytyc	also	owns	approximately	2.7	acres	of	land	and	approximately	47,000	square	feet	of	facilities	housing	additional manufacturing	operations	in	Londonderry,	New	Hampshire.

# Leased	Real	Property

In	September	2002,	we	completed	a	sale/leaseback	transaction	for	our	approximately	207,000	square	foot	headquarters	and	manufacturing	facility	located	in Bedford,	Massachusetts	and	our	approximately	62,000	square	foot	Lorad	manufacturing	facility	in	Danbury,	Connecticut.	The	lease	for	these	facilities,	including	the associated	land,	has	a	term	of	20	years,	with	four-five	year	renewal	options.	In	January	2004,	Cytyc	leased	approximately	216,000	square	feet	in	Marlborough, Massachusetts	for	its	administrative,	research,	manufacturing	and	distribution	operations	for	a	term	of	15	years	with	two	(2)	five-year	options	to	extend	the	term	upon written	notice	to	the	landlord.	In	July	2006,	Cytyc	entered	into	a	12-year	lease	agreement	for	a	building	with	approximately	146,000	square	feet	also	located	in Marlborough,	Massachusetts,	which	is	principally	used	as	an	additional	manufacturing	facility.	We	also	lease	approximately	60,000	square	feet	of	office	and manufacturing	space	in	Danbury,	Connecticut	near	our	Lorad	manufacturing	facility.	This	lease	expires	in	December	2012.	In	April	2007,	Cytyc	entered	into	a	ten	year lease	for	a	building	with	approximately	164,000	square	feet	located	in	Alajuela,	Costa	Rica.	We	moved	certain	of	our	manufacturing	operations	to	this	newly constructed	facility	in	fiscal	2009.	We	lease	approximately	62,000	square	feet	of	office	and	manufacturing	space	in	Madison,	Wisconsin.	This	lease	expires	in	September 2014.

We	lease	other	facilities	utilized	for	office	space	and	manufacturing	and	distribution	operations	across	the	United	States,	Europe,	Canada	and	Hong	Kong.	We also	lease	several	sales	and	service	offices	throughout	the	world.

In	connection	with	our	secured	credit	facility,	we	entered	into	mortgages	for	our	Newark,	Delaware	and	Londonderry,	New	Hampshire	properties	and	leasehold mortgages	for	our	interests	in	our	Danbury,	Connecticut,	Bedford,	Massachusetts	and	Indianapolis,	Indiana	facilities.

# Item	3. Legal	Proceedings

On	October	5,	2007,	Ethicon	Endo-Surgery,	Inc.,	a	Johnson	&	Johnson	operating	company,	filed	a	complaint	against	the	Company	and	its	wholly-owned subsidiary	Suros	in	the	United	States	District	Court	for	the	Southern	District	of	Ohio,	Western	Division.	The	complaint	alleges	that	certain	of	the	ATEC	biopsy	systems manufactured	and	sold	by	Suros	infringe	four	Ethicon	patents.	An	amended	complaint	filed	January	11,	2008	additionally	asserts	claims	of	unfair	competition.	The complaint	seeks	to	enjoin	Hologic	and	Suros	from	conducting	acts	of	unfair	competition	and	infringing	the	patents	as	well	as	the	recovery	of	unspecified	damages	and costs.	A	Markman	hearing	was	held	on	January	8,	2009,	and	the	Court	issued	its	ruling	on	April	3,	2009.	A	court	ordered	settlement	conference	occurred	on	August	11, 2009	without	any	resolution.	This	suit	is	currently	scheduled	to	go	to	trial	on	February	1,	2010.	The	Company	is	unable	to	reasonably	estimate	the	ultimate	outcome	of this	case.

On	May	22,	2009,	Conceptus,	Inc.	filed	suit	in	the	United	States	District	Court	for	the	Northern	District	of	California	seeking	a	declaration	by	the	Court	that Hologic's	planned	importation,	use,	sale	or	offer	to	sell	of	its	forthcoming	Adiana	Permanent	Contraception	System,	would	infringe	five	Conceptus	patents.	On	July	9, 2009,	Conceptus	filed	an	amended	complaint	alleging	infringement	of	the	same	five	patents	by	the	Adiana	Permanent	Contraception	System.	The	complaint	seeks preliminary	and	permanent	injunctive	relief	and	unspecified	monetary	damages.	In	addition	to	the	amended	complaint,	Conceptus	also	filed	a	motion	for	preliminary injunction	seeking	to	preliminarily	enjoin	sales	of	the	Adiana	System	based	on	alleged	infringement	of	certain	claims	of	three	of	the	five	patents.	A	hearing	on Conceptus'	preliminary	injunction	motion	was	held	on	November	4,	2009,	and	on	November	6,	2009,	the	judge	issued	an	order	denying	the	motion.	A	hearing	on	claim construction	is	scheduled	for	March	10,	2010.	A	trial	date	has	not	been	set.	Based	on	the	early	stage	of	this	litigation,	the	Company	is	unable	to	reasonably	estimate	the ultimate	outcome	of	this	case.

On	August	6,	2009,	Ethicon	Endo-Surgery,	Inc.,	a	Johnson	&	Johnson	operating	company,	filed	a	complaint	against	the	Company	and	its	wholly-owned subsidiary	Suros	in	the	United	States	District	Court	for	the	District	of	Delaware.	The	complaint	alleges	that	certain	of	the	Eviva	biopsy	systems	manufactured	and	sold by	Suros

infringe	four	Ethicon	patents.	The	complaint	seeks	to	enjoin	Hologic	and	Suros	from	infringing	the	patents	as	well	as	recovery	of	damages	and	costs	resulting	from	the alleged	infringement.	Based	on	the	early	stage	of	this	litigation,	the	Company	is	unable	to	reasonably	estimate	the	ultimate	outcome	of	this	case.

The	Company	is	a	party	to	various	other	legal	proceedings	and	claims	arising	out	of	the	ordinary	course	of	its	business.	The	Company	believes	that	except	for those	described	above	there	are	no	other	proceedings	or	claims	pending	against	it	the	ultimate	resolution	of	which	would	have	a	material	adverse	effect	on	its	financial condition	or	results	of	operations.

# Item	4. Submission	of	Matters	to	a	Vote	of	Security	Holders.

None.

# PART	II

# Item	5. Market	for	Registrant's	Common	Equity,	Related	Stockholder	Matters	and	Issuer	Purchases	of	Equity	Securities.

Market	Information.	Our	common	stock	is	traded	on	the	Nasdaq	Global	Select	Market	under	the	symbol	"HOLX."	The	following	table	sets	forth	the	high	and	low sales	prices	per	share	of	our	common	stock,	as	reported	by	the	Nasdaq	Global	Select	Market.	This	stock	price	information	has	been	adjusted	to	give	effect	for	the	stock split	effected	on	April	2,	2008.

| Fiscal	Year	Ended	September	26,	2009 | High | Low |
| :--- | :--- | :--- |
| First\tQuarter | $19.95 | $10.54 |
| Second\tQuarter | \t 14.52 | 9.31 |
| Third\tQuarter | \t 15.91 | \t 11.36 |
| Fourth\tQuarter | \t 17.83 | \t 12.52 |

| Fiscal	Year	Ended	September	27,	2008 | High | Low |
| :--- | :--- | :--- |
| First\tQuarter | $35.79 | $29.40 |
| Second\tQuarter | \t 36.44 | \t 25.73 |
| Third\tQuarter | \t 30.99 | \t 20.15 |
| Fourth\tQuarter | \t 24.22 | \t 17.83 |

Number	of	Holders.	As	of	November	18,	2009,	there	were	approximately	1,653	holders	of	record	of	our	common	stock,	including	multiple	beneficial	holders	at depositaries,	banks	and	brokers	listed	as	a	single	holder	in	the	street	name	of	each	respective	depositary,	bank	or	broker.

Dividend	Policy.	We	have	never	declared	or	paid	cash	dividends	on	our	capital	stock	and	do	not	plan	to	pay	any	cash	dividends	in	the	foreseeable	future.	Our current	policy	is	to	retain	all	of	our	earnings	to	finance	future	growth.	In	addition,	our	amended	credit	facility	prohibits	us	from	declaring	or	paying	any	cash	dividends.

Recent	Sales	of	Unregistered	Securities.	We	did	not	sell	unregistered	securities	during	the	fourth	quarter	of	fiscal	2009.

Issuer's	Purchases	of	Equity	Securities.	For	the	majority	of	restricted	stock	units	granted,	the	number	of	shares	issued	on	the	date	that	the	restricted	stock	units vest	is	net	of	the	minimum	statutory	tax	withholding	requirements	that	we	pay	in	cash	to	the	appropriate	taxing	authorities	on	behalf	of	our	employees.	The	following table	sets	forth	information	about	repurchases	of	our	common	stock	to	cover	employee	income	tax	withholding	obligations	in	connection	with	the	vesting	of	restricted stock	units	under	our	equity	incentive	plans	for	the	three	months	ended	September	26,	2009:

|  |  |  | Total	Number	of |
| :--- | :--- | :--- | :--- |
|  |  |  | Shares |
|  |  |  | Purchased\tAs |
|  |  |  | Part\tof\tPublicly |
|  | Total\tNumber\tof | Average\tPrice | Announced |
| Period\tof\tRepurchase | Shares\tPurchased | Paid\tPer\tShare | Program |
| June\t28,\t2009—July\t25,\t2009 | 68 | $14.73 | — |
| July\t26,\t2009—August\t22,\t2009 | — | — | — |
| August\t23,\t2009—September\t26,\t2009 | 96 | 16.01 | — |
| Total | 164 | $15.48 | — |

# Stock	Performance	Graph

The	following	graph	compares	cumulative	total	shareholder	return	on	our	common	stock	since	September	25,	2004	with	the	cumulative	total	return	of	the	Russell 1000	Index	and	the	Standard	&	Poor's	Health	Care	Supplies	Index.	This	graph	assumes	the	investment	of	$100	on	September	25,	2004	in	our	common	stock,	the	Russell 1000	Index	and	the	S&P	Health	Care	Supplies	Index.	Measurement	points	are	the	last	trading	day	of	each	respective	fiscal	year.

# COMPARISON	OF	5	YEAR	CUMULATIVE	TOTAL	RETURN*

Among	Hologic,	Inc.,	The	Russell	1000	Index

And	The	S&P	Health	Care	Supplies	Index

* $100	invested	on	9/25/04	in	stock	or	on	9/30/04	in	index,	including	reinvestment	of	dividends.	Indexes	calculated	on	month-end	basis.

Copyright ©	2009	S&P,	a	division	of	The	McGraw-Hill	Companies	Inc.	All	rights	reserved.

# Item	6. Selected	Financial	Data.

The	following	selected	financial	data	should	be	read	in	conjunction	with	our	consolidated	financial	statements	and	related	notes	appearing	elsewhere	in	this Annual	Report	on	Form	10-K,	beginning	on	page	F-1.	In	the	first	and	fourth	quarters	of	fiscal	2008,	we	acquired	Cytyc	Corporation	("Cytyc")	and	Third	Wave Technologies,	Inc.	("Third	Wave"),	respectively.	In	the	fourth	quarter	of	fiscal	2007,	we	acquired	BioLucent,	Inc.	("BioLucent).	In	fiscal	2006,	we	acquired	AEG Elektrofotografie	("AEG"),	R2	Technology,	Inc.	("R2")	and	Suros	Surgical,	Inc.	("Suros"),	and	we	also	acquired	the	intellectual	property	relating	to	Fischer	Imaging Corporation's	mammography	business.	Results	of	operations	for	each	of	these	businesses	are	included	in	our	consolidated	financial	statements	from	the	date	of acquisition.	Effective	in	fiscal	2006,	we	began	to	record	stock-based	compensation	expense	associated	with	the	fair	value	of	stock	options	in	accordance	with	U.S .generally	accepted	accounting	principles.

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 | September	30,<br>2006 | September	24,<br>2005 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | (In\tthousands,\texcept\tper\tshare\tdata) |  |  |
| Consolidated\tStatement\tof\tOperations\tData |  |  |  |  |  |
| Revenues: |  |  |  |  |  |
| Product\tsales | $1,426,986 | $1,502,447 | $628,854 | $388,111 | $229,075 |
| Service\tand\tother\trevenues | 210,148 | 172,052 | 109,514 | 74,569 | 58,609 |
|  | 1,637,134 | 1,674,499 | 738,368 | 462,680 | 287,684 |
| Costs\tand\tExpenses: |  |  |  |  |  |
| Cost\tof\tproduct\tsales | 470,295 | 535,082 | 267,470 | 188,443 | 116,478 |
| Cost\tof\tproduct\tsales—amortization\tof\tintangible\tassets | 155,519 | 95,310 | 11,262 | 5,011 | 1,153 |
| Cost\tof\tproduct\tsales—impairment\tof\tintangibles | 4,065 | — | — | — | — |
| Cost\tof\tservice\tand\tother\trevenues | 149,769 | 151,589 | 114,307 | 75,921 | 58,181 |
| Research\tand\tdevelopment | 94,328 | 81,421 | 44,381 | 28,113 | 18,508 |
| Selling\tand\tmarketing | 238,977 | 261,524 | 85,520 | 56,239 | 34,200 |
| General\tand\tadministrative | 148,825 | 147,405 | 62,092 | 42,176 | 26,533 |
| Amortization\tof\tintangible\tassets | 51,210 | 25,227 | 5,584 | 1,631 | — |
| Impairment\tof\tgoodwill | 2,340,023 | — | — | — | — |
| Impairment\tof\tintangible\tassets | — | 2,900 | — | — | — |
| Net\tgain\ton\tsale\tof\tintellectual\tproperty | — | — | — | (5,093) | — |
| Acquired\tin-process\tresearch\tand\tdevelopment | — | 565,200 | — | 19,900 | — |
| Restructuring\tcharges | 797 | 6,383 | — | — | — |
|  | 3,653,808 | 1,872,041 | 590,616 | 412,341 | 255,053 |
| (Loss)\tincome\tfrom\toperations | (2,016,674) | (197,542) | 147,752 | 50,339 | 32,631 |
| Interest\tincome | 1,161 | 4,528 | 2,815 | 4,082 | 2,219 |
| Interest\texpense | (69,502) | (84,912) | (2,511) | (1,230) | (376) |
| Other\t(expense)\tincome,\tnet | (3,660) | (1,215) | 433 | 32 | 221 |
| (Loss)\tincome\tbefore\tincome\ttaxes | (2,088,675) | (279,141) | 148,489 | 53,223 | 34,695 |
| Provision\tfor\tincome\ttaxes | 87,562 | 106,476 | 53,911 | 25,800 | 6,439 |
| Net\t(loss)\tincome | $(2,176,237) | $(385,617) | $94,578 | $27,423 | $28,256 |

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 | September	30,<br>2006 | September	24,<br>2005 |
| :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | (In\tthousands,\texcept\tper\tshare\tdata) | (In\tthousands,\texcept\tper\tshare\tdata) |  |  |
| Basic\tnet\t(loss)\tincome\tper\tcommon\tshare\t(1) | $(8.48) | $(1.57) | $0.88 | $0.29 | $0.33 |
| Diluted\tnet\t(loss)\tincome\tper\tcommon\tshare\t(1) | $(8.48) | $(1.57) | $0.86 | $0.28 | $0.31 |
| Weighted\taverage\tnumber\tof\tcommon\tshares\toutstanding\t(1):\nBasic | 256,545 | 245,968 | 106,873 | 93,025 | 85,648 |
| Diluted | 256,545 | 245,968 | 109,669 | 97,240 | 90,252 |
| Consolidated\tBalance\tSheet\tData |  |  |  |  |  |
| Working\tcapital | $492,226 | $352,703 | $220,568 | $123,493 | $172,615 |
| Total\tassets | 5,689,828 | 8,134,632 | 1,066,349 | 856,205 | 279,839 |
| Line\tof\tcredit | — | — | — | 55,000 | — |
| Long-term\tdebt | 1,864,955 | 2,162,420 | 9,222 | 6,163 | — |
| Total\tstockholders'\tequity | 2,512,715 | 4,642,269 | 805,723 | 605,750 | 217,834 |

(1) All	share	and	per	share	data	have	been	retroactively	restated	to	reflect	the	2-for-1	stock	splits	effected	on	November	30,	2005	and	April	2,	2008.

# Item	7. Management's	Discussion	and	Analysis	of	Financial	Condition	and	Results	of	Operations.

The	following	discussion	and	analysis	should	be	read	in	conjunction	with	the	Consolidated	Financial	Statements	and	the	information	described	under	the	caption "Risk	Factors"	included	elsewhere	in	this	report.

We	are	a	developer,	manufacturer	and	supplier	of	medical	imaging	systems	and	diagnostic	and	surgical	products	focused	on	the	healthcare	needs	of	women.	Our core	business	segments	are	focused	on	breast	health,	diagnostics,	GYN	surgical	and	skeletal	health.

Historically,	we	have	developed,	manufactured	and	marketed	products	focused	on	mammography,	breast	care	and	osteoporosis	assessment.	We	have	historically focused	our	resources	on	developing	systems	and	subsystems	offering	superior	image	quality	and	diagnostic	accuracy,	which	has	enabled	us	to	capture	significant market	share	and	customer	loyalty,	despite	the	presence	of	large	competitors.	Our	merger	with	Cytyc	in	the	first	quarter	of	fiscal	2008	enabled	us	to	benefit	from	Cytyc's strengths	in	the	fields	of	obstetrics,	gynecology,	radiation	oncology	and	minimally	invasive	surgery.

Our	breast	health	products	include	a	broad	portfolio	of	breast	imaging	and	related	products	and	accessories,	including	digital	and	film-based	mammography systems,	computer-aided	detection	("CAD"),	minimally	invasive	breast	biopsy	and	tissue	extraction	devices,	breast	biopsy	guidance	systems,	breast	imaging	comfort pads,	and	breast	brachytherapy	products.	We	have	also	developed	a	new	breast	imaging	platform,	"Dimensions",	which	utilizes	a	new	technology,	tomosynthesis,	to produce	three	dimensional	("3D")	images,	as	well	as	conventional	two	dimensional	("2D")	full	field	digital	mammography	(FFDM)	images.	In	the	U.S.,	our	Dimensions product	has	been	approved	by	the	FDA	for	providing	conventional	2D	images,	and	we	are	conducting	further	clinical	trials	to	support	our	PMA	application	for	the	3D configuration.	Our	Dimensions	platform	received	CE	mark	approval	in	Europe	in	fiscal	2008	and	Canadian	registration	in	March	2009,	both	for	2D	and	3D	modes	of imaging.	Currently,	we	cannot	determine	the	timing	of	FDA	approval	for	our	3D	configuration,	if	at	all.	We	also	sell	breast	biopsy	products,	and	within	our	breast brachytherapy	products	is	our	MammoSite	System,	which

provides	accelerated	partial	breast	irradiation	technology.	We	received	FDA	clearance	for	our	MammoSite	ML	radiation	therapy	system,	which	is	a	multi-lumen	device that	provides	the	oncologist	with	additional	flexibility	in	specifically	targeting	radiation	in	the	tissue	where	cancer	is	most	likely	to	recur,	on	August	27,	2009.

Our	diagnostic	products	include	the	ThinPrep	System,	which	is	primarily	used	in	cytology	testing	applications,	such	as	cervical	cancer	screening,	and	the	Rapid Fetal	Fibronectin	Test,	which	assists	physicians	in	assessing	risk	of	pre-term	birth.	In	the	fourth	quarter	of	fiscal	2008,	we	acquired	Third	Wave	Technologies,	Inc. ("Third	Wave")	a	company	that	develops	and	markets	molecular	diagnostic	reagents	for	a	wide	variety	of	DNA	and	RNA	analysis	applications	based	on	its	proprietary Invader	chemistry.	Our	current	clinical	diagnostic	offerings	based	upon	this	Invader	chemistry	include	products	to	assist	in	the	diagnosis	of	human	papillomavirus ("HPV"),	cystic	fibrosis,	cardiovascular	risk	and	other	diseases.	We	received	FDA	approval	of	Cervista	HPV	High	Risk	("HR")	and	Cervista	HPV	16/18	tests	in	March 2009	as	well	as	CE	mark	approval	in	Europe	in	January	2009	for	Cervista	HPV	HR	and	in	May	2009	for	Cervista	HPV	16/18.

Our	GYN	surgical	products	are	made	up	of	the	NovaSure	System	and	the	Adiana	Permanent	Contraception	System	("Adiana	System").	The	Novasure	System enables	physicians	to	treat	women	suffering	from	excessive	menstrual	bleeding	in	a	minimally	invasive	manner	in	order	to	eliminate	or	reduce	their	bleeding.	The Adiana	System	is	a	form	of	permanent	female	contraception	intended	as	an	alternative	to	tubal	ligation.	We	received	FDA	approval	of	the	Adiana	System	in	July	2009 and	CE	mark	approval	in	Europe	in	2008.	Our	revenues	from	the	Adiana	System	have	been	modest	to	date	as	both	the	U.S.	and	international	market	launches	were limited.

Our	skeletal	health	products	primarily	consist	of	dual-energy	X-ray	bone	densitometry	systems,	an	ultrasound-based	osteoporosis	assessment	product,	our Fluoroscan	mini	C-arm	imaging	product	and	our	Esaote	line	of	extremity	Magnetic	Resonance	Imaging	("MRI")	systems	that	were	manufactured	by	an	original equipment	manufacturer.

# RECENT	DEVELOPMENTS

Market	acceptance	of	our	medical	products	in	the	United	States	and	other	countries	is	dependent	upon	the	medical	equipment	purchasing	and	procurement practices	of	our	customers,	patient	demand	for	our	products	and	procedures	and	the	reimbursement	of	patient's	medical	expenses	by	government	healthcare	programs, private	insurers	or	other	healthcare	payors.	Since	the	end	of	calendar	2008,	the	uncertainty	surrounding	world	financial	markets	and	deteriorating	worldwide macroeconomic	conditions	have	caused	and	may	continue	to	cause	the	purchasers	of	medical	equipment	to	decrease	their	medical	equipment	purchasing	and procurement	activities.	Additionally,	constrictions	in	world	credit	markets	have	caused	and	continue	to	cause	our	customers	to	experience	increased	difficulty	securing the	financing	necessary	to	purchase	our	products.	Economic	uncertainty	has	and	may	continue	to	result	in	cost-conscious	consumers	focusing	on	acute	care	rather	than wellness,	which	could	adversely	affect	demand	for	our	products	and	procedures.	Furthermore,	governments	and	other	third	party	payors	around	the	world	facing tightening	budgets	could	move	to	further	reduce	the	reimbursement	rates	or	the	scope	of	coverage	offered,	which	could	adversely	effect	sales	of	our	products.	If	the current	adverse	economic	conditions	continue,	our	business	and	prospects	may	be	negatively	impacted.

As	we	operate	in	a	highly	regulated	industry,	other	governmental	actions	may	adversely	affect	our	business,	operations	or	financial	condition,	including,	without limitation:	new	laws,	regulations	or	judicial	decisions,	or	new	interpretations	of	existing	laws,	regulations	or	decisions,	related	to	health	care	availability,	method	of delivery	and	payment	for	health	care	products	and	services;	changes	in	the	FDA	and	foreign	regulatory	approval	processes	that	may	delay	or	prevent	the	approval	of new	products	and	treatments	and	result	in	lost	market	opportunity;	changes	in	FDA	and	foreign	regulations	that	may	require	additional	safety	monitoring,	labeling changes,	restrictions	on	product	distribution	or	use,	or	other	measures	after	the	introduction	of	our	products	and	treatments	to	market,	which	could	increase	our	costs	of doing	business,	adversely	affect	the	future	permitted	uses	of	approved	products	or	treatments,	or	otherwise	adversely	affect	the	market	for	our	products	and	treatments; new	laws,	regulations	and	judicial	decisions	affecting	pricing	or	marketing	practices;	and	changes	in	the	tax	laws	relating	to	our	operations,	including	those	associated with	proposed	health	care	reform,	such	as	the	tax	proposal	included	in	the	health-care	reform	bill	recently	approved	by	the	Finance	Committee	of	the	U.S.	Senate	that would	assess	an	annual	tax	on	the	revenue	of	medical	device	manufacturers	based	upon	market	share,	could	have	a	material	adverse	impact	on	our	results	of	operations.

Professional	societies,	practice	management	groups,	private	health/science	foundations,	and	organizations	involved	in	healthcare	issues	may	publish	guidelines, recommendations	or	studies	to	the	healthcare	and	patient	communities	from	time	to	time.	Recommendations	of	government	agencies	or	these	other	groups/organizations may	relate	to	such	matters	as	usage,	cost-effectiveness,	and	use	of	related	therapies.	Organizations	like	these	have	in	the	past	made	recommendations	about	our	products and	those	of	our	competitors.	Recommendations,	guidelines	or	studies	that	are	followed	by	patients	and	healthcare	providers	could	result	in	decreased	use	of	our products.	For	example,	recently,	the	American	College	of	Obstetricians	and	Gynecologists	changed	their	recommendations	for	pap	smear	screening,	and	the	United States	Preventive	Services	Task	Force	changed	their	recommendations	for	mammography	screening.	These	new	recommendations,	if	implemented,	could	significantly reduce	the	amount	of	screening	using	our	ThinPrep,	mammography	and	related	products	and	adversely	affect	the	sale	of	those	products.

During	the	first	quarter	of	fiscal	2009,	the	value	of	the	U.S.	dollar	strengthened	against	the	value	of	many	foreign	currencies	and	remained	at	this	strengthened position	throughout	our	second	quarter	of	fiscal	2009.	However,	in	our	fiscal	third	quarter,	the	dollar	weakened	slightly	and	continued	to	weaken	in	the	fourth	quarter.	A majority	of	our	sales	to	international	dealers	are	denominated	in	U.S.	dollars.	The	ongoing	fluctuations	of	the	value	of	the	U.S.	dollar	may	cause	our	products	to	be	less competitive	in	international	markets	and	may	impact	sales	and	margins	over	time.	In	addition,	we	have	international	sales,	principally	in	our	Diagnostics	segment,	that are	denominated	in	foreign	currencies.	The	value	of	these	sales	is	also	impacted	by	fluctuations	in	the	value	of	the	U.S.	dollar.	Given	the	uncertainty	in	the	worldwide financial	markets,	foreign	currency	fluctuations	may	be	significant	in	the	future,	and	if	the	U.S.	dollar	strengthens,	we	may	experience	a	material	adverse	effect	on	our international	sales	and	margins.

# ACQUISITIONS

Fiscal	2008	Acquisitions:

# Third	Wave	Technologies,	Inc.

On	July	24,	2008,	we	completed	our	acquisition	of	Third	Wave	pursuant	to	a	definitive	agreement	dated	June	8,	2008.	We	paid	$11.25	per	share	of	Third	Wave, for	an	estimated	aggregate	purchase	price	of	$591.1	million,	including	$8.1	million	for	the	estimated	fair	value	of	fully	vested	stock-based	awards	and	$7.6	million	in acquisition-related	expenses.	We	concluded	that	the	acquisition	of	Third	Wave	did	not	represent	a	material	business	combination	and	therefore	no	pro	forma	financial information	has	been	provided	herein.	Our	results	of	operations	include	the	results	of	Third	Wave	since	the	acquisition	date,	as	a	component	of	our	Diagnostics	reporting segment.

Our	acquisition	of	Third	Wave	was	accounted	for	using	the	purchase	method	of	accounting,	and	the	total	purchase	price	was	allocated	to	the	assets	acquired	and liabilities	assumed	based	on	our	estimate	of	their	fair	values	as	of	the	date	of	the	acquisition.	The	excess	of	purchase	price	over	those	fair	values	was	recorded	as goodwill.	As	a	result	of	this	acquisition,	we	recorded	a	$195.2	million	charge	for	acquired	in-process	research	and	development	in	the	fourth	quarter	of	fiscal	2008,	and we	have	recorded	additional	amortization	expense	for	the	acquired	intangible	assets	and	additional	interest	expense	on	the	funds	we	borrowed	to	complete	the	acquisition in	both	fiscal	2009	and	2008.

The	allocation	of	the	purchase	price	was	based	upon	preliminary	estimates	of	the	fair	value	of	assets	acquired	and	liabilities	assumed	as	of	July	24,	2008.	We finalized	the	allocation	of	the	purchase	price	in	fiscal	2009	once	we	had	all	necessary	information	to	complete	our	estimates.	The	purchase	price	in	excess	of	net	tangible assets	acquired	was	allocated	to	identifiable	intangible	assets,	including	in-process	research	and	development,	based	upon	a	detailed	valuation	that	relies	on	information and	assumptions	further	described	below.	The	excess	of	the	purchase	price	over	the	fair	value	of	the	net	tangible	and	intangible	assets	acquired	and	liabilities	assumed was	allocated	to	goodwill.

As	part	of	the	preliminary	purchase	price	allocation,	$195.2	million	of	the	purchase	price	was	allocated	to	acquired	in-process	research	and	development	projects. The	amounts	allocated	to	acquired	in-process	research	and	development	represents	programs	for	which	some	research	and	development	has	been	completed,	but technological	feasibility	has	not	been	determined	or	FDA	approval	is	pending.	The	amount	allocated	to	acquired	in-process	research	and	development	represents	the estimated	fair	value	based	on	risk-adjusted	cash	flows	related	to	these	projects	using	a	discount	rate	of	20%.	The	primary	basis	for	determining	the	technological feasibility	of	these	projects	was	obtaining	regulatory	approval	to	market	the	underlying	products.	The	fair	value	attributable	to	these	in-process	projects	was	expensed	at the	time	of	the	acquisition.	If	the	projects	are	not	successful	or	completed	in	a	timely	manner,	we	may	not	realize	the	financial	benefits	expected	for	these	projects	or	for the	transaction	as	a	whole.

The	most	significant	acquired	in-process	technology	related	to	the	Cervista	HPV	HR	screening,	for	which	we	estimated	a	value	of	$151.2	million.	At	the	time	of, and	subsequent	to	the	acquisition,	we	sold	HPV	reagents	that	detect	certain	high	risk	HPV	types	as	Analyte	Specific	Reagents	("ASRs").	In	2006,	Third	Wave	began clinical	trials	for	PMA	submissions	to	the	FDA	for	Cervista	HPV	HR.	Third	Wave	submitted	the	PMAs	in	April	2008	and	received	FDA	approval	in	the	second	quarter of	fiscal	2009.	Since	receiving	FDA	approval,	we	have	begun	to	transition	to	only	selling	HPV	IVDs	and	expect	to	complete	this	transition	by	the	end	of	fiscal	2010.	The HPV	in-process	research	and	development	related	only	to	the	HPV	IVDs	and	the	HPV	ASRs	were	valued	as	developed	technology.

The	estimated	cost	to	complete	Third	Wave's	remaining	in-process	research	and	development	projects	as	of	September	26,	2009	in	the	aggregate	was	$4.0 million.

On	July	17,	2008,	we	entered	into	an	amended	and	restated	credit	agreement	with	Goldman	Sachs	Credit	Partners	L.P.	and	certain	other	lenders	and	borrowed $540.0	million	under	that	facility	to	finance	our	acquisition	of	Third	Wave.

# Cytyc	Corporation

On	October	22,	2007,	we	completed	our	merger	with	Cytyc,	pursuant	to	which	Cytyc	became	our	wholly-owned	subsidiary.	Under	the	terms	of	the	merger agreement,	Cytyc	shareholders	received	1.04	shares	of	our	common	stock	and	$16.50	in	cash	for	each	share	of	Cytyc	common	stock	held	by	them.	The	aggregate consideration	we	paid	for	Cytyc,	including	liabilities	assumed	in	connection	with	the	transaction,	was	$6.2	billion	comprised	as	follows:

•	 merger	consideration	paid	to	the	former	Cytyc	stockholders	of	$5.8	billion,	consisting	of	approximately	$2.1	billion	in	cash	and	approximately	132.0	million shares	of	our	common	stock	with	an	estimated	fair	value	of	approximately	$3.7	billion;

•	 16.5	million	of	fully	vested	stock	options	issued	upon	conversion	of	Cytyc	stock	options	with	an	estimated	fair	value	of	approximately	$241.4	million;

•the	assumption	of	obligations	of	Cytyc	under	its	2.25%	Senior	Convertible	Notes	due	2024	with	a	principal	amount	outstanding	as	of	October	22,	2007	of approximately	$73.0	million	and	an	estimated	fair	value	of	approximately	$125.0	million;	and

•	 direct	acquisition	costs	of	$24.2	million.

In	connection	with	the	merger,	we	entered	into	a	credit	agreement	relating	to	a	senior	secured	credit	facility	with	Goldman	Sachs	Credit	Partners	L.P.	and	certain other	lenders,	in	which	the	lenders	committed	to	provide,	in	the	aggregate,	senior	secured	financing	of	up	to	approximately	$2.55	billion	to	pay	for	the	cash	portion	of	the merger	consideration,	for	repayment	of	existing	debt	of	Cytyc,	for	expenses	relating	to	the	merger	and	for	working	capital	following	the	completion	of	the	merger.	As	of the	closing	of	the	merger,	we	borrowed	$2.35	billion	under	the	credit	facility.	In	December	2007,	we	refinanced	a	substantial	portion	of	this	credit	facility	through	the issuance	of	2.00%	Convertible	Senior	Notes	due	2037	in	the	principal	amount	of	$1.725	billion.	On	July	17,	2008,	after	having	paid	off	all	outstanding	term	loans	under the	credit	facility,	we	amended	and	restated	the	credit	facility	to	finance	our	acquisition	of	Third	Wave.

Our	merger	with	Cytyc	was	accounted	for	using	the	purchase	method	of	accounting,	and	we	were	considered	to	be	the	acquirer	of	Cytyc	for	accounting	purposes. Our	results	of	operations	after	completion	of	the	merger	include	the	operations	of	Cytyc.	As	a	result	of	the	acquisition,	we	recorded	an	in-process	research	and development	of	$370	million	in	the	first	quarter	of	fiscal	2008,	and	we	have	recorded	increased	amortization	expense	for	the	acquired	intangible	assets	and	additional interest	on	the	funds	we	borrowed	to	complete	the	merger	in	both	fiscal	2009	and	2008.

We	have	allocated	the	purchase	price	for	our	merger	with	Cytyc	to	the	assets	acquired	and	liabilities	assumed	based	on	our	estimate	of	their	estimated	fair	values. We	then	allocated	the	purchase	price	in	excess	of	net	tangible	assets	acquired	to	identifiable	intangible	assets,	including	in-process	research	and	development,	based upon	a	detailed	valuation	that	relies	on	information	and	assumptions	further	described	below.	The	excess	of	the	purchase	price	over	the	fair	value	of	the	net	tangible	and intangible	assets	acquired	and	liabilities	assumed	was	allocated	to	goodwill.

# Identifiable	Intangible	Assets

As	part	of	the	purchase	price	allocation,	we	determined	that	Cytyc's	identifiable	intangible	assets	include	existing	technology,	customer	relationships	and	trade names.	Cytyc's	existing	technology	relates	to	patents,	patent	applications	and	know-how	with	respect	to	the	technologies	embedded	in	its	currently	marketed	products.

In	determining	the	allocation	of	the	purchase	price	to	existing	technology,	consideration	was	only	given	to	patent	and	patent	applications	that	relate	to	products	that	have been	approved	by	the	FDA.	Cytyc's	customer	relationship	assets	relate	to	relationships	that	Cytyc's	sales	force	has	developed	with	OB/GYNS,	breast	surgeons,	clinical laboratories	and	other	physicians.	The	trade	names	relate	to	both	the	Cytyc	name	as	well	as	key	product	names.

We	used	the	income	approach	to	value	the	existing	technology	and	marketing	based	intangibles.	This	approach	calculates	fair	value	by	discounting	the	after-tax cash	flows	back	to	a	present	value.	The	baseline	data	for	this	analysis	was	the	cash	flow	estimates	used	to	price	the	transaction.	Cash	flows	were	forecasted	for	each intangible	asset,	and	then	discounted	based	on	an	appropriate	discount	rate.	The	discount	rates	applied	were	benchmarked	with	reference	to	the	implied	rate	of	return from	the	transaction	model	as	well	as	Cytyc's	weighted	average	cost	of	capital	based	on	the	capital	asset	pricing	model.

In	estimating	the	useful	life	of	the	acquired	assets,	we	considered	ASC	350,	Intangible—Goodwill	and	Other,	Subsection	30-35-3	(formerly	paragraph	11	of SFAS	No.	142,	Goodwill	and	Other	Intangible	Assets),	which	lists	the	pertinent	factors	to	be	considered	when	estimating	the	useful	life	of	an	intangible	asset.	These factors	included	a	review	of	the	expected	use	by	the	combined	company	of	the	assets	acquired,	the	expected	useful	life	of	another	asset	(or	group	of	assets)	related	to	the acquired	assets,	legal,	regulatory	or	other	contractual	provisions	that	may	limit	the	useful	life	of	an	acquired	asset	or	may	enable	the	extension	of	the	useful	life	of	an acquired	asset	without	substantial	cost,	the	effects	of	obsolescence,	demand,	competition	and	other	economic	factors,	and	the	level	of	maintenance	expenditures	required to	obtain	the	expected	future	cash	flows	from	the	asset.	We	are	amortizing	these	intangible	assets	over	their	estimated	useful	lives	either	using	a	method	that	is	based	on estimated	future	cash	flows	as	we	believe	this	will	approximate	the	pattern	in	which	the	economic	benefits	of	the	assets	will	be	utilized,	or	on	a	straightline	basis	if	those cash	flows	are	not	reliably	determinable.

# Acquired	In-Process	Research	and	Development

As	part	of	the	purchase	price	allocation	for	our	merger	with	Cytyc,	we	allocated	approximately	$370	million	of	the	purchase	price	to	acquired	in-process	research and	development	projects.	The	amount	allocated	to	acquired	in-process	research	and	development	represented	the	estimated	fair	value	based	on	risk-adjusted	cash	flows related	to	in-process	projects	that	had	not	yet	reached	technological	feasibility	and	had	no	alternative	future	uses	as	of	the	date	of	the	merger.	The	primary	basis	for determining	the	technological	feasibility	of	these	projects	was	obtaining	regulatory	approval	to	market	the	underlying	products.	The	fair	value	attributable	to	these	in- process	projects	was	expensed	at	the	time	of	the	merger.	If	the	projects	are	not	successful	or	completed	in	a	timely	manner,	we	may	not	realize	the	financial	benefits expected	for	these	projects	or	for	the	transaction	as	a	whole.

The	fair	value	assigned	to	acquired	in-process	research	and	development	was	determined	by	estimating	the	costs	to	develop	the	acquired	technology	into commercially	viable	products,	estimating	the	resulting	net	cash	flows	from	the	projects,	and	discounting	the	net	cash	flows	to	their	present	value.	The	revenue projections	used	to	value	the	acquired	in-process	research	and	development	was	based	on	estimates	of	relevant	market	sizes	and	growth	factors,	expected	trends	in technology,	and	the	nature	and	expected	timing	of	new	product	introductions	by	us	and	our	competitors.	The	resulting	net	cash	flows	from	such	projects	were	based	on our	estimates	of	cost	of	sales,	operating	expenses,	and	income	taxes	from	such	projects.

The	rates	utilized	to	discount	the	net	cash	flows	to	their	present	value	were	based	on	estimated	cost	of	capital	calculations	and	the	implied	rate	of	return	from	the transaction	model	plus	a	risk	premium.	Due	to	the	nature	of	the	forecasts	and	the	risks	associated	with	the	developmental	projects,	appropriate	risk-adjusted	discount rates	were	used	for	the	in-process	research	and	development	projects.	The	discount	rates	are	based	on	the	stage	of	completion	and	uncertainties	surrounding	the successful	development	of	the	purchased	in-process	technology	projects.

The	acquired	in-process	research	and	development	of	Cytyc	related	to	the	following	research	and	development	projects:	Adiana	System	and	expanded	labeling	of the	NovaSure	System,	Gestiva,	the	ThinPrep	Imaging	System,	the	ThinPrep	Processor	and	Helica.

The	most	significant	acquired	in-process	technology	related	to	the	Adiana	System	for	which	we	estimated	a	value	of	approximately	$220.0	million.	The	system	is an	incisionless	trans-cervical	permanent	sterilization	device	intended	to	be	used	during	an	office	or	hospital	based	procedure.	In	January	2008,	the	FDA	requested	an additional	year	of	clinical	trial	data	for	the	product,	and	in	July	2009,	we	received	FDA	approval	for	the	product.

On	January	16,	2008,	we	entered	into	a	definitive	agreement	to	sell	our	rights	to	Gestiva,	a	drug	being	developed	to	be	used	in	the	prevention	of	preterm	birth	in pregnant	women	with	a	history	of	spontaneous	preterm	birth,	to	K-V	Pharmaceutical	Company	for	a	total	purchase	price	of	$82.0	million.	A	portion	of	the	purchase	price is	to	be	paid	upon	final	approval	by	the	FDA	of	a	Gestiva	New	Drug	Application	("NDA")	on	or	before	February	19,	2010	and	the	production	of	a	quantity	of	Gestiva suitable	to	enable	the	commercial	launch	of	the	product.	Either	party	has	the	right	to	terminate	the	agreement	if	FDA	approval	is	not	obtained	by	February	19,	2010.	In fiscal	2008,	we	received	$9.5	million	of	the	purchase	price,	and	the	balance	is	due	upon	the	satisfaction	of	the	above	conditions.	We	have	agreed	to	continue	our	efforts to	obtain	FDA	approval	of	the	NDA	for	Gestiva	as	part	of	this	arrangement,	for	which	we	are	being	reimbursed	by	K-V	Pharmaceutical.	All	costs	incurred	in	these efforts	are	to	be	reimbursed	by	K-V	Pharmaceutical	and	are	being	recorded	as	a	credit	against	research	and	development	expenses.	We	have	recorded	the	$9.5	million	as a	deferred	gain	within	current	liabilities	of	our	Consolidated	Balance	Sheet.	We	expect	the	gain	will	be	recognized	upon	the	closing	of	the	transaction	following	final FDA	approval	of	the	Gestiva	NDA	or	if	the	agreement	is	terminated.	We	had	allocated	$53.4	million	to	acquired	in-process	research	for	this	product	as	part	of	the	initial purchase	price	allocation.	We	cannot	assure	that	we	will	be	able	to	obtain	the	requisite	FDA	approval,	that	the	transaction	will	be	completed	or	that	we	will	receive	the balance	of	the	purchase	price.	Moreover,	if	K-V	Pharmaceutical	terminates	the	agreement	as	a	result	of	our	breach	of	a	material	representation,	warranty,	covenant	or agreement,	we	will	be	required	to	return	the	funds	previously	received	by	us	as	well	as	expenses	reimbursed	to	us	by	K-V.

Subsequent	to	the	merger	with	Cytyc,	we	decided	to	discontinue	the	development	of	Cytyc's	Helica	Thermal	Coagulator	System	product.	We	will	not	incur	any further	costs	or	realize	any	future	cash	flows	from	this	product.	Our	intangible	asset	valuation	for	Cytyc	included	$2.9	million	related	to	customer	relationships	for Helica.	As	a	result	of	the	Helica	product	discontinuation,	we	recorded	an	impairment	charge	of	$2.9	million	during	the	first	quarter	of	fiscal	2008.

The	other	in-process	research	and	development	projects	we	acquired	in	our	merger	with	Cytyc	were	at	different	stages	of	development,	ranging	from	the	early stages	of	development	to	Phase	IIb	prototype	building,	ongoing	clinical	trials	and	submission	to	the	FDA	of	PMA	and	drug	applications.	FDA	approval	or	clearance	had not	been	granted	for	any	of	the	products	classified	as	in-process	research	and	development,	nor	had	Cytyc	received	any	foreign	approvals	or	clearances	for	any	of	these products.	All	products	classified	as	in-process	research	and	development	require	various	levels	of	in-house	and	external	testing,	clinical	trials	and	approvals	from	the FDA	before	these	future	products	can	be	marketed.	The	estimated	cash	requirements	to	complete	the	remaining	products	as	of	September	26,	2009	were	expected	to	be approximately	$3.8	million.

The	successful	development	of	new	products	and	product	enhancements	is	subject	to	numerous	risks	and	uncertainties,	both	known	and	unknown,	including, unanticipated	delays,	access	to	capital,	budget	overruns,	technical	problems	and	other	difficulties	that	could	result	in	the	abandonment	or	substantial	change	in	the design,	development	and	commercialization	of	these	new	products	and	enhancements,	including,	for	example	changes	requested	by	the	FDA	in	connection	with	PMA	or NDA	applications	for	products	or	510(k)	notification.	Given	the	uncertainties	inherent	with	product	development	and	introduction,	we	cannot	provide	assurance	that	any of	our	product	development	efforts	will	be	successful	on	a	timely	basis	or	within	budget,	if	at	all.	Our	failure	to	develop	new	products	and	product	enhancements	on	a timely	basis	or	within	budget	could	harm	our	results	of	operations	and	financial	condition.

# Goodwill

The	purchase	price	allocation	for	Cytyc	initially	resulted	in	goodwill	of	approximately	$3.8	billion.	The	factors	contributing	to	the	recognition	of	this	amount	of goodwill	were	based	upon	several	strategic	and	synergistic	benefits	that	were	expected	to	be	realized	from	the	combination.	These	benefits	include	the	expectation	that our	complementary	products	and	technologies	will	create	a	leading	women's	healthcare	company	with	an	enhanced	presence	in	hospitals,	private	practices	and healthcare	organizations.	We	also	expected	to	realize	substantial	synergies	through	the	use	of	Cytyc's	OB/GYN	and	breast	surgeon	sales	channel	to	cross-sell	our existing	and	future	products.	Our	merger	with	Cytyc	provided	us	broader	channel	coverage	within	the	United	States	and	expanded	geographic	reach	internationally,	as well	as	increased	scale	and	scope	for	further	expanding	operations	through	product	development	and	complementary	strategic	transactions.

As	a	result	of	the	Company's	interim	impairment	analysis	of	goodwill	as	of	December	27,	2008,	the	Company	recorded	an	impairment	charge	of	$2.34	billion related	to	the	goodwill	from	the	merger	with	Cytyc.	See	the	Critical	Accounting	Policies	below	for	additional	information	pertaining	to	the	interim	impairment	analysis of	the	Company's	goodwill.

# Fiscal	2007	Acquisition:

# BioLucent,	Inc.

On	September	18,	2007,	we	completed	the	acquisition	of	BioLucent,	Inc.	("BioLucent")	pursuant	to	a	definitive	agreement	dated	June	20,	2007.	We	have concluded	that	the	acquisition	of	BioLucent	does	not	represent	a	material	business	combination	and	therefore	no	pro	forma	financial	information	has	been	provided herein.	BioLucent,	previously	located	in	Aliso	Viejo,	California,	develops,	markets	and	sells	MammoPad	breast	cushions	to	decrease	the	discomfort	associated	with mammography.	Prior	to	the	acquisition,	BioLucent's	primary	research	and	development	efforts	were	directed	at	its	brachytherapy	business,	which	was	focused	on	breast cancer	therapy.	Prior	to	the	acquisition,	BioLucent	spun-off	its	brachytherapy	technology	and	business	to	the	holders	of	BioLucent's	outstanding	shares	of	capital	stock. As	a	result,	we	only	acquired	BioLucent's	MammoPad	cushion	business	and	related	assets.	We	invested	$1	million	directly	in	the	spun-off	brachytherapy	business	in exchange	for	shares	of	preferred	stock	issued	by	the	new	business.

The	aggregate	purchase	price	for	BioLucent	was	$73.2	million,	consisting	of	$6.8	million	in	cash	and	issuance	of	2.3	million	shares	of	our	common	stock	valued at	$63.2	million,	debt	assumed	and	paid	off	of	$1.6	million	and	$1.6	million	for	acquisition	related	fees	and	expenses.	The	acquisition	also	provided	for	up	to	two	annual earn-out	payments	not	to	exceed	$15.0	million	in	the	aggregate	based	on	BioLucent's	achievement	of	certain	revenue	targets.	We	considered	the	provision	of	EITF	Issue No.	95-8,	Accounting	for	Contingent	Consideration	Paid	to	the	Shareholders	of	an	Acquired	Enterprise	in	a	Purchase	Business	Combination,	and	concluded	that	this contingent	consideration	will	represent	additional	purchase	price.	As	a	result,	goodwill	will	be	increased	by	the	amount	of	the	additional	consideration,	if	any,	when	it becomes	due	and	payable.	As	of	September	26,	2009,	we	have	not	recorded	any	amounts	for	these	potential	earn-outs.

# RESULTS	OF	OPERATIONS

The	following	table	sets	forth,	for	the	periods	indicated,	the	percentage	of	total	revenues	represented	by	items	as	shown	in	our	Consolidated	Statements	of Operations.	All	dollar	amounts	in	tables	are	presented	in	thousands.

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |
| Product\tsales | 87.2% | 89.7% | 85.2% |
| Service\tand\tother\trevenues | 12.8 | 10.3 | 14.8 |
|  | 100.0 | 100.0 | 100.0 |
| Costs\tand\texpenses: |  |  |  |
| Cost\tof\tproduct\tsales | 28.7 | 32.0 | 36.2 |
| Cost\tof\tproduct\tsales—amortization\tof\tintangible\tassets | 9.5 | 5.7 | 1.5 |
| Cost\tof\tproduct\tsales—impairment\tof\tintangible\tassets | 0.2 | — | — |
| Cost\tof\tservice\tand\tother\trevenues | 9.2 | 9.0 | 15.5 |
| Research\tand\tdevelopment | 5.8 | 4.9 | 6.0 |
| Selling\tand\tmarketing | 14.6 | 15.6 | 11.6 |
| General\tand\tadministrative | 9.2 | 8.8 | 8.4 |
| Amortization\tof\tintangible\tassets | 3.1 | 1.5 | 0.8 |
| Impairment\tof\tgoodwill | 142.9 | — | — |
| Impairment\tof\tintangible\tassets | — | 0.2 | — |
| Acquired\tin-process\tresearch\tand\tdevelopment | — | 33.7 | — |
| Restructuring\tcharges | — | 0.4 | — |
|  | 223.2 | 111.8 | 80.0 |
| (Loss)\tincome\tfrom\toperations | (123.2) | (11.8) | 20.0 |
| Interest\tincome | 0.1 | 0.3 | 0.3 |
| Interest\texpense | (4.2) | (5.1) | (0.3) |
| Other\t(expense)\tincome,\tnet | (0.2) | (0.1) | 0.1 |
| (Loss)\tincome\tbefore\tincome\ttaxes | (127.5) | (16.7) | 20.1 |
| Provision\tfor\tincome\ttaxes | 5.4 | 6.3 | 7.3 |
| Net\t(loss)\tincome | (132.9)% | (23.0)% | 12.8% |

# Fiscal	Year	Ended	September	26,	2009	Compared	to	Fiscal	Year	Ended	September	27,	2008

# Product	Sales.

|  | September	26,	2009 | September	26,	2009 | September	27,	2008 | September	27,	2008 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | Amount | %\tof\tTotal\nRevenue | Amount | %\tof\tTotal\nRevenue | Amount | % |
| Product\tSales |  |  |  |  |  |  |
| Breast\tHealth | $553,065 | 34% | $731,267 | 44% | $(178,202) | (24)% |
| Diagnostics | 544,143 | 33% | 474,633 | 28% | 69,510 | 15% |
| GYN\tSurgical | 263,187 | 16% | 219,305 | 13% | 43,882 | 20% |
| Skeletal\tHealth | 66,591 | 4% | 77,242 | 5% | (10,651) | (14)% |
|  | $1,426,986 | 87% | $1,502,447 | 90% | $(75,461) | (5)% |

In	fiscal	2009,	our	product	sales	decreased	5%	compared	to	fiscal	2008,	primarily	due	to	a	$178.2	million	decrease	in	revenues	from	our	Breast	Health	products and,	to	a	lesser	extent,	a	$10.7	million	decrease	in	revenues	from	our	Skeletal	Health	products,	partially	offset	by	increased	revenues	in	our	Diagnostics	and	GYN Surgical	segments	of	$69.5	million	and	$43.9	million,	respectively.	These	increases	were	due	in	part	to	a	full	year	of	revenue	for	these	segments	in	fiscal	2009	compared to	the	inclusion	of	only	49	weeks	of	operating	results	for	fiscal	2008	as	we	acquired	these	segments	with	the	Cytyc	merger	on	October	22,	2007.	Included	in	the increased	Diagnostics'	revenue	is	additional	revenue	from	Third	Wave	of	$31.2	million.	We	acquired	Third	Wave	in	the	fourth	quarter	of	fiscal	2008	and	as	such	had	a full	year	of	revenue	in	fiscal	2009	compared	to	11	weeks	in	fiscal	2008.

Breast	Health	product	sales	decreased	24%	in	fiscal	2009	compared	to	fiscal	2008,	primarily	due	to	a	$150.0	million	decrease	in	digital	mammography	systems sales	caused	primarily	by	a	reduction	in	the	number	of	Selenia	full	field	mammography	systems	and	related	components,	including	our	CAD	software,	sold	domestically, and	to	a	lesser	extent,	internationally.	In	addition,	we	have	seen	a	slight	deterioration	of	average	selling	prices,	both	domestically	and	internationally,	driven	by	the current	economic	environment	for	capital	purchases,	and	less	expensive	configurations	of	the	units	being	sold.	Also	contributing	to	the	decrease	was	a	$15.6	million decrease	in	multicare	stereotactic	table	sales	primarily	attributable	to	a	decrease	in	the	number	of	systems	sold,	principally	in	the	U.S.	We	attribute	the	decline	in	sales	of breast	health	capital	equipment	and	related	products	primarily	to	the	more	difficult	economic	and	capital	spending	environment.	We	also	experienced	a	decline	in	our MammoSite	single-lumen	products	of	$10.2	million	due	to	increased	competition	as	a	result	of	lower	reimbursement	rates	compared	to	multi-lumen	products.	We received	FDA	clearance	for	our	multi-lumen	product	on	August	27,	2009,	which	we	expect	will	improve	our	competitive	position.	Partially	offsetting	the	declines	in sales	referenced	above	was	an	$18.2	million	increase	in	revenues	from	our	breast	biopsy	products.

Diagnostics	product	sales,	which	include	ThinPrep,	Rapid	Fetal	Fibronectin	Test	and	our	Third	Wave	products,	increased	15%	in	fiscal	2009	compared	to	fiscal 2008.	This	increase	was	primarily	due	to	the	addition	of	Third	Wave	revenues	of	$37.1	million	in	fiscal	2009	compared	to	$5.9	million	in	fiscal	2008	and,	to	a	lesser extent,	an	increase	in	the	number	of	ThinPrep	Pap	Tests.	The	increase	in	fiscal	2009	is	also	due	to	the	inclusion	of	Cytyc's	results	for	the	full	fiscal	year	versus	49	weeks in	fiscal	2008.	While	we	received	FDA	approval	of	the	Cervista	HPV	HR	and	Cervista	HPV	16/18	tests	in	March	2009,	the	revenue	contribution	has	been	modest	in fiscal	2009.

GYN	Surgical	product	sales,	which	include	our	NovaSure	System	and	Adiana	System,	increased	20%	in	fiscal	2009	compared	to	fiscal	2008.	This	increase	was primarily	due	to	a	significant	increase	in	the	number	of	NovaSure	systems	sold.	The	increase	is	also	due	to	the	inclusion	of	GYN	Surgical's	revenue	for	the	full	fiscal year	versus	49	weeks	in	fiscal	2008.	Revenues	from	the	Adiana	System,	which	we	received	FDA	approval	on	July	6,	2009,	have	been	modest	as	the	US	and international	market	launches	have	been	limited.	We	recently	transferred	the	manufacturing	of	our	Adiana	System	to	our	new	manufacturing	facility	in	Coyol,	Costa Rica,	and	we	are	in	the	process	of	ramping	up	production	to	support	the	full	scale	launch	of	this	product.	We	could	incur	delays	and	unanticipated	costs	in	connection with	our	transfer	and	ramping	up	these	manufacturing	operations	in	our	new	facility	that	could	delay	our	full	scale	launch	of	the	Adiana	System.

Skeletal	Health	product	sales	decreased	14%	in	fiscal	2009	compared	to	fiscal	2008,	primarily	due	to	a	$5.8	million	decrease	in	osteoporosis	assessment	product sales	caused	primarily	by	a	decrease	in	the	number	of	bone	densitometry	systems	sold	worldwide	and	lower	average	selling	prices.	This	product	line	continues	to	face	a difficult	capital	equipment	environment	in	the	U.S.	and	the	ongoing	effects	of	the	reduction	in	reimbursement	for	osteoporosis	assessment	exams	in	the	U.S.	In	addition, we	experienced	a	reduction	in	revenues	of	$2.8	million	in	mini-C	arm	sales	and	a	decrease	in	extremity	MRI	sales	of	$2.1	million.	The	decrease	in	mini-C	arm	and extremity	MRI	sales	was	due	to	a	decrease	in	the	number	of	systems	sold.

In	fiscal	2009	and	2008,	approximately	80%	of	product	sales	were	generated	in	the	U.S.,	12%	in	Europe,	4%	in	Asia,	and	4%	in	other	international	markets.

#       Service	and	Other	Revenues.

| Service	and	Other	Revenues. |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Years\tEnded |  |  |  |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 | September\t27,\t2008 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Service\tand\tOther\tRevenues | $210,148 | 13% | $172,052 | 10% | $38,096 | 22% |

Service	and	other	revenues	is	primarily	comprised	of	revenue	generated	from	our	field	service	organization	to	provide	ongoing	service,	installation	and	repair	of our	products.	Service	and	other	revenues	increased	22%	in	fiscal	2009	compared	to	fiscal	2008,	primarily	in	our	Breast	Health	segment,	due	to	an	increase	in	the	number of	service	contracts	executed	driven	by	an	increase	in	the	installed	base	of	our	full	field	digital	mammography	systems	and	detectors.

# Cost	of	Product	Sales.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 |  | Change | Change |
|  |  | %\tof\tProduct |  | %\tof\tProduct |  |  |
|  | Amount | Sales | Amount | Sales | Amount | % |
| Cost\tof\tProduct\tSales | $470,295 | 33% | $535,082 | 36% | $(64,787) | (12)% |
| Cost\tof\tProduct\tSales—Amortization\tof\tIntangible\tAssets | \t 155,519 | 11% | 95,310 | 6% | 60,209 | 63% |
| Cost\tof\tProduct\tSales—Impairment\tof\tIntangible\tAssets | 4,065 | 0% | — | — | 4,065 | 100% |
|  | $629,879 | 44% | $630,392 | 42% | $(513) | (0)% |

Product	sales	gross	margin	decreased	to	56%	in	fiscal	2009	compared	to	58%	in	fiscal	2008	primarily	due	to	the	significant	increase	in	intangible	asset amortization	expense	of	$60.2	million,	partially	offset	by	the	increase	in	sales	of	our	higher	gross	margin	disposable	products	in	our	Diagnostics	and	GYN	Surgical segments.

Cost	of	Product	Sales.	The	cost	of	product	sales	as	a	percentage	of	product	sales	in	fiscal	2009	was	33%	compared	to	36%	in	fiscal	2008.	This	improvement	was primarily	attributable	to	the	increase	in	sales	of	our	Diagnostics	and	GYN	Surgical	segments	as	a	percentage	of	our	total	product	sales	as	these	products	have	a	lower product	cost	as	a	percent	of	revenue	compared	to	our	Breast	Health	and	Skeletal	Health	products.	In	addition,	our	cost	of	product	sales	in	fiscal	2008	included	additional costs	associated	with	the	write-up	of	acquired	inventory	to	fair	value	in	purchase	accounting	of	$42.4	million	related	to	the	merger	with	Cytyc	and	$3.9	million	related	to the	Third	Wave	acquisition.	In	fiscal	2009,	the	impact	of	these	costs	was	only	$1.2	million	related	to	the	Third	Wave	inventory	write-up.	Our	margins	in	fiscal	2009	were also	positively	impacted	by	our	cost	reduction	initiatives	implemented	in	the	first	half	of	2009,	which	included	securing	lower	material	costs	from	our	vendors.	Partially offsetting	these	improvements,	was	a	decrease	in	gross	margin	in	our	Breast	Health	segment,	primarily	attributable	to	lower	absorption	of	manufacturing	costs	due	to lower	volumes	and	to	a	lesser	extent,	a	slight	deterioration	of	average	selling	prices,	driven	by	the	current	economic	environment	for	capital	purchases,	and	less expensive	configurations	of	the	units	being	sold.

Fiscal	2009	and	2008	cost	of	product	sales	included	charges	of	$0.7	million	and	$4.5	million,	respectively,	for	impairment	of	MRI	inventory	and	a	related purchase	obligation,	which	was	fulfilled	in	fiscal	2009.

Cost	of	Product	Sales—Amortization	of	Intangible	Assets.	Amortization	of	intangible	assets	relates	to	acquired	developed	technology,	which	are	generally	being amortized	over	their	estimated	useful	lives	of	between	8.5	and	15	years	using	a	straight-line	method	or,	if	reliably	determinable,	based	on	the	pattern	in	which	the

economic	benefits	of	the	assets	are	expected	to	be	consumed	utilizing	expected	undiscounted	future	cash	flows.	The	increase	in	amortization	expense	is	due	partly	to	the method	of	recognition	based	on	expected	economic	benefits	of	the	underlying	assets,	primarily	related	to	the	intangible	assets	acquired	in	the	merger	with	Cytyc,	which increased	to	$133.2	million	from	$80.2	million	in	fiscal	2008,	and	a	full	year	of	Third	Wave	related	amortization	of	$7.8	million	compared	to	$1.1	million	in	fiscal	2008.

Cost	of	Product	Sales—Impairment	of	Intangible	Assets.	During	the	second	quarter	of	fiscal	2009,	we	decided	to	discontinue	selling	a	certain	product	acquired in	the	Third	Wave	acquisition	as	a	result	of	communications	from	the	FDA	in	the	second	quarter	of	2009	regarding	the	approval	process.	This	decision	was	an	indicator of	impairment,	and	we	performed	an	impairment	test,	which	indicated	the	undiscounted	cash	flows	the	asset	group	would	generate	over	its	remaining	estimated	useful life	would	not	be	sufficient	to	recover	the	carrying	value	of	the	asset	group.	Due	to	the	insufficient	cash	flows	to	be	generated,	the	Company	determined	that	the	related asset	group's	fair	value	was	de	minimus	and	recorded	an	impairment	charge	of	$4.1	million	comprised	of	developed	technology	of	$2.6	million	and	capitalized	license fees	of	$1.5	million.

#       Cost	of	Service	and	Other	Revenues.

Service	and	other	revenues	gross	margin	has	improved	to	29%	in	fiscal	2009	from	12%	in	fiscal	2008	due	in	part	to	the	improved	absorption	of	fixed	service	costs and	the	continued	growth	of	service	contract	revenue,	primarily	in	the	Breast	Health	segment.	We	have	increased	the	number	of	service	contracts	due	to	our	increased installed	base	of	our	full	field	digital	mammography	systems	and	detectors.	In	addition,	warranty	costs	have	decreased	due	to	lower	failure	rates	in	our	products.

# Operating	Expenses.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 | September\t27,\t2008 | Change | Change |
|  | Amount | %\tof\tTotal\nRevenue | Amount | %\tof\tTotal\nRevenue | Amount | % |
| Operating\tExpenses |  |  |  |  |  |  |
| Research\tand\tDevelopment | $94,328 | 6% | $81,421 | 5% | $12,907 | 16\t% |
| Selling\tand\tMarketing | 238,977 | 15% | 261,524 | 16% | (22,547) | (9)% |
| General\tand\tAdministrative | 148,824 | 9% | 147,405 | 9% | 1,419 | 1\t% |
| Amortization\tof\tIntangibles | 51,210 | 3% | 25,227 | 1% | 25,983 | 103\t% |
| Impairment\tof\tGoodwill | 2,340,023 | 143% | — | — | 2,340,023 | 100\t% |
| Impairment\tof\tIntangibles | — | — | 2,900 | — | (2,900) | (100)% |
| Acquired\tIn-Process\tResearch\tand\tDevelopment | — | — | 565,200 | 34% | (565,200) | (100)% |
| Restructuring\tCharges | 797 | — | 6,383 | — | (5,586) | (88)% |
|  | $2,874,159 | 176% | $1,090,060 | 65% | $1,784,099 | 164\t% |

Research	and	Development	Expenses.	Research	and	development	expenses	increased	16%	in	fiscal	2009	compared	to	fiscal	2008.	These	increases	were	primarily due	to	a	full	year	of	expenses	of	$20.7	million	related	to	Third	Wave	compared	to	$3.7	million	in	fiscal	2008,	and	to	a	lesser	extent	a	full	year	of	operations	from	Cytyc in

fiscal	2009	compared	to	49	weeks	in	fiscal	2008.	In	addition,	there	was	an	increase	in	expenses	related	to	the	anticipated	launch	of	the	Adiana	System	and	additional clinical	spending	for	a	number	of	projects.	These	increases	were	partially	offset	by	a	decrease	in	related	headcount,	bonus	and	other	discretionary	areas	resulting	from	a number	of	cost	reduction	initiatives	implemented	in	the	first	half	of	2009.	In	fiscal	2008,	we	recorded	a	$1.8	million	charge	related	to	a	change	in	control	payment associated	with	the	merger	with	Cytyc.	We	expect	research	and	development	expenses	to	increase	in	fiscal	2010	as	we	conduct	additional	clinical	trials	and	research	to obtain	FDA	approval	for	our	tomosynthesis	product	(Dimensions	3D)	and	continue	our	efforts	to	improve	our	existing	products	and	develop	next	generation	products.

Selling	and	Marketing	Expenses.	Selling	and	marketing	expenses	decreased	9%	in	fiscal	2009	compared	to	fiscal	2008	primarily	due	to	lower	commission expenses	as	a	result	of	lower	product	revenues,	lower	bonuses	driven	by	the	Company's	operating	results,	reduced	advertising	and	trade	show	expenditures,	and	other cost	reductions	including	lower	employee	headcount	resulting	from	our	cost	reduction	initiatives	implemented	in	the	first	half	of	2009.	These	decreases	were	partially offset	by	an	increase	of	$6.8	million	related	to	the	inclusion	of	a	full	year	of	operations	of	Third	Wave,	as	well	as	a	full	year	of	operations	from	Cytyc	in	fiscal	2009 compared	to	49	weeks	in	fiscal	2008.

General	and	Administrative	Expenses.	General	and	administrative	expenses	increased	slightly	in	fiscal	2009	compared	to	fiscal	2008.	The	increase	in	the	current year	is	primarily	due	to	an	increase	of	$7.4	million	related	to	the	inclusion	of	a	full	year	of	operations	of	Third	Wave,	as	well	as	a	full	year	of	operations	from	Cytyc	in fiscal	2009	compared	to	49	weeks	in	fiscal	2008.	In	addition,	stock-based	compensation	expense	was	higher	by	$5.2	million	in	fiscal	2009.	Partially	offsetting	these increases	was	a	decrease	in	bonus,	headcount	and	related	compensation,	and	other	expenses	as	a	result	of	our	cost	reduction	initiatives	implemented	in	the	first	half	of 2009.

Amortization	of	Intangible	Assets.	Amortization	of	intangible	assets	results	from	customer	relationships	and	trade	names	related	to	our	acquisitions.	These intangible	assets	are	being	amortized	over	their	estimated	useful	lives	of	between	8.5	and	30	years	using	a	straight-line	method	or,	if	reliably	determinable,	based	on	the pattern	in	which	the	economic	benefits	of	the	assets	are	expected	to	be	consumed	utilizing	expected	undiscounted	future	cash	flows.	The	increases	in	these	costs primarily	relate	to	additional	Cytyc-related	amortization	based	on	the	pattern	of	economic	benefit.

Impairment	of	Goodwill.	Based	upon	a	combination	of	factors,	including	the	deteriorating	macro-economic	environment,	declines	in	the	stock	market	and	the decline	of	our	market	capitalization	significantly	below	the	book	value	of	our	net	assets,	we	concluded	that	potential	goodwill	impairment	indicators	existed	as	of December	27,	2008.	As	a	result,	we	performed	an	interim	goodwill	impairment	analysis	as	of	December	27,	2008.	Step	1	of	the	impairment	analysis	indicated	that	the carrying	value	of	the	net	assets	of	certain	of	our	reporting	units,	acquired	in	connection	with	the	Cytyc	acquisition,	exceeded	the	estimated	fair	value	of	those	reporting units.	As	a	result,	we	were	required	to	complete	Step	2	of	the	impairment	analysis	to	determine	the	amount,	if	any,	of	goodwill	impairment	charges.	We	completed	Step	2 of	this	analysis	during	the	second	quarter	of	fiscal	2009	and	recorded	a	goodwill	impairment	charge	of	$2.34	billion	in	the	second	quarter	of	fiscal	2009.	Refer	to	Note	2 in	our	Consolidated	Financial	Statements	contained	in	Item	15	of	this	Annual	Report	for	more	information.	We	completed	our	fiscal	2009	annual	goodwill	impairment analysis	as	of	the	first	day	of	our	fourth	quarter	and	no	additional	impairments	were	recorded.

Impairment	of	Intangible	Assets.	Subsequent	to	the	merger	with	Cytyc,	we	discontinued	the	development	of	Cytyc's	Helica	Thermal	Coagulator	System	product, used	for	the	treatment	of	endometriosis.	We	will	not	realize	any	future	cash	flows	from	this	product.	Our	intangible	asset	valuation	for	Cytyc	included	approximately $2.9	million	related	to	customer	relationships	for	Helica.	As	a	result	of	the	Helica	product	discontinuation,	we	recorded	an	impairment	charge	of	$2.9	million	in	fiscal 2008.

Acquired	In-Process	Research	and	Development	Expenses.	The	$565.2	million	charge	for	in-process	research	and	development	expense	is	comprised	of	a $370.0	million	charge	recorded	in	connection	with	our	merger	with	Cytyc	and	a	$195.2	million	charge	recorded	in	connection	with	the	Third	Wave	acquisition.	Both	of these	charges	are	described	in	further	detail	above	under	the	respective	acquisitions.

Restructuring	Charges.	During	the	fourth	quarter	of	2009,	we	closed	our	manufacturing	facility	in	Shanghai,	China	due	to	Chinese	government	requirements	to move	the	facility.	This	facility,	which	manufactured	organic	photoconductor	drum	coatings,	was	acquired	in	connection	with	the	AEG	acquisition	in	2006,	and contributed	approximately	$9.7	million	of	revenue	to	our	Breast	Health	business	in	fiscal	2009.	In	connection	with	this	action,	we	recorded	severance	benefits	and	other costs	of	$0.8	million.	The	majority	of	employees	were	terminated	and	all	termination	benefits	were	paid	as	of	September	26,	2009.	Additional	clean-up	and	closure	costs will	be	recorded	in	fiscal	2010,	however,	we	do	not	expect	these	costs	to	be	material	to	our	consolidated	financial	statements.	Other	costs	were	recorded	in	connection with	this	closure	of	$1.9	million	primarily	related	to	the	impairment	of	manufacturing	equipment,	accelerated	depreciation	expense,	and	the	write-off	of	inventory,	all	of which	was	recorded	in	cost	of	product	sales.	During	the	third	quarter	of	fiscal	2008,	we	recorded	$6.4	million	in	compensation	charges,	including	$1.9	million	in	stock- based	compensation,	related	to	the	resignation	of	our	former	Executive	Chairman,	which	was	effective	May	20,	2008.	The	cash	payments	were	made	during	fiscal	2008.

Interest	expense	consists	primarily	of	the	interest	costs	and	the	related	amortization	of	deferred	financing	costs	for	both	our	senior	secured	credit	agreement entered	into	on	October	22,	2007	in	connection	with	the	merger	with	Cytyc	and	amended	on	July	17,	2008	in	connection	with	the	Third	Wave	acquisition	and	our	2.0% Convertible	Notes	that	were	issued	in	December	2007	to	pay	down	a	portion	of	the	term	loans,	which	had	higher	interest	rates.	The	decrease	in	interest	expense	in	fiscal 2009	compared	to	fiscal	2008	was	primarily	due	to	lower	term	loan	balances	as	we	pay	them	down	quarterly	and	lower	interest	rates	on	those	balances.	In	addition	to	the required	principal	payments,	we	have	made	voluntary	payments	throughout	the	year	resulting	in	a	total	decrease	of	$290.8	million	in	the	principal	of	our	term	loans during	fiscal	2009.	Additionally,	we	had	the	benefit	of	the	lower	interest	rates	from	our	Convertible	Notes	for	all	of	fiscal	2009	compared	to	approximately	nine	months in	fiscal	2008	as	prior	to	the	issuance	of	the	Convertible	Notes	we	were	paying	a	higher	interest	rate	on	the	term	loans,	which	had	higher	outstanding	balances.	In	fiscal 2010,	we	will	implement	accounting	guidance	that	requires	us	to	allocate	a	portion	of	our	Convertible	Notes	to	equity	based	on	the	relative	fair	value	of	the	embedded conversion	feature	in	our	Convertible	Notes.	This	component	is	amortized	to	interest	expense.	As	a	result,	we	expect	non-cash	interest	to	increase	approximately	$71.1 million	in	fiscal	2010	from	the	adoption	of	this	accounting	guidance.	See	discussion	under	Recent	Accounting	Pronouncements	below	for	additional	information.

| Other	(Expense)	Income,	net. |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Years\tEnded |  |  |
|  | September\t26,\t2009 | September\t27,\t2008 | Change | Change |
|  | Amount | Amount | Amount | % |
| Other\t(Expense)\tIncome,\tnet | $(3,660) | $(1,215) | $(2,445) | 201% |

In	fiscal	2009,	other	(expense)	income,	net	primarily	includes	other-than-temporary	impairment	charges	of	cost-method	investments	of	$2.2	million	and	foreign currency	transaction	losses	of	$2.3	million,	offset	by	an	increase	of	$0.7	million	in	the	cash	surrender	value	of	life	insurance	contracts	related	to	our	Supplemental Executive	Retirement	Plan	("SERP").	Included	in	the	foreign	currency	transaction	losses	is	a	gain	of	$0.7	million	related	to	the	elimination	of	the	cumulative	translation adjustment	related	to	our	manufacturing	facility	in	Shanghai,	China	due	to	its	closure.	In	fiscal	2008,	these	balances	were	primarily	related	to	a	decrease	in	the	cash surrender	value	of	life	insurance	contracts	related	to	our	SERP	of	$1.4	million	and	foreign	currency	transaction	losses	of	$0.7	million.	The	increase	in	foreign	currency losses	is	due	to	the	significant	volatility	of	exchange	rates	during	fiscal	2009,	primarily	the	Euro.	To	the	extent	that	foreign	currency	exchange	rates	fluctuate	in	the future,	we	may	be	exposed	to	continued	financial	risk.

#       Provision	for	Income	Taxes.

Our	effective	tax	rate	for	fiscal	2009	was	4.2%	of	the	pre-tax	loss	compared	to	38.1%	of	the	pre-tax	loss	in	fiscal	2008.	Our	effective	tax	rate	for	fiscal	2009	was significantly	impacted	by	the	$2.34	billion	goodwill	impairment	charge	recorded	in	the	second	quarter	of	fiscal	2009,	substantially	all	of	which	is	not	deductible	for	tax purposes.	The	effective	tax	rate	for	fiscal	2008	was	significantly	impacted	by	the	acquired	in-process	research	and	development	charge	related	to	the	merger	with	Cytyc and	Third	Wave	acquisition,	which	is	not	tax	deductible.

We	anticipate	an	effective	tax	rate	of	approximately	36%	of	pre-tax	earnings	in	fiscal	2010.

# Segment	Results	of	Operations

We	report	our	business	as	four	segments:	Breast	Health,	Diagnostics,	GYN	Surgical	and	Skeletal	Health.	The	accounting	policies	of	the	segments	are	the	same	as those	described	in	the	footnotes	to	the	accompanying	consolidated	financial	statements.	We	measure	segment	performance	based	on	total	revenues	and	operating	income or	loss.	Revenues	from	product	sales	of	each	of	these	segments	are	described	in	further	detail	above.	The	discussion	that	follows	is	a	summary	analysis	of	total	revenues and	the	primary	changes	in	operating	income	or	loss	by	segment.

# Breast	Health.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 | September\t27,\t2008 | Change | Change |
|  | Amount | %\tof\tTotal\nSegment\nRevenue | Amount | %\tof\tTotal\nSegment\nRevenue | Amount | % |
| Total\tRevenues | $728,884 | 100% | $860,848 | 100% | $(131,964) | (15)% |
| Operating\t(Loss)\tIncome | $(122,559) | (17)% | $211,704 | 25% | $(334,263) | (158)% |

Breast	Health	revenues	decreased	in	fiscal	2009	compared	to	fiscal	2008	primarily	due	to	the	$178.2	million	decrease	in	product	sales	discussed	above,	partially offset	by	an	increase	of	$46.2	million	in	service	revenues	that

is	substantially	related	to	additional	service	contracts	for	the	increased	number	of	Selenia	systems	in	our	installed	base.

This	segment	incurred	an	operating	loss	in	fiscal	2009	compared	to	operating	income	in	fiscal	2008	primarily	due	to	a	$265.9	million	goodwill	impairment	charge recorded	in	the	second	quarter	related	to	our	MammoSite	reporting	unit	in	addition	to	the	reduction	of	revenue	discussed	above	and	lower	gross	margins,	partially	offset by	a	reduction	of	operating	expenses	from	our	cost	reduction	initiatives	implemented	in	the	first	half	of	fiscal	2009.	Our	gross	margin	in	this	business	segment	was	47% in	fiscal	2009	compared	to	51%	in	fiscal	2008.	The	decrease	in	gross	margin	was	primarily	attributable	to	lower	absorption	of	manufacturing	costs	due	to	lower	volumes, an	increase	of	$8.8	million	in	amortization	expense	of	intangible	assets,	and	to	a	lesser	extent,	a	slight	deterioration	of	average	selling	prices	driven	by	the	current economic	environment	for	capital	purchases,	and	less	expensive	configurations	of	the	units	being	sold.	In	addition,	included	in	cost	of	product	sales	was	approximately $1.9	million	of	costs	related	to	the	closure	of	our	manufacturing	facility	in	Shanghai.	This	segment	incurred	charges	of	$3.3	million	in	fiscal	2008	related	to	sales	of acquired	MammoSite	inventory	that	was	written	up	to	fair	value	for	purchase	accounting	purposes.

# Diagnostics.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 |  | Change | Change |
|  |  | %\tof\tTotal | %\tof\tTotal | %\tof\tTotal |  |  |
|  |  | Segment | Segment | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $547,892 | 100% | $485,004 | 100% | $62,888 | 13% |
| Operating\tLoss | $(809,640) | (148)% | $(172,538) | (36)% | $(637,102) | 369% |

Diagnostics	revenues	increased	in	fiscal	2009	compared	to	fiscal	2008	primarily	due	to	the	increase	in	product	sales	discussed	above.

The	operating	loss	in	this	segment	in	fiscal	2009	included	a	$908.3	million	goodwill	impairment	charge	recorded	in	the	second	quarter,	intangible	asset amortization	of	$119.2	million	and	a	full	year	of	operating	costs	related	to	Third	Wave	compared	to	11	weeks	in	fiscal	2008.	Partially	offsetting	these	additional	charges in	fiscal	2009	were	reduced	operating	expenses	resulting	from	our	cost	reduction	initiatives	implemented	in	the	first	half	of	fiscal	2009.	The	operating	loss	in	fiscal	2008 included	a	$195.2	million	charge	for	in-process	research	and	development	related	to	the	Third	Wave	acquisition,	an	$85.2	million	charge	for	in-process	research	and development	related	to	the	merger	with	Cytyc,	intangible	asset	amortization	of	$68.7	million,	and	a	$3.6	million	restructuring	charge	in	the	third	quarter	related	to	the resignation	of	our	former	Executive	Chairman	in	May	2008.	Gross	margin	in	fiscal	2009	was	55%	compared	to	56%	in	fiscal	2008.	The	reduction	in	gross	margin	was primarily	due	to	an	increase	in	amortization	expense	due	to	an	increase	of	$27.6	million	and	$6.7	million	in	the	amortization	of	Cytyc	and	Third	Wave	related	intangible assets,	respectively.	In	addition,	gross	margin	in	fiscal	2009	included	the	write-off	of	intangible	assets	of	$4.1	million	and	$1.2	million	of	charges	for	the	write-up	to	fair value	of	acquired	inventory	sold	by	Third	Wave	in	fiscal	2009.	Gross	margin	in	fiscal	2008	included	charges	of	$26.6	million	and	$3.9	million,	respectively,	for	the write-up	to	fair	value	of	acquired	Cytyc	and	Third	Wave	inventory	sold	during	fiscal	2008.

# GYN	Surgical.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t26,\t2009 | September\t26,\t2009 | September\t27,\t2008 | September\t27,\t2008 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $264,900 | 100% | $221,069 | 100% | $43,831 | 20% |
| Operating\tLoss | $(1,097,685) | (414)% | $(241,450) | (109)% | $(856,235) | 355% |

GYN	Surgical	revenues	increased	in	fiscal	2009	compared	to	fiscal	2008	due	to	the	increase	in	product	sales	discussed	above.	The	operating	loss	in	this	segment	in fiscal	2009	included	a	$1.17	billion	goodwill	impairment	charge	recorded	in	the	second	quarter	and	additional	amortization	expense	of	$26.5	million.	Partially	offsetting these	charges	in	fiscal	2009	was	the	increase	in	revenue	discussed	above	as	well	as	a	decrease	in	operating	expenses	as	a	result	of	cost	reduction	initiatives	implemented in	the	first	half	of	this	year.	The	operating	loss	in	fiscal	2008	included	a	$284.8	million	charge	for	in-process	research	and	development	related	to	the	merger	with	Cytyc, a	$2.9	million	impairment	charge	for	the	Helica	Thermal	Coagulator	System	intangibles	and	a	$2.4	million	restructuring	charge	in	the	third	quarter	related	to	the resignation	of	our	former	Executive	Chairman	in	May	2008.	Our	gross	margin	in	this	business	segment	was	67%	in	both	fiscal	2009	and	2008.	Gross	margin	in	fiscal 2009	and	2008	included	amortization	expense	from	intangible	assets	of	$38.2	million	and	$21.0	million,	respectively,	and	fiscal	2008	included	a	$12.4	million	charge for	the	write-up	to	fair	value	of	Cytyc	inventory	that	was	sold	during	the	first	quarter	of	fiscal	2008.

# Skeletal	Health.

|  | September	26,	2009 | September	26,	2009 | September	27,	2008 |  | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $95,458 | 100% | $107,578 | 100% | $(12,120) | (11)% |
| Operating\tIncome | $13,210 | 14% | $4,742 | 4% | $8,468 | 179% |

Skeletal	Health	revenues	decreased	in	fiscal	2009	compared	to	fiscal	2008	primarily	due	to	the	decline	in	product	sales	discussed	above.	Our	gross	margin	in	this business	segment	was	41%	compared	to	34%	in	fiscal	2008.	The	improvement	was	primarily	due	to	reductions	in	material	costs	and	in	manufacturing	spending.

Operating	income	for	this	segment	improved	due	to	the	improved	gross	margin	and	from	cost	reduction	initiatives	implemented	in	the	first	half	of	2009.	The	operating income	and	gross	margin	in	fiscal	2009	included	a	$0.7	million	charge	associated	with	MRI	inventory	and	purchase	obligations	compared	to	$4.5	million	in	fiscal	2008.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  | Amount | %\tof\tTotal\nRevenue | Amount | %\tof\tTotal\nRevenue | Amount | % |
| Product\tSales |  |  |  |  |  |  |
| Breast\tHealth | $731,267 | 44% | $559,092 | 76% | $172,175 | 31% |
| Diagnostics | 474,633 | 28% | — | — | 474,633 | 100% |
| GYN\tSurgical | 219,305 | 13% | — | — | 219,305 | 100% |
| Skeletal\tHealth | 77,242 | 5% | 69,762 | 9% | 7,480 | 11% |
|  | $1,502,447 | 90% | $628,854 | 85% | $873,593 | 139% |

In	fiscal	2008,	our	product	sales	increased	139%	compared	to	fiscal	2007,	primarily	due	to	the	revenues	from	the	addition	of	the	Diagnostics	segment,	of approximately	$474.6	million,	and	the	GYN	Surgical	segment,	of	approximately	$219.3	million,	that	we	acquired	in	connection	with	our	merger	with	Cytyc,	and	an increase	in	revenues	from	our	Breast	Health	products	of	approximately	$172.2	million.

Breast	Health	product	sales	increased	31%	in	fiscal	2008	compared	to	fiscal	2007,	primarily	due	to	a	$97.0	million	increase	in	worldwide	digital	mammography system	sales,	the	addition	of	$33.9	million	of	product	sales

of	the	MammoSite	Radiation	Therapy	System,	a	$23.6	million	increase	in	breast	biopsy	device	sales	and	an	increase	of	$21.5	million	in	product	sales	of	the	MammoPad breast	cushion.	Partially	offsetting	these	increases	was	a	decrease	of	$6.4	million	in	digital	array	sales	to	an	OEM	as	we	phase	out	of	selling	these	arrays	to	third	parties. The	MammoSite	system	was	acquired	in	connection	with	our	merger	with	Cytyc	in	October	2007	and	the	MammoPad	breast	cushion	was	acquired	in	connection	with our	BioLucent	acquisition	in	September	2007.	The	increase	in	our	digital	mammography	product	sales	was	primarily	attributable	to	an	increase	in	the	number	of	Selenia systems	and	related	components	sold,	including	our	CAD	software.	In	fiscal	2008,	we	sold	1,678	digital	mammography	systems	compared	to	1,189	systems	in	fiscal 2007.	This	revenue	was	partially	offset	by	a	decrease	in	average	selling	prices	primarily	attributable	to	increased	competition,	higher	dealer	sales,	changes	in	product configuration	and	increased	multi-system	sales.	We	attribute	the	increase	in	digital	mammography	system	sales	primarily	to	the	growing	acceptance	of	our	Selenia mammography	system	and	of	digital	mammography	in	general.

Diagnostics	product	sales	were	$474.6	million	in	fiscal	2008,	due	to	the	inclusion	of	Cytyc	results	for	49	of	the	52	weeks	in	the	current	year	as	well	as	9	weeks	of Third	Wave	revenues	of	approximately	$5.9	million.	Cytyc	Diagnostic	sales	include	our	ThinPrep	and	Rapid	products.

GYN	Surgical	product	sales	were	$219.3	million	in	fiscal	2008,	due	to	the	inclusion	of	Cytyc	results	for	49	of	the	52	weeks	in	the	current	year.	These	sales	include our	NovaSure	system.

Skeletal	Health	product	sales	increased	11%	in	fiscal	2008	compared	to	fiscal	2007,	primarily	due	to	a	$10.8	million	increase	in	mini	C-arm	sales	worldwide, partially	offset	by	a	$2.0	million	decrease	in	extremity	MRI	sales	and	a	$1.2	million	decrease	in	bone	densitometry	product	sales.	The	increase	in	mini	C-arm	sales	was primarily	due	to	an	increase	in	the	number	of	units	sold	and,	to	a	lesser	extent,	an	increase	in	the	average	selling	prices	related	to	the	commercialization	of	a	new	and enhanced	product	version.	The	decrease	in	extremity	MRI	sales	was	due	to	a	decrease	in	the	number	of	systems	sold.	The	decrease	in	bone	densitometry	sales	was primarily	due	to	a	decrease	in	the	number	of	used	bone	densitometry	systems	and	upgrades	sold	and	a	decrease	in	the	average	selling	prices	of	our	bone	densitometry systems	in	the	United	States,	partially	offset	by	an	increase	in	the	number	of	bone	densitometry	systems	sold	internationally.	We	believe	the	decrease	in	our	domestic osteoporosis	assessment	average	selling	prices	reflected	a	decline	in	market	conditions	due	in	part	to	a	reduction	in	reimbursement	for	osteoporosis	assessment	exams.

In	fiscal	2008,	approximately	80%	of	product	sales	were	generated	in	the	United	States,	12%	in	Europe,	4%	in	Asia,	and	4%	in	other	international	markets.	In fiscal	2007,	approximately	75%	of	product	sales	were	generated	in	the	United	States,	15%	in	Europe,	5%	in	Asia,	and	5%	in	other	international	markets.	The	increase	in the	percentage	of	product	sales	generated	in	the	United	States	in	fiscal	2008	is	primarily	due	to	the	additional	product	sales	from	Cytyc,	which	had	a	higher	percentage	of its	product	sales	from	the	United	States	than	our	historical	businesses.

| Service	and	Other	Revenues. |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Years\tEnded |  |  |  |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Service\tand\tOther\tRevenues | $172,052 | 10% | $109,514 | 15% | $62,538 | 57% |

Service	and	other	revenues	increased	57%	in	fiscal	2008	compared	to	fiscal	2007.	This	increase	was	primarily	due	to	an	increase	in	service	and	other	revenues	of $49.8	million	in	our	Breast	Health	segment,	primarily	due	to	an	increase	in	service	contract	revenues,	and	the	inclusion	of	service	and	other	revenues	of	$10.3	million from	the	Diagnostics	segment	as	a	result	of	the	inclusion	of	Cytyc	results	for	49	of	the	52	weeks	in	fiscal	2008.	We	believe	that	the	increase	in	our	Breast	Health	service and	other	revenues	reflected	the	growth	in	our	installed	base	of	systems	and	detectors.

|  | September	27,	2008 | September	27,	2008 | September	29,	2007 | September	29,	2007 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | %\tof\tProduct |  | %\tof\tProduct |  |  |
|  | Amount | Sales | Amount | Sales | Amount | % |
| Cost\tof\tProduct\tSales | $535,082 | 36% | $267,470 | 43% | $267,612 | 100% |
| Cost\tof\tProduct\tSales—Amortization\tof\tIntangible\tAssets | 95,310 | 6% | 11,262 | 2% | 84,048 | 746% |
|  | $630,392 | 42% | $278,732 | 44% | $351,660 | 126% |

Our	gross	margin	increased	in	fiscal	2008	to	58%	from	56%	in	fiscal	2007	due	to	the	inclusion	of	Cytyc's	products,	which	have	higher	gross	margins	than	our Breast	Health	and	Skeletal	Health	products	offset	by	the	additional	amortization	expense	almost	entirely	related	to	the	merger	with	Cytyc.

Cost	of	Product	Sales.	The	cost	of	product	sales	increased	100%	in	fiscal	2008	compared	to	fiscal	2007	primarily	due	to	the	addition	of	$196.0	million	of	cost	of product	sales	from	the	Cytyc	products	included	in	our	results	since	October	22,	2007	and,	to	a	lesser	extent,	increased	product	sales	of	our	historical	products	discussed above.	Included	in	the	additional	Cytyc	cost	of	product	sales	is	approximately	$42.3	million	of	additional	costs	related	to	sales	of	acquired	Cytyc	inventory	that	was written	up	to	fair	value	for	purchase	accounting	purposes	as	of	the	date	of	acquisition.

The	cost	of	product	sales	as	a	percentage	of	product	revenue	in	fiscal	2008	was	36%	as	compared	to	43%	in	the	prior	year.	These	costs	as	a	percentage	of	product sales	decreased	primarily	due	to	the	higher	gross	margins	earned	on	Cytyc	product	sales	compared	to	our	historical	products,	partially	offset	by	the	additional	charges	for the	write-up	to	fair	value	for	the	Cytyc	inventory	sold	as	noted	above.	Also	contributing	to	the	decrease	in	cost	of	product	sales	as	a	percentage	of	product	revenue	was increased	revenues	and	improved	profitability	associated	with	the	shift	in	mammography	product	sales	to	our	Selenia	full	field	digital	mammography	systems.	Our	higher Selenia	system	sales	resulted	in	an	improved	absorption	of	fixed	manufacturing	costs.	Partially	offsetting	the	decreases	in	costs	as	a	percentage	of	product	sales	were charges	associated	with	a	MRI	inventory	impairment	charge	and	related	purchase	obligations	totaling	$4.5	million,	and	$3.9	million	related	to	sales	of	acquired	Third Wave	inventory	that	was	written	up	to	fair	value	in	connection	with	purchase	accounting	in	fiscal	2008.

We	identified	certain	costs	recorded	within	"Cost	of	Service	and	Other	Revenues"	in	our	Consolidated	Statement	of	Operations	during	the	first	three	quarters	of fiscal	2008	that	more	appropriately	should	be	classified	as	"Cost	of	Product	Sales".	We	determined	that	the	reclassification	was	not	material	to	our	consolidated financial	statements	and	corrected	the	classification	in	the	fourth	quarter	of	fiscal	2008.	We	also	reclassified	these	costs	related	to	prior	periods	to	the	current presentation,	which	resulted	in	an	increase	in	"Cost	of	Product	Sales"	and	a	corresponding	decrease	in	"Cost	of	Service	and	Other	Revenues"	of	$9.3	million	in	the	three months	ended	December	29,	2007;	$12.3	million	in	the	three	months	ended	March	29,	2008;	and	$13.3	million	in	the	three	months	ended	June	28,	2008.

Cost	of	Product	Sales—Amortization	of	Intangible	Assets.	Cost	of	product	sales—amortization	of	intangible	assets	increased	primarily	due	to	$80.2	million	of amortization	of	intangible	assets	obtained	as	part	of	the	merger	with	Cytyc	in	the	first	quarter	of	fiscal	2008.	The	underlying	intangible	assets	substantially	relate	to acquired	developed	technology	and	know-how.	These	intangible	assets	are	generally	being	amortized	over	their	estimated	useful	lives	of	between	8.5	and	15	years.

| Cost	of	Service	and	Other	Revenues. |  |  |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Years\tEnded |  |  |  |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Cost\tof\tService\tand\tOther\tRevenues | $151,589 | 88% | $114,307 | 104% | $37,282 | 33% |

Cost	of	service	and	other	revenues	increased	in	absolute	dollars	primarily	related	to	additional	costs	from	the	merger	with	Cytyc	of	approximately	$14.7	million	in fiscal	2008.	The	remainder	of	the	increase	was	primarily	due	to	personnel	and	other	costs	to	expand	our	service	capabilities	for	breast	health,	especially	in	the	United States,	to	support	our	growing	installed	base	of	our	breast	health	products	as	a	result	of	the	increased	service	and	other	revenues.	Please	see	"Cost	of	Product	Sales" above	for	discussion	of	reclassification	between	cost	of	product	sales	and	cost	of	service	and	other	revenues	during	fiscal	2008.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  | Amount | %\tof\tTotal\nRevenue | Amount | %\tof\tTotal\nRevenue | Amount | % |
| Operating\tExpenses |  |  |  |  |  |  |
| Research\tand\tDevelopment | $81,421 | 5% | $44,381 | 6% | $37,040 | 83% |
| Selling\tand\tMarketing | 261,524 | 16% | 85,520 | 12% | 176,004 | 206% |
| General\tand\tAdministrative | 147,405 | 9% | 62,092 | 8% | 85,313 | 137% |
| Amortization\tof\tIntangibles | 25,227 | 1% | 5,584 | 1% | 19,643 | 352% |
| Restructuring\tCharges | 6,383 | — | — | — | 6,383 | 100% |
| Impairment\tof\tIntangibles | 2,900 | — | — | — | 2,900 | 100% |
| Acquired\tIn-Process\tResearch\tand\tDevelopment | 565,200 | 34% | — | — | 565,200 | 100% |
|  | $1,090,060 | 65% | $197,577 | 27% | $892,483 | 452% |

Research	and	Development	Expenses.	Research	and	development	expenses	increased	83%	in	fiscal	2008	as	compared	to	fiscal	2007.	These	increases	were primarily	due	to	the	inclusion	of	$31.5	million	and	$3.7	million	of	expenses	in	the	current	year	associated	with	Cytyc-related	and	Third	Wave-related	activity, respectively,	since	the	close	of	the	merger	with	Cytyc	and	the	acquisition	of	Third	Wave.	Also	contributing	to	the	increase	was	an	increase	in	mammography	related expenses	of	$2.6	million	in	fiscal	2008	primarily	related	to	our	tomosynthesis	project	and	a	$1.8	million	charge	for	a	change	in	control	payment	related	to	the	merger with	Cytyc	recorded	in	the	first	quarter.

Selling	and	Marketing	Expenses.	Selling	and	marketing	expenses	increased	206%	in	fiscal	2008	as	compared	to	fiscal	2007.	These	increases	were	primarily	due to	the	inclusion	of	$160.3	million	of	expenses	associated	with	Cytyc-related	activity	since	the	close	of	the	merger	and	approximately	$5.1	million	related	to	increased compensation	and	related	expenses	from	the	additional	sales	representatives	added	from	the	BioLucent	acquisition	in	the	fourth	quarter	of	fiscal	2007.	Also	contributing to	the	increase	was	approximately	$3.3	million	increased	commission	expense	due	to	the	increased	product	sales.

General	and	Administrative	Expenses.	General	and	administrative	expenses	increased	137%	in	fiscal	2008	as	compared	to	fiscal	2007	primarily	due	to	$77.5 million	in	expenses	associated	with	Cytyc-related	activity	since	the	close	of	the	merger	and	an	increase	of	$11.2	million	due	to	incremental	stock-based	compensation.

Amortization	of	Intangible	Assets.	Amortization	expense	of	intangible	assets	increased	352%	in	fiscal	2008	as	compared	to	fiscal	2007,	primarily	due	to	$15.9 million	of	amortization	of	intangible	assets	obtained	as	part	of	the	merger	with	Cytyc	in	the	first	quarter	of	fiscal	2008.	Fiscal	years	2008	and	2007	also	include	the amortization	of	intangible	assets	acquired	from	AEG,	R2,	and	Suros	in	the	third	and	fourth	quarters	of	fiscal	2006.	The	underlying	intangible	assets	substantially	relate to	acquired	customer	relationships	and	trade	names.	The	intangible	assets	acquired	in	the	merger	with	Cytyc	are	being	amortized	over	their	estimated	useful	lives	of between	8.5	and	30	years.

Restructuring	Charges.	During	fiscal	2008,	we	recorded	$6.4	million	in	compensation	charges,	including	$1.9	million	in	stock-based	compensation,	related	to	the resignation	of	our	Executive	Chairman,	which	was	effective	May	20,	2008.

Impairment	of	Intangible	Assets.	Subsequent	to	the	merger	with	Cytyc,	we	discontinued	the	development	of	Cytyc's	Helica	Thermal	Coagulator	System	product, used	for	the	treatment	of	endometriosis.	We	will	not	realize	any	future	cash	flows	from	this	product.	Our	intangible	asset	valuation	for	Cytyc	included	approximately $2.9	million	related	to	customer	relationships	for	Helica.	As	a	result	of	the	Helica	product	discontinuation,	we	recorded	an	impairment	charge	of	$2.9	million	during	the first	quarter	of	fiscal	2008.

Acquired	In-Process	Research	and	Development	Expenses.	Included	in	this	charge	in	fiscal	2008	is	$370.0	million	for	in-process	research	and	development incurred	in	connection	with	our	merger	with	Cytyc	as	described	in	further	detail	above	under	"Fiscal	2008	Acquisitions—Cytyc	Corporation."	Also	included	is	$195.2 million	for	in-process	research	and	development	incurred	in	connection	with	our	acquisition	of	Third	Wave	as	described	in	further	detail	above	under	"Fiscal	2008 Acquisitions—Third	Wave	Technologies,	Inc."

Interest	income	increased	in	fiscal	2008	compared	to	fiscal	2007	primarily	due	an	increase	in	our	investment	balances,	partially	offset	by	a	decrease	in	the	interest rate	earned	during	the	current	year	compared	to	fiscal	2007.

#       Interest	Expense.

| rate	earned	during	the	current	year	compared	to	fiscal	2007. |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
| Interest\tExpense. |  |  |  |  |
|  |  | Years\tEnded |  |  |
|  | September\t27,\t2008 | September\t29,\t2007 | Change | Change |
|  | Amount | Amount | Amount | % |
| Interest\tExpense | $(84,912) | $(2,511) | $(82,401) | 3,282% |

In	fiscal	2008,	these	expenses	consisted	primarily	of	the	interest	costs	and	the	related	amortization	of	deferred	financing	costs	related	to	both	the	senior	secured credit	agreement	entered	into	on	October	22,	2007	in	connection	with	the	merger	with	Cytyc	and	our	subsequent	2.0%	Convertible	Note	Offering.	In	fiscal	2007,	these expenses	consisted	primarily	of	the	interest	costs	and	fees	on	the	unsecured	revolving	line	of	credit	entered	into	on	July	24,	2006	(and	amended	on	September	25,	2006) of	$1.5	million	as	well	as	interest	costs	on	notes	payable	assumed	with	the	acquisition	of	AEG	in	the	amount	of	$1.0	million.	We	incurred	additional	interest	expense	in the	fourth	quarter	of	fiscal	2008	in	connection	with	our	borrowing	of	$540.0	million	on	July	17,	2008	to	fund	a	portion	of	the	purchase	price	for	the	acquisition	of	Third Wave.

| Other	(Expense)	Income,	net. |  |  |  |  |
| :--- | :--- | :--- | :--- | :--- |
|  |  | Years\tEnded |  |  |
|  | September\t27,\t2008 | September\t29,\t2007 | Change | Change |
|  | Amount | Amount | Amount | % |
| Other\t(Expense)\tIncome,\tnet | $(1,215) | $433 | $(1,648) | 381% |

In	fiscal	2008,	these	balances	were	primarily	related	to	foreign	currency	transaction	losses	of	approximately	$0.7	million	and	a	decrease	in	the	cash	surrender value	of	life	insurance	contracts	related	to	our	SERP	of	approximately	$1.4	million.	In	fiscal	2007,	other	income	related	primarily	to	the	increase	in	the	cash	surrender value	of	life	insurance	contracts	related	to	our	SERP.

Our	effective	tax	rate	for	fiscal	2008	was	38.1%	of	the	pre-tax	loss.	For	fiscal	2008,	our	effective	tax	rate	was	affected	by	the	in-process	research	and	development and	intangible	asset	impairment	charges	we	incurred	in	connection	with	our	merger	with	Cytyc	and	the	in-process	research	and	development	that	we	incurred	in connection	with	the	acquisition	of	Third	Wave	Technologies.	Absent	the	in-process	research	and	development	and	intangible	asset	impairment	charges,	our	effective	tax rate	would	have	been	approximately	36.9%	for	fiscal	2008.	Our	effective	tax	rate	for	fiscal	2007	was	36.3%	of	pre-tax	earnings.	This	represented	our	normalized	rate	of approximately	37%	reduced	by	certain	tax	credits.

Our	net	deferred	tax	liability	increased	approximately	$842.0	million	in	fiscal	2008	primarily	due	to	the	increase	of	intangible	assets	as	a	result	of	the	merger	with Cytyc,	for	which	the	related	amortization	is	not	deductible	for	tax	purposes.

As	a	result	of	our	merger	with	Cytyc	we	began	reporting	our	business	as	four	segments:	Breast	Health,	Diagnostics,	GYN	Surgical	and	Skeletal	Health.	Fiscal 2007	was	restated	to	conform	to	this	presentation.	The	accounting	policies	of	the	segments	are	the	same	as	those	described	in	the	footnotes	to	the	accompanying consolidated	financial	statements.	We	measure	segment	performance	based	on	total	revenues	and	operating	income	or	loss.	Revenues	from	product	sales	of	each	of	these segments	are	described	in	further	detail	above.	The	discussion	that	follows	is	a	summary	analysis	of	total	revenues	and	the	primary	changes	in	operating	income	or	loss by	segment.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $860,848 | 100% | $638,898 | 100% | $221,950 | 35% |
| Operating\tIncome | $211,704 | 25% | $146,907 | 23% | $64,797 | 44% |

Breast	Health	revenues	for	fiscal	2008	increased	primarily	due	to	the	$172.2	million	increase	in	product	sales	discussed	above	and	due	to	a	$49.8	million	increase in	service	revenues	that	was	primarily	related	to	the	increased	number	of	service	contracts	for	the	increased	number	of	Selenia	systems	in	our	installed	base.	Operating income	for	this	business	segment	increased	primarily	due	to	the	increased	revenues.	Our	gross	margin	in	this	business	segment	was	51%	in	fiscal	2008	as	compared	to 49%	in	fiscal	2007.	In	fiscal	2008	our	gross	margins	improved	from	the	increase	in	product	revenues	of	our	more	profitable	Selenia	systems	versus	our	analog mammography	systems	and,	to	a	lesser	extent,	higher	margins	realized	on	our	MammoSite	product,	acquired	as	part	of	the	merger	with	Cytyc.	In	addition,	higher	total revenues	including	higher	Selenia	system	sales	have	allowed	for	the	greater	absorption	of	manufacturing	costs.	Partially	offsetting	these	improvements	was	a	charge	of $3.3	million	for	the	write-up	to	fair	value	of	MammoSite	RTS	inventory	sold,	primarily	during	the	first	quarter	of	fiscal	2008.	Operating	expenses	for	this	business segment	increased	34%	in	fiscal	2008,	primarily	due	to	the	addition	of	$28.4	million	of	operating	expenses	from	the	MammoSite	business	as	well	as	from	increased operating	expenses	in	support	of	our	growing	Selenia	business.	Also	contributing	to	the	increases	during	the	year	was	an	increase	in	stock-based	compensation	of	$7.1 million,	as	well	as	a	$0.4	million	restructuring	charge	in	the	third	quarter	related	to	the	resignation	of	our	Executive	Chairman	in	May	2008.

|  | September	27,	2008 | September	27,	2008 | September	29,	2007 | September	29,	2007 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $485,004 | 100% | $— | — | $485,004 | — |
| Operating\tLoss | $(172,538) | (36%) | $— | — | $(172,538) | — |

Diagnostics	revenues,	which	include	our	ThinPrep,	Rapid	Fetal	Fibronectin	Test	and	Third	Wave	products,	totaled	$485.0	million	in	fiscal	2008.	Our	gross margin	in	this	business	segment	was	57%,	including	charges	of	$26.6	million	and	$3.9	million,	respectively,	for	the	write-up	to	fair	value	of	the	Cytyc	inventory	sold during	the	first	quarter	and	the	Third	Wave	inventory	sold	during	the	fourth	quarter	of	fiscal	2008.	The	operating	loss	also	included	an	$85.2	million	charge	for	in- process	research	and	development	as	a	result	of	the	merger	with	Cytyc	in	the	first	quarter,	a	$195.2	million	charge	for	in-process	research	and	development	as	a	result	of the	Third	Wave	acquisition	in	the	fourth	quarter,	stock-based	compensation	of	$7.6	million	and	a	$3.6	million	restructuring	charge	in	the	third	quarter	related	to	the resignation	of	our	Executive	Chairman	in	May	2008.

|  |  |  | Years	Ended |  |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  | September\t27,\t2008 | September\t27,\t2008 | September\t29,\t2007 | September\t29,\t2007 | Change | Change |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $221,069 | 100% | $— | — | $221,069 | — |
| Operating\tLoss | $(241,450) | (109%) | $— | — | $(241,450) | — |

GYN	Surgical	revenues,	which	include	our	NovaSure	products	and	our	Adiana	System	under	development	in	fiscal	2008,	totaled	$221.1	million	in	fiscal	2008.	In the	second	and	third	quarters,	we	believe	that	sales	of	the	NovaSure	System	were	adversely	affected	by	a	modest	softening	in	sales	to	the	hospital-based	market,	as	well as	lower	than	expected	customer	inventory	utilization.	Our	sales	to	both	the	hospital	market	and	office	based	market	generally	have	been	based	upon	current	order bookings	for	immediate	shipment	with	little	or	no	backlog.	Over	the	last	three	quarters,	we	refocused	our	sales	efforts	and	programs	to	increasing	longer	term	customer 63

commitments.	However,	while	we	could	not	assure	that	we	would	be	successful,	our	goal	was	to	have	an	increase	in	NovaSure	system	backlog,	followed	by	an	increase in	sequential	growth	of	revenue	during	fiscal	2009	with	sales	to	the	physician	office-based	market	playing	a	role	in	that	increase.	Our	gross	margin	in	this	business segment	was	67%	during	this	period	and	includes	a	charge	of	$12.4	million	for	the	write-up	to	fair	value	of	the	Cytyc	inventory	sold	during	the	first	fiscal	quarter	of 2008.	The	operating	loss	for	fiscal	2008	also	includes	a	$284.8	million	charge	for	in-process	research	and	development	as	a	result	of	the	merger	with	Cytyc	and	a	$2.9 million	impairment	charge	of	the	Helica	Thermal	Coagulator	System	intangibles.	This	segment	included	stock-based	compensation	of	$3.8	million	in	fiscal	2008,	as well	as	a	$2.4	million	restructuring	charge	in	the	third	quarter	related	to	the	resignation	of	our	Executive	Chairman	in	May	2008.

|  | September	27,	2008 | September	27,	2008 | September	29,	2007 | September	29,	2007 | Change | Change |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  | %\tof\tTotal |  | %\tof\tTotal |  |  |
|  |  | Segment |  | Segment |  |  |
|  | Amount | Revenue | Amount | Revenue | Amount | % |
| Total\tRevenues | $107,578 | 100% | $99,470 | 100% | $8,108 | 8% |
| Operating\tIncome | $4,742 | 4% | $845 | 1% | $3,897 | 461% |

Skeletal	Health	revenues	increased	in	fiscal	2008	compared	to	the	corresponding	period	in	the	prior	year	primarily	due	to	the	$7.5	million	increase	in	product	sales discussed	above.	Our	gross	margin	in	this	business	segment	was	34%	in	fiscal	2008	compared	to	32%	in	fiscal	2007.	Operating	income	and	gross	margin	for	the	Skeletal Health	segment	increased	in	fiscal	2008	over	fiscal	2007	primarily	due	to	the	increased	revenues	and	due	to	improved	absorption	as	a	result	of	manufacturing	additional products	in	the	facility	where	the	Skeletal	Health	products	are	produced,	partially	offset	by	charges	associated	with	MRI	inventory	and	purchase	obligations	recorded	in fiscal	2008	totaling	$4.5	million	compared	to	$2.0	million	in	fiscal	2007.	Skeletal	Health	costs	and	expenses	included	stock	compensation	of	$2.2	million	and	$1.1 million	in	fiscal	2008	and	fiscal	2007,	respectively.

# Liquidity	and	Capital	Resources

At	September	26,	2009,	we	had	$492.2	million	of	working	capital,	and	our	cash	and	cash	equivalents	totaled	$293.2	million.	Our	cash	and	cash	equivalents balance	increased	by	$197.5	million	during	fiscal	2009,	primarily	from	cash	generated	from	our	operations.	This	cash	source	was	partially	offset	by	our	financing activities	relating	to	our	repayment	of	amounts	outstanding	under	our	credit	agreement	and	certain	other	notes	payable	and	to	a	lesser	extent	cash	used	in	our	investing activities	primarily	for	purchases	of	property	and	equipment	and	placement	of	equipment	under	customer	usage	agreements.

Our	operating	activities	generated	$546.4	million	of	cash,	which	included	a	net	loss	of	$2.18	billion	reduced	primarily	by	non-cash	charges	for	goodwill	and intangible	asset	impairments	of	$2.34	billion,	depreciation	and	amortization	expense	of	$273.9	million,	stock-based	compensation	expense	of	$32.9	million	and	non-cash interest	expense	of	$17.7	million	from	the	amortization	of	debt	issuance	costs.	Cash	provided	by	operations	due	to	changes	in	our	operating	assets	and	liabilities	included a	decrease	in	accounts	receivable	of	$57.6	million,	an	increase	in	deferred	revenue	of	$19.6	million	and	a	decrease	in	prepaid	income	taxes	of	$17.9	million.	The decrease	in	accounts	receivable	was	primarily	due	to	the	decline	in	sales	volume	in	the	current	quarter	as	compared	to	the	fourth	quarter	of	fiscal	2008	as	well	as improved	collections.	The	increase	in	deferred	revenue	was	primarily	due	to	an	increase	in	the	number	of	service	contracts	as	our	installed	base	of	our	Breast	Health products	continues	to	grow.	The	decrease	in	prepaid	income	taxes	was	due	to	the	utilization	of	amounts	to	offset	current	taxable	income.	Cash	provided	by	operations was	offset	by	an	increase	in	inventories	of	$15.1	million	and	a	decrease	in	accounts	payable	and	accrued	expenses	and	other	liabilities	of	$12.9	million	and	$10.6 million,	respectively.	The	increase	in	inventories	was	primarily	related	to	the	increase	in	components	on	hand	as	a	result

of	the	decline	in	sales	volume.	The	decrease	in	accounts	payable	was	primarily	due	to	the	timing	of	payments	and	our	overall	efforts	to	reduce	operating	expenses.	The decrease	in	accrued	expenses	and	other	liabilities	was	primarily	due	to	lower	compensation	and	bonuses	as	a	result	of	a	lower	headcount	and	operating	results	below	the operating	plan,	and	overall	lower	operating	expenses	excluding	amortization	of	intangible	assets	due	to	our	cost	reduction	initiatives.

During	fiscal	2009,	we	used	$61.5	million	of	cash	in	investing	activities.	This	use	of	cash	was	primarily	attributable	to	$31.4	million	for	purchases	of	property	and equipment,	which	consisted	primarily	of	manufacturing,	demonstration	and	test	equipment	and	computer	software	and	hardware.	We	also	invested	$22.8	million	in equipment	under	customer	usage	agreements	and	purchased	certain	intellectual	property	totaling	$6.2	million.	In	addition,	we	purchased	of	$5.3	million	of	life	insurance contracts	to	fund	future	payments	under	our	SERP.

During	fiscal	2009,	we	utilized	$288.6	million	of	cash	in	financing	activities,	substantially	for	repayments	of	the	term	loans	under	our	credit	agreement	of	$290.8 million	and	the	payment	of	$10.1	million	of	notes	payable,	primarily	our	AEG	loans.	Offsetting	these	payments	was	proceeds	of	$10.9	million	from	the	exercise	of stock	options	and	the	purchase	of	common	shares	under	the	employee	stock	purchase	plan.

We	had	total	debt	of	$1.9	billion	at	September	26,	2009.	The	majority	of	our	debt,	our	convertible	notes	and	term	loans	under	our	credit	agreement,	was	obtained to	fund	our	Third	Wave	acquisition	and	merger	with	Cytyc	in	fiscal	2008.	The	debt	maturity	schedule	for	the	components	of	our	debt	obligations	as	of	September	26, 2009	is	as	follows:

|  | 2010 | 2011 | 2012 | 2013 | 2014 | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Term\tLoan\tA | $28,789 | $18,227 | $18,227 | $59,475 | $— | $124,718 |
| Term\tLoan\tB | 6,785 | 628 | 628 | 41,408 | — | 49,449 |
| AEG\tdebt | 1,500 | — | — | — | — | 1,500 |
| Other | 1,299 | 1,362 | — | — | — | 2,661 |
| Convertible\tNotes\t(1) | — | — | — | — | 1,725,000 | 1,725,000 |
|  | $38,373 | $20,217 | $18,855 | $100,883 | $1,725,000 | $1,903,328 |

(1) Our	Convertible	Notes	can	first	be	put	to	us	on	December	13,	2013	and	as	such,	we	have	assumed	they	will	be	paid	off	in	fiscal	2014.

Credit	Agreement.	On	October	22,	2007,	we	entered	into	a	$2.55	billion	senior	secured	credit	agreement	(the	"Credit	Agreement")	with	Goldman	Sachs	Credit Partners	L.P.	and	certain	other	lenders	(collectively,	the	"Lenders").	As	of	the	closing	of	the	merger	with	Cytyc	we	borrowed	$2.35	billion	under	the	credit	facilities,	all of	which	had	variable	interest	rates.	We	applied	the	net	proceeds	from	our	convertible	note	offering	described	below	to	repay	amounts	outstanding	under	the	Credit Agreement.	During	the	year	ended	September	27,	2008,	we	also	made	voluntary	prepayments	of	principal	to	fully	repay	the	terms	loans	under	the	Credit	Agreement.

On	July	17,	2008,	in	connection	with	our	acquisition	of	Third	Wave,	we	entered	into	an	amended	and	restated	credit	agreement	with	certain	of	the	Lenders	(the "Amended	Credit	Agreement").	The	Amended	Credit	Agreement	amended	and	restated	our	existing	Credit	Agreement	with	Goldman	Sachs	Credit	Partners	L.P.	and	the lenders	named	therein,	dated	as	of	October	22,	2007.

In	order	to	consummate	the	purchase	of	all	issued	and	outstanding	stock	of	Third	Wave,	we	borrowed	$540.0	million	of	term	loans	under	the	credit	facilities	on July	17,	2008	of	which	$400.0	million	was	designated	Term	Loan	A	and	$140.0	million	designated	Term	Loan	B.	In	addition,	we	have	a	$200.0	million	revolving	credit facility	under	the	Amended	Credit	Agreement	(the	"Revolving	Facility").	Our	obligations	under	the

Amended	Credit	Agreement	are	secured	by	substantially	all	of	our	assets.	As	of	September	26,	2009,	we	had	an	aggregate	of	$174.2	million	of	principal	outstanding under	the	Amended	Credit	Agreement,	consisting	of	$124.7	million	under	Term	Loan	A	and	$49.5	million	under	Term	Loan	B.	Subsequent	to	September	26,	2009,	we paid	an	additional	$24.6	million	of	principal	of	which	$21.0	million	was	a	voluntary	payment.	This	voluntary	payment	of	$21.0	million	has	been	reclassified	to	current portion	of	long	term	debt	on	our	Consolidated	Balance	Sheet	at	September	26,	2009.	As	of	that	date	we	had	no	amounts	outstanding	under	the	Revolving	Facility,	and therefore,	had	full	availability.	The	final	maturity	dates	for	the	credit	facility	are	September	30,	2012	for	the	Term	Loan	A	and	Revolving	Facility	and	March	31,	2013	for the	Term	Loan	B.

All	amounts	outstanding	under	the	Amended	Credit	Agreement	bear	interest,	at	Hologic's	option,	as	follows:

With respect	to	loans	made	under	the	revolving	facility	and	the	Term	Loan	A	facility:

(ii) at	the	reserve	adjusted	Eurodollar	Rate	plus	2.25%	per	annum,	which	was	reduced	from	2.50%	in	May	2009;	and

With respect	to	loans	made	under	the	Term	Loan	B	facility:

(ii) at	the	reserve	adjusted	Eurodollar	Rate	plus	3.25%	per	annum.

The	credit	facilities	contain	affirmative	and	negative	covenants	customarily	applicable	to	senior	secured	credit	facilities,	including	covenants	restricting	the	ability of	the	Hologic	loan	parties,	subject	to	negotiated	exceptions,	to:	incur	additional	indebtedness	and	additional	liens	on	their	assets;	engage	in	mergers	or	acquisitions	or dispose	of	assets,	enter	into	sale-leaseback	transactions,	pay	dividends	or	make	other	distributions,	voluntarily	prepay	other	indebtedness,	enter	into	transactions	with affiliated	persons,	make	investments,	and	change	the	nature	of	their	businesses.	The	credit	facilities	require	the	Hologic	loan	parties	to	maintain	certain	maximum leverage	and	minimum	interest	coverage	ratios	as	of	the	last	day	of	each	fiscal	quarter,	as	defined	in	the	Amended	Credit	Agreement.	We	were	in	compliance	with	the financial	covenants	as	of	September	26,	2009.

Convertible	Notes.	On	December	10,	2007,	we	issued	and	sold	$1.725	billion,	at	par,	of	our	2.00%	Convertible	Senior	Notes	due	2037.	The	net	proceeds	from	the offering	was	approximately	$1.69	billion,	after	deducting	the	underwriters'	discounts	and	estimated	offering	expenses	of	approximately	$1.5	million	payable	by	us,	and was	used	to	repay	a	portion	of	our	then	outstanding	senior	secured	indebtedness	under	our	Credit	Agreement.

Holders	may	require	us	to	repurchase	the	notes	on	December	13	of	2013,	and	on	each	of	December	15,	2017,	2022,	2027	and	2032	at	a	repurchase	price	equal	to 100%	of	their	accreted	principal	amount,	plus	accrued	and	unpaid	interest.	We	may	redeem	any	of	the	notes	beginning	December	18,	2013,	by	giving	holders	at	least	30 days'	notice.	We	may	redeem	the	notes	either	in	whole	or	in	part	at	a	redemption	price	equal	to	100%	of	their	principal	amount,	plus	accrued	and	unpaid	interest, including	contingent	interest	and	liquidated	damages,	if	any,	to,	but	excluding,	the	redemption	date.

The	notes	bear	interest	at	a	rate	of	2.00%	per	year	on	the	principal	amount,	payable	semi-annually	in	arrears	in	cash	on	June	15	and	December	15	of	each	year, beginning	June	15,	2008,	and	ending	on	December	15,	2013	and	will	accrete	principal	from	December	15,	2013	at	a	rate	that	provides	holders	with	an	aggregate	annual yield	to	maturity	of	2.00%	per	year.	Beginning	with	the	six	month	interest	period	commencing	December	15,	2013,	we	will	pay	contingent	interest	during	any	six	month interest	period	to	the	holders	of	notes	if	the	"trading	price",	as	defined,	of	the	notes	for	each	of	the	five	trading	days	ending	on	the	second	trading	day	immediately preceding	the	first	day	of	the	applicable	six	month	interest	period	equals	or	exceeds	120%	of	the	accreted	principal	amount

of	the	notes.	The	holders	of	the	notes	may	convert	the	notes	into	shares	of	our	common	stock	at	a	conversion	price	of	approximately	$38.60	per	share,	subject	to adjustment,	prior	to	the	close	of	business	on	September	15,	2037,	subject	to	prior	redemption	or	repurchase	of	the	notes,	under	any	of	the	following	circumstances: (1)	during	any	calendar	quarter	after	the	calendar	quarter	ending	December	31,	2007	if	the	last	reported	sale	price	of	our	common	stock	exceeds	130%	of	the	conversion price	for	at	least	20	trading	days	in	the	30	consecutive	trading	days	ending	on	the	last	trading	day	of	the	preceding	calendar	quarter;	(2)	during	the	five	business	day period	after	any	five	consecutive	trading	day	period	in	which	the	trading	price	per	note	for	each	day	of	such	period	was	less	than	98%	of	the	product	of	the	last	reported sale	price	of	our	common	stock	and	the	conversion	rate	on	each	such	day;	(3)	if	the	notes	have	been	called	for	redemption;	or	(4)	upon	the	occurrence	of	specified corporate	events.

In	lieu	of	delivery	of	shares	of	our	common	stock	in	satisfaction	of	our	obligation	upon	conversion	of	the	notes,	we	may	elect	to	deliver	cash	or	a	combination	of cash	and	shares	of	our	common	stock.	If	we	elect	to	satisfy	our	conversion	obligation	solely	in	cash,	we	will	deliver	cash	in	an	amount	as	provided	in	the	indenture	for the	notes.	If	we	elect	to	satisfy	our	conversion	obligation	in	a	combination	of	cash	and	shares	of	our	common	stock,	we	will	deliver	up	to	a	specified	dollar	amount	of cash	per	$1,000	original	principal	amount	of	notes,	and	will	settle	the	remainder	of	our	conversion	obligation	in	shares	of	our	common	stock,	in	each	case	based	on	the daily	conversion	value	calculated	as	provided	in	the	indenture	for	the	notes.	In	addition,	at	any	time	on	or	prior	to	the	35th	scheduled	trading	day	prior	to	the	maturity date	of	the	notes,	we	may	make	an	irrevocable	election	to	settle	conversions	of	the	notes	either	solely	in	cash	or	in	a	combination	of	cash	and	shares	of	our	common stock	with	a	specified	cash	amount	at	least	equal	to	the	accreted	principal	amount	of	the	notes.	This	net	share	settlement	election	is	in	our	sole	discretion	and	does	not require	the	consent	of	holders	of	the	notes.	It	is	our	current	intent	and	policy	to	settle	any	conversion	of	the	notes	as	if	we	had	elected	to	make	the	net	share	settlement election.

The	notes	are	our	senior	unsecured	obligations	and	rank	equally	with	all	of	our	existing	and	future	senior	unsecured	debt	and	prior	to	all	future	subordinated	debt. The	notes	are	effectively	subordinated	to	any	future	secured	indebtedness	to	the	extent	of	the	collateral	securing	such	indebtedness,	and	structurally	subordinated	to	all indebtedness	and	other	liabilities	(including	trade	payables)	of	our	subsidiaries.

Contingent	Earn-Out	Payments.	As	a	result	of	the	merger	with	Cytyc,	we	assumed	the	obligation	to	the	former	Adiana	stockholders	to	make	contingent	earn-out payments	tied	to	the	achievement	of	milestones.	The	milestone	payments	include	potential	contingent	payments	of	up	to	$155	million	based	on	worldwide	sales	of	the Adiana	System	in	the	first	year	following	FDA	approval	and	on	annual	incremental	sales	growth	thereafter	through	December	31,	2012.	We	received	FDA	approval	of the	Adiana	System	on	July	6,	2009,	and	the	Company	began	accruing	contingent	consideration	in	the	fourth	quarter	of	fiscal	2009	based	on	the	defined	percentage	of worldwide	sales	of	the	product.	The	total	accrued	contingent	consideration	net	at	September	26,	2009	is	$1.5	million.	These	amounts	are	being	recorded	as	additional purchase	price,	and	under	the	terms	of	the	agreement	the	first	payment	is	not	due	to	the	Adiana	shareholders	until	October	2010.	The	agreement	includes	an indemnification	provision	that	provides	for	the	reimbursement	of	qualifying	legal	expenses	in	defense	of	the	Adiana	intellectual	property,	and	we	have	the	right	to	offset contingent	consideration	payments	to	the	Adiana	shareholders	with	these	qualifying	legal	costs.	Legal	costs	have	not	been	material	to	date.

Since	it	is	not	possible	to	estimate	the	amount,	and	the	timing	of	such	amounts,	of	contingent	consideration	we	will	pay	in	the	future	as	it	is	based	on	future revenues,	the	maximum	amount	or	any	other	amount	of	contingent	consideration	payments	has	not	been	included	in	the	contractual	obligations	table	below.

Contractual	Obligations.	The	following	table	summarizes	our	contractual	obligations	and	commitments	as	of	September	26,	2009:

|  | Less	than |  |  | More	than |  |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Contractual\tObligations | 1\tyear | 1-3\tyears | 3-5\tyears | 5\tyears | Total |
| Long-Term\tDebt\tObligations\t(1) | $38,373 | $39,072 | $1,825,883 | $— | $1,903,328 |
| Interest\ton\tLong-Term\tDebt\tObligations | 39,017 | 75,862 | 52,567 | — | 167,446 |
| Operating\tLeases | 17,823 | 30,538 | 22,426 | 45,326 | 116,113 |
| Purchase\tObligations | 27,940 | 11,631 | 2,059 | 554 | 42,184 |
| Financing\tLeases\t(2) | 2,523 | 5,148 | 5,585 | 12,282 | 25,538 |
| Long-Term\tSupply\tContracts\t(3) | 3,035 | 6,000 | — | — | 9,035 |
| Pension\tObligations\t(4) | 332 | 727 | 815 | 4,862 | 6,736 |
| Private\tEquity\tInvestment\t(5) | 1,324 | — | — | — | 1,324 |
| Total\tContractual\tObligations | $130,367 | $168,978 | $1,909,335 | $63,024 | $2,271,704 |

(1) Our	Convertible	Notes	can	first	be	put	to	us	on	December	13,	2013	and	we	have	assumed	for	purpose	of	the	above	table	that	they	will	be	paid	off	in	fiscal	2014.

(2) We	acquired	the	financing	leases	in	connection	with	our	acquisition	of	Cytyc	in	fiscal	2008.	Cytyc	had	executed	two	leases	for	an	office	building	and	for	a manufacturing	facility,	which	were	required	to	be	recorded	on	our	balance	sheet	under	US	GAAP.	See	Note	12	in	our	Consolidated	Financial	Statements contained	in	Item	15	of	this	Annual	Report	for	more	information.

(3) This	represents	certain	non-cancelable	supply	contracts.	For	reasons	of	quality	assurance,	sole	source	availability	or	cost	effectiveness,	certain	key	components and	raw	materials	are	available	only	from	a	sole	supplier.	To	assure	continuity	of	supply	while	maintaining	high	quality	and	reliability,	long-term	supply	contracts have	been	executed	with	these	suppliers.	In	certain	of	these	contracts,	a	minimum	purchase	commitment	has	been	established.

(4) Pension	obligations	do	not	include	our	obligation	under	the	Supplemental	Executive	Retirement	Plan,	which	is	recorded	as	a	current	liability	of	$11.2	million. These	benefits	are	generally	paid	out	at	retirement	or	termination	of	employment.

(5) This	represents	a	private	equity	investment	commitment	with	a	limited	liability	partnership,	which	could	be	paid	over	the	succeeding	two	years.

The	above	table	does	not	reflect	our	long-term	liabilities	associated	with	uncertain	tax	positions	recorded	under	FIN	48	(codified	primarily	in	ASC	740,	Income Taxes)	totaling	$14.7	million.	Due	to	the	complexity	associated	with	tax	uncertainties,	we	cannot	reasonably	make	a	reliable	estimate	of	the	period	in	which	we	expect	to settle	these	non-current	liabilities.	See	Note	8	in	our	Consolidated	Financial	Statements	contained	in	Item	15	of	this	Annual	Report	for	more	information	on	our unrecognized	tax	benefits.	In	addition,	certain	of	our	cost	method	equity	investments	give	us	the	option	to	acquire	the	company	in	the	future.	Since	it	is	not	possible	to estimate	when,	or	even	if,	we	will	exercise	our	option	to	acquire	these	companies,	we	have	not	included	these	future	potential	payments	in	the	table	above.

We	expect	to	continue	to	review	and	evaluate	potential	acquisitions	of	businesses,	products	or	technologies,	and	strategic	alliances	that	we	believe	will complement	our	current	or	future	business.	Subject	to	the	Risk	Factors	set	forth	in	Part	I,	Item	1A	of	this	report	and	the	general	disclaimers	set	forth	in	our	Special	Note Regarding	Forward-Looking	Statements	at	the	outset	of	this	Report,	we	believe	that	cash	flow	from	operations	and	cash	available	from	our	Amended	Credit	Agreement will	provide	us	with	sufficient	funds	in	order	to	fund	our	expected	operations	over	the	next	twelve	months.	Our	longer-term	liquidity	is	contingent	upon	future	operating performance	and	our	ability	to	continue	to	meet	financial	covenants	under	our	Amended	Credit	Agreement.	We

may	also	require	additional	capital	in	the	future	to	fund	capital	expenditures,	acquisitions	or	other	investments,	or	to	repay	our	convertible	notes.	The	holders	of	the Convertible	Notes	may	require	us	to	repurchase	the	notes	on	December	13	of	2013,	and	on	each	of	December	15,	2017,	2022,	2027	and	2032	at	a	repurchase	price	equal to	100%	of	their	accreted	principal	amount.	These	capital	requirements	could	be	substantial.	Our	operating	performance	may	also	be	affected	by	matters	discussed	under the	above-referenced	Risk	Factors	as	elsewhere	in	this	report.	These	risks,	trends	and	uncertainties	may	also	adversely	affect	our	long-term	liquidity.

# Legal	Contingencies

We	are	currently	involved	in	certain	legal	proceedings	and	claims.	In	connection	with	these	legal	proceedings	and	claims,	management	periodically	reviews estimates	of	potential	costs	to	be	incurred	by	us	in	connection	with	the	adjudication	or	settlement,	if	any,	of	these	proceedings.	These	estimates	are	developed	in consultation	with	outside	counsel	and	are	based	on	an	analysis	of	potential	litigation	outcomes	and	settlement	strategies.	In	accordance	with	ASC	450,	Contingencies (formerly	SFAS	No.	5,	Accounting	for	Contingencies),	loss	contingencies	are	accrued	if,	in	the	opinion	of	management,	an	adverse	outcome	is	probable	and	such outcome	can	be	reasonably	estimated.	It	is	possible	that	future	results	for	any	particular	quarter	or	annual	period	may	be	materially	affected	by	changes	in	our assumptions	or	the	effectiveness	of	our	strategies	relating	to	these	proceedings.

# CRITICAL	ACCOUNTING	POLICIES	AND	ESTIMATES

The	discussion	and	analysis	of	our	financial	condition	and	results	of	operations	are	based	upon	our	consolidated	financial	statements,	which	have	been	prepared	in accordance	with	U.S.	generally	accepted	accounting	principles.	The	preparation	of	these	consolidated	financial	statements	requires	us	to	make	estimates	and	judgments that	affect	the	reported	amounts	of	assets,	liabilities,	revenues	and	expenses,	and	related	disclosure	of	contingent	assets	and	liabilities.	On	an	on-going	basis,	we	evaluate our	estimates,	including	those	related	to	revenue	recognition	for	multiple	element	arrangements,	allowance	for	doubtful	accounts,	reserves	for	excess	and	obsolete inventories,	valuations	and	purchase	price	allocations	related	to	business	combinations,	expected	future	cash	flows	including	growth	rates,	discount	rates,	terminal	values and	other	assumptions	and	estimates	used	to	evaluate	the	recoverability	of	long-lived	assets	and	goodwill,	estimated	fair	values	of	intangible	assets	and	goodwill, amortization	methods	and	periods,	warranty	reserves,	certain	accrued	expenses,	restructuring	and	other	related	charges,	stock-based	compensation,	contingent	liabilities, tax	reserves	and	recoverability	of	our	net	deferred	tax	assets	and	related	valuation	allowance.	We	base	our	estimates	on	historical	experience	and	various	other assumptions	that	are	believed	to	be	reasonable	under	the	circumstances.	Actual	results	could	differ	from	these	estimates	if	past	experience	or	other	assumptions	do	not turn	out	to	be	substantially	accurate.	Any	differences	may	have	a	material	impact	on	our	financial	condition	and	results	of	operations.

The	following	is	a	discussion	of	what	we	believe	to	be	the	more	significant	critical	accounting	policies	and	estimates	used	in	the	preparation	of	our	consolidated financial	statements.

# Inventory

Our	inventories	include	material,	labor	and	overhead,	and	are	stated	at	the	lower	of	cost	(first-in,	first-out)	or	market.	As	a	designer	and	manufacturer	of	high technology	medical	equipment,	we	may	be	exposed	to	a	number	of	economic	and	industry	factors	that	could	result	in	portions	of	our	inventory	becoming	either	obsolete or	in	excess	of	anticipated	usage.	These	factors	include,	but	are	not	limited	to,	technological	changes	in	our	markets,	our	ability	to	meet	changing	customer	requirements, competitive	pressures	on	products	and	prices,	reliability	and	replacement	of	and	the	availability	of	key	components	from	our	suppliers.	Our	policy	is	to	establish inventory	reserves	when	conditions	exist	that	suggest	that	our	inventory	may	be	in	excess	of	anticipated	demand	or	is	obsolete	based	upon	our	assumptions	about	future demand	for	our	products	and	market	conditions.	We	regularly	evaluate	our	ability	to	realize	the	value	of	our	inventory	based	on	a	combination	of	factors	including	the following:	historical	usage	rates,	forecasted	sales	or	usage,	product	end	of	life	dates,	estimated	current	and	future

market	values	and	new	product	introductions.	Assumptions	used	in	determining	our	estimates	of	future	product	demand	may	prove	to	be	incorrect,	in	which	case	the provision	required	for	excess	and	obsolete	inventory	would	have	to	be	adjusted	in	the	future.	If	inventory	is	determined	to	be	overvalued,	we	would	be	required	to recognize	such	costs	as	cost	of	goods	sold	at	the	time	of	such	determination.	Although	every	effort	is	made	to	ensure	the	accuracy	of	our	forecasts	of	future	product demand,	any	significant	unanticipated	changes	in	demand	could	have	a	significant	negative	impact	on	the	value	of	our	inventory	and	our	reported	operating	results. Additionally,	purchasing	requirements	and	alternative	usage	avenues	are	explored	within	these	processes	to	mitigate	inventory	exposure.	When	recorded,	our	reserves are	intended	to	reduce	the	carrying	value	of	our	inventory	to	its	net	realizable	value.

Provisions	for	excess	or	obsolete	inventory	are	primarily	based	on	our	estimates	of	forecasted	net	sales	and	service	usage	levels.	A	significant	change	in	the timing	or	level	of	demand	for	our	products	as	compared	to	forecasted	amounts	may	result	in	recording	additional	provisions	for	excess	or	expired	inventory	in	the	future. We	record	provisions	for	excess	or	obsolete	inventory	as	cost	of	sales.

# Accounts	Receivable	Reserves

We	maintain	allowances	for	doubtful	accounts	for	estimated	losses	resulting	from	the	inability	of	our	customers	to	make	required	payments.	We	regularly evaluate	the	collectibility	of	our	trade	receivables	based	on	a	combination	of	factors,	including	a	dialogue	with	the	customer	to	determine	the	cause	of	non-payment,	and evaluation	of	the	customer's	current	financial	situation.	In	the	event	it	is	determined	that	the	customer	may	not	be	able	to	meet	its	full	obligation	to	us,	we	record	a specific	allowance	to	reduce	the	receivable	to	the	amount	that	we	expect	to	recover	given	all	information	present.	We	perform	ongoing	credit	evaluations	of	our customers	and	adjust	credit	limits	based	upon	payment	history	and	our	assessment	of	the	customer's	current	credit	worthiness.	We	continuously	monitor	collections from	our	customers	and	maintain	a	provision	for	estimated	credit	losses	based	upon	our	historical	experience	and	any	specific	customer	collection	issues	that	we	have identified.	While	such	credit	losses	have	historically	been	within	our	expectations	and	the	provisions	established,	we	cannot	guarantee	that	we	will	continue	to experience	the	same	credit	loss	rates	in	the	future.	If	the	financial	condition	of	our	customers	were	to	deteriorate,	for	example	as	a	result	of	the	recent	financial	and economic	turmoil	or	otherwise,	resulting	in	an	impairment	of	their	ability	to	make	payments,	additional	allowances	may	be	required.

We	also	record	a	provision	for	estimated	sales	returns	and	allowances	on	product	and	service	related	sales	in	the	same	period	as	the	related	revenues	are	recorded. These	estimates	are	based	on	the	specific	facts	and	circumstances	of	particular	orders,	analysis	of	credit	memo	data	and	other	known	factors.	If	the	data	we	use	to calculate	these	estimates	do	not	properly	reflect	reserve	requirements,	then	a	change	in	the	allowances	would	be	made	in	the	period	in	which	such	a	determination	is made	and	revenues	in	that	period	could	be	adversely	affected.

# Valuation	of	Business	Combinations

We	record	tangible	and	intangible	assets	acquired	and	liabilities	assumed	in	business	combinations	under	the	purchase	method	of	accounting.	Amounts	paid	for each	acquisition	are	allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	fair	values	at	the	dates	of	acquisition.	The	fair	value	of	identifiable	intangible assets	is	based	on	detailed	valuations	that	use	information	and	assumptions	provided	by	management.	We	allocate	any	excess	purchase	price	over	the	fair	value	of	the	net tangible	and	intangible	assets	acquired	and	liabilities	assumed	to	goodwill.	The	valuation	of	purchased	research	and	development	represents	the	estimated	fair	value	at the	date	of	acquisition	related	to	in-process	projects.	Our	purchased	research	and	development	represents	the	value	of	in-process	projects	that	have	not	yet	reached technological	feasibility	and	have	no	alternative	future	uses	as	of	the	date	of	acquisition.	We	expense	the	value	attributable	to	these	in-process	projects	at	the	time	of	the acquisition.	If	the	projects	are	not	successful	or	completed	in	a	timely	manner,	we	may	not	realize	the	financial	benefits	expected	for	these	projects	or	for	the	acquisitions as	a	whole.

We	use	the	income	approach	to	determine	the	fair	values	of	our	purchased	research	and	development.	This	approach	determines	fair	value	by	estimating	the	after- tax	cash	flows	attributable	to	an	in-process	project	over	its	useful	life	and	then	discounting	these	after-tax	cash	flows	back	to	a	present	value.	We	base	our	revenue assumptions	on	estimates	of	relevant	market	sizes,	expected	market	growth	rates,	expected	trends	in	technology	and	expected	product	introductions	by	competitors.	In arriving	at	the	value	of	the	in-process	projects,	we	consider,	among	other	factors,	the	in-process	projects'	stage	of	completion,	the	complexity	of	the	work	completed	as of	the	acquisition	date,	the	costs	already	incurred,	the	projected	costs	to	complete,	the	contribution	of	core	technologies	and	other	acquired	assets,	the	expected introduction	date	and	the	estimated	useful	life	of	the	technology.	We	base	the	discount	rate	used	to	arrive	at	a	present	value	as	of	the	date	of	acquisition	on	the	time	value of	money	and	medical	technology	investment	risk	factors.	For	the	in-process	projects	we	acquired	in	connection	with	our	fiscal	2008	acquisitions,	we	used	risk-adjusted discount	rates	to	discount	our	projected	cash	flows,	ranging	from	12.5%	to	20%.	We	believe	that	the	estimated	purchased	research	and	development	amounts	so determined	represent	the	fair	value	at	the	date	of	acquisition	and	do	not	exceed	the	amount	a	third	party	would	pay	for	the	projects.

We	have	also	used	the	income	approach,	as	described	above,	to	determine	the	estimated	fair	value	of	certain	other	identifiable	intangible	assets	including developed	technology,	customer	relationships	and	trade	names.	Developed	technology	represents	patented	and	unpatented	technology	and	know-how.	Customer relationships	represent	established	relationships	with	customers,	which	provide	a	ready	channel	for	the	sale	of	additional	products	and	services.	Tradenames	represent acquired	product	names	that	we	intend	to	continue	to	utilize.

# Intangible	Assets	and	Goodwill

# Intangible	Assets

We	amortize	our	intangible	assets	that	have	finite	lives	using	either	the	straight-line	method	or,	if	reliably	determinable,	based	on	the	pattern	in	which	the economic	benefit	of	the	asset	is	expected	to	be	consumed	utilizing	expected	undiscounted	future	cash	flows.	Amortization	is	recorded	over	the	estimated	useful	lives ranging	from	2	to	30	years.	We	review	our	intangible	assets	subject	to	amortization	to	determine	if	any	adverse	conditions	exist	or	a	change	in	circumstances	has occurred	that	would	indicate	impairment	or	a	change	in	the	remaining	useful	life.	If	the	carrying	value	of	an	asset	exceeds	its	undiscounted	cash	flows,	we	will	write- down	the	carrying	value	of	the	intangible	asset	to	its	fair	value	in	the	period	identified.	In	assessing	recoverability,	we	must	make	assumptions	regarding	estimated	future cash	flows	and	discount	rates.	If	these	estimates	or	related	assumptions	change	in	the	future,	we	may	be	required	to	record	impairment	charges.	We	generally	calculate fair	value	as	the	present	value	of	estimated	future	cash	flows	to	be	generated	by	the	asset	using	a	risk-adjusted	discount	rate.	If	the	estimate	of	an	intangible	asset's remaining	useful	life	is	changed,	we	will	amortize	the	remaining	carrying	value	of	the	intangible	asset	prospectively	over	the	revised	remaining	useful	life.

In	accordance	with	ASC	350,	Intangibles—Goodwill	and	Other	(formerly	FASB	Statement	of	Financial	Accounting	Standard	No.	142	("SFAS	142"),	Goodwill and	Other	Intangible	Assets),	we	test	goodwill	at	the	reporting	unit	level	for	impairment	on	an	annual	basis	and	between	annual	tests	if	events	and	circumstances	indicate it	is	more	likely	than	not	that	the	fair	value	of	a	reporting	unit	is	less	than	its	carrying	value.	Events	that	would	indicate	impairment	and	trigger	an	interim	impairment assessment	include,	but	are	not	limited	to	current	economic	and	market	conditions,	including	a	decline	in	market	capitalization,	a	significant	adverse	change	in	legal factors,	business	climate	or	operational	performance	of	the	business,	and	an	adverse	action	or	assessment	by	a	regulator.	Our	annual	impairment	test	date	is	the	first	day of	our	fiscal	fourth	quarter.

In	performing	the	test,	we	utilize	the	two-step	approach	prescribed	under	ASC	350.	The	first	step	requires	a	comparison	of	the	carrying	value	of	the	reporting units,	as	defined,	to	the	fair	value	of	these	units.	We	consider	a	number	of	factors	to	determine	the	fair	value	of	a	reporting	unit,	including	an	independent	valuation	to conduct

this	test.	The	valuation	is	based	upon	expected	future	discounted	operating	cash	flows	of	the	reporting	unit	as	well	as	analysis	of	recent	sales	or	offerings	of	similar companies.	We	base	the	discount	rate	used	to	arrive	at	a	present	value	as	the	date	of	the	impairment	test	on	our	weighted	average	cost	of	capital.	If	the	carrying	value	of a	reporting	unit	exceeds	its	fair	value,	we	will	perform	the	second	step	of	the	goodwill	impairment	test	to	measure	the	amount	of	impairment	loss,	if	any.	The	second	step of	the	goodwill	impairment	test	compares	the	implied	fair	value	of	a	reporting	unit's	goodwill	to	its	carrying	value.

During	the	first	quarter	of	fiscal	2009,	based	upon	a	combination	of	factors,	including	the	deteriorating	macro-economic	environment,	declines	in	the	stock	market and	the	decline	of	our	market	capitalization	significantly	below	the	book	value	of	our	net	assets,	we	concluded	that	potential	goodwill	impairment	indicators	existed	as	of December	27,	2008.	As	a	result,	we	performed	an	interim	goodwill	impairment	analysis	as	of	December	27,	2008.	Step	1	of	the	impairment	analysis	indicated	that	the carrying	value	of	the	net	assets	of	certain	reporting	units,	acquired	in	connection	with	the	Cytyc	acquisition,	exceeded	the	estimated	fair	value	of	those	reporting	units. As	a	result,	we	were	required	to	perform	Step	2	of	the	goodwill	impairment	test	to	determine	the	amount,	if	any,	of	goodwill	impairment	charges	for	each	of	the applicable	reporting	units.	The	Step	2	analysis	required	us	to	perform	a	hypothetical	purchase	price	allocation	for	each	of	these	reporting	units	to	determine	the	implied fair	value	of	goodwill	and	to	compare	the	implied	fair	value	of	goodwill	to	the	recorded	amount	of	goodwill	by	reporting	unit.	Due	to	the	complexities	and	time	involved in	preparing	the	Step	1	analysis,	we	had	not	commenced	the	Step	2	analysis	as	of	February	5,	2009,	the	date	we	filed	our	Form	10-Q	for	the	quarter	ended	December	27, 2008.	As	a	result	of	the	fact	that	we	had	not	commenced	the	Step	2	analysis	and	the	complexity	of	the	analysis	required	to	complete	the	Step	2	analysis,	we	were	unable to	determine	that	an	impairment	loss,	in	accordance	with	ASC	450	(formerly	SFAS	No.	5,	Accounting	for	Contingencies),	was	both	probable	and	reasonably	estimable at	December	27,	2008.	We	completed	the	Step	2	analysis	during	our	second	quarter	of	fiscal	2009,	which	resulted	in	an	aggregate	goodwill	impairment	charge	of	$2.34 billion.	This	impairment	charge	is	comprised	of	$1.17	billion	for	GYN	Surgical,	$908.3	million	for	Diagnostics,	and	$265.9	million	for	Breast	Health	related	to	our MammoSite	reporting	unit	acquired	from	Cytyc.	We	believe	that	our	procedures	and	related	assumptions	for	estimating	the	reporting	units'	fair	value	are	reasonable	and consistent	with	the	market	conditions	that	existed	at	the	time	of	the	impairment	test.

For	illustrative	purposes,	had	the	fair	values	of	each	reporting	unit	for	which	we	recorded	goodwill	impairment	charges	in	the	second	quarter	of	fiscal	2009	been lower	by	10%	as	of	December	27,	2008,	we	would	have	recorded	an	additional	impairment	charge	of	$435.5	million.	Based	on	the	Company's	estimates	as	of December	27,	2008,	the	impact	of	reducing	our	fair	value	estimates	for	our	other	reporting	units,	for	which	we	did	not	record	any	goodwill	impairment	charges,	by	10% would	have	had	no	impact	on	the	our	goodwill	assessment	for	those	reporting	units.

We	conducted	our	annual	impairment	test	as	of	the	first	day	of	the	fourth	quarter	of	fiscal	2009.	In	order	to	complete	the	annual	impairment	test,	we	updated	our interim	impairment	test	results	and	performed	detailed	analyses	estimating	the	fair	value	of	most	of	our	reporting	units	utilizing	our	fiscal	2010	forecast	with	updated long-term	growth	assumptions.	For	one	reporting	unit,	we	utilized	the	results	of	our	interim	impairment	test.	Pursuant	to	ASC	350-20-35-29	(formerly	paragraph	27	of SFAS	142),	we	concluded	that	it	met	the	required	criteria	to	use	the	estimated	fair	value	determined	from	its	interim	impairment	analysis	for	this	reporting	unit	because 1)	the	composition	of	the	assets	and	liabilities	of	this	reporting	unit	had	not	changed	significantly	since	the	most	recent	fair	value	determination,	2)	the	most	recent	fair value	determination	resulted	in	a	fair	value	that	exceeded	the	carrying	value	of	the	reporting	unit	by	a	substantial	margin,	and	3)	management	concluded,	based	on	an analysis	of	current	events	that	had	occurred	and	circumstances	that	had	changed	since	the	most	recent	fair	value	determination,	that	it	is	remote	that	the	current	fair	value of	the	reporting	unit	would	not	exceed	their	carrying	amounts.

As	a	result	of	completing	Step	1,	all	of	our	reporting	units,	except	one,	had	a	fair	value	exceeding	their	carrying	value,	and	as	such	Step	2	of	the	impairment	test was	not	required	for	these	reporting	units.	For	the	reporting	unit	that	failed	Step	1,	we	completed	Step	2	and	determined	that	an	impairment	charge	was	not	required 72

due	to	the	fair	value	of	the	implied	goodwill	exceeding	the	carrying	value	of	the	reporting	unit's	goodwill.	For	illustrative	purposes,	had	the	fair	value	of	this	reporting unit	at	June	28,	2009	been	lower	by	10%,	the	Company	still	would	not	have	recorded	any	impairment	charge.	If	the	fair	value	of	our	other	reporting	units	had	been lower	by	10%,	two	reporting	units	would	have	failed	Step	1	requiring	a	Step	2	analysis.	These	reporting	units,	one	in	the	Diagnostics	reportable	segment	and	one	in	the Skeletal	Health	reportable	segment,	had	fair	values	at	this	date	that	exceeded	their	carrying	values	by	9%	and	2%,	respectively,	and	goodwill	of	$236.0	million	and	$8.2 million,	respectively.	The	fair	value	of	these	reporting	units	is	determined	by	use	of	a	discounted	cash	flow	analysis	("DCF")	under	the	income	approach.	The	key assumptions	that	drive	the	fair	value	in	this	model	are	the	discount	rates	(i.e.,	weighted	average	cost	of	capital,	"WACC"),	terminal	values,	growth	rates,	and	the	amount and	timing	of	expected	future	cash	flows.	If	the	current	worldwide	financial	markets	and	economic	environment	were	to	deteriorate,	this	would	likely	result	in	a	higher WACC	because	market	participants	would	require	a	higher	rate	of	return.	In	the	DCF	as	the	WACC	increases,	the	fair	value	decreases.	The	other	significant	factor	in	the DCF	is	our	projected	financial	information	(i.e.,	amount	and	timing	of	expected	future	cash	flows	and	growth	rates)	and	if	our	assumptions	were	to	be	adversely impacted,	this	could	result	in	a	reduction	of	the	fair	values	of	these	reporting	units.	For	our	other	reporting	units	with	goodwill	aggregating	$1.77	billion,	we	believe	that these	reporting	units	are	not	at	risk	of	failing	Step	1	of	the	goodwill	impairment	test.

The	estimate	of	fair	value	requires	significant	judgment.	Any	loss	resulting	from	an	impairment	test	would	be	reflected	in	operating	income	(loss)	in	our Consolidated	Statements	of	Operations.	The	annual	impairment	testing	process	is	subjective	and	requires	judgment	at	many	points	throughout	the	analysis.	If	these estimates	or	their	related	assumptions	change	in	the	future,	we	may	be	required	to	record	impairment	charges	for	these	assets	not	previously	recorded.

# Revenue	Recognition

We	recognize	product	revenue	upon	shipment	provided	that	there	is	persuasive	evidence	of	an	arrangement,	there	are	no	uncertainties	regarding	acceptance,	the sales	price	is	fixed	or	determinable,	no	rights	of	return	exist	and	collection	of	the	resulting	receivable	is	reasonably	assured.	Generally,	our	product	arrangements	are multiple	element	arrangements,	including	services	such	as	installation	and	training.	We	account	for	these	arrangements	in	accordance	with	ASC	605-25,	Multiple Element	Arrangements	(formerly	Emerging	Issues	Task	Force	("EITF")	No.	00-21,	Accounting	for	Revenue	Arrangements	with	Multiple	Deliverables).	Based	on	the terms	and	conditions	of	the	product	arrangements,	we	have	concluded	that	these	services	and	undelivered	products	can	be	accounted	for	separately	from	the	delivered product	element	as	our	delivered	product	has	value	to	our	customers	on	a	stand-alone	basis	and	we	have	objective	and	reliable	evidence	of	the	fair	value	of	such	services and	undelivered	products.	Accordingly,	service	revenue	representing	the	fair	value	of	services	not	yet	performed	at	the	time	of	product	shipment	is	deferred	and recognized	as	such	services	are	performed.	The	fair	value	of	the	undelivered	products	is	also	deferred	at	the	time	of	product	shipment	and	recognized	when	these products	are	delivered.	The	residual	revenue	under	the	product	arrangement	will	be	recognized	as	product	revenue	upon	shipment.	There	are	no	customer	rights	of	return in	our	sales	agreements.

We	recognize	product	revenue	upon	the	completion	of	installation	for	products	whose	installation	is	essential	to	its	functionality,	primarily	related	to	our	digital imaging	systems.	A	provision	is	made	at	that	time	for	estimated	warranty	costs	to	be	incurred.

Service	revenues	primarily	consist	of	amounts	recorded	under	service	and	maintenance	contracts	and	repairs	not	covered	under	warranty,	installation	and	training revenues	and	shipping	and	handling	costs	billed	to	customers.	Service	and	maintenance	contract	revenues	are	recognized	ratably	over	the	term	of	the	contract.	Other service	revenues	are	recorded	when	the	services	are	delivered.

Although	certain	of	our	products	contain	operating	and	application	software,	we	have	determined	that	except	for	our	CAD	(computer	aided	detection)	products obtained	with	the	acquisition	of	R2	Technology,	Inc.	and	the	newly	released	Dimensions	2D/3D	full	field	digital	mammography	product	("Dimensions"),	the	software element	is	incidental	in	accordance	with	the	software	revenue	recognition	rules.

We	have	determined	that	the	provisions	of	ASC	985-605,	Software—Revenue	Recognition	(formerly	AICPA	Statement	of	Position	No.	97-2,	Software	Revenue Recognition)	apply	to	revenue	transactions	for	our	CAD	systems	and	the	Dimensions	product.	ASC	985-605	generally	requires	revenue	earned	on	software	arrangements involving	multiple	elements	to	be	allocated	to	each	element	based	on	the	relative	fair	values	of	the	elements.	Revenue	recognized	from	multi-element	arrangements	is allocated	to	each	element	of	the	arrangement	using	the	residual	method	based	on	the	fair	value	of	the	undelivered	elements.	Our	determination	of	fair	value	of	the undelivered	elements	in	multi-element	arrangements	is	based	on	vendor-specific	objective	evidence	("VSOE").	We	limit	our	assessment	of	VSOE	for	each	element	to either	the	price	charged	when	the	same	element	is	sold	separately	or	the	price	established	by	management,	having	the	relevant	authority	to	do	so,	for	an	element	not	yet sold	separately.	We	recognize	revenue	on	CAD	systems	and	Dimensions	product	sales	upon	completion	of	installation,	at	which	time	the	only	remaining	undelivered element	is	Post	Contract	Support	("PCS").

Upon	its	release,	we	completed	an	evaluation	of	the	software	component	of	our	Dimensions	product	in	accordance	with	the	software	revenue	recognition	rules. We	noted	the	following	in	our	evaluation	of	the	software	component	of	our	new	Dimensions	product:

•	 Dimensions	is	offered	in	different	configurations	offering	different	levels	of	functionality	(2D	vs.	3D).	Customers	who	purchase	the	2D	configuration	will	be to	able	to	upgrade	the	product	to	a	3D	version	and	such	upgrade	will	solely	represent	a	software	upgrade	that	will	be	marketed	and	sold	separately.	This differentiation	from	our	existing	2D	digital	mammography	product	is	expected	to	be	highlighted	in	our	marketing	literature.

•	 As	part	of	the	initial	warranty	of	the	Dimensions	product,	customers	will	receive	not	only	bug	fixes	related	to	the	software	but	will	also	receive	any	updates and	enhancements	to	the	software	that	are	released.	Therefore,	we	concluded	that	this	represents	PCS	as	defined	in	ASC	985-605.

As	a	result,	we	have	determined	that	the	Dimensions	product	contains	software	that	is	more	than	incidental	to	the	product	as	a	whole	and	thus,	will	be	accounted for	under	ASC	985-605.	Therefore,	we	recognize	revenue	upon	installation	and	acceptance,	if	required,	and	defer	revenue	based	on	the	VSOE	of	fair	value	of	the	initial bundled	PCS.	We	have	determined	that	VSOE	of	fair	value	of	the	initial	bundled	PCS	exists	based	on	the	establishment	of	the	price	for	which	this	element	will	be	sold separately	by	management	having	the	relevant	authority	and	that	it	is	probable	that	this	price	will	not	change	prior	to	when	this	service	is	sold	separately.	We	have specified	the	renewal	rates	at	which	service	can	be	purchased	separately	upon	expiration	of	the	initial	PCS	period	and	those	rates	have	been	consistent.

For	multi-element	arrangements	where	VSOE	of	fair	value	of	PCS	has	been	established,	we	recognize	revenue	using	the	residual	method	at	the	time	all	other revenue	recognition	criteria	have	been	met.	Amounts	attributable	to	post	contract	support	are	recorded	as	deferred	revenue	and	recognized	ratably	over	the	contractual term	of	the	support.

Under	customer	usage	agreements,	we	install	certain	equipment	(for	example,	a	ThinPrep	Processor	or	a	ThinPrep	Imaging	System)	at	customer	sites	and customers	commit	to	purchasing	minimum	quantities	of	disposable	supplies	at	a	stated	price	(generally	including	a	usage	fee	for	the	equipment)	over	a	defined	contract term,	which	is	typically	between	three	and	five	years.	Revenue	is	recognized	over	the	term	of	the	customer	usage	agreement	as	disposable	supplies	are	delivered.	We also	rent	certain	equipment	to	customers.	Revenues	from	rental	agreements	are	recorded	over	the	terms	of	the	rental	agreements.

# Product	Warranties

Products	sold	are	generally	covered	by	a	warranty	for	a	period	of	one	year.	We	accrue	a	warranty	reserve	at	the	time	of	revenue	recognition	for	estimated	costs	to provide	warranty	services.	Our	estimate	of	costs	to	service	our	warranty	obligations	is	based	on	historical	experience	and	expectation	of	future	conditions.	To	the	extent we	experience	increased	or	decreased	warranty	claim	activity	or	increased	or	decreased	costs	associated	with

servicing	those	claims,	our	warranty	accrual	will	increase	or	decrease,	respectively,	resulting	in	decreased	or	increased	gross	profit.	Our	warranty	accrual	was approximately	$5.6	million,	$9.1	million	and	$12.1	million	in	fiscal	2009,	2008	and	2007,	respectively.	The	decrease	in	the	warranty	accrual	in	both	fiscal	2009	and fiscal	2008	is	primarily	attributable	to	a	decrease	in	warranty	claim	activity	primarily	related	to	our	digital	mammography	systems.

# Stock-Based	Compensation

The	adoption	of	SFAS	No.	123(R),	Share-Based	Payment	(codified	in	ASC	718,	Stock	Compensation)	in	the	first	quarter	of	fiscal	2006	required	that	stock-based compensation	expense	associated	with	stock	options	and	related	awards	be	recognized	in	the	statement	of	income,	rather	than	being	disclosed	in	a	pro	forma	footnote	to the	consolidated	financial	statements.	Determining	the	amount	of	stock-based	compensation	to	be	recorded	requires	us	to	develop	estimates	to	be	used	in	calculating	the grant-date	fair	value	of	stock	options.	Prior	to	the	adoption	of	SFAS	123(R),	we	determined	the	fair	value	of	our	stock	options	using	the	Black-Scholes	Option	Pricing Model.	In	connection	with	the	adoption	of	SFAS	123(R),	we	elected	to	use	a	binomial	lattice	model	to	determine	the	fair	value	of	our	stock	options.	We	consider	a number	of	factors	to	determine	the	fair	value	of	stock	options	including	the	advice	of	an	outside	valuation	advisor	and	the	advisor's	model.	The	model	requires	us	to make	estimates	of	the	following	assumptions:

Expected	volatility—We	are	responsible	for	estimating	volatility	and	have	considered	a	number	of	factors,	including	third-party	estimates,	when	estimating volatility.	We	currently	use	a	combination	of	historical	and	implied	volatility,	which	is	weighted	based	on	a	number	of	factors.

Expected	term—We	use	historical	employee	exercise	and	option	expiration	data	to	estimate	the	expected	term	assumption.	We	believe	that	this	historical	data	is currently	the	best	estimate	of	the	expected	term	of	a	new	option,	and	that	generally,	all	of	our	employees	exhibit	similar	exercise	behavior.

Risk-free	interest	rate—The	yield	on	zero-coupon	U.S.	Treasury	securities	for	a	period	that	is	commensurate	with	the	expected	term	assumption	is	used	as	the	risk- free	interest	rate.

The	amount	of	stock-based	compensation	expense	recognized	during	a	period	is	based	on	the	value	of	the	portion	of	the	awards	that	are	ultimately	expected	to vest.	ASC	718	requires	forfeitures	to	be	estimated	at	the	time	of	grant	and	revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those	estimates. The	term	"forfeitures"	is	distinct	from	"cancellations"	or	"expirations"	and	represents	only	the	unvested	portion	of	the	surrendered	option.	Based	on	an	analysis	of historical	forfeitures,	the	Company	has	determined	a	specific	forfeiture	rate	for	certain	employee	groups	and	has	applied	forfeiture	rates	ranging	from	0%	to	6%	as	of September	26,	2009	depending	on	the	specific	employee	group.	This	analysis	is	re-evaluated	quarterly	and	the	forfeiture	rate	is	adjusted	as	necessary.	Ultimately,	the actual	expense	recognized	over	the	vesting	period	will	only	be	for	those	awards	that	vest.

We	recognized	$32.9	million,	$25.7	million	and	$6.1	million	of	stock-based	compensation	expense	for	employee	equity	awards	in	fiscal	years	2009,	2008	and 2007,	respectively.	As	of	September	26,	2009,	there	was	$32.0	million	of	unrecognized	compensation	expense	related	to	stock	option	awards	that	we	expect	to	recognize over	a	weighted-average	period	of	3.5	years.	As	of	September	26,	2009,	there	was	$33.0	million	of	unrecognized	compensation	expense	related	to	restricted	stock	units that	we	expect	to	recognize	over	a	weighted	average	period	of	2.3	years.

# Income	Taxes

We	use	the	asset	and	liability	method	for	accounting	for	income	taxes.	Under	this	method	we	determine	deferred	tax	assets	and	liabilities	based	on	the	difference between	financial	reporting	and	taxes	bases	of	our	assets	and	liabilities.	We	measure	deferred	tax	assets	and	liabilities	using	enacted	tax	rates	and	laws	that	will	be	in effect	when	we	expect	the	differences	to	reverse.

We	recognized	net	deferred	tax	liabilities	of	$860.8	million	at	September	26,	2009	and	$867.2	million	at	September	27,	2008.	The	liabilities	primarily	relate	to deferred	taxes	associated	with	our	acquisitions	and	the	original	issuance	discount	on	our	Convertible	Notes.	The	tax	assets	relate	primarily	net	operating	loss carryforwards,	accruals	and	reserves,	stock-based	compensation	and	research	credits.	We	record	a	valuation	allowance	to	reduce	our	deferred	tax	assets	to	the	amount that	is	more	likely	than	not	to	be	realized.	While	we	have	considered	future	taxable	income	and	ongoing	prudent	and	feasible	tax	planning	strategies	in	assessing	the need	for	the	valuation	allowance,	in	the	event	we	were	to	determine	that	we	would	be	able	to	realize	our	deferred	tax	assets	in	the	future	in	excess	of	the	net	recorded amount,	an	adjustment	to	the	deferred	tax	asset	would	increase	income	in	the	period	such	determination	was	made.	Likewise,	should	we	determine	that	we	would	not	be able	to	realize	all	or	part	of	our	net	deferred	tax	asset	in	the	future,	an	adjustment	to	the	deferred	tax	asset	would	be	charged	to	income	in	the	period	such	determination was	made.

On	September	30,	2007,	we	adopted	Financial	Accounting	Standards	Board	("FASB")	Interpretation	("FIN")	No.	48,	Accounting	for	Uncertainty	in	Income	Taxes —an	interpretation	of	FASB	Statement	No.	109	(codified	primarily	in	ASC	740,	Income	Taxes),	which	clarifies	the	accounting	for	uncertainty	in	income	taxes recognized	in	an	enterprise's	financial	statements.	FIN	No.	48	prescribes	a	recognition	threshold	and	measurement	criteria	for	the	financial	statement	recognition	and measurement	of	a	tax	position	taken	or	expected	to	be	taken	in	a	tax	return.	FIN	No.	48	also	provides	guidance	on	derecognition,	classification,	interest	and	penalties, accounting	in	interim	periods,	disclosure,	and	transition	and	defines	the	criteria	that	must	be	met	for	the	benefits	of	a	tax	position	to	be	recognized.	As	a	result	of	our adoption	of	FIN	No.	48,	we	recorded	the	cumulative	effect	of	the	change	in	accounting	principle	of	$0.5	million	as	a	decrease	to	opening	retained	earnings.

We	had	gross	unrecognized	tax	benefits,	including	interest,	of	approximately	$29.2	million	as	of	September	26,	2009	and	$20.2	million	as	of	September	27,	2008. At	September	26,	2009,	$29.2	million	represents	the	amount	of	unrecognized	tax	benefits	that,	if	recognized,	would	result	in	a	reduction	of	the	Company's	effective	tax rate.	In	the	next	twelve	months	it	is	reasonably	possible	that	we	will	reduce	our	unrecognized	tax	benefits	by	$2.2	million	due	to	expiration	of	statute	of	limitations	and settlements	with	taxing	authorities,	which	will	reduce	the	Company's	effective	tax	rate.

In	the	ordinary	course	of	global	business,	there	are	many	transactions	and	calculations	where	the	ultimate	tax	outcome	is	uncertain.	Judgment	is	required	in determining	our	worldwide	income	tax	provision.	In	our	opinion,	we	have	made	adequate	provisions	for	income	taxes	for	all	years	subject	to	audit.	Although	we	believe our	estimates	are	reasonable,	no	assurance	can	be	given	that	the	final	tax	outcome	of	these	matters	will	not	be	different	than	that	which	is	reflected	in	our	historical income	tax	provisions	and	accruals.	In	the	event	our	assumptions	are	incorrect,	the	differences	could	have	a	material	impact	on	our	income	tax	provision	and	operating results	in	the	period	in	which	such	determination	is	made.

# Recent	Accounting	Pronouncements

In	September	2009,	the	FASB	ratified	ASC	Update	No.	2009-13,	Multiple-Deliverable	Revenue	Arrangements,	or	ASU	2009-13.	ASU	2009-13,	amends	existing revenue	recognition	accounting	pronouncements	that	are	currently	within	the	scope	of	FASB	Accounting	Standards	Codification,	or	ASC,	Subtopic	605-25	(previously included	within	EITF	Issue	No.	00-21,	Revenue	Arrangements	with	Multiple	Deliverables,	or	EITF	00-21).	This	consensus	provides	for	two	significant	changes	to	the existing	multiple	element	revenue	recognition	guidance.	First,	this	guidance	deletes	the	requirement	to	have	objective	and	reliable	evidence	of	fair	value	for	undelivered elements	in	an	arrangement	and	will	result	in	more	deliverables	being	treated	as	separate	units	of	accounting.	The	second	change	modifies	the	manner	in	which	the transaction	consideration	is	allocated	across	the	separately	identified	deliverables.	These	changes	may	result	in	entities	recognizing	more	revenue	up-front,	and	entities will	no	longer	be	able	to	apply	the	residual	method	and	defer	the	fair	value	of	undelivered	elements.	Upon	adoption	of	these	new	rules,	each	separate	unit	of	accounting must	have	a	selling	price,	which	can	be	based	on	management's	estimate	when	there	is	no	other	means	to	determine	the	fair	value	of	that	undelivered	item,	and	the arrangement	consideration	is	allocated	based	on	the	elements'	relative

selling	price.	This	accounting	guidance	is	effective	no	later	than	fiscal	years	beginning	on	or	after	June	15,	2010	but	may	be	early	adopted	as	of	the	first	quarter	of	an entity's	fiscal	year.	Entities	may	elect	to	adopt	this	accounting	guidance	either	through	prospective	application	to	all	revenue	arrangements	entered	into	or	materially modified	after	the	date	of	adoption	or	through	a	retrospective	application	to	all	revenue	arrangements	for	all	periods	presented	in	the	financial	statements.	We	are currently	evaluating	the	impact	of	this	revised	accounting	guidance,	which	we	can	adopt	as	early	as	the	first	quarter	of	fiscal	2010.

In	September	2009,	the	FASB	ratified	ASU	No.	2009-14,	Applicability	of	SOP	97-2	to	Certain	Arrangements	that	Include	Software	Elements	(formerly	EITF Issue	No.	09-3,	Certain	Revenue	Arrangements	that	Include	Software	Elements),	which	amends	the	existing	accounting	guidance	for	how	entities	account	for arrangements	that	include	both	hardware	and	software,	which	typically	resulted	in	the	sale	of	hardware	being	accounted	for	under	the	software	revenue	recognition	rules. This	accounting	guidance	changes	revenue	recognition	for	tangible	products	containing	software	elements	and	non-software	elements.	The	tangible	element	of	the product	is	always	outside	of	the	scope	of	the	software	revenue	recognition	rules,	and	the	software	elements	of	tangible	products	when	the	software	element	and	non- software	elements	function	together	to	deliver	the	product's	essential	functionality	are	outside	of	the	scope	of	the	software	rules.	As	a	result,	both	the	hardware	and qualifying	related	software	elements	are	excluded	from	the	scope	of	the	software	revenue	guidance	and	accounted	for	under	the	revised	multiple-element	revenue recognition	guidance.	This	accounting	guidance	is	effective	for	all	fiscal	years	beginning	on	or	after	June	15,	2010	with	early	adoption	permitted.	Entities	must	adopt ASU	2009-14	and	ASU	2009-13	in	the	same	manner	and	at	the	same	time.	We	are	currently	evaluating	the	impact	of	this	revised	accounting	guidance,	which	we	can adopt	as	early	as	the	first	quarter	of	fiscal	2010.

In	April	2009,	the	FASB	issued	FASB	Staff	Positions	("FSP")	FAS	115-2	and	FAS	124-2,	Recognition	and	Presentation	of	Other-Than-Temporary	Impairment (FSP	115-2/124-2)	(codified	within	ASC	320,	Investments—Debt	and	Equity	Securities).	FSP	115-2/124-2	amends	the	requirements	for	the	recognition	and measurement	of	other-than-temporary	impairments	for	debt	securities	by	modifying	the	pre-existing	"intent	and	ability"	indicator.	Under	this	FSP,	an	other-than- temporary	impairment	is	triggered	when	there	is	an	intent	to	sell	the	security,	it	is	more	likely	than	not	that	the	security	will	be	required	to	be	sold	before	recovery,	or	the security	is	not	expected	to	recover	the	entire	amortized	cost	basis	of	the	security.	Additionally,	this	FSP	changes	the	presentation	of	an	other-than-temporary	impairment in	the	income	statement	for	those	impairments	involving	credit	losses.	The	credit	loss	component	will	be	recognized	in	earnings	and	the	remainder	of	the	impairment	will be	recorded	in	other	comprehensive	income.	FSP	115-2/124-2	was	effective	for	us	beginning	with	the	third	quarter	of	fiscal	2009.	The	adoption	of	this	FSP	did	not	have a	significant	impact	on	our	consolidated	financial	statements.

In	December	2007,	the	FASB	issued	ASC	805,	Business	Combinations	(formerly	SFAS	No.	141	(Revised	2007),	Business	Combinations	("SFAS	141(R)").	This Statement	retains	the	fundamental	requirements	in	SFAS	141	that	the	acquisition	method	of	accounting	(which	SFAS	141	called	the	purchase	method)	be	used	for	all business	combinations	and	for	an	acquirer	to	be	identified	for	each	business	combination.	ASC	805	requires	an	acquirer	to	recognize	the	assets	acquired,	the	liabilities assumed,	and	any	noncontrolling	interest	in	the	acquiree	at	the	acquisition	date,	measured	at	their	fair	values	as	of	that	date,	with	limited	exceptions	specified	in	the Statement.	ASC	805	replaces	SFAS	141's	cost-allocation	process,	which	required	the	cost	of	an	acquisition	to	be	allocated	to	the	individual	assets	acquired	and liabilities	assumed	based	on	their	estimated	fair	values.	The	Statement	retains	the	guidance	in	SFAS	141	for	identifying	and	recognizing	intangible	assets	separately	from goodwill.	ASC	805	will	now	require	acquisition	costs	to	be	expensed	as	incurred,	and	changes	in	deferred	tax	asset	valuation	allowances	and	income	tax	uncertainties after	the	acquisition	date	generally	to	affect	income	tax	expense.	ASC	805	applies	prospectively	to	business	combinations	for	which	the	acquisition	date	is	on	or	after	the beginning	of	the	first	annual	reporting	period	beginning	on	or	after	December	15,	2008,	which	is	our	2010	fiscal	year.	Early	adoption	is	prohibited.	We	are	currently evaluating	the	impact	that	the	adoption	of	ASC	805	will	have	on	our	consolidated	financial	statements.

In	December	2007,	the	FASB	issued	SFAS	No.	160,	Noncontrolling	Interests	in	Consolidated	Financial	Statements—An	amendment	of	ARB	No.	51	("SFAS 160")	(codified	within	ASC	810,	Consolidation).	SFAS	160	amends	Accounting	Research	Bulletin	("ARB")	No.	51	to	establish	accounting	and	reporting	standards	for the

noncontrolling	interest	in	a	subsidiary	and	for	the	deconsolidation	of	a	subsidiary.	It	clarifies	that	a	noncontrolling	interest	in	a	subsidiary	is	an	ownership	interest	in	the consolidated	entity	that	should	be	reported	as	equity	in	the	consolidated	financial	statements.	The	amount	of	net	income	attributable	to	the	noncontrolling	interest	will	be included	in	consolidated	net	income	on	the	face	of	the	income	statement.	SFAS	160	clarifies	that	changes	in	a	parent's	ownership	interest	in	a	subsidiary	that	do	not result	in	deconsolidation	are	equity	transactions	if	the	parent	retains	its	controlling	financial	interest.	In	addition,	this	Statement	requires	that	a	parent	recognize	a	gain	or loss	in	net	income	when	a	subsidiary	is	deconsolidated.	SFAS	160	is	effective	for	fiscal	years,	and	interim	periods	within	those	fiscal	years,	beginning	on	or	after December	15,	2008,	which	is	our	2010	fiscal	year.	Early	adoption	is	prohibited.	We	do	not	expect	the	adoption	of	this	standard	to	have	an	impact	on	our	financial position	or	results	of	operations.

In	April	2008,	the	FASB	issued	FASB	FSP	No.	142-3,	Determination	of	the	Useful	Life	of	Intangible	Assets	(codified	within	ASC	350,	Intangibles—Goodwill and	Other),	which	amends	the	factors	that	must	be	considered	in	developing	renewal	or	extension	assumptions	used	to	determine	the	useful	life	over	which	to	amortize the	cost	of	a	recognized	intangible	asset	under	ASC	350.	The	objective	of	this	FSP	is	to	improve	the	consistency	between	the	useful	life	of	a	recognized	intangible	asset under	ASC	350	and	the	period	of	expected	cash	flows	used	to	measure	the	fair	value	of	the	asset	under	ASC	805.	The	FSP	is	effective	for	financial	statements	for	fiscal years	beginning	after	December	15,	2008,	which	will	be	the	beginning	of	fiscal	2010	for	us.	We	are	currently	evaluating	the	impact	that	the	adoption	of	this	FSP	will have	on	our	consolidated	financial	statements.	Early	adoption	is	prohibited.

In	May	2008,	the	FASB	issued	FSP	No.	APB	14-1,	Accounting	for	Convertible	Debt	Instruments	That	May	Be	Settled	in	Cash	upon	Conversion	(Including Partial	Cash	Settlement)	(codified	within	ASC	470,	Debt).	This	FSP	applies	to	convertible	debt	instruments	that,	by	their	stated	terms,	may	be	settled	in	cash	(or	other assets)	upon	conversion,	including	partial	cash	settlement,	unless	the	embedded	conversion	option	is	required	to	be	separately	accounted	for	as	a	derivative	under	ASC 815,	Derivatives	and	Hedging	(formerly	SFAS	No.	133,	Accounting	for	Derivative	Instruments	and	Hedging	Activities).	The	liability	and	equity	components	of convertible	debt	instruments	within	the	scope	of	this	FSP	must	be	separately	accounted	for	in	a	manner	that	will	reflect	the	entity's	nonconvertible	debt	borrowing	rate when	interest	cost	is	recognized	in	subsequent	periods.	The	excess	of	the	principal	amount	of	the	debt	over	the	amount	ultimately	allocated	to	the	liability	component	is required	to	be	amortized	to	interest	expense	using	the	effective	interest	method.	This	FSP	is	effective	for	financial	statements	issued	for	fiscal	years	beginning	after December	15,	2008,	and	interim	periods	within	those	fiscal	years.	As	a	result,	we	will	adopt	this	standard	at	the	beginning	of	fiscal	2010.	This	FSP	must	be	applied retrospectively	to	all	periods	presented.	The	retrospective	adoption	of	this	FSP	will	increase	our	historical	reported	interest	expense	from	December	10,	2007	(issuance date	of	the	Convertible	Notes—See	Note	5)	forward.

The	adoption	of	FSP	APB	14-1	will	have	no	impact	on	our	actual	past	or	future	cash	flows.	However,	upon	adoption	in	fiscal	2010,	we	will	restate	prior	periods by	reclassifying	approximately	$470,000	of	our	Convertible	Notes	to	additional	paid-in	capital,	resulting	in	a	debt	discount.	It	is	estimated	that	our	non-cash	interest expense	will	increase	by	approximately	$65.5	million	and	$48.1	for	the	years	ended	September	26,	2009	and	September	27,	2008,	respectively,	resulting	in	a	restated diluted	net	loss	per	share	of	approximately	$(8.64)	and	$(1.69)	for	the	years	ended	September	26,	2009	and	September	27,	2008,	respectively.	We	expect	to	record approximately	an	additional	$71.1	million	of	non-cash	interest	expense	in	fiscal	2010.

In	June	2008,	the	FASB	ratified	the	consensus	reached	on	EITF	Issue	No.	07-5,	Determining	Whether	an	Instrument	(or	Embedded	Feature)	Is	Indexed	to	an Entity's	Own	Stock	("EITF	07-5")	(codified	within	ASC	815).	This	accounting	guidance	clarifies	the	determination	of	whether	an	instrument	(or	an	embedded	feature)	is indexed	to	an	entity's	own	stock,	which	would	qualify	as	a	scope	exception	under	ASC	815,	and	it	is	effective	for	financial	statements	issued	for	fiscal	years	beginning after	December	15,	2008.	Early	adoption	for	an	existing	instrument	is	not	permitted.	We	have	concluded	that	upon	the	adoption	of	this	standard,	the	embedded derivative

option	in	our	Convertible	Notes	(See	Note	5)	will	continue	to	be	considered	indexed	to	our	own	stock.	As	a	result,	the	adoption	of	this	standard	is	not	expected	to	have	a material	impact	on	our	financial	condition	or	results	of	operations.

In	June	2009,	the	FASB	issued	SFAS	No.	168,	The	FASB	Accounting	Standards	Codification	and	the	Hierarchy	of	Generally	Accepted	Accounting	Principles (codified	within	ASC	105,	Generally	Accepted	Accounting	Principles)	,	which	establishes	the	FASB	Accounting	Standards	Codification	as	the	single	source	of authoritative	U.S.	GAAP.	The	Codification	will	supersede	all	existing	non-SEC	accounting	and	reporting	standards.	As	a	result,	upon	adoption,	all	references	to accounting	literature	in	our	SEC	filings	will	conform	to	the	appropriate	reference	within	the	Codification.	The	adoption	of	this	standard	did	not	have	any	impact	on	our financial	position	or	results	of	operations.

# Item	7A. Quantitative	and	Qualitative	Disclosures	About	Market	Risk.

Financial	Instruments,	Other	Financial	Instruments,	and	Derivative	Commodity	Instruments.	ASC	825,	Financial	Instruments	(formerly	SFAS	No.	107,

Disclosure	of	Fair	Value	of	Financial	Instruments),	requires	disclosure	about	fair	value	of	financial	instruments.	Financial	instruments	consist	of	cash	equivalents, accounts	receivable,	and	debt	obligations.	Except	for	our	outstanding	convertible	note,	the	fair	value	of	these	financial	instruments	approximates	their	carrying	amount. As	of	September	26,	2009	we	have	$1.725	billion	of	Convertible	Notes	outstanding.	The	fair	value	of	our	Convertible	Notes	was	approximately	$1.4	billion	as	of September	26,	2009	based	on	the	trading	price	as	of	that	date.

Primary	Market	Risk	Exposures.	Our	primary	market	risk	exposures	are	in	the	areas	of	interest	rate	risk	and	foreign	currency	exchange	rate	risk.	We	incur	interest expense	on	borrowings	outstanding	under	our	Amended	Credit	Agreement	and	to	a	much	lesser	extent	the	debt	assumed	in	our	acquisition	of	AEG,	which	as	of September	26,	2009	is	$1.5	million.	Borrowings	under	the	Amended	Credit	Agreement	bear	interest	at	a	rate	per	annum	equal	to,	at	our	option,	with	respect	to	the borrowings	under	the	Term	Loan	A	of	either	(1)	the	Base	Rate	(the	greater	of	the	prime	rate	as	quoted	in	The	Wall	Street	Journal	and	the	Federal	Funds	Effective	Rate) plus	1.25%,	which	was	reduced	from	1.50%	in	May	2009	or	(2)	the	Eurodollar	Rate,	plus	2.25%,	which	was	reduced	from	2.50%	in	May	2009,	and	with	respect	to	the Term	Loan	B	of	either	(1)	the	Base	Rate	(the	greater	of	the	prime	rate	as	quoted	in	The	Wall	Street	Journal	and	the	Federal	Funds	Effective	Rate)	plus	2.25%	or	(2)	the Eurodollar	Rate,	plus	3.25%.

As	of	September	26,	2009,	there	was	approximately	$174.2	million	outstanding	under	the	Amended	Credit	Agreement,	including	$124.7	million	under	the	Term Loan	A	facility	which	matures	on	September	30,	2012	and	$49.5	million	under	the	Term	Loan	B	facility	which	matures	on	March	31,	2013.	Subsequent	to September	26,	2009,	we	paid	an	additional	$24.6	million	of	principal	resulting	in	an	outstanding	balance	of	$149.6	million	at	the	time	of	filing	this	Form	10-K.

These	debt	obligations	are	variable	rate	instruments	and	our	interest	expense	associated	with	these	instruments	is,	therefore,	subject	to	changes	in	market	interest rates.	A	10%	adverse	movement	(increase	in	LIBOR)	would	increase	annual	interest	expense	by	approximately	$1.3	million.

The	return	from	cash	and	cash	equivalents	will	vary	as	short-term	interest	rates	change.	A	hypothetical	10%	increase	or	decrease	in	interest	rates,	however,	would not	have	a	material	adverse	effect	on	our	financial	condition.	Interest	income	on	our	cash	and	cash	equivalents	is	recorded	as	a	component	of	Other	(Expense)	Income, net	in	our	accompanying	Consolidated	Statements	of	Operations.

Foreign	Currency	Exchange	Risk.	Our	international	business	is	subject	to	risks,	including,	but	not	limited	to:	unique	economic	conditions,	changes	in	political climate,	differing	tax	structures,	other	regulations	and	restrictions,	and	foreign	exchange	rate	volatility.	Accordingly,	our	future	results	could	be	materially	adversely impacted	by	changes	in	these	or	other	factors.

We	maintain	sales	and	service	offices	outside	the	United	States,	have	manufacturing	facilities	in	Germany	and	Costa	Rica	and	conduct	business	worldwide.	The expenses	of	our	international	offices	are	denominated	in	local	currencies,	except	at	our	Costa	Rica	subsidiary,	where	the	majority	of	the	business	is	conducted	in	U.S. dollars.	Our	foreign	sales	are	denominated	in	local	currencies,	the	Euro	or	U.S.	dollars.	Fluctuations	in	the	foreign	currency	rates	could	affect	our	sales,	cost	of	goods and	operating	margins	and	could	result	in	exchange	losses.	In	addition,	currency	devaluations	can	result	in	a	loss	if	we	hold	deposits	of	that	currency.

We	believe	that	the	operating	expenses	of	our	international	subsidiaries	that	are	incurred	in	local	currencies	will	not	have	a	material	adverse	effect	on	our business,	results	of	operations	or	financial	condition.	Our	operating	results	and	certain	assets	and	liabilities	that	are	denominated	in	the	Euro	are	affected	by	changes	in the	relative	strength	of	the	U.S.	dollar	against	the	Euro.	Our	expenses	denominated	in	Euros	are	positively	affected	when	the	United	States	dollar	strengthens	against	the Euro	and	adversely	affected	when	the	United	States	dollar	weakens.	However,	we	believe	that	the	foreign	currency	exchange	risk	is	not	significant.	A	hypothetical	10% increase	or	decrease	in	foreign	currencies	that	we	transact	in	would	not	have	a	material	adverse	effect	on	our	financial	condition	or	results	of	operations.	During	fiscal 2009,	2008	and	2007,	we	incurred	foreign	exchange	losses	of	$2.3	million,	$0.7	million	and	$0.4	million,	respectively.

# Item	8. Financial	Statements	and	Supplementary	Data.

Our	Consolidated	Financial	Statements	and	Supplementary	Data	are	listed	under	Part	IV,	Item	15,	in	this	report.

# Item	9. Changes	in	and	Disagreements	with	Accountants	on	Accounting	and	Financial	Disclosure.

# Item	9A. Controls	and	Procedures.

# Evaluation	of	Disclosure	Controls	and	Procedures

We	maintain	disclosure	controls	and	procedures	that	are	designed	to	ensure	that	information	required	to	be	disclosed	in	our	Securities	Exchange	Act	reports	is recorded,	processed,	summarized	and	reported	within	the	time	periods	specified	in	the	SEC's	rules	and	forms,	and	that	such	information	is	accumulated	and communicated	to	our	management,	including	our	Chief	Executive	Officer	and	Chief	Financial	Officer,	as	appropriate,	to	allow	timely	decisions	regarding	required disclosure.	In	designing	and	evaluating	the	disclosure	controls	and	procedures,	management	recognized	that	any	controls	and	procedures,	no	matter	how	well	designed and	operated,	can	provide	only	reasonable	assurance	of	achieving	the	desired	control	objectives,	as	ours	are	designed	to	do,	and	management	necessarily	was	required	to apply	its	judgment	in	evaluating	the	cost-benefit	relationship	of	possible	controls	and	procedures.

As	of	September	26,	2009,	we	carried	out	an	evaluation,	under	the	supervision	and	with	the	participation	of	our	management,	including	our	Chief	Executive Officer	and	Chief	Financial	Officer,	of	the	effectiveness	of	the	design	and	operation	of	our	disclosure	controls	and	procedures,	as	defined	in	Rules	13a-15(e)	and	15d- 15(e)	under	the	Securities	Exchange	Act	of	1934.	Based	upon	that	evaluation,	our	Chief	Executive	Officer	and	Chief	Financial	Officer	concluded	that	our	disclosure controls	and	procedures	are	effective.

# Report	of	Management	on	Internal	Control	over	Financial	Reporting

We	are	responsible	for	establishing	and	maintaining	adequate	internal	control	over	financial	reporting.	Internal	control	over	financial	reporting	is	defined	in	Rule 13a-15(f)	and	15d-15(f)	under	the	Securities	Exchange	Act	of	1934,	as	amended,	as	a	process	designed	by,	or	under	the	supervision	of	our	principal	executive	and

principal	financial	officers	and	effected	by	our	board	of	directors,	management	and	other	personnel	to	provide	reasonable	assurance	regarding	the	reliability	of	financial reporting	and	the	preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles	and	includes	those	policies	and procedures	that:

•	 pertain	to	the	maintenance	of	records	that	in	reasonable	detail	accurately	and	fairly	reflect	the	transactions	and	disposition	of	our	assets;

•	 provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in	accordance	with	generally	accepted accounting	principles,	and	that	our	receipts	and	expenditures	are	being	made	only	in	accordance	with	authorization	of	our	management	and	directors;	and

•	 provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use	or	disposition	of	our	assets	that	could	have	a	material effect	on	the	financial	statements.

Our	internal	control	system	was	designed	to	provide	reasonable	assurance	to	our	management	and	board	of	directors	regarding	the	preparation	and	fair presentation	of	published	financial	statements.	Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements. Projections	of	any	evaluation	of	effectiveness	to	future	periods	are	subject	to	the	risks	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the degree	of	compliance	with	the	policies	or	procedures	may	deteriorate.

We	have	assessed	the	effectiveness	of	our	internal	control	over	financial	reporting	as	of	September	26,	2009.	In	making	this	assessment,	we	used	the	criteria	set forth	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	("COSO")	in	Internal	Control-Integrated	Framework.

Based	on	our	assessment,	we	believe	that,	as	of	September	26,	2009,	our	internal	control	over	financial	reporting	is	effective	at	a	reasonable	assurance	level	based on	these	criteria.

Ernst	&	Young	LLP,	an	independent	registered	public	accounting	firm,	has	issued	an	attestation	report	on	the	effectiveness	of	our	internal	control	over	financial reporting.	This	report	in	which	they	expressed	an	unqualified	opinion	is	included	below.

# Report	of	Independent	Registered	Public	Accounting	Firm

# The	Board	of	Directors	and	Shareholders	of	Hologic,	Inc.:

We	have	audited	Hologic	Inc.'s	(the	"Company")	internal	control	over	financial	reporting	as	of	September	26,	2009,	based	on	criteria	established	in	Internal Control—Integrated	Framework	issued	by	the	Committee	of	Sponsoring	Organizations	of	the	Treadway	Commission	(the	COSO	criteria).	The	Company's	management is	responsible	for	maintaining	effective	internal	control	over	financial	reporting,	and	for	its	assessment	of	the	effectiveness	of	internal	control	over	financial	reporting included	in	the	accompanying	Report	of	Management	on	Internal	Control	over	Financial	Reporting.	Our	responsibility	is	to	express	an	opinion	on	the	Company's internal	control	over	financial	reporting	based	on	our	audit.

We	conducted	our	audit	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	effective	internal	control	over	financial	reporting	was	maintained	in	all	material	respects.	Our audit	included	obtaining	an	understanding	of	internal	control	over	financial	reporting,	assessing	the	risk	that	a	material	weakness	exists,	testing	and	evaluating	the	design and	operating	effectiveness	of	internal	control	based	on	the	assessed	risk,	and	performing	such	other	procedures	as	we	considered	necessary	in	the	circumstances.	We believe	that	our	audit	provides	a	reasonable	basis	for	our	opinion.

A	company's	internal	control	over	financial	reporting	is	a	process	designed	to	provide	reasonable	assurance	regarding	the	reliability	of	financial	reporting	and	the preparation	of	financial	statements	for	external	purposes	in	accordance	with	generally	accepted	accounting	principles.	A	company's	internal	control	over	financial reporting	includes	those	policies	and	procedures	that	(1)	pertain	to	the	maintenance	of	records	that,	in	reasonable	detail,	accurately	and	fairly	reflect	the	transactions	and dispositions	of	the	assets	of	the	company;	(2)	provide	reasonable	assurance	that	transactions	are	recorded	as	necessary	to	permit	preparation	of	financial	statements	in accordance	with	generally	accepted	accounting	principles,	and	that	receipts	and	expenditures	of	the	company	are	being	made	only	in	accordance	with	authorizations	of management	and	directors	of	the	company;	and	(3)	provide	reasonable	assurance	regarding	prevention	or	timely	detection	of	unauthorized	acquisition,	use,	or disposition	of	the	company's	assets	that	could	have	a	material	effect	on	the	financial	statements.

Because	of	its	inherent	limitations,	internal	control	over	financial	reporting	may	not	prevent	or	detect	misstatements.	Also,	projections	of	any	evaluation	of effectiveness	to	future	periods	are	subject	to	the	risk	that	controls	may	become	inadequate	because	of	changes	in	conditions,	or	that	the	degree	of	compliance	with	the policies	or	procedures	may	deteriorate.

In	our	opinion,	Hologic,	Inc.	maintained,	in	all	material	respects,	effective	internal	control	over	financial	reporting	as	of	September	26,	2009,	based	on	the	COSO criteria.

We	have	also	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	consolidated	balance	sheets	of Hologic,	Inc.	as	of	September	26,	2009	and	September	27,	2008	and	the	related	consolidated	statements	of	operations,	stockholders'	equity	and	other	comprehensive income	(loss)	and	cash	flows	for	each	of	the	three	years	in	the	period	ended	September	26,	2009	of	Hologic,	Inc.	and	our	report	dated	November	24,	2009	expressed	an unqualified	opinion	thereon.

/s/	Ernst	&	Young	LLP

Boston,	Massachusetts

# Changes	in	Internal	Control	over	Financial	Reporting

During	the	quarter	ended	September	26,	2009,	there	have	been	no	changes	in	our	internal	control	over	financial	reporting	that	have	materially	affected,	or	are reasonably	likely	to	materially	affect,	our	internal	control	over	financial	reporting.

# Item	9B. Other	Information.

# PART	III

# Item	10. Directors,	and	Executive	Officers	and	Corporate	Governance.

Pursuant	to	Section	406	of	the	Sarbanes-Oxley	Act	of	2002,	we	have	adopted	a	Code	of	Ethics	for	Senior	Financial	Officers	that	applies	to	our	principal	executive officer	and	principal	financial	officer,	principal	accounting	officer	and	controller,	and	other	persons	performing	similar	functions.	Our	Code	of	Ethics	for	Senior Financial	Officers	is	publicly	available	on	our	website	at	www.hologic.com	under	Investor	Relations.	We	intend	to	satisfy	the	disclosure	requirement	under	Item	5.05	of Current	Report	on	Form	8-K	regarding	an	amendment	to,	or	waiver	from,	a	provision	of	this	code	by	posting	such	information	on	our	website,	at	the	address	specified above.

The	additional	information	required	by	this	item	is	incorporated	by	reference	to	our	Definitive	Proxy	Statement	for	our	annual	meeting	of	stockholders	to	be	filed with	the	Securities	and	Exchange	Commission	within	120	days	after	the	close	of	our	fiscal	year.

# Item	11. Executive	Compensation.

The	information	required	by	this	item	is	incorporated	by	reference	to	our	Definitive	Proxy	Statement	for	our	annual	meeting	of	stockholders	to	be	filed	with	the Securities	and	Exchange	Commission	within	120	days	after	the	close	of	our	fiscal	year.

# Item	12. Security	Ownership	of	Certain	Beneficial	Owners	and	Management	and	Related	Stockholder	Matters.

We	maintain	a	number	of	equity	compensation	plans	for	employees,	officers,	directors	and	others	whose	efforts	contribute	to	our	success.	The	table	below	sets forth	certain	information	as	of	the	end	of	our	fiscal	year	ended	September	26,	2009	regarding	the	shares	of	our	common	stock	available	for	grant	or	granted	under	stock option	plans	and	equity	incentives	that	(i)	were	approved	by	our	stockholders,	and	(ii)	were	not	approved	by	our	stockholders.

# Equity	Compensation	Plan	Information

| Plan	Category | Number	of<br>securities	to	be<br>issued	upon<br>exercise	of<br>outstanding<br>options,	warrants<br>and	rights<br>(a) | Weighted-average<br>exercise	price	of<br>outstanding<br>options,<br>warrants	and	rights<br>(b) | Number	of	securities<br>remaining	available	for<br>future	issuance	under<br>equity	compensation<br>plans	(excluding<br>securities	reflected	in<br>column	(a))<br>(c) |
| :--- | :--- | :--- | :--- |
| Equity\tcompensation\tplans\tapproved\tby\tsecurity\tholders | 16,814,080 | $14.09 | 15,017,869 |
| Equity\tcompensation\tplans\tnot\tapproved\tby\tsecurity\tholders\t(1) | 509,263 | $3.83 | — |
| Total | 17,323,343 | $13.79 | 15,017,869 |

(1) Includes	the	following	plans:	1997	Employee	Equity	Incentive	Plan	and	2000	Acquisition	Equity	Incentive	Plan.	A	description	of	each	of	these	plans	is	as follows:

1997	Employee	Equity	Incentive	Plan.	The	purposes	of	the	1997	Employee	Equity	Incentive	Plan	(the	"1997	Plan"),	adopted	by	the	Board	of	Directors	in	May 1997,	were	to	attract	and	retain	key	employees,	consultants	and	advisors,	to	provide	an	incentive	for	them	to	assist	us	in	achieving	long-range	performance	goals,	and	to enable	such	person	to	participate	in	our	long-term	growth.	In	general,	under	the	1997	Plan,	all	employees,

consultants,	and	advisors	who	were	not	executive	officers	or	directors	were	eligible	to	participate	in	the	1997	Plan.	The	1997	Plan	is	administered	by	our	Compensation Committee.	Participants	in	the	1997	Plan	are	eligible	to	receive	non-qualified	stock	options,	stock	appreciation	rights,	restricted	stock	and	performance	shares.	A	total	of 4,400,000	shares	of	our	common	stock	were	reserved	for	issuance	under	the	1997	Plan.	Of	the	shares	reserved	for	issuance	under	the	1997	Plan,	options	to	purchase 297,165	shares	are	outstanding	as	of	September	26,	2009.	In	September	2005,	our	Compensation	Committee	determined	that	no	further	awards	would	be	made	under this	plan	and	cancelled	all	remaining	332,168	shares	available	for	issuance	under	the	1997	Plan	that	were	not	subject	to	outstanding	stock	option	awards.

2000	Acquisition	Incentive	Plan.	The	purpose	of	the	2000	Acquisition	Equity	Incentive	Plan	(the	"2000	Plan"),	adopted	by	the	Board	of	Directors	in	April	2001, was	to	attract	and	retain	(a)	employees,	consultants	and	advisors,	of	newly	acquired	businesses	who	have	been	or	were	being	hired	as	employees,	consultants	or	advisors of	our	company	or	any	of	our	consolidated	subsidiaries,	and	(b)	employees,	consultants	and	advisors,	of	our	company	who	have	or	were	anticipated	to	provide significant	assistance	in	connection	with	the	acquisition	of	a	newly	acquired	business	or	its	integration	with	our	company,	and	to	provide	such	persons	an	incentive	for them	to	achieve	long-range	performance	goals,	and	to	enable	them	to	participate	in	our	long-term	growth.	In	general,	under	the	2000	Plan,	only	employees,	consultants and	advisors	who	were	not	officers	or	directors	of	our	company	were	eligible	to	participate	in	the	2000	Plan.	The	2000	Plan	was	administered	by	our	Compensation Committee.	Participants	in	the	2000	Plan	were	eligible	to	receive	non-qualified	stock	options,	stock	appreciation	rights,	restricted	stock	and	performance	shares.	A	total of	3,200,000	shares	of	our	common	stock	were	reserved	for	issuance	under	the	2000	Plan.	Of	the	shares	reserved	for	issuance	under	the	2000	Plan,	options	to	purchase 212,098	shares	were	outstanding	as	of	September	26,	2009.	In	September	2005,	our	Compensation	Committee	determined	that	no	further	awards	would	be	made	under this	plan	and	cancelled	all	remaining	835,408	shares,	available	for	issuance	under	the	2000	Plan	that	were	not	subject	to	outstanding	stock	option	awards.

# Item	13. Certain	Relationships	and	Related	Transactions.

# Item	14. Principal	Accountant	Fees	and	Services.

# PART	IV

# Item	15. Exhibits,	Financial	Statement	Schedules.

(a)	The	following	documents	are	filed	as	part	of	this	report:

(1)	Financial	Statements

Report	of	Independent	Registered	Public	Accounting	Firm	on	Consolidated	Financial	Statements

Consolidated	Balance	Sheets	as	of	September	26,	2009	and	September	27,	2008

Consolidated	Statements	of	Operations	for	the	years	ended	September	26,	2009,	September	27,	2008	and	September	29,	2007

Consolidated	Statements	of	Stockholders'	Equity	and	Comprehensive	Income	(Loss)	for	the	years	ended	September	26,	2009,	September	27,	2008	and September	29,	2007

Consolidated	Statements	of	Cash	Flows	for	the	years	ended	September	26,	2009,	September	27,	2008	and	September	29,	2007

Notes	to	Consolidated	Financial	Statements

# (2)	Financial	Statement	Schedules

All	schedules	have	been	omitted	because	they	are	not	required	or	because	the	required	information	is	given	in	the	Consolidated	Financial	Statements or	Notes	thereto.

# (b)	Listing	of	Exhibits

A We	previously	filed	this	exhibit	on	January	24,	1990	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Registration	Statement	on	Form	S-1	(Registration No.	33-33128)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

B We	previously	filed	this	exhibit	on	January	31,	1990	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Registration	Statement	on	Form	8-A,	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

C We	previously	filed	this	exhibit	on	May	14,	1996,	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Quarterly	Report	on	Form	10-Q	(SEC	File	No.	000- 18281)	for	the	quarter	ended	March	30,	1996,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

D We	previously	filed	this	exhibit	on	August	20,	1997	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Registration	Statement	on	Form	S-8	(SEC	File No.	333-34003)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

E Trex	Medical	Corporation	previously	filed	this	exhibit	with	the	referenced	exhibit	number	as	an	exhibit	to	its	Registration	Statement	on	Form	S-1	(Reg.	No.	333- 2926)	and	the	previously	filed	exhibit	is	incorporated	by	reference.

F We	previously	filed	this	exhibit	on	December	12,	2001	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	29,	2001,	and	the	previously	filed	exhibit	is	incorporated	by	reference.

G We	previously	filed	this	exhibit	on	December	4,	2002	with	the	referenced	exhibit	number	as	an	exhibit	to	our	registration	statement	on	Form	8-A	(SEC	File	No. 000-18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

H We	previously	filed	this	exhibit	on	December	24,	2002	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	28,	2002,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

I We	previously	filed	this	exhibit	on	December	6,	2005	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	24,	2005,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

J We	previously	filed	this	exhibit	on	December	14,	2006	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	30,	2006,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

K We	previously	filed	this	exhibit	on	May	21,	2007	with	the	referenced	exhibit	number	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281)	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

L We	previously	filed	this	exhibit	on	October	23,	2007	with	the	referenced	exhibit	number	to	our	Registration	Statement	on	Form	S-8	(SEC	File	No.	333-146887) and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

M We	previously	filed	this	exhibit	on	October	23,	2007	with	the	referenced	exhibit	number	to	our	Current	Report	on	Form	8-K/A	(SEC	File	No.	000-18281)	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

N Cytyc	Corporation	previously	filed	this	exhibit	on	February	28,	2007	with	the	referenced	exhibit	number	as	an	Exhibit	to	its	Current	Report	on	Form	8-K	(SEC File	No.	000-27558)	and	the	previously	filed	exhibit	is	incorporated	by	reference.

O Cytyc	Corporation	previously	filed	this	exhibit	on	January	30,	2004	with	the	referenced	exhibit	number	as	an	exhibit	to	its	Annual	Report	on	Form	10-K	(SEC File	No.	000-27558)	and	the	previously	filed	exhibit	is	incorporated	by	reference.

P Cytyc	Corporation	previously	filed	this	exhibit	on	March	24,	2003	with	the	referenced	exhibit	number	as	an	exhibit	to	its	Annual	Report	on	Form	10-K	(SEC	File No.	000-27558)	and	the	previously	filed	exhibit	is	incorporated	by	reference.

Q We	previously	filed	this	exhibit	on	September	26,	2002	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Registration	Statement	on	Form	8-K	(SEC	File	No. 000-18218)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

R We	previously	filed	this	exhibit	on	June	9,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281) and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

S We	previously	filed	this	exhibit	on	March	11,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

T We	previously	filed	this	exhibit	on	April	3,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Registration	Statement	on	Form	8-A	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

U We	previously	filed	this	exhibit	on	December	10,	2007	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

V We	previously	filed	this	exhibit	on	November	17,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

W We	previously	filed	this	exhibit	on	May	8,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Quarterly	Report	on	Form	10-Q	(SEC	File	No.	000- 18281)	for	the	fiscal	quarter	ended	March	29,	2008,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

X We	previously	filed	this	exhibit	on	January	17,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

Y We	previously	filed	this	exhibit	on	July	17,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281) and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

Z We	previously	filed	this	exhibit	on	November	27,	2007	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	29,	2007,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

AA We	previously	filed	this	exhibit	on	November	26,	2008	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Annual	Report	on	Form	10-K	(SEC	File	No.	000- 18281)	for	the	fiscal	year	ended	September	27,	2008,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

BB We	previously	filed	this	exhibit	on	February	5,	2009,	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Quarterly	Report	on	Form	10-Q	(SEC	File	No.	000- 18281)	for	the	quarter	ended	December	27,	2008,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

CC We	previously	filed	this	exhibit	on	March	6,	2009	with	the	referenced	exhibit	number	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281)	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

DD We	previously	filed	this	exhibit	on	November	9,	2009	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

EE We	previously	filed	this	exhibit	on	November	17,	2009	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000- 18281)	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

FF We	previously	filed	this	exhibit	on	October	22,	2007	with	the	referenced	exhibit	number	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281)	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

GG We	previously	filed	this	exhibit	on	May	4,	2006	with	the	referenced	exhibit	number	as	an	exhibit	to	our	Quarterly	Report	on	Form	10-Q	(SEC	File	No.	000- 18281)	for	the	fiscal	quarter	ended	March	25,	2006,	and	the	previously	filed	exhibit	is	incorporated	herein	by	reference.

HH We	previously	filed	this	exhibit	on	December	12,	2008	with	the	referenced	exhibit	number	to	our	Current	Report	on	Form	8-K	(SEC	File	No.	000-18281)	and	the previously	filed	exhibit	is	incorporated	herein	by	reference.

# SIGNATURES

Pursuant	to	the	requirements	of	Section	13	or	15(d)	of	the	Securities	Exchange	Act	of	1934,	the	registrant	has	duly	caused	this	report	to	be	signed	on	its	behalf	by the	undersigned,	thereunto	duly	authorized.

# Robert	A.	Cascella

Pursuant	to	the	requirements	of	the	Securities	Exchange	Act	of	1934,	this	report	has	been	signed	below	by	the	following	persons	on	behalf	of	the	registrant	and	in the	capacities	and	on	the	dates	indicated.

| Signature | Title | Date |
| :--- | :--- | :--- |
| /s/\t\t\t\tROBERT\tA.\tCASCELLA | Director,\tPresident\tand\tChief\tExecutive\tOfficer\t(Principal | November\t24,\t2009 |
| ROBERT\tA.\tCASCELLA | Executive\tOfficer) |  |
| /s/\t\t\t\tGLENN\tP.\tMUIR | Director,\tExecutive\tVice\tPresident,\tFinance\tand | November\t24,\t2009 |
| GLENN\tP.\tMUIR | Administration\tand\tChief\tFinancial\tOfficer,\t(Principal\nFinancial\tOfficer) |  |
| /s/\t\t\t\tROBERT\tH.\tLAVALLEE | Senior\tVice\tPresident,\tChief\tAccounting\tOfficer\t(Principal | November\t24,\t2009 |
| ROBERT\tH.\tLAVALLEE | Accounting\tOfficer) |  |
| /s/\t\t\t\tJOHN\tW.\tCUMMING | Chairman,\tDirector\tand\tExecutive\tOfficer | November\t24,\t2009 |
| JOHN\tW.\tCUMMING |  |  |
| /s/\t\t\t\tSALLY\tW.\tCRAWFORD | Director | November\t24,\t2009 |
| SALLY\tW.\tCRAWFORD |  |  |
| /s/\t\t\t\tDAVID\tR.\tLAVANCE,\tJR. | Lead\tIndependent\tDirector | November\t24,\t2009 |
| DAVID\tR.\tLAVANCE,\tJR. |  |  |
| /s/\t\t\t\tNANCY\tL.\tLEAMING | Director | November\t24,\t2009 |
| NANCY\tL.\tLEAMING |  |  |
| /s/\t\t\t\tLAWRENCE\tM.\tLEVY | Director | November\t24,\t2009 |
| LAWRENCE\tM.\tLEVY |  |  |
| /s/\t\t\t\tELAINE\tS.\tULLIAN | Director | November\t24,\t2009 |

# Consolidated	Financial	Statements

# Contents

# on	Consolidated	Financial	Statements

# The	Board	of	Directors	and	Stockholders	of	Hologic,	Inc.:

We	have	audited	the	accompanying	consolidated	balance	sheets	of	Hologic,	Inc.	and	subsidiaries	as	of	September	26,	2009	and	September	27,	2008,	and	the related	consolidated	statements	of	operations,	stockholders'	equity	and	other	comprehensive	income	(loss),	and	cash	flows	for	each	of	the	three	years	in	the	period	ended September	26,	2009.	These	financial	statements	are	the	responsibility	of	the	Company's	management.	Our	responsibility	is	to	express	an	opinion	on	these	financial statements	based	on	our	audits.

We	conducted	our	audits	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States).	Those	standards	require	that	we plan	and	perform	the	audit	to	obtain	reasonable	assurance	about	whether	the	financial	statements	are	free	of	material	misstatement.	An	audit	includes	examining,	on	a test	basis,	evidence	supporting	the	amounts	and	disclosures	in	the	financial	statements.	An	audit	also	includes	assessing	the	accounting	principles	used	and	significant estimates	made	by	management,	as	well	as	evaluating	the	overall	financial	statement	presentation.	We	believe	that	our	audits	provide	a	reasonable	basis	for	our	opinion.

In	our	opinion,	the	consolidated	financial	statements	referred	to	above	present	fairly,	in	all	material	respects,	the	consolidated	financial	position	of	Hologic,	Inc. and	subsidiaries	at	September	26,	2009	and	September	27,	2008,	and	the	consolidated	results	of	their	operations	and	their	cash	flows	for	each	of	the	three	years	in	the period	ended	September	26,	2009,	in	conformity	with	U.S.	generally	accepted	accounting	principles.

As	discussed	in	Note	7	in	the	notes	to	the	consolidated	financial	statements,	effective	September	29,	2007,	the	Company	adopted	the	recognition	and	disclosure requirements	of	Statement	of	Financial	Accounting	Standard	(SFAS)	No	158	Employers'	Accounting	for	Defined	Benefit	Pension	and	Other	Postretirement	Plans	–	an amendment	of	FASB	Statements	No.	87,	88,	106	and	132(R)	(codified	primarily	in	FASB	ASC	Topic	715-20	Defined	Benefit	Plans-General).

As	discussed	in	Note	8	in	the	notes	of	consolidated	financial	statements,	effective	September	30,	2007,	the	Company	adopted	Financial	Accounting	Standard Board	(FASB)	Interpretation	No.	48	Accounting	for	Uncertainty	in	Income	Taxes,	an	interpretation	of	FASB	Statement	No.	109	(codified	primarily	in	FASB	ASC Topic	740	Income	Taxes).

We	also	have	audited,	in	accordance	with	the	standards	of	the	Public	Company	Accounting	Oversight	Board	(United	States),	the	effectiveness	of	Hologic,	Inc.'s internal	control	over	financial	reporting	as	of	September	26,	2009,	based	on	criteria	established	in	Internal	Control-Integrated	Framework	issued	by	the	Committee	of Sponsoring	Organizations	of	the	Treadway	Commission	and	our	report	dated	November	24,	2009	expressed	an	unqualified	opinion	thereon.

# Consolidated	Balance	Sheets

# (In	thousands,	except	per	share	data)

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| Assets |  |  |
| Current\tassets: |  |  |
| Cash\tand\tcash\tequivalents | $293,186 | $95,661 |
| Restricted\tcash | 916 | 3,629 |
| Accounts\treceivable,\tless\treserves\tof\t$7,279\tand\t$6,326\trespectively | 263,231 | 321,299 |
| Inventories | 182,780 | 174,667 |
| Deferred\tincome\ttax\tassets | 52,165 | 53,660 |
| Prepaid\tincome\ttaxes | 172 | 17,797 |
| Prepaid\texpenses\tand\tother\tcurrent\tassets | 29,066 | 26,865 |
| Total\tcurrent\tassets | 821,516 | 693,578 |
| Property\tand\tequipment,\tat\tcost: |  |  |
| Land | 8,983 | 8,978 |
| Buildings\tand\timprovements | 57,214 | 55,743 |
| Equipment\tand\tsoftware | 187,961 | 172,789 |
| Equipment\tunder\tcustomer\tusage\tagreements | 125,635 | 100,316 |
| Furniture\tand\tfixtures | 11,112 | 11,083 |
| Leasehold\timprovements | 39,701 | 38,620 |
|  | 430,606 | 387,529 |
| Less—accumulated\tdepreciation\tand\tamortization | 158,978 | 103,554 |
|  | 271,628 | 283,975 |
| Intangible\tassets,\tnet\t(Note\t2) | 2,424,812 | 2,629,651 |
| Goodwill | 2,108,963 | 4,450,496 |
| Other\tassets | 62,909 | 76,932 |
| Total\tassets | $5,689,828 | $8,134,632 |
| Liabilities\tand\tStockholders'\tEquity |  |  |
| Current\tliabilities: |  |  |
| Current\tportion\tof\tlong-term\tdebt | $38,373 | $38,480 |
| Accounts\tpayable | 46,589 | 59,590 |
| Accrued\texpenses\t(Note\t14) | 137,284 | 154,746 |
| Deferred\trevenue | 97,544 | 78,559 |
| Deferred\tgain\t(Note\t4) | 9,500 | 9,500 |
| Total\tcurrent\tliabilities | 329,290 | 340,875 |
| Long-term\tdebt,\tnet\tof\tcurrent\tportion\t(Note\t5) | 139,955 | 437,420 |
| Convertible\tnotes\t(Note\t5) | 1,725,000 | 1,725,000 |
| Deferred\tincome\ttax\tliabilities | 912,970 | 920,838 |
| Deferred\tservice\tobligations—long-term | 11,364 | 10,777 |
| Other\tlong-term\tliabilities\t(Note\t14) | 58,534 | 57,453 |
| Commitments\tand\tcontingencies\t(Notes\t12\tand\t15) |  |  |
| Stockholders'\tequity |  |  |
| Preferred\tstock,\t$0.01\tpar\tvalue–1,623\tshares\tauthorized;\t0\tshares\tissued | — | — |
|  | 2,579 | 2,564 |
| Capital\tin\texcess\tof\tpar\tvalue | 4,898,422 | 4,853,837 |
| Accumulated\tdeficit | (2,393,881) | (217,644) |
| Accumulated\tother\tcomprehensive\tincome | 7,028 | 4,945 |
| Treasury\tstock,\tat\tcost—214\tshares | (1,433) | (1,433) |
| Total\tstockholders'\tequity | 2,512,715 | 4,642,269 |
| Total\tliabilities\tand\tstockholders'\tequity | $5,689,828 | $8,134,632 |

See	accompanying	notes.

# Consolidated	Statements	of	Operations

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Revenues: |  |  |  |
| Product\tsales | $1,426,986 | $1,502,447 | $628,854 |
| Service\tand\tother\trevenues | 210,148 | 172,052 | 109,514 |
|  | 1,637,134 | 1,674,499 | 738,368 |
| Costs\tand\texpenses: |  |  |  |
| Cost\tof\tproduct\tsales | 470,295 | 535,082 | 267,470 |
| Cost\tof\tproduct\tsales—amortization\tof\tintangible\tassets | 155,519 | 95,310 | 11,262 |
| Cost\tof\tproduct\tsales—impairment\tof\tintangible\tassets | 4,065 | — | — |
| Cost\tof\tservice\tand\tother\trevenues | 149,769 | 151,589 | 114,307 |
| Research\tand\tdevelopment | 94,328 | 81,421 | 44,381 |
| Selling\tand\tmarketing | 238,977 | 261,524 | 85,520 |
| General\tand\tadministrative | 148,825 | 147,405 | 62,092 |
| Amortization\tof\tintangible\tassets | 51,210 | 25,227 | 5,584 |
| Impairment\tof\tgoodwill\t(Note\t2) | 2,340,023 | — | — |
| Impairment\tof\tintangible\tassets\t(Note\t2) | — | 2,900 | — |
| Acquired\tin-process\tresearch\tand\tdevelopment\t(Note\t3) | — | 565,200 | — |
| Restructuring\tcharges\t(Note\t2) | 797 | 6,383 | — |
|  | 3,653,808 | 1,872,041 | 590,616 |
| (Loss)\tincome\tfrom\toperations | (2,016,674) | (197,542) | 147,752 |
| Interest\tincome | 1,161 | 4,528 | 2,815 |
| Interest\texpense | (69,502) | (84,912) | (2,511) |
| Other\t(expense)\tincome,\tnet | (3,660) | (1,215) | 433 |
| (Loss)\tincome\tbefore\tincome\ttaxes | (2,088,675) | (279,141) | 148,489 |
| Provision\tfor\tincome\ttaxes | 87,562 | 106,476 | 53,911 |
| Net\t(loss)\tincome | $(2,176,237) | $(385,617) | $94,578 |
| Basic\tnet\t(loss)\tincome\tper\tcommon\tshare | $(8.48) | $(1.57) | $0.88 |
| Diluted\tnet\t(loss)\tincome\tper\tcommon\tshare | $(8.48) | $(1.57) | $0.86 |
| Weighted\taverage\tnumber\tof\tcommon\tshares\toutstanding:\nBasic | 256,545 | 245,968 | 106,873 |
| Diluted | 256,545 | 245,968 | 109,669 |

# Consolidated	Statements	of	Stockholders'	Equity	and	Comprehensive	Income	(Loss)

|  | Common	Stock | Common	Stock |  |  | Accumulated | Treasury	Stock | Treasury	Stock |  |  |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- |
|  |  |  | Capital\tin |  | Other |  |  | Total |  |
|  | Number\tof |  | Excess\tof | Accumulated | Comprehensive | Number\tof |  | Stockholders' | Comprehensive |
|  | Shares | \t Par\tValue | Par\tValue | Deficit | Income\t(Loss) | Shares | \t Amount | Equity | Income\t(Loss) |
| Balance\tat\tSeptember\t30,\t2006 | 105,290 | $1,053 | $531,728 | $73,875 | $(442) | 180 | $(464) | $605,750 |  |
| Issuance\tof\tcommon\tstock\trelated\tto\tacquisitions | 2,315 | 23 | 63,155 | — | — | — | — | 63,178 |  |
| Exercise\tof\tstock\toptions | 2,695 | 27 | 10,564 | — | — | — | — | 10,591 |  |
| Stock-based\tcompensation\texpense | — | — | 6,104 | — | — | — | — | 6,104 |  |
| Purchase\tof\ttreasury\tshares\tto\tsettle\tminimum\twithholding\ttaxes | — | — | — | — | — | 34 | (969) | (969) |  |
| Tax\tbenefit\trelated\tto\texercise\tof\tstock\toptions | — | — | 21,926 | — | — | — | — | 21,926 |  |
| Net\tincome | — | — | — | 94,578 | — | — | — | 94,578 | $94,578 |
| Translation\tadjustments | — | — | — | — | 2,353 | — | — | 2,353 | 2,353 |
| Adjustment\tto\tminimum\tpension\tliability,\tnet | — | — | — | — | 2,212 | — | — | 2,212 | 2,212 |
| Comprehensive\tincome |  |  |  |  |  |  |  |  | $99,143 |
| Balance\tat\tSeptember\t29,\t2007 | 110,300 | 1,103 | 633,477 | 168,453 | 4,123 | 214 | (1,433) | 805,723 |  |
| Issuance\tof\tcommon\tstock\trelated\tto\tacquisitions | 132,060 | 1,321 | \t 3,670,818 | — | — | — | — | 3,672,139 |  |
| Exercise\tof\tstock\toptions | 11,398 | 114 | 170,995 | — | — | — | — | 171,109 |  |
| Fair\tvalue\tof\tcommon\tstock\tissued\tin\tconnection\twith\tconversion\tof |  |  |  |  |  |  |  |  |  |
| Cytyc\tconvertible\tdebt | 2,557 | 25 | 84,176 | — | — | — | — | 84,201 |  |
| Fair\tvalue\tof\tvested\toptions\texchanged\trelated\tto\tacquisitions | — | — | 256,941 | — | — | — | — | 256,941 |  |
| Issuance\tof\tcommon\tstock\tto\temployees\tupon\tvesting\tof\trestricted\tstock |  |  |  |  |  |  |  |  |  |
| units,\tnet\tof\tminimum\ttax\twithholdings | 58 | 1 | (1,343) | — | — | — | — | (1,342) |  |
| Stock-based\tcompensation\texpense | — | — | 25,664 | — | — | — | — | 25,664 |  |
| Tax\tbenefit\trelated\tto\texercise\tof\tstock\toptions | — | — | 13,109 | — | — | — | — | 13,109 |  |
| Cumulative\teffect\tof\ta\tchange\tin\taccounting\tprinciple—FIN\t48 | — | — | — | (480) | — | — | — | (480) |  |
| Net\tloss | — | — | — | (385,617) | — | — | — | (385,617) | $(385,617) |
| Translation\tadjustments | — | — | — | — | 1,092 | — | — | 1,092 | 1,092 |
| Adjustment\tto\tminimum\tpension\tliability,\tnet | — | — | — | — | (270) | — | — | (270) | (270) |
| Comprehensive\tloss |  |  |  |  |  |  |  |  | $(384,795) |
| Balance\tat\tSeptember\t27,\t2008 | 256,373 | 2,564 | \t 4,853,837 | (217,644) | 4,945 | 214 | (1,433) | 4,642,269 |  |
| Exercise\tof\tstock\toptions | 1,306 | 13 | 9,379 | — | — | — | — | 9,392 |  |
| Issuance\tof\tcommon\tstock\tto\temployees\tupon\tvesting\tof\trestricted\tstock |  |  |  |  |  |  |  |  |  |
| units,\tnet\tof\tminimum\ttax\twithholdings | 138 | 1 | (882) |  |  |  |  | (881) |  |
| Issuance\tof\tcommon\tshares\tunder\tthe\temployee\tstock\tpurchase\tplan | 121 | 1 | 1,541 | — | — | — | — | 1,542 |  |
| Stock-based\tcompensation\texpense | — | — | 32,939 | — | — | — | — | 32,939 |  |
| Tax\tbenefit\trelated\tto\texercise\tof\tstock\toptions | — | — | 1,608 | — | — | — | — | 1,608 |  |
| Net\tloss | — | — | — | (2,176,237) | — | — | — | (2,176,237) | $(2,176,237) |
| Translation\tadjustments | — | — | — | — | 1,666 | — | — | 1,666 | 1,666 |
| Adjustment\tto\tminimum\tpension\tliability,\tnet | — | — | — | — | 417 | — | — | 417 | 417 |
|  |  |  |  |  |  |  |  |  | $(2,174,154) |
| Balance\tat\tSeptember\t26,\t2009 | 257,938 | $2,579 | $4,898,422 | $(2,393,881) | $7,028 | 214 | $(1,433) | $2,512,715 |  |

# Consolidated	Statements	of	Cash	Flows

# (In	thousands)

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Operating\tactivities |  |  |  |
| Net\t(loss)\tincome | $(2,176,237) | $(385,617) | $94,578 |
| Adjustments\tto\treconcile\tnet\t(loss)\tincome\tto\tnet\tcash\tprovided\tby\toperating\tactivities: |  |  |  |
| Depreciation | 67,195 | 52,413 | 14,291 |
| Amortization | 206,729 | 120,537 | 16,871 |
| Fair\tvalue\twrite-up\tof\tCytyc\tand\tThird\tWave\tinventory\tsold | 1,167 | 46,258 | — |
| Non-cash\tinterest\texpense | 17,742 | 20,541 | 181 |
| Goodwill\timpairment\tcharge | 2,340,023 | — | — |
| Acquired\tin-process\tresearch\tand\tdevelopment | — | 565,200 | — |
| Impairment\tcharges\tof\tintangibles | 4,065 | 2,900 | — |
| Stock-based\tcompensation\texpense | 32,939 | 25,664 | 6,104 |
| Excess\ttax\tbenefit\trelated\tto\texercise\tof\tnon-qualified\tstock\toptions | (2,978) | (62,740) | (21,926) |
| Deferred\tincome\ttaxes | (1,941) | (10,365) | 5,873 |
| Impairment\tof\tcost-method\tinvestments | 2,243 | — | — |
| Loss\ton\tdisposal\tand\timpairment\tof\tproperty\tand\tequipment | 4,399 | 1,740 | 734 |
| Other\tnon-cash\tactivity | (1,660) | 2,510 | (368) |
| Changes\tin\toperating\tassets\tand\tliabilities,\texcluding\tthe\teffect\tof\tacquisitions: |  |  |  |
| Accounts\treceivable | 57,581 | (58,801) | (45,367) |
| Inventories | (15,142) | (29,595) | (7,997) |
| Prepaid\tincome\ttaxes | 17,925 | 74,408 | — |
| Prepaid\texpenses\tand\tother\tassets | (3,831) | (5,692) | 269 |
| Accounts\tpayable | (12,881) | (10,189) | 14,265 |
| Accrued\texpenses\tand\tother\tliabilities | (10,613) | (14,596) | 59,758 |
| Deferred\trevenue | 19,640 | 27,022 | 16,661 |
| Net\tcash\tprovided\tby\toperating\tactivities | 546,365 | 361,598 | 153,927 |
| Investing\tactivities |  |  |  |
| Acquisition\tof\tbusinesses,\tnet\tof\tcash\tacquired | — | (2,584,947) | (9,793) |
| Payment\tof\tadditional\tacquisition\tconsideration | (229) | (24,394) | (19,033) |
| Purchase\tof\tproperty\tand\tequipment | (31,357) | (53,536) | (22,840) |
| Increase\tin\tequipment\tunder\tcustomer\tusage\tagreements | (22,786) | (24,731) | — |
| Purchase\tof\tlicensed\ttechnology\tand\tother\tintangible\tassets | (6,238) | — | — |
| Proceeds\tfrom\tsale\tof\tintellectual\tproperty | 2,250 | 3,000 | — |
| Proceeds\tfrom\tsale\tof\tbuilding | — | — | 1,427 |
| Purchase\tof\tinsurance\tcontracts | (5,322) | (3,322) | (3,322) |
| Proceeds\tfrom\tsale\tof\tcost\tmethod\tinvestment | — | 936 | 2,150 |
| Purchase\tof\tcost\tmethod\tinvestment | (550) | — | (1,000) |
| Purchases\tof\tinvestment\tsecurities | — | (263) | — |
| Proceeds\tfrom\tsales\tand\tmaturities\tof\tinvestment\tsecurities | — | 2,638 | — |
| Acquisition\tof\tnon-controlling\tinterest | — | — | (1,100) |
| Deferred\tacquisition\tcosts | — | — | (6,393) |
| Decrease\t(increase)\tin\trestricted\tcash | 2,713 | (1,332) | — |
| Deferred\tgain | — | 9,500 | — |
| Net\tcash\tused\tin\tinvesting\tactivities | (61,519) | (2,676,451) | (59,904) |

# Consolidated	Statements	of	Cash	Flows	(continued)

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Financing\tactivities |  |  |  |
| Proceeds\tfrom\tissuance\tof\tconvertible\tnotes,\tnet\tof\tissuance\tcosts | — | 1,688,974 | — |
| Payments\tupon\tconversion\tof\tCytyc\tconvertible\tnotes | (298) | (40,574) | — |
| Proceeds\tunder\tcredit\tagreements,\tnet\tof\tissuance\tcosts | — | 2,855,609 | — |
| Repayments\tunder\tcredit\tagreements | (290,833) | (2,425,000) | (55,000) |
| Proceeds\tfrom\tnote\tpayable | — | 2,062 | 6,889 |
| Repayments\tof\tnotes\tpayable | (10,127) | (2,895) | (5,884) |
| Excess\ttax\tbenefit\trelated\tto\texercise\tof\tnon-qualified\tstock\toptions | 2,978 | 62,740 | 21,926 |
| Net\tproceeds\tfrom\tissuance\tof\tcommon\tstock\tpursuant\tto\temployee\tstock\tplans | 10,887 | 171,014 | 10,578 |
| Financing\tcosts\ton\tcredit\tagreement | (350) | — | — |
| Payments\tof\temployee\trestricted\tstock\ttax\twithholdings | (881) | (851) | — |
| Purchase\tof\ttreasury\tshares\tto\tsettle\tminimum\twithholding\ttaxes | — | — | (969) |
| Net\tcash\t(used\tin)\tprovided\tby\tfinancing\tactivities | (288,624) | 2,311,079 | (22,460) |
| Effect\tof\texchange\trate\tchanges\ton\tcash\tand\tcash\tequivalents | 1,303 | (968) | (1,083) |
| Net\tincrease\t(decrease)\tin\tcash\tand\tcash\tequivalents | 197,525 | (4,742) | 70,480 |
| Cash\tand\tcash\tequivalents,\tbeginning\tof\tyear | 95,661 | 100,403 | 29,923 |
| Cash\tand\tcash\tequivalents,\tend\tof\tyear | $293,186 | $95,661 | $100,403 |

# 1. Operations

Hologic,	Inc.	(the	"Company"	or	"Hologic")	develops,	manufactures	and	distributes	medical	imaging	systems	and	diagnostic	and	surgical	products	focused	on	the healthcare	needs	of	women.

In	October	2007	(the	first	quarter	of	fiscal	2008),	the	Company	completed	its	merger	with	Cytyc	Corporation	("Cytyc"),	a	company	that	develops,	manufactures and	markets	complementary	products	covering	a	range	of	cancer	and	women's	health	applications,	including	cervical	cancer	screening,	treatment	of	excessive	menstrual bleeding	and	radiation	treatment	of	early-stage	breast	cancer.	As	a	result	of	the	Company's	merger	with	Cytyc,	as	more	fully	described	in	Note	3,	the	Company	has become	one	of	the	largest	companies	in	the	world	focused	on	women's	health.

# 2. Summary	of	Significant	Accounting	Policies

# Principles	of	Consolidation

The	consolidated	financial	statements	include	the	accounts	of	the	Company	and	its	wholly	owned	subsidiaries.	All	intercompany	transactions	and	balances	have been	eliminated	in	consolidation.	The	Company's	fiscal	year	ends	on	the	last	Saturday	in	September.	Fiscal	2009,	2008	and	2007	ended	on	September	26,	2009, September	27,	2008,	and	September	29,	2007,	respectively,	and	each	fiscal	year	presented	included	52	weeks.

# Reclassifications

The	Company	reclassified	other	receivable	amounts	of	$5,902	from	"Accounts	receivable"	to	"Prepaid	expenses	and	other	current	assets"	for	fiscal	2008	to conform	to	the	current	period	presentation.	The	Company	also	reclassified	certain	amounts	in	the	Consolidated	Statement	of	Cash	Flows	for	fiscal	2008	and	2007	to conform	to	the	current	period	presentation.	As	a	result,	net	cash	provided	by	operations	decreased	to	$361,598	from	$364,596	for	fiscal	2008	primarily	due	to reclassifying	changes	in	certain	other	assets	and	other	liabilities	to	cash	flows	provided	by	operating	activities	from	investing	activities	aggregating	$3,849	offset	by reclassifying	$851	of	payments	to	tax	authorities	for	tax	withholdings	on	the	vesting	of	restricted	stock	units	issued	to	employees	as	a	cash	outflow	in	the	financing section.	As	result	of	these	changes	cash	used	in	investing	activities	for	fiscal	2008	decreased	to	$2,676,451	from	$2,680,300	and	cash	provided	by	financing	activities decreased	to	$2,311,079	from	$2,311,930.	In	addition,	there	were	insignificant	reclassifications	of	certain	amounts	within	the	line	items	of	the	investing	activities section.	For	fiscal	2007,	the	Company	reclassified	changes	in	certain	other	assets	and	other	liabilities	to	cash	flows	provided	by	operating	activities	from	investing activities	resulting	in	cash	flows	from	operations	increasing	to	$153,927	from	$153,250	and	cash	used	in	investing	activities	increasing	to	$59,904	from	$59,226.

# Subsequent	Events	Consideration

The	Company	considers	events	or	transactions	that	occur	after	the	balance	sheet	date	but	prior	to	the	issuance	of	the	financial	statements	to	provide	additional evidence	relative	to	certain	estimates	or	to	identify	matters	that	require	additional	disclosure.	Subsequent	events	have	been	evaluated	through	November	24,	2009,	the date	these	financial	statements	are	considered	issued,	and	the	financial	statements	reflect	those	material	items	that	arose	after	the	balance	sheet	date	but	prior	to	this	date that	would	be	considered	recognized	subsequent	events.	Subsequent	to	September	26,	2009,	the	Company	made	voluntary	payments	of	$21,000	on	its	term	notes,	and	as such,	the	Company	reclassified	this	amount	to	short-term	debt	from	long-term	debt,	which	is	reflected	in	the	Consolidated	Balance	Sheet.	There	were	no	other	material recognized	subsequent	events	recorded	in	the	September	26,	2009	consolidated	financial	statements.

# Notes	to	Consolidated	Financial	Statements	(continued)

# Stock	Split

On	April	2,	2008,	the	Company	effected	a	two-for-one	stock	split	in	the	form	of	a	stock	dividend.	The	stock	split	is	retroactively	reflected	in	the	accompanying consolidated	financial	statements	and	notes	for	all	periods	presented.

# Management's	Estimates	and	Uncertainties

The	preparation	of	financial	statements	in	conformity	with	U.S.	generally	accepted	accounting	principles	requires	management	to	make	significant	estimates	and assumptions	that	affect	the	reported	amounts	of	assets	and	liabilities	and	disclosure	of	contingent	assets	and	liabilities	at	the	date	of	the	financial	statements	and	the reported	amounts	of	revenues	and	expenses	during	the	reporting	periods.	Significant	estimates	and	assumptions	by	management	affect	the	Company's	revenue recognition	for	multiple	element	arrangements,	allowance	for	doubtful	accounts,	the	net	realizable	value	of	inventory,	estimated	fair	value	of	cost	method	investments, valuations	and	purchase	price	allocations	related	to	business	combinations,	expected	future	cash	flows	including	growth	rates,	discount	rates,	terminal	values	and	other assumptions	and	estimates	used	to	evaluate	the	recoverability	of	long-lived	assets	and	goodwill,	estimated	fair	values	of	intangible	assets	and	goodwill,	amortization methods	and	periods,	warranty	reserves,	certain	accrued	expenses,	restructuring	and	other	related	charges,	stock-based	compensation,	contingent	liabilities,	tax	reserves and	recoverability	of	the	Company's	net	deferred	tax	assets	and	related	valuation	allowance.

Although	the	Company	regularly	assesses	these	estimates,	actual	results	could	differ	materially	from	these	estimates.	Changes	in	estimates	are	recorded	in	the period	in	which	they	become	known.	The	Company	bases	its	estimates	on	historical	experience	and	various	other	assumptions	that	it	believes	to	be	reasonable	under	the circumstances.

The	Company	is	subject	to	a	number	of	risks	similar	to	those	of	other	companies	of	similar	size	in	its	industry,	including,	dependence	on	third	party reimbursements	to	support	the	markets	of	the	Company's	products,	early	stage	of	development	of	certain	products,	rapid	technological	changes,	recoverability	of	long- lived	assets,	including	intangible	assets	and	goodwill,	competition,	stability	of	world	financial	markets,	ability	to	obtain	regulatory	approvals,	limited	number	of suppliers,	customer	concentration,	integration	of	acquisitions,	substantial	indebtedness,	government	regulations,	future	sales	or	issuances	of	our	common	stock, management	of	international	activities,	protection	of	proprietary	rights,	patent	and	other	litigation	and	dependence	on	key	individuals.

# Cash	Equivalents

Cash	equivalents	are	highly	liquid	investments	with	insignificant	interest	rate	risk	and	maturities	of	three	months	or	less	at	the	time	of	acquisition.	At September	26,	2009,	the	Company's	cash	equivalents	consisted	of	money	market	accounts,	and	at	September	27,	2008	cash	equivalents	consisted	of	money	market accounts	and	certificates	of	deposit.

# Restricted	Cash

Restricted	cash	at	September	26,	2009	is	primarily	comprised	of	various	deposits	for	operating	leases	and	duty	taxes.

# Concentrations	of	Credit	Risk

Financial	instruments	that	subject	the	Company	to	credit	risk	primarily	consist	of	cash	and	cash	equivalents,	cost-method	investments,	and	trade	accounts receivable.	The	Company	invests	its	cash	and	cash	equivalents	with	financial	institutions	with	highly	rated	credit.

The	Company's	customers	are	principally	located	in	the	United	States,	Europe	and	Asia.	The	Company	performs	ongoing	credit	evaluations	of	the	financial condition	of	its	customers	and	generally	does	not	require	collateral.	Although	the	Company	is	directly	affected	by	the	overall	financial	condition	of	the	healthcare industry,	as	well	as	global	economic	conditions,	management	does	not	believe	significant	credit	risk	exists	as	of	September	26,	2009.	The	Company	generally	has	not experienced	any	material	losses	related	to	receivables	from	individual	customers	or	groups	of	customers	in	the	health	care	industry.	The	Company	maintains	an allowance	for	doubtful	accounts	based	on	accounts	past	due	and	historical	collection	experience.	The	Company's	losses	related	to	collection	of	trade	receivables	have consistently	been	within	management's	expectations.	Due	to	these	factors,	no	additional	credit	risk	beyond	amounts	provided	for	collection	losses,	is	believed	by management	to	be	probable.

There	were	no	customers	with	balances	greater	than	10%	of	accounts	receivable	as	of	September	26,	2009	and	September	27,	2008,	nor	customers	that represented	greater	than	10%	of	total	revenues	for	fiscal	years	2009,	2008	and	2007.

# Disclosure	of	Fair	Value	of	Financial	Instruments

The	Company's	financial	instruments	mainly	consist	of	cash	and	cash	equivalents,	accounts	receivable,	cost-method	investments,	accounts	payable	and	debt obligations.	The	carrying	amounts	of	the	Company's	cash	equivalents,	accounts	receivable	and	accounts	payable	approximate	their	fair	value	due	to	the	short-term nature	of	these	instruments.	Amounts	outstanding	under	the	Company's	Amended	Credit	Agreement	(See	Note	5)	of	$174,167	and	$465,000	at	September	26,	2009	and September	27,	2008,	respectively,	are	subject	to	variable	rates	of	interest	based	on	current	market	rates;	as	such,	the	Company	believes	the	carrying	amounts	of	this obligation	approximate	its	fair	value.

The	Company's	AEG	subsidiary	also	has	several	notes	payable	outstanding	(See	Note	5).	These	notes	payable	are	denominated	in	either	the	Euro	or	US	dollar and	have	variable	rates	of	interest.	As	of	September	26,	2009	and	September	27,	2008,	amounts	outstanding	of	$1,500	and	$10,602	under	these	notes	payable approximated	their	fair	value	based	on	comparable	market	terms	and	conditions.

# Supplemental	Cash	Flow	Statement	Information

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Cash\tpaid\tduring\tthe\tperiod\tfor\tincome\ttaxes | $59,077 | $40,971 | $8,344 |
| Cash\tpaid\tduring\tthe\tperiod\tfor\tinterest | $\t\t\t\t\t52,001 | $53,125 | $2,246 |
| Non-Cash\tInvesting\tActivities: |  |  |  |
| Additional\tacquisition\tcontingent\tconsideration\taccrued | $1,854 | $73 | $— |
| Non-Cash\tFinancing\tActivities: |  |  |  |
| Issuance\tof\tcommon\tstock\tupon\tconversion\tof\tCytyc\tconvertible\tnotes | $— | $84,201 | $— |
| Issuance\tof\tnote\tpayable\trelated\tto\tpurchase\tof\tlicensed\ttechnology | $3,900 | $— | $— |
| Business\tAcquisitions,\tNet\tof\tCash\tAcquired: |  |  |  |
| Fair\tvalue\tof\ttangible\tassets\tacquired | $— | $695,113 | $5,148 |
| Liabilities\tassumed | — | (301,441) | (11,798) |
| Fair\tvalue\tof\toptions\texchanged | — | (249,460) | — |
| Fair\tvalue\tof\tstock\tissued | — | (3,671,513) | (63,178) |
| Cost\tin\texcess\tof\tfair\tvalue\tof\tassets\tacquired\t(Goodwill) | — | 4,071,767 | 47,774 |
| Acquired\tidentifiable\tintangible\tassets | — | 2,579,500 | 32,100 |
| Deferred\ttax\tliability | — | (982,630) | — |
| In-process\tresearch\tand\tdevelopment | — | 565,200 | — |
|  | — | 2,706,536 | \t\t\t\t\t10,046 |
| Less\tacquisition\tcosts\tpaid\tprior\tto\tSeptember\t29,\t2007 | — | 6,400 | — |
| Less\tcash\tand\tcash\tequivalents\tacquired | — | 115,189 | 253 |
| Net\tcash\tpaid\tfor\tbusiness\tacquisition | $— | $2,584,947 | $9,793 |

# Inventories

Inventories	are	valued	at	the	lower	of	cost	or	market	on	a	first	in,	first	out	basis.	Work-in-process	and	finished	goods	inventories	consist	of	materials,	labor	and manufacturing	overhead.	The	valuation	of	inventory	requires	management	to	estimate	excess	and	obsolete	inventory.	The	Company	employs	a	variety	of	methodologies to	determine	the	net	realizable	value	of	its	inventory.	Provisions	for	excess	and	obsolete	inventory	are	primarily	based	on	management's	estimates	of	forecasted	net	sales and	service	usage	levels.	A	significant	change	in	the	timing	or	level	of	demand	for	the	Company's	products	as	compared	to	forecasted	amounts	may	result	in	recording additional	provisions	for	excess	and	obsolete	inventory	in	the	future.	The	Company	records	provisions	for	excess	and	obsolete	inventory	as	cost	of	product	sales.

Inventories	at	September	26,	2009	and	September	27,	2008	consisted	of	the	following:

# Property	and	Equipment

Property	and	equipment	is	recorded	at	cost	less	allowances	for	depreciation.	The	straight-line	method	of	depreciation	is	used	for	all	property	and	equipment.

Repair	and	maintenance	costs	are	expensed	as	incurred.	Property	and	equipment	are	depreciated	over	the	following	estimated	useful	lives:

The	asset	on	the	Company's	balance	sheet	entitled	equipment	under	customer	usage	agreements	consists	of	diagnostic	and	medical	imaging	equipment	located	at customer	sites	but	owned	by	the	Company.	Generally,	the	customer	has	the	right	to	use	it	for	a	period	of	time	provided	they	meet	certain	agreed	to	conditions.

The	Company	applies	the	provisions	of	Accounting	Standard	Codification	("ASC")	ASC	350-40,	Internal-Use	Software	(formerly	American	Institute	of	Certified Public	Accountants	("AICPA")	Statement	of	Position	("SOP")	98-1,	Software	Developed	or	Obtained	for	Internal	Use).	This	accounting	guidance	requires	computer software	costs	associated	with	internal	use	software	to	be	expensed	as	incurred	until	certain	capitalization	criteria	are	met,	and	it	also	defines	which	types	of	costs	should be	capitalized	and	which	should	be	expensed.	The	Company	capitalized	$1,589,	$3,215,	and	$341	during	fiscal	2009,	2008	and	2007,	respectively,	related	to	a	company wide	Enterprise	Resource	Planning	("ERP")	system	implementation	project,	as	well	as	upgrades	and	enhancements	that	added	significant	functionality	to	the	system	and has	included	these	amounts	in	equipment	and	software	in	the	accompanying	consolidated	balance	sheets.	The	Company	amortizes	such	costs	when	the	ERP	system	and new	functionality	become	operational.	The	initial	system	costs	are	being	amortized	over	an	estimated	useful	life	of	ten	years	and	new	functionality	is	amortized	over	the remaining	useful	life	of	the	related	system.

As	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	two	leases	under	which	Cytyc	or	the	Company	disbursed	cash	for	property	and	equipment	to	build out	and	equip	these	leased	facilities.	Pursuant	to	the	provisions	of	ASC	840,	Leases,	Subsection	40-15-5	(formerly	included	within	EITF	Issue	No.	97-10	("EITF")	97- 10,	The	Effect	of	Lessee	Involvement	in	Asset	Construction),	the	Company	was	deemed	to	be	the	owner	of	the	facility	during	the	construction	periods	and	after completion	of	the	construction	periods.	As	a	result,	these	leases	are	not	classified	as	operating	leases	but	have	been	recorded	by	the	Company	at	fair	market	value	within property	and	equipment	on	its	Consolidated	Balance	Sheets,	with	an	offsetting	increase	to	accrued	expenses	and	other	long-term	liabilities.	Please	refer	to	Note	12, "Commitments	and	Contingencies",	for	further	discussion	regarding	the	Company's	obligations	under	these	lease	agreements.

# Long-Lived	Assets

The	Company	reviews	it	long-lived	assets,	which	includes	property	and	equipment	and	identifiable	intangible	assets	(see	below	for	discussion	of	intangible assets),	for	impairment	whenever	events	or	changes	in	circumstances	indicate	that	the	carrying	amount	of	an	asset	may	not	be	recoverable	in	accordance	with	ASC	360- 10-35-15,	Impairment	or	Disposal	of	Long-Lived	Assets	(formerly	included	within	SFAS	No.	144,	Accounting	for	the	Impairment	or	Disposal	of	Long-Lived	Assets).

Recoverability	of	these	assets	is	evaluated	by

comparing	the	carrying	value	of	the	assets	to	the	undiscounted	cash	flows	estimated	to	be	generated	by	those	assets	over	their	remaining	economic	life.	If	the undiscounted	cash	flows	are	not	sufficient	to	recover	the	carrying	value	of	the	assets,	the	assets	are	considered	impaired.	The	impairment	loss	is	measured	by	comparing the	fair	value	of	the	assets	to	their	carrying	value.	Fair	value	is	determined	by	either	a	quoted	market	price,	if	any,	or	a	value	determined	by	a	discounted	cash	flow technique.	There	were	no	material	impairment	charges	related	to	property	and	equipment	in	fiscal	2009,	2008	and	2007.	See	below	for	discussion	of	impairment	of intangible	assets.

# Valuation	of	Business	Combinations	and	Acquisition	of	Intangible	Assets

The	Company	records	tangible	and	intangible	assets	acquired	in	business	combinations	and	acquisitions	of	intangible	assets	under	the	purchase	method	of accounting.	The	Company	accounts	for	acquisitions	in	accordance	with	FASB	Statement	No.	141,	Business	Combinations.	Amounts	paid	for	each	acquisition	are allocated	to	the	assets	acquired	and	liabilities	assumed	based	on	their	fair	values	at	the	dates	of	acquisition.	The	Company	then	allocates	the	purchase	price	in	excess	of the	fair	value	of	the	net	tangible	assets	acquired	to	identifiable	intangible	assets,	including	purchased	research	and	development,	based	on	detailed	valuations	that	use information	and	assumptions	provided	by	management.	The	Company	allocates	any	excess	purchase	price	over	the	fair	value	of	the	net	tangible	and	intangible	assets acquired	to	goodwill.	The	use	of	alternative	valuation	assumptions,	including	estimated	cash	flows	and	discount	rates,	and	alternative	useful	life	assumptions	could	result in	different	purchase	price	allocations,	acquired	research	and	development	charges,	and	intangible	asset	amortization	expense	in	current	and	future	periods.

The	valuation	of	purchased	research	and	development	represents	the	estimated	fair	value	at	the	dates	of	acquisition	related	to	in-process	projects.	The	Company's purchased	research	and	development	represents	the	value	of	in-process	projects	that	have	not	yet	reached	technological	feasibility	and	have	no	alternative	future	uses	as of	the	date	of	acquisition.	The	Company	expenses	the	value	attributable	to	these	in-process	projects	at	the	time	of	the	acquisition.	If	the	projects	are	not	successful	or completed	in	a	timely	manner,	the	Company	may	not	realize	the	financial	benefits	expected	for	these	projects	or	for	the	acquisitions	as	a	whole.

The	Company	uses	the	income	approach	to	determine	the	fair	values	of	its	purchased	research	and	development.	This	approach	determines	fair	value	by estimating	the	after-tax	cash	flows	attributable	to	an	in-process	project	over	its	useful	life	and	then	discounting	these	after-tax	cash	flows	back	to	a	present	value.	The Company	bases	its	revenue	assumptions	on	estimates	of	relevant	market	sizes,	expected	market	growth	rates,	expected	trends	in	technology	and	expected	product introductions	by	competitors.	In	arriving	at	the	value	of	the	in-process	projects,	the	Company	considers,	among	other	factors,	the	in-process	projects'	stage	of completion,	the	complexity	of	the	work	completed	as	of	the	acquisition	date,	the	costs	already	incurred,	the	projected	costs	to	complete,	the	contribution	of	core technologies	and	other	acquired	assets,	the	expected	introduction	date	and	the	estimated	useful	life	of	the	technology.	The	Company	bases	the	discount	rate	used	to arrive	at	a	present	value	as	of	the	date	of	acquisition	on	the	time	value	of	money	and	medical	technology	investment	risk	factors.	Please	see	Note	3	for	a	discussion	of	the risk-adjusted	discount	rates	used	to	discount	projected	cash	flows	for	the	in-process	projects	the	Company	acquired	in	connection	with	its	2008	acquisitions.	The Company	did	not	acquire	any	such	projects	during	fiscal	2007.	The	Company	believes	that	the	estimated	purchased	research	and	development	amounts	so	determined represent	the	fair	value	at	the	date	of	acquisition	and	do	not	exceed	the	amount	a	third	party	would	pay	for	the	projects.

The	Company	also	uses	the	income	approach,	as	described	above,	to	determine	the	estimated	fair	value	of	certain	other	identifiable	intangible	assets	including developed	technology,	customer	relationships	and	trade	names.	Developed	technology	represents	patented	and	unpatented	technology	and	know-how.	Customer

relationships	represent	established	relationships	with	customers,	which	provide	a	ready	channel	for	the	sale	of	additional	products	and	services.	Tradenames	represent acquired	product	names	that	the	Company	intends	to	continue	to	utilize.

The	majority	of	the	Company's	intangible	assets	arose	in	connection	with	its	business	combinations.	These	intangible	assets	were	recorded	at	fair	value	and	are stated	net	of	accumulated	amortization	and	impairments.	The	Company	amortizes	its	intangible	assets	that	have	finite	lives	using	either	the	straight-line	method,	or	if reliably	determinable,	based	on	the	pattern	in	which	the	economic	benefit	of	the	asset	is	expected	to	be	consumed	utilizing	expected	undiscounted	future	cash	flows. Amortization	is	recorded	over	the	estimated	useful	lives	ranging	from	2	to	30	years.	The	Company	evaluates	the	realizability	of	its	definite	lived	intangible	assets, whenever	events	or	changes	in	circumstances	or	business	conditions	indicate	that	the	carrying	value	of	these	assets	may	not	be	recoverable	based	on	expectations	of future	undiscounted	cash	flows	for	each	asset	group.	If	the	carrying	value	of	an	asset	exceeds	its	undiscounted	cash	flows,	the	Company	will	write-down	the	carrying value	of	the	intangible	asset	to	its	fair	value	in	the	period	identified.	The	Company	generally	calculates	fair	value	as	the	present	value	of	estimated	future	cash	flows	to	be generated	by	the	asset	using	a	risk-adjusted	discount	rate.	If	the	estimate	of	an	intangible	asset's	remaining	useful	life	is	changed,	the	Company	will	amortize	the remaining	carrying	value	of	the	intangible	asset	prospectively	over	the	revised	useful	life.

As	a	result	of	the	Company's	conclusion	that	an	interim	impairment	test	of	goodwill	was	required	as	of	December	27,	2008	(as	discussed	below),	the	Company performed	an	impairment	test	of	certain	long-lived	assets	as	of	December	27,	2008.	The	impairment	evaluation	was	based	on	expectations	of	future	undiscounted	cash flows	compared	to	the	carrying	value	of	the	long-lived	asset	groups.	The	Company's	cash	flow	estimates	were	based	upon	historical	cash	flows,	as	well	as	future projected	cash	flows	derived	from	the	Company-wide	annual	planning	process	and	updated	interim	forecasting	process.	The	Company	believes	that	its	procedures	for estimating	future	cash	flows	were	reasonable	and	consistent	with	market	conditions	at	the	time	of	estimation.	The	results	of	the	Company's	interim	impairment	testing indicated	that	there	was	no	impairment	of	its	long-lived	assets	as	of	December	27,	2008.	In	those	instances	where	indicators	of	impairment	were	identified,	the	Company performed	an	impairment	test	consistent	with	the	method	described	above.

Subsequent	to	the	merger	with	Cytyc,	the	Company	decided	to	discontinue	the	development	of	Cytyc's	Helica	product	and	determined	it	would	not	realize	any future	cash	flows	from	this	product.	The	Company's	intangible	asset	valuation	for	Cytyc	included	approximately	$2,900	related	to	customer	relationships	for	Helica.	As a	result	of	the	Helica	product	discontinuation,	the	Company	recorded	an	impairment	charge,	as	a	component	of	its	GYN	Surgical	segment,	of	$2,900	in	the	first	quarter of	fiscal	2008.

During	the	second	quarter	of	fiscal	2009,	the	Company	decided	to	discontinue	selling	a	certain	product	within	the	Diagnostic	reporting	segment	as	a	result	of communications	from	the	FDA	regarding	the	approval	process.	The	Company	believes	that	its	decision	was	an	indicator	of	impairment,	and	therefore,	the	Company performed	an	impairment	test	in	accordance	with	ASC	360-10-35-15.	The	Company	determined	that	the	undiscounted	cash	flows	to	be	generated	by	the	asset	group	over its	remaining	estimated	useful	life	would	not	be	sufficient	to	recover	the	carrying	value	of	the	asset	group.	Due	to	the	insufficient	cash	flows	to	be	generated,	the Company	determined	that	the	asset	group's	fair	value	was	de	minimus	and	recorded	an	impairment	charge	of	$4,065	comprised	of	developed	technology	of	$2,594	and capitalized	license	fees	of	$1,471.	This	charge	is	reflected	in	cost	of	product	sales	in	the	Consolidated	Statement	of	Operations	for	fiscal	2009.

During	the	third	quarter	of	fiscal	2009,	the	Company	acquired	certain	developed	technology	of	approximately	$5,400.

On	April	4,	2008,	the	Company	sold	its	CT	CAD	technology,	acquired	as	part	of	its	acquisition	of	R2	Technology	in	fiscal	2006.	As	a	result	of	this	sale,	the Company	reduced	the	net	book	value	of	its	developed	technology	in	the	Breast	Health	reporting	segment	by	$11,000	during	the	year	ended	September	27,	2008.

Intangible	assets	consist	of	the	following:

|  | As	of	September	26,	2009 | As	of	September	26,	2009 | As	of	September	27,	2008 | As	of	September	27,	2008 |
| :--- | :--- | :--- | :--- | :--- |
| Description | Gross\nCarrying\nValue | Accumulated\nAmortization | Gross\nCarrying\nValue | Accumulated\nAmortization |
| Developed\tTechnology | $2,137,711 | $267,259 | $2,135,688 | $112,568 |
| Customer\tRelationships | 484,993 | 63,494 | 484,136 | 22,509 |
| Trade\tNames | 146,965 | 20,094 | 146,963 | 9,950 |
| Patents | 11,513 | 7,771 | 11,183 | 7,544 |
| Capitalized\tLicense\tFees | 2,766 | 518 | 4,364 | 112 |
| Totals | $2,783,948 | $359,136 | $2,782,334 | $152,683 |

Amortization	expense	related	to	developed	technology,	capitalized	license	fees	and	patents	is	classified	as	a	component	of	cost	of	product	sales—amortization	of intangible	assets	in	the	Consolidated	Statements	of	Operations.	Amortization	expense	related	to	customer	relationship	and	trade	name	is	classified	as	a	component	of amortization	of	intangible	assets	in	the	Consolidated	Statements	of	Operations.

The	estimated	remaining	amortization	expense	at	September	26,	2009	for	each	of	the	five	succeeding	fiscal	years:

| Fiscal	2010 | $	228,467 |
| :--- | :--- |
| Fiscal\t2011 | 232,795 |
| Fiscal\t2012 | 234,148 |
| Fiscal\t2013 | 224,465 |
| Fiscal\t2014 | 215,119 |

In	accordance	with	ASC	350,	Intangibles—Goodwill	and	Other	(formerly	SFAS	No.	142,	Goodwill	and	Other	Intangible	Assets),	the	Company	tests	goodwill	at the	reporting	unit	level	for	impairment	on	an	annual	basis	and	between	annual	tests	if	events	and	circumstances	indicate	it	is	more	likely	than	not	that	the	fair	value	of	a reporting	unit	is	less	than	its	carrying	value.	Events	that	would	indicate	impairment	and	trigger	an	interim	impairment	assessment	include,	but	are	not	limited	to	current economic	and	market	conditions,	including	a	decline	in	market	capitalization,	a	significant	adverse	change	in	legal	factors,	business	climate	or	operational	performance of	the	business,	and	an	adverse	action	or	assessment	by	a	regulator.

In	performing	the	impairment	test,	the	Company	utilizes	the	two-step	approach	prescribed	under	ASC	350.	The	first	step	requires	a	comparison	of	the	carrying value	of	each	reporting	unit	to	its	estimated	fair	value.	To

estimate	the	fair	value	of	its	reporting	units	for	Step	1,	the	Company	primarily	utilizes	the	income	approach.	The	income	approach	is	based	on	a	discounted	cash	flow analysis	("DCF")	and	calculates	the	fair	value	by	estimating	the	after-tax	cash	flows	attributable	to	a	reporting	unit	and	then	discounting	the	after-tax	cash	flows	to	a present	value	using	a	risk-adjusted	discount	rate.	Assumptions	used	in	the	DCF	require	the	exercise	of	significant	judgment,	including	judgment	about	appropriate discount	rates	and	terminal	values,	growth	rates,	and	the	amount	and	timing	of	expected	future	cash	flows.	The	forecasted	cash	flows	are	based	on	the	Company's	most recent	budget	and	for	years	beyond	the	budget,	the	Company's	estimates	are	based	on	assumed	growth	rates.	The	Company	believes	its	assumptions	are	consistent	with the	plans	and	estimates	used	to	manage	the	underlying	businesses.	The	discount	rates,	which	are	intended	to	reflect	the	risks	inherent	in	future	cash	flow	projections, used	in	the	DCF	are	based	on	estimates	of	the	weighted-average	cost	of	capital	("WACC")	of	market	participants	relative	to	each	respective	reporting	unit.	The	market approach	considers	comparable	market	data	based	on	multiples	of	revenue	or	earnings	before	taxes,	depreciation	and	amortization	("EBITDA").	The	Company	believes its	assumptions	used	to	determine	the	fair	value	of	its	respective	reporting	units	are	reasonable.	If	different	assumptions	were	used,	particularly	with	respect	to	forecasted cash	flows,	WACCs,	or	market	multiples,	different	estimates	of	fair	value	may	result	and	there	could	be	the	potential	that	an	impairment	charge	could	result.	Actual operating	results	and	the	related	cash	flows	of	the	reporting	units	could	differ	from	the	estimated	operating	results	and	related	cash	flows.

If	the	carrying	value	of	a	reporting	unit	exceeds	its	estimated	fair	value,	the	Company	is	required	to	perform	the	second	step	of	the	goodwill	impairment	test	to measure	the	amount	of	impairment	loss,	if	any.	The	second	step	of	the	goodwill	impairment	test	compares	the	implied	fair	value	of	a	reporting	unit's	goodwill	to	its carrying	value.	The	implied	fair	value	of	goodwill	is	derived	by	performing	a	hypothetical	purchase	price	allocation	for	each	reporting	unit	as	of	the	measurement	date, allocating	the	reporting	unit's	estimated	fair	value	to	its	assets	and	liabilities.	The	residual	amount	from	performing	this	allocation	represents	the	implied	fair	value	of goodwill.	To	the	extent	this	amount	is	below	the	carrying	value	of	goodwill,	an	impairment	charge	is	recorded.

The	Company	conducted	its	annual	impairment	test	for	its	reporting	units	as	of	the	first	day	of	the	fourth	quarter	of	fiscal	2009.	In	order	to	complete	the	annual impairment	test,	the	Company	updated	its	interim	impairment	test	results	(see	below)	and	performed	detailed	analysis	estimating	the	fair	value	of	its	reporting	units utilizing	its	fiscal	2010	forecast	with	updated	long-term	growth	assumptions.	For	one	reporting	unit,	the	Company	utilized	the	results	of	its	interim	impairment	test. Pursuant	to	ASC	350-20-35-29	(formerly	paragraph	27	of	SFAS	142),	the	Company	concluded	that	it	met	the	required	criteria	to	use	the	estimated	fair	value	determined from	its	interim	impairment	analysis	for	this	reporting	unit	because	1)	the	composition	of	the	assets	and	liabilities	of	this	reporting	unit	had	not	changed	significantly since	the	most	recent	fair	value	determination,	2)	the	most	recent	fair	value	determination	resulted	in	a	fair	value	that	exceeded	the	carrying	value	of	the	reporting	unit	by a	substantial	margin	after	consideration	of	the	interim	goodwill	charge,	and	3)	management	concluded,	based	on	an	analysis	of	current	events	that	have	occurred	and circumstances	that	have	changed	since	the	most	recent	fair	value	determination,	that	it	was	remote	that	the	current	fair	value	of	the	reporting	unit	would	not	exceed	its carrying	amount.

As	a	result	of	completing	Step	1,	all	of	the	Company's	reporting	units,	except	one,	had	a	fair	value	exceeding	their	carrying	value,	and	as	such,	Step	2	of	the impairment	test	was	not	required	for	these	reporting	units.	For	the	reporting	unit	that	failed	Step	1,	the	Company	completed	Step	2,	consistent	with	the	procedures described	above,	and	determined	that	an	impairment	charge	was	not	required	due	to	the	fair	value	of	the	implied	goodwill	exceeding	the	carrying	value	of	the	reporting unit's	goodwill.	If	the	fair	value	of	this	reporting	unit	at	June	28,	2009	had	been	lower	by	10%,	the	Company	still	would	not	have	recorded	an	impairment	charge.	If	the fair	value	of	the	Company's	other	reporting	units	had	been	lower	by	10%,	two	reporting	units	would	have	failed

Step	1	requiring	a	Step	2	analysis.	These	reporting	units,	one	in	the	Diagnostics	reportable	segment	and	one	in	the	Skeletal	Health	reportable	segment,	had	fair	values	at this	date	that	exceeded	their	carrying	values	by	9%	and	2%,	respectively,	and	goodwill	of	$236.0	million	and	$8.2	million,	respectively.	The	fair	value	of	these	reporting units	is	determined	by	use	of	the	DCF.	As	noted	above,	the	key	assumptions	that	drive	the	fair	value	in	this	model	are	the	WACC,	terminal	values,	growth	rates,	and	the amount	and	timing	of	expected	future	cash	flows.	If	the	current	worldwide	financial	markets	and	economic	environment	were	to	deteriorate,	this	would	likely	result	in	a higher	WACC	because	market	participants	would	require	a	higher	rate	of	return.	In	the	DCF	as	the	WACC	increases,	the	fair	value	decreases.	The	other	significant factor	in	the	DCF	is	our	projected	financial	information	(i.e.,	amount	and	timing	of	expected	future	cash	flows	and	growth	rates)	and	if	these	assumptions	were	to	be adversely	impacted,	this	could	result	in	a	reduction	of	the	fair	values	of	these	reporting	units.	For	the	Company's	other	reporting	units	with	goodwill	aggregating	$1.77 billion,	the	Company	believes	that	these	reporting	units	are	not	at	risk	of	failing	Step	1	of	the	goodwill	impairment	test.

During	the	first	quarter	of	fiscal	2009,	based	upon	a	combination	of	factors,	including	the	deteriorating	macro-economic	environment,	declines	in	the	stock	market and	the	decline	of	the	Company's	market	capitalization	significantly	below	the	book	value	of	the	Company's	net	assets,	the	Company	concluded	that	potential	goodwill impairment	indicators	existed	as	of	December	27,	2008.	As	a	result,	the	Company	performed	an	interim	goodwill	impairment	analysis	as	of	December	27,	2008	in accordance	with	ASC	350.	As	noted	above,	the	Company	utilized	DCF	and	market	approaches	to	estimate	the	fair	value	of	its	reporting	units	as	of	December	27,	2008 and	believes	it	has	used	reasonable	estimates	and	assumptions	about	future	revenue,	cost	projections,	cash	flows	and	market	multiples.	In	addition,	using	a	DCF	requires the	use	of	a	risk-adjusted	discount	rate	for	which	the	Company	based	its	rate	on	the	WACC	of	market	participants.	The	Company	performed	a	peer	company	analysis and	considered	the	industry	weighted	average	return	on	debt	and	equity	from	a	market	participant	perspective	for	its	reporting	units.	Given	the	disruptions	in	the	credit and	equity	markets,	the	WACCs	for	each	reporting	unit	increased	between	the	Company's	annual	test	performed	on	the	first	day	of	its	fourth	quarter	of	fiscal	2008	and the	interim	test	performed	as	of	December	27,	2008.	The	long-term	growth	rates	are	largely	consistent	with	those	applied	in	the	fiscal	2008	annual	test,	except	for MammoSite,	which	is	a	reporting	unit	in	Breast	Health,	in	which	the	long-term	growth	rate	declined	due	to	current	competitive	pressures	on	the	reporting	unit's products,	as	well	as	recent	regulatory	and	reimbursement	changes.	The	Step	1	impairment	analysis	indicated	that	the	carrying	value	of	the	net	assets	of	three	of	the Company's	reporting	units,	acquired	in	connection	with	the	Cytyc	acquisition,	exceeded	the	estimated	fair	value	of	those	reporting	units.	As	a	result,	the	Company	was required	to	perform	Step	2	of	the	goodwill	impairment	test	to	determine	the	amount,	if	any,	of	goodwill	impairment	charges	for	each	of	the	applicable	reporting	units. Due	to	the	complexities	and	time	involved	in	preparing	the	Step	1	analysis,	the	Company	had	not	commenced	the	Step	2	analysis	as	of	February	5,	2009,	the	date	it	filed its	Form	10-Q	for	the	quarter	ended	December	27,	2008.	As	a	result	of	the	fact	that	the	Company	had	not	commenced	the	Step	2	analysis	and	the	complexity	of	the analysis	required	to	complete	the	Step	2	analysis,	the	Company	was	unable	to	determine	that	an	impairment	loss,	in	accordance	with	ASC	450,	Contingencies	(formerly SFAS	No.	5,	Accounting	for	Contingencies),	was	both	probable	and	reasonably	estimable	at	December	27,	2008.

The	Company	completed	the	Step	2	analysis	during	its	second	quarter	of	fiscal	2009,	which	resulted	in	an	aggregate	goodwill	impairment	charge	of	$2,340,023. This	impairment	charge	is	comprised	of	$1,165,804	for	GYN	Surgical,	$908,349	for	Diagnostics,	and	$265,870	for	Breast	Health.	The	impairment	charges	for	GYN Surgical	and	Diagnostics	are	primarily	attributable	to	the	assumption	of	higher	discount	rates	compared	to	those	used	in	the	annual	impairment	test	performed	as	of	the first	day	of	the	fourth	quarter	of	fiscal	2008	(the	July	2008	valuation)	and	the	assumption	that	the	reporting	units	would	be	purchased	or	sold	in	a	taxable	transaction	in accordance	with	EITF	Issue	No.	02-13,	Deferred	Income	Tax	Considerations	in	Applying	the	Goodwill	Impairment	Test	in	FASB	Statement	No.	142	(codified	within ASC	350,	Intangibles-Goodwill	and	Other).	The

impairment	charge	for	MammoSite	is	a	result	of	a	combination	of	a	higher	discount	rate	and	lower	projected	future	cash	flows	compared	to	those	used	in	the	July	2008 valuation.	The	higher	discount	rates	for	the	three	reporting	units,	which	range	from	10%	to	13.5%	compared	to	9%	to	10%	used	in	the	July	2008	valuation,	reflected	an increase	in	the	risks	inherent	in	the	estimated	future	cash	flows	and	the	higher	rate	of	return	a	market	participant	would	require	based	on	the	macro-economic environment	at	the	measurement	date.	The	reduction	in	forecasted	cash	flows	for	the	MammoSite	reporting	unit	is	due	to	current	competitive	pressure	on	the	reporting unit's	products	as	well	as	recent	regulatory	and	reimbursement	changes.

The	Company	also	evaluated	the	aggregate	fair	value	of	its	reporting	units	compared	to	its	market	capitalization	noting	an	implied	control	premium	of approximately	16%	at	December	27,	2008.	The	Company	used	an	average	of	its	market	capitalization	over	the	30	calendar	days	preceding	the	impairment	testing	date	as being	more	reflective	of	its	market	value	than	a	single	day,	point-in-time	market	price.	The	Company	concluded	that	its	implied	control	premium	was	reasonable	when compared	to	industry	specific	information.

For	illustrative	purposes,	had	the	fair	values	of	each	reporting	unit	for	which	the	Company	has	recorded	goodwill	impairment	charges	in	the	second	quarter	of fiscal	2009	been	lower	by	10%	as	of	December	27,	2008,	the	Company	would	have	recorded	an	additional	impairment	charge	of	$435,480.	Based	on	the	Company's estimates	as	of	December	27,	2008,	the	impact	of	reducing	the	Company's	fair	value	estimates	for	its	other	reporting	units,	for	which	the	Company	did	not	record	any goodwill	impairment	charges,	by	10%	would	have	no	impact	on	the	Company's	goodwill	assessment	for	those	reporting	units.

The	Company	believes	that	the	procedures	performed	and	the	estimates	and	assumptions	used	in	the	Step	1	and	Step	2	analyses	for	each	reporting	unit	are reasonable	and	in	accordance	with	the	guidelines	for	acquisition	accounting	under	U.S.	generally	accepted	accounting	principles.

The	estimate	of	fair	value	requires	significant	judgment.	Any	loss	resulting	from	the	goodwill	impairment	analysis	is	reflected	in	operating	(loss)	income	in	the Company's	Consolidated	Statements	of	Operations.	The	impairment	testing	process	is	subjective	and	requires	judgment	at	many	points	throughout	the	analysis.	If	these estimates	or	their	related	assumptions	change	in	the	future,	the	Company	may	be	required	to	record	impairment	charges	for	these	assets	not	previously	recorded. Impairment	charges	related	to	goodwill	have	no	impact	on	the	Company's	cash	balances	or	compliance	with	financial	covenants	under	its	Amended	and	Restated	Credit Agreement.

In	prior	years,	the	Company	conducted	its	annual	impairment	test	of	goodwill	for	certain	of	its	reporting	units	(its	historical	reporting	units	prior	to	the	merger with	Cytyc)	as	of	the	last	day	of	the	second	quarter.	In	the	fourth	quarter	of	fiscal	2008,	the	Company	changed	the	measurement	date	from	the	last	day	of	its	second quarter	to	the	first	day	of	its	fourth	quarter,	in	order	to	provide	additional	time	to	determine	the	fair	value	of	its	reporting	units	and	to	evaluate	the	results	of	the impairment	testing.	This	change	did	not	delay,	accelerate	or	avoid	an	impairment	charge.	In	addition,	this	change	did	not	have	any	effect	on	the	Company's	financial performance	or	results	of	operations,	nor	was	there	any	impact	on	prior	periods'	financial	statements	under	the	requirements	of	ASC	250,	Accounting	Changes	and Error	Corrections	(formerly	SFAS	No.	154,	Accounting	Changes	and	Error	Corrections).	The	retrospective	application	as	required	under	this	accounting	guidance	was not	necessary	as	no	impairment	charges	had	been	recorded	in	any	previously	recorded	financial	statements	nor	did	the	change	in	measurement	date	cause	any impairments.

As	a	result	of	the	change	in	the	measurement	date	for	the	Company's	annual	goodwill	impairment	test	for	its	historical	reporting	units	from	the	last	day	of	the second	quarter	to	the	first	day	of	the	fourth	quarter,	the	Company	evaluated,	in	accordance	with	ASC	350-20-35-9,	whether	the	detailed	determination	of	fair	value	of	its

historical	reporting	units	as	of	March	29,	2008	could	be	carried	forward	to	the	first	day	of	its	fiscal	fourth	quarter	of	2008	or	if	a	new	test	of	goodwill	impairment	was required	to	be	performed	for	these	historical	reporting	units.	In	its	evaluation,	the	Company	noted	that	the	assets	and	liabilities	of	the	reporting	units	had	not	changed significantly,	there	was	sufficient	margin	between	the	carrying	amount	and	fair	value	determination	for	each	reporting	unit	and	no	events	or	circumstances	related	to these	reporting	units	would	suggest	that	a	current	fair	value	determination	of	reporting	units	would	result	in	a	valuation	lower	than	the	carrying	amount	of	the	reporting units.	Based	on	this	evaluation,	the	Company	believed	it	sufficiently	met	the	requirements	to	carry	forward	its	estimate	of	fair	value	for	these	reporting	units.

The	Company	conducted	its	fiscal	2008	annual	impairment	test	of	goodwill	for	its	new	reporting	units	as	a	result	of	the	Company's	acquisition	of	Cytyc Corporation	as	of	the	first	day	of	the	fourth	quarter	of	fiscal	2008.	The	fair	value	of	each	reporting	unit	was	determined	to	be	in	excess	of	each	reporting	unit's	carrying value	and	as	a	result	the	second	step	of	the	impairment	test	was	not	required.

A	rollforward	of	goodwill	activity	from	September	29,	2007	to	September	26,	2009	is	as	follows:

| Acquisition	of	Third	Wave. | 241,785 |
| :--- | :--- |
| Contingent\tconsideration\trelated\tto\tSuros\tacquisition | 24,467 |
| Estimated\ttax\tbenefit\tof\tvested\tconverted\toptions\texercised\tafter\tacquisition. | (49,630) |
| Cytyc\tpurchase\tprice\tadjustments | (14,227) |
| Other\tpurchase\tprice\tadjustments\tand\tforeign\tcurrency\ttranslation\timpact | (3,527) |
| Balance\tas\tof\tSeptember\t27,\t2008 | 4,450,496 |
| Impairment\tof\tgoodwill | (2,340,023) |
| Cytyc\tpurchase\tprice\tadjustments | (2,930) |
| Third\tWave\tpurchase\tprice\tadjustments | 1,450 |
| Contingent\tconsideration\trelated\tto\tAdiana | 1,854 |
| Other\tpurchase\tprice\tadjustments\tand\tforeign\tcurrency\ttranslation\tadjustment | (1,884) |
| Balance\tas\tof\tSeptember\t26,\t2009 | $2,108,963 |

The	other	purchase	price	adjustments	in	fiscal	2009	and	2008	substantially	relate	to	the	adjustment	of	R2	and	Suros	tax	liabilities.	R2	and	Suros	were	acquired	in fiscal	2006.

During	fiscal	2008,	as	a	result	of	the	merger	with	Cytyc,	the	Company	reallocated	its	segment	allocation	of	goodwill	to	reflect	expected	revenue	synergies	in	its historical	reporting	segments.	Accordingly,	the	Company	recorded	an	increase	in	goodwill	allocated	to	its	Breast	Health	and	Skeletal	Health	segments	in	the	amount	of $502,800	and	$7,600,	respectively	in	fiscal	2008.	The	allocation	of	goodwill	by	reporting	segment	consists	of	the	following:

|  | Balance	as	of | Balance	as	of |
| :--- | :--- | :--- |
| Reporting\tSegment | September\t26,\t2009 | September\t27,\t2008 |
| Breast\tHealth | $662,735 | $930,672 |
| Diagnostics | 578,290 | 1,486,988 |
| GYN\tSurgical | 859,739 | 2,024,639 |
| Skeletal\tHealth | 8,199 | 8,197 |
|  | $2,108,963 | $4,450,496 |

# Other	Assets

As	of	September	26,	2009	and	September	27,	2008,	other	assets	were	comprised	primarily	of	deferred	financing	costs,	cost-method	investments	and	Company owned	life	insurance	contracts.

As	of	September	26,	2009	and	September	27,	2008,	other	assets	included	$34,622	and	$52,055,	respectively,	of	deferred	financing	costs	related	to	the	Company's Convertible	Notes	and	the	Company's	Amended	Credit	Agreement	(See	Note	5).	The	Company	was	initially	amortizing	deferred	financing	costs	related	to	the	Amended Credit	Agreement,	which	was	executed	in	2008,	to	interest	expense	over	a	five	year	period;	however,	as	the	Company	has	repaid	principal	early,	it	has	accelerated amortization	of	the	deferred	financing	costs.	Interest	expense	related	to	the	amortization	of	deferred	financing	costs	for	the	Amended	Credit	Agreement	was	$11,738	and $3,532	for	fiscal	2009	and	2008,	respectively.	The	Company	is	amortizing	amounts	related	to	the	Convertible	Notes	on	a	straight-line	basis	over	the	period	of	earliest redemption,	which	is	a	six	year	period.	As	a	result,	the	Company	recorded	interest	expense	related	to	the	amortization	of	deferred	financing	costs	of	$6,004	and	$4,775 for	fiscal	2009	and	2008,	respectively.	In	connection	with	the	Convertible	Notes	offering	and	other	voluntary	repayments,	the	Company's	term	loans	under	the	original Credit	Agreement	were	repaid,	and	the	Company	accelerated	the	amortization	of	the	related	deferred	financing	costs	resulting	in	total	interest	expense	of	$11,516 relating	to	these	term	loans	in	fiscal	2008.	Additionally,	the	Company	recorded	$718	of	interest	expense	related	to	its	unamortized	deferred	financing	costs	upon	the termination	of	its	credit	facility	with	Bank	of	America	during	fiscal	2008.

Other	assets	also	include	certain	other	cost-method	investments	in	non-publicly	traded	equity	securities	aggregating	$7,585	and	$9,278	for	fiscal	2009	and	2008, respectively.	These	investments	are	generally	carried	at	cost	as	the	Company	owns	less	than	20%	of	the	voting	equity	and	does	not	have	the	ability	to	exercise	significant influence	over	these	companies.	The	Company	regularly	evaluates	the	carrying	value	of	its	cost-method	investments	for	impairment	and	whether	any	events	or circumstances	are	identified	that	would	significantly	harm	the	fair	value	of	the	investment.	The	indicators	the	Company	utilizes	to	identify	these	events	and circumstances	include	(1)	the	investee's	revenue	or	earnings	trends	compared	to	budgets	and	pre-defined	milestones,	(2)	the	technological	feasibility	of	the	investee's products	and	technologies,	(3)	general	market	conditions	in	the	investee's	industry	including	adverse	regulatory	or	economic	changes,	(4)	factors	related	to	the	investee's ability	to	remain	in	business,	such	as	the	investee's	liquidity	and	rate	of	cash	use,	and	(5)	the	investee's	ability	to	secure	additional	funding	and	the	value	of	that additional	funding.	In	the	event	a	decline	in	fair	value	is	judged	to	be	other-than-temporary,	the	Company	will	record	an	other-than-temporary	impairment	charge	in Other	income	(expense),	net	in	the	Consolidated	Statements	of	Operations.	During	fiscal	2009,	the	Company	recorded	other-than-temporary	impairment	charges	totaling $2,243	related	to	certain	of	its	cost	method	investments	to	adjust	their	carrying	amounts	to	fair	value.

The	Company	owned	life	insurance	contracts	included	in	other	assets	primarily	include	contracts	that	were	purchased	in	connection	with	the	Company's Supplemental	Executive	Retirement	Plan	("SERP")	and	were	valued	at	$11,602	as	of	September	26,	2009	and	$5,575	as	of	September	27,	2008	(See	Note	11	for	further discussion).

# Research	and	Software	Development	Costs

Costs	incurred	in	the	research	and	development	of	the	Company's	products	are	expensed	as	incurred.	Nonrefundable	advance	payments	for	goods	or	services	to be	received	in	the	future	by	the	Company	for	use	in	research	and	development	activities	are	deferred	and	capitalized.	The	capitalized	amounts	are	expensed	as	the	related goods	are	delivered	or	the	services	are	performed.	If	the	Company's	expectations	change	such	that	it	does	not	expect	it	will	need	the	goods	to	be	delivered	or	the	services to	be	rendered,	capitalized	nonrefundable	advance	payments	are	charged	to	expense	in	that	period.

The	Company	accounts	for	the	development	costs	of	software	embedded	in	the	Company's	products	for	which	revenues	are	recognized	pursuant	to	ASC	985-605, Software	Revenue	Recognition	(formerly	AICPA	SOP	97-2,	Software	Revenue	Recognition),	in	accordance	with	ASC	985,	Software	(formerly	SFAS	No.	86,	Accounting for	the	Costs	of	Computer	Software	to	be	Sold,	Leased	or	Otherwise	Marketed.	Costs	incurred	in	the	research,	design	and	development	of	software	embedded	in	products to	be	sold	to	customers	are	charged	to	expense	until	technological	feasibility	of	the	ultimate	product	to	be	sold	is	established.	Software	development	costs	incurred	after the	establishment	of	technological	feasibility	and	until	the	product	is	available	for	general	release	are	capitalized,	provided	recoverability	is	reasonably	assured.	Software development	costs	eligible	for	capitalization	have	not	been	significant	to	date.

# Foreign	Currency	Translation

The	financial	statements	of	the	Company's	foreign	subsidiaries	are	translated	in	accordance	with	ASC	830,	Foreign	Currency	Matters	(formerly	SFAS	No.	52, Foreign	Currency	Translation).	The	reporting	currency	for	the	Company	is	the	U.S.	dollar.	With	the	exception	of	its	Costa	Rica	subsidiary,	whose	functional	currency	is the	U.S.	dollar,	the	functional	currency	of	the	Company's	subsidiaries	is	their	local	currency.	Accordingly,	the	assets	and	liabilities	of	these	subsidiaries	are	translated into	U.S.	dollars	using	the	exchange	rate	in	effect	at	each	balance	sheet	date.	Before	translation,	the	Company	re-measures	foreign	currency	denominated	assets	and liabilities,	including	inter-company	accounts	receivable	and	payable,	into	the	functional	currency	of	the	respective	entity,	resulting	in	unrealized	gains	or	losses	recorded in	other	(expense)	income,	net	in	the	Consolidated	Statement	of	Operations.	Revenues	and	expenses	are	translated	using	average	exchange	rates	during	the	respective period.	Foreign	currency	translation	adjustments	are	accumulated	as	a	component	of	other	comprehensive	income	as	a	separate	component	of	stockholders'	equity. Gains	and	losses	arising	from	transactions	denominated	in	foreign	currencies	are	included	in	other	(expense)	income,	net	on	the	Consolidated	Statements	of	Operations and	to	date	have	not	been	material.

# Comprehensive	(Loss)	Income

ASC	220,	Comprehensive	Income	(formerly	SFAS	No.	130,	Reporting	Comprehensive	Income),	requires	the	financial	statements	to	include	the	reporting	of comprehensive	(loss)	income,	which	includes	net	(loss)	income	and	certain	transactions	that	have	generally	been	reported	in	the	statement	of	shareholders'	equity. Comprehensive	(loss)	income	is	disclosed	in	the	Consolidated	Statements	of	Stockholders'	Equity	and	Comprehensive	(Loss)	Income.

Accumulated	other	comprehensive	income,	net	of	tax,	consists	of	the	following	as	of	September	26,	2009	and	September	27,	2008:

|  | 2009 | 2008 |
| :--- | :--- | :--- |
| Foreign\tcurrency\ttranslation\tadjustment | $4,669 | $3,003 |
| Minimum\tpension\tliability,\tnet\tof\ttax\tof\t$1,011\tand\t$832,\trespectively | 2,359 | 1,942 |
|  | $7,028 | $4,945 |

The	Company	generates	revenue	from	the	sale	of	its	products,	primarily	capital	equipment	and	disposable	supplies,	and	related	services.

The	Company	recognizes	product	revenue	upon	shipment	provided	that	there	is	persuasive	evidence	of	an	arrangement,	there	are	no	uncertainties	regarding acceptance,	the	sales	price	is	fixed	or	determinable,	no	right	of	return	exists	and	collection	of	the	resulting	receivable	is	probable.	Generally,	the	Company's	product arrangements	for	capital	equipment	sales,	primarily	in	Breast	Health	and	Skeletal	Health,	are	multiple-element	arrangements,	including	services,	such	as	installation	and training	and	multiple	products.	In	accordance	with	ASC	605-25,	Multiple	Element	Arrangements	(formerly	Emerging	Issues	Task	Force	("EITF")	Issue	No.	00-21, Accounting	for	Revenue	Arrangements	with	Multiple	Deliverables),	based	on	the	terms	and	conditions	of	the	product	arrangements,	the	Company	believes	that	these services	and	undelivered	products	can	be	accounted	for	separately	from	the	delivered	product	element	as	the	Company's	delivered	product	has	value	to	its	customers	on a	stand-alone	basis	and	the	Company	has	objective	and	reliable	evidence	of	the	fair	value	of	such	services	and	undelivered	products.	Accordingly,	service	revenue representing	the	fair	value	of	services	not	yet	performed	at	the	time	of	product	shipment	is	deferred	and	recognized	as	such	services	are	performed.	The	fair	value	of	the undelivered	products	is	also	deferred	at	the	time	of	product	shipment	and	recognized	when	these	products	are	delivered.	The	residual	revenue	under	the	product arrangement	is	recognized	as	product	revenue	upon	shipment	or	installation	as	discussed.	There	is	no	customer	right	of	return	in	the	Company's	sales	agreements.

The	Company	recognizes	product	revenue	upon	the	completion	of	installation	for	products	whose	installation	is	essential	to	its	functionality,	primarily	related	to its	digital	imaging	systems.	A	provision	is	made	at	that	time	for	estimated	warranty	costs	to	be	incurred.

Although	certain	of	the	Company's	products	contain	operating	and	application	software,	the	Company	has	determined	that	except	for	its	CAD	(computer	aided detection)	products	obtained	with	the	acquisition	of	R2	Technology,	Inc.	and	the	newly	released	Dimensions	2D/3D	full	field	digital	mammography	product ("Dimensions"),	the	software	element	is	incidental	in	accordance	with	the	software	revenue	recognition	rules.

The	Company	has	determined	ASC	985-605,	Software—Revenue	Recognition	(formerly	SOP	97-2)	applies	to	revenue	transactions	for	its	CAD	systems	and Dimensions	product	(see	below),	which	are	included	in	Breast	Health.	ASC	985-605	generally	requires	revenue	earned	on	software	arrangements	involving	multiple elements	to	be	allocated	to	each	element	based	on	the	relative	fair	values	of	the	elements.	Revenue	recognized	from	multi-element	arrangements	is	allocated	to	each element	of	the	arrangement	using	the	residual	method	based	on	the	fair	value	of	the	undelivered	elements.	The	Company's	determination	of	fair	value	of	the	undelivered elements	in	the	multi-element	arrangements	is	based	on	vendor-specific	objective	evidence	("VSOE").	The	Company	limits	its	assessment	of	VSOE	for	each	element	to either	the	price	charged	when	the	same	element	is	sold	separately	or	the	price	established	by	management,	having	the	relevant	authority	to	do	so	for	an	element	not	yet sold	separately.	The	Company	recognizes	revenue	on	CAD	systems	and	Dimensions	product	sales	upon	completion	of	installation	at	which	time	the	only	remaining undelivered	element	is	Post	Contract	Support	("PCS").

Upon	its	release,	the	Company	completed	an	evaluation	of	the	software	component	of	its	Dimensions	product	in	accordance	with	the	software	revenue	recognition rules.	The	Company	noted	the	following	in	its	evaluation	of	the	software	component	of	its	new	Dimensions	product:

•	 Dimensions	is	offered	in	different	configurations	providing	different	levels	of	functionality	(2D	vs.	3D).	Customers	who	purchase	the	2D	configuration	will be	to	able	to	upgrade	the	product	to	a	3D	version	and	such	upgrade	will	solely	represent	a	software	upgrade	that	will	be	marketed	and	sold	separately.	This differentiation	from	the	Company's	existing	2D	digital	mammography	product	is	expected	to	be	highlighted	in	the	Company's	marketing	literature.

•	 As	part	of	the	initial	warranty	of	the	Dimensions	product,	customers	will	receive	not	only	bug	fixes	related	to	the	software	but	also	will	receive	any	updates and	enhancements	to	the	software	that	are	released.	Therefore,	the	Company	concluded	that	this	represents	PCS	as	defined	in	the	software	revenue recognition	rules.

As	a	result,	the	Company	has	determined	that	the	Dimensions	product	contains	software	that	is	more	than	incidental	to	the	product	as	a	whole	and	should	be accounted	for	under	the	software	revenue	recognition	rules.	The	Company	recognizes	revenue	upon	installation	and	acceptance,	if	required,	and	defers	the	VSOE	of	fair value	of	the	initial	bundled	PCS.	The	Company	has	determined	that	VSOE	of	fair	value	of	the	initial	bundled	PCS	exists	based	on	the	establishment	of	a	price	for	which this	element	will	be	sold	separately	by	management	having	the	relevant	authority	and	that	it	is	probable	that	this	price	will	not	change	prior	to	when	this	service	is	sold separately.	The	Company	has	specified	the	renewal	rates	at	which	the	PCS	service	can	be	purchased	separately	for	upon	expiration	of	the	initial	PCS	period	and	those rates	are	consistent	among	its	customers.

For	multiple-element	arrangements	where	VSOE	of	fair	value	of	PCS	has	been	established,	the	Company	recognizes	revenue	using	the	residual	method	at	the	time all	other	revenue	recognition	criteria	have	been	met.	Amounts	attributable	to	PCS	are	recorded	as	deferred	revenue	and	recognized	ratably	over	the	contractual	term	of PCS.

Under	customer	usage	agreements,	the	Company	installs	certain	equipment	(for	example,	a	ThinPrep	Processor	or	a	ThinPrep	Imaging	System)	at	customer	sites and	customers	commit	to	purchasing	minimum	quantities	of	disposable	supplies	at	a	stated	price	(generally	including	a	usage	fee	for	the	equipment)	over	a	defined contract	term,	which	is	typically	between	three	and	five	years.	Revenue	is	recognized	over	the	term	of	the	customer	usage	agreement	as	disposable	supplies	are delivered.	The	Company	also	rents	certain	equipment	to	customers.	Revenues	from	rental	agreements	are	recorded	over	the	terms	of	the	rental	agreements.

# Accounts	Receivable	and	Reserves

The	Company	records	reserves	for	doubtful	accounts	based	upon	a	specific	review	of	all	outstanding	invoices,	known	collection	issues	and	historical	experience. The	Company	regularly	evaluates	the	collectability	of	its	trade	accounts	receivables	and	performs	ongoing	credit	evaluations	of	its	customers	and	adjusts	credit	limits based	upon	payment	history	and	its	assessment	of	the	customer's	current	credit	worthiness.	These	estimates	are	based	on	specific	facts	and	circumstances	of	particular orders,	analysis	of	credit	memo	data	and	other	known	factors.

Accounts	receivable	reserve	activity	for	the	years	ended	September	26,	2009,	September	27,	2008	and	September	29,	2007	is	as	follows:

|  | Balance	at<br>Beginning<br>of	Period | Acquisition<br>and	Other<br>Adjustments | Charged	to<br>Costs	and<br>Expenses | Write-<br>offs	and<br>Payments | Balance	at<br>End	of<br>Period |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Period\tEnded: |  |  |  |  |  |
| September\t26,\t2009 | $6,326 | $— | $2,334 | $(1,381) | $7,279 |
| September\t27,\t2008 | $4,598 | $(206) | $2,109 | $(175) | $6,326 |
| September\t29,\t2007 | $3,712 | $(20) | $947 | $(41) | $4,598 |

Cost	of	service	and	other	revenues	primarily	represents	payroll	and	related	costs	associated	with	the	Company's	professional	services'	employees,	consultants, infrastructure	costs	and	overhead	allocations,	including	depreciation	and	rent	and	materials	consumed	in	providing	the	service.

The	Company	accounts	for	share-based	payments	in	accordance	with	ASC	718,	Stock	Compensation	(formerly	SFAS	123(R)	Share-Based	Payments).	As	such, all	share-based	payments	to	employees,	including	grants	of	stock	options	and	restricted	stock	units,	are	recognized	in	the	statement	of	operations	based	on	their	fair values	as	the	date	of	grant.	The	Company	adopted	SFAS	123(R)	using	the	"modified	prospective"	transition	method	in	which	compensation	cost	is	recognized	beginning with	the	effective	date	(a)	based	on	the	requirements	of	SFAS	123(R)	for	all	share-based	payments	granted	after	the	effective	date	and	(b)	based	on	the	requirements	of SFAS	123	for	all	awards	granted	to	employees	prior	to	the	effective	date	of	SFAS	123(R)	that	remain	unvested	on	the	effective	date.	As	a	result,	the	Company	is recognizing	compensation	for	the	fair	value	of	the	unvested	portion	of	option	grants	issued	prior	to	the	adoption	of	SFAS	123(R),	whose	fair	value	was	calculated utilizing	a	Black-Scholes	Option	Pricing	Model.	In	accordance	with	the	modified-prospective	transition	method	of	SFAS	123(R),	results	for	prior	periods	have	not	been restated.

# Net	(Loss)	Income	Per	Share

Basic	net	(loss)	income	per	share	is	computed	by	dividing	net	(loss)	income	by	the	weighted	average	number	of	common	shares	outstanding.	Diluted	net	(loss) income	per	share	is	computed	by	dividing	net	(loss)	income	by	the	weighted	average	number	of	common	shares	and	potential	common	shares	from	outstanding	stock options,	restricted	stock	units	and	convertible	debt	determined	by	applying	the	treasury	stock	method.	In	accordance	with	ASC	718	the	assumed	proceeds	under	the treasury	stock	method	include	the	average	unrecognized	compensation	expense	of	stock	options	that	are	in-the-money	and	restricted	stock	units.

The	Company	applies	the	provisions	of	ASC	260,	Earnings	Per	Share,	Subsection	10-45-44	(formerly	EITF	No.	04-8,	The	Effect	of	Contingently	Convertible Instruments	on	Diluted	Earnings	per	Share),	to	determine	diluted	weighted	average	shares	outstanding	as	it	relates	to	its	outstanding	Convertible	Notes,	and	due	to	the type	of	debt	instrument	issued,	the	dilutive	impact	of	the	Company's	Convertible	Notes	is	based	on	the	difference	between	the	Company's	current	stock	price	and	the conversion	price	of	the	Convertible	Notes,	provided	there	is	a	premium.	Pursuant	to	this	accounting	guidance,	there	is	no	dilution	from	the	accreted	principal	of	the Convertible	Notes.	Accordingly,	the	Company	uses	the	treasury	stock	method	to	determine	dilutive	weighted	average	shares	related	to	its	Convertible	Notes	and	not	the if-converted	method.

A	reconciliation	of	basic	and	diluted	share	amounts	for	fiscal	years	2009,	2008,	and	2007	are	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 | September	20,<br>2007 |
| :--- | :--- | :--- | :--- |
| Numerator:\nNet\t(loss)\tincome | $(2,176,237) | $(385,617) | $94,578 |
| Denominator: |  |  |  |
| Basic\tweighted\taverage\tcommon\tshares\toutstanding | 256,545 | 245,968 | 106,873 |
| Weighted\taverage\tcommon\tstock\tequivalents\tfrom\tassumed\texercise\tof\tstock\toptions\tand |  |  |  |
| restricted\tstock\tunits | — | — | 2,796 |
| Diluted\tweighted\taverage\tcommon\tshares\toutstanding | 256,545 | 245,968 | 109,669 |
| Basic\tnet\t(loss)\tincome\tper\tcommon\tshare | $(8.48) | $(1.57) | $0.88 |
| Diluted\tnet\t(loss)\tincome\tper\tcommon\tshare | $(8.48) | $(1.57) | $0.86 |
| Weighted-average\tanti-dilutive\tshares\trelated\tto: |  |  |  |
| Outstanding\tstock\toptions | 13,489 | 7,303 | 1,316 |
| Restricted\tstock\tunits | 1,575 | 132 | 168 |

Diluted	weighted	average	shares	outstanding	do	not	include	any	effect	resulting	from	the	conversion	of	the	Company's	Convertible	Notes	issued	in	December 2007	as	their	impact	would	be	anti-dilutive	for	all	periods	presented.	In	those	reporting	periods	in	which	the	Company	has	reported	net	income,	anti-dilutive	shares comprise	those	common	stock	equivalents	that	have	either	an	exercise	price	above	the	average	stock	price	for	the	period	or	the	common	stock	equivalents	related average	unrecognized	stock	compensation	expense	is	sufficient	to	"buy	back"	the	entire	amount	of	shares.	In	those	reporting	periods	in	which	the	Company	has	a	net loss,	anti-dilutive	shares	comprise	the	impact	of	those	number	of	shares	that	would	have	been	dilutive	had	the	Company	had	net	income	plus	the	number	of	common stock	equivalents	that	would	be	anti-dilutive	had	the	company	had	net	income.

The	Company	generally	offers	a	one-year	warranty	for	its	products.	The	Company	provides	for	the	estimated	cost	of	product	warranties	at	the	time	product revenue	is	recognized.	Factors	that	affect	the	Company's	warranty	reserves	include	the	number	of	units	sold,	historical	and	anticipated	rates	of	warranty	repairs	and	the cost	per	repair.	The	Company	periodically	assesses	the	adequacy	of	the	warranty	reserve	and	adjusts	the	amount	as	necessary.

Product	warranty	activity	for	the	years	ended	September	26,	2009	and	September	27,	2008	is	as	follows:

|  | Balance	at<br>Beginning	of<br>Period | Charged	to<br>Costs	and<br>Expenses | Acquired<br>Reserves | Cost<br>Incurred | Balance	at	End<br>of	Period |
| :--- | :--- | :--- | :--- | :--- | :--- |
| Period\tend: |  |  |  |  |  |
| September\t26,\t2009 | $9,109 | $4,937 | $$(8,444) | $$(8,444) | $5,602 |
| September\t27,\t2008 | $12,087 | $5,223 | $591 | $(8,792) | $9,109 |

# Restructuring	Charges	and	Accrual

In	the	fourth	quarter	of	fiscal	2009,	the	Company	closed	its	manufacturing	facility	in	Shanghai,	China.	This	facility,	which	manufactured	organic	photoconductor drum	coatings,	was	acquired	in	connection	with	the	AEG	acquisition	in	2006.	The	Company	recorded,	as	restructuring	charges,	severance	benefits	of	$420	and	other costs	of	$377.	The	severance	benefits	were	paid	to	the	employees	as	of	September	26,	2009.	In	connection	with	this	action,	the	Company	ceased	production	during	the fourth	quarter	of	2009	and	recorded	impairment	charges	of	$661	in	cost	of	product	sales	for	manufacturing	equipment	that	has	no	further	utility.	The	Company	expects to	incur	additional	compensation	and	other	clean-up	expenses	to	complete	the	closure	of	fully	close	the	facility,	which	is	expected	to	be	completed	during	fiscal	2010. These	costs	are	not	expected	to	be	material.	In	addition,	since	this	subsidiary	is	deemed	to	be	substantially	liquidated	pursuant	to	the	foreign	currency	translation accounting	rules,	the	Company	has	eliminated	its	cumulative	translation	adjustment	related	to	this	subsidiary	resulting	in	other	income	of	$726,	which	has	been recorded	as	a	component	of	Other	(expense)	income,	net	in	the	Consolidated	Statements	of	Operations.

In	fiscal	2008,	the	Company	recorded	a	restructuring	charge	of	$6,383	related	to	the	resignation	of	its	former	Chairman	of	the	Board	of	Directors,	which	is	not included	in	the	table	below.	On	May	20,	2008,	the	Company	entered	into	a	Separation	and	Release	Agreement	(the	"Separation	Agreement")	with	Patrick	J.	Sullivan, Chairman	of	the	Board	of	Directors	of	the	Company.	The	Separation	Agreement	required	the	Company	to	pay	Mr.	Sullivan	a	total	of	$4,442	and	continue	to	pay Mr.	Sullivan's	premiums	for	COBRA	continuation	coverage	under	the	Company's	group	medical	plan	for	eighteen	months	following	the	effective	date	of	the	separation. In	addition,	the	Separation	Agreement	provided	that	Mr.	Sullivan's	46	restricted	stock	units	granted	on	October	22,	2007	would	become	fully	vested,	and	the	time	period to	exercise	all	of	his	outstanding	stock	options,	all	of	which	were	fully	vested,	would	be	extended	so	as	to	remain	exercisable	until	August	31,	2009.	The	acceleration	of the	restricted	stock	units	and	modification	of	stock	options	resulted	in	a	stock-based	compensation	charge	of	$1,941.

In	fiscal	2008,	as	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	previous	Cytyc	management	approved	restructuring	plans	designed	to	reduce	future operating	expenses	by	consolidating	its	Mountain	View,	California	operations	into	its	existing	operations	in	Costa	Rica	and	Massachusetts	as	well	as	restructuring	plans relating	to	Cytyc's	historical	acquisitions	completed	in	March	2007.	In	connection	with	these	plans,	the	Company	assumed	a	total	liability	of	approximately	$4,658.	The Company	assumed	an	arrangement	in	which	Cytyc	had	sub-leasing	all	of	its	Mountain	View	facility	to	a	third	party	for	a	term	of	approximately	five	years,	a	period	of time	equivalent	to	the	remainder	of	the	Company's	lease	of	this	facility.	The	sub-lease	commenced	on	July	1,	2007,	and	the	sub-lease	income	under	this	arrangement exceeded	the	related	lease	obligation.	The	Company	did	not	incur	any	additional	restructuring	costs	related	to	these	plans,	and	these	costs	were	paid	in	full	during	fiscal 2009.

The	Company	also	recorded	a	liability	related	to	the	merger	with	Cytyc	in	accordance	with	EITF	Issue	No.	95-3	("EITF	95-3"),	Recognition	of	Liabilities	in Connection	with	a	Purchase	Business	Combination,	primarily	related	to	the	termination	of	certain	employees,	minimum	inventory	purchase	commitments,	and	other contractual	obligations	for	which	business	activities	had	been	discontinued.

In	fiscal	2008	as	a	result	of	the	Third	Wave	acquisition,	the	Company	assumed	previous	Third	Wave	management	approved	restructuring	plans	designed	to reduce	future	operating	expenses.	In	connection	with	these	plans,	the	Company	assumed	a	total	liability	related	to	termination	benefits	of	approximately	$7,509.	The Company	did	not	incur	any	additional	restructuring	costs	related	to	retention	costs	for	these	employees.

Changes	in	the	restructuring	accrual	are	as	follows:

|  | Other | Termination<br>Benefits |
| :--- | :--- | :--- |
| Balance\tat\tSeptember\t29,\t2007 | $— | $105 |
| Cytyc\tbalance\tacquired,\tOctober\t22,\t2007 | — | 4,658 |
| Third\tWave\tbalance\tacquired,\tJuly\t24,\t2008 | 261 | 7,029 |
| Provided\tfor\tunder\tEITF\tNo.\t95-3 | \t 1,820 | 1,020 |
| Adjustments | (382) | (270) |
| Payments | (817) | (11,233) |
| Balance\tat\tSeptember\t27,\t2008 | 882 | 1,309 |
| Current\tperiod\tcharges | 377 | 420 |
| Adjustments | (754) | (479) |
| Payments | (130) | (1,202) |
| Balance\tat\tSeptember\t26,\t2009 | $375 | $48 |

# Advertising	Costs

Advertising	costs	are	charged	to	operations	as	incurred.	The	Company	does	not	have	any	direct-response	advertising.	Advertising	costs,	which	include	trade shows	and	conventions,	were	approximately	$12,385,	$15,281	and	$6,683	for	fiscal	2009,	2008	and	2007,	respectively,	and	were	included	in	selling	and	marketing expense	in	the	Consolidated	Statements	of	Operations.

# Recently	Issued	Accounting	Pronouncements

In	September	2009,	the	FASB	ratified	ASC	Update	("ASU")	No.	2009-13,	Multiple-Deliverable	Revenue	Arrangements	(formerly	EITF	08-1),	or	ASU	2009-13. ASU	2009-13,	amends	existing	revenue	recognition	accounting	pronouncements	that	are	currently	within	the	scope	of	FASB	Accounting	Standards	Codification,	or ASC,	Subtopic	605-25	(previously	included	within	EITF	Issue	No.	00-21,	Revenue	Arrangements	with	Multiple	Deliverables,	or	EITF	00-21).	ASU	2009-13	provides for	two	significant	changes	to	the	existing	multiple	element	revenue	recognition	guidance.	First,	this	guidance	deletes	the	requirement	to	have	objective	and	reliable evidence	of	fair	value	for	undelivered	elements	in	an	arrangement	and	will	result	in	more	deliverables	being	treated	as	separate	units	of	accounting.	The	second	change modifies	the	manner	in	which	the	transaction	consideration	is	allocated	across	the	separately	identified	deliverables.	These	changes	may	result	in	entities	recognizing more	revenue	up-front,	and	entities	will	no	longer	be	able	to	apply	the	residual	method	and	defer	the	fair	value	of	undelivered	elements.	Upon	adoption	of	these	new rules,	each	separate	unit	of	accounting	must	have	a	selling	price,	which	can	be	based	on	management's	estimate	when	there	is	no	other	means	to	determine	the	fair	value of	that	undelivered	item,	and	the	arrangement	consideration	is	allocated	based	on	the	elements'	relative	selling	price.	This	accounting	guidance	is	effective	no	later	than fiscal	years	beginning	on	or	after	June	15,	2010	but	may	be	early	adopted	as	of	the	first	quarter	of	an	entity's	fiscal	year.	Entities	may	elect	to	adopt	this	accounting guidance	either	through	prospective	application	to	all	revenue	arrangements	entered	into	or	materially	modified	after	the	date	of	adoption	or	through	a	retrospective application	to	all	revenue	arrangements	for	all	periods	presented	in	the	financial	statements.	The	Company	is	currently	evaluating	the	impact	of	this	revised	accounting guidance,	which	it	can	adopt	as	early	as	the	first	quarter	of	fiscal	2010.

In	September	2009,	the	FASB	ratified	ASU	No.	2009-14,	Applicability	of	SOP	97-2	to	Certain	Arrangements	that	Include	Software	Elements	(formerly	EITF Issue	No.	09-3,	Certain	Revenue	Arrangements

that	Include	Software	Elements),	which	amends	the	existing	accounting	guidance	for	how	entities	account	for	arrangements	that	include	both	hardware	and	software, which	typically	resulted	in	the	sale	of	hardware	being	accounted	for	under	the	software	revenue	recognition	rules.	This	accounting	guidance	changes	revenue	recognition for	tangible	products	containing	software	elements	and	non-software	elements.	The	tangible	element	of	the	product	is	always	outside	of	the	scope	of	the	software	rules, and	the	software	elements	of	tangible	products	when	the	software	element	and	non-software	elements	function	together	to	deliver	the	product's	essential	functionality	are outside	of	the	scope	of	the	software	rules.	As	a	result,	both	the	hardware	and	qualifying	related	software	elements	are	excluded	from	the	scope	of	the	software	revenue guidance	and	accounted	for	under	the	revised	multiple-element	revenue	recognition	guidance.	ASU	2009-14	is	effective	for	all	fiscal	years	beginning	on	or	after	June	15, 2010	with	early	adoption	permitted.	Entities	must	adopt	ASU	2009-14	and	ASU	2009-13	in	the	same	manner	and	at	the	same	time.	The	Company	is	currently	evaluating the	impact	of	this	revised	accounting	guidance,	which	it	can	adopt	as	early	as	the	first	quarter	of	fiscal	2010.

In	April	2009,	the	FASB	issued	FSP	FAS	115-2	and	FAS	124-2,	The	Meaning	of	Other-Than-Temporary	Impairment	and	Its	Applications	to	Certain	Investments (codified	within	ASC	320	Investments-Debt	and	Equity	Securities)	FSP	115-2/124-2	amends	the	requirements	for	the	recognition	and	measurement	of	other-than- temporary	impairments	for	debt	securities	by	modifying	the	pre-existing	"intent	and	ability"	indicator.	Under	this	FSP	an	other-than-temporary	impairment	is	triggered when	there	is	an	intent	to	sell	the	security,	it	is	more	likely	than	not	that	the	security	will	be	required	to	be	sold	before	recovery,	or	the	security	is	not	expected	to	recover the	entire	amortized	cost	basis	of	the	security.	Additionally,	this	FSP	changes	the	presentation	of	an	other-than-temporary	impairment	in	the	income	statement	for	those impairments	involving	credit	losses.	The	credit	loss	component	will	be	recognized	in	earnings	and	the	remainder	of	the	impairment	will	be	recorded	in	other comprehensive	income.	This	FSP	was	effective	for	the	Company	beginning	with	the	third	quarter	of	fiscal	2009.	The	adoption	of	this	FSP	did	not	have	a	significant impact	on	the	Company's	consolidated	financial	statements.

In	December	2007,	the	FASB	issued	ASC	805,	Business	Combinations	(formerly	SFAS	No.	141	(Revised	2007),	Business	Combinations).	This	Statement	retains the	fundamental	requirements	in	SFAS	141	that	the	acquisition	method	of	accounting	(which	SFAS	141	called	the	purchase	method)	be	used	for	all	business combinations	and	for	an	acquirer	to	be	identified	for	each	business	combination.	ASC	805	requires	an	acquirer	to	recognize	the	assets	acquired,	the	liabilities	assumed, and	any	noncontrolling	interest	in	the	acquiree	at	the	acquisition	date,	measured	at	their	fair	values	as	of	that	date,	with	limited	exceptions	specified	in	the	Statement. ASC	805	replaces	SFAS	141's	cost-allocation	process,	which	required	the	cost	of	an	acquisition	to	be	allocated	to	the	individual	assets	acquired	and	liabilities	assumed based	on	their	estimated	fair	values.	The	Statement	retains	the	guidance	in	SFAS	141	for	identifying	and	recognizing	intangible	assets	separately	from	goodwill.	ASC 805	will	now	require	acquisition	costs	to	be	expensed	as	incurred,	and	changes	in	deferred	tax	asset	valuation	allowances	and	income	tax	uncertainties	after	the acquisition	date	generally	to	affect	income	tax	expense.	ASC	805	applies	prospectively	to	business	combinations	for	which	the	acquisition	date	is	on	or	after	the beginning	of	the	first	annual	reporting	period	beginning	on	or	after	December	15,	2008,	which	is	the	Company's	2010	fiscal	year.	Early	adoption	is	prohibited.	The Company	is	currently	evaluating	the	impact	that	the	adoption	of	ASC	805	will	have	on	its	consolidated	financial	statements.

In	December	2007,	the	FASB	issued	SFAS	No.	160,	Noncontrolling	Interests	in	Consolidated	Financial	Statements—An	amendment	of	ARB	No.	51	(codified within	ASC	810,	Consolidation).	SFAS	160	amends	Accounting	Research	Bulletin	("ARB")	No.	51	to	establish	accounting	and	reporting	standards	for	the noncontrolling	interest	in	a	subsidiary	and	for	the	deconsolidation	of	a	subsidiary.	It	clarifies	that	a	noncontrolling	interest	in	a	subsidiary	is	an	ownership	interest	in	the consolidated	entity	that	should	be	reported	as	equity	in	the	consolidated	financial	statements.	The	amount	of	net	income	attributable	to	the	noncontrolling

interest	will	be	included	in	consolidated	net	income	on	the	face	of	the	income	statement.	This	accounting	guidance	clarifies	that	changes	in	a	parent's	ownership	interest in	a	subsidiary	that	do	not	result	in	deconsolidation	are	equity	transactions	if	the	parent	retains	its	controlling	financial	interest.	In	addition,	this	Statement	requires	that	a parent	recognize	a	gain	or	loss	in	net	income	when	a	subsidiary	is	deconsolidated.	This	accounting	guidance	is	effective	for	fiscal	years,	and	interim	periods	within	those fiscal	years,	beginning	on	or	after	December	15,	2008,	which	is	the	Company's	2010	fiscal	year.	Early	adoption	is	prohibited.	The	Company	does	not	expect	the adoption	of	this	standard	to	have	a	material	impact	on	our	financial	position	or	results	of	operations.

In	April	2008,	the	FASB	issued	FASB	Staff	Position	("FSP")	No.	142-3,	Determination	of	the	Useful	Life	of	Intangible	Assets	(codified	within	ASC	350, Intangibles—Goodwill	and	Other),	which	amends	the	factors	that	must	be	considered	in	developing	renewal	or	extension	assumptions	used	to	determine	the	useful	life over	which	to	amortize	the	cost	of	a	recognized	intangible	asset	under	ASC	350.	The	objective	of	this	FSP	is	to	improve	the	consistency	between	the	useful	life	of	a recognized	intangible	asset	under	ASC	350	and	the	period	of	expected	cash	flows	used	to	measure	the	fair	value	of	the	asset	under	ASC	805.	The	FSP	is	effective	for financial	statements	for	fiscal	years	beginning	after	December	15,	2008,	which	will	be	the	beginning	of	fiscal	2010	for	the	Company.	The	Company	is	currently evaluating	the	impact	that	the	adoption	of	this	FSP	will	have	on	its	consolidated	financial	statements.	Early	adoption	is	prohibited.

In	May	2008,	the	FASB	issued	FSP	No.	APB	14-1,	Accounting	for	Convertible	Debt	Instruments	That	May	Be	Settled	in	Cash	upon	Conversion	(Including Partial	Cash	Settlement)	(codified	within	ASC	470,	Debt).	This	FSP	applies	to	convertible	debt	instruments	that,	by	their	stated	terms,	may	be	settled	in	cash	(or	other assets)	upon	conversion,	including	partial	cash	settlement,	unless	the	embedded	conversion	option	is	required	to	be	separately	accounted	for	as	a	derivative	under	ASC 815,	Derivatives	and	Hedging	(formerly	SFAS	No.	133,	Accounting	for	Derivative	Instruments	and	Heading	Activities).	The	liability	and	equity	components	of convertible	debt	instruments	within	the	scope	of	this	FSP	must	be	separately	accounted	for	in	a	manner	that	will	reflect	the	entity's	nonconvertible	debt	borrowing	rate when	interest	cost	is	recognized	in	subsequent	periods.	The	excess	of	the	principal	amount	of	the	debt	over	the	amount	ultimately	allocated	to	the	liability	component	is required	to	be	amortized	to	interest	expense	using	the	effective	interest	method.	This	FSP	is	effective	for	financial	statements	issued	for	fiscal	years	beginning	after December	15,	2008,	and	interim	periods	within	those	fiscal	years.	As	a	result,	the	Company	will	adopt	this	standard	at	the	beginning	of	fiscal	2010.	This	FSP	must	be applied	retrospectively	to	all	periods	presented.	The	retrospective	adoption	of	this	FSP	will	increase	the	Company's	historical	reported	interest	expense	from December	10,	2007	(issuance	date	of	the	Convertible	Notes—See	Note	5)	forward.

The	adoption	of	FSP	APB	14-1	will	have	no	impact	on	the	Company's	actual	past	or	future	cash	flows.	However,	upon	adoption	in	fiscal	2010,	the	Company	will restate	prior	periods	by	reclassifying	approximately	$470,000	of	its	Convertible	Notes	to	additional	paid-in	capital,	resulting	in	a	debt	discount.	It	is	estimated	that	the Company's	non-cash	interest	expense	will	increase	by	approximately	$65,500	and	$48,100	for	the	years	ended	September	26,	2009	and	September	27,	2008,

respectively,	resulting	in	a	restated	diluted	net	loss	per	share	of	approximately	$(8.64)	and	$(1.69)	for	the	years	ended	September	26,	2009	and	September	27,	2008, respectively.

In	June	2008,	the	FASB	ratified	the	consensus	reached	on	EITF	Issue	No.	07-5,	Determining	Whether	an	Instrument	(or	Embedded	Feature)	Is	Indexed	to	an Entity's	Own	Stock	("EITF	07-5")	(codified	within	ASC	815).	This	accounting	guidance	clarifies	the	determination	of	whether	an	instrument	(or	an	embedded	feature)	is indexed	to	an	entity's	own	stock,	which	would	qualify	as	a	scope	exception	under	ASC	815,	and	it	is	effective	for

financial	statements	issued	for	fiscal	years	beginning	after	December	15,	2008.	Early	adoption	for	an	existing	instrument	is	not	permitted.	The	Company	has	concluded that	upon	the	adoption	of	this	standard,	the	embedded	derivative	option	in	the	Company's	Convertible	Notes	(See	Note	5)	will	continue	to	be	considered	indexed	to	the Company's	own	stock.	As	a	result,	the	adoption	of	this	standard	is	not	expected	to	have	a	material	impact	on	the	Company's	financial	condition	or	results	of	operations.

In	June	2009,	the	FASB	issued	SFAS	No.	168,	The	FASB	Accounting	Standards	Codification	and	the	Hierarchy	of	Generally	Accepted	Accounting	Principles (codified	within	ASC	105,	Generally	Accepted	Accounting	Principles),	which	establishes	the	FASB	Accounting	Standards	Codification	as	the	single	source	of authoritative	U.S.	GAAP.	The	Codification	will	supersede	all	existing	non-SEC	accounting	and	reporting	standards.	As	a	result,	upon	adoption,	all	references	to accounting	literature	in	our	SEC	filings	will	conform	to	the	appropriate	reference	within	the	Codification.	The	adoption	of	this	standard	did	not	have	any	impact	on	the Company's	financial	position	or	results	of	operations.

# 3. Business	Combinations

# Acquisition	of	Third	Wave	Technologies,	Inc.

On	July	24,	2008,	the	Company	completed	its	acquisition	of	Third	Wave	Technologies,	Inc.	("Third	Wave")	pursuant	to	a	definitive	agreement	dated	June	8, 2008.	The	Company	concluded	that	the	acquisition	of	Third	Wave	did	not	represent	a	material	business	combination	and	therefore	no	pro	forma	financial	information has	been	provided	herein.	Subsequent	to	the	acquisition	date,	the	Company's	results	of	operations	include	the	results	of	Third	Wave,	which	is	a	component	of	the Company's	Diagnostics	reporting	segment.

Third	Wave,	located	in	Madison,	Wisconsin,	develops	and	markets	molecular	diagnostic	reagents	for	a	wide	variety	of	DNA	and	RNA	analysis	applications	based on	its	proprietary	Invader	chemistry.	Third	Wave's	current	clinical	diagnostic	offerings	consist	of	products	for	conditions	such	as	Cystic	Fibrosis,	cardiovascular	risk	and other	diseases.	In	March	2009,	Third	Wave	received	approval	from	the	U.S.	Food	and	Drug	Administration	("FDA")	for	two	human	papillomavirus	("HPV")	tests; Cervista	HPV	High	Risk	("HR")	and	Cervista	HPV	16/18.

The	Company	paid	$11.25	per	share	of	Third	Wave,	for	an	aggregate	purchase	price	of	approximately	$591,100	(subject	to	adjustment)	consisting	of approximately	$575,400	in	cash	in	exchange	for	stock	and	warrants;	approximately	668	of	fully	vested	stock	options	granted	to	Third	Wave	employees	in	exchange	for their	vested	Third	Wave	stock	options,	with	an	estimated	fair	value	of	approximately	$8,100;	and	approximately	$7,600	for	acquisition	related	fees	and	expenses.	There are	no	potential	contingent	consideration	arrangements	payable	to	the	former	shareholders	in	connection	with	this	transaction.	Additionally,	the	Company	granted approximately	315	unvested	stock	options	in	exchange	for	unvested	Third	Wave	stock	options,	with	an	estimated	fair	value	of	approximately	$5,100,	which	is	being recognized	as	compensation	expense	over	the	vesting	period.

The	Company	determined	the	fair	value	of	the	options	issued	in	connection	with	the	acquisition	in	accordance	with	EITF	Issue	No.	99-12,	Determination	of	the Measurement	Date	for	the	Market	Price	of	Acquirer	Securities	Issued	in	a	Purchase	Business	Combination").	The	Company	determined	the	measurement	date	to	be July	24,	2008,	the	date	the	transaction	was	completed,	as	the	number	of	shares	to	be	issued	according	to	the	exchange	ratio	was	not	fixed	until	this	date.	The	Company valued	the	securities	based	on	the	average	market	price	for	two	days	before	the	measurement	date	and	the	measurement	date	itself.	The	weighted	average	stock	price	was determined	to	be	$23.54.

The	purchase	price	is	as	follows:

The	fair	value	of	vested	Hologic	common	stock	options	exchanged	for	vested	Third	Wave	options	was	included	in	the	purchase	price	as	such	options	were	fully vested.	The	Company	estimated	the	fair	value	of	these	stock	options	using	the	Binomial	Option	Pricing	Model	assuming	no	expected	dividends	and	the	following weighted-average	assumptions:

The	allocation	of	the	purchase	price	was	based	on	estimates	of	the	fair	value	of	assets	acquired	and	liabilities	assumed	as	of	July	24,	2008.	The	components	and allocation	of	the	purchase	price	consists	of	the	following	approximate	amounts:

The	preliminary	purchase	price	allocation	resulted	in	goodwill	of	approximately	$241,800	as	of	July	24,	2008.	During	fiscal	2009,	the	Company	increased goodwill	approximately	$1,500	primarily	related	to	a	$3,600	decrease	in	the	estimated	net	operating	loss	offset	by	net	increases	of	$1,700	in	the	estimate	of	other	tax attributes.	At	September	26,	2009,	goodwill	related	to	the	Third	Wave	acquisition	is	approximately	$242,900.

Subsequent	to	the	close	of	the	Third	Wave	acquisition	through	September	26,	2009,	stock	options	originally	issued	by	Third	Wave	and	converted	into	options	to purchase	Hologic	common	stock	were	exercised.	The	Company	recorded	the	estimated	tax	benefit	of	$121	and	$368	related	to	the	exercise	of	these	options	as	a reduction	to	goodwill	during	fiscal	2009	and	2008,	respectively.

As	part	of	the	purchase	price	allocation,	the	Company	determined	that	the	only	separately	identifiable	intangible	asset	was	developed	technology.	The	fair	value	of the	developed	technology	intangible	assets	was	determined	through	the	application	of	the	income	approach.	Developed	technology	represented	currently	marketable purchased	products	that	the	Company	continues	to	sell	as	well	as	utilize	to	enhance	and	incorporate	into	the	Company's	existing	products.

As	part	of	the	purchase	price	allocation,	approximately	$195,200	of	the	purchase	price	was	allocated	to	acquired	in-process	research	and	development	projects. The	amount	allocated	to	acquired	in-process	research	and	development	represented	the	estimated	fair	value	of	in-process	projects	based	on	risk-adjusted	cash	flows utilizing	a	discount	rate	of	20%.	These	in-process	projects	had	not	yet	reached	technological	feasibility	and	had	no	future	alternative	uses	as	of	the	date	of	the	merger. The	primary	basis	for	determining	the	technological	feasibility	of	these	projects	was	obtaining	regulatory	approval	to	market	the	underlying	products.	The	fair	value attributable	to	these	in-process	projects	was	expensed	at	the	time	of	the	acquisition.	If	the	projects	are	not	successful	or	completed	in	a	timely	manner,	the	Company	may not	realize	the	financial	benefits	expected	for	these	projects	or	for	the	transaction	as	a	whole.

The	most	significant	acquired	in-process	technology	related	to	Cervista	HPV	HR,	for	which	the	Company	estimated	a	value	of	approximately	$151,200.	At	the time	of,	and	subsequent	to	the	acquisition,	the	Company	sold	HPV	reagents	that	detect	certain	HPV	HR	types	as	Analyte	Specific	Reagents	("ASRs").	In	2006,	Third Wave	began	clinical	trials	for	PMA	submissions	to	the	FDA	for	Cervista	HR	and	submitted	the	PMAs	in	April	2008.	During	March	2009,	the	FDA	approved	the Company's	PMAs	for	both	the	Cervista	HPV	HR	and	Cervista	HPV	16/18	tests.	Since	receiving	FDA	approval,	the	Company	has	begun	to	transition	to	only	selling HPV	In	Vitro	Diagnostics	("IVDs")	and	expects	to	complete	this	transition	by	the	end	of	fiscal	2010.	The	HPV	in-process	research	and	development	related	only	to	the HPV	IVDs,	and	the	HPV	ASRs	were	valued	as	developed	technology.

The	estimated	cost	to	complete	Third	Wave's	remaining	in-process	research	and	development	projects	in	the	aggregate	as	of	September	26,	2009	is	approximately $4,000.

The	net	deferred	income	taxes	primarily	relates	to	the	tax	effect	of	acquired	identifiable	intangible	assets	and	fair	value	adjustments	to	acquired	inventory	and property	and	equipment,	as	such	amounts	are	not	deductible	for	tax	purposes.

# Cytyc	Corporation	Merger

On	October	22,	2007,	the	Company	completed	its	merger	with	Cytyc	Corporation	("Cytyc")	pursuant	to	the	Agreement	and	Plan	of	Merger	("Merger Agreement")	executed	on	May	20,	2007.	Under	the	terms	and	conditions	of	the	Merger	Agreement,	at	the	effective	time	of	the	merger,	Cytyc	became	a	wholly-owned subsidiary	of	the	Company	and	each	share	of	common	stock	of	Cytyc,	issued	and	outstanding	immediately	prior	to	the	closing,	was	cancelled	and	converted	into	the right	to	receive	(i)1.04	shares	of	common	stock	of	the	Company	(as	adjusted	for	the	stock	split	effected	on	April	2,	2008)	and	(ii)$16.50	in	cash.	In	accordance	with Statement	of	Financial	Accounting	Standards	("SFAS")	No.	141,	Business	Combinations,	and	based	on	the	terms	of	the	merger,	the	Company	is	the	accounting	acquirer. This	conclusion	was	based	on	the	facts	that	Hologic	board	members	and	senior	management	control	and	represent	a	majority	of	the	board	of	directors	and	senior management	of	the	combined	company,	as	well	as	the	terms	of	the	merger	consideration,	pursuant	to	which	the	Cytyc	stockholders	received	a	premium	over	the	fair market	value	of	their	shares	on	such	date	and	cash	of	$16.50	per	share	(or	approximately	35%	of	the	merger	consideration).	There	were	no	preexisting	relationships between	the	two	companies.

Cytyc,	headquartered	in	Marlborough,	Massachusetts,	is	a	diversified	diagnostic	and	medical	device	company	that	designs,	develops,	manufactures,	and	markets innovative	and	clinically	effective	diagnostics	and	surgical	products.	Cytyc	products	cover	a	range	of	cancer	and	women's	health	applications,	including	cervical	cancer screening,	prenatal	diagnostics,	treatment	of	excessive	menstrual	bleeding	and	radiation	treatment	of	early-stage	breast	cancer.

Upon	the	close	of	the	merger,	Cytyc	shareholders	received	an	aggregate	of	132,038	shares	of	Hologic	common	stock	and	approximately	$2,094,800	in	cash.	In connection	with	the	close	of	the	merger,	the	Company	entered	into	a	credit	agreement	relating	to	a	senior	secured	credit	facility	(the	"Credit	Agreement")	with	Goldman Sachs	Credit	Partners	L.P.	and	certain	other	lenders,	in	which	the	lenders	committed	to	provide,	in	the	aggregate,	senior	secured	financing	of	up	to	approximately $2,550,000	to	pay	for	the	cash	portion	of	the	merger	consideration,	repayment	of	existing	debt	of	Cytyc,	expenses	relating	to	the	merger	and	working	capital	following the	completion	of	the	merger.	As	of	the	closing	of	the	merger,	the	Company	borrowed	$2,350,000	under	this	Credit	Agreement.	See	Note	5	for	further	discussion.

The	aggregate	purchase	price	of	approximately	$6,156,900	included	$2,094,800	in	cash;	132,038	shares	of	Hologic	common	stock	at	an	estimated	fair	value	of $3,671,500;	16,465	of	fully	vested	stock	options	granted	to	Cytyc	employees	in	exchange	for	their	vested	Cytyc	stock	options,	with	an	estimated	fair	value	of approximately	$241,400;	the	fair	value	of	Cytyc's	outstanding	convertible	notes	assumed	in	the	merger	of	approximately	$125,000;	and	approximately	$24,200	of	direct acquisition	costs.	There	are	no	potential	contingent	consideration	arrangements	payable	to	the	former	Cytyc	shareholders	in	connection	with	this	transaction.

The	Company	measured	the	fair	value	of	the	132,038	shares	of	the	Company	common	stock	issued	as	consideration	in	connection	with	the	merger	under	EITF	99- 12.	The	Company	determined	the	measurement	date	to	be	May	20,	2007,	the	date	the	transaction	was	announced,	as	the	number	of	shares	to	be	issued	according	to	the exchange	ratio	was	fixed	without	subsequent	revision.	The	Company	valued	the	securities	based	on	the	average	market	price	a	few	days	before	and	after	the measurement	date.	The	weighted	average	stock	price	was	determined	to	be	$27.81.

# (i)	Purchase	price

| Cash	portion	of	consideration | $2,094,800 |
| :--- | :--- |
| Fair\tvalue\tof\tsecurities\tissued | 3,671,500 |
| Fair\tvalue\tof\tvested\toptions\texchanged | 241,400 |
| Fair\tvalue\tof\tCytyc's\toutstanding\tconvertible\tnotes | 125,000 |
| Direct\tacquisition\tcosts | 24,200 |
| Total\testimated\tpurchase\tprice | $6,156,900 |

The	fair	value	of	vested	Hologic	common	stock	options	exchanged	for	vested	Cytyc	options	was	included	in	the	purchase	price	as	such	options	were	fully	vested. The	Company	estimated	the	fair	value	of	these	stock	options	using	the	Binomial	Option	Pricing	Model	assuming	no	expected	dividends	and	the	following	weighted- average	assumptions:

# (ii)	Purchase	Price	Allocation

The	allocation	of	the	purchase	price	is	based	upon	estimates	of	the	fair	value	of	assets	acquired	and	liabilities	assumed	as	of	October	22,	2007.	As	a	result	of	the merger,	the	Company	assumed	Cytyc's	obligation	to	the	former	stockholders	of	Adiana,	Inc.	to	make	contingent	earn-out	payments	based	on	the	achievement	of	certain milestones.	The	Company	considered	the	provision	of	EITF	Issue	No.	95-8,	Accounting	for	Contingent	Consideration	Paid	to	the	Shareholders	of	an	Acquired Enterprise	in	a	Purchase	Business	Combination,	and	concluded	that	this	contingent	consideration	represents	additional	purchase	price.	As	a	result,	goodwill	will	be increased	by	the	amount	of	additional	consideration	as	it	is	earned.	The	milestone	to	begin	accrual	of	the	additional	consideration	was	achieved	in	the	fourth	quarter	of fiscal	2009,	and	the	Company	recorded	$1,854	as	additional	goodwill.	See	Note	12	for	additional	discussion.

The	Company	had	formulated	and	undertook	a	plan	to	restructure	certain	of	Cytyc's	activities.	The	Company	recorded	a	liability	of	approximately	$2,800	in accordance	with	EITF	95-3	primarily	related	to	the	termination	of	certain	employees,	minimum	inventory	purchase	commitments	and	other	contractual	obligations	for which	the	related	business	activities	have	been	discontinued.

       The	components	and	allocation	of	the	purchase	price	consist	of	the	following	approximate	amounts:

# (iii)	Valuation	of	Intangible	Assets	and	Goodwill

The	purchase	price	for	the	merger	with	Cytyc	was	allocated	to	assets	acquired	and	liabilities	assumed	based	on	management's	estimate	of	their	fair	values. Management	determined	the	identifiable	intangible	assets,	including	in-process	research	and	development,	based	upon	a	detailed	valuation	that	relies	on	information	and assumptions	further	described	below.	The	excess	purchase	price	over	the	fair	value	of	the	net	tangible	and	intangible	assets	acquired	and	liabilities	assumed	was	allocated to	goodwill.

As	part	of	the	purchase	price	allocation,	the	Company	determined	that	Cytyc's	identifiable	intangible	assets	included	existing	technology,	customer	relationships and	trade	names.	Cytyc's	existing	technology	relates	to	patents,	patent	applications	and	know-how	with	respect	to	the	technologies	embedded	in	its	currently	marketed products.	In	determining	the	allocation	of	the	purchase	price	to	existing	technology,	consideration	was	only	given	to	patent	and	patent	applications	that	relate	to	products that	had	been	approved	by	the	FDA.	Cytyc's	customer	relationship	assets	relate	to	relationships	that	Cytyc's	sales	force	had	developed	with	obstetricians/gynecologists and	gynecological	surgeons,	breast	surgeons,	radiation	oncologists,	clinical	laboratories	and	other	physicians.	The	trade	names	related	to	both	the	Cytyc	name	as	well	as key	product	names.

The	Company	used	the	income	approach	to	value	the	existing	technology	and	marketing	based	intangibles.	This	approach	calculates	fair	value	by	discounting	the after-tax	cash	flows	back	to	a	present	value.	The	baseline	data	for	this	analysis	was	the	cash	flow	estimates	used	to	price	the	transaction.	Cash	flows	were	forecasted	for each	intangible	asset,	then	discounted	based	on	an	appropriate	discount	rate.	The	discount	rates	applied,	which	ranged	between	10.5%	and	13.5%,	were	benchmarked with	reference	to	the	implied	rate	of	return	from	the	transaction	model	as	well	as	Cytyc's	weighted	average	cost	of	capital	based	on	the	capital	asset	pricing	model.

In	estimating	the	useful	life	of	the	acquired	assets,	the	Company	considered	ASC	350-30-35	(formerly	paragraph	11	of	SFAS	No.	142,	Goodwill	and	Other Intangible	Assets),	which	lists	the	pertinent	factors	to	be	considered	when	estimating	the	useful	life	of	an	intangible	asset.	These	factors	included	a	review	of	the expected	use	by	the	combined	company	of	the	assets	acquired,	the	expected	useful	life	of	another	asset	(or	group	of	assets)	related	to	the	acquired	assets,	legal, regulatory	or	other	contractual	provisions	that	may	limit	the	useful	life	of	an	acquired	asset	or	may	enable	the	extension	of	the	useful	life	of	an	acquired	asset	without substantial	cost,	the	effects	of	obsolescence,	demand,	competition	and	other	economic	factors,	and	the	level	of	maintenance	expenditures	required	to	obtain	the	expected future	cash	flows	from	the	asset.	The	Company	is	amortizing	these	intangible	assets	over	their	estimated	useful	lives	using	a	method	that	is	based	on	estimated	future cash	flows	as	the	Company	believes	this	will	approximate	the	pattern	in	which	the	economic	benefits	of	the	assets	will	be	utilized	or	on	a	straight-line	basis	if	it	was deemed	that	the	cash	flows	were	not	reliably	determinable.

As	part	of	the	purchase	price	allocation,	approximately	$370,000	of	the	purchase	price	was	allocated	to	acquired	in-process	research	and	development	projects. The	amount	allocated	to	acquired	in-process	research	and	development	represented	the	estimated	fair	value,	based	on	risk-adjusted	cash	flows,	related	to	in-process projects	that	had	not	yet	reached	technological	feasibility	and	had	no	future	alternative	uses	as	of	the	date	of	the	merger.	The	primary	basis	for	determining	the technological	feasibility	of	these	projects	was	obtaining	regulatory	approval	to	market	the	underlying	products.	The	fair	value	attributable	to	these	in-process	projects	was expensed	at	the	time	of	the	merger.	If	the	projects	are	not	successful	or	completed	in	a	timely	manner,	the	Company	may	not	realize	the	financial	benefits	expected	for these	projects	or	for	the	transaction	as	a	whole.

The	fair	value	assigned	to	acquired	in-process	research	and	development	was	determined	by	estimating	the	costs	to	develop	the	acquired	technology	into commercially	viable	products,	estimating	the	resulting	net	cash	flows	from	the	projects,	and	discounting	the	net	cash	flows	to	their	present	value.	The	revenue projections	used	to	value	the	acquired	in-process	research	and	development	were	based	on	estimates	of	relevant	market	sizes	and	growth	factors,	expected	trends	in technology,	and	the	nature	and	expected	timing	of	new	product	introductions	by	the	Company	and	its	competitors.	The	resulting	net	cash	flows	from	such	projects	were based	on	management's	estimates	of	cost	of	sales,	operating	expenses,	and	income	taxes	from	such	projects.

The	rates	utilized	to	discount	the	net	cash	flows	to	their	present	value	of	12.5%	to	13.5%	were	based	on	estimated	cost	of	capital	calculations	and	the	implied	rate of	return	from	the	transaction	model	plus	a	risk	premium.	Due	to	the	nature	of	the	forecasts	and	the	risks	associated	with	the	developmental	projects,	appropriate	risk- adjusted	discount	rates	were	used	for	the	in-process	research	and	development	projects.	The	discount	rates	are	based	on	the	stage	of	completion	and	uncertainties surrounding	the	successful	development	of	the	purchased	in-process	technology	projects.

The	acquired	in-process	research	and	development	related	to	the	following	research	and	development	projects:	Adiana	Complete	TransCervical	Sterilization ("TCS")	System,	which	the	Company	subsequently	renamed	the	Adiana	Permanent	Contraception	System,	and	expanded	labeling	of	the	NovaSure	System,	Gestiva,	the ThinPrep	Imaging	System,	the	ThinPrep	Processor	and	the	Helica	Thermal	Coagulator	System	("Helica").

The	most	significant	acquired	in-process	technology	related	to	the	Adiana	Permanent	Contraception	System	for	which	the	Company	had	estimated	a	value	of approximately	$220,000.	The	Adiana	Permanent	Contraception	System	includes	an	incisionless	trans-cervical	permanent	sterilization	device	intended	to	be	used	during an	office	or	hospital	based	procedure.	The	system	consists	of	three	different	parts:	a	disposable	applicator,	an	implantable	polymer	matrix	and	a	radio	frequency controller.	The	Company	completed	this	in-process	project	during	the	third	quarter	of	fiscal	2009	and	received	FDA	approval	on	July	6,	2009.

Cytyc's	other	in-process	research	and	development	projects	were	at	different	stages	of	development,	ranging	from	the	early	stages	of	development	to	Phase	IIb prototype	building,	ongoing	clinical	trials	and	submission	to	the	FDA	of	Pre-Market	Approval	("PMA")	and	drug	applications.	FDA	approval	or	clearance	had	not	been granted	for	any	of	the	products	classified	as	in-process	research	and	development,	nor	had	Cytyc	received	any	foreign	approvals	or	clearances	for	any	of	these	products. All	products	classified	as	in-process	research	and	development	require	various	levels	of	in-house	and	external	testing,	clinical	trials	and	approvals	from	the	FDA	before these	future	products	could	be	marketed.	As	of	September	26,	2009,	the	estimated	cash	requirements	in	the	aggregate	to	complete	these	remaining	products	were expected	to	be	approximately	$3,800.	Certain	of	these	projects	that	have	been	discontinued	or	delayed	are	not	included	in	this	estimate	as	their	cost	to	complete	and timing	of	completion	are	unknown	at	this	time.	Certain	of	the	projects	included	in	this	estimated	cash	requirement	have	been	delayed	to	fiscal	2010	and	the	estimated costs	for	these	projects	have	been	increased	accordingly.

The	successful	development	of	new	products	and	product	enhancements	is	subject	to	numerous	risks	and	uncertainties,	both	known	and	unknown,	including, unanticipated	delays,	access	to	capital,	budget	overruns,	technical	problems	and	other	difficulties	that	could	result	in	the	abandonment	or	substantial	change	in	the design,	development	and	commercialization	of	these	new	products	and	enhancements,	including,	for	example	changes	requested	by	the	FDA	in	connection	with	PMA applications	for	products	or	510(k)	notification.	Given	the	uncertainties	inherent	with	product	development	and	introduction,	there	can	be	no	assurance	that	any	of	the Company's	product	development	efforts	will	be	successful	on	a	timely	basis	or	within	budget,	if	at	all.	The	failure	of	the	Company	to	develop	new	products	and	product enhancements	on	a	timely	basis	or	within	budget	could	harm	the	Company's	results	of	operations	and	financial	condition.

The	preliminary	purchase	price	allocation	resulted	in	goodwill	of	approximately	$3,844,100	as	of	October	22,	2007,	the	date	of	the	merger.	During	the	first	quarter of	fiscal	2009,	the	Company	reduced	goodwill	in	the	purchase	price	allocation	by	approximately	$1,900	primarily	due	to	a	decrease	in	the	valuation	allowance	related	to certain	tax	assets	acquired	where	the	Company	has	determined	that	it	is	more	likely	than	not	that	these	assets	will	be	realized.	Subsequent	to	the	one	year	allocation period	from	the	date	of	acquisition,	the	Company	recorded	additional	adjustments	to	goodwill	of	approximately	$1,000	for	revisions	to	certain	tax	assets.	The	Company had	previously	reduced	this	goodwill	in	the	amount	of	approximately	$14,200	from	the	date	of	acquisition	through	September	27,	2008.	The	reduction	was	primarily related	to	a	$16,800	increase	in	the	preliminary	valuation	of	assets	acquired	(primarily	related	to	deferred	tax	assets	acquired),	an	$1,845	increase	in	the	preliminary valuation	of	certain	tangible	assets	and	a	$1,700	increase	in	the	preliminary	valuation	of	certain	intangible	assets	which	were	partially	offset	by	a	$5,900	increase	in	the preliminary	estimate	of	liabilities	assumed	(primarily	related	to	current	tax	liabilities)	and	a	$200	increase	in	the	preliminary	estimate	of	acquisition	costs	and	expenses.

The	factors	contributing	to	the	recognition	of	this	amount	of	goodwill	were	based	upon	several	strategic	and	synergistic	benefits	that	were	expected	to	be	realized from	the	combination.	These	benefits	included	the	expectation	that	the	Company's	complementary	products	and	technologies	would	create	a	leading	women's	healthcare company	with	an	enhanced	presence	in	hospitals,	private	practices	and	healthcare	organizations.	The	Company	also	expected	to	realize	substantial	synergies	through	the use	of	Cytyc's	OB/GYN	and	breast	surgeon	sales	channel	to	cross-sell	the	Company's	existing	and	future	products.	The	merger	provided	the	Company	broader	channel coverage	within	the	United	States	and	expanded	geographic	reach	internationally,	as	well	as	increased	scale	and	scope	for	further	expanding	operations	through	product development	and	complementary	strategic	transactions.

Subsequent	to	the	close	of	the	merger	with	Cytyc,	vested	stock	options	originally	issued	by	Cytyc	and	converted	into	options	to	purchase	Hologic	common	stock were	exercised.	The	Company	recorded	the	estimated	excess	tax	benefit	of	approximately	$49,300	related	to	the	exercise	of	these	options	as	a	reduction	to	goodwill	in fiscal	2008	and	$988	in	fiscal	2009.

# Supplemental	Pro-forma	Information

The	following	unaudited	pro-forma	information	presents	the	consolidated	results	of	operations	of	the	Company	and	Cytyc	as	if	the	transaction	had	occurred	at	the beginning	of	fiscal	2007,	with	pro-forma	adjustments	to	give	effect	to	amortization	of	intangible	assets,	an	increase	in	interest	expense	on	acquisition	financing, subsequent	refinancing	and	certain	other	adjustments	together	with	related	tax	effects:

| (approximate	amounts	in	thousands	except	per	share	data) | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- |
| Revenue | $1,711,405 | $1,472,400 |
| Net\tincome | $658,678 | $62,600 |
| Net\tincome\tper\tcommon\tshare: |  |  |
| Basic | $0.85 | $0.26 |
| Diluted | $0.83 | $0.25 |

The	$370,000	charge	for	acquired	in-process	research	and	development,	the	fair	value	of	the	inventory	step-up	of	$42,300,	stock-based	compensation	of approximately	$60,000,	direct	acquisition	fees	and	expenses	of	approximately	$28,000	and	change	of	control	payments	of	approximately	$18,600	that	were	a	direct result	of	the	transaction	are	excluded	from	the	unaudited	pro	forma	information	above.	The	unaudited	pro	forma	results	are	not	necessarily	indicative	of	the	results	that the	Company	would	have	attained	had	the	merger	with	Cytyc	occurred	at	the	beginning	of	the	periods	presented.	The	$195,200	charge	for	acquired	in-process	research and	development	and	the	fair	value	of	the	inventory	step-up	of	$3,933	that	were	a	direct	result	of	the	acquisition	of	Third	Wave	have	been	excluded	from	the	unaudited pro	forma	information	above.	The	Company	has	not	reflected	any	other	pro	forma	adjustments	related	to	Third	Wave	as	it	was	not	considered	a	material	acquisition.

Prior	to	the	close	of	the	merger,	the	Board	of	Directors	of	Cytyc	approved	a	modification	to	certain	outstanding	equity	awards	for	Cytyc	employees,	which	was consented	to	by	Hologic.	The	modification	provided	for	the	acceleration	of	vesting	upon	the	close	of	the	merger	for	those	awards	that	did	not	provide	for	acceleration upon	a	change	of	control	as	part	of	the	original	terms	of	the	award.	This	modification	was	consented	to	by	the	Company	so	that	the	Company	would	not	incur	stock- based	compensation	charges	that	it	otherwise	would	have	if	the	awards	had	continued	to	vest	under	their	original	terms.

# Acquisition	of	BioLucent,	Inc.

On	September	18,	2007,	the	Company	completed	the	acquisition	of	BioLucent,	Inc.	("BioLucent")	pursuant	to	a	definitive	agreement	dated	June	20,	2007.	The results	of	operations	for	BioLucent	have	been	included	in	the	Company's	consolidated	financial	statements	from	the	date	of	acquisition	as	part	of	its	Breast	Health segment.

BioLucent,	previously	located	in	Aliso	Viejo,	California,	develops,	markets	and	sells	MammoPad	breast	cushions	to	decrease	the	discomfort	associated	with mammography.	Prior	to	the	acquisition,	BioLucent's	primary	research	and	development	efforts	were	directed	at	its	brachytherapy	business	which	was	focused	on	breast cancer	therapy.	Prior	to	the	acquisition,	BioLucent	spun-off	its	brachytherapy	technology	and	business	to	the	holders	of	BioLucent's	outstanding	shares	of	capital	stock. As	a	result,	the	Company	only	acquired	BioLucent's	MammoPad	cushion	business	and	related	assets.	The	Company	invested	$1,000	directly	in	the	spun-off brachytherapy	business	in	exchange	for	shares	of	preferred	stock	issued	by	the	new	business.

The	aggregate	purchase	price	for	BioLucent	was	approximately	$73,200,	consisting	of	approximately	$6,800	in	cash	and	2,314	shares	of	Hologic	common	stock valued	at	approximately	$63,200,	debt	assumed	and	paid	off	of	approximately	$1,600	and	approximately	$1,600	for	acquisition	related	fees	and	expenses.	The	Company determined	the	fair	value	of	the	shares	issued	in	connection	with	the	acquisition	in	accordance	with	EITF	99-12.

The	acquisition	also	provides	for	up	to	two	annual	earn-out	payments	not	to	exceed	$15,000	in	the	aggregate	based	on	BioLucent's	achievement	of	certain revenue	targets.	The	Company	considered	the	provision	of	EITF	95-8,	and	concluded	that	this	contingent	consideration	represents	additional	purchase	price.	As	a	result, goodwill	will	be	increased	by	the	amount	of	the	additional	consideration,	if	any,	as	it	is	earned.	As	of	September	26,	2009,	the	Company	has	not	recorded	any	amounts for	these	potential	earn-outs.	The	allocation	of	the	purchase	price	was	based	upon	estimates	of	the	fair	value	of	assets	acquired	and	liabilities	assumed	as	of September	18,	2007.	The	components	and	allocation	of	the	purchase	price	consisted	of	the	following	approximate	amounts:

| Net	tangible	assets	acquired	as	of	September	18,	2007 | $2,800 |
| :--- | :--- |
| Developed\ttechnology\tand\tknow\thow | \t 12,300 |
| Customer\trelationship | \t 17,000 |
| Trade\tname | 2,800 |
| Deferred\tincome\ttax\tliabilities,\tnet | (9,500) |
| Goodwill | \t 47,800 |
| Final\tpurchase\tprice | $73,200 |

As	part	of	the	purchase	price	allocation,	all	intangible	assets	that	were	a	part	of	the	acquisition	were	identified	and	valued.	It	was	determined	that	only	customer relationship,	trade	name	and	developed	technology	had	separately	identifiable	values.	The	fair	value	of	these	intangible	assets	was	determined	through	the	application	of the	income	approach.	Customer	relationship	represented	a	large	customer	base	that	was	expected	to	purchase	the	disposable	MammoPad	product	on	a	regular	basis. Trade	name	represented	the	BioLucent	product	name	that	the	Company	intended	to	continue	to	use.	Developed	technology	represented	currently	marketable	purchased products	that	the	Company	continues	to	sell	as	well	as	utilize	to	enhance	and	incorporate	into	the	Company's	existing	products.

The	deferred	income	tax	liability	relates	to	the	tax	effect	of	acquired	identifiable	intangible	assets	and	fair	value	adjustments	to	acquired	inventory,	as	such amounts	are	not	deductible	for	tax	purposes,	partially	offset	by	acquired	net	operating	loss	carryforwards	of	approximately	$2,400.

# 4. Sale	of	Gestiva

On	January	16,	2008,	the	Company	entered	into	a	definitive	agreement	pursuant	to	which	it	agreed	to	sell	full	U.S.	and	world-wide	rights	to	Gestiva	to	K-V Pharmaceutical	Company	upon	approval	of	the	pending	Gestiva	new	drug	application	(the	"Gestiva	NDA")	by	the	FDA	for	a	purchase	price	of	$82,000.	The	Company received	$9,500	of	the	purchase	price	in	fiscal	2008,	and	the	balance	is	due	upon	final	approval	of	the	Gestiva	NDA	by	the	FDA	on	or	before	February	19,	2010	and	the production	of	a	quantity	of	Gestiva	suitable	to	enable	the	commercial	launch	of	the	product.	Either	party	has	the	right	to	terminate	the	agreement	if	FDA	approval	is	not obtained	by	February	19,	2010.	The	Company	agreed	to	continue	its	efforts	to	obtain	FDA	approval	of	the	NDA	for	Gestiva	as	part	of	this	arrangement.	All	costs incurred	in	these	efforts	will	be	reimbursed	by	K-V	Pharmaceutical	and	are	being	recorded	as	a	credit	against	research	and	development	expenses.	During	fiscal	2009 and	2008,	these	reimbursed	costs	were	not	material.	The	Company	recorded	the	$9,500	as	a	deferred	gain	within	current	liabilities	in	the	Consolidated	Balance	Sheet. The	Company	expects	that	the	gain	will	be	recognized	upon	the	closing	of	the	transaction	following	final	FDA	approval	of	the	Gestiva	NDA	or	if	the	agreement	is terminated.	The	Company	cannot	assure	that	it	will	be	able	to	obtain	the	requisite	FDA	approval,	that	the	transaction	will	be	completed	or	that	it	will	receive	the	balance of	the	purchase	price.	Moreover,	if	K-V	Pharmaceutical	terminates	the	agreement	as	a	result	of	a	breach	by	the	Company	of	a	material	representation,	warranty,	covenant or	agreement,	the	Company	will	be	required	to	return	the	funds	previously	received	as	well	as	expenses	reimbursed	by	K-V.

The	development	of	Gestiva,	a	drug	that,	if	approved	by	the	FDA,	could	be	used	in	the	prevention	of	preterm	birth	in	pregnant	women	with	a	history	of	at	least one	spontaneous	preterm	birth,	was	originally	begun	by	Adeza	Biomedical	Corporation,	which	was	acquired	by	Cytyc	on	April	2,	2007.	On	October	22,	2007,	the Company	completed	its	merger	with	Cytyc	and	as	a	result	acquired	all	rights	to	Gestiva.	The	Company	allocated	$53,400	to	acquired	in-process	research	and development	as	part	of	the	initial	purchase	price	allocation.

# 5. Borrowings	and	Credit	Arrangements

|  | 2009 | 2008 |
| :--- | :--- | :--- |
| Current\tdebt\tobligations: |  |  |
| Term\tLoan\tA | $28,789 | $34,444 |
| Term\tLoan\tB | 6,785 | 1,723 |
| AEG\tdebt | 1,500 | 2,015 |
| Cytyc\tnotes | — | 298 |
| Other | 1,299 | — |
| Total\tcurrent\tdebt\tobligations | 38,373 | 38,480 |
| Long-term\tdebt\tobligations: |  |  |
| Term\tLoan\tA | 95,929 | 310,000 |
| Term\tLoan\tB | 42,664 | 118,833 |
| AEG\tdebt | — | 8,587 |
| Other | 1,362 | — |
|  | 139,955 | 437,420 |
| Convertible\tnotes | 1,725,000 | 1,725,000 |
| Total\tlong-term\tdebt\tobligations | 1,864,955 | 2,162,420 |
| Total\tdebt\tobligations | $1,903,328 | $2,200,900 |

As	of	September	26,	2009,	the	debt	maturity	schedule	for	the	Company's	term	loans	as	well	as	other	components	of	its	debt	obligations	is	as	follows	for	each fiscal	year:

|  | 2010 | 2011 | 2012 | 2013 | 2014 | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Term\tLoan\tA | $28,789 | $18,227 | $18,227 | $59,475 | $— | $124,718 |
| Term\tLoan\tB | 6,785 | 628 | 628 | 41,408 | — | 49,449 |
| AEG\tdebt | 1,500 | — | — | — | — | 1,500 |
| Other | 1,299 | 1,362 | — | — | — | 2,661 |
| Convertible\tNotes\t(1) | — | — | — | — | 1,725,000 | 1,725,000 |
|  | $38,373 | $20,217 | $18,855 | $100,883 | $1,725,000 | $1,903,328 |

# Credit	Agreement

On	October	22,	2007,	the	Company	and	certain	of	its	domestic	subsidiaries	entered	into	a	senior	secured	credit	agreement	(the	"Credit	Agreement")	with Goldman	Sachs	Credit	Partners	L.P.	and	certain	other	lenders,	(collectively,	the	"Lenders").	Pursuant	to	the	terms	and	conditions	of	the	Credit	Agreement,	the	Lenders committed	to	provide	senior	secured	financing	in	an	aggregate	amount	of	up	to	$2,550,000.	As	of	the	closing	of	the	merger	with	Cytyc,	the	Company	borrowed $2,350,000	under	the	credit	facilities.	The	Company	used	the	proceeds	from	the	credit	facilities	to	pay	the	cash	consideration	of	the	merger	with	Cytyc,	and	to	pay	fees, commissions	and	expenses	incurred	by	the	Company	in	connection	with	the	merger	with	Cytyc	and	the	Credit	Agreement.	In	addition,	the	Company	used	the	proceeds	of the	credit	facilities,	together	with	the	Company's	available	cash,	to	pay	the	cash	due	upon	conversion	of	Cytyc's	2.25%	Senior	Convertible	Notes	due	2024	that	were outstanding	after	the	closing	of	the	merger	with	Cytyc.

The	credit	facilities	under	the	Credit	Agreement	consisted	of:

•	 $1,250,000	senior	secured	capital	markets	term	loan	(the	"Term	Loan	X	facility")	with	a	final	maturity	date	of	April	22,	2009;

•	 $200,000	senior	secured	revolving	credit	facility	(the	"revolving	facility")	with	a	final	maturity	date	of	October	22,	2012.

The	Company	applied	the	net	proceeds	from	its	Convertible	Notes	offering	described	below	to	repay	amounts	outstanding	under	the	Credit	Agreement,	including all	of	the	remaining	amounts	outstanding	under	Term	Loan	X	of	$1,100,000	and	Term	Loan	B-2	of	$250,000.	The	Company	also	repaid	a	pro	rata	portion	of	the Company's	Term	Loan	A	in	the	amount	of	$251,000	and	Term	Loan	B-1	in	the	amount	of	$104,000.	During	fiscal	2008,	the	Company	also	made	voluntary	prepayments of	the	remaining	principal	under	its	Term	Loan	X,	Term	Loan	A	and	Term	Loan	B-1	of	$150,000,	$349,000	and	$146,000,	respectively.	There	were	no	amounts outstanding	under	these	term	notes	as	of	September	27,	2008	or	September	26,	2009.

All	amounts	outstanding	under	the	credit	facilities	accrued	interest,	at	the	Company's	option,	initially,	with	respect	to	all	loans	made	under	the	revolving	facility and	the	Term	Loan	A	facility:	(i)	at	the	Base	Rate	plus	1.25%	per	annum;	or	(ii)	at	the	reserve	adjusted	Eurodollar	Rate	plus	2.25%	per	annum.	With	respect	to	loans made	under	the	Term	Loan	B	facility:	(i)	at	the	Base	Rate	plus	1.5%	per	annum;	or	(ii)	at	the	reserve	adjusted	Eurodollar	Rate	plus	2.50%;	and	with	respect	to	loans made	under	the	Term	Loan	X	facility:	(i)	at	the	Base	Rate	plus	0.75%	per	annum;	or	(ii)	at	the	reserve	adjusted	Eurodollar	Rate	plus	1.75%	per	annum.

Borrowings	outstanding	under	the	credit	agreement	from	initial	drawdown	through	final	repayment	in	June	2008	had	a	weighted	average	interest	rate	of	6.72%. Interest	expense	under	these	credit	facilities	totaled	$40,200	during	fiscal	2008,	which	included	non-cash	interest	expense	of	approximately	$12,300	related	to	the amortization	of	the	capitalized	deferred	financing	costs	related	to	the	Amended	Credit	Agreement.	As	of	September	27,	2008,	all	of	the	deferred	financing	costs	had been	amortized,	with	the	exception	of	$3,464	of	remaining	deferred	financing	costs	allocated	to	the	revolving	credit	facility,	as	all	Term	Loan	borrowings	had	been	fully repaid.

The	Credit	Agreement	contained	affirmative	and	negative	covenants	customarily	applicable	to	senior	secured	credit	facilities,	including	requirements	to	maintain maximum	leverage	and	minimum	interest	coverage	ratios,	as	of	the	last	day	of	each	fiscal	quarter,	as	defined	within	the	Credit	Agreement.	The	Company	had	been	in compliance	with	all	covenants	through	the	term	of	the	agreement.

In	connection	with	the	acquisition	of	Third	Wave,	on	July	17,	2008,	the	Company	entered	into	an	amended	and	restated	credit	agreement	with	certain	of	the Lenders	(the	"Amended	Credit	Agreement").	The	Amended	Credit	Agreement	amended	and	restated	the	Company's	existing	credit	agreement	with	Goldman	Sachs Credit	Partners	L.P.	and	the	lenders	named	therein,	dated	as	of	October	22,	2007.	Pursuant	to	the	terms	and	conditions	of	the	Amended	Credit	Agreement,	the	Lenders committed	to	provide	senior	secured	financing	in	an	aggregate	amount	of	up	to	$800,000.	The	credit	facilities	under	the	Amended	Credit	Agreement	consist	of	$400,000 senior	secured	tranche	A	term	loan	("Term	Loan	A");	$200,000	senior	secured	tranche	B	term	loan	("Term	Loan	B");	$200,000	senior	secured	revolving	credit	facility (the	"revolving	facility").

In	order	to	complete	the	acquisition	of	Third	Wave,	the	Company	borrowed	$540,000	under	the	credit	facilities	on	July	17,	2008,	consisting	of	$400,000	under the	Term	Loan	A	and	$140,000	under	the	Term	Loan	B.	As	of	September	26,	2009	and	September	27,	2008,	the	Company	had	an	aggregate	of	$174,167	and	$465,000, respectively,	of	principal	outstanding	under	this	credit	facility	of	which	$124,718	and	$344,444,	respectively,	was	under	the	Term	Loan	A	and	$49,449	and	$120,556, respectively,	was	under	the	Term	Loan	B,	as	of	September	26,	2009	and	September	27,	2008.	The	Company	has	been	making	voluntary	prepayments	throughout	the term	of	the	loan,	and	subsequent	to	September	26,	2009,	the	Company	paid	down	approximately	$24,600	of	the	outstanding	principal	of	which	$21,000	was	a	voluntary payment.	The	Company	has	reclassified	this	voluntary	payment	of	$21,000	to	current	portion	of	long-term	debt	in	its	Consolidated	Balance	Sheet	at	September	26, 2009.	No	such	voluntary	prepayments	occurred	subsequent	to	September	27,	2008	but	prior	to	the	issuance	of	the	Company's	2008	Form	10-K.	The	Company	had	no amounts	outstanding	under	its	Revolving	Facility,	and	therefore,	had	full	availability	of	the	$200,000	Revolving	Facility	as	of	September	26,	2009.	The	final	maturity dates	for	the	credit	facility	are	September	30,	2012	for	the	Term	Loan	A	and	Revolving	Facility	and	March	31,	2013	for	the	Term	Loan	B.

The	domestic	subsidiaries	of	the	Company	which	are	party	to	the	Amended	Credit	Agreement	(including	Third	Wave,	which	joined	as	a	party	to	the	Amended Credit	Agreement	on	July	24,	2008)	have	guaranteed	the	Company's	obligations	under	the	credit	facilities	and	the	credit	facilities	are	secured	by	first-priority	liens	on, and	first-priority	security	interests	in,	substantially	all	of	the	assets	of	the	Company	and	all	subsidiaries	party	to	the	Amended	Credit	Agreement,	a	first	priority	security interest	in	100%	of	the	capital	stock	issued	by	each	guarantor,	65%	of	the	capital	stock	issued	by	certain	first-tier	foreign	subsidiaries	of	the	Company	and	all intercompany	debt.	The	security	interests	are	evidenced	by	an	Amended	and	Restated	Pledge	and	Security	Agreement	by	and	among	Goldman	Sachs	Credit	Partners L.P.,	as	collateral	agent,	Hologic	and	the	other	parties	therein	named	(the	"Amended	Pledge	and	Security	Agreement").	The	Amended	Pledge	and	Security	Agreement amended	and	restated	Hologic's	existing	Pledge	and	Security	Agreement	by	and	among	Goldman	Sachs	Credit	Partners	L.P.,	as	collateral	agent,	Hologic	and	the	other parties	therein	named,	dated	as	of	October	22,	2007.

The	Company	was	initially	required	to	make	scheduled	principal	payments	under	the	Term	Loan	A	facility	in	increasing	amounts	ranging	from	$10,000	per quarter	commencing	with	the	quarter	ending	September	30,	2008	to	$15,000	per	quarter	commencing	with	the	quarter	ending	September	30,	2010,	and	under	the	Term Loan	B	facility,	in	equal	quarterly	installments	of	$500	beginning	on	the	quarter	ending	September	30,	2008,	with	the	remaining	balance	of	each	term	loan	facility	due	at the	maturity	of	the	applicable	term	loan	facility.	The	Company	is	required	to	make	principal	repayments	first,	pro	rata	among	the	term	loan	facilities,	and	second	to

the	revolving	credit	facility	from	specified	excess	cash	flows	from	operations	and	from	the	net	proceeds	of	specified	types	of	asset	sales,	debt	issuances,	insurance recoveries	and	equity	offerings.	These	minimum	scheduled	principal	payments	are	reduced	on	a	prorata	basis	as	the	Company	makes	voluntary	repayments	against	the outstanding	principal	amounts.	Since	the	Company	has	made	voluntary	payments,	the	required	scheduled	principal	payments	have	been	reduced,	and	the	current	annual amounts	due	are	reflected	in	the	five	year	payment	schedule	above.	Amounts	borrowed	under	the	revolving	credit	facility	are	due	at	maturity.	The	Company	may voluntarily	prepay	any	of	the	credit	facilities	without	premium	or	penalty	(other	than	applicable	breakage	costs	related	to	interest	on	Eurodollar	loans).

The	margin	applicable	to	loans	under	the	revolving	credit	facility	and	the	Term	Loan	A	facility	is	subject	to	specified	changes	based	on	certain	changes	in	the leverage	ratio	as	specified	in	the	Amended	Credit	Agreement.

Interest	accruing	at	the	base	rate	generally	is	payable	by	the	Company	on	a	quarterly	basis.	Interest	accruing	at	the	Eurodollar	Rate	is	payable	on	the	last	day	of selected	interest	periods	(which	shall	be	one,	two,	three	and	six	months	and	in	certain	circumstances,	nine	or	twelve	months)	unless	the	interest	period	exceeds	three months,	in	which	case,	interest	will	be	due	at	the	end	of	every	three	months.

Borrowings	outstanding	under	the	Amended	Credit	Agreement	in	fiscal	2009	and	2008	had	a	weighted	average	interest	rate	of	3.81%	and	5.24%,	respectively. The	interest	rates	on	the	outstanding	Term	Loan	A	and	Term	Loan	B	borrowings	at	September	26,	2009	ranged	from	2.5%	to	4.5%	and	3.5%	to	5.5%,	respectively	and	at September	27,	2008	were	5.25%	and	6.0%,	respectively.	Interest	expense	under	the	Amended	Credit	Agreement	totaled	$23,929	and	$8,148,	respectively,	during	fiscal 2009	and	2008,	which	includes	non-cash	interest	expense	of	$10,757	and	$2,718,	respectively,	related	to	the	amortization	of	the	deferred	financing	costs	related	to	the Amended	Credit	Agreement.	As	of	September	26,	2009,	there	was	$6,441	in	deferred	financing	costs	related	to	the	Term	Loans	classified	as	Other	Assets	in	the Consolidated	Balance	Sheet.

Interest	expense	under	the	Amended	Credit	Agreement	for	the	Revolving	Facility	totaled	$1,889	and	$1,759	in	fiscal	2009	and	fiscal	2008,	respectively, consisting	of	commitment	fees	on	the	unused	portion	of	this	facility	and	non-cash	interest	expense	of	$981	and	$814,	respectively,	related	to	the	amortization	of	deferred financing	costs.	As	of	September	26,	2009,	there	was	$2,974	in	deferred	financing	costs	related	to	the	Revolving	Facility	classified	as	Other	Assets	on	the	Company's Consolidated	Balance	Sheets.	The	Company	pays	a	quarterly	commitment	fee,	at	a	per	annum	rate	of	0.375%,	which	was	reduced	from	0.50%	in	May	2009,	on	the undrawn	commitments	available	under	the	Revolving	Facility,	which	per	annum	rate	is	subject	to	reduction	based	on	a	leverage	ratio	as	specified	in	the	Amended	Credit Agreement.

The	credit	facilities	contain	affirmative	and	negative	covenants	customarily	applicable	to	senior	secured	credit	facilities,	including	covenants	restricting	the	ability of	the	Hologic	loan	parties,	subject	to	negotiated	exceptions,	to:	incur	additional	indebtedness	and	additional	liens	on	their	assets;	engage	in	mergers	or	acquisitions	or dispose	of	assets,	enter	into	sale-leaseback	transactions,	pay	dividends	or	make	other	distributions,	voluntarily	prepay	other	indebtedness,	enter	into	transactions	with affiliated	persons,	make	investments,	and	change	the	nature	of	their	businesses.	The	credit	facilities	require	the	Hologic	loan	parties	to	maintain	certain	maximum leverage	and	minimum	interest	coverage	ratios	as	of	the	last	day	of	each	fiscal	quarter,	as	defined	in	the	Amended	Credit	Agreement.	The	Company	was	in	compliance with	its	financial	covenants	as	of	September	26,	2009.

# Convertible	Notes

On	December	10,	2007,	the	Company	issued	and	sold	$1,725,000	aggregate	original	principal	of	2.00%	Convertible	Senior	Notes	due	2037	(the	"Convertible Notes").	The	net	proceeds	from	the	offering	of	approximately	$1,689,000,	after	deducting	the	underwriters'	discounts	of	$34,500	and	estimated	offering	expenses	of approximately	$1,500,	were	used	to	repay	the	Company's	outstanding	senior	secured	indebtedness	under	its	Credit	Agreement,	including	all	of	the	Company's	Term Loan	X	and	Term	Loan	B-2,	and	a	pro	rata	portion	of	the	Company's	Term	Loan	A	and	Term	Loan	B-1	as	discussed	above.	The	Convertible	Notes	are	the	Company's senior	unsecured	obligations	and	rank	equally	with	all	of	the	Company's	existing	and	future	senior	unsecured	debt	and	prior	to	all	future	subordinated	debt.	The Convertible	Notes	are	effectively	subordinated	to	any	future	secured	indebtedness	to	the	extent	of	the	collateral	securing	such	indebtedness,	and	structurally	subordinated to	all	indebtedness	and	other	liabilities	(including	trade	payables)	of	the	Company's	subsidiaries.

Holders	may	require	the	Company	to	repurchase	the	Convertible	Notes	on	December	13	of	2013,	and	each	of	December	15,	2017,	2022,	2027	and	2032	at	a repurchase	price	equal	to	100%	of	their	accreted	principal	amount,	plus	accrued	and	unpaid	interest.	The	Company	may	redeem	any	of	the	Convertible	Notes	beginning December	18,	2013,	by	giving	holders	at	least	30	days'	notice.	The	Company	may	redeem	the	Convertible	Notes	either	in	whole	or	in	part	at	a	redemption	price	equal	to 100%	of	their	principal	amount,	plus	accrued	and	unpaid	interest,	including	contingent	interest	and	liquidated	damages,	if	any,	to,	but	excluding,	the	redemption	date.

The	Convertible	Notes	bear	interest	at	a	rate	of	2.00%	per	year	on	the	principal	amount,	payable	semi-annually	in	arrears	in	cash	on	June	15	and	December	15	of each	year,	beginning	June	15,	2008	and	ending	on	December	15,	2013.	The	Convertible	Notes	will	accrete	principal	from	December	15,	2013	at	a	rate	that	provides holders	with	an	aggregate	annual	yield	to	maturity	of	2.00%	per	year.	Beginning	with	the	six	month	interest	period	commencing	December	15,	2013,	the	Company	will pay	contingent	interest	during	any	six	month	interest	period	to	the	holders	of	Convertible	Notes	if	the	"trading	price",	as	defined,	of	the	Convertible	Notes	for	each	of	the five	trading	days	ending	on	the	second	trading	day	immediately	preceding	the	first	day	of	the	applicable	six	month	interest	period	equals	or	exceeds	120%	of	the	accreted principal	amount	of	the	Convertible	Notes.	Interest	expense	under	the	Convertible	Notes	totaled	$40,273	and	$27,696,	respectively,	during	fiscal	2009	and	2008,	which included	non-cash	interest	expense	of	$6,004	and	$4,775,	respectively,	related	to	the	amortization	of	deferred	financing	costs.

The	holders	of	the	Convertible	Notes	may	convert	the	notes	into	shares	of	the	Company's	common	stock	at	a	conversion	price	of	approximately	$38.60	per	share, subject	to	adjustment,	prior	to	the	close	of	business	on	September	15,	2037	under	any	of	the	following	circumstances:	(1)	during	any	calendar	quarter	if	the	last	reported sale	price	of	the	Company's	common	stock	exceeds	130%	of	the	conversion	price	for	at	least	20	trading	days	in	the	30	consecutive	trading	days	ending	on	the	last trading	day	of	the	preceding	calendar	quarter;	(2)	during	the

five	business	day	period	after	any	five	consecutive	trading	day	period	in	which	the	trading	price	per	note	for	each	day	of	such	period	was	less	than	98%	of	the	product	of the	last	reported	sale	price	of	the	Company's	common	stock	and	the	conversion	rate	on	each	such	day;	(3)	if	the	notes	have	been	called	for	redemption;	or	(4)	upon	the occurrence	of	specified	corporate	events.	None	of	these	triggering	events	had	occurred	as	of	September	26,	2009.

In	lieu	of	delivery	of	shares	of	the	Company's	common	stock	in	satisfaction	of	the	Company's	obligation	upon	conversion	of	the	Convertible	Notes,	the	Company may	elect	to	deliver	cash	or	a	combination	of	cash	and	shares	of	the	Company's	common	stock.	If	the	Company	elects	to	satisfy	its	conversion	obligation	in	a combination	of	cash	and	shares	of	the	Company's	common	stock,	the	Company	is	required	to	deliver	up	to	a	specified	dollar	amount	of	cash	per	$1,000	original principal	amount	of	Convertible	Notes,	and	will	settle	the	remainder	of	its	conversion	obligation	in	shares	of	its	common	stock.	It	is	the	Company's	current	intent	and policy	to	settle	any	conversion	of	the	Convertible	Notes	as	if	the	Company	had	elected	to	make	the	net	share	settlement	election.

If	an	event	of	default,	as	defined,	relates	to	the	Company's	failure	to	comply	with	the	reporting	obligations	in	the	Convertible	Notes,	if	the	Company	so	elects,	the sole	remedy	of	the	holders	of	the	Convertible	Notes	for	the	first	90	days	following	such	event	of	default	consists	exclusively	of	the	right	to	receive	an	extension	fee	on the	notes	in	an	amount	equal	to	0.25%	of	the	accreted	principal	amount	of	the	Convertible	Notes.

Based	on	the	Company's	evaluation	of	the	Convertible	Notes	in	accordance	with	ASC	815,	Derivatives	and	Hedging,	Subsection	40,	Contracts	in	Entity's	Own Equity	(formerly	EITF	Issue	No.	00-19,	Accounting	for	Derivative	Financial	Instruments	Indexed	to,	and	Potentially	Settled	in,	a	Company's	Own	Stock,	and	EITF Issue	07-5,	Determining	Whether	an	Instrument	(or	Embedded	Feature)	IS	Indexed	to	an	Entity's	Own	Stock),	the	Company	determined	that	the	Convertible	Notes contained	a	single	embedded	derivative,	comprising	both	the	contingent	interest	feature	and	the	filing	failure	penalty	payment	requiring	bifurcation	as	the	features	were not	clearly	and	closely	related	to	the	host	instrument.	The	Company	has	determined	that	the	value	of	this	embedded	derivative	was	nominal	as	of	September	26,	2009 and	September	27,	2008.

As	of	September	26,	2009,	upon	conversion,	including	the	potential	premium	that	could	be	payable	on	a	fundamental	change	(as	defined),	the	Company	would issue	a	maximum	of	approximately	56,000	common	shares	to	the	Convertible	Note	holders.

Please	See	Note	2,	"Summary	of	Significant	Accounting	Policies—Recently	Issued	Accounting	Pronouncements"	for	a	discussion	related	to	the	impact	of	the adoption	of	FSP	APB	14-1,	Accounting	for	Convertible	Debt	Instruments	that	May	Be	Settled	in	Cash	upon	Conversion	(Including	Partial	Cash	Settlement)	(codified within	ASC	470,	Debt)	in	fiscal	2010.

# AEG	Debt

The	Company's	AEG	subsidiary	has	$1,500	and	$10,602,	respectively,	outstanding	at	September	26,	2009	and	September	27,	2008,	under	certain	debt agreements.	During	fiscal	2009,	the	Company	paid	down	certain	of	these	loans,	and	the	remaining	loans	are	currently	due	on	demand.	Outstanding	borrowings	had weighted	average	interest	rates	of	3.3%,	6.26%	and	6.34%	during	the	years	ended	September	26,	2009,	September	27,	2008	and	September	29,	2007,	respectively. Interest	expense	incurred	under	these	debt	agreements	totaled	$347,	$755	and	$1,208	in	fiscal	2009,	2008	and	2007,	respectively.

# Cytyc	Convertible	Notes

In	connection	with	the	merger	with	Cytyc,	the	Company	assumed	the	obligations	under	Cytyc's	2.25%	Senior	Convertible	Notes	due	2024	(the	"Cytyc	Notes"). As	a	result	of	the	merger,	the	Cytyc	Notes	ceased	to	be	convertible	into	shares	of	Cytyc	common	stock	but	rather	into	the	kind	and	amount	of	shares	of	stock	and	cash which	a	holder	of	shares	of	Cytyc	common	stock	would	have	been	entitled	to	receive	upon	the	merger	had	the	Cytyc	Notes	been	converted	into	shares	of	Hologic common	stock	immediately	prior	to	the	merger,	such	that	each	$1,000	principal	face	amount	of	Cytyc	Notes	may	be	converted	at	any	time	and	from	time	to	time	into $556.12	in	cash	and	35.06	shares	of	Hologic	common	stock.	The	Company	offered	to	repurchase	all	of	the	outstanding	Cytyc	Notes	in	exchange	for	the	principal	face amount	of	such	Cytyc	Notes	plus	accrued	but	unpaid	interest	thereon.	Under	the	agreement	between	the	parties,	at	any	time	after	March	20,	2009	the	Cytyc	Notes	could be	redeemed	by	the	Company	at	a	cash	redemption	price	equal	to	the	principal	amount	of	the	Cytyc	Notes,	plus	accrued	and	unpaid	interest.

As	of	the	close	of	the	merger	with	Cytyc,	the	Company	assumed	the	outstanding	principal	amount	under	the	Cytyc	Notes	of	$73,258.	Subsequent	to	the	close	of the	merger	through	September	27,	2008,	Cytyc	Notes	in	the	principal	amount	of	$72,960	were	submitted	for	conversion	upon	which	the	Company	issued	2,557	shares	of its	common	stock	and	made	cash	payments	in	the	amount	of	$40,574.	No	holder	of	a	Cytyc	Note	accepted	the	Company's	offer	to	repurchase	the	Cytyc	Notes.	During fiscal	2009,	the	remaining	Cytyc	Notes	with	an	aggregate	principal	amount	of	$298	were	paid	and	no	amounts	remain	outstanding	at	September	26,	2009.

# 6. Fair	Value	Measurements

Effective	September	28,	2008,	the	Company	adopted	ASC	820,	Fair	Value	Measurements	and	Disclosures	(formerly	SFAS	No.	157,	Fair	Value	Measurement	), for	its	financial	assets	and	financial	liabilities	that	are	re-measured	and	reported	at	fair	value	at	each	reporting	period	and	its	nonfinancial	assets	and	nonfinancial liabilities	that	are	re-measured	and	reported	at	fair	value	at	least	annually.	As	permitted,	the	Company	has	elected	to	defer	implementation	of	ASC	820	as	it	relates	to	its nonfinancial	assets	and	nonfinancial	liabilities	that	are	recognized	and	disclosed	at	fair	value	in	the	financial	statements	on	a	non-recurring	basis	until	September	27, 2009.	The	Company	is	evaluating	the	impact,	if	any,	ASC	820	will	have	on	its	nonfinancial	assets	and	nonfinancial	liabilities.

The	adoption	of	ASC	820	for	financial	assets	and	financial	liabilities	that	are	re-measured	and	reported	at	fair	value	on	a	recurring	basis	did	not	have	an	impact on	the	Company's	financial	results.

ASC	820	establishes	a	three-level	valuation	hierarchy	for	disclosure	of	fair	value	measurements.	Financial	assets	and	financial	liabilities	are	categorized	within the	valuation	hierarchy	based	upon	the	lowest	level	of	input	that	is	significant	to	the	measurement	of	fair	value.	The	three	levels	of	the	hierarchy	are	defined	as	follows:

•	 Level	1—Inputs	to	the	valuation	methodology	are	quoted	market	prices	for	identical	assets	or	liabilities.

•	 Level	2—Inputs	to	the	valuation	methodology	are	other	observable	inputs,	including	quoted	market	prices	for	similar	assets	or	liabilities	and	market- corroborated	inputs.

•	 Level	3—Inputs	to	the	valuation	methodology	are	unobservable	inputs	based	on	management's	best	estimate	of	inputs	market	participants	would	use	in pricing	the	asset	or	liability	at	the	measurement	date,	including	assumptions	about	risk.

As	of	September	26,	2009,	the	Company's	financial	assets	that	are	re-measured	at	fair	value	on	a	recurring	basis	consisted	of	$313	in	money	market	mutual	funds that	are	classified	as	cash	and	cash	equivalents	in	the	Consolidated	Balance	Sheets.	As	there	are	no	withdrawal	restrictions,	they	are	classified	within	Level	1	of	the	fair value	hierarchy	and	are	valued	using	quoted	market	prices	for	identical	assets.

The	Company	holds	certain	minority	cost-method	equity	investments	in	non-publicly	traded	securities	aggregating	$7,585	and	$9,278	at	September	26,	2009	and September	27,	2008,	respectively,	which	are	included	in	other	long-term	assets	on	the	Company's	Consolidated	Balance	Sheets.	These	investments	are	generally	carried at	cost.	As	the	inputs	utilized	for	the	Company's	periodic	impairment	assessment	are	not	based	on	observable	market	data,	these	cost	method	investments	are	classified within	Level	3	of	the	fair	value	hierarchy	on	a	non-recurring	basis.	To	determine	the	fair	value	of	these	investments,	the	Company	uses	all	available	financial information	related	to	the	entities,	including	information	based	on	recent	or	pending	third-party	equity	investments	in	these	entities.	In	certain	instances,	a	cost	method investment's	fair	value	is	not	estimated	as	there	are	no	identified	events	or	changes	in	circumstances	that	may	have	a	significant	adverse	effect	on	the	fair	value	of	the investment	and	to	do	so	would	be	impractical.	During	fiscal	2009,	the	Company	recorded	other-than-temporary	impairment	charges	totaling	$2,243	related	to	two	of	its cost	method	investments	to	adjust	their	carrying	amounts	to	fair	value.

# 7. Pension	and	Other	Employee	Benefits

The	Company	has	certain	defined	benefit	pension	plans	covering	the	employees	of	its	AEG	German	subsidiary	(the	"Pension	Benefits").	As	of	September	29, 2007,	the	Company	adopted	SFAS	No.	158,	Employers'	Accounting	for	Defined	Benefit	Pension	and	Other	Postretirement	Plans,	an	amendment	of	FASB	Statements No.	87,	88,	106	and	132(R)	(codified	primarily	in	ASC	715,	Defined	Benefit	Plans)	using	a	prospective	approach.	The	adoption	of	this	Standard	did	not	impact	the Company's	compliance	with	its	debt	covenants	under	its	credit	agreements,	cash	position	or	results	of	operations.

The	following	table	summarizes	the	incremental	effect	of	adopting	this	Standard	on	individual	line	items	in	the	Consolidated	Balance	Sheet	as	of	September	29, 2007:

|  | Before |  | After |
| :--- | :--- | :--- | :--- |
|  | Adoption\tof | Adjustments | Adoption\tof |
|  | SFAS\tNo.\t158 | (In\tthousands) | SFAS\tNo.\t158 |
| Accumulated\tother\tcomprehensive\tincome | $— | $2,212 | $2,212 |
| Total\tstockholders'\tequity | $803,511 | $2,212 | $805,723 |

As	of	September	26,	2009	and	September	27,	2008,	the	Company's	pension	liability	is	$6,736	and	$7,323,	respectively,	which	is	primarily	recorded	as	a component	of	long-term	liabilities	in	the	Consolidated	Balance	Sheets.	Under	German	law,	there	are	no	rules	governing	investment	or	statutory	supervision	of	the pension	plan.	As	such,	there	is	no	minimum	funding	requirement	imposed	on	employers.	Pension	benefits	are	safeguarded	by	the	Pension	Guaranty	Fund,	a	form	of compulsory	reinsurance	that	guarantees	an	employee	will	receive	vested	pension	benefits	in	the	event	of	insolvency.

The	tables	below	provide	a	reconciliation	of	benefit	obligations,	plan	assets,	funded	status,	and	related	actuarial	assumptions	of	the	Company's	German	Pension Benefits.

| Change	in	Benefit	Obligation | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Benefit\tobligation\tat\tbeginning\tof\tyear | $(7,323) | $(7,627) | $(8,005) |
| Service\tcost | — | — | — |
| Interest\tcost | (469) | (424) | (397) |
| Plan\tparticipants'\tcontributions | — | — | — |
| Actuarial\tgain | 764 | 665 | 1,455 |
| Foreign\texchange | (28) | (229) | (947) |
| Benefits\tpaid | 320 | 292 | 267 |
| Benefit\tobligation\tat\tend\tof\tyear | (6,736) | (7,323) | (7,627) |
| Plan\tassets | — | — | — |
| Funded\tstatus | $(6,736) | $(7,323) | $(7,627) |

The	tables	below	outline	the	components	of	the	net	periodic	benefit	cost	and	related	actuarial	assumptions	of	the	Company's	German	Pension	Benefits	plan.

|  |  | Pension	Benefits |  |
| :--- | :--- | :--- | :--- |
| Components\tof\tNet\tPeriodic\tBenefit\tCost | 2009 | 2008 | 2007 |
| Service\tcost | $— | $— | $— |
| Interest\tcost | 469 | 424 | \t 397 |
| Expected\treturn\ton\tplan\tassets | — | — | \t — |
| Amortization\tof\tprior\tservice\tcost | — | — | \t — |
| Recognized\tnet\tactuarial\tgain | (169) | (93) | (91) |
| Net\tperiodic\tbenefit\tcost | $300 | $331 | $306 |

|  | Pension	Benefits |  |  |
| :--- | :--- | :--- | :--- |
| Weighted-Average\tNet\tPeriodic\tBenefit\tCost\tAssumptions | \t\t\t\t2009 | \t\t\t\t2008 | 2007 |
| Discount\trate | 6.6% | 6.5% | 5.5% |
| Expected\treturn\ton\tplan\tassets | 0% | 0% | 0% |
| Rate\tof\tcompensation\tincrease | 0% | 0% | 0% |

The	projected	benefit	obligation	for	the	German	Pension	Benefits	plans	with	projected	benefit	obligations	in	excess	of	plan	assets	was	$6,736	and	$7,323	at September	26,	2009	and	September	27,	2008,	respectively,	and	the	accumulated	benefit	obligation	for	the	German	Pension	Benefits	plans	was	$6,736	and	$7,323	at September	26,	2009	and	September	27,	2008,	respectively.

The	Company	is	also	obligated	to	pay	long-term	service	award	benefits.	The	projected	benefit	obligation	for	long-term	service	awards	was	$631	and	$601	at September	26,	2009	and	September	27,	2008,	respectively.

The	table	below	reflects	the	total	Pension	Benefits	expected	to	be	paid	as	of	September	26,	2009	from	the	plans.

|  | Pension<br>Benefits |
| :--- | :--- |
| 2010 | $332 |
| 2011 | 354 |
| 2012 | 373 |
| 2013 | 395 |
| 2014 | 420 |
| 2015\tto\t2019 | \t 2,316 |

The	Company	also	maintains	additional	contractual	pension	benefits	for	its	top	German	executive	officers	in	the	form	of	a	defined	contribution	plan. Contributions	in	fiscal	2009,	2008	and	2007	were	$62,	$179	and	$175,	respectively.

The	Company	accounts	for	income	taxes	using	the	liability	method	as	required	by	ASC	740,	Income	Taxes	(formerly	SFAS	No.	109,	Accounting	for	Income Taxes).	Under	this	method,	deferred	income	taxes	are	recognized	for	the	future	tax	consequences	of	differences	between	the	tax	and	financial	accounting	bases	of	assets and	liabilities	at	the	end	of	each	reporting	period.	Deferred	income	taxes	are	based	on	enacted	tax	laws	and	statutory	tax	rates	applicable	to	the	periods	in	which	the differences	are	expected	to	affect	taxable	income.	A	valuation	allowance	is	established	when	necessary	to	reduce	deferred	tax	assets	to	the	amounts	expected	to	be realized.

The	provision	for	income	taxes	consisted	of	the	following:

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Federal: |  |  |  |
| Current | $74,311 | $102,212 | $39,096 |
| Deferred | 4,447 | (10,835) | 6,053 |
|  | 78,758 | 91,377 | 45,149 |
| State: |  |  |  |
| Current | 9,804 | 10,411 | 6,735 |
| Deferred | (6,210) | 265 | (2,101) |
|  | 3,594 | 10,676 | 4,634 |
| Foreign: |  |  |  |
| Current | 5,388 | 4,218 | 6,167 |
| Deferred | (178) | 205 | (2,039) |
|  | 5,210 | 4,423 | 4,128 |
|  | $87,562 | $106,476 | $53,911 |

A	reconciliation	of	income	taxes	at	the	U.S.	federal	statutory	rate	to	the	Company's	effective	tax	rate	is	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Income\ttax\tprovision\tat\tfederal\tstatutory\trate | (35.0)% | (35.0)% | 35.0% |
| Increase\t(decrease)\tin\ttax\tresulting\tfrom: |  |  |  |
| Goodwill\timpairment | 39.1 | — | — |
| Section\t199\tmanufacturing\tdeduction | (0.3) | (2.2) | — |
| State\tincome\ttaxes,\tnet\tof\tfederal\tbenefit | 0.3 | 2.5 | 3.3 |
| In-process\tresearch\tand\tdevelopment | — | 71.2 | — |
| State\tlaw\tchange | (0.1) | 0.8 | — |
| Tax\tcredits | (0.2) | (0.6) | (1.4) |
| Permanent\tdifferences | 0.2 | 1.0 | (0.7) |
| Change\tin\tvaluation\tallowance | 0.1 | — | (0.4) |
| Other | 0.1 | 0\t.4 | 0.5 |
|  | 4.2% | 38.1% | 36.3% |

The	Company's	(loss)	income	before	income	taxes	consisted	of	the	following:

|  |  | Years	ended |  |
| :--- | :--- | :--- | :--- |
|  | September\t26,\n2009 | September\t27,\n2008 | September\t29,\n2007 |
| Domestic | $(2,095,809) | $(275,091) | $137,659 |
| Foreign | 7,134 | (4,050) | 10,830 |
|  | $(2,088,675) | $(279,141) | $148,489 |

Significant	components	of	the	Company's	deferred	tax	assets	and	liabilities	are	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| Deferred\ttax\tassets |  |  |
| Net\toperating\tloss\tcarryforwards | $96,170 | $123,377 |
| Nondeductible\taccruals | 18,533 | 19,038 |
| Nondeductible\treserves | 9,773 | 7,068 |
| Stock-based\tcompensation | 18,926 | 10,373 |
| Other\ttemporary\tdifferences | 5,421 | 6,486 |
| Research\tand\tother\tcredits | 10,550 | 8,698 |
|  | 159,373 | 175,040 |
| Less:\tvaluation\tallowance | (24,424) | (17,710) |
|  | $134,949 | $157,330 |
| Deferred\ttax\tliabilities |  |  |
| Depreciation\tand\tamortization | $(903,017) | $(985,955) |
| Original\tissue\tdiscount | (89,628) | (36,904) |
| Investment\tin\tsubsidiary | (3,109) | (1,649) |
|  | $(995,754) | $(1,024,508) |
|  | $(860,805) | $(867,178) |

The	effective	tax	rate	for	fiscal	2009	was	significantly	impacted	by	the	goodwill	impairment	charge	recorded	in	the	second	quarter	of	fiscal	2009,	substantially	all of	which	is	not	tax	deductible	for	tax	purposes.	In	addition,	the	tax	provision	for	fiscal	2009	includes	a	reversal	for	a	charge	recorded	in	fiscal	2008	for	approximately $2,300	related	to	a	clarification	in	Massachusetts	tax	law	on	apportionment	for	affiliates	of	manufacturing	companies.	The	Company	also	recorded	an	additional	$1,328 as	a	result	of	losing	its	tax	holiday	status	due	to	the	closure	of	its	manufacturing	facility	in	Shanghai,	China.	The	effective	tax	rate	for	fiscal	2008	was	significantly impacted	by	the	acquired	in-process	research	and	development	charge	related	to	the	merger	with	Cytyc	and	Third	Wave	acquisition,	which	is	not	tax	deductible.	The	tax provision	for	fiscal	2008	also	included	a	net	charge	of	$1,498	primarily	related	to	the	Company's	U.S.	based	deferred	tax	assets	and	liabilities	resulting	from	newly enacted	State	legislation.	In	accordance	with	ASC	740,	the	adjustment	for	the	effect	of	the	change	in	state	tax	law	is	included	in	the	tax	provision	for	the	period	that includes	the	enactment	date.

Under	ASC	740,	the	Company	can	only	recognize	a	deferred	tax	asset	for	the	future	benefit	of	its	tax	loss	carryforward	to	the	extent	that	it	is	"more	likely	than not"	that	these	assets	will	be	realized.	The	Company	has	established	a	valuation	allowance	against	a	portion	of	its	remaining	potential	deferred	tax	assets	after consideration	of	all	positive	and	negative	evidence	that	it	is	more	likely	than	not	a	portion	of	its	tax	loss	carryforward	will	not	be	realized.	In	determining	the	realizability of	these	assets,	the	Company	considers	numerous	factors,	including	historical	profitability,	estimated	future	taxable	income	and	the	industry	in	which	it	operates.	The valuation	allowance	increased	$6,714	in	fiscal	2009	from	fiscal	2008	primarily	due	to	the	deferred	taxes	acquired	in	the	Third	Wave	acquisition,	and	the	Company's belief	that	it	is	more	likely	than	not	that	these	state	tax	assets	will	expire	unutilized.

During	fiscal	2009,	the	Company	recorded	a	$1,608	increase	to	capital	in	excess	of	par	and	a	$1,112	decrease	to	goodwill	related	to	the	excess	tax	benefit	of	stock options	exercised	in	fiscal	2009.	During	fiscal	2008,	the	Company	recorded	a	$13,109	increase	to	capital	in	excess	of	par	and	a	$49,630	decrease	to	goodwill	related	to the	excess	tax	benefit	of	stock	options	exercised	in	fiscal	2008.

As	of	September	26,	2009,	the	Company	had	total	net	operating	loss	and	credit	carryforwards	of	$220,391	and	$10,550,	respectively,	that	it	believes	are	more likely	than	not	that	they	will	be	realized.	The	$220,391	excludes	$359,521	of	federal,	state	and	international	net	operating	losses,	which	if	tax	effected	would	be $23,362,	that	the	Company	believes	will	expire	unutilized.	These	net	operating	losses	primarily	relate	to	Third	Wave,	which	was	acquired	in	fiscal	2008.	The	following table	summarizes	the	expiration	periods	of	the	net	operating	loss	and	credit	carryforwards:

|  | 2010-2015 | 2016-2020 | 2021-2025 | 2026-2030 | No	expiration | Total |
| :--- | :--- | :--- | :--- | :--- | :--- | :--- |
| Net\toperating\tloss | $682 | $21,289 | $102,543 | $95,877 | $— | $220,391 |
| R&amp;D\tcredit | $90 | $2,426 | $3,593 | $24 | $— | $6,133 |
| CA\tCredits | $— | $— | $— | $— | $1,273 | $1,273 |
| CT\tcredit | $— | $823 | $424 | $—\t\t\t\t $— | $—\t\t\t\t $— | $1,247 |
| MA\tcredits | $— | $719 | $805 | $—\t\t\t\t $— | $—\t\t\t\t $— | $1,524 |
| WI\tcredits | $— | $— | $221 | $—\t\t\t\t $— | $—\t\t\t\t $— | $221 |
| IN\tcredits | $— | $— | $— | $— | $152 | $152 |

On	September	30,	2007,	the	Company	adopted	Financial	Accounting	Standards	Board	("FASB")	Interpretation	("FIN")	No.	48,	Accounting	for	Uncertainty	in Income	Taxes—an	interpretation	of	FASB	Statement	No.	109	(codified	within	ASC	740-10),	and	recorded	the	cumulative	effect	of	the	change	in	accounting	principle	of $480	as	a	decrease	to	opening	retained	earnings.

The	Company	has	gross	unrecognized	tax	benefits,	including	interest,	of	$29,227	as	of	September	26,	2009	and	$20,154	as	of	September	27,	2008.	At September	26,	2009,	$29,227	represents	the	amount	of	unrecognized	tax	benefits	that,	if	recognized,	would	result	in	a	reduction	of	the	Company's	effective	tax	rate.	The increase	in	unrecognized	tax	benefits	during	fiscal	2009	is	primarily	due	to	the	finalization	of	the	purchase	accounting	of	the	Third	Wave	acquisition.	In	the	next	twelve months	it	is	reasonably	possible	that	the	Company	will	reduce	the	balance	of	its	unrecognized	tax	benefits	by	$2,221	due	to	expiration	of	statute	of	limitations	and settlements	with	taxing	authorities,	which	will	reduce	the	Company's	effective	tax	rate.

The	Company's	unrecognized	income	tax	benefits	are	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| Balance\tat\tbeginning\tof\tfiscal\tyear | $19,447 | $6,200 |
| Tax\tpositions\trelated\tto\tcurrent\tyear: |  |  |
| Additions | 2,532 | 1,173 |
| Reductions | — | — |
| Tax\tpositions\trelated\tto\tprior\tyears: |  |  |
| Additions\trelated\tto\tchange\tin\testimate | 1,391 | 363 |
| Reductions | — | — |
| Settlements | (405) | — |
| Lapses\tin\tstatutes\tof\tlimitations | (492) | (545) |
| Acquired\ttax\tpositions: |  |  |
| Additions\trelated\tto\treserves\tacquired\tfrom\tCytyc |  | 12,256 |
| Additions\trelated\tto\treserves\tacquired\tfrom\tThird\tWave | 5,600 |  |
| Balance\tas\tof\tthe\tend\tof\tthe\tfiscal\tyear | $28,073 | $19,447 |

The	Company's	policy	is	to	recognize	accrued	interest	and	penalties	related	to	unrecognized	tax	benefits	and	income	tax	liabilities,	when	applicable,	as	part	of income	tax	expense	in	its	Consolidated	Statements	of	Operations.	As	of	September	26,	2009	and	September	27,	2008,	accrued	interest	was	$1,154	and	$707, respectively,	net	of	federal	benefit.	As	of	September	26,	2009,	no	penalties	have	been	accrued.

The	Company	and	its	subsidiaries	are	subject	to	United	States	federal	income	tax,	as	well	as	income	tax	of	multiple	state	income	and	foreign	jurisdictions.	The current	tax	returns	are	open	for	audit	through	fiscal	2013.

The	Company	currently	has	a	tax	holiday	in	Costa	Rica	that	is	scheduled	to	expire	in	2015.	This	tax	holiday	did	not	materially	reduce	the	Company's	income	tax provision	for	fiscal	2009	or	2008.

The	Company	intends	to	reinvest,	indefinitely,	approximately	$18,659	of	unremitted	earnings.	It	is	not	practical	to	estimate	the	amount	of	additional	taxes	that might	be	payable	upon	repatriation	of	foreign	earnings.

# 9. Stockholders'	Equity	and	Stock-Based	Compensation

# Common	Shares	Authorization

On	October	22,	2007,	the	Company's	certificate	of	incorporation	was	amended	to	increase	the	number	of	authorized	shares	of	the	Company's	common	stock thereunder	from	180,000	to	600,000.	At	the	Company's	March	11,	2008	Annual	Meeting	of	Stockholders,	an	increase	in	the	number	of	authorized	shares	of	common stock	from	600,000	to	750,000	was	approved.

# Rights	Agreement

On	April	2,	2008,	the	Company	entered	into	an	Amended	and	Restated	Rights	Agreement	(the	"Amended	and	Restated	Rights	Agreement")	between	the Company	and	American	Stock	Transfer	&	Trust	Company	as	Rights	Agent	(the	"Rights	Agent").	The	Amended	and	Restated	Rights	Agreement	amends	and	restates	the Company's	rights	agreement,	dated	as	of	September	17,	2002,	as	amended	on	May	21,	2007,	between	the	Company	and	the	Rights	Agent.

On	April	2,	2008,	the	Company	effected	a	two-for-one	stock	split	in	the	form	of	a	stock	dividend	to	stockholders	as	of	March	21,	2008.	Pursuant	to	the	Amended and	Restated	Rights	Agreement,	the	Company	amended	the	terms	of	the	rights	issued	and	issuable	under	the	agreement	("Rights"),	effective	as	of	April	3,	2008	(after the	stock	dividend),	to	reset	the	Rights	such	that	each	share	of	Common	Stock	is	entitled	to	receive	one	Right,	to	retain	the	purchase	price	of	each	Right	at	$60	per	Right, and	to	provide	that	each	Right	will	entitle	the	holder	to	purchase	one	twenty-five	thousandth	of	a	share	of	Series	A	Junior	Participating	Preferred	Stock	(the	"Series	A Preferred	Stock").	Conforming	changes	have	also	been	made	to	the	Company's	certificate	of	designation	for	the	Series	A	Preferred	Stock	to	provide	that	each	share	of Series	A	Preferred	Stock	carries	25,000	times	the	dividend,	liquidation	and	voting	rights	of	the	Company's	Common	Stock.	Other	modifications	have	also	been	made	in the	Amended	and	Restated	Rights	Agreement	to	update	the	agreement	for	certain	developments,	including	the	recent	amendments	to	the	Company's	by-laws	permitting stockholders	to	hold	and	transfer	shares	of	the	Company's	capital	stock	in	book	entry	form.	The	expiration	date	of	the	Rights	has	remained	unchanged	at	January	1, 2013.

# Equity	Compensation	Plans

The	Company	has	one	share-based	compensation	plan	pursuant	to	which	awards	are	currently	being	made—the	2008	Equity	Incentive	Plan.	The	Company	has four	share-based	compensation	plans	pursuant	to	which	outstanding	awards	have	been	made,	but	from	which	no	further	awards	can	or	will	be	made—i)	the	1995 Combination	Stock	Option	Plan;	ii)	the	1997	Employee	Equity	Incentive	Plan;	iii)	the	1999	Equity	Incentive	Plan;	and	iv)	the	2000	Acquisition	Equity	Incentive	Plan.

At	the	Company's	March	11,	2008	Annual	Meeting	of	Stockholders,	the	Company's	2008	Equity	Incentive	Plan	(the	"2008	Equity	Plan")	was	approved.	In connection	with	this	approval,	the	Company's	1999	Second	Amended	and	Restated	Equity	Incentive	Plan	was	terminated.	The	purpose	of	the	2008	Equity	Plan	is	to provide	stock	options,	stock	issuances	and	other	equity	interests	in	the	Company	to	employees,	officers,	directors,	consultants	and	advisors	of	the	Company	and	its parents	and	subsidiaries,	and	any	other	person	who	is	determined	by	the	Board	of	Directors	to	have	made	(or	is	expected	to	make)	contributions	to	the	Company.	The 2008	Equity	Plan	is	administered	by	the	Board	of	Directors	of	the	Company,	and	a	total	of	20,000	shares	were	reserved	for	issuance	under	this	Plan.	As	of	September	26, 2009,	the	Company	had	15,018	shares	available	for	future	grant	under	this	plan.

The	Company	has	certain	other	plans	that	were	assumed	by	the	Company	in	fiscal	2008	upon	merger	with	Cytyc	and	Third	Wave,	and	no	shares	are	available	for future	grant	under	these	plans.

# Grant-Date	Fair	Value

Effective	with	the	adoption	of	SFAS	123(R)	(codified	in	ASC	718),	the	Company	elected	to	use	a	binomial	lattice	model	to	determine	the	fair	value	of	its	stock options.	The	Company	considers	a	number	of	factors	to	determine	the	fair	value	of	options	including	the	advice	of	an	outside	valuation	advisor	and	the	advisor's	model. Information	pertaining	to	stock	options	granted	during	fiscal	2009,	2008	and	2007	and	related	assumptions	are	noted	in	the	following	table:

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Options\tgranted | 3,007 | 3,224 | 8,330 |
| Weighted-average\texercise\tprice | $14.43 | $32.84 | $25.68 |
| Weighted-average\tgrant\tdate\tfair\tvalue | $5.40 | $10.61 | $13.19 |
| Assumptions: |  |  |  |
| Risk-free\tinterest\trates | 2.0% | 2.7%\tto\t4.0% | 5.0% |
| Expected\tlife\t(in\tyears) | 4.0 | 3.8\tto\t4.6 | 5.0 |
| Expected\tvolatility | 46% | 36%\tto\t38% | 55.0% |
| Dividend\tyield | — | — | — |

The	risk-free	interest	rate	is	based	on	a	treasury	instrument	whose	term	is	consistent	with	the	expected	life	of	the	stock	options.	In	projecting	expected	stock	price volatility,	the	Company	uses	a	combination	of	historical	stock	price	volatility	and	implied	volatility	from	observable	market	prices	of	similar	equity	instruments.	The Company	estimated	the	expected	life	of	stock	options	based	on	historical	experience	using	employee	exercise	and	option	expiration	data.

The	reduction	in	the	assumption	used	for	the	expected	life	of	the	options	from	5	years	to	3.8	years	beginning	in	the	third	quarter	of	fiscal	2008	is	due	to	a	change in	the	contractual	life	of	the	options	granted	beginning	in	the	second	quarter	of	2008	from	10	years	to	7	years.

# Stock-Based	Compensation	Expense

The	Company	uses	the	straight-line	attribution	method	to	recognize	stock-based	compensation	expense	for	stock	options	and	restricted	stock	units	(RSU).	The vesting	term	of	stock	options	is	generally	five	years	with	annual	vesting	of	20%	per	year	on	the	anniversary	of	the	grant	date,	and	RSUs	either	cliff	vest	at	the	end	of three	years	or	vest	over	four	years	with	annual	vesting	at	25%	per	year	on	the	anniversary	of	the	grant	date.	The	amount	of	stock-based	compensation	recognized	during a	period	is	based	on	the	value	of	the	portion	of	the	awards	that	are	ultimately	expected	to	vest.	ASC	718	requires	forfeitures	to	be	estimated	at	the	time	granted	and revised,	if	necessary,	in	subsequent	periods	if	actual	forfeitures	differ	from	those	estimates.	The	term	"forfeitures"	is	distinct	from	"cancellations"	or	"expirations"	and represents	only	the	unvested	portion	of	the	surrendered	stock	option	or	RSU.	Based	on	an	analysis	of	historical	forfeitures,	the	Company	has	determined	a	specific forfeiture	rate	for	certain	employee	groups	and	has	applied	forfeiture	rates	ranging	from	0%	to	6%	as	of	September	26,	2009	depending	on	the	specific	employee	group. This	analysis	is	re-evaluated	quarterly	and	the	forfeiture	rate	will	be	adjusted	as	necessary.	Ultimately,	the	actual	stock-based	compensation	expense	recognized	will	only be	for	those	stock	options	and	RSUs	that	vest.

Stock-based	compensation	expense	from	the	issuance	of	stock	options	and	RSUs	in	fiscal	2009,	2008	and	2007	is	as	follows:

|  | 2009 | 2008 | 2007 |
| :--- | :--- | :--- | :--- |
| Cost\tof\trevenues | $3,522 | $2,293 | $695 |
| Research\tand\tdevelopment | 3,960 | 2,806 | 828 |
| Selling\tand\tmarketing | 5,161 | 3,487 | 602 |
| General\tand\tadministrative | 20,296 | 15,137 | 3,979 |
| Restructuring\tcharge | — | 1,941 | — |
|  | $32,939 | $25,664 | $6,104 |

Included	in	stock-based	compensation	expense	for	fiscal	2008	was	$2,662	as	a	result	of	the	acceleration	of	vesting	for	certain	outstanding	Hologic	stock	options upon	the	close	of	the	merger	with	Cytyc.	The	original	terms	of	these	employee	stock	options	provided	for	acceleration	of	vesting	upon	a	change	of	control.	In	addition, stock-based	compensation	expense	includes	a	total	of	$3,512	related	to	option	modifications	during	fiscal	2008.	During	this	period,	the	Company	recorded	$768	related to	a	modification	of	certain	options	to	extend	the	period	of	time	to	exercise	upon	termination	from	90	days	to	August	31,	2009	upon	termination	of	the	Company's Chairman	of	the	Board	of	Directors	(See	Note	2).	The	Company	also	recorded	$2,264	of	stock-based	compensation	as	a	result	of	a	modification	of	certain	Hologic	stock options	in	connection	with	the	merger	with	Cytyc	Agreement	in	May	2007.	The	modification	provided	for	acceleration	of	vesting	of	the	unvested	options	upon	a termination	as	a	result	of	a	change	of	control,	as	well	as	an	extension	of	the	period	to	exercise	vested	options	from	90	days	to	December	31,	2009,	which	occurred	upon the	close	of	the	merger	with	Cytyc.	Additionally,	stock-based	compensation	expense	included	$480	related	to	certain	former	Third	Wave	executives	who	were terminated.

In	fiscal	2008,	stock-based	compensation	included	$570	as	a	result	of	the	acceleration	of	vesting	for	certain	outstanding	Hologic	restricted	stock	units	upon	the close	of	the	merger	with	Cytyc.	The	original	terms	of	these	restricted	stock	units	provided	for	acceleration	of	vesting	upon	a	change	of	control.	Fiscal	2008	stock-based compensation	also	included	$1,174	related	to	the	acceleration	of	certain	restricted	stock	units	related	to	a	separation	agreement	with	the	Company's	Chairman	of	the Board	of	Directors.

Prior	to	the	close	of	the	merger	the	Board	of	Directors	of	both	Hologic	and	Cytyc	approved	a	modification	to	certain	outstanding	equity	awards	for	Cytyc employees.	The	modification	provided	for	the	acceleration	of	vesting	upon	the	close	of	Merger	for	those	awards	that	did	not	provide	for	acceleration	upon	a	change	of control	as	part	of	the	original	terms	of	the	award.	This	modification	was	made	so	that	the	Company	would	not	incur	stock	based	compensation	charges	that	it	otherwise would	have	if	the	awards	had	continued	to	vest	under	their	original	terms.

# Option	Exchange	Program

On	December	22,	2008,	the	Board	of	Directors	approved,	subject	to	stockholder	approval,	a	stock	option	exchange	program	(the	"Option	Exchange	Program"). The	Option	Exchange	Program	was	approved	at	the	Annual	Meeting	of	Stockholders	held	on	March	4,	2009.	The	Option	Exchange	Program	permitted	eligible employees	to	exchange	their	outstanding	options	issued	on	January	16,	2008	at	an	exercise	price	per	share	of	$33.31	for	a	lesser	number	of	new	options	("New Options"),	with	such	number	of	New	Options	issuable	upon	exchange	calculated	pursuant	to	an	exchange	ratio	based	on	the	original	exercise	price	of	the	surrendered option.	The	exchange	offer	expired	on	April	5,	2009.	Pursuant	to	the	Option	Exchange	Program,	the	New	Options	have	an	exercise	price	of	$14.87,	which	is	110%	of	the last	reported	closing	sales	price	of	the	Company's	common	stock	as	of	the	date	of	the	new	grant,	which	was	April	5,	2009.	The	total	number	of	stock	options	eligible	to be	exchanged	of	784	was	exchanged	for	406	New	Options.

On	the	date	of	exchange,	the	estimated	fair	value	of	the	New	Options	approximated	the	estimated	fair	value	of	the	exchanged	stock	options	calculated immediately	prior	to	the	exchange.	As	such,	there	is	no	incremental	fair	value	of	the	New	Options,	and	the	Company	will	not	record	additional	compensation	expense related	to	the	exchange.	The	Company	will	continue	to	recognize	the	remaining	compensation	expense	related	to	the	exchanged	options	over	the	remaining	vesting period	of	the	original	options.	The	New	Options	become	exercisable	over	a	period	of	four	years,	with	25%	vesting	on	the	first	anniversary	of	the	date	the	New	Options were	granted	and	25%	vesting	on	each	anniversary	thereafter,	so	long	as	the	option	holder	continues	to	be	employed	by	the	Company.

# Share	Based	Payment	Activity

The	following	table	summarizes	all	stock	option	activity	under	the	Company's	stock	option	plans	for	the	year	ended	September	26,	2009:

|  |  | Weighted- | Remaining | Aggregate |
| :--- | :--- | :--- | :--- | :--- |
|  | Number\nof\tShares | Average\nExercise\tPrice | Contractual\tLife\nin\tYear | Intrinsic\nValue |
| Options\toutstanding\tat\tSeptember\t27,\t2008 | 14,493 |  |  |  |
| Granted | 3,007 | $14.43 |  |  |
| Cancelled/forfeited | (1,263) | 19.51 |  |  |
| Net\teffect\tof\toption\tcancellation/regrant | (378) | 33.31 |  |  |
| Exercised | (1,306) | 7.19 |  | $10,525 |
| Options\toutstanding\tat\tSeptember\t26,\t2009 | 14,553 | $16.42 | 4.91 | $47,630 |
| Options\texercisable\tat\tSeptember\t26,\t2009 | 9,531 | $14.60 | 4.23 | $41,310 |
| Options\tvested\tand\texpected\tto\tvest\tat\tSeptember\t26,\t2009\t(1) | 14,068 | $16.36 | 4.87 | $46,946 |

(1) This	represents	the	number	of	vested	stock	options	as	of	September	26,	2009	plus	the	unvested	outstanding	options	at	September	26,	2009	expected	to	vest	in	the future,	adjusted	for	estimated	forfeitures.

During	fiscal	2008	and	2007,	the	total	intrinsic	value	of	options	exercised	(i.e.,	the	difference	between	the	market	price	on	the	date	of	exercise	and	the	price	paid by	the	employee	to	exercise	the	options)	was	$196,960	and	$63,477,	respectively.

A	summary	of	the	Company's	Restricted	Stock	Units	activity	during	the	year	September	26,	2009	is	presented	below:

| Non-vested	Shares | Number	of<br>Shares | Weighted-Average<br>Grant-Date	Fair<br>Value |
| :--- | :--- | :--- |
| Non-vested\tat\tSeptember\t27,\t2008 | 1,461 | $31.23 |
| Granted. | 1,669 | 14.46 |
| Vested | (210) | 23.87 |
| Forfeited | (150) | 23.44 |
| Non-vested\tat\tSeptember\t26,\t2009 | 2,770 | $21.96 |

The	number	of	restricted	stock	units	vested	includes	shares	withheld	on	behalf	of	employees	to	satisfy	minimum	statutory	tax	withholding	requirements.	During fiscal	2009,	2008	and	2007	the	total	fair	value	of	RSUs	vested	was	$5,014,	$2,009	and	$0,	respectively.

# Employee	Stock	Purchase	Plan

At	the	Company's	March	11,	2008	Annual	Meeting	of	Stockholders,	the	Company's	2008	Employee	Stock	Purchase	Plan	(the	"ESPP")	was	approved.	The	plan meets	the	criteria	set	forth	in	ASC	718's	definition	of	a	non-compensatory	plan	and	does	not	give	rise	to	stock-based	compensation	expense.	Employees	who	have completed	three	consecutive	months,	or	two	years,	whether	or	not	consecutive,	of	employment	with	the	Company	or	any	of	its	participating	subsidiaries	are	eligible	to participate	in	the	ESPP.	The	ESPP	plan	period	is	semi-annual	and	allows	participants	to	purchase	the	Company's	common	stock	at	95%	of	the	closing	price	of	the	stock on	the	last	day	of	the	plan	period.	A	total	of	400	shares	may	be	issued	under	the	ESPP.	During	fiscal	2009,	the	Company	issued	121	shares	under	the	ESPP.

The	Company	has	a	qualified	profit	sharing	plan	covering	substantially	all	of	its	employees.	Contributions	to	the	plan	are	at	the	discretion	of	the	Company's Board	of	Directors.	The	Company	made	contributions	of	$5,725,	$5,305	and	$1,572	for	fiscal	years	2009,	2008	and	2007,	respectively.

# 11. Supplemental	Executive	Retirement	Plan

Effective	March	15,	2006,	the	Company	adopted	a	SERP	to	provide	non-qualified	retirement	benefits	to	a	select	group	of	executive	officers,	senior	management and	highly	compensated	employees	of	the	Company.	Eligible	employees	may	elect	to	contribute	up	to	75%	of	their	annual	base	salary	and	100%	of	their	annual	bonus	to the	SERP	and	such	employee	contributions	are	100%	vested.	In	addition,	the	Company	may	elect	to	make	annual	discretionary	contributions	on	behalf	of	participants	in the	SERP.	Each	Company	contribution	is	subject	to	a	three	year	vesting	schedule,	such	that	each	contribution	vests	one	third	annually.	Employee	contributions	are recorded	within	accrued	expenses	in	the	Consolidated	Balance	Sheets.

Upon	enrollment	into	the	SERP,	employees	make	investment	elections	for	both	their	voluntary	contributions	and	discretionary	contributions,	if	any,	made	by	the Company.	Earnings	and	losses	on	contributions	based	on	these	investment	elections	are	recorded	as	a	component	of	compensation	expense	in	the	period	earned.

On	October	30,	2006	and	October	22,	2007,	the	Compensation	Committee	of	the	Board	of	Directors	approved	a	$1,500	discretionary	cash	contribution	to	the SERP	for	each	year.	In	November	2008,	the	Compensation	Committee	of	the	Board	of	Directors	approved	a	$2,825	discretionary	contribution	to	the	SERP	for	fiscal 2008.	Discretionary	contributions	by	the	Company	to	the	SERP	are	held	in	a	Rabbi	Trust.	The	Company	is	recording	compensation	expense	for	the	SERP	discretionary contribution	ratably	over	the	three-year	vesting	period,	which	totaled	$1,815,	$876	and	$442	in	fiscal	years	2009,	2008	and	2007,	respectively.	The	full	amount	of	the discretionary	contribution,	net	of	forfeitures,	is	recorded	within	accrued	expenses	in	the	Consolidated	Balance	Sheets.

The	Company	has	purchased	Company-owned	group	life	insurance	contracts,	in	which	both	voluntary	and	discretionary	Company	SERP	contributions	are invested,	to	fund	payment	of	the	Company's	obligation	to	the	SERP	participants.	The	total	amount	invested	at	September	26,	2009	and	September	27,	2008	was	$11,602 and	$5,575,	respectively,	which	approximated	the	total	of	employee	voluntary	contributions	into	the	plan	and	the	Company's	cash	portion	of	its	discretionary contribution.	The	values	of	these	life	insurance	contracts	are	recorded	with	other	long-term	assets	in	the	Consolidated	Balance	Sheets.	Changes	in	the	cash	surrender value	of	life	insurance	contracts,	which	were	immaterial	in	fiscal	2009,	2008	and	2007,	are	recorded	as	a	component	of	(expense)	other	income,	net	in	the	Consolidated Statement	of	Operations.

# 12. Commitments	and	Contingencies

# Contingent	Earn-Out	Payments

As	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	the	obligation	to	the	former	Adiana	stockholders	to	make	contingent	earn-out	payments	tied	to	the achievement	of	milestones.	The	milestone	payments	include	potential	contingent	payments	of	up	to	$155,000	based	on	worldwide	sales	of	the	Adiana	Permanent Contraception	System	in	the	first	year	following	FDA	approval	and	on	annual	incremental	sales	growth	thereafter	through	December	31,	2012.	FDA	approval	of	the Adiana	Permanent	Contraception	System	occurred	on	July	6,	2009,	and	the	Company	began	accruing	contingent	consideration	in	the	fourth	quarter	of	fiscal	2009	based on	the	defined	percentage	of	worldwide	sales	of	the	product.	The	total	accrued	contingent	consideration,	net	at	September	26,	2009	is	$1,454.	These	amounts	are	being recorded	as	additional	purchase	price,	and	under	the	terms	of	the	agreement	the	first	payment	is	not	due	to	the	Adiana	shareholders	until	October	2010.	The	agreement includes	an	indemnification	provision	that	provides	for	the	reimbursement	of	qualifying	legal	expenses	in	defense	of	the	Adiana	intellectual	property,	and	the	Company has	the	right	to	offset	contingent	consideration	payments	to	the	Adiana	shareholders	with	these	qualifying	legal	costs	(see	Note	15).	Legal	costs	have	not	been	material to	date.

The	Company	satisfied	its	obligation	for	a	second	and	final	earn-out	to	the	former	Suros	Surgical	stockholders	related	to	Suros'	incremental	revenue	growth	for revenues	earned	through	July	31,	2008.	The	Company	accrued	an	amount	of	approximately	$24,500	for	this	second	annual	earn-out	in	the	fourth	quarter	of	2008,	with an	increase	to	goodwill,	of	which	$24,400	was	paid	as	of	September	27,	2008	and	the	remainder	was	paid	as	of	December	27,	2008.	The	Company	had	also	made	a payment	of	approximately	$19,000	to	the	former	Suros	stockholders	in	the	fourth	quarter	of	fiscal	2007	for	the	first	year	earn-out.

# Finance	Lease	Obligations

As	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	the	obligation	to	a	non-cancelable	lease	agreement	for	a	building	with	approximately	164,000	square feet	located	in	Alajuela,	Costa	Rica,	to	be	used	as	a	manufacturing	and	office	facility	to	replace	its	existing	Costa	Rica	facility.	The	Company	moved	into	this	new

location	during	fiscal	2009.	The	Company	was	responsible	for	a	significant	portion	of	the	construction	costs	and	therefore	was	deemed,	for	accounting	purposes,	to	be the	owner	of	the	building	during	the	construction	period,	in	accordance	with	ASC	840,	Leases,	Subsection	40-15-5.	During	the	year	ended	September	27,	2008,	the Company	recorded	an	additional	$4,400	in	fair	market	value	of	the	building,	which	was	completed	in	fiscal	2008.	This	is	in	addition	to	the	$3,000	fair	market	value	of the	land	and	the	$7,700	fair	market	value	related	to	the	building	constructed	that	Cytyc	had	recorded	as	of	October	22,	2007.	The	Company	has	recorded	such	fair market	value	within	property	and	equipment	on	its	Consolidated	Balance	Sheets.	At	September	26,	2009,	the	Company	has	recorded	$1,508	in	accrued	expenses	and $16,329	in	other	long-term	liabilities	related	to	this	obligation	in	the	Consolidated	Balance	Sheet.	The	term	of	the	lease	is	for	a	period	of	approximately	ten	years	with	the option	to	extend	for	two	consecutive	five-year	terms.	The	lease	term	commenced	in	May	2008,	at	which	time	the	Company	began	transferring	the	Company's	Costa Rican	operations	to	this	facility.	It	is	expected	that	this	process	will	be	complete	by	February	2009.

At	the	completion	of	the	construction	period,	the	Company	reviewed	the	lease	for	potential	sale-leaseback	treatment	in	accordance	with	ASC	840,	Subsection	40, Sale-Leaseback	Transactions	(formerly	SFAS	No.	98	("SFAS	98"),	Accounting	for	Leases:	Sale-Leaseback	Transactions	Involving	Real	Estate,	Sales-Type	Leases	of Real	Estate,	Definition	of	the	Lease	Term,	and	Initial	Direct	Costs	of	Direct	Financing	Leases—an	amendment	of	Financial	Accounting	Standards	Board	("FASB") Statements	No.	13,	66,	and	91	and	a	rescission	of	FASB	Statement	No.	26	and	Technical	Bulletin	No.	79-11).	Based	on	its	analysis,	the	Company	determined	that	the lease	did	not	qualify	for	sale-leaseback	treatment.	Therefore,	the	building,	leasehold	improvements	and	associated	liabilities	will	remain	on	the	Company's	financial statements	throughout	the	lease	term,	and	the	building	and	leasehold	improvements	will	be	depreciated	on	a	straight	line	basis	over	their	estimated	useful	lives	of	35 years.

Future	minimum	lease	payments,	including	principal	and	interest,	under	this	lease	were	as	follows	at	September	26,	2009:

|  | Amount |
| :--- | :--- |
| Fiscal\t2010\nFiscal\t2011\nFiscal\t2012\nFiscal\t2013\nFiscal\t2014\nThereafter | $1,508\n1,561\n1,616\n1,672\n1,731\n7,288 |
| Total\tminimum\tpayments | \t 15,376 |
| Less-amount\trepresenting\tinterest | (6,094) |
| Total | $9,282 |

In	addition,	as	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	the	obligation	to	a	non-cancelable	lease	agreement	for	a	building	with	approximately 146,000	square	feet	located	in	Marlborough,	Massachusetts,	to	be	principally	used	as	an	additional	manufacturing	facility.	In	2011,	the	Company	will	have	an	option	to lease	an	additional	30,000	square	feet.	As	part	of	the	lease	agreement,	the	lessor	agreed	to	allow	the	Company	to	make	significant	renovations	to	the	facility	to	prepare the	facility	for	the	Company's	manufacturing	needs.	The	Company	was	responsible	for	a	significant	amount	of	the	construction	costs	and	therefore	was	deemed,	for accounting	purposes,	to	be	the	owner	of	the	building	during	the	construction	period	in	accordance	with	ASC	840-40-15-5.	The	$13,200	fair	market	value	of	the	facility	is included	within	property	and	equipment,	net	on	the	Consolidated	Balance	Sheet.	At	September	26,	2009,	the	Company	has	recorded	$982	in	accrued	expenses	and

$15,314	in	other	long-term	liabilities	related	to	this	obligation	in	the	Consolidated	Balance	Sheet.	The	term	of	the	lease	is	for	a	period	of	approximately	12	years commencing	on	November	14,	2006	with	the	option	to	extend	for	two	consecutive	5-year	terms.	Based	on	its	ASC	840-40	analysis,	the	Company	determined	that	the lease	did	not	qualify	for	sale-leaseback	treatment.	Therefore,	the	improvements	and	associated	liabilities	will	remain	on	the	Company's	financial	statements	throughout the	lease	term,	and	the	leasehold	improvements	will	be	depreciated	on	a	straight	line	basis	over	their	estimated	useful	lives	of	up	to	35	years.

|  | Amount |
| :--- | :--- |
| Fiscal\t2010\nFiscal\t2011\nFiscal\t2012\nFiscal\t2013\nFiscal\t2014\nThereafter | $982\n982\n982\n1,091\n1,091\n4,995 |
| Total\tminimum\tpayments | \t 10,123 |
| Less-amount\trepresenting\tinterest | (3,636) |
| Total | $6,487 |

# Long-Term	Supply	Contract

As	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	certain	non-cancelable	supply	contracts.	For	reasons	of	quality	assurance,	sole	source	availability	or cost	effectiveness,	certain	key	components	and	raw	materials	are	available	only	from	a	sole	supplier	and	Cytyc	had	entered	into	certain	long-term	supply	contracts	to assure	continuity	of	supply.	Some	of	these	contracts	have	minimum	purchase	commitments.

Future	supply	commitments	under	these	long-term	supply	contracts	are	as	follows	as	of	September	26,	2009:

# Concentration	of	Suppliers

The	Company	purchases	certain	components	of	the	Company's	products	from	a	single	or	small	number	of	suppliers.	A	change	in	or	loss	of	these	suppliers	could cause	a	delay	in	filling	customer	orders	and	a	possible	loss	of	sales,	which	could	adversely	affect	results	of	operations;	however,	management	believes	that	suitable replacement	suppliers	could	be	obtained	in	such	an	event.

# Operating	Leases

The	Company	conducts	its	operations	in	leased	facilities	under	operating	lease	agreements	that	expire	through	fiscal	2022.	The	Company	leases	certain	equipment under	operating	lease	agreements	that	expire	through	fiscal	2015.	Substantially	all	of	the	Company's	lease	agreements	require	the	Company	to	maintain	the	facilities during	the	term	of	the	lease	and	to	pay	all	taxes,	insurance,	utilities	and	other	costs	associated	with	those	facilities.	The	Company	makes	customary	representations	and warranties	and	agrees	to	certain	financial	covenants	and	indemnities.	In	the	event	the	Company	defaults	on	a	lease,	typically	the	landlord	may	terminate	the	lease, accelerate	payments	and	collect	liquidated	damages.	As	of	September	26,	2009,	the	Company	was	not	in	default	of	any	covenants	contained	in	the	lease.	Certain	of	the Company's	lease	agreements	provide	for	renewal	options.	Such	renewal	options	are	at	rates	similar	to	the	current	rates	under	the	agreements.

Future	minimum	lease	payments	under	all	of	the	Company's	operating	leases	at	September	26,	2009	are	as	follows:

|  | Amount |
| :--- | :--- |
| Fiscal\t2010 | $17,823 |
| Fiscal\t2011 | 16,400 |
| Fiscal\t2012 | 14,138 |
| Fiscal\t2013 | 11,646 |
| Fiscal\t2014 | 10,780 |
| Thereafter | 45,326 |
| Total\t(not\treduced\tby\tminimum\tsublease\trentals\tof\t$4,300) | $116,113 |

The	Company	subleased	a	portion	of	its	Bedford	and	Santa	Clara	facilities	and	has	received	rental	income	of	$390,	$247	and	$158	for	fiscal	years	2009,	2008	and 2007,	respectively,	which	has	been	recorded	as	an	offset	to	rent	expense.	As	a	result	of	the	merger	with	Cytyc,	the	Company	assumed	an	arrangement	in	which	the Company	is	sub-leasing	all	of	its	Mountain	View	facility	to	a	third	party	for	a	term	of	approximately	five	years,	a	period	of	time	equivalent	to	the	remainder	of	the Company's	lease	of	this	facility.	The	sub-lease	commenced	on	July	1,	2007.	The	Company	received	rental	income	of	$1,062	and	$739	for	fiscal	years	2009	and	2008, respectively,	which	has	been	recorded	as	an	offset	to	rent	expense.

The	Company	subleases	a	portion	of	its	Newark,	DE	facility	and	received	rental	income	of	$1,550,	$1,531	and	$1,551	for	fiscal	years	2009,	2008	and	2007, respectively,	which	has	been	recorded	as	an	offset	to	rent	expense.	The	future	minimum	annual	rental	income	payments	under	these	sublease	agreements	at September	26,	2009	are	as	follows:

|  | Amount |
| :--- | :--- |
| Fiscal\t2010 | $1,550 |
| Fiscal\t2011 | \t 1,550 |
| Fiscal\t2012 | \t 1,543 |
| Fiscal\t2013 | \t 1,531 |
| Fiscal\t2014 | \t 1,531 |
| Thereafter | 893 |
| Total | $8,598 |

The	majority	of	this	sublease	income	is	from	one	tenant,	and	this	income	is	being	accounted	for	on	a	straight-line	basis.

# Workforce	Subject	to	Collective	Bargaining	Agreements

Approximately	200	of	AEG's	German	employees	are	represented	by	a	Works	Council	and	are	subject	to	collective	bargaining	agreements.	None	of	the Company's	other	employees	are	subject	to	a	collective	bargaining	agreement.

# 13. Business	Segments	and	Geographic	Information

The	Company	reports	segment	information	in	accordance	with	ASC	280,	Segment	Reporting	(formerly	SFAS	No.	131,	Disclosures	about	Segments	of	an Enterprise	and	Related	Information).	Operating	segments	are	identified	as	components	of	an	enterprise	about	which	separate,	discrete	financial	information	is	available for	evaluation	by	the	chief	operating	decision	maker,	or	decision-making	group,	in	making	decisions	how	to	allocate	resources	and	assess	performance.	The	Company's chief	operating	decision	maker	is	the	president,	and	the	Company's	reportable	segments	have	been	identified	based	on	the	end	markets	to	which	its	product	are	sold	into. Each	reportable	segment	generates	revenue	from	either	the	sale	of	medical	equipment	and	related	services	and/or	sale	of	disposable	supplies,	primarily	used	in	providing diagnostic	tests	and	surgical	procedures.	As	of	September	26,	2009,	the	Company	has	four	reportable	segments.	Certain	reportable	segments	represent	an	aggregation	of operating	units	within	each	segment.	The	Company	measures	and	evaluates	its	reportable	segments	based	on	segment	revenues	and	operating	income	(loss).

In	fiscal	2008,	as	a	result	of	the	merger	with	Cytyc,	the	Company	reassessed	its	segment	reporting	based	on	the	operating	and	reporting	structure	of	the	combined company.	Beginning	in	fiscal	2008,	the	Company	combined	its	previously	reported	Other	Business	segment	with	its	Breast	Health	(formerly	Mammography/Breast Care)	and	Skeletal	Health	(formerly	Osteoporosis)	segments,	to	better	reflect	how	the	Company	views	its	operations	and	manages	its	business.	The	Company's	Other Business	segment	previously	included	AEG,	mini	C-arm,	extremity	MRI,	conventional	general	radiography	service	and	digital	general	radiography	systems	businesses. The	AEG	business	is	now	part	of	Breast	Health	while	the	remaining	reporting	units	are	part	of	Skeletal	Health.	In	addition,	the	Company	began	reporting	two	new operating	segments:	Diagnostics	and	GYN	Surgical.	Diagnostics	includes	the	ThinPrep	Products	and	the	Rapid	Fetal	Fibronectin	test,	as	well	as	the	Company's proprietary	Invader	chemistry	and	two	Cervista	HPV	tests	obtained	in	the	Third	Wave	acquisition,	which	received	FDA	approval	in	fiscal	2009.	GYN	Surgical	includes the	NovaSure	system	and	the	Adiana	Permanent	Contraception	System,	which	received	FDA	approval	in	fiscal	2009.	The	MammoSite	Radiation	Therapy	system, previously	part	of	Cytyc's	surgical	reporting	segment,	which	is	a	single-use	device	for	the	treatment	of	early-stage	breast	cancer,	is	part	of	the	Company's	Breast	Health segment.	The	Company	received	FDA	approval	for	its	multi-lumen	product,	MammoSite	ML,	in	August	2009.The	Diagnostic	segment	also	includes	the	results	of	Third Wave,	which	was	acquired	in	the	fourth	quarter	of	fiscal	2008.

As	a	result	of	these	changes	in	fiscal	2008,	the	Company	reports	its	business	as	four	segments:	Breast	Health,	Diagnostics,	GYN	Surgical	and	Skeletal	Health. Identifiable	assets	for	the	four	principal	operating	segments	consist	of	inventories,	intangible	assets,	and	property	and	equipment.	The	Company	fully	allocates depreciation	expense	to	its	four	reportable	segments;	however,	certain	depreciable	assets	have	not	been	allocated	to	these	segments.	The	Company	presents	all	other identifiable	assets	as	corporate	assets.	Intersegment	sales	and	transfers	are	not	significant.	Segment	information	for	fiscal	years	2009,	2008	and	2007	is	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Total\trevenues: |  |  |  |
| Breast\tHealth | $728,884 | $860,848 | $638,898 |
| Diagnostics | 547,892 | 485,004 | — |
| GYN\tSurgical | 264,900 | 221,069 | — |
| Skeletal\tHealth | 95,458 | 107,578 | 99,470 |
|  | $1,637,134 | $1,674,499 | $738,368 |
| Operating\t(loss)\tincome: |  |  |  |
| Breast\tHealth | $(122,559) | $211,704 | $146,907 |
| Diagnostics | (809,640) | (172,538) | — |
| GYN\tSurgical | (1,097,685) | (241,450) | — |
| Skeletal\tHealth | 13,210 | 4,742 | 845 |
|  | $(2,016,674) | $(197,542) | $147,752 |
| Depreciation\tand\tamortization: |  |  |  |
| Breast\tHealth | $50,764 | $38,990 | $26,891 |
| Diagnostics | 157,562 | 97,282 | — |
| GYN\tSurgical | 56,341 | 30,702 | — |
| Skeletal\tHealth | 9,257 | 5,976 | 4,271 |
|  | $273,924 | $172,950 | $31,162 |
| Capital\texpenditures: |  |  |  |
| Breast\tHealth | $10,966 | $17,493 | $15,570 |
| Diagnostics | 7,779 | 10,585 | — |
| GYN\tSurgical | 5,856 | 14,119 | — |
| Skeletal\tHealth | 6,756 | 11,339 | 7,270 |
|  | $31,357 | $53,536 | $22,840 |
| Identifiable\tassets: |  |  |  |
| Breast\tHealth | $1,133,714 | $1,435,674 | $718,155 |
| Diagnostics | 1,942,494 | 2,976,854 | — |
| GYN\tSurgical | 1,860,834 | 3,080,365 | — |
| Skeletal\tHealth | 30,937 | 25,151 | 29,531 |
| Corporate | 721,849 | 616,588 | 318,663 |
|  | $5,689,828 | $8,134,632 | $1,066,349 |

As	a	result	of	the	Company's	interim	impairment	analysis	of	goodwill	as	of	December	27,	2008,	the	Company	recorded	a	goodwill	impairment	charge	of $2,340,023	during	the	three	months	ended	March	28,	2009	comprised	of	$1,165,804	for	GYN	Surgical,	$908,349	for	Diagnostics,	and	$265,870	for	Breast	Health.	These charges	are	reflected	in	each	reportable	segments'	operating	loss	for	fiscal	2009.	In	connection	with	its	acquisitions	in	fiscal	2008,	the	Company	recorded	in-process research	and	development	charges	of	$280,400	in	Diagnostics	and	$284,800	in	GYN	Surgical.

Product	export	sales	from	the	United	States	to	unaffiliated	customers,	primarily	in	Europe,	Asia	and	Latin	America,	during	fiscal	2009,	2008	and	2007	totaled approximately	$291,356,	$297,287	and	$158,827,	respectively.

Products	sold	by	the	Company	internationally	are	manufactured	at	domestic	and	international	manufacturing	locations	such	as	Costa	Rica	where	much	of	the GYN	Surgical	products	are	currently	being	manufactured.

Transfers	between	the	Company	and	its	subsidiaries	are	generally	recorded	at	amounts	similar	to	the	prices	paid	by	unaffiliated	foreign	dealers.	All	intercompany profit	is	eliminated	in	consolidation.

Export	product	sales	as	a	percentage	of	total	product	sales	are	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 | September	29,<br>2007 |
| :--- | :--- | :--- | :--- |
| Europe | 12% | 12% | 15% |
| Asia | 4 | 4 | 5 |
| All\tothers | 4 | 4 | 5 |
|  | 20% | 20% | 25% |

The	Company's	property	and	equipment	are	geographically	located	as	follows:

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| United\tStates | $199,881 | $213,482 |
| Costa\tRica | 35,886 | 34,786 |
| Europe | 32,328 | 34,085 |
| All\tother\tcountries | 3,533 | 1,622 |
|  | $271,628 | $283,975 |

# 14. Accrued	Expenses	and	Other	Long-Term	Liabilities

Accrued	expenses	and	other	long-term	liabilities	consist	of	the	following:

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| Accrued\tExpenses |  |  |
| Accrued\tcompensation\tand\temployee\tbenefits | $51,727 | $68,204 |
| Accrued\tcommissions | 14,325 | 15,768 |
| Accrued\tincome\tand\tother\ttaxes | 18,056 | 11,744 |
| Accrued\tinterest | 10,184 | 11,284 |
| Accrued\twarranty,\tcurrent\tportion | 5,602 | 9,080 |
| Other\taccrued\texpenses | 37,390 | 38,666 |
|  | $137,284 | $154,746 |

|  | September	26,<br>2009 | September	27,<br>2008 |
| :--- | :--- | :--- |
| Other\tLong-Term\tLiabilities |  |  |
| Accrued\tlease\tobligation—long-term | $31,650 | $31,164 |
| Reserve\tfor\tincome\ttax\tuncertainties | 14,728 | 12,307 |
| Pension\tliabilities—long-term | 6,404 | 6,995 |
| Other | 5,752 | 6,987 |
|  | $58,534 | $57,453 |

# 15. Litigation	and	Other	Matters

On	May	22,	2009,	Conceptus,	Inc.	filed	suit	in	the	United	States	District	Court	for	the	Northern	District	of	California	seeking	a	declaration	by	the	Court	that Hologic's	planned	importation,	use,	sale	or	offer	to	sell	of	its	forthcoming	Adiana	Permanent	Contraception	System,	would	infringe	five	Conceptus	patents.	On	July	9, 2009,	Conceptus	filed	an	amended	complaint	alleging	infringement	of	the	same	five	patents	by	the	Adiana	Permanent	Contraception	System.	The	complaint	seeks preliminary	and	permanent	injunctive	relief	and	unspecified	monetary	damages.	In	addition	to	the	amended	complaint,	Conceptus	also	filed	a	motion	for	preliminary injunction	seeking	to	preliminarily	enjoin	sales	of	the	Adiana	System	based	on	alleged	infringement	of	certain	claims	of	three	of	the	five	patents.	A	hearing	on Conceptus'	preliminary	injunction	motion	was	held	on	November	4,	2009,	and	on	November	6,	2009,	the	judge	issues	an	order	denying	the	motion.	A	hearing	on	claim construction	is	scheduled	for	March	10,	2010.	A	trial	date	has	not	been	set.	Based	on	the	early	stage	of	this	litigation,	the	Company	is	unable	to	reasonably	estimate	the ultimate	outcome	of	this	case.

On	August	6,	2009,	Ethicon	Endo-Surgery,	Inc.,	a	Johnson	&	Johnson	operating	company,	filed	a	complaint	against	the	Company	and	its	wholly-owned subsidiary	Suros	in	the	United	States	District	Court	for	the	District	of	Delaware.	The	complaint	alleges	that	certain	of	the	Eviva	biopsy	systems	manufactured	and	sold by	Suros	infringe	four	Ethicon	patents.	The	complaint	seeks	to	enjoin	Hologic	and	Suros	from	infringing	the	patents	as	well	as	recovery	of	damages	and	costs	resulting from	the	alleged	infringement.	Based	on	the	early	stage	of	this	litigation,	the	Company	is	unable	to	reasonably	estimate	the	ultimate	outcome	of	this	case.

As	of	September	26,	2009,	the	Company	does	not	believe	a	loss	is	probable	in	any	of	the	matters	disclosed	above.	The	Company	is	a	party	to	various	other	legal proceedings	and	claims	arising	out	of	the	ordinary	course	of	its	business.	The	Company	believes	that	except	for	those	described	above	there	are	no	other	proceedings	or claims	pending	against	it	the	ultimate	resolution	of	which	would	have	a	material	adverse	effect	on	its	financial	condition	or	results	of	operations.

# 16. Quarterly	Statement	of	Operations	Information	(Unaudited)

The	following	table	presents	a	summary	of	quarterly	results	of	operations	for	fiscal	2009	and	2008:

|  | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter |
| :--- | :--- | :--- | :--- | :--- |
| Total\trevenue | $429,233 | $402,014 | $403,120 | $402,767 |
| Gross\tprofit\t(1) | 229,959 | 209,574 | 211,145 | 206,808 |
| Net\tincome\t(loss)\t(2) | 47,993 | (2,300,170) | 41,000 | 34,940 |
| Diluted\tnet\tincome\t(loss)\tper\tcommon\tshare | $0.19 | $(8.97) | $0.16 | $0.13 |

|  | First<br>Quarter | Second<br>Quarter | Third<br>Quarter | Fourth<br>Quarter |
| :--- | :--- | :--- | :--- | :--- |
| Total\trevenue\t(3) | $371,445 | $431,048 | $429,492 | $442,513 |
| Gross\tprofit | 167,835 | 239,638 | 244,763 | 240,281 |
| Net\tincome\t(loss)\t(2) | (358,608) | 55,986 | 61,379 | (144,374) |
| Diluted\tnet\tincome(loss)\tper\tcommon\tshare | $(1.65) | $0.22 | $0.24 | $(0.56) |

(1) During	the	third	quarter	of	fiscal	2009,	the	Company	determined	that	certain	amounts	previously	classified	as	a	component	of	selling	and	marketing	expenses should	be	reclassified	to	cost	of	product	sales.	As	a	result,	gross	profit	was	reduced	by	$704	in	the	first	quarter	and	$689	in	the	second	quarter	of	fiscal	2009.

(2) See	Note	2	for	further	discussion	of	goodwill	impairment	charges	recorded	in	the	second	quarter	of	fiscal	2009,	and	see	Note	3	for	further	discussion	of	in-process research	and	development	expenses	incurred	in	the	first	and	fourth	quarters	of	fiscal	2008	related	to	the	merger	with	Cytyc	and	Third	Wave	acquisition.

(3) The	sum	of	the	quarterly	total	revenue	does	not	agree	with	the	Consolidated	Statements	of	Operations	due	to	rounding.

# 17. Subsequent	Event

On	November	5,	2009,	the	Company's	Board	of	Directors	appointed	Robert	Cascella,	its	President	and	Chief	Operating	Officer,	to	the	position	of	President	and Chief	Executive	Officer.	John	Cumming,	our	former	Chairman	and	Chief	Executive	Officer,	will	remain	with	the	Company	as	Chairman	and	an	executive	officer.	In connection	with	this	change	in	responsibilities,	the	Company	made	a	payment	of	$1,750	to	the	Chairman	and	provided	that	he	remains	employed	by	the	Company	on	the first	and	second	anniversary	of	the	effective	date	of	the	change,	he	will	receive	additional	payments	of	$1,725	for	each	period.

# Exhibit	Index

* Management	compensation	plan	or	arrangement



Question: what is the estimated fair value of hologic common stock?
Calculation:    total_shares = 132038
 fair_value_of_shares = 3671500
answer = fair_value_of_shares / total_shares 
Answer: 27.8