================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                              ---------------------
                                    FORM 10-K
               [ X ] Annual Report Pursuant To Section 13 Or 15(d)
                     Of The Securities Exchange Act Of 1934
                     For the Fiscal Year Ended June 30, 2000

                                       OR
              [ ] Transition Report Pursuant To Section 13 Or 15(d)
                     Of The Securities Exchange Act Of 1934
            For the transition period from _________ to ____________

                          Commission File Number 1-4389

                              ---------------------
                                 PE Corporation
             (Exact name of registrant as specified in its charter)
     DELAWARE                                                06-1534213
     (State or other jurisdiction of                         (I.R.S. Employer
     incorporation or organization)                          Identification No.)

     761 Main Avenue, Norwalk, Connecticut                   06859-0001
     (Address of principal executive offices)                (Zip Code)

     Registrant's telephone number, including area code:     203-762-1000

                              ---------------------

Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
                                                              Name of each exchange
               Title of class                                  on which registered
----------------------------------------------     ---------------------------------------------
     <S>                                                     <C>
     PE Corporation - PE Biosystems Group                     New York Stock Exchange
     Common Stock (par value $0.01 per share)                    Pacific Exchange

     PE Corporation - Celera Genomics Group                   New York Stock Exchange
     Common Stock (par value $0.01 per share)                    Pacific Exchange

</TABLE>

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

                                 Title of class
                                ----------------

                                Class G Warrants

         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.

                X  Yes                            _____ 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]

         As of September 18, 2000, 209,420,304 shares of PE Corporation -- PE
Biosystems Group Common Stock were outstanding, and the aggregate market value
of such shares (based upon the average of the high and low price) held by
non-affiliates was approximately $22,068,840,000. As of September 18, 2000,
60,236,861 shares of PE Corporation -- Celera Genomics Group Common Stock were
outstanding, and the aggregate market value of such shares (based upon the
average of the high and low price) held by non-affiliates was approximately
$5,609,634,000.

--------------------------------------------------------------------------------
                       DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Stockholders for Fiscal Year ended June 30, 2000 - Parts I, II,
and IV. Proxy Statement for Annual Meeting of Stockholders dated September 8,
2000 - Part III.
================================================================================

PART I Item 1. BUSINESS General Development of Business PE Corporation (hereinafter referred to as the "Company") was incorporated in 1998 under the laws of the State of Delaware. The Company conducts its business through two groups: the PE Biosystems Group (which, since July 2000 has conducted business under the name "Applied Biosystems") and the Celera Genomics Group. The Company maintains a corporate staff to provide accounting, tax, treasury, legal, and other internal services. The PE Biosystems Group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The markets for the PE Biosystems Group's products span the spectrum of the life sciences industry, including: basic human disease research; genetic analysis; pharmaceutical drug discovery, development, and manufacturing; human identification; agriculture; and food and environmental testing. Universities, government agencies, and other non-profit organizations engaged in research activities also use the PE Biosystems Group's products. The Celera Genomics Group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics Group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics Group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics Group has recently expanded its business into the emerging fields of functional genomics, particularly proteomics and personalized health/medicine. The Company is the successor to PE Corporation (NY), formerly "The Perkin-Elmer Corporation," which became a wholly-owned subsidiary of the Company as a result of a recapitalization of PE Corporation (NY) completed in May 1999. As part of the recapitalization, the Company established two classes of common stock that track the businesses of each of the PE Biosystems Group and the Celera Genomics Group (i.e., PE Corporation -- PE Biosystems Group Common Stock and PE Corporation -- Celera Genomics Group Common Stock). In May 1999, the Company sold its Analytical Instruments business to PerkinElmer, Inc. (formerly EG&G, Inc.) and as part of that transaction also sold the "Perkin-Elmer" name. The Company is seeking approval from its stockholders at its 2000 annual meeting to change its corporate name to "Applera Corporation," which the Company believes will better reference its consituent parts, and to formally change the name of the PE Biosystems Group to the "Applied Biosystems Group," which the Company believes is more closely associated with the business of the PE Biosystems Group than its current name. In June 2000, the Celera Genomics Group completed the acquisition of Paracel, Inc. ("Paracel"). Paracel is a leading producer of advanced genomic and text analysis supercomputing technology. -2-

Financial Information About Industry Segments A summary of net revenues from external customers, operating income (loss), and total assets attributable to each of the Company's industry segments for the fiscal years ended June 30, 1998, 1999, and 2000 is incorporated herein by reference to Note 6 on page 35, Note 6 on page 65, and Note 6 on pages 102-103 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Narrative Description of Business PE Biosystems Group (d/b/a Applied Biosystems) Overview. The PE Biosystems Group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. Its products are used in various applications including the synthesis, amplification, purification, isolation, analysis, and sequencing of nucleic acids, proteins, and other molecules of biological interest. The PE Biosystems Group currently consists of four business units and a shared service organization consisting of human resources, finance, sales, marketing, communications, manufacturing, legal, quality control, and advanced research. The business units that make up the PE Biosystems Group are: Molecular Biology (formerly Applied Biosystems), PerSeptive Biosystems, Informatics (formerly PE Informatics), and Tropix. Each business unit is responsible for the development and marketing of products within its particular area of business. The business units serve substantially the same customer base but have little overlap in their product offerings. As a result, the PE Biosystems Group is able to enhance the operating efficiency of these units through cross-selling and reduced administrative costs. Scientific Background. All living organisms contain four basic biomolecules: nucleic acids, which include DNA and RNA; proteins; carbohydrates; and lipids. Biomolecules are typically much larger and more complex than common molecules. These structural differences make the analysis of biomolecules significantly more complex than the analysis of smaller compounds. Although all of these biomolecules are critical for a cell to function normally, historically, key advances in therapeutics have come from an understanding of proteins or DNA. DNA molecules provide instructions that ultimately control the synthesis of proteins within a cell. DNA molecules consist of long chains of chemical subunits, called nucleotides. There are four nucleotides -- adenine, cytosine, guanine, and thymine -- often abbreviated with their first letters A, C, G, and T. DNA molecules consist of two long chains of nucleotides bound together to form a double helix. Genes are individual segments of these DNA molecules that carry the specific information necessary to construct particular proteins. Genes may contain from several dozen to tens of thousands of nucleotides. The entire collection of DNA in an organism, called the genome, may contain a wide range of nucleotides, including as few as 4 million nucleotides in the case of simple bacteria and 3.1 billion base pairs of nucleotides in the case of human beings. Principally driven by the "biotechnology revolution," and the increasing focus on DNA, researchers are developing a better understanding of DNA's role in human disease. An increased appreciation of how DNA ultimately determines the functions of living organisms has generated -3-

a worldwide effort to identify and sequence genes of many organisms, including the genes that make up the human genome. The Company believes the best scientific evidence to date indicates that the number of genes in the human genome is between 50,000 and 80,000, although some have estimated the number to be as high as 150,000. Individual research efforts generally fall into two broad categories, sequencing and sizing. In sequencing procedures, the goal is to determine the exact order of the individual nucleotides in a DNA strand so that this information can be related to the genetic activity influenced by that piece of DNA. In DNA sizing, a particular fragment of a DNA molecule, isolated from a specific sample, is tested to determine whether it contains a particular category of size or nucleotide order. This testing is not performed to determine the complete structure of the segment, but rather is performed to determine if the particular piece is a certain length or contains a specific short sequence. The Company believes that genetic research will increase as companies in the pharmaceutical and biotechnology industries to accelerate their drug discovery and development efforts. These efforts are expected to create a demand for increased automation and efficiency in pharmaceutical and biotechnology laboratories. The PE Biosystems Group's products address this demand by combining the detection capabilities of bioanalytical instruments with advances in automation. Molecular Biology (formerly Applied Biosystems). The Molecular Biology unit is the genetic analysis and genomics technology unit of the PE Biosystems Group. The Molecular Biology unit develops, markets, and services instrument systems for nucleic acid synthesis, Polymerase Chain Reaction ("PCR"), DNA sequencing, genetic analysis, and cellular detection. These products and services are used in both research and commercial applications for purifying, analyzing, synthesizing, sequencing, and amplifying genetic material. The products of the Molecular Biology unit can be broadly classified into the following categories: o PCR Products. PCR is a process in which a short strand of DNA is copied multiple times, or "amplified," so that it can be more readily detected and analyzed. The Molecular Biology unit's PCR amplification instruments, known as thermal cyclers, include 24, 48, and 96 sample amplification systems, several combination thermal cyclers and PCR detection systems, reagents, and software. The unit's dual 384-well sample thermal cycler is expected to complement the Model 3700 DNA Analyzer and fill a significant market need for laboratories conducting high volume genomic research. The Sequence Detection Systems product line, introduced in 1996, uses TaqMan(R) chemistry, a unique PCR technology designed by the Roche Group and developed by the Molecular Biology unit. TaqMan(R) chemistry detects the product of PCR amplification and quantifies the initial sample during the thermal cycling process. This product line, which includes the Model 7700, has been widely accepted in the pharmaceutical discovery research market. The newly introduced 6700 Automated Nucleic Acid Workstation automates nucleic acid preparation, including sample filtration and purification, assay plate set-up, and plate scaling. This instrument is -4-

designed to substantially decrease the labor and cost involved in preparing DNA for analysis. o Genetic Analysis. Genetic analysis uses electrophoresis to separate DNA molecules based on their differing lengths and the resulting differences in the speeds at which they will pass through a gel. The Molecular Biology unit's genetic analysis products generally perform both DNA sequencing and fragment analysis. DNA sequencing is used to determine the exact order of nucleotides in a strand of DNA. Typically, fluorescent tags are used to generate labeled products, with each of the four different nucleotides labeled with a different color. The labeled fragments are run through an electrophoresis gel and detected. DNA fragment analyzers are used to determine the size, quantity, or pattern of DNA fragments. Fragment analysis applications include gene mapping; forensic typing, using microsatellite markers, single-strand conformation polymorphism (SSCP) analysis screening for unknown mutations; and oligonucleotide ligation assays to detect known mutations. The Molecular Biology unit's DNA sequencing products include a sequencer with 96 capillaries (Model 3700), a recently introduced sequencer with 16 capillaries (Model 3100), a one capillary sequencer (Model 310), a slab-gel instrument expandable to 96 lanes (Model 377), sequencing reagents, and analysis software. These products are used to sequence DNA to provide an understanding of human and other genomes and to analyze DNA fragments for various applications, including human disease research, food contamination, and forensic analysis. The high throughput Model 3700 DNA Analyzer, which was introduced in the Company's 1999 fiscal year, is designed to enable applications requiring tens of thousands of samples produced weekly by combining proven capillary electrophoresis hardware and separation polymer chemistry with new detection technology and automation. This is an automated instrument which allows 24 hour unattended operation. The Model 3700 DNA Analyzer is the principal instrument used by the Celera Genomics Group. The Company believes the Model 3700 DNA Analyzer is also the principal instrument used by the Human Genome Project for its sequencing projects. The Model 3100, which was introduced in the Company's 2000 fiscal year and was designed for use by academic programs and commercial laboratories worldwide, incorporates the automated technology developed for these large-scale programs. The PE Biosystems Group's Model 377 DNA Sequencer accounted for 12.49%, 5.93%, and 3.1% of the Company's consolidated revenues in fiscal years 1998, 1999, and 2000, respectively. The Model 3700 accounted for 10.5% and 14.5% of the Company's consolidated revenues in fiscal years 1999 and 2000, respectively. o DNA Synthesis. DNA synthesizers produce synthetic DNA (oligonucleotides) for genetic analysis. The synthetic DNA is an essential reagent for PCR and DNA sequencing and is also used in drug discovery applications. The needs of multiple markets are met with several models of synthesizers and supporting reagents -5-

marketed by the Molecular Biology unit. The unit also provides custom synthesis, in which oligonucleotides are made to order and shipped to customers. o PNA. The Molecular Biology unit has a license, which is exclusive for certain applications, to manufacture and sell peptide nucleic acid ("PNA") for molecular biology research and various other applications. PNA is comprised of a sequence of nucleobases, but unlike DNA, PNA has a modified uncharged peptide-like "backbone." The unique chemical structure of PNA enhances its affinity and specificity as a DNA or RNA probe. PNA may be used in many areas, including basic research, pharmaceutical discovery, diagnostic development, and food and environmental testing. o Applied Markets. The Molecular Biology unit has formed product development and marketing groups to develop products and services specially designed for specific markets. The focus of these groups is in the food and environmental testing and human identification (mainly forensic) markets. The Molecular Microbiology unit within the Molecular Biology unit is principally responsible for the development and marketing of technologies for bacterial and fungal detection, characterization, and identification. This unit has developed the MicroSeq 16S rDNA Bacterial Sequencing Kit to accurately identify microorganisms. TaqMan(R) Pathogen Detection Kits relying on Sequence Detection Systems instrument platforms are under development. These kits are being developed to rapidly detect bacterial contamination. The Human Identification unit within the Molecular Biology unit develops systems that are used by crime laboratories and other agencies to identify individuals based on their DNA. The Company believes these systems are most often used in cases of violent crime where DNA found at the crime scene is matched with DNA from suspects. The use of DNA in some criminal investigations may help solve the crimes and may reduce the cost of the investigation, and the Company believes there is a growing recognition of the validity of the use of DNA testing and DNA databases for this purpose. The systems are also used in the identification of human remains at disaster sites. o Human Diagnostics. The Molecular Biology unit has a license from the Roche Group to use PCR techniques in the development and marketing of products for human diagnostics. Products developed for human diagnostics fall into the following general categories: immunology; genetic disease carrier identification; infectious disease; and cancer. The PE Biosystems Group expects to develop tests based on this technology to support tissue typing (HLA) in bone marrow transplants and for HIV resistance diagnosis. Tests have also been developed for carrier identification for cystic fibrosis, fragile X syndrome, and loss of heterozygosity associated with specific forms of colorectal cancer. o Cellular Detection Systems. Through its strategic alliance with Becton, Dickinson and Company, the Molecular Biology unit is co-developing a fluorometric microvolume assay technology system ("FMAT"). This instrument system uses proprietary scanning technology to rapidly detect and measure fluorescence -6-

associated with objects as small as a single cell. This system is expected to satisfy market needs in pharmaceutical development for a cell-based, high throughput screening system. PerSeptive Biosystems. PerSeptive Biosystems develops, markets, and supports proprietary consumable products and instrument systems for the purification, analysis, and synthesis of proteins and related molecules. Proteins are the products of genes and, after expression and modification, are the key drivers and mediators of cellular function and biological system activity. The understanding and treatment of disease today involves the study of proteins and frequently involves the measurement of a drug's binding to specific proteins in the body. PerSeptive Biosystems products are designed for use in the life science markets to reduce the time and cost required for the discovery, development, and manufacture of pharmaceutical products. PerSeptive Biosystems products can be broadly classified into the following categories: o Mass Spectrometry. PerSeptive Biosystems mass spectrometry products are used for the analysis of both large molecules such as proteins and small molecules including those that might be used as drugs. These systems may be sold and used on a stand-alone basis or coupled with a liquid chromatograph ("LC/MS"). LC/MS systems are able to separate and analyze the components of complex mixtures. All mass spectrometry systems include an ionization source which creates charged molecules and a mass separation/detection component which separates these charged molecules on the basis of their mass, and detects their presence. Until recently, mass spectrometry was not very useful for the analysis of large molecules of biological importance such as proteins because the classical methods for creating ions caused these complex molecules to disintegrate into many small pieces. This process resulted in the destruction of the information about the original large molecule. The mass separation component was also problematic because it was not possible to distinguish between large molecules of nearly the same mass. The PE Biosystems Group believes that its delayed extraction technology used in its Matrix-Assisted, Laser Desorption Ionization Time-of-flight ("MALDI-TOF") mass spectrometer overcomes those deficiencies for the analysis of proteins and many other large molecules of biological importance. This technology, along with planned future enhancements, is expected to satisfy market needs in the emerging field of proteomics by providing high throughput systems for the identification and characterization of proteins. Since MALDI-TOF instruments are not directly coupled to separation devices, mixtures are often separated, purified, and collected before analysis. This process can be accomplished with PerSeptive Biosystems purification products such as the VISION(TM) Workstation, an integrated separation device which provides rapid separation of proteins or other large molecules. Mass spectrometry systems are also used to identify and quantify smaller molecules and are especially important for the measurement of drugs and their metabolites, which are compounds resulting from the body's acting upon the drug, in bodily fluids such as blood or urine. This information is required by the U.S. Food and Drug -7-

Administration and other regulatory agencies for the approval of drugs. This application is very demanding because the amounts of the drugs and their metabolites are very low and the mixtures are very complex. In order to analyze this mixture, scientists use LC/MS/MS systems, which consist of high pressure liquid chromatography ("HPLC") devices which separate the components of the mixture, usually an extract of blood or urine, and which are coupled directly to tandem mass spectrometry systems. For this application, it is important to achieve as much sensitivity and specificity as possible. This can be done with components which have been developed and refined by Applied Biosystems/MDS SCIEX Instruments (formerly Perkin-Elmer/SCIEX Instruments and PE SCIEX Instruments), a joint venture between the Company and MDS Inc. of Canada (formerly MDS Health Group Limited of Canada) through which the Company manufactures and sells certain of its mass spectrometry instrument systems. Applied Biosystems/MDS SCIEX Instruments has developed the MS/MS technologies which create the sensitivity and specificity required for this demanding application. Under the terms of the joint venture agreement with MDS Inc., the PE Biosystems Group has the exclusive worldwide distribution rights to the LC/MS products manufactured for the joint venture by the MDS SCIEX Division of MDS Inc. o Purification. As the human genome is sequenced and becomes known, the information obtained is expected to be used to study proteins, which are expressed by genes. Consequently, tens of thousands of proteins will need to be purified and characterized because many of these proteins may be used as drug targets or as therapeutics. PerSeptive Biosystems believes that its purification products in general can be incorporated readily into the development process of pharmaceutical products and offer productivity advantages, enabled by high throughput separation, over conventional counterparts. PerSeptive Biosystems' patented Perfusion Chromatography(R) technology uses proprietary flow-through particles and BioCad(R) Chromatography workstations to reduce the time necessary for the purification and analysis of biomolecules. This technology separates biomolecules 10 to 100 times faster than conventional liquid chromatography or HPLC without compromising resolution or capacity. The PerSeptive Biosystems Vision(TM) Workstation is believed to be the first robotic-equipped HPLC platform introduced to the life science markets that allows for the separation of proteins followed by analysis of the fractions collected in an unattended operation. Together, the automated platform and flow-through particles are designed to increase throughput and efficiency for the purification of biomolecules. o Protein Sequencing and Synthesis. Protein sequencers provide information about the sequence of amino acids that make up a given protein by chemically disassembling the protein and analyzing the amino acids. The PerSeptive Biosystems Procise(R) Protein Sequencing system uses Edman protein sequencing chemistry to sequence a peptide (the building blocks of proteins), one amino acid at a time, and in turn to identify or characterize the protein that contains the peptide. Synthetically produced peptides are used in understanding antibody reactions and as potential drugs or drug analogs. The PerSeptive Biosystems Pioneer(TM) and 433A -8-

Peptide Synthesis systems are designed for the high throughput and quality synthesis of peptides, peptide analogs, and small proteins. PerSeptive Biosystems also manufactures and sells proprietary synthesis reagents and fine chemicals for use with these and other products. Informatics. The Informatics unit of Applied Biosystems develops, markets, and distributes software and services to integrate and automate life sciences research. The unit also provides software for Applied Biosystems instruments systems. The science of informatics seeks to blend biology and computing to transform massive amounts of data into useful information. The Informatics unit's customers are typically involved in gene mapping, drug discovery and development, and molecular diagnostics. They use the Informatics unit's various software products for laboratory information management, sample tracking, data collection, analysis, and data mining. Laboratories seeking greater automation and integration of lab processes use the Informatics unit's Rapid Integration Solutions to streamline and speed their genomics, proteomics, expression, and high-throughput screening activities. Tropix. Tropix develops, manufactures, and markets chemiluminescent substrates and related products for the life science markets. Chemiluminescence is the conversion of chemical energy stored within a molecule into light. Chemiluminescent substrates are substances that emit light in the presence of another target substance that is tagged with an enzyme. Chemiluminescent technology is used in life science research and commercial applications including drug discovery and development, clinical diagnostics, gene function study, molecular biology, and immunology research. Tropix also licenses its technology to companies selling bioanalytical and clinical diagnostic tests. Tropix's products include reagents and chemiluminescent plate readers which measure light emitted by a sample. Tropix also operates a facility devoted to drug discovery services for the pharmaceutical, biotechnology, and agricultural markets. The services offered by this facility include custom assay development using proprietary technologies and high throughput drug screening with a capacity of 100,000 to approximately 400,000 tests per day. Marketing and Distribution. The markets for the PE Biosystems Group's products and services span the spectrum of the life sciences industry, including: basic human disease research; genetic analysis; pharmaceutical drug discovery, development, and manufacturing; human identification; agriculture; and food and environmental testing. Universities, government agencies, and other non-profit organizations engaged in research activities also use the PE Biosystems Group's products. Each of these markets has unique requirements and expectations that the PE Biosystems Group seeks to address in its product offerings. The PE Biosystems Group's customers are continually searching for processes and systems that can perform tests faster, more efficiently, and at lower costs. The PE Biosystems Group believes that its focus on automated and high throughput systems enables it to respond to this need. The size and growth of the PE Biosystems Group's markets are influenced by a number of factors, including: o technological innovation in bioanalytical practice; -9-

o government funding for basic and disease-related research, such as in heart disease, AIDS, and cancer; o application of biotechnology in basic agricultural processes; o increased awareness of biological contamination in food and the environment; and o research and development spending by biotechnology and pharmaceutical companies. In the United States, the PE Biosystems Group markets the largest portion of its products directly through its own sales and distribution organizations, although certain products are marketed through independent distributors and sales representatives. Sales to major markets outside of the United States are generally made by the PE Biosystems Group's foreign-based sales and service staff, but are also made directly from the United States to foreign customers in some cases. In some foreign countries, sales are made through various representative and distributorship arrangements. The PE Biosystems Group owns or leases sales and service offices in the United States and in foreign countries through its foreign sales subsidiaries and distribution operations. None of the PE Biosystems Group's products are distributed through retail outlets. Raw Materials. There are no specialized raw materials that are particularly essential to the operation of the PE Biosystems Group's business. The PE Biosystems Group's manufacturing operations require a wide variety of raw materials, electronic and mechanical components, chemical and biochemical materials, and other supplies, some of which are occasionally found to be in short supply. The PE Biosystems Group has multiple commercial sources for most components and supplies, but it is dependent on single sources for a limited number of such items, in which case the PE Biosystems Group normally secures long-term supply contracts. In some cases, if a supplier discontinues a product, it could temporarily interrupt the business of the PE Biosystems Group. Patents, Licenses, and Franchises. The PE Biosystems Group's products are based on complex, rapidly developing technologies. Some of these technologies are covered by patents owned by the PE Biosystems Group, and others are owned by third parties and used by the PE Biosystems Group under license. The PE Biosystems Group has pursued a policy of seeking patent protection in the United States and other countries for developments, improvements, and inventions originating within its organization that are incorporated into the PE Biosystems Group's products or that fall within its fields of interest. The PE Biosystems Group's business depends on its ability to continue developing new technologies which can be patented, or licensing new technologies from third parties that own patents in such technologies. The rights that the PE Biosystems Group considers important to its current business include the following: o The PE Biosystems Group has rights to PCR technology under a series of agreements with the Roche Group, which owns the patents covering the PCR process. The first of these patents expires in 2004. In July 2000, the PE Biosystems Group and the Roche Group agreed to expand the markets each company serves with products incorporating PCR. This new arrangement will allow both companies to develop and market products for all potential uses of PCR. Additionally, the PE -10-

Biosystems Group will continue to distribute products the Roche Group manufactures for research and non-diagnostic applications. o The PE Biosystems Group also licenses rights under certain patents assigned to the California Institute of Technology relating to DNA sequencing. These patents expire between 2006 and 2015. o The PE Biosystems Group also licenses rights under certain patents assigned to the University of Colorado relating to oligonucleotide synthesis. These patents expire between 2000 and 2007. From time to time, the PE Biosystems Group has asserted that various competitors and others are infringing its patents; and similarly, from time to time, others have asserted that the PE Biosystems Group was or is infringing patents owned by them. (See Item 3, Legal Proceedings, on pp. 24-25 of this Annual Report on Form 10-K.) These claims are sometimes settled by mutual agreement on a satisfactory basis and result in the granting of licenses by or to the PE Biosystems Group. However, the Company cannot make any assurances as to the outcome of any pending or future claims. The PE Biosystems Group has established a licensing program that provides industry access to certain of its intellectual property. Backlog. The PE Biosystems Group's total recorded backlog at June 30, 1999 was $186.3 million, which included $23.3 million of orders from the Celera Genomics Group. The PE Biosystems Group's total recorded backlog at June 30, 2000 was $220.9 million, which included $25.8 million of orders from the Celera Genomics Group. It is the PE Biosystems Group's general policy to include in backlog only purchase orders or production releases that have firm delivery dates within one year. Recorded backlog may not result in sales because of cancellation or other factors. It is anticipated that all orders included in the current backlog will be delivered before the close of fiscal year 2001. Competition. The markets in which the PE Biosystems Group operates are highly competitive and are characterized by the application of advanced technology. A number of the PE Biosystems Group's competitors are well known manufacturers with a high degree of technical proficiency. In addition, competition is intensified by the ever-changing nature of the technologies in the industries in which the PE Biosystems Group is engaged. The PE Biosystems Group's principal competition comes from specialized manufacturers that have strengths in narrow segments of the life science markets. The PE Biosystems Group competes principally in terms of the breadth and quality of its product offerings, and its service and distribution capabilities. While the absence of reliable statistics makes it difficult to determine the PE Biosystems Group's relative market position in its industry segment, the PE Biosystems Group believes it is one of the principal suppliers in its fields, marketing a broad line of instruments and life science systems. Research, Development, and Engineering. The PE Biosystems Group is actively engaged in basic and applied research, development, and engineering programs designed to develop new products and to improve existing products. Research, development, and engineering expenditures for the PE Biosystems Group totaled $109.9 million in fiscal 1998, -11-

$143.6 million in fiscal 1999, and $150.6 million in fiscal 2000. The Company spent $120.2 million in fiscal 1998, $189.3 million in fiscal 1999, and $284.2 million in fiscal 2000 on company-sponsored research, development, and engineering activities. The PE Biosystems Group's new products generally originate from four sources: internal research and development programs; external collaborative efforts with technology companies and individuals in academic institutions; devices or techniques that are generated in customers' laboratories; and business and technology acquisitions. Research and development projects at the PE Biosystems Group include the development of improved electrophoresis techniques for DNA analysis, real-time PCR for nucleic acid quantification, innovative approaches to cellular analysis, sample preparation, information technologies, and mass spectrometry. Environmental Matters. The PE Biosystems Group is subject to federal, state, and local laws and regulations regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, in those jurisdictions where the PE Biosystems Group operates or maintains facilities. The PE Biosystems Group does not believe that any liability arising under, or compliance with, environmental laws or regulations will have any material effect on its business, and no material capital expenditures are expected for environmental control. Employees. As of June 30, 2000, the PE Biosystems Group employed approximately 4,036 persons worldwide. This number does not include the Company's corporate staff which provides accounting, tax, treasury, legal, and other internal services for the PE Biosystems Group. As of June 30, 2000, the Company had 148 corporate staff employees. None of the PE Biosystems Group's United States employees and none of the Company's corporate staff employees are subject to collective bargaining agreements, and the Company generally considers its relations with its employees to be good. Celera Genomics Group Overview. The Celera Genomics Group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics Group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics Group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics Group has recently expanded its business into the emerging fields of functional genomics, particularly proteomics and personalized health/medicine. The Company and Dr. J. Craig Venter, a leading genomic scientist and founder of The Institute for Genomic Research ("TIGR"), formed the Celera Genomics Group business for the purpose of generating and commercializing genomic, proteomic, and related biological and medical information to accelerate the understanding of biological processes and to assist pharmaceutical, biotechnology, and life science research entities in areas of research including: o new drugs and improved drug development processes; -12-

o novel genes and factors that regulate and control gene expression; o understanding basic biological processes; o interrelationships between genetic variability, disease, and drug response; and o personalized health/medicine. A key component of the Celera Genomics Group's business strategy is its Celera Discovery System(TM). The Celera Discovery System is an online system through which customers can access the Celera Genomics Group's genomic and related biological information. The Celera Genomics Group is developing the Celera Discovery System into an integrated information and discovery system which is expected to include the most comprehensive and integrated databases of genomic and related biological and medical information available. The Celera Discovery System contains proprietary information from both the Celera Genomics Group and external sources. Also, the Celera Genomics Group has developed, and expects to continue developing, software tools that enable users to view, browse, and analyze data available through the Celera Discovery System in an integrated way to facilitate discovery. The Celera Genomics Group intends to supplement the base-level human genome sequence data it generates with other information to increase the value of its Celera Discovery System. This additional information may include comparative genomic information and associated tissue-specific gene and protein expression profiles from human and other model organisms. Comparative genomic information from model organisms, such as Drosophila (fruit fly) and mouse, are often used as a mechanism to better analyze specific areas of the genome and develop the interrelationships of the genetic code to disease and drug response. This information, which facilitates a better understanding of how genes are controlled by regulatory elements, is expected to have significant implications for therapeutic development and gene therapy. The Celera Genomics Group anticipates that its Celera Discovery System will become a resource for a wide range of customers, including companies in the pharmaceutical and biotechnology industries, academic and research institutions, and ultimately physicians and individuals. The Celera Genomics Group's approach to genomics and scientific progress to date. Since the early 1990's, with the commencement of the Human Genome Project, scientists have generally believed that technology would limit the pace at which the entire human genome might be sequenced. The combination of the PE Biosystems Group's higher-throughput sequencing equipment and the advanced sequencing strategy techniques developed by Dr. Venter and his scientific team at TIGR resulted in the Celera Genomics Group's announcement in June 2000 that the Celera Genomics Group had completed the sequencing and first assembly of the human genome. The Celera Genomics Group started sequencing the human genome in September 1999. This sequencing began after the completion of the sequencing of Drosophila, Celera's first sequencing project, carried out in cooperation with the Berkeley Drosophila Genome Project ("BDGP"). Drosophila was chosen because it is an important organism for biomedical and agricultural research, and because it is believed that its large and complex nature would demonstrate the operational capability of the Celera Genomics Group's facilities and the efficacy of the whole genome shotgun technique in deciphering other large and complex genomes like the human genome. Upon completion of the sequencing of the Drosophila genome, the Celera Genomics Group undertook the task of using its computational approach to assemble the genome -13-

into its proper order. The Celera Genomics Group has completed its sequencing and assembly efforts, and the results, together with further in depth analysis, were published with the BDGP in the spring of 2000. In sequencing and completing the first assembly of the human genome, the Celera Genomics Group has used an approach similar to the approach used to sequence and assemble the Drosophila genome. The Celera Genomics Group has used a combination of public and proprietary data to build the assembled human genome. The Celera Genomics Group's customers have started to receive versions of the assembly that continue to be upgraded. The Celera Genomics Group believes that its shotgun sequencing strategy has accelerated the discovery of new genes and has generated genomic information that has not yet been the focus of research. This information includes rarely expressed genes, the proteins for which they code, and other factors, such as regulatory regions, that control gene expression. This data is forming the basis of the Celera Genomics Group's human genome database. Information from this database is being delivered regularly to customers through the Celera Discovery System. The Celera Genomics Group expects to release a detailed ordered consensus human genome assembly in a scientific publication. The data that the Celera Genomics Group releases to non-commercial entities will be available, in a searchable format, via its web site. The ultimate form of data release will be affected by, among other things, the evolution of intellectual property law and the Celera Genomics Group's assessment of the likelihood that other organizations may seek to obtain the Celera Genomics Group's data and resell it to their own customers in competition with the Celera Genomics Group. The Celera Genomics Group believes that current efforts by some companies to obtain data made publicly available for the purpose of private resale may continue, and that the need to protect the value of its information while carrying out its intention to share this data with the research community will affect its data disclosure strategy. The Celera Genomics Group believes that disclosing consensus assembled sequence data to non-commercial entities will not affect the value of its information products and services to customers. The Celera Genomics Group also believes that disclosing this data in this manner will establish the Celera Genomics Group's data as the genome reference standard and will encourage researchers to use its data and ultimately become customers of the Celera Genomics Group. The Celera Genomics Group will make available to its customers, on a subscription basis, extensive integrated genomic information systems, including proprietary, public, and third party annotations; polymorphism information; comparative genomics information; protein expression information; search tools and algorithms; and assay and other services. Commercial Applications; Products and Services. The Celera Genomics Group expects that the use of the information it develops and the discoveries it makes will help transform life sciences research by increasing the understanding of biological processes, thus enabling scientists to accelerate the discovery and development process. The Celera Genomics Group also believes that this information will ultimately facilitate the development of individual genetic profiles that will be used for personal health planning by the medical and consumer markets. The commercial markets that the Celera Genomics Group believes will benefit from its information include pharmaceutical drug discovery and development, medical, and consumer markets. -14-

The Celera Genomics Group expects that its primary revenue sources will come from selling access to its information through subscriptions, collaborative services, and licensing its intellectual property. For certain information products, the Celera Genomics Group does not expect to seek ownership of intellectual property developed by its customers on such use. For these products, this policy should promote use of its information by a wide variety of users and will distinguish the Celera Genomics Group from other genomics companies that seek intellectual property rights in their customers' discoveries based solely upon access to those companies' database information. The structure of customer subscriptions, including the databases to be offered, functionality of the system, the access fees to be charged, the intellectual property terms, and the nature of any services provided to customers, will vary according to customer requirements and are expected to change over time. The Celera Genomics Group is currently offering, or plans to offer, the following products and services: o Information products. The Celera Genomics Group intends to build the Celera Discovery System into a comprehensive online information and discovery system that provides subscribers with access over the Internet to the following information and services: - a set of evolving, integrated databases comprised of both genome and functional genomics information; - a comprehensive set of bioinformatics tools that allow users to search, browse, visualize, and analyze information and information relationships; - the ability to integrate internal (customer) and external data sources into the overall system; and - the capability to perform comparative analysis with other genomes, including those of Drosophila and mouse, to permit researchers to better understand gene function and the ways in which genes and proteins operate within cells. The Celera Genomics Group is currently offering, or plans to offer, the following genome and functional database options as part of the Celera Discovery System: Genome Databases - Drosophila Genome Reference Database. The first complete sequence of available data generated by the Celera Genomics Group's sequencing activity is the Drosophila genome. Scientists have widely studied Drosophila, which has been shown to share similar genes with humans. This genomic information will allow comparisons of both sequences and genes for the drug discovery process. The content of the Drosophila database includes DNA sequence information generated by the Celera Genomics Group or obtained from public sources and assemblies of the genome generated by the Celera Genomics Group. Over time, the Celera Genomics Group intends to supplement this data with data obtained -15-

from other accessible resources. The database is expected to include, at a minimum, the following annotations: DNA and protein matches, gene predictions, predicted gene function, identified protein domains, expressed sequence tag ("EST") matches, and marker locations on chromosome maps. - Human Gene Index. The Celera Genomics Group expects that this database will represent the most current view available of the set of human genes. It will be the extension of the TIGR Human Gene Index, which has been licensed to the Celera Genomics Group on a non-exclusive basis. The database will be derived from transcripts derived from genomic sequences, assemblies of ESTs and related data used to develop the ESTs. This database is expected to contain an extensive network of links to other sources of biological information, including information from mapping data, genomic sequences, expression data, and the Human Genome Project's databases. - Human Genome Database. The Celera Genomics Group believes this information base will be a foundation for developing an information and discovery source that ultimately links genomic data to relevant biological and medical information. The Human Genome Database, which will also incorporate data from third party sources, is expected to include types of annotations which are similar to those of the Drosophila genome. - Mouse Genome Reference Database. The Celera Genomics Group has begun sequencing the mouse genome and expects to complete its work by the end of calendar 2000. The Celera Genomics Group believes that the mouse is an important model organism for studying gene function, having been the subject of extensive genetic studies. In addition, mice are available with specific genes disabled, allowing further functional characterization. These genes can be correlated with their human counterparts and thus can be used to study human health. The Mouse Genome Reference Database is expected to contain types of annotations which are similar to those of the human and Drosophila genomes. In addition, the mouse and human genomes are expected to be overlaid to allow comparative studies of their respective structures, the functions of their genes, and their common regulatory mechanisms. Functional Genomics Databases - Gene Expression Databases. The Celera Genomics Group expects to provide databases consisting of human and animal gene expression information to provide rapid, in-depth analysis of where genes are expressed and in what quantities. - Human Protein Database. The Celera Genomics Group plans for this database to represent the most comprehensive view of protein expression in humans. The Celera Genomics Group believes this information will become a foundation of protein reference information to which comparative studies in various disease states and aging studies can be compared. This data is expected to be correlated to provide an enhanced understanding of key biological processes, from gene to function. -16-

- SNP Database. The Celera Genomics Group believes that as it continues to sequence the DNA from multiple individuals it will likely discover millions of single nucleotide polymorphism ("SNP") sites. SNP sites are locations on the genome where variations in genetic sequence can occur and which may lead to the development of certain diseases or influence the effect of a drug on a patient. Scientists believe that polymorphism information is important in understanding the relationship of genetic factors to disease and how and why certain patients react favorably to certain drugs while others do not. Because the identification of polymorphic sites is very difficult using current methods and few polymorphic discovery programs exist, the Celera Genomics Group believes that the SNPs it discovers will add considerable value to its integrated information system. - Genotype/Phenotype Database. The Celera Genomics Group expects to develop an information database that links SNP information to phenotype information. The Celera Genomics Group believes this database will be a key asset for both therapeutic development and medical and diagnostic applications and will enable personalized health planning. o Personalized Health/Medicine. The Celera Genomics Group expects that genomic and proteomic information will be used to develop molecular diagnostic tests to better classify diseases and to identify the genetic make-up of individuals. These diagnostic tests are expected to contribute to a more personalized approach to medicine. For example, there are many types of cancer that have similar disease manifestations. Because these disease manifestations may be similar between one type of cancer and another, it may be important to differentiate between the actual type of disease rather than just the disease manifestations in prescribing an effective treatment. It is believed that, rather than prescribing a drug based solely on disease manifestations, physicians will be able to use a molecular diagnostic test to help select the most effective drug with fewer negative side effects. As a result, this approach should benefit the patient with more customized care, reduced illness length, and ultimately, better treatment results. It is believed that the genetic profile information that the Celera Genomics Group intends to develop will provide a key basis for interactions and transactions among consumers, physicians, and solution providers. Consumer controlled access to this information by physicians and solution providers should enable more effective and efficient application of health solutions that may ultimately result in reduced health care costs. Further, the Celera Genomics Group anticipates that the aggregation of the identified genetic profiles will provide pharmaceutical and biotechnology companies with a rich demographic database to enhance the research process. The Celera Genomics Group intends to make this information available to these communities under various conditions that will provide revenues to the Celera Genomics Group. o Value Added Programs. The Celera Genomics Group believes that its investment in staff and technology and its integrated information systems should permit it to expand its business into providing value added programs. These additional areas may include licensing of proprietary intellectual property rights from its own -17-

discovery efforts and collaborative endeavors, and establishment of collaborative relationships to develop information related to specific customer needs. The Celera Genomics Group intends to conduct its own discovery initiatives as part of its analysis of genomic and functional genomic information generated through its efforts. The Celera Genomics Group currently intends to pursue intellectual property protection on such discoveries. If the Celera Genomics Group is successful in making novel discoveries and generally establishing intellectual property rights, it expects to license most of its discoveries broadly. The Celera Genomics Group may also enter into other collaborative arrangements with customers to develop information specific to a particular customer's interest. Such arrangements could involve an extensive population genetics study on behalf of a pharmaceutical company or the sequencing of certain plant, animal, or insect genomes on behalf of customers. In addition, customers may build proprietary gene expression databases through such collaborative arrangements. These arrangements may also include providing customers biological materials, such as full length cDNA clones, and sequencing clones of novel genes. The Celera Genomics Group anticipates that the terms of these collaborative arrangements will generally provide that the Celera Genomics Group will receive some combination of up-front license fees, research fees, royalty payments, and milestone payments. In addition, the intention of such collaborations will be to incorporate information generated during the research into the Celera Genomics Group's databases. The Celera Genomics Group is currently offering, or plans to offer, the following programs: - Genome Services. The Celera Genomics Group offers programs to sequence and assemble genomes and discover novel genes of interest, and also offers full length cloning and gene expression services. - Protein Expression Services and Analysis. The proposed development of a high throughput facility for protein expression is intended to provide the capability to perform specific research programs for customers wanting to compare the Celera Genomics Group's reference information to specific development projects. The Celera Genomics Group intends to create comprehensive analysis capabilities for proteins. These capabilities will be utilized within customer programs and the Celera Genomics Group intends to analyze the protein reference information as it is generated to identify and seek intellectual property protection on diagnostic markers, novel genes, and therapeutic proteins. - Human Polymorphism Services and Analysis. The Celera Genomics Group intends to use the information it creates on polymorphisms combined with high throughput genotyping technology to provide services to detect and analyze individual genome profiles. The Celera Genomics Group has the capability of performing high throughput sequencing of specific genes or genomic regions across populations of interest. -18-

- Informatics Services. The Celera Genomics Group believes that the quantity of genomics and related data and the application of sophisticated bioinformatics tools will drive users of this information to require knowledge management, computing, and storage solutions. The Celera Genomics Group, with its strategic partners, is expected to be in a unique position to supply customized combinations of bioinformatics tools and computer bandwidth to users of its information. Intellectual Property. Through its internal research programs and collaborative programs, the Celera Genomics Group anticipates that it will develop an ever-increasing portfolio of intellectual property. The Celera Genomics Group intends to license such intellectual property to customers for some combination of license fees, milestone payments, and royalty payments. Raw Materials. The Celera Genomics Group's operations require a variety of raw materials, such as chemical and biochemical materials, and other supplies, some of which are occasionally found to be in short supply. The Celera Genomics Group depends on the PE Biosystems Group for several critical materials, including reagents and capillary arrays, required for sequencing. For certain of these materials, the PE Biosystems Group is the sole supplier, and for other materials the Celera Genomics Group believes that the PE Biosystems Group provides the highest quality materials available. Any interruption in the availability of these materials could adversely affect and, in some cases, shut down sequencing operations. Patents, Licenses, and Franchises. The Celera Genomics Group's business and competitive position are dependent, in part, upon its ability to protect its database information, its proprietary gene sequence methods, its software technology, and the novel genes it identifies. The Celera Genomics Group's commercial success will be affected by, but is not directly dependent on, the ability to obtain patent protection on genes, polymorphisms, and proteins discovered by it and/or by the Celera Genomics Group's customers on their own behalf and by collaborators. The Celera Genomics Group plans to seek intellectual property protection, including copyright protection, for the Celera Discovery System, including its content, and the software and methods it creates to manage, store, analyze, and search novel information. The Celera Genomics Group's current plan is to apply for patent protection upon the identification of candidate novel genes, novel gene fragments, and their biological function or utility. Although obtaining patent protection based on partial gene sequences might enhance the Celera Genomics Group's business, the Celera Genomics Group does not believe that its commercial success will be materially dependent on its ability to do so. The Celera Genomics Group will use a combination of strategies in order to protect its intellectual property assets involving SNP discovery, validation, and functional characteristics of genes, proteins, and SNPs. The Celera Genomics Group recognizes that many of the intellectual property laws are directly suitable for application to SNP discoveries while other protections may not be available or extend to cover SNP-based discoveries. During the sequencing and early assembly phases of the human genome, the Celera Genomics Group intends to maintain proprietary protection of its SNP discoveries using a combination of confidential treatment of, and control of access to, the information, as well as by seeking patent protection where appropriate. During later stages of assembly and gene -19-

annotation, the Celera Genomics Group may seek broader patent protections of its discoveries. Such an approach will be utilized to establish commercial applications and patentable utility for such SNP discoveries. The granting of patents on genomic discoveries is uncertain worldwide and is currently under review and revision in many countries. Moreover, publication of information concerning partial gene sequences prior to the time that the Celera Genomics Group applies for patent protection based on the full-length gene sequences or different partial gene sequences in the same gene may affect the Celera Genomics Group's ability to obtain patent protection. Certain court decisions suggest that disclosure to the applicable agency of a partial sequence may not be sufficient to support the patentability of a full-length sequence and that patent claims to a partial sequence may not cover a full-length sequence inclusive of that partial sequence. Currently, the U.S. Patent and Trademark Office requires an adequate disclosure of a specific and substantial utility, such as gene function, in order to support the patentability of a gene sequence. In January 1997, TIGR, in collaboration with the National Center for Biological Information, disclosed full-length DNA sequences assembled from ESTs available in publicly accessible databases or sequenced at TIGR. The National Human Genome Research Institute also plans to release sequence information to the public. Such disclosures might limit the scope of the Celera Genomics Group's claims or make subsequent discoveries related to full-length genes unpatentable. While the Celera Genomics Group believes that the publication of sequence data will not preclude it or others from being granted patent protection on genes, there can be no assurances that such publication has not affected and will not affect the ability to obtain patent protection. The Celera Genomics Group can not ensure that any changes to, or interpretations of, the patent laws will not adversely affect its patent position. The Celera Genomics Group anticipates that there may be significant litigation in the industry regarding genomic patent and other intellectual property rights. If the Celera Genomics Group becomes involved in such litigation, it could consume a substantial portion of the Celera Genomics Group's resources, and the Celera Genomics Group may not ultimately prevail. If the Celera Genomics Group does not prevail in a patent litigation dispute, it may be required to pay damages or royalties or to take measures to avoid any future infringement, or the Celera Genomics Group may not be able to stop a competitor from making, using, or selling similar products or technology. The Celera Genomics Group also intends to rely on trade secret protection for its confidential and proprietary information. The Celera Genomics Group believes it has developed proprietary procedures for sequencing and analyzing genes and for assembling the genes in their naturally occurring order. In addition, the Celera Genomics Group believes it has developed novel methods for searching and identifying particularly important regions of genetic information or whole genes of interest. The Celera Genomics Group currently protects these methods and procedures as trade secrets and has sought patent protection for some of the proprietary methods. The Celera Genomics Group has taken security measures to protect its databases concerning genes identified by it, including entering into confidentiality agreements with employees and academic collaborators who are provided or have access to confidential or proprietary information. The Celera Genomics Group continues to explore ways to further enhance the security for its data, including copyright protection for its databases. -20-

Backlog. The Celera Genmoics Group's total recorded backlog at June 30, 1999, was $13.9 million. The Celera Genomics Group's total recorded backlog at June 30, 2000, was $24.3 million. It is the Celera Genomics Group's general policy to include in backlog only purchase orders that have firm delivery dates within one year. Recorded backlog may not result in sales because of cancellation or other factors. It is anticipated that all orders included in the current backlog will be delivered before the close of fiscal year 2001. Competition. The Celera Genomics Group's principal competitors are those public and private entities that are currently involved, or intend to become involved, in providing genomic sequences, polymorphism information, gene expression, protein expression, and related analysis capabilities in such areas as genetic variability and drug target discovery. The Celera Genomics Group's market and financial success will be dependent, in large part, upon its ability to maintain a competitive position in each of these areas. Entities with which the Celera Genomics Group is directly competing in certain markets include Curagen Corporation, Gene Logic Inc., Genset, Incyte Genetics, Inc., Affymetrix, Inc., Millennium Pharmaceuticals, Inc., Genaissance Pharmaceuticals, Inc., Orchid Biosciences, Inc., Oxford GlycoSciences Plc, and the SNP Consortium. The SNP Consortium is a non-profit collaboration that was established in April 1999 and is supported by a group of ten major pharmaceutical companies, the Wellcome Trust, International Business Machines Corporation, and Motorola, Inc. There are also several small public and private companies with which the Celera Genomics Group will indirectly compete in particular lines of business, such as in gene discovery and the development of drug targets. In addition, some of the Celera Genomics Group's potential customers, such as pharmaceutical companies, may choose to develop technologies and information similar to those offered by the Celera Genomics Group. Also, a customer may use the Celera Genomics Group's services to develop products that compete with products separately developed by the Celera Genomics Group or its other customers. Finally, new technologies that improve the gene analysis and discovery process may emerge over time and could compete with those being developed by the Celera Genomics Group, or otherwise affect its business strategy. Research and Development. The Celera Genomics Group is actively engaged in basic and applied research and development programs designed to develop new products. Research and development expenditures for the Celera Genomics Group totaled $10.3 million in fiscal 1998, $48.4 million in fiscal 1999, and $167.8 million in fiscal 2000. The Company spent $120.2 million in fiscal 1998, $189.3 million in fiscal 1999, and $284.2 million in fiscal 2000 on company-sponsored research, development, and engineering activities. The Celera Genomics Group's new products are expected to originate from three sources: internal research and development programs, external collaborative efforts or alliances, and business and technology acquisitions. Environmental Matters. The Celera Genomics Group is subject to federal, state, and local laws and regulations regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, in those jurisdictions where the Celera Genomics Group operates or maintains facilities. The Celera Genomics Group does not believe that any liability arising under, or compliance with, environmental laws or regulations will have any material effect on its business, and no material capital expenditures are expected for environmental control. -21-

Employees. The Celera Genomics Group had approximately 684 employees as of June 30, 2000. This number does not include the Company's corporate staff which provides accounting, tax, treasury, legal, and other internal services for the Celera Genomics Group. As of June 30, 2000, the Company had 148 corporate staff employees. The Celera Genomics Group's employees and the Company's corporate staff employees are not subject to collective bargaining agreements, and the Company generally considers its relations with its employees to be good. Financial Information About Geographic Areas A summary of net revenues from external customers and long-lived assets attributed to each of the Company's geographic areas for the fiscal years 1998, 1999, and 2000 is incorporated herein by reference to Note 6 on page 35, Note 6 on page 65, and Note 6 on pages 102-103 of the Annual Report to Stockholders for the fiscal year ended June 30, 2000. The Company's consolidated net revenues from external customers in countries other than the United States for fiscal years 1998, 1999, and 2000 were $487.2 million, $607.9 million, and $690.0 million, or 51.6%, 50.0%, and 50.3%, respectively, of the Company's consolidated net revenues. The Company's manufacturing facilities outside the continental United States are located in the United Kingdom, Japan, and Singapore. There are currently no material foreign exchange controls or similar limitations restricting the repatriation to the United States of capital earnings from operations outside the United States. Item 2. PROPERTIES PE Biosystems Group Facilities The PE Biosystems Group's headquarters are located in leased facilities in Foster City, California, and the PE Biosystems Group owns or leases various other facilities for manufacturing, research and development, and administrative purposes. All of these facilities -22-

are maintained in good working order. The following is a list of the PE Biosystems Group's principal facilities: <TABLE> <CAPTION> Owned or Leased Location (Approximate Floor Area in Sq. Ft.) (Expiration Dates of Leases) -------------------------------------------- ------------------------------ <S> <C> Foster City, CA (761,235) Leased (2000-2015) Hayward, CA (66,048) Leased (2004) San Jose, CA (81,000) Owned Bedford, MA (43,000) Leased (2007) Framingham, MA (196,000) Leased (2009) Santa Fe, NM (14,000) Leased (2010) Houston, TX (21,000) Leased (2004) Warrington, England (22,000) Owned Singapore (30,000) Leased (2002) Narita, Japan (24,000) Owned </TABLE> The leased properties in Foster City, California consist of three principal facilities totaling approximately 475,455 square feet, and additional facilities totaling approximately 285,780 square feet. Approximately 40,761 square feet of such space is leased to the Celera Genomics Group. The PE Biosystems Group also leases space in several locations, including the Celera Genomics Group headquarters facility in Rockville, Maryland, for use as regional sales and service offices, technical demonstration centers, and warehouses. The PE Biosystems Group also owns undeveloped land in Vacaville, California. Celera Genomics Group Facilities The Celera Genomics Group's headquarters are located in owned facilities in Rockville, Maryland. The Celera Genomics Group's administrative facilities, sequencing facility, laboratories, and bioinformatics facilities are located at its headquarters. The Celera Genomics Group also leases various other facilities for research and development and product marketing. All of these facilities are maintained in good working order. The following is a list of the Celera Genomics Group's principal facilities: <TABLE> <CAPTION> Owned or Leased Location (Approximate Floor Area in Sq. Ft.) (Expiration Date of Leases) -------------------------------------------- --------------------------- <S> <C> Rockville, MD (220,000) Owned Foster City, CA (30,000) Leased (2008) Foster City, CA (10,761) Leased (2003) Pasadena, CA (25,000) Leased (2001) Davis, CA (16,200) Leased (2001) Davis, CA (15,000) Leased (2000) </TABLE> All of the space in Rockville, Maryland, which consists of two adjacent buildings, is occupied by the Celera Genomics Group, except for approximately 7,200 square feet which is leased to the PE Biosystems Group. The Foster City, California facilities are leased from the PE -23-

Biosystems Group. The lease for the Pasadena, California facilites will expire in March 2001. The Celera Genomics Group has signed a lease for a new facility in Pasadena, California with approximately 85,000 square feet. The term of this lease is for ten years and will commence upon the expiration of the existing Pasadena lease. The Celera Genomics Group also leases space for use as regional sales and service centers in several locations. Corporate Facilities The Company's corporate headquarters are located at an owned facility in Norwalk, Connecticut with an area of approximately 402,000 square feet. The Company uses approximately 29,000 square feet of this space for corporate staff and related support functions. Of the remaining amount of this space, approximately 260,000 square feet is subleased to PerkinElmer, Inc. and the balance of approximately 113,000 square feet is vacant. This facility is maintained in good working order. This facility is being held for sale or long term lease. The Company also leases space in facilities located in Wilton, Connecticut. These facilities were sold by the Company in May 2000. In connection with the sale, the Company leased back approximately 220,000 square feet under a lease which is currently scheduled to expire in May 2001. The Company uses approximately 18,000 square feet of this space for corporate staff and related support functions. Of the remaining amount of this leased space, approximately 172,000 square feet is subleased to PerkinElmer, Inc. and balance of approximately 30,000 square feet is vacant. This facility is maintained in good working order. The Company intends to consolidate all of its corporate staff in Norwalk and Wilton, Connecticut, into a single leased facility upon the expiration of the Wilton, Connecticut, lease. The Company is considering various potential facilities for this purpose. Item 3. LEGAL PROCEEDINGS The Company is a defendant in various legal actions, including patent, commercial, and environmental, arising from the conduct of the Company's normal business activities, including those described below. Although the amount of any liability that might arise with respect to any of these matters cannot be accurately predicted, the resulting liability, if any, will not, in the opinion of management of the Company, have a material adverse effect on the financial statements of the Company, the PE Biosystems Group, or the Celera Genomics Group. Amersham On November 18, 1997, Amersham Pharmacia Biotech, Inc. ("Amersham") filed a patent infringement action against the Company in the United States District Court for the Northern District of California. The complaint alleges that the Company is directly, contributorily or by inducement infringing U.S. Patent No. 5,688,648 ("the '648 patent"), entitled "Probes Labelled with Energy Transfer Coupled Dyes." Amersham asserts that the Company's sale of DNA analysis reagents and systems that incorporate "BigDye" fluorescence detection technology would infringe the '648 patent, and seeks injunctive and monetary relief. The -24-

Company answered the complaint, alleging that the '648 patent is invalid and that the Company has not infringed the '648 patent. This case is scheduled for trial in January 2001. On March 13, 1998, the Company filed a patent infringement action against Amersham and Molecular Dynamics, Inc. ("Molecular Dynamics") in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 4,811,218) is infringed by reason of Molecular Dynamics' and Amersham's sale of certain DNA analysis systems (e.g., the MegaBACE 1000 System). The Company's complaint seeks injunctive and monetary relief. In response, the defendants have asserted various affirmative defenses and several counterclaims, including that the Company is infringing two patents (U.S. 5,091,652 and U.S. 5,459,325) owned by or licensed to Molecular Dynamics by selling the ABI PRISM 377(TM) DNA Sequencing Systems. On May 21, 1998, Amersham filed a patent infringement action against the Company in the United States District Court for the Southern District of New York. The complaint alleges that the Company is infringing, contributing to the infringement and inducing the infringement of U.S. Patent No. 4,707,235 ("the '235 patent") entitled "Electrophoresis Method and Apparatus having Continuous Detection Means." The complaint seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '235 patent is invalid and that the Company does not infringe the '235 patent. The matters described in this paragraph and the immediately preceding paragraph have been consolidated into a single case to be heard in the United States District Court for the Northern District of California. This case has not yet been scheduled for trial. On May 30, 2000, the Company filed a patent infringement action against Amersham in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 5,945,526) is infringed by reason of Amersham's sale of DNA analysis reagents and systems that incorporate ET Terminator fluorescence detection technology. The Company's complaint seeks injunctive and monetary relief. This case is in the early stages of discovery. Berlin v. PE Corporation, et. al. As of the filing of this Annual Report on Form 10-K, the Company and certain of its officers had been served in five lawsuits purportedly on behalf of purchasers of Celera Genomics Group Common Stock in the Company's offering of Celera Genomics Group Common Stock completed on March 6, 2000. In the offering, the Company sold an aggregate of 4,370,000 shares of Celera Genomics Group Common Stock at a public offering price of $225 per share. The complaints in these lawsuits generally allege that the prospectus used in connection with the offering contained inaccurate and misleading statements in violation of federal securities laws. The complaints seek unspecified damages, rescission, costs and expenses, and such other relief as the court deems proper. All of these lawsuits have been consolidated into a single case. The plaintiffs filed a motion for appointment of the lead plaintiff and lead counsel, which has not yet been decided by the court. United States v. Davis The Company is a party to the action United States v. Davis, pending in the United States District Court for the District of Rhode Island. The Company was brought into the case -25-

along with numerous other companies as a result of a third party complaint filed by United Technologies Corporation ("UTC") seeking contribution for environmental cleanup costs imposed by the United States government. In December 1998, the District Court found the Company liable to UTC along with certain, but not all, of the defendants in the case. The Company believes the amount of such liability to be less than $200,000, which will be determined when all appeals have been concluded. Both UTC and the Company appealed the District Court's decision. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. PART II Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Market Information The principal United States market where the Company's PE Biosystems Group Common Stock and Celera Genomics Group Common Stock are traded is the New York Stock Exchange, although such stock is also traded on the Pacific Exchange. The high and low sales prices of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock for each quarterly period during fiscal year 2000 and for the period from May 6, 1999, through June 30, 1999, and for the Common Stock of The Perkin-Elmer Corporation for each quarterly period during fiscal year 1999 through May 5, 1999, is incorporated herein by reference to Note 12, pages 41-42, Note 12, page 70, and Note 12, pages 110-111 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Holders On September 18, 2000, the approximate number of holders of PE Biosystems Group Common Stock was 6,534, and the approximate number of holders of Celera Genomics Group Common Stock was 6,104. The approximate number of holders is based upon the actual number of holders registered in the Company's books at such date and does not include holders of shares in "street name" or persons, partnerships, associations, corporations, or other entities identified in security position listings maintained by depository trust companies. The calculation of the numbers of shares held by non-affiliates shown on the cover of this Annual Report on Form 10-K was made on the assumption that there were no affiliates other than executive officers and directors. -26-

Dividends Information regarding the amount of quarterly dividends during fiscal years 1999 and 2000 is incorporated herein by reference to Note 12, pages 41-42, and Note 12, pages 110-111 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Sale of Unregistered Securities The Company has not sold securities during the fiscal year ended June 30, 2000, that were not registered under the Securities Act of 1933. Risks Relating to the Company's Capital Structure Stockholders of the Company are stockholders of one company and, therefore, financial effects on one group could adversely affect the other. The PE Biosystems Group and the Celera Genomics Group are not separate legal entities. As a result, stockholders are subject to all of the risks of an investment in the Company, including the PE Biosystems Group and the Celera Genomics Group. The risks and uncertainties that may affect the operations, performance, development, and results of the businesses of either group include but are not limited to rapidly changing technology and dependence on new products, dependence of sales on customers' capital spending policies and government-sponsored research, claims for patent infringement, significant overseas operations, future growth strategy and earthquakes. The assets attributed to one group could be subject to the liabilities of the other group, whether such liabilities arise from lawsuits, contracts, or indebtedness that the Company attributes to the other group. If the Company is unable to satisfy one group's liabilities out of the assets attributed to it, the Company may be required to satisfy those liabilities with assets the Company has attributed to the other group. Financial effects from one group that affect the consolidated results of operations or financial condition could, if significant, affect the results of operations or financial condition of the other group and the market price of the common stock relating to the other group. In addition, net losses of either group and dividends or distributions on, or repurchases of, either class of common stock or repurchases of certain preferred stock will reduce the funds the Company can pay as dividends on each class of common stock under Delaware law. For these reasons, stockholders should read the consolidated financial information with the financial information provided for each group. Holders of group common stock have limited rights related to their group. Holders of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock have only the rights customarily held by common stockholders. They have only the following rights related to their corresponding group: o certain rights with regard to dividends and liquidation; o requirements for a mandatory dividend, redemption, or conversion upon the disposition of all or substantially all of the assets of their corresponding group; and -27-

o a right to vote on matters as a separate voting class in the limited circumstances provided under Delaware law, by stock exchange rules, or as determined by the Company's Board of Directors. The Company will not hold separate meetings for holders of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock. Limits exist on the voting power of group common stock. o Celera Genomics Group Common Stock May Not Initially Have Any Influence on the Outcome of Stockholder Voting PE Biosystems Group Common Stock has a substantial majority of the voting power of the Company's common stock. Except in limited circumstances requiring separate class voting, either class of common stock that is entitled to more than the number of votes required to approve any stockholder action could control the outcome of such vote - even if the matter involves a divergence or conflict of the interests of the holders of the PE Biosystems Group Common Stock and Celera Genomics Group Common Stock. These matters may include mergers and other extraordinary transactions. o Group common stock with less than majority voting power can block action if a class vote is required. If Delaware law, stock exchange rules, or the Company's Board of Directors requires a separate vote on a matter by the holders of either the PE Biosystems Group Common Stock or the Celera Genomics Group Common Stock, those holders could prevent approval of the matter - even if the holders of a majority of the total number of votes cast or entitled to be cast, voting together as a class, were to vote in favor of it. o Holders of only one class of common stock cannot ensure that their voting power will be sufficient to protect their interests. Since relative voting power per share of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock will fluctuate based on the market values of the two classes of common stock, the relative voting power of a class of common stock could decrease. As a result, holders of shares of only one of the two classes of common stock cannot ensure that their voting power will be sufficient to protect their interests Stockholders may not have any remedies for breach of fiduciary duties if any action by directors and officers has a disadvantageous effect on either class of common stock. Stockholders may not have any remedies if any action or decision of the Company's Board of Directors or officers has a disadvantageous effect on the PE Biosystems Group Common Stock or Celera Genomics Group Common Stock compared to the other class of common stock. Recent cases in Delaware involving tracking stocks have established that decisions by directors or officers involving differing treatment of tracking stocks are judged under the -28-

principle known as the "business judgment rule" unless self-interest is shown. In addition, principles of Delaware law established in cases involving differing treatment of two classes of capital stock or two groups of holders of the same class of capital stock provide that a board of directors owes an equal duty to all stockholders regardless of class or series. Absent abuse of discretion, a good faith business decision made by a disinterested and adequately informed Board of Directors, Board of Directors' committee, or officer of the Company with respect to any matter having different effects on holders of PE Biosystems Group Common Stock and holders of Celera Genomics Group Common Stock would be a defense to any challenge to such determination made by or on behalf of the holders of either class of stock. Stock ownership could cause directors and officers to favor one group over the other. As a policy, the Company's Board of Directors periodically monitors the ownership of shares of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock by the Company's directors and senior officers as well as their option holdings and other benefits so that their interests are not misaligned with the two classes of common stock and with their duty to act in the best interests of the Company and its stockholders as a whole. However, because the actual value of their interests in PE Biosystems Group Common Stock and Celera Genomics Group Common Stock could vary significantly, it is possible that they could favor one group over the other as a result of their common stock holdings, options and other benefits. Numerous potential conflicts of interest exist between the classes of common stock which may be difficult to resolve by the Company's Board of Directors or which may be resolved adversely to one of the classes. o Allocation of corporate opportunities could favor one group over the other. The Company's Board of Directors may be required to allocate corporate opportunities between the groups. In some cases, the Company's directors could determine that a corporate opportunity, such as a business that the Company is acquiring or a new business, should be shared by the groups or be allocated to one group over the other. Any such decisions could favor one group to the detriment of the other. o Groups may compete with each other to the detriment of their businesses. The existence of two separate classes of common stock will not prevent the groups from competing with each other. Any competition between the two groups could be detrimental to the businesses of either or both of the groups. Under a Board of Directors' policy, groups will generally not engage in the principal businesses of the other, except for joint transactions with each other. However, the Company's Chief Executive Officer or Board of Directors will permit indirect competition between the groups, such as one group doing business with a competitor of the other group, based on his or its good faith business judgment that such competition is in the best interests of the Company and all of the Company's stockholders as a whole. In addition, the groups may compete in a business that is not a principal business of the other group. -29-

o The Board of Directors may pay more or less dividends on group common stock than if that group were a separate company. Subject to the limitations referred to below, the Company's Board of Directors has the authority to declare and pay dividends on the PE Biosystems Group Common Stock and Celera Genomics Group Common Stock in any amount and could, in its sole discretion, declare and pay dividends exclusively on the PE Biosystems Group Common Stock, exclusively on the Celera Genomics Group Common Stock, or on both, in equal or unequal amounts. The Company's Board of Directors is not required to consider the amount of dividends previously declared on each class, the respective voting or liquidation rights of each class, or any other factor. The performance of one group may cause the Company's Board of Directors to pay more or less dividends on the common stock relating to the other group than if that other group was a stand-alone corporation. In addition, Delaware law and the Company's certificate of incorporation impose limitations on the amount of dividends which may be paid on each class of common stock. o Proceeds of mergers or consolidations may be allocated unfavorably. The Company's Board of Directors will determine how consideration to be received by holders of PE Biosystems Group Common Stock and Celera Genomics Group Common Stock in connection with a merger or consolidation involving the Company is to be allocated among holders of each class of common stock. Such percentage may be materially more or less than that which might have been allocated to such holders had the Company's Board of Directors chosen a different method of allocation. o Holders of either class of common stock may be adversely affected by a conversion of group common stock. The Company's Board of Directors could, in its sole discretion and without stockholder approval, determine to convert shares of Celera Genomics Group Common Stock into shares of PE Biosystems Group Common Stock, or vice versa, at any time including when either or both classes of common stock may be considered to be overvalued or undervalued. If the Company's Board of Directors chose to issue Celera Genomics Group Common Stock in exchange for PE Biosystems Group Common Stock, or vice versa, such conversion would dilute the interests in the Company of the holders of the class of common stock being issued in the conversion. If the Company's Board of Directors chose to issue Celera Genomics Group Common Stock in exchange for PE Biosystems Group Common Stock, or vice versa, such conversion could give holders of shares of the class of common stock converted a greater or lesser premium than any premium that was paid or might be paid by a third-party buyer of all or substantially all of the assets of the group whose stock is converted. o Proceeds of newly issued Celera Genomics Group Common Stock in the future could be allocated to the PE Biosystems Group. If and to the extent the PE Biosystems Group has an equity interest in the Celera Genomics Group in the form of Celera Genomics Designated Shares at the time of any future sale of Celera Genomics Group Common Stock, the Company's Board of Directors could allocate some or all of the proceeds of that sale to the PE Biosystems Group. Any such decision -30-

could favor one group over the other group. For example, the decision to allocate the proceeds to the PE Biosystems Group may adversely affect the Celera Genomics Group's ability to obtain funds to finance its growth strategies. There are no Celera Genomics Designated Shares outstanding as of the date of this Annual Report on Form 10-K. The Company's Board of Directors may change its management and allocation policies without stockholder approval to the detriment of either group. The Company's Board of Directors may modify or rescind the Company's policies with respect to the allocation of corporate overhead, taxes, debt, interest, and other matters, or may adopt additional policies, in its sole discretion, without stockholder approval. A decision to modify or rescind these policies, or adopt additional policies, could have different effects on holders of PE Biosystems Group Common Stock and holders of Celera Genomics Group Common Stock or could result in a benefit or detriment to one class of stockholders compared to the other class. The Company's Board of Directors will make any such decision in accordance with its good faith business judgment that the decision is in the best interests of the Company and all of its stockholders as a whole. Either group may finance the other group on terms unfavorable to one of the groups. From time to time, the Company anticipates that it will transfer cash and other property between groups to finance their business activities. When this occurs, the group providing the financing will be subject to the risks relating to the group receiving the financing. The Company will account for those transfers in one of the following ways: o as a reallocation of pooled debt or preferred stock; o as a short-term or long-term loan between groups or as a repayment of a previous borrowing; o as an increase or decrease in the PE Biosystems Group's equity interest in the Celera Genomics Group; or o as a sale of assets between groups. The Company's Board of Directors has not adopted specific criteria for determining when the Company will account for transfer of cash or other property as a reallocation of pooled debt or preferred stock, a loan or repayment, an increase or decrease in equity interest, or a sale of assets. These determinations, including the terms of any transactions accounted for as debt, may be unfavorable to either the group transferring or the group receiving the cash or other property. The Company's Board of Directors expects to make these determinations, either in specific instances or by setting generally applicable policies, after considering the financing requirements and objectives of the receiving group, the investment objectives of the transferring group, and the availability, cost, and time associated with alternative financing sources, prevailing interest rates, and general economic conditions. The Company can not assure stockholders that any terms that it fixes for debt will approximate those that could have been obtained by the borrowing group if it were a stand-alone corporation. -31-

The Celera Genomics Group may not be fully reimbursed for the PE Biosystems Group's use of its tax benefits and could be charged with higher future taxes than if it were a stand-alone tax payer. The Company's management and allocation policies provide that tax benefits generated but not used by the Celera Genomics Group may be used by the PE Biosystems Group. In accordance with management policy, the aggregate amount reimbursed to the Celera Genomics Group for such use may not exceed $75 million. All subsequent tax benefits in excess of this amount will not be credited to the Celera Genomics Group and the Celera Genomics Group will not be reimbursed for those tax benefits, unless the Celera Genomics Group can use those tax benefits. Accordingly, any tax benefits that can not be used by the Celera Genomics Group will not be carried forward to reduce its future taxes. This could result in the Celera Genomics Group being charged a greater portion of the total corporate tax liability in the future than would have been the case if the Celera Genomics Group had retained its tax benefits. Holders of group common stock may receive less consideration upon a sale of assets than if the group were a separate company. The Company's certificate of incorporation provides that if a disposition of all or substantially all of the assets of either group occurs, the Company must, subject to certain exceptions: o distribute to holders of the class of common stock relating to such group an amount equal to the net proceeds of such disposition, or o convert at a 10% premium such common stock into shares of the class of common stock relating to the other group. If the group subject to the disposition were a separate, independent company and its shares were acquired by another person, certain costs of that disposition, including corporate level taxes, might not be payable in connection with that acquisition. As a result, if the group subject to the disposition were a separate, independent company, stockholders of that group might receive a greater amount than the net proceeds that would be received by such stockholders if the assets of such group were sold. In addition, the Company can not assure stockholders that the net proceeds per share of the common stock relating to that group will be equal to or more than the market value per share of such common stock prior to or after announcement of a disposition. The Company's capital structure and variable vote per share may discourage acquisitions of a group or a class of common stock. A potential acquirer could acquire control of the Company by acquiring shares of common stock having a majority of the voting power of all shares of common stock outstanding. Such a majority could be obtained by acquiring a sufficient number of shares of both classes of common stock or, if one class of common stock has a majority of such voting power, only shares of that class. Currently, the PE Biosystems Group Common Stock has a substantial majority of the voting power. As a result, it is possible for an acquiror to obtain control by purchasing only shares of the PE Biosystems Group Common Stock. -32-

Decisions by directors and officers that affect market values could adversely affect voting and conversion rights. The relative voting power per share of each class of common stock and the number of shares of one class of common stock issuable upon the conversion of the other class of common stock will vary depending upon the relative market values of the PE Biosystems Group Common Stock and the Celera Genomics Group Common Stock. The market value of either or both classes of common stock could be adversely affected by market reaction to decisions by the Company's Board of Directors or management that investors perceive as affecting differently one class of common stock compared to the other. These decisions could involve changes to the Company's management and allocation policies, transfers of assets between groups, allocations of corporate opportunities, and financing resources between groups, and changes in dividend policies. Investors may not value common stock based on group financial information and policies. The Company can not assure stockholders that investors will value the PE Biosystems Group Common Stock and the Celera Genomics Group Common Stock based on the reported financial results and prospects of the separate groups or the dividend policies established by the Company's Board of Directors with respect to such groups. A recent Clinton Administration proposal could have adverse tax consequences for the Company or for Holders of group common stock. The Clinton Administration proposed legislation in February 2000 dealing with tracking stock such as PE Biosystems Group Common Stock and Celera Genomics Group Common Stock. Such proposal would, among other things, treat the receipt of stock similar to PE Biosystems Group Common Stock and Celera Genomics Common Group Stock in exchange for other stock in a corporation, or in a distribution by the issuing corporation, as taxable to the stockholders. If this proposal is enacted, it could have adverse tax consequences for the Company or for holders of PE Biosystems Group Common Stock or Celera Genomics Group Common Stock. A similar proposal was made in 1999. Congress did not act on the 1999 proposal, and it is not possible to predict whether Congress will act upon this proposal or any other proposal relating to tracking stock. If there are adverse U.S. federal income tax law developments, the Company may convert PE Biosystems Group Common Stock or Celera Genomics Group Common Stock into shares of the other class without any premium. The proposal of the Clinton Administration would be such an adverse development if it is implemented or receives certain legislative action. Provisions governing common stock could discourage a change of control and the payment of a premium for stockholders' shares. The Company's stockholder rights plan could prevent stockholders from profiting from an increase in the market value of their shares as a result of a change in control of the Company by delaying or preventing such change in control. The existence of two classes of common stock -33-

could also present complexities and could, in certain circumstances, pose obstacles, financial and otherwise, to an acquiring person. In addition, certain provisions of Delaware law and the Company's certificate of incorporation may also deter hostile takeover attempts. Item 6. SELECTED FINANCIAL DATA The Company incorporates herein by reference pages 9, 45, and 72 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company incorporates herein by reference pages 10-19, 46-54, and 73-87 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company incorporates herein by reference pages 15 and 79 of the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000. Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The following financial statements and the supplementary financial information included in the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000, are incorporated herein by reference: The combined Financial Statements and the reports thereon of PricewaterhouseCoopers LLP dated July 25, 2000, the Consolidated Financial Statements and the report thereon of PricewaterhouseCoopers LLP dated July 25, 2000, and pages 20-44, 55-71, and 88-114 of said Annual Report, including Note 12, pages 41-42, Note 12, page 70, and Note 12, pages 110-111, which contain unaudited quarterly financial information. Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The Company has not changed its public accounting firm within 24 months prior to June 30, 2000, the date of the Company's most recent financial statements, or during any subsequent period. There have been no unresolved disagreements on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. -34-

PART III Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Identification and Background of Directors The Company incorporates herein by reference pages 3-4 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. Identification of Executive Officers The following is a list of the Company's executive officers, their ages, and their positions and offices with the Company, as of September 8, 2000. <TABLE> <CAPTION> Name Age Present Positions and Year First Elected <S> <C> <C> Peter Barrett.................... 47 Vice President (1998) Samuel E. Broder................. 55 Vice President (1999) Peter Chambre.................... 44 Vice President (2000) Ugo D. DeBlasi................... 38 Assistant Controller (1999) Ronald D. Edelstein.............. 51 Vice President and Chief Information Officer (1998) Elaine J. Heron.................. 52 Vice President (1998) Michael W. Hunkapiller........... 51 Senior Vice President (1998); President, PE Biosystems Group (1994) Vikram Jog....................... 44 Controller (1999) Barbara J. Kerr.................. 54 Vice President, Human Resources (2000) Joseph E. Malandrakis............ 55 Vice President (1993) Kenneth D. Noonan................ 52 Senior Vice President, Corporate Development (2000) William B. Sawch................. 45 Senior Vice President and General Counsel (1993) Gregory T. Schiffman............. 42 Assistant Controller (1999) Deborah A. Smeltzer.............. 46 Assistant Controller (1999) J. Craig Venter.................. 53 Senior Vice President and President, Celera Genomics Group (1998) Tony L. White.................... 54 Chairman, President, and Chief Executive Officer (1995) Dennis L. Winger................. 52 Senior Vice President and Chief Financial Officer (1997) </TABLE> Each of the foregoing named officers was either elected at the last organizational meeting of the Company's Board of Directors, or elected by the Board since that date. The term of each officer will expire on October 19, 2000, the date of the next scheduled organizational meeting of the Board of Directors, unless renewed for another year. Identification of Certain Significant Employees Not applicable. Family Relationships To the best of the Company's knowledge and belief, there is no family relationship between any of the Company's directors, executive officers, or persons nominated or chosen by the Company to become a director or an executive officer. -35-

Business Experience With respect to the business experience of the Company's directors and persons nominated to become directors, the Company incorporates herein by reference pages 3-4 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. With respect to the executive officers of the Company, each such officer has been employed by the Company or a subsidiary in one or more executive or managerial capacities for at least the past five years, with the exception of Dr. Broder, Mr. Chambre, Mr. Edelstein, Dr. Heron, Mr. Jog, Ms. Kerr, Dr. Noonan, Mr. Schiffman, Ms. Smeltzer, Dr. Venter, and Mr. Winger. Dr. Broder was elected Vice President of the Company on August 19, 1999. Prior to his employment by the Company in August, 1998, Dr. Broder was Senior Vice President of IVAX Corporation for three years, and from 1989 to 1995 he served as director of the National Cancer Institute. Mr. Chambre was elected Vice President of the Company on August 17, 2000. Mr. Chambre is expected to assume the formal responsibilities of Chief Operating Officer of Celera Genomics in the fall of this year. Prior to his employment by the Company in July 2000, Mr. Chambre served as Chief Executive Officer of Bespak plc, a United Kingdom drug delivery group, for six years. Mr. Edelstein was elected Vice President of the Company on June 18, 1998. Prior to his employment by the Company in June 1998, Mr. Edelstein served as Vice President and Chief Information Officer of Witco Corporation, a manufacturer of specialty chemicals, for seven years. Dr. Heron was elected Vice President of the Company on December 21, 1995. She was most recently appointed Vice President and General Manager of the Molecular Biology unit of the PE Biosystems Group in July 1998. Previously Dr. Heron served as Vice President, Worldwide Sales, Service, and Marketing since December 1995. She had served as Vice President of Marketing at Affymetrix, Inc., a supplier of genetic analysis equipment, for the year prior to this appointment and previously was Director of Marketing for Applied Biosystems beginning in 1990. Mr. Jog was elected Controller of the Company on August 19, 1999. Prior to his employment by the Company in July, 1999, Mr. Jog served as Vice President and Controller of Hercules Incorporated, a manufacturer of chemicals, for seven years. Ms. Kerr was elected Vice President, Human Resources of the Company on September 5, 2000. Prior to her employment by the Company in September, 2000, Ms. Kerr served as a principal of Quantic, Inc., a human resources and compensation consulting firm. Prior to that, Ms. Kerr was employed by Chiron Corporation, which conducts research and development in the fields of biological proteins, gene therapy, and combinatorial chemistry, where she was Vice President, Human Resources from 1990 to 1997. Dr. Noonan was elected Senior Vice President of the Company on January 4, 2000. Prior to his employment by the Company in January, 2000, Dr. Noonan was a partner in the global life sciences practice of Booz, Allen & Hamilton, Inc., an international consulting firm, -36-

for three years, and from 1990 to 1996 he was a partner in The Wilkerson Group, a specialty medical products consulting group. Mr. Schiffman was elected Assistant Controller of the Company on August 19, 1999. Prior to his employment by the Company in June 1998, Mr. Schiffman was employed by Hewlett-Packard Company, a diversified electronics manufacturer, for ten years, most recently as controller and manufacturing manager of the company's NetMetrix Division. Ms. Smeltzer was elected Assistant Controller of the Company on November 18, 1999. Prior to her employment by the Company in November 1999, Ms. Smeltzer served as Chief Financial Officer and Vice President of Genset, SA, a global genomics company from May 1996 to November 1999, and she was a general partner of Grotech Capital Group, Inc. from 1988 to 1996. Dr. Venter was elected Senior Vice President of the Company and President, Celera Genomics Group, on November 19, 1998. Prior to his employment by the Company in August 1998, Dr. Venter was employed by The Institute for Genomic Research (TIGR), a non-profit entity which conducts research and development in genes, where he was founder, Chairman, and President for six years, and where he remains as Chairman. Mr. Winger was elected Senior Vice President and Chief Financial Officer of the Company on October 16, 1997. Prior to his employment by the Company in September 1997, Mr. Winger was employed by Chiron Corporation, which conducts research and development in the fields of biological proteins, gene therapy, and combinatorial chemistry, where he was Senior Vice President, Finance and Administration, and Chief Financial Officer since 1989. Involvement in Certain Legal Proceedings To the best of the Company's knowledge and belief, none of the Company's directors, persons nominated to become directors, or executive officers has been involved in any proceedings during the past five years that are material to an evaluation of the ability or integrity of such persons to be directors or executive officers of the Company. Compliance with Section 16(a) of the Securities Exchange Act of 1934 Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated herein by reference to page 10 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. Item 11. EXECUTIVE COMPENSATION The Company incorporates herein by reference pages 10-21 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. -37-

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Ownership of Certain Beneficial Owners Information concerning the security ownership of certain beneficial owners is incorporated herein by reference to pages 8-10 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. Security Ownership of Management Information concerning the security ownership of management is incorporated herein by reference to pages 8-10 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. Changes in Control The Company knows of no arrangements, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Information concerning certain relationships and related transactions is incorporated herein by reference to pages 20-21 of the Company's Proxy Statement dated September 8, 2000, in connection with its Annual Meeting of Stockholders to be held on October 19, 2000. -38-

PART IV Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following financial statements, together with the report thereon of PricewaterhouseCoopers LLP dated July 25, 2000, appearing in the Company's Annual Report to Stockholders for the fiscal year ended June 30, 2000, are incorporated by reference in this Annual Report on Form 10-K. With the exception of the aforementioned information and that which is specifically incorporated in Parts I and II, the Annual Report to Stockholders for the fiscal year ended June 30, 2000, is not to be deemed filed as part of this Annual Report on Form 10-K. <TABLE> <CAPTION> PE Biosystems Group Annual Report Page No. ------------------ <S> <C> Combined Statements of Operations Fiscal years 1998, 1999 and 2000.................... 20 Combined Statements of Financial Position At June 30, 1999 and 2000........................... 21 Combined Statements of Cash Flows Fiscal years 1998, 1999, and 2000................... 22 Combined Statements of Group Equity and Comprehensive Income Fiscal years 1998, 1999, and 2000................... 23 Notes to Combined Financial Statements....................... 24-43 Report of Management......................................... 44 Report of Independent Accountants............................ 44 -39-

Celera Genomics Group Annual Report Page No. ------------------ Combined Statements of Operations Fiscal years 1998, 1999, and 2000................... 55 Combined Statements of Financial Position At June 30, 1999 and 2000........................... 56 Combined Statements of Cash Flows Fiscal years 1998, 1999, and 2000................... 57 Combined Statements of Group Equity and Comprehensive Loss Fiscal years 1998, 1999, and 2000................... 58 Notes to Combined Financial Statements....................... 59-70 Report of Management......................................... 71 Report of Independent Accountants............................ 71 PE Corporation Annual Report Page No. ------------------ Consolidated Statements of Operations Fiscal years 1998, 1999, and 2000................... 88 Consolidated Statements of Financial Position At June 30, 1999 and 2000........................... 89 Consolidated Statements of Cash Flows Fiscal years 1998, 1999, and 2000................... 90 Consolidated Statements of Stockholders' Equity and Comprehensive Income Fiscal years 1998, 1999, and 2000................... 91 Notes to Consolidated Financial Statements................... 92-113 Report of Management......................................... 114 Report of Independent Accountants............................ 114 </TABLE> -40-

(a) 2. Financial Statement Schedules The following additional financial data should be read in conjunction with the consolidated financial statements in said Annual Report to Stockholders for the fiscal year ended June 30, 2000. Schedules not included with this additional financial data have been omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. 10-K Page No. ------------- Report of Independent Accountants on Financial Statement Schedule.......................................................... 46 Schedule II - Valuation and Qualifying Accounts and Reserves.......................................................... 47 (a) 3. Exhibits Exhibit No. --------- 2(1) Purchase Agreement dated as of March 8, 1999, between The Perkin-Elmer Corporation and EG&G, Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K of the Company dated May 28, 1999 (Commission file number 1-4389)). 2(2) Agreement and Plan of Merger dated March 10, 1999, among The Perkin-Elmer Corporation, a New York corporation, The Perkin-Elmer Corporation, a Delaware corporation, and PE Merger Corp., a New York corporation (incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-4 (No. 333-67797)). 2(3) Agreement and Plan of Merger, dated as of March 20, 2000, among PE Corporation, Umbrella Acquisition Corp. and Paracel, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-4 (No. 333-35080)). 3(i)(1) Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-4 (No. 333-67797)). 3(i)(2) Certificate of Designations of Series A Participating Junior Preferred Stock and Series B Participating Junior Preferred Stock (incorporated by reference to Exhibit A to Exhibit 4.1 to the Company's Registration Statement on Form S-4 (No. 333-67797)). 3(ii) By-laws of the Company (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 (No. 333-67797)). 4(1) Shareholder Protection Rights Agreement between the Company and BankBoston, N.A. (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-4 (No. 333-67797)). 4(2) Credit Agreement dated as of April 20, 2000, among The Perkin-Elmer Corporation, the Company, the lenders party thereto, Salomon Smith Barney Inc., Wachovia Bank, N.A., The Chase Manhattan Bank, and Citibank, N.A. 10(1) The Perkin-Elmer Corporation 1988 Stock Incentive Plan for Key Employees (incorporated by reference to Exhibit 10(4) to Annual Report on Form 10-K of the Company for the fiscal year ended July 31, 1988 (Commission file number 1-4389)).* 10(2) The Perkin-Elmer Corporation 1993 Stock Incentive Plan for Key Employees (incorporated by reference to Exhibit 99 to the Company's Registration Statement on Form S-8 (No. 33-50847)).* -41-

10(3) The Perkin-Elmer Corporation 1996 Stock Incentive Plan (incorporated by reference to Exhibit 99 to the Company's Registration Statement on Form S-8 (No. 333-15189)).* 10(4) The Perkin-Elmer Corporation 1996 Employee Stock Purchase Plan, as amended October 15, 1998 (incorporated by reference to Exhibit A to the Company's Proxy Statement for its 1998 Annual Meeting of Stockholders (Commission file number 1-4389)).* 10(5) The Perkin-Elmer Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 to the Company's Registration Statement on Form S-8 (No. 333-38713)).* 10(6) PerSeptive Biosystems, Inc. 1989 Stock Plan, as amended August 1, 1991 (incorporated by reference to Exhibit 10(1) of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998 (Commission file number 1-4389)).* 10(7) PerSeptive Biosystems, Inc. 1992 Stock Plan, as amended January 20, 1997 (incorporated by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q of PerSeptive Biosystems, Inc. for the fiscal quarter ended March 29, 1997 (Commission file No. 0-20032)).* 10(8) Molecular Informatics, Inc. 1997 Equity Ownership Plan (incorporated by reference to Exhibit 99 to the Company's Registration Statement on Form S-8 (Commission file No. 333-42683)).* 10(9) The Perkin-Elmer Corporation 1998 Stock Incentive Plan (incorporated by reference to Exhibit B to the Company's Proxy Statement for its 1998 Annual Meeting of Stockholders (Commission file number 1-4389)).* 10(10) PE Corporation 1999 Employee Stock Purchase Plan (incorporated by reference to Exhibit A to the Company's Proxy Statement for its 1999 Annual Meeting of Stockholders (Commission file number 1-4389)).* 10(11) PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan, as amended October 21, 1999 (incorporated by reference to Exhibit B to the Company's Proxy Statement for its 1999 Annual Meeting of Stockholders (Commission file number 1-4389)).* 10(12) PE Corporation/Celera Genomics Group 1999 Stock Incentive Plan, as amended October 21, 1999 (incorporated by reference to Exhibit C to the Company's Proxy Statement for its 1999 Annual Meeting of Stockholders (Commission file number 1-4389)).* 10(13) Agreement dated September 12, 1995, between the Company and Tony L. White (incorporated by reference to Exhibit 10(21) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1995 (Commission file number 1-4389)).* 10(14) Deferred Compensation Contract dated September 15, 1994, between the Company and Michael W. Hunkapiller (incorporated by reference to Exhibit 10(7) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1995 (Commission file number 1-4389)).* 10(15) Change of Control Agreement dated September 12, 1995, between the Company and Tony L. White (incorporated by reference to Exhibit 10(16) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1995 (Commission file number 1-4389)).* 10(16) Employment Agreement dated November 16, 1995, between the Company and Michael W. Hunkapiller (incorporated by reference to Exhibit 10(11) to Annual Report on Form 10-K of the Company for fiscal year ended June 30, 1996 (Commission file number 1-4389)).* 10(17) Employment Agreement dated November 16, 1995, between the Company and William B. Sawch (incorporated by reference to Exhibit 10(16) to Annual Report on Form 10-K of the Company for fiscal year ended June 30, 1998 (Commission file number 1-4389)).* 10(18) Employment Agreement dated September 25, 1997, between the Company and Dennis L. Winger (incorporated by reference to Exhibit 10(17) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1998 (Commission file number 1-4389)).* 10(19) Letter Agreement dated June 24, 1997, between the Company and Dennis L. Winger (incorporated by reference to Exhibit 10(18) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1998 (Commission file number 1-4389)).* 10(20) Deferred Compensation Contract dated July 15, 1993, between the Company and William B. Sawch (incorporated by reference to Exhibit 10(19) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1998 (Commission file number 1-4389)).* -42-

10(21) Agreement dated April 28, 1999, between the Company and J. Craig Venter (incorporated by reference to Exhibit 10(20) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1999 (Commission file number 1-4389)).* 10(22) The Perkin-Elmer Corporation Supplemental Retirement Plan effective as of August 1, 1979, as amended through October 1, 1996.* 10(23) The Excess Benefit Plan of The Perkin-Elmer Corporation dated August 1, 1984, as amended through August 17, 2000.* 10(24) 1993 Director Stock Purchase and Deferred Compensation Plan as amended through March 17, 2000 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2000 (Commission file number 1-4389)).* 10(25) PE Corporation Performance Unit Bonus Plan as amended through November 18, 1999 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q of the Company for the quarter ended December 31, 1999 (Commission file number 1-4389)).* 10(26) The Estate Enhancement Plan of The Perkin-Elmer Corporation (incorporated by reference to Exhibit 10(22) to Annual Report on Form 10-K of the Company for the fiscal year ended June 30, 1997 (Commission file number 1-4389)). 10(27) PE Corporation Deferred Compensation Plan, as amended and restated effective as of January 1, 1998 (incorporated by reference to Exhibit 4 to the Company's Registration Statement on Form S-8 (No. 333-45187).* 11 Computation of Net Income (Loss) per Share for the three years ended June 30, 2000 (incorporated by reference to Note 1 to Consolidated Financial Statements of Annual Report to Stockholders for the fiscal year ended June 30, 2000). 13 Annual Report to Stockholders for the fiscal year ended June 30, 2000 (to the extent incorporated herein by reference). 21 List of Subsidiaries. 23 Consent of PricewaterhouseCoopers LLP. 27 Financial Data Schedule. * Management plan or compensatory plan or arrangement (b) Reports on Form 8-K During the quarter ended June 30, 2000, the Company filed a Current Report on Form 8-K dated June 9, 2000, and filed June 12, 2000, to report under Item 2 thereof the acquisition of Paracel, Inc. -43-

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. PE CORPORATION By /s/ William B. Sawch --------------------------- William B. Sawch Senior Vice President and General Counsel Date: September 27, 2000 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. /s/ Tony L. White September 27, 2000 -------------------------------------------- Tony L. White Chairman of the Board of Directors, President and Chief Executive Officer (Principal Executive Officer) /s/ Dennis L. Winger September 27, 2000 ----------------------------------------------------- Dennis L. Winger Senior Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Vikram Jog September 27, 2000 ----------------------------------------------------- Vikram Jog Controller (Principal Accounting Officer) -44-

/s/ Richard H. Ayers September 27, 2000 ----------------------------------------------------- Richard H. Ayers Director /s/ Jean-Luc Belingard September 27, 2000 ----------------------------------------------------- Jean-Luc Belingard Director /s/ Robert H. Hayes September 27, 2000 ----------------------------------------------------- Robert H. Hayes Director /s/ Arnold J. Levine September 27, 2000 ----------------------------------------------------- Arnold J. Levine Director /s/ Theodore E. Martin September 27, 2000 ----------------------------------------------------- Theodore E. Martin Director /s/ Georges C. St. Laurent, Jr. September 27, 2000 ----------------------------------------------------- Georges C. St. Laurent, Jr. Director /s/ Carolyn W. Slayman September 27, 2000 ----------------------------------------------------- Carolyn W. Slayman Director /s/ Orin R. Smith September 27, 2000 ----------------------------------------------------- Orin R. Smith Director /s/ James R. Tobin September 27, 2000 ----------------------------------------------------- James R. Tobin Director -45-

REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of PE Corporation Our audits of the consolidated financial statements of PE Corporation referred to in our report dated July 25, 2000, in the 2000 Annual Report to Stockholders of PE Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a)2 of this Form 10-K. In our opinion, the Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford, Connecticut July 25, 2000 -46-

PE CORPORATION VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED JUNE 30, 1998, 1999, AND 2000 (Amounts in thousands) <TABLE> <CAPTION> ALLOWANCE FOR DOUBTFUL ACCOUNTS <S> <C> Balance at June 30, 1997............................................... $ 3,840 Charged to income in fiscal year 1998.................................. 1,518 Deductions from reserve in fiscal year 1998............................ (1,070) Acquired Business (2).................................................. 495 ------- Balance at June 30, 1998............................................... 4,783 Charged to income in fiscal year 1999.................................. 2,101 Divested Business (2).................................................. (449) Deductions from reserve in fiscal year 1999............................ (2,601) ------- Balance at June 30, 1999 (1)........................................... 3,834 Charged to income in fiscal year 2000.................................. 3,146 Deductions from reserve in fiscal year 2000............................ (3,015) ------- Balance at June 30, 2000 (1)........................................... $ 3,965 ======= </TABLE> (1) Deducted in the Consolidated Statements of Financial Position from accounts receivable. (2) See Note 2 to the Consolidated Financial Statements. SCHEDULE II -47-

EXHIBIT INDEX Exhibit Number 4.(2) Credit Agreement 10.(22) The Perkin-Elmer Corporation Supplemental Retirement Plan 10.(23) The Excess Benefit Plan of The Perkin-Elmer Corporation 13 Annual Report to Stockholders for the fiscal year ended June 30, 2000 (to the extent incorporated herein by reference). 21 List of Subsidiaries. 23 Consent of Pricewaterhouse Coopers LLP. 27 Financial Data Schedule.


                                                                  EXECUTION COPY


                                U.S. $100,000,000


                                CREDIT AGREEMENT

                           Dated as of April 20, 2000

                                      Among

                          THE PERKIN-ELMER CORPORATION
                                   as Borrower


                                 PE CORPORATION

                                  as Guarantor


                        THE INITIAL LENDERS NAMED HEREIN

                               as Initial Lenders


                            SALOMON SMITH BARNEY INC.

                                as Sole Arranger


                               WACHOVIA BANK, N.A.

                              as Syndication Agent


                            THE CHASE MANHATTAN BANK

                             as Documentation Agent

                                       and

                                 CITIBANK, N.A.

                             as Administrative Agent


TABLE OF CONTENTS ARTICLE I DEFINITIONS AND ACCOUNTING TERMS <TABLE> <S> <C> <C> SECTION 1.01. Certain Defined Terms 1 --------------------- SECTION 1.02. Computation of Time Periods 12 --------------------------- SECTION 1.03. Accounting Terms 12 ---------------- ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances 12 ----------------------------- SECTION 2.02. Making the Revolving Credit Advances 12 ------------------------------------ SECTION 2.03. The Competitive Bid Advances 13 ---------------------------- SECTION 2.04. Fees 16 ---- SECTION 2.05. Optional Termination or Reduction of the Commitments 16 ---------------------------------------------------- SECTION 2.06. Repayment of Revolving Credit Advances 16 -------------------------------------- SECTION 2.07. Interest on Revolving Credit Advances 17 ------------------------------------- SECTION 2.08. Interest Rate Determination 17 --------------------------- SECTION 2.09. Optional Conversion of Revolving Credit Advances 18 ------------------------------------------------ SECTION 2.10. Prepayments of Revolving Credit Advances 18 ---------------------------------------- SECTION 2.11. Increased Costs 19 --------------- SECTION 2.12. Illegality 19 ---------- SECTION 2.13. Payments and Computations 19 ------------------------- SECTION 2.14. Taxes 20 ----- SECTION 2.15. Sharing of Payments, Etc. 22 ------------------------ SECTION 2.16. Evidence of Debt 22 ---------------- SECTION 2.17. Use of Proceeds 23 --------------- SECTION 2.18. Increase in the Aggregate Commitments 23 ------------------------------------- SECTION 2.19. Extension of Termination Date 24 ----------------------------- ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03 26 --------------------------------------------------------------- SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing 27 ------------------------------------------------------ SECTION 3.04. Determinations Under Section 3.01 28 --------------------------------- ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower and the Guarantor 28 ARTICLE V COVENANTS OF THE GUARANTOR SECTION 5.01. Affirmative Covenants 30 --------------------- SECTION 5.02. Negative Covenants 31 ------------------

ii Page SECTION 5.03. Financial Covenants 32 ------------------- ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default 33 ----------------- ARTICLE VII GUARANTY 7.01. Guaranty 35 -------- 7.02. Guaranty Absolute 35 ----------------- 7.03. Waivers and Acknowledgments 36 --------------------------- 7.04. Subrogation 36 ----------- 7.05. Continuing Guaranty; Assignments 37 -------------------------------- ARTICLE VIII THE AGENT SECTION 8.01. Authorization and Action 37 ------------------------ SECTION 8.02. Agent's Reliance, Etc. 37 --------------------- SECTION 8.03. Citibank and Affiliates 38 ----------------------- SECTION 8.04. Lender Credit Decision 38 ---------------------- SECTION 8.05. Indemnification 38 --------------- SECTION 8.06. Successor Agent 38 --------------- SECTION 8.07. Other Agents. 39 ------------- ARTICLE IX MISCELLAEOUS SECTION 9.01. Amendments, Etc. 39 --------------- SECTION 9.02. Notices, Etc. 39 ------------ SECTION 9.03. No Waiver; Remedies 40 ------------------- SECTION 9.04. Costs and Expenses 40 ------------------ SECTION 9.05. Right of Set-off 41 ---------------- SECTION 9.06. Binding Effect 41 -------------- SECTION 9.07. Assignments and Participations 41 ------------------------------ SECTION 9.08. Confidentiality 43 --------------- SECTION 9.09. Governing Law 43 ------------- SECTION 9.10. Execution in Counterparts 43 ------------------------- SECTION 9.11. Jurisdiction, Etc. 43 ----------------- Schedules Schedule I - List of Applicable Lending Offices </TABLE>

iii <TABLE> <S> <C> <C> Schedule 3.01(b) - Disclosed Litigation Schedule 5.02(a) - Existing Liens Exhibits Exhibit A-1 - Form of Revolving Credit Note Exhibit A-2 - Form of Competitive Bid Note Exhibit B-1 - Form of Notice of Revolving Credit Borrowing Exhibit B-2 - Form of Notice of Competitive Bid Borrowing Exhibit C - Form of Assignment and Acceptance Exhibit D - Form of Opinion of Counsel for the Borrower and the Guarantor </TABLE>

CREDIT AGREEMENT Dated as of April 20, 2000 THE PERKIN-ELMER CORPORATION, a New York corporation (the "Borrower"), PE CORPORATION, a Delaware corporation the ("Guarantor"), the banks, financial institutions and other institutional lenders (the "Initial Lenders") listed on the signature pages hereof, SALOMON SMITH BARNEY INC., as sole arranger, WACHOVIA BANK, N.A., as syndication agent, THE CHASE MANHATTAN BANK, as documentation agent, and CITIBANK, N.A. ("Citibank"), as administrative agent (the "Agent") for the Lenders (as hereinafter defined), agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Advance" means a Revolving Credit Advance or a Competitive Bid Advance. "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the possession, direct or indirect, of the power to vote 20% or more of the Voting Stock of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by contract or otherwise. "Agent's Account" means the account of the Agent maintained by the Agent at Citibank at its office at 399 Park Avenue, New York, New York 10043, Account No. 36852248, Attention: Brian Maxwell. "Applicable Lending Office" means, with respect to each Lender, such Lender's Domestic Lending Office in the case of a Base Rate Advance and such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Advance and, in the case of a Competitive Bid Advance, the office of such Lender notified by such Lender to the Agent as its Applicable Lending Office with respect to such Competitive Bid Advance. "Applicable Margin" means as of any date, a percentage per annum determined by reference to the Pricing Level in effect on such date as set forth below:

2 <TABLE> <CAPTION> ----------------------------------------------------------------------------------------- Pricing Level Applicable Margin for Applicable Margin for Base Rate Advances Eurodollar Rate Advances ----------------------------------------------------------------------------------------- <S> <C> <C> Level 1 0.00% 0.185% ----------------------------------------------------------------------------------------- Level 2 0.00% 0.270% ----------------------------------------------------------------------------------------- Level 3 0.00% 0.350% ----------------------------------------------------------------------------------------- Level 4 0.00% 0.500% ----------------------------------------------------------------------------------------- Level 5 0.00% 0.675% ----------------------------------------------------------------------------------------- </TABLE> "Applicable Percentage" means, as of any date a percentage per annum determined by reference to the Pricing Level in effect on such date as set forth below: <TABLE> <CAPTION> -------------------------------------------------------------- Pricing Level Applicable Percentage <S> <C> -------------------------------------------------------------- Level 1 0.065% -------------------------------------------------------------- Level 2 0.080% -------------------------------------------------------------- Level 3 0.100% -------------------------------------------------------------- Level 4 0.125% -------------------------------------------------------------- Level 5 0.175% -------------------------------------------------------------- </TABLE> "Applicable Utilization Fee" means, as of any date on which the aggregate outstanding Advances exceed 33% of the aggregate Commitments, a percentage per annum determined by reference to the Pricing Level in effect on such date as set forth below: <TABLE> <CAPTION> -------------------------------------------------------------- Pricing Level Applicable Utilization Fee -------------------------------------------------------------- <S> <C> Level 1 0.050% -------------------------------------------------------------- Level 2 0.075% -------------------------------------------------------------- Level 3 0.100% -------------------------------------------------------------- Level 4 0.125% -------------------------------------------------------------- Level 5 0.150% -------------------------------------------------------------- </TABLE> "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the Agent, in substantially the form of Exhibit C hereto. "Assuming Lender" has the meaning specified in Section 2.18(d).

3 "Assumption Agreement" has the meaning specified in Section 2.18(d)(ii). "Base Rate" means a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank's base rate; (b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by dividing (A) the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major United States money market banks, such three-week moving average (adjusted to the basis of a year of 360 days) being determined weekly on each Monday (or, if such day is not a Business Day, on the next succeeding Business Day) for the three-week period ending on the previous Friday by Citibank on the basis of such rates reported by certificate of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication shall be suspended or terminated, on the basis of quotations for such rates received by Citibank from three New York certificate of deposit dealers of recognized standing selected by Citibank, by (B) a percentage equal to 100% minus the average of the daily percentages specified during such three-week period by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, but not limited to, any emergency, supplemental or other marginal reserve requirement) for Citibank with respect to liabilities consisting of or including (among other liabilities) three-month U.S. dollar non-personal time deposits in the United States, plus (iii) the average during such three-week period of the annual assessment rates estimated by Citibank for determining the then current annual assessment payable by Citibank to the Federal Deposit Insurance Corporation (or any successor) for insuring U.S. dollar deposits of Citibank in the United States; and (c) 1/2 of one percent per annum above the Federal Funds Rate. "Base Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(i). "Borrowing" means a Revolving Credit Borrowing or a Competitive Bid Borrowing. "Business Day" means a day of the year on which banks are not required or authorized by law to close in New York City and, if the applicable Business Day relates to any Eurodollar Rate Advances or LIBO Rate Advances, on which dealings are carried on in the London interbank market. "Commitment" means as to any Lender (a) the amount set forth opposite such Lender's name on the signature pages hereof, (b) if such Lender has become a Lender hereunder pursuant to an Assumption Agreement, the amount set forth in such Assumption Agreement or (c) if such Lender has entered into any Assignment and Acceptance, the amount set forth for such Lender in the Register maintained by the Agent pursuant to Section 9.07(d), as such amount may be reduced pursuant to Section 2.05 or increased pursuant to Section 2.18. "Commitment Date" has the meaning specified in Section 2.18(b). "Commitment Increase" has the meaning specified in Section 2.18(a).

4 "Competitive Bid Advance" means an advance by a Lender to the Borrower as part of a Competitive Bid Borrowing resulting from the competitive bidding procedure described in Section 2.03 and refers to a Fixed Rate Advance or a LIBO Rate Advance. "Competitive Bid Borrowing" means a borrowing consisting of simultaneous Competitive Bid Advances from each of the Lenders whose offer to make one or more Competitive Bid Advances as part of such borrowing has been accepted under the competitive bidding procedure described in Section 2.03. "Competitive Bid Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower to such Lender resulting from a Competitive Bid Advance made by such Lender. "Competitive Bid Reduction" has the meaning specified in Section 2.01. "Confidential Information" means information that the Borrower or the Guarantor furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Borrower or the Guarantor. "Consenting Lender" has the meaning specified in Section 2.19(b). "Consolidated" refers to the consolidation of accounts in accordance with GAAP. "Convert", "Conversion" and "Converted" each refers to a conversion of Revolving Credit Advances of one Type into Revolving Credit Advances of the other Type pursuant to Section 2.08 or 2.09. "Debt" of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 90 days incurred in the ordinary course of such Person's business), (c) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (f) all obligations, contingent or otherwise, of such Person in respect of acceptances, letters of credit or similar extensions of credit, (g) all obligations of such Person in respect of Hedge Agreements, (h) all Debt of others referred to in clauses (a) through (g) above or clause (i) below guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (1) to pay or purchase such Debt or to advance or supply funds for the payment or purchase of such Debt, (2) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Debt or to assure the holder of such Debt against loss, (3) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (4) otherwise to assure a creditor against loss, and (i) all Debt referred to in clauses (a) through (h) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien on property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt.

5 "Debt for Borrowed Money" of any Person means all Debt of such Person of the types described in clauses (a) through (e) of the definition of "Debt", to the extent reflected on a Consolidated balance sheet of such Person in accordance with GAAP. "Debt Rating" means, as of any date, the Public Debt Rating in effect on such date or, if no Public Debt Rating is then in effect, the Implied Debt Rating in effect on such date. "Debt/Total Capital Ratio" means, as of any date of determination, the ratio, expressed as a decimal fraction, of Consolidated Debt for Borrowed Money of the Guarantor and its Subsidiaries to the sum of Consolidated Debt for Borrowed Money of the Guarantor and its Subsidiaries plus Net Worth. "Default" means any Event of Default or any event that would constitute an Event of Default but for the requirement that notice be given or time elapse or both. "Disclosed Litigation" has the meaning specified in Section 3.01(b). "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" opposite its name on Schedule I hereto or in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Effective Date" has the meaning specified in Section 3.01. "Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender; and (iii) any other Person approved by the Agent and, unless an Event of Default has occurred and is continuing at the time any assignment is effected in accordance with Section 9.07, the Borrower, such approval not to be unreasonably withheld or delayed; provided, however, that neither the Borrower nor an Affiliate of the Borrower shall qualify as an Eligible Assignee. "Environmental Action" means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" means any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" means any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.

6 "ERISA Affiliate" means any Person that for purposes of Title IV of ERISA is a member of the Guarantor's controlled group, or under common control with the Guarantor, within the meaning of Section 414 of the Internal Revenue Code. "ERISA Event" means (a) (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect to such event has been waived by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without regard to subsection (2) of such Section) are met with a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect to such Plan within the following 30 days; (b) the application for a minimum funding waiver with respect to a Plan; (c) the provision by the administrator of any Plan of a notice of intent to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation of operations at a facility of the Borrower, the Guarantor or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by the Borrower, the Guarantor or any ERISA Affiliate from a Multiple Employer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the imposition of a lien under Section 302(f) of ERISA shall have been met with respect to any Plan; (g) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" opposite its name on Schedule I hereto or in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender (or, if no such office is specified, its Domestic Lending Office), or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "Eurodollar Rate" means, for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/100 of 1% per annum) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars are offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to such Reference Bank's Eurodollar Rate Advance comprising part of such Revolving Credit Borrowing to be outstanding during such Interest Period and for a period equal to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. If the Telerate Page 3750 (or any successor page) is unavailable, the Eurodollar Rate for any Interest Period for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08.

7 "Eurodollar Rate Advance" means a Revolving Credit Advance that bears interest as provided in Section 2.07(a)(ii). "Eurodollar Rate Reserve Percentage" for any Interest Period for all Eurodollar Rate Advances or LIBO Rate Advances comprising part of the same Borrowing means the reserve percentage applicable two Business Days before the first day of such Interest Period under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System in New York City with respect to liabilities or assets consisting of or including Eurocurrency Liabilities (or with respect to any other category of liabilities that includes deposits by reference to which the interest rate on Eurodollar Rate Advances or LIBO Rate Advances is determined) having a term equal to such Interest Period. "Events of Default" has the meaning specified in Section 6.01. "Extension Date" has the meaning specified in Section 2.19(b). "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. "Fixed Rate Advances" has the meaning specified in Section 2.03(a)(i). "GAAP" has the meaning specified in Section 1.03. "Hazardous Materials" means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Hedge Agreements" means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements. "Implied Debt Rating" means the rating assigned by S&P to the Guarantor's unsecured "implied senior debt" from time to time, as published by S&P on January 11, 2000 or any subsequent publication thereof in any medium by S&P (which rating on the date hereof is A-) or, if such rating is unavailable, the equivalent rating assigned by Moody's to the Guarantor's unsecured "implied senior debt", as notified in writing to the Guarantor by Moody's. "Increase Date" has the meaning specified in Section 2.18(a). "Increasing Lender" has the meaning specified in Section 2.18(b). "Information Memorandum" means the information memorandum dated March 13, 2000 used by the Agent in connection with the syndication of the Commitments.

8 "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Revolving Credit Borrowing and each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing, the period commencing on the date of such Eurodollar Rate Advance or LIBO Rate Advance or the date of the Conversion of any Base Rate Advance into such Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, with respect to Eurodollar Rate Advances, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be one, two, three or six months or nine or twelve months if available by all Lenders, as the Borrower may, upon notice received by the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, select; provided, however, that: (i) the Borrower may not select any Interest Period that ends after the Termination Date; (ii) Interest Periods commencing on the same date for Eurodollar Rate Advances comprising part of the same Revolving Credit Borrowing or for LIBO Rate Advances comprising part of the same Competitive Bid Borrowing shall be of the same duration; (iii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, however, that, if such extension would cause the last day of such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day; and (iv) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated and rulings issued thereunder. "Lenders" means the Initial Lenders, each Assuming Lender that shall become a party hereto pursuant to Section 2.18 or 2.19 and each Person that shall become a party hereto pursuant to Section 9.07. "LIBO Rate" means, for any Interest Period for all LIBO Rate Advances comprising part of the same Competitive Bid Borrowing, an interest rate per annum equal to the rate per annum obtained by dividing (a) the rate per annum (rounded upward to the nearest whole multiple of 1/100 of 1% per annum) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in U.S. dollars at approximately 11:00 A.M. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period or, if for any reason such rate is not available, the average (rounded upward to the nearest whole multiple of 1/100 of 1% per annum, if such average is not such a multiple) of the rate per annum at which deposits in U.S. dollars offered by the principal office of each of the Reference Banks in London, England to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days before the first day of such Interest Period in an amount substantially equal to the amount that would be the Reference Banks' respective ratable shares of such Borrowing if such Borrowing were to be a Revolving Credit Borrowing to be outstanding during such interest Period and for a period equal

9 to such Interest Period by (b) a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage for such Interest Period. If Telerate Page 3750 (or any successor page) is unavailable, the LIBO Rate for any Interest Period for each LIBO Rate Advance comprising part of the same Competitive Bid Borrowing shall be determined by the Agent on the basis of applicable rates furnished to and received by the Agent from the Reference Banks two Business Days before the first day of such Interest Period, subject, however, to the provisions of Section 2.08. "LIBO Rate Advances" means a Competitive Bid Advance bearing interest based on the LIBO Rate. "Lien" means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor. "Material Adverse Change" means any material adverse change in the business, financial condition or results of operations of the Guarantor and its Subsidiaries taken as a whole. "Material Adverse Effect" means a material adverse effect on (a) the business, financial condition or operations of the Guarantor and its Subsidiaries taken as a whole or (b) the rights and remedies of the Agent or any Lender under this Agreement or any Note. "Moody's" means Moody's Investors Service, Inc. "Multiemployer Plan" means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to which the Borrower, the Guarantor or any ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the preceding five plan years made or accrued an obligation to make contributions. "Multiple Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower, the Guarantor or any ERISA Affiliate and at least one Person other than the Borrower, the Guarantor and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower, the Guarantor or any ERISA Affiliate could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated. "Net Worth" means stockholders' equity of the Guarantor. "Non-Consenting Lender" has the meaning specified in Section 2.19(b). "Note" means a Revolving Credit Note or a Competitive Bid Note. "Notice of Competitive Bid Borrowing" has the meaning specified in Section 2.03(a). "Notice of Revolving Credit Borrowing" has the meaning specified in Section 2.02(a). "PBGC" means the Pension Benefit Guaranty Corporation (or any successor). "Permitted Liens" means such of the following as to which no enforcement, collection, execution, levy or foreclosure proceeding shall have been commenced: (a) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising

10 in the ordinary course of business securing obligations that are not overdue for a period of more than 60 days or that are being contested in good faith by appropriate proceedings; (c) pledges or deposits to secure obligations under workers' compensation laws, unemployment insurance or similar legislation or to secure public or statutory obligations; and (d) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof. "Plan" means a Single Employer Plan or a Multiple Employer Plan. "Pricing Level" means, as of any date the level set forth below as then in effect for the Guarantor, as determined in accordance with the following provisions of this definition: Level 1: Debt Rating of not lower than A+ by S&P or not lower than A1 by Moody's or, if no Debt Rating is available from S&P or Moody's, Net Worth of not less than $2,000,000,000 and Debt/Total Capital Ratio of not more than 0.30:1.00. Level 2: Debt Rating of lower than Level 1 but not lower than A by S&P or A2 by Moody's or, if no Debt Rating is available from S&P or Moody's, Net Worth of not less than $1,600,000,000 and Debt/Total Capital Ratio of not more than 0.35:1.00. Level 3: Debt Rating of lower than Level 2 but not lower than A- by S&P or A3 by Moody's or, if no Debt Rating is available from S&P or Moody's, Net Worth of not less than $1,300,000,000 and Debt/Total Capital Ratio of not more than 0.40:1.00. Level 4: Debt Rating of lower than Level 3 but not lower than BBB+ by S&P or Baa1 by Moody's or, if no Debt Rating is available from S&P or Moody's, Net Worth of not less than $1,000,000,000 and Debt/Total Capital Ratio of not more than 0.45:1.00. Level 5: Debt Rating of lower than Level 4 or, if no Debt Rating is available from S&P or Moody's, Net Worth of less than $1,000,000,000 or Debt/Total Capital Ratio of more than 0.45:1.00. For purposes of the foregoing, (a) if only one of S&P and Moody's shall have in effect a Debt Rating, the Pricing Level shall be determined by reference to the available rating; (b) if the ratings established by S&P and Moody's shall fall within different levels, the Pricing Level shall be based upon the higher rating; and (c) if no Debt Rating is then available (x) any change in the Pricing Level determined by reference to the Borrower's Net Worth or Debt/Total Capital Ratio shall be effective on the date that the financial statements required to be delivered pursuant to Section 5.01(h)(i) and (ii) are delivered or deemed delivered in accordance with such Section and (y) the Pricing Level shall be at Level 5 for so long as the Borrower has not delivered the information described in clause (c)(x) above as and when required under Section 5.01(h)(i) or (ii), as the case may be. "Public Debt Rating" means, as of any date, the lowest rating that has been most recently announced by either S&P or Moody's, as the case may be, for any class of non-credit enhanced long-term senior unsecured debt issued by the Guarantor. For purposes of the foregoing, (a) if any rating established by S&P or Moody's shall be changed, such change shall be effective as of the date on which such change is first announced publicly

11 by the rating agency making such change; and (b) if S&P or Moody's shall change the basis on which ratings are established, each reference to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall refer to the then equivalent rating by S&P or Moody's, as the case may be. "Reference Banks" means Citibank, The Chase Manhattan Bank and Wachovia Bank, N.A. "Register" has the meaning specified in Section 9.07(d). "Required Lenders" means at any time Lenders owed at least a majority in interest of the then aggregate unpaid principal amount of the Revolving Credit Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having at least a majority in interest of the Commitments. "Revolving Credit Advance" means an advance by a Lender to the Borrower as part of a Revolving Credit Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance (each of which shall be a "Type" of Revolving Credit Advance). "Revolving Credit Borrowing" means a borrowing consisting of simultaneous Revolving Credit Advances of the same Type and, in the case of Eurodollar Rate Advances, for the same Interest Period, made by each of the Lenders pursuant to Section 2.01. "Revolving Credit Note" means a promissory note of the Borrower payable to the order of any Lender, delivered pursuant to a request made under Section 2.16 in substantially the form of Exhibit A-1 hereto, evidencing the aggregate indebtedness of the Borrower to such Lender resulting from the Revolving Credit Advances made by such Lender. "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies, Inc. "Single Employer Plan" means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees of the Borrower, the Guarantor or any ERISA Affiliate and no Person other than the Borrower, the Guarantor and the ERISA Affiliates or (b) was so maintained and in respect of which the Borrower, the Guarantor or any ERISA Affiliate could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated. "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's other Subsidiaries. "Termination Date" means the earlier of (a) April 20, 2005, subject to the extension thereof pursuant to Section 2.19 and (b) the date of termination in whole of the Commitments pursuant to Section 2.05 or 6.01; provided, however, that the Termination Date of any Lender that is a Non-Consenting Lender to any requested extension pursuant to Section 2.19 shall be the Termination Date in effect immediately prior to the applicable Extension Date for all purposes of this Agreement.

12 "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". SECTION 1.03. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in Section 4.01(e) ("GAAP"). ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Revolving Credit Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate amount not to exceed at any time outstanding such Lender's Commitment provided that the aggregate amount of the Commitments of the Lenders shall be deemed used from time to time to the extent of the aggregate amount of the Competitive Bid Advances then outstanding and such deemed use of the aggregate amount of the Commitments shall be allocated among the Lenders ratably according to their respective Commitments (such deemed use of the aggregate amount of the Commitments being a "Competitive Bid Reduction"). Each Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Revolving Credit Advances of the same Type made on the same day by the Lenders ratably according to their respective Commitments. Within the limits of each Lender's Commitment, the Borrower may borrow under this Section 2.01, prepay pursuant to Section 2.10 and reborrow under this Section 2.01. SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving Credit Borrowing shall be made on notice, given not later than (x) 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances or (y) 11:00 A.M. (New York City time) on the date of the proposed Revolving Credit Borrowing in the case of a Revolving Credit Borrowing consisting of Base Rate Advances, by the Borrower to the Agent, which shall give to each Lender prompt notice thereof by telecopier or telex. Each such notice of a Revolving Credit Borrowing (a "Notice of Revolving Credit Borrowing") shall be by telephone, confirmed immediately in writing, or telecopier or telex in substantially the form of Exhibit B-1 hereto, specifying therein the requested (i) date of such Revolving Credit Borrowing, (ii) Type of Advances comprising such Revolving Credit Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing, and (iv) in the case of a Revolving Credit Borrowing consisting of Eurodollar Rate Advances, initial Interest Period for each such Revolving Credit Advance. Each Lender shall, before 12:00 noon (New York City time) on the date of such Revolving Credit Borrowing make available for the account of its Applicable Lending Office to the Agent at the Agent's Account, in same day funds, such Lender's ratable portion of such Revolving Credit Borrowing. After the Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Agent will make such funds available to the Borrower at the Agent's address referred to in Section 9.02.

13 (b) Anything in subsection (a) above to the contrary notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for any Revolving Credit Borrowing if the aggregate amount of such Revolving Credit Borrowing is less than $5,000,000 or if the obligation of the Lenders to make Eurodollar Rate Advances shall then be suspended pursuant to Section 2.08 or 2.12 and (ii) the Eurodollar Rate Advances may not be outstanding as part of more than ten separate Revolving Credit Borrowings. (c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding on the Borrower. In the case of any Revolving Credit Borrowing that the related Notice of Revolving Credit Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Revolving Credit Borrowing for such Revolving Credit Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Revolving Credit Advance to be made by such Lender as part of such Revolving Credit Borrowing when such Revolving Credit Advance, as a result of such failure, is not made on such date. (d) Unless the Agent shall have received notice from a Lender prior to the date of any Revolving Credit Borrowing that such Lender will not make available to the Agent such Lender's ratable portion of such Revolving Credit Borrowing, the Agent may assume that such Lender has made such portion available to the Agent on the date of such Revolving Credit Borrowing in accordance with subsection (a) of this Section 2.02 and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Agent, such Lender and the Borrower severally agree to repay to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Revolving Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Agent such corresponding amount, such amount so repaid shall constitute such Lender's Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes of this Agreement. (e) The failure of any Lender to make the Revolving Credit Advance to be made by it as part of any Revolving Credit Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Revolving Credit Advance on the date of such Revolving Credit Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Revolving Credit Advance to be made by such other Lender on the date of any Revolving Credit Borrowing. SECTION 2.03. The Competitive Bid Advances. (a) Each Lender severally agrees that the Borrower may make Competitive Bid Borrowings under this Section 2.03 from time to time on any Business Day during the period from the date hereof until the date occurring 10 days prior to the Termination Date in the manner set forth below; provided that, following the making of each Competitive Bid Borrowing, the aggregate amount of the Advances then outstanding shall not exceed the aggregate amount of the Commitments of the Lenders (computed without regard to any Competitive Bid Reduction). (i) The Borrower may request a Competitive Bid Borrowing under this Section 2.03 by delivering to the Agent, by telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice of Competitive Bid Borrowing"), in substantially the form of Exhibit B-2 hereto, specifying therein the requested (v) date of such proposed Competitive Bid Borrowing, (w) aggregate amount of such proposed Competitive Bid Borrowing, (x) in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, Interest Period, or in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances, maturity date for repayment of each Fixed Rate Advance to be made as part of such Competitive Bid Borrowing (which maturity

14 date may not be earlier than the date occurring 7 days after the date of such Competitive Bid Borrowing or later than the Termination Date), (y) interest payment date or dates relating thereto, and (z) other terms (if any) to be applicable to such Competitive Bid Borrowing, not later than 10:00 A.M. (New York City time) (A) at least one Business Day prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall specify in the Notice of Competitive Bid Borrowing that the rates of interest to be offered by the Lenders shall be fixed rates per annum (the Advances comprising any such Competitive Bid Borrowing being referred to herein as "Fixed Rate Advances") and (B) at least four Business Days prior to the date of the proposed Competitive Bid Borrowing, if the Borrower shall instead specify in the Notice of Competitive Bid Borrowing that the Advances comprising such Competitive Bid Borrowing shall be LIBO Rate Advances. Each Notice of Competitive Bid Borrowing shall be irrevocable and binding on the Borrower. The Agent shall in turn promptly notify each Lender of each request for a Competitive Bid Borrowing received by it from the Borrower by sending such Lender a copy of the related Notice of Competitive Bid Borrowing. (ii) Each Lender may, if, in its sole discretion, it elects to do so, irrevocably offer to make one or more Competitive Bid Advances to the Borrower as part of such proposed Competitive Bid Borrowing at a rate or rates of interest specified by such Lender in its sole discretion, by notifying the Agent (which shall give prompt notice thereof to the Borrower), (A) before 9:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and (B) before 10:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances of the minimum amount and maximum amount of each Competitive Bid Advance which such Lender would be willing to make as part of such proposed Competitive Bid Borrowing (which amounts of such proposed Competitive Bid may, subject to the proviso to the first sentence of this Section 2.03(a), exceed such Lender's Commitment, if any), the rate or rates of interest therefor and such Lender's Applicable Lending Office with respect to such Competitive Bid Advance; provided that if the Agent in its capacity as a Lender shall, in its sole discretion, elect to make any such offer, it shall notify the Borrower of such offer at least 30 minutes before the time and on the date on which notice of such election is to be given to the Agent, by the other Lenders. If any Lender shall elect not to make such an offer, such Lender shall so notify the Agent before 10:00 A.M. (New York City time), and such Lender shall not be obligated to, and shall not, make any Competitive Bid Advance as part of such Competitive Bid Borrowing; provided that the failure by any Lender to give such notice shall not cause such Lender to be obligated to make any Competitive Bid Advance as part of such proposed Competitive Bid Borrowing. (iii) The Borrower shall, in turn, (A) before 10:30 A.M. (New York City time) on the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of Fixed Rate Advances and (B) before 11:00 A.M. (New York City time) three Business Days before the date of such proposed Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing consisting of LIBO Rate Advances, either: (x) cancel such Competitive Bid Borrowing by giving the Agent notice to that effect, or (y) accept one or more of the offers made by any Lender or Lenders pursuant to paragraph (ii) above, in its sole discretion, by giving notice to the Agent of the amount of each Competitive Bid Advance (which amount shall be equal to or greater than the minimum amount, and equal to or less than the maximum amount, notified to the Borrower by the Agent on behalf of such Lender for such Competitive Bid Advance pursuant to paragraph (ii) above) to be made by each Lender as part of such Competitive Bid Borrowing, and reject any remaining offers made by Lenders pursuant to paragraph (ii) above by giving the Agent notice to that effect. The Borrower shall accept

15 the offers made by any Lender or Lenders to make Competitive Bid Advances in order of the lowest to the highest rates of interest offered by such Lenders. If two or more Lenders have offered the same interest rate, the amount to be borrowed at such interest rate will be allocated among such Lenders in proportion to the amount that each such Lender offered at such interest rate (with appropriate rounding, in the sole discretion of the Borrower, to assure that each accepted Competitive Bid Advance is an integral multiple of $1,000,000). (iv) If the Borrower notifies the Agent that such Competitive Bid Borrowing is canceled pursuant to paragraph (iii)(x) above, the Agent shall give prompt notice thereof to the Lenders and such Competitive Bid Borrowing shall not be made. (v) If the Borrower accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, the Agent shall in turn promptly notify (A) each Lender that has made an offer as described in paragraph (ii) above, of the date and aggregate amount of such Competitive Bid Borrowing and whether or not any offer or offers made by such Lender pursuant to paragraph (ii) above have been accepted by the Borrower, (B) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, of the amount of each Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing, and (C) each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing, upon receipt, that the Agent has received forms of documents appearing to fulfill the applicable conditions set forth in Article III. Each Lender that is to make a Competitive Bid Advance as part of such Competitive Bid Borrowing shall, before 11:00 A.M. (New York City time) on the date of such Competitive Bid Borrowing specified in the notice received from the Agent pursuant to clause (A) of the preceding sentence or any later time when such Lender shall have received notice from the Agent pursuant to clause (C) of the preceding sentence, make available for the account of its Applicable Lending Office to the Agent at its address referred to in Section 9.02, in same day funds, such Lender's portion of such Competitive Bid Borrowing. Upon fulfillment of the applicable conditions set forth in Article III and after receipt by the Agent of such funds, the Agent will make such funds available to the Borrower at the location specified by the Borrower in its Notice of Competitive Bid Borrowing. Promptly after each Competitive Bid Borrowing the Agent will notify each Lender of the amount of the Competitive Bid Borrowing, the consequent Competitive Bid Reduction and the dates upon which such Competitive Bid Reduction commenced and will terminate. (vi) If the Borrower notifies the Agent that it accepts one or more of the offers made by any Lender or Lenders pursuant to paragraph (iii)(y) above, such notice of acceptance shall be irrevocable and binding on the Borrower. The Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in the related Notice of Competitive Bid Borrowing for such Competitive Bid Borrowing the applicable conditions set forth in Article III, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Competitive Bid Advance to be made by such Lender as part of such Competitive Bid Borrowing when such Competitive Bid Advance, as a result of such failure, is not made on such date. (b) Each Competitive Bid Borrowing shall be in an aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, following the making of each Competitive Bid Borrowing, the Borrower shall be in compliance with the limitations set forth in the proviso to the first sentence of subsection (a) above. (c) Within the limits and on the conditions set forth in this Section 2.03, the Borrower may from time to time borrow under this Section 2.03, repay or prepay pursuant to subsection (d) below, and reborrow under this Section 2.03, provided that a Competitive Bid Borrowing shall not be made within three Business Days of the date of any other Competitive Bid Borrowing.

16 (d) The Borrower shall repay to the Agent for the account of each Lender that has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by the Borrower for repayment of such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and provided in the Competitive Bid Note evidencing such Competitive Bid Advance), the then unpaid principal amount of such Competitive Bid Advance. The Borrower shall have no right to prepay any principal amount of any Competitive Bid Advance unless, and then only on the terms, specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above and set forth in the Competitive Bid Note evidencing such Competitive Bid Advance or except in connection with an assignment of such Lender's Commitments as a result of a demand by the Borrower under Section 9.07(a). (e) The Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the date of such Competitive Bid Advance to the date the principal amount of such Competitive Bid Advance is repaid in full, at the rate of interest for such Competitive Bid Advance specified by the Lender making such Competitive Bid Advance in its notice with respect thereto delivered pursuant to subsection (a)(ii) above, payable on the interest payment date or dates specified by the Borrower for such Competitive Bid Advance in the related Notice of Competitive Bid Borrowing delivered pursuant to subsection (a)(i) above, as provided in the Competitive Bid Note evidencing such Competitive Bid Advance. Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a), the Borrower shall pay interest on the amount of unpaid principal of and interest on each Competitive Bid Advance owing to a Lender, payable in arrears on the date or dates interest is payable thereon, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Competitive Bid Advance under the terms of the Competitive Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in such Competitive Bid Note. (f) The indebtedness of the Borrower resulting from each Competitive Bid Advance made to the Borrower as part of a Competitive Bid Borrowing shall be evidenced by a separate Competitive Bid Note of the Borrower payable to the order of the Lender making such Competitive Bid Advance. SECTION 2.04. Fees. (a) Facility Fee. The Borrower agrees to pay to the Agent for the account of each Lender a facility fee on the aggregate amount of such Lender's Commitment from the Effective Date in the case of each Initial Lender and from the effective date specified in the Assumption Agreement or in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender until the Termination Date at a rate per annum equal to the Applicable Percentage in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December, commencing June 30, 2000, and on the Termination Date. (b) Agent's Fees. The Borrower shall pay to the Agent for its own account such fees as may from time to time be agreed between the Borrower and the Agent. SECTION 2.05. Optional Termination or Reduction of the Commitments. The Borrower shall have the right, upon at least three Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the respective Commitments of the Lenders, provided that each partial reduction shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and provided further that the aggregate amount of the Commitments of the Lenders shall not be reduced to an amount that is less than the aggregate principal amount of the Competitive Bid Advances then outstanding. SECTION 2.06. Repayment of Revolving Credit Advances. The Borrower shall repay to the Agent for the ratable account of the Lenders on the Termination Date the aggregate principal amount of the Revolving Credit Advances then outstanding.

17 SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled Interest. The Borrower shall pay interest on the unpaid principal amount of each Revolving Credit Advance owing to each Lender from the date of such Revolving Credit Advance until such principal amount shall be paid in full, at the following rates per annum: (i) Base Rate Advances. During such periods as such Revolving Credit Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (x) the Base Rate in effect from time to time plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee in effect from time to time, payable in arrears quarterly on the last day of each March, June, September and December during such periods and on the date such Base Rate Advance shall be Converted or paid in full. (ii) Eurodollar Rate Advances. During such periods as such Revolving Credit Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during each Interest Period for such Revolving Credit Advance to the sum of (x) the Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus (y) the Applicable Margin in effect from time to time plus (z) the Applicable Utilization Fee in effect from time to time, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period and on the date such Eurodollar Rate Advance shall be Converted or paid in full. (b) Default Interest. Upon the occurrence and during the continuance of an Event of Default under Section 6.01(a), the Borrower shall pay interest on (i) the unpaid principal amount of each Revolving Credit Advance owing to each Lender, payable in arrears on the dates referred to in clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Revolving Credit Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law, the amount of any interest, fee or other amount payable hereunder that is not paid when due, from the date such amount shall be due until such amount shall be paid in full, payable in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on Base Rate Advances pursuant to clause (a)(i) above. SECTION 2.08. Interest Rate Determination. (a) The Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Agent for purposes of Section 2.07(a)(i) or (ii), and the rate, if any, furnished by each Reference Bank for the purpose of determining the interest rate under Section 2.07(a)(ii). (b) If, with respect to any Eurodollar Rate Advances, the Required Lenders notify the Agent that the Eurodollar Rate for any Interest Period for such Advances will not adequately reflect the cost to such Required Lenders of making, funding or maintaining their respective Eurodollar Rate Advances for such Interest Period, the Agent shall forthwith so notify the Borrower and the Lenders, whereupon (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance, and (ii) the obligation of the Lenders to make, or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. (c) If the Borrower shall fail to select the duration of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in the definition of "Interest Period" in Section 1.01, the Agent will forthwith so notify the Borrower and the Lenders and such Advances will automatically, on the last day of the then existing Interest Period therefor, be Converted into Base Rate Advances.

18 (d) On the date on which the aggregate unpaid principal amount of Eurodollar Rate Advances comprising any Borrowing shall be reduced, by payment or prepayment or otherwise, to less than $5,000,000, such Advances shall automatically Convert into Base Rate Advances. (e) Upon the occurrence and during the continuance of any Event of Default under Section 6.01(a), (i) each Eurodollar Rate Advance will automatically, on the last day of the then existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be suspended. (f) If Telerate Page 3750 is unavailable and fewer than two Reference Banks furnish timely information to the Agent for determining the Eurodollar Rate or LIBO Rate for any Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, (i) the Agent shall forthwith notify the Borrower and the Lenders that the interest rate cannot be determined for such Eurodollar Rate Advances or LIBO Rate Advances, as the case may be, (ii) with respect to Eurodollar Rate Advances, each such Advance will automatically, on the last day of the then existing Interest Period therefor, be prepaid by the Borrower or be automatically Converted into a Base Rate Advance (or if such Advance is then a Base Rate Advance, will continue as a Base Rate Advance), and (iii) the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.09. Optional Conversion of Revolving Credit Advances. The Borrower may on any Business Day, upon notice given to the Agent not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Conversion and subject to the provisions of Sections 2.08 and 2.12, Convert all Revolving Credit Advances of one Type comprising the same Borrowing into Revolving Credit Advances of the other Type; provided, however, that any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in an amount not less than the minimum amount specified in Section 2.02(b) and no Conversion of any Revolving Credit Advances shall result in more separate Revolving Credit Borrowings than permitted under Section 2.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the duration of the initial Interest Period for each such Advance. Each notice of Conversion shall be irrevocable and binding on the Borrower. SECTION 2.10. Prepayments of Revolving Credit Advances. The Borrower may, upon notice at least two Business Days' prior to the date of such prepayment, in the case of Eurodollar Rate Advances, and not later than 11:00 A.M. (New York City time) on the date of such prepayment, in the case of Base Rate Advances, to the Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Revolving Credit Advances comprising part of the same Revolving Credit Borrowing in whole or ratably in part, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that (x) each partial prepayment shall be in an aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 9.04(c).

19 SECTION 2.11. Increased Costs. (a) If, due to either (i) the introduction of or any change in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Eurodollar Rate Advances or LIBO Rate Advances (excluding for purposes of this Section 2.11 any such increased costs resulting from (i) Taxes or Other Taxes (as to which Section 2.14 shall govern) and (ii) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized or has its Applicable Lending Office or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error. (b) If any Lender determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend hereunder. A certificate as to such amounts submitted to the Borrower and the Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error. (c) Notwithstanding the foregoing, the Borrower shall not be required to compensate a Lender pursuant to this Section 2.11 for any amounts incurred more than six months prior to the date that such Lender notifies the Borrower of such Lender's intention to claim compensation therefor; provided that, if the circumstances giving rise to such claim have a retroactive effect, then such six-month period shall be extended to include the period of such retroactive effect. SECTION 2.12. Illegality. Notwithstanding any other provision of this Agreement, if any Lender shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Lender or its Eurodollar Lending Office to perform its obligations hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances hereunder, (a) each Eurodollar Rate Advance will automatically, upon such demand, Convert into a Base Rate Advance and (b) the obligation of the Lenders to make Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit Advances into Eurodollar Rate Advances shall be suspended until the Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. SECTION 2.13. Payments and Computations. (a) The Borrower shall make each payment hereunder not later than 11:00 A.M. (New York City time) on the day when due to the Agent at the Agent's Account in same day funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.03, 2.11, 2.14 or 9.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. Upon any Assuming Lender becoming a Lender hereunder as a result of a Commitment Increase pursuant to Section 2.18 or an extension of the Termination Date pursuant to Section 2.19, and upon the Agent's receipt of such Lender's Assumption Agreement and recording of the information contained therein in the Register, from and after the applicable Increase Date or Extension Date, as the case may be, the

20 Agent shall make all payments hereunder and under any Notes issued in connection therewith in respect of the interest assumed thereby to the Assuming Lender. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 9.07(c), from and after the effective date specified in such Assignment and Acceptance, the Agent shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (b) All computations of interest based on the Base Rate shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, all computations of interest based on the Eurodollar Rate, the LIBO Rate or the Federal Funds Rate or in respect of Fixed Rate Advances and of fees shall be made by the Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided, however, that, if such extension would cause payment of interest on or principal of Eurodollar Rate Advances or LIBO Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day. (d) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate. SECTION 2.14. Taxes. (a) Any and all payments by the Borrower or the Guarantor hereunder or under the Notes shall be made, in accordance with Section 2.13, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Lender and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which such Lender or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Lender, taxes imposed on its overall net income, and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction of such Lender's Applicable Lending Office or any political subdivision thereof or any other jurisdiction that is imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and such jurisdiction (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as "Taxes"). If the Borrower or the Guarantor shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder or under any Note to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.14) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower or the Guarantor shall make such deductions and (iii) the Borrower or the Guarantor shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law.

21 (b) In addition, the Borrower shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies that arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, performing under, or otherwise with respect to, this Agreement or the Notes (hereinafter referred to as "Other Taxes"). (c) The Borrower shall indemnify each Lender and the Agent for and hold it harmless against the full amount of Taxes or Other Taxes (including, without limitation, taxes of any kind imposed by any jurisdiction on amounts payable under this Section 2.14) imposed on or paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within 30 days from the date such Lender or the Agent (as the case may be) makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes, the Borrower or the Guarantor, as the case may be, shall furnish to the Agent, at its address referred to in Section 9.02, the original or a certified copy of a receipt evidencing such payment. In the case of any payment hereunder or under the Notes by or on behalf of the Borrower through an account or branch outside the United States or by or on behalf of the Borrower or the Guarantor, as the case may be, by a payor that is not a United States person, if the Borrower or the Guarantor, as the case may be, determines that no Taxes are payable in respect thereof, the Borrower or the Guarantor shall furnish, or shall cause such payor to furnish, to the Agent, at such address, an opinion of counsel acceptable to the Agent stating that such payment is exempt from Taxes. For purposes of this subsection (d) and subsection (e), the terms "United States" and "United States person" shall have the meanings specified in Section 7701 of the Internal Revenue Code. (e) Each Lender organized under the laws of a jurisdiction outside the United States, on or prior to the date of its execution and delivery of this Agreement in the case of each Initial Lender and on the date of the Assumption Agreement or the Assignment and Acceptance pursuant to which it becomes a Lender in the case of each other Lender, and from time to time thereafter as requested in writing by the Borrower (but only so long as such Lender remains lawfully able to do so), shall provide each of the Agent and the Borrower with two original Internal Revenue Service forms W-8BEN or W-8ECI, as appropriate, or any successor or other form prescribed by the Internal Revenue Service, certifying that such Lender is exempt from or entitled to a reduced rate of United States withholding tax on payments pursuant to this Agreement or the Notes. If the form provided by a Lender at the time such Lender first becomes a party to this Agreement indicates a United States interest withholding tax rate in excess of zero, withholding tax at such rate shall be considered excluded from Taxes unless and until such Lender provides the appropriate forms certifying that a lesser rate applies, whereupon withholding tax at such lesser rate only shall be considered excluded from Taxes for periods governed by such form; provided, however, that, if at the date of the Assignment and Acceptance pursuant to which a Lender assignee becomes a party to this Agreement, the Lender assignor was entitled to payments under subsection (a) in respect of United States withholding tax with respect to interest paid at such date, then, to such extent, the term Taxes shall include (in addition to withholding taxes that may be imposed in the future or other amounts otherwise includable in Taxes) United States withholding tax, if any, applicable with respect to the Lender assignee on such date. If any form or document referred to in this subsection (e) requires the disclosure of information, other than information necessary to compute the tax payable and information required on the date hereof by Internal Revenue Service form W-8BEN or W-8ECI, that the Lender reasonably considers to be confidential, the Lender shall give notice thereof to the Borrower and shall not be obligated to include in such form or document such confidential information. (f) For any period with respect to which a Lender has failed to provide the Borrower with the appropriate form described in Section 2.14(e) (other than if such failure is due to a change in law occurring subsequent to the date on which a form originally was required to be provided, or if such form otherwise is not required under subsection (e) above), such Lender shall not be entitled to indemnification under Section 2.14(a) or (c) with respect to Taxes imposed by the United States by reason of such failure; provided, however, that should a Lender become subject

22 to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as the Lender shall reasonably request to assist the Lender to recover such Taxes. (g) Any Lender claiming any additional amounts payable pursuant to this Section 2.14 agrees to use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Eurodollar Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Lender, be otherwise disadvantageous to such Lender. SECTION 2.15. Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Revolving Credit Advances owing to it (other than pursuant to Section 2.11, 2.14 or 9.04(c)) in excess of its ratable share of payments on account of the Revolving Credit Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Revolving Credit Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.15 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. SECTION 2.16. Evidence of Debt. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Revolving Credit Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder in respect of Revolving Credit Advances. The Borrower agrees that upon notice by any Lender to the Borrower (with a copy of such notice to the Agent) to the effect that a Revolving Credit Note is required or appropriate in order for such Lender to evidence (whether for purposes of pledge, enforcement or otherwise) the Revolving Credit Advances owing to, or to be made by, such Lender, the Borrower shall promptly execute and deliver to such Lender a Revolving Credit Note payable to the order of such Lender in a principal amount up to the Commitment of such Lender. (b) The Register maintained by the Agent pursuant to Section 9.07(d) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the Type of Advances comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assumption Agreement and each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Agent from the Borrower hereunder and each Lender's share thereof. (c) Entries made in good faith by the Agent in the Register pursuant to subsection (b) above, and by each Lender in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided, however, that the failure of the Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.

23 SECTION 2.17. Use of Proceeds. The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) for general corporate purposes of the Borrower and its Subsidiaries, including commercial paper backstop. SECTION 2.18. Increase in the Aggregate Commitments. (a) The Borrower may, at any time but in any event not more than once in any calendar year prior to the Termination Date, by notice to the Agent, request that the aggregate amount of the Commitment be increased by a minimum amount of $25,000,000 (each a "Commitment Increase") to be effective as of a date that is at least 90 days prior to the scheduled Termination Date then in effect (the "Increase Date") as specified in the related notice to the Agent; provided, however that (i) in no event shall the aggregate amount of the Commitments at any time exceed $150,000,000 and (ii) on the date of any request by the Borrower for a Commitment Increase and on the related Increase Date, the Borrower's Debt Ratings are at least BBB+ from S&P or Baa3 from Moody's, or if no Debt Rating is available from S&P or Moody's, the Guarantor's Net Worth is not less than $1,000,000,000 and Debt/Total Capital Ratio is not more than 0.45:1.00, and the applicable conditions set forth in Article III shall be satisfied. (b) The Agent shall promptly notify the Lenders of a request by the Borrower for a Commitment Increase, which notice shall include (i) the proposed amount of such requested Commitment Increase, (ii) the proposed Increase Date and (iii) the date by which Lenders wishing to participate in the Commitment Increase must commit to an increase in the amount of their respective Commitments (the "Commitment Date"). Each Lender that is willing to participate in such requested Commitment Increase (each an "Increasing Lender") shall, in its sole discretion, give written notice to the Agent on or prior to the Commitment Date of the amount by which it is willing to increase its Commitment. If the Lenders notify the Agent that they are willing to increase the amount of their respective Commitments by an aggregate amount that exceeds the amount of the requested Commitment Increase, the requested Commitment Increase shall be allocated among the Lenders willing to participate therein in such amounts as are agreed between the Borrower and the Agent. (c) Promptly following each Commitment Date, the Agent shall notify the Borrower as to the amount, if any, by which the Lenders are willing to participate in the requested Commitment Increase. If the aggregate amount by which the Lenders are willing to participate in any requested Commitment Increase on any such Commitment Date is less than the requested Commitment Increase, then the Borrower may extend offers to one or more Eligible Assignees to participate in any portion of the requested Commitment Increase that has not been committed to by the Lenders as of the applicable Commitment Date; provided, however, that the Commitment of each such Eligible Assignee shall be in a minimum amount of $5,000,000. (d) On each Increase Date, each Eligible Assignee that accepts an offer to participate in a requested Commitment Increase in accordance with Section 2.18(c) (each such Eligible Assignee and each Eligible Assignee that agrees to an extension of the Termination Date in accordance with Section 2.19(c), an "Assuming Lender") shall become a Lender party to this Agreement as of such Increase Date and the Commitment of each Increasing Lender for such requested Commitment Increase shall be so increased by such amount (or by the amount allocated to such Lender pursuant to the last sentence of Section 2.18(b)) as of such Increase Date; provided, however, that the Agent shall have received on or before such Increase Date the following, each dated such date: (i) (A) certified copies of resolutions of the Board of Directors of the Borrower or the Executive Committee of such Board approving the Commitment Increase and the corresponding modifications to this Agreement, (B) an opinion of counsel for the Borrower (which may be in-house counsel), in substantially the form of Exhibit D hereto and (C) a consent of the Guarantor approving the Commitment Increase and the corresponding modifications to this Agreement;

24 (ii) an assumption agreement from each Assuming Lender, if any, in form and substance satisfactory to the Borrower and the Agent (each an "Assumption Agreement"), duly executed by such Eligible Assignee, the Agent and the Borrower; (iii) confirmation from each Increasing Lender of the increase in the amount of its Commitment in a writing satisfactory to the Borrower and the Agent; and (iv) if any Revolving Credit Advances are then outstanding, a Notice of Revolving Credit Borrowing for Advances to be made by only the Increasing Lenders and the Assuming Lenders under this Section 2.18 in an aggregate amount equal to the amount which, after giving effect to such Advances, will result in the aggregate Revolving Credit Advances made by all Lenders to be ratable in proportion to their respective Commitments after giving effect to such Commitment Increase, and of a Type and for an Interest Period which will, to the extent practicable, result in each Lender having funded Advances of the same Type and for co-terminus Interest Periods. On each Increase Date, upon fulfillment of the conditions set forth in the immediately preceding sentence of this Section 2.18(d), the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) and the Borrower, on or before 1:00 P.M. (New York City time), by telecopier or telex, of the occurrence of the Commitment Increase to be effected on such Increase Date and shall record in the Register the relevant information with respect to each Increasing Lender and each Assuming Lender on such date. SECTION 2.19. Extension of Termination Date. (a) At least 45 days but not more than 60 days prior to the Termination Date, the Borrower, by written notice to the Agent, may request an extension of the Termination Date in effect at such time by one year from its then scheduled expiration. The Agent shall promptly notify each Lender of such request, and each Lender shall in turn, in its sole discretion, not later than 20 days prior to the Termination Date, notify the Borrower and the Agent in writing as to whether such Lender will consent to such extension. If any Lender shall fail to notify the Agent and the Borrower in writing of its consent to any such request for extension of the Termination Date at least 20 days prior to the Termination Date, such Lender shall be deemed to be a Non-Consenting Lender with respect to such request. The Agent shall notify the Borrower not later than 15 days prior to the Termination Date of the decision of the Lenders regarding the Borrower's request for an extension of the Termination Date. (b) If all the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.19, the Termination Date in effect at such time shall, effective as at the Termination Date (the "Extension Date"), be extended for one year; provided that on each Extension Date the applicable conditions set forth in Article III shall be satisfied. If less than all of the Lenders consent in writing to any such request in accordance with subsection (a) of this Section 2.19, the Termination Date in effect at such time shall, effective as at the applicable Extension Date and subject to subsection (d) of this Section 2.19, be extended as to those Lenders that so consented (each a "Consenting Lender") but shall not be extended as to any other Lender (each a "Non-Consenting Lender"). To the extent that the Termination Date is not extended as to any Lender pursuant to this Section 2.19 and the Commitment of such Lender is not assumed in accordance with subsection (c) of this Section 2.19 on or prior to the applicable Extension Date, the Commitment of such Non-Consenting Lender shall automatically terminate in whole on such unextended Termination Date without any further notice or other action by the Borrower, such Lender or any other Person; provided that such Non-Consenting Lender's rights under Sections 2.11, 2.14 and 9.04, and its obligations under Section 8.05, shall survive the Termination Date for such Lender as to matters occurring prior to such date. It is understood and agreed that no Lender shall have any obligation whatsoever to agree to any request made by the Borrower for any requested extension of the Termination Date. (c) If less than all of the Lenders consent to any such request pursuant to subsection (a) of this Section 2.19, the Agent shall promptly so notify the Consenting Lenders, and each Consenting Lender may, in its sole

25 discretion, give written notice to the Agent not later than 10 days prior to the Termination Date of the amount of the Non-Consenting Lenders' Commitments for which it is willing to accept an assignment. If the Consenting Lenders notify the Agent that they are willing to accept assignments of Commitments in an aggregate amount that exceeds the amount of the Commitments of the Non-Consenting Lenders, such Commitments shall be allocated among the Consenting Lenders willing to accept such assignments in such amounts as are agreed between the Borrower and the Agent. If after giving effect to the assignments of Commitments described above there remains any Commitments of Non-Consenting Lenders, the Borrower may arrange for one or more Consenting Lenders or other Eligible Assignees as Assuming Lenders to assume, effective as of the Extension Date, any Non-Consenting Lender's Commitment and all of the obligations of such Non-Consenting Lender under this Agreement thereafter arising, without recourse to or warranty by, or expense to, such Non-Consenting Lender; provided, however, that the amount of the Commitment of any such Assuming Lender as a result of such substitution shall in no event be less than $5,000,000 unless the amount of the Commitment of such Non-Consenting Lender is less than $5,000,000, in which case such Assuming Lender shall assume all of such lesser amount; and provided further that: (i) any such Consenting Lender or Assuming Lender shall have paid to such Non-Consenting Lender (A) the aggregate principal amount of, and any interest accrued and unpaid to the effective date of the assignment on, the outstanding Advances, if any, of such Non-Consenting Lender plus (B) any accrued but unpaid facility fees owing to such Non-Consenting Lender as of the effective date of such assignment; (ii) all additional costs reimbursements, expense reimbursements and indemnities payable to such Non-Consenting Lender, and all other accrued and unpaid amounts owing to such Non-Consenting Lender hereunder, as of the effective date of such assignment shall have been paid to such Non-Consenting Lender; and (iii) with respect to any such Assuming Lender, the applicable processing and recordation fee required under Section 9.07(a) for such assignment shall have been paid; provided further that such Non-Consenting Lender's rights under Sections 2.11, 2.14 and 9.04, and its obligations under Section 8.05, shall survive such substitution as to matters occurring prior to the date of substitution. At least three Business Days prior to any Extension Date, (A) each such Assuming Lender, if any, shall have delivered to the Borrower and the Agent an Assumption Agreement, duly executed by such Assuming Lender, such Non-Consenting Lender, the Borrower and the Agent, (B) any such Consenting Lender shall have delivered confirmation in writing satisfactory to the Borrower and the Agent as to the increase in the amount of its Commitment and (C) each Non-Consenting Lender being replaced pursuant to this Section 2.19 shall have delivered to the Agent any Note or Notes held by such Non-Consenting Lender. Upon the payment or prepayment of all amounts referred to in clauses (i), (ii) and (iii) of the immediately preceding sentence, each such Consenting Lender or Assuming Lender, as of the Extension Date, will be substituted for such Non-Consenting Lender under this Agreement and shall be a Lender for all purposes of this Agreement, without any further acknowledgment by or the consent of the other Lenders, and the obligations of each such Non-Consenting Lender hereunder shall, by the provisions hereof, be released and discharged. (d) If (after giving effect to any assignments or assumptions pursuant to subsection (c) of this Section 2.19) Lenders having Commitments equal to more than 50% of the Commitments in effect immediately prior to the Extension Date consent in writing to a requested extension (whether by execution or delivery of an Assumption Agreement or otherwise) not later than one Business Day prior to such Extension Date, the Agent shall so notify the Borrower, and, subject to the satisfaction of the applicable conditions in Article III, the Termination Date then in effect shall be extended for the additional one-year period as described in subsection (a) of this Section 2.19, and all references in this Agreement, and in the Notes, if any, to the "Termination Date" shall, with respect to each Consenting Lender and each Assuming Lender for such Extension Date, refer to the Termination Date as so extended. Promptly following each Extension Date, the Agent shall notify the Lenders (including, without limitation, each Assuming Lender) of the

26 extension of the scheduled Termination Date in effect immediately prior thereto and shall thereupon record in the Register the relevant information with respect to each such Consenting Lender and each such Assuming Lender. ARTICLE III CONDITIONS TO EFFECTIVENESS AND LENDING SECTION 3.01. Conditions Precedent to Effectiveness of Sections 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become effective on and as of the first date (the "Effective Date") on which the following conditions precedent have been satisfied: (a) There shall have occurred no Material Adverse Change since June 30, 1999. (b) There shall exist no action, suit, investigation, litigation or proceeding affecting the Guarantor or any of its Subsidiaries pending or threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.01(b) hereto (the "Disclosed Litigation") or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note or the consummation of the transactions contemplated hereby. (c) All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect. (d) The Borrower shall have notified each Lender and the Agent in writing as to the proposed Effective Date. (e) The Borrower shall have paid all accrued fees and expenses of the Agent and the Lenders (including the accrued fees and expenses of counsel to the Agent). (f) On the Effective Date, the following statements shall be true and the Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that: (i) The representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and (ii) No event has occurred and is continuing that constitutes a Default. (g) The Agent shall have received on or before the Effective Date the following, each dated such day, in form and substance satisfactory to the Agent and (except for the Revolving Credit Notes) in sufficient copies for each Lender: (i) The Revolving Credit Notes to the order of the Lenders to the extent requested by any Lender pursuant to Section 2.16. (ii) Certified copies of the resolutions of the Board of Directors of the Borrower approving this Agreement and the Notes, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement and the Notes.

27 (iii) Certified copies of the resolutions of the Board of Directors of the Guarantor approving this Agreement, and of all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement. (iv) A certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true signatures of the officers of the Borrower authorized to sign this Agreement and the Notes and the other documents to be delivered by it hereunder. (v) A certificate of the Secretary or an Assistant Secretary of the Guarantor certifying the names and true signatures of the officers of the Guarantor authorized to sign this Agreement and the other documents to be delivered by it hereunder. (vi) A favorable opinion of Thomas Livingston, counsel for the Borrower and the Guarantor, substantially in the form of Exhibit D hereto and as to such other matters as any Lender through the Agent may reasonably request. (vii) A favorable opinion of Shearman & Sterling, counsel for the Agent, in form and substance satisfactory to the Agent. (h) The Borrower shall have terminated the commitments of the lenders, and repaid or prepaid all outstanding obligations under, the $100,000,000 Five-Year Credit Agreement dated as of June 1, 1994, as amended, among the Borrower, the banks parties thereto and Morgan Guaranty Trust Company of New York, as agent, and each of the Lenders that is a party to such Five-Year Credit Agreement hereby waives the requirement of Section 2.09(i) of such Five-Year Credit Agreement to the extent that such provision requires three days notice to terminate the commitments of the lenders under such Five-Year Credit Agreement. SECTION 3.02. Conditions Precedent to Each Revolving Credit Borrowing, Increase Date and Extension Date. The obligation of each Lender to make a Revolving Credit Advance on the occasion of each Revolving Credit Borrowing, each Commitment Increase and each extension of Commitments pursuant to Section 2.19 shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Revolving Credit Borrowing the applicable Increase Date or the applicable Extension Date (a) the following statements shall be true (and each of the giving of the applicable Notice of Revolving Credit Borrowing, request for Commitment Increase, request for Commitment Extension and the acceptance by the Borrower of the proceeds of such Revolving Credit Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing, such Increase Date or such Extension Date such statements are true): (i) the representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) are correct on and as of such date, before and after giving effect to such Revolving Credit Borrowing, such Increase Date or such Extension Date and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) no event has occurred and is continuing, or would result from such Revolving Credit Borrowing, such Increase Date, such Extension Date or from the application of the proceeds therefrom, that constitutes a Default; and (b) the Agent shall have received such other approvals, opinions or documents as any Lender through the Agent may reasonably request.

28 SECTION 3.03. Conditions Precedent to Each Competitive Bid Borrowing. The obligation of each Lender that is to make a Competitive Bid Advance on the occasion of a Competitive Bid Borrowing to make such Competitive Bid Advance as part of such Competitive Bid Borrowing is subject to the conditions precedent that (i) the Agent shall have received the written confirmatory Notice of Competitive Bid Borrowing with respect thereto, (ii) on or before the date of such Competitive Bid Borrowing, but prior to such Competitive Bid Borrowing, the Agent shall have received a Competitive Bid Note payable to the order of such Lender for each of the one or more Competitive Bid Advances to be made by such Lender as part of such Competitive Bid Borrowing, in a principal amount equal to the principal amount of the Competitive Bid Advance to be evidenced thereby and otherwise on such terms as were agreed to for such Competitive Bid Advance in accordance with Section 2.03, and (iii) on the date of such Competitive Bid Borrowing the following statements shall be true (and each of the giving of the applicable Notice of Competitive Bid Borrowing and the acceptance by the Borrower of the proceeds of such Competitive Bid Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Competitive Bid Borrowing such statements are true): (a) the representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) are correct on and as of the date of such Competitive Bid Borrowing, before and after giving effect to such Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, and (b) no event has occurred and is continuing, or would result from such Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default. SECTION 3.04. Determinations Under Section 3.01. For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document, condition or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Agent responsible for the transactions contemplated by this Agreement shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Agent shall promptly notify the Lenders of the occurrence of the Effective Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES SECTION 4.01. Representations and Warranties of the Borrower and the Guarantor. The Borrower and the Guarantor each represents and warrants as follows: (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. The Guarantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) The execution, delivery and performance by the Borrower of this Agreement and the Notes to be delivered by it, and the consummation of the transactions contemplated hereby, are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Borrower. The execution, delivery and performance by the Guarantor of this Agreement, and the consummation of the transactions contemplated hereby, are within the Guarantor's corporate powers, have been duly authorized by

29 all necessary corporate action, and do not contravene (i) the Guarantor's charter or by-laws or (ii) law or any contractual restriction binding on or affecting the Guarantor. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery and performance by the Borrower or the Guarantor of this Agreement or, in the case of the Borrower, the Notes to be delivered by it. (d) This Agreement has been, and each of the Notes to be delivered by it when delivered hereunder will have been, duly executed and delivered by the Borrower and this Agreement has been duly executed and delivered by the Guarantor. This Agreement is, and each of the Notes when delivered hereunder will be, the legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with their respective terms and this Agreement is the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms; except, in each case, as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principals (whether enforcement is sought by proceedings in equity or at law). (e) The Consolidated balance sheet of the Guarantor and its Subsidiaries as at June 30, 1999, and the related Consolidated statements of income and cash flows of the Guarantor and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of PricewaterhouseCoopers LLP, independent public accountants, and the Consolidated balance sheet of the Guarantor and its Subsidiaries as at December 31, 1999, and the related Consolidated statements of income and cash flows of the Guarantor and its Subsidiaries for the six months then ended, duly certified by the chief financial officer or chief accounting officer of the Guarantor, copies of which have been furnished to each Lender, fairly present, subject, in the case of said balance sheet as at December 31, 1999, and said statements of income and cash flows for the six months then ended, to year-end audit adjustments, the Consolidated financial condition of the Guarantor and its Subsidiaries as at such dates and the Consolidated results of the operations of the Guarantor and its Subsidiaries for the periods ended on such dates, all in accordance with generally accepted accounting principles consistently applied. Since June 30, 1999, there has been no Material Adverse Change. (f) There is no pending or threatened action, suit, investigation, litigation or proceeding, including, without limitation, any Environmental Action, affecting the Guarantor or any of its Subsidiaries before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of this Agreement or any Note. (g) Following application of the proceeds of each Advance, not more than 25 percent of the value of the assets (the Guarantor and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 5.02(a) or subject to any restriction contained in any agreement or instrument between the Guarantor and any Lender or any Affiliate of any Lender relating to Debt and within the scope of Section 6.01(d) will be margin stock (within the meaning of Regulation U issued by the Board of Governors of the Federal Reserve System). (h) Neither the Borrower nor the Guarantor is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended.

30 ARTICLE V COVENANTS OF THE GUARANTOR SECTION 5.01. Affirmative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Guarantor will: (a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include, without limitation, compliance with ERISA and Environmental Laws. (b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all lawful claims that, if unpaid, might by law become a Lien upon its property; provided, however, that neither the Guarantor nor any of its Subsidiaries shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained. (c) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Guarantor or such Subsidiary operates; provided, however, that the Guarantor and its Subsidiaries may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas in which the Guarantor or such Subsidiary operates and to the extent consistent with prudent business practice. (d) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights (charter and statutory) and franchises; provided, however, that the Guarantor and its Subsidiaries may consummate any merger or consolidation permitted under Section 5.02(b) and provided further that neither the Guarantor nor any of its Subsidiaries shall be required to preserve any right or franchise if the Board of Directors of the Guarantor or such Subsidiary shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Guarantor or such Subsidiary, as the case may be, and that the loss thereof is not disadvantageous in any material respect to the Guarantor and its Subsidiaries taken as a whole. (e) Visitation Rights. At any reasonable time and from time to time, permit the Agent or any of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, the Guarantor and any of its Subsidiaries, and to discuss the affairs, finances and accounts of the Guarantor and any of its Subsidiaries with any of their officers or directors and with their independent certified public accountants. (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Guarantor and each such Subsidiary in accordance with generally accepted accounting principles in effect from time to time. (g) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.

31 (h) Reporting Requirements. Furnish to the Lenders (which, to the extent any of the following are publically filed with the Securities and Exchange Commission in electronic format (EDGAR), shall be deemed so furnished upon such filing): (i) as soon as available and in any event within 60 days after the end of each of the first three quarters of each fiscal year of the Guarantor, the Consolidated balance sheet of the Guarantor and its Subsidiaries as of the end of such quarter and Consolidated statements of income and cash flows of the Guarantor and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of the Guarantor as having been prepared in accordance with generally accepted accounting principles and certificates of the chief financial officer or chief accounting officer of the Guarantor as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Guarantor shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP; (ii) as soon as available and in any event within 100 days after the end of each fiscal year of the Guarantor, a copy of the annual report for such year for the Guarantor and its Subsidiaries, containing the audited Consolidated balance sheet of the Guarantor and its Subsidiaries as of the end of such fiscal year and audited Consolidated statements of income and cash flows of the Guarantor and its Subsidiaries for such fiscal year, in each case accompanied by a report of PricewaterhouseCoopers LLP or other independent public accountants of nationally recognized standing, provided that in the event of any change in GAAP used in the preparation of such financial statements, the Guarantor shall also provide, if necessary for the determination of compliance with Section 5.03, a statement of reconciliation conforming such financial statements to GAAP; (iii) as soon as possible and in any event within five Business Days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer or chief accounting officer of the Borrower or the Guarantor setting forth details of such Default and the action that the Borrower or the Guarantor has taken and proposes to take with respect thereto; (iv) promptly after the sending or filing thereof, copies of all reports that the Guarantor sends to any of its public securityholders, and copies of all reports that the Guarantor or any Subsidiary files with the Securities and Exchange Commission; (v) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting the Guarantor or any of its Subsidiaries of the type described in Section 4.01(f)(ii); (vi) so long as no Public Debt Rating is then in effect, within five Business Days after receipt thereof by the Guarantor, copies of each notice from S&P (or Moody's, if S&P has ceased to provide the Implied Debt Rating) indicating any change in the Implied Debt Rating; and (vii) such other information respecting the Guarantor or any of its Subsidiaries as any Lender through the Agent may from time to time reasonably request. SECTION 5.02. Negative Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Guarantor will not:

32 (a) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to create or suffer to exist, any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, other than: (i) Permitted Liens, (ii) purchase money Liens upon or in any fixed or capital assets acquired or held by the Guarantor or any Subsidiary in the ordinary course of business to secure the purchase price of such assets or to secure Debt incurred for the purpose of financing the acquisition of such assets, or Liens existing on such assets at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such assets) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount, provided, however, that no such Lien shall extend to or cover any assets of any character other than the assets being acquired, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced, provided further that the aggregate principal amount of the indebtedness secured by the Liens referred to in this clause (ii) shall not exceed $50,000,000 at any time outstanding, (iii) the Liens existing on the Effective Date and described on Schedule 5.02(a) hereto, (iv) other Liens securing Debt in an aggregate principal amount not to exceed at any time outstanding an amount equal to 5% of the Consolidated assets of the Guarantor and its Subsidiaries at the time of incurrence, and (v) the replacement, extension or renewal of any Lien permitted by clause (iii) or (iv) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the amount or change in any direct or contingent obligor) of the Debt secured thereby. (b) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so, except that any Subsidiary of the Guarantor may merge or consolidate with or into, or dispose of assets to, any other Subsidiary of the Guarantor, and except that any Subsidiary of the Guarantor may merge into or dispose of assets to the Guarantor and the Guarantor may merge with any other Person so long as the Guarantor is the surviving corporation, provided, in each case, that no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom. SECTION 5.03. Financial Covenants. So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Guarantor will: (a) Net Worth. Maintain Net Worth of not less than $900,000,000. (b) Debt/Total Capital Ratio. Maintain a Debt/Total Capital Ratio of not more than 0.50:1.00.

33 ARTICLE VI EVENTS OF DEFAULT SECTION 6.01. Events of Default. If any of the following events ("Events of Default") shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Advance when the same becomes due and payable; or the Borrower shall fail to pay any interest on any Advance or make any other payment of fees or other amounts payable under this Agreement or any Note within five Business Days after the same becomes due and payable; or (b) Any representation or warranty made by the Borrower or the Guarantor herein or by the Borrower or the Guarantor (or any of their respective officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (c) (i) The Guarantor shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d), 5.01(h)(iii), 5.01(h)(v), 5.01(h)(vi), 5.02 or 5.03, or (ii) the Guarantor shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied for 30 days after written notice thereof shall have been given to the Guarantor by the Agent or any Lender; or (d) The Guarantor or any of its Subsidiaries shall fail to pay any principal of or premium or interest on any Debt that is outstanding in a principal or notional amount of at least $50,000,000 in the aggregate (but excluding Debt outstanding hereunder) of the Guarantor or such Subsidiary (as the case may be), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Debt and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof; or (e) The Guarantor or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Guarantor or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its property) shall occur; or the Guarantor or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or

34 (f) Judgments or orders for the payment of money in excess of $50,000,000 in the aggregate shall be rendered against the Guarantor or any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not be an Event of Default under this Section 6.01(f) if and for so long as (i) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (ii) such insurer, which shall be rated at least "A-" by A.M. Best Company, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; or (g) (i) Any Person or two or more Persons acting in concert shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of the Guarantor (or other securities convertible into such Voting Stock) representing 20% or more of the combined voting power of all Voting Stock of the Guarantor; or (ii) the board of directors of the Guarantor shall for any reason cease to consist of a majority of the directors of the Guarantor on the Effective Date and each other director whose nomination for election to the board of directors of the Guarantor is recommended by at least a majority of the directors of the board of directors of the Guarantor on the Effective Date and directors so recommended; or (iii) any Person or two or more Persons acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Guarantor; or (h) The Guarantor or any of its ERISA Affiliates shall incur, or shall be reasonably likely to incur liability in excess of $50,000,000 in the aggregate as a result of one or more of the following: (i) the occurrence of any ERISA Event; (ii) the partial or complete withdrawal of the Borrower, the Guarantor or any of its ERISA Affiliates from a Multiemployer Plan; or (iii) the reorganization or termination of a Multiemployer Plan; or (i) any provision of Article VII shall for any reason cease to be valid and binding on or enforceable against the Guarantor, or the Guarantor shall so state in writing; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Advances, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Advances, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Advances, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

35 ARTICLE VII GUARANTY SECTION 7.01. Guaranty. The Guarantor hereby absolutely, unconditionally and irrevocably guarantees the punctual payment when due, whether at scheduled maturity or on any date of a required prepayment or by acceleration, demand or otherwise, of all obligations of the Borrower now or hereafter existing under or in respect of this Agreement and the Notes (including, without limitation, any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premiums, fees, indemnities, contract causes of action, costs, expenses or otherwise (such obligations being the "Guaranteed Obligations"), and agrees to pay any and all expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by the Agent or any other Lender in enforcing any rights under this Article VII. Without limiting the generality of the foregoing, the Guarantor's liability shall extend to all amounts that constitute part of the Guaranteed Obligations and would be owed by the Borrower to the Agent or any Lender under or in respect of this Agreement or the Notes but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or similar proceeding involving the Borrower. SECTION 7.02. Guaranty Absolute. The Guarantor guarantees that the Guaranteed Obligations will be paid strictly in accordance with the terms of this Agreement and the Notes, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender with respect thereto. The obligations of the Guarantor under or in respect of this Article VII are independent of the Guaranteed Obligations or any other obligations of any the Borrower under or in respect of this Agreement and the Notes, and a separate action or actions may be brought and prosecuted against the Guarantor to enforce this Article VII, irrespective of whether any action is brought against the Borrower or whether the Borrower is joined in any such action or actions. The liability of the Guarantor under this Article VII shall be irrevocable, absolute and unconditional irrespective of, and the Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following: (a) any lack of validity or enforceability of this Agreement (other than this Article VII), the Notes or any agreement or instrument relating thereto; (b) subject to Section 9.01, any change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations or any other obligations of the Borrower under or in respect of this Agreement or the Notes, or any other amendment or waiver of or any consent to departure from this Agreement or the Notes, including, without limitation, any increase in the Guaranteed Obligations resulting from the extension of additional credit to the Borrower or any of its Subsidiaries or otherwise; (c) any taking, exchange, release or non-perfection of any collateral, or any taking, release or amendment or waiver of, or consent to departure from, any other guaranty, for all or any of the Guaranteed Obligations; (d) any manner of application of collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any manner of sale or other disposition of any collateral for all or any of the Guaranteed Obligations or any other obligations of the Borrower under this Agreement or the Notes or any other assets of the Borrower or any of its Subsidiaries; (e) any change, restructuring or termination of the corporate structure or existence of the Borrower or any of its Subsidiaries;

36 (f) any failure of any Lender or the Agent to disclose to the Guarantor any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower now or hereafter known to such Lender or the Agent (the Guarantor waiving any duty on the part of the Lenders and the Agent to disclose such information); or (g) any other circumstance or any existence of or reliance on any representation by any Lender or the Agent that might otherwise constitute a defense available to, or a discharge of, the Borrower or any other guarantor or surety. This Article VII shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by any Lender or the Agent or any other Person upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment had not been made. SECTION 7.03. Waivers and Acknowledgments. (a) The Guarantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Guaranteed Obligations and this Article VII and any requirement that any Lender or the Agent protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against the Borrower or any other Person or any collateral. (b) The Guarantor hereby unconditionally and irrevocably waives any right to revoke this Article VII and acknowledges that the guaranty under this Article VII is continuing in nature and applies to all Guaranteed Obligations, whether existing now or in the future. (c) The Guarantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by any Lender or the Agent that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of the Guarantor or other rights of the Guarantor to proceed against the Borrower, any other guarantor or any other Person or any collateral and (ii) any defense based on any right of set-off or counterclaim against or in respect of the obligations of the Guarantor hereunder. (d) The Guarantor hereby unconditionally and irrevocably waives any duty on the part of any Lender or the Agent to disclose to the Guarantor any matter, fact or thing relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of the Borrower or any of its Subsidiaries now or hereafter known by such Lender or the Agent. (e) The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by this Agreement and the Notes and that the waivers set forth in Section 7.02 and this Section 7.03 are knowingly made in contemplation of such benefits. SECTION 7.04. Subrogation. The Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower or any other insider guarantor that arise from the existence, payment, performance or enforcement of the Guarantor's Obligations under or in respect of this Article VII, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Lender or the Agent against the Borrower or any other insider guarantor or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from the Borrower or any other insider guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner,

37 payment or security on account of such claim, remedy or right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Article VII shall have been paid in full in cash and the Commitments shall have expired or been terminated. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the later of (a) the payment in full in cash of the Guaranteed Obligations and all other amounts payable under this Article VII and (b) the Termination Date, such amount shall be received and held in trust for the benefit of the Lenders and the Agent, shall be segregated from other property and funds of the Guarantor and shall forthwith be paid or delivered to the Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Article VII, whether matured or unmatured, in accordance with the terms of this Agreement, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Article VII thereafter arising. If (i) the Guarantor shall make payment to any Lender or the Agent of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Article VII shall have been paid in full in cash and (iii) the Termination Date shall have occurred, the Lenders and the Agent will, at the Guarantor's request and expense, execute and deliver to the Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to the Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by the Guarantor pursuant to this Article VII. SECTION 7.05. Continuing Guaranty; Assignments. The guaranty under this Article VII is a continuing guaranty and shall (a) remain in full force and effect until the later of (i) the payment in full of the Guaranteed Obligations and all other amounts payable under this Article VII and (ii) the Termination Date, (b) be binding upon the Guarantor, its successors and assigns and (c) inure to the benefit of and be enforceable by the Lenders and the Agent and their successors, transferees and assigns. Without limiting the generality of clause (c) of the immediately preceding sentence, any Lender may assign or otherwise transfer all or any portion of its rights and obligations under this Agreement (including, without limitation, all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Lender herein or otherwise, in each case as and to the extent provided in Section 9.07. The Guarantor shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. ARTICLE VIII THE AGENT SECTION 8.01. Authorization and Action. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however, that the Agent shall not be required to take any action that exposes the Agent to personal liability or that is contrary to this Agreement or applicable law. The Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower or the Guarantor pursuant to the terms of this Agreement. SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may treat the Lender that made any Advance as the holder of the Debt resulting therefrom until the Agent receives and accepts an Assumption Agreement entered into by an Assuming Lender as

38 provided in Section 2.18 or 2.19, as the case may be, or an Assignment and Acceptance entered into by such Lender, as assignor, and an Eligible Assignee, as assignee, as provided in Section 9.07; (ii) may consult with legal counsel (including counsel for the Borrower or the Guarantor), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or the Guarantor or to inspect the property (including the books and records) of the Borrower or the Guarantor; (v) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 8.03. Citibank and Affiliates. With respect to its Commitment, the Advances made by it and the Note issued to it, Citibank shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Guarantor, any of its Subsidiaries and any Person who may do business with or own securities of the Guarantor or any such Subsidiary, all as if Citibank were not the Agent and without any duty to account therefor to the Lenders. SECTION 8.04. Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. SECTION 8.05. Indemnification. The Lenders agree to indemnify the Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Revolving Credit Advances then owed to each of them (or if no Revolving Credit Advances are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against the Agent in any way relating to or arising out of this Agreement or any action taken or omitted by the Agent under this Agreement (collectively, the "Indemnified Costs"), provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 8.05 applies whether any such investigation, litigation or proceeding is brought by the Agent, any Lender or a third party.

39 SECTION 8.06. Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 8.07. Other Agents. Each Lender hereby acknowledges that neither the documentation agent nor any other Lender designated as an "Agent" on the signature pages hereof has any liability hereunder other than in its capacity as a Lender. ARTICLE IX MISCELLANEOUS SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or the Revolving Credit Notes, nor consent to any departure by the Borrower or the Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower, the Guarantor and the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent shall, unless in writing and signed by each Lender directly affected thereby, do any of the following: (a) waive any of the conditions specified in Section 3.01, (b) increase the Commitments of the Lenders or subject the Lenders to any additional obligations, (c) reduce the principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (d) postpone any date fixed for any payment of principal of, or interest on, the Revolving Credit Advances or any fees or other amounts payable hereunder, (e) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Revolving Credit Advances, or the number of Lenders, that shall be required for the Lenders or any of them to take any action hereunder, (f) reduce or limit the obligations of the Guarantor under Section 7.01 or release the Guarantor or otherwise limit the Guarantor's liability with respect to its obligations under Article VII, (g) change the manner of application of any payments made under this Agreement or the Notes or (h) amend this Section 9.01; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 9.02. Notices, Etc. All notices and other communications provided for hereunder shall be in writing (including telecopier, telegraphic or telex communication) and mailed, telecopied, telegraphed, telexed or delivered, if to the Borrower or the Guarantor, at its address at 761 Main Avenue, Norwalk, Connecticut 06859, Attention: Treasurer; if to any Initial Lender, at its Domestic Lending Office specified opposite its name on Schedule I hereto; if to any other Lender, at its Domestic Lending Office specified in the Assumption Agreement or the Assignment and Acceptance pursuant to which it became a Lender; and if to the Agent, at its address at Two Penns Way, New Castle, Delaware 19720, Attention: Bank Loan Syndications Department; or, as to the Borrower, the Guarantor or the Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to

40 the Borrower and the Agent. All such notices and communications shall, when mailed, telecopied, telegraphed or telexed, be effective when deposited in the mails, telecopied, delivered to the telegraph company or confirmed by telex answerback, respectively, except that notices and communications to the Agent pursuant to Article II, III or VIII shall not be effective until received by the Agent. Delivery by telecopier of an executed counterpart of any amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and delivered hereunder shall be effective as delivery of a manually executed counterpart thereof. SECTION 9.03. No Waiver; Remedies. No failure on the part of any Lender or the Agent to exercise, and no delay in exercising, any right hereunder or under any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 9.04. Costs and Expenses. (a) The Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification and amendment of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, (A) all due diligence, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, consultant, and audit expenses and (B) the reasonable fees and expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to its rights and responsibilities under this Agreement. The Borrower further agrees to pay on demand all costs and expenses of the Agent and the Lenders, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of this Agreement, the Notes and the other documents to be delivered hereunder, including, without limitation, reasonable fees and expenses of counsel for the Agent and each Lender in connection with the enforcement of rights under this Section 9.04(a). (b) The Borrower agrees to indemnify and hold harmless the Agent and each Lender and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of the Borrower or any of its Subsidiaries or any Environmental Action relating in any way to the Borrower or any of its Subsidiaries, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower also agrees not to assert any claim for special, indirect, consequential or punitive damages against the Agent, any Lender, any of their Affiliates, or any of their respective directors, officers, employees, attorneys and agents, on any theory of liability, arising out of or otherwise relating to the Notes, this Agreement, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances. (c) If any payment of principal of, or Conversion of, any Eurodollar Rate Advance, LIBO Rate Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment or Conversion pursuant to Section 2.08(d) or (e), 2.09, 2.10 or 2.12, acceleration of the maturity of the Notes pursuant to Section 6.01 or for any other reason or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 9.07 as a result of a demand by the Borrower pursuant to

41 Section 9.07(a), the Borrower shall, upon demand by such Lender (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or Conversion, including, without limitation, any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance. (d) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower and, in the case of Section 2.14, the Guarantor, contained in Sections 2.11, 2.14 and 9.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the Notes. SECTION 9.05. Right of Set-off. Upon (i) the occurrence and during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 6.01, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or the account of the Borrower or the Guarantor against any and all of the obligations of the Borrower or the Guarantor now or hereafter existing under this Agreement and the Note held by such Lender, whether or not such Lender shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Lender agrees promptly to notify the Borrower or the Guarantor, as the case may be, after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Lender and its Affiliates under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Lender and its Affiliates may have. SECTION 9.06. Binding Effect. This Agreement shall become effective (other than Sections 2.01 and 2.03, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower, the Guarantor and the Agent and when the Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Guarantor, the Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Lenders. SECTION 9.07. Assignments and Participations. (a) Each Lender may, with the consent of the Agent and the Borrower (which consent shall not be unreasonably withheld or delayed) and, if demanded by the Borrower (following a demand by such Lender pursuant to Section 2.11 or 2.14, a notice by such Lender under Section 2.12 or the failure of such Lender to perform its obligations hereunder) so long as no Event of Default has occurred and is continuing, upon at least five Business Days' notice to such Lender and the Agent, will assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Revolving Credit Advances owing to it and the Revolving Credit Note or Notes held by it); provided, however, that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement (other than any right to make Competitive Bid Advances, Competitive Bid Advances owing to it and Competitive Bid Notes), (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender's rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, and (iv) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Revolving Credit Note

42 subject to such assignment and a processing and recordation fee of $3,500 payable by the parties to each such assignment, provided, however, that in the case of an assignment made as a result of a demand by the Borrower, such recordation fee shall be payable by the Borrower except that no such recordation fee shall be payable in the case of an assignment made at the request of the Borrower to an Eligible Assignee that is an existing Lender, and (vii) any Lender may, without the approval of the Borrower or the Agent, assign all or a portion of its rights to any of its Affiliates. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantor or the performance or observance by the Borrower or the Guarantor of any of their obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement as are delegated to the Agent by the terms hereof, together with such powers and discretion as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender. (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Revolving Credit Note or Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. (d) The Agent shall maintain at its address referred to in Section 9.02 a copy of each Assumption Agreement and each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Guarantor, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Guarantor or any Lender at any reasonable time and from time to time upon reasonable prior notice.

43 (e) Each Lender may sell participations to one or more banks or other entities (other than the Guarantor or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitment, the Advances owing to it and any Note or Notes held by it); provided, however, that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of this Agreement or any Note, or any consent to any departure by the Borrower or the Guarantor therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder, release any guaranty given to support the obligations of the Borrower hereunder or amend this Section 9.07(e), or postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. (f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.07, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower or the Guarantor furnished to such Lender by or on behalf of the Borrower or the Guarantor; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower or the Guarantor received by it from such Lender. (g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including, without limitation, the Advances owing to it and any Note or Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System. SECTION 9.08. Confidentiality. Neither the Agent nor any Lender shall disclose any Confidential Information to any other Person without the consent of the Borrower, other than (a) to the Agent's or such Lender's Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 9.07(f), to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. SECTION 9.09. Governing Law. This Agreement and the Notes shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 9.10. Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the Notes, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other

44 manner provided by law. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or the Notes in the courts of any jurisdiction. (b) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Notes in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. THE PERKIN-ELMER CORPORATION, as Borrower By /s/ John S. Ostaszewski ----------------------------------------- Title: By /s/ Vikram Jog ----------------------------------------- Title: PE CORPORATION, as Guarantor By /s/ John S. Ostaszewski ----------------------------------------- Title: By /s/ Vikram Jog ----------------------------------------- Title: CITIBANK, N.A., as Agent By /s/ Robert D. Wetrus ----------------------------------------- Title: Robert D. Wetrus Citibank, N.A. Vice President Initial Lenders --------------- Commitment ---------- $30,000,000 CITIBANK, N.A. By /s/ Wolfgang Viragh ----------------------------------------- Title: VP

45 $20,000,000 BANK OF AMERICA, N.A. By /s/ Philip S. Durand ------------------------------------------- Title: Philip S. Durand Principal $25,000,000 THE CHASE MANHATTAN BANK By /s/ A. Neil Sweeny ------------------------------------------- Title: Vice President $25,000,000 WACHOVIA BANK By /s/ Jane C. Deaver ------------------------------------------- Title: Jane C. Deaver Senior Vice President $100,000,000 Total of the Commitments

<TABLE> <CAPTION> SCHEDULE I THE PERKIN-ELMER CORPORATION FIVE YEAR CREDIT AGREEMENT APPLICABLE LENDING OFFICES <S> <C> <C> -------------------------------------------------------------------------------------------------------------------- Name of Initial Lender Domestic Lending Office Eurodollar Lending Office -------------------------------------------------------------------------------------------------------------------- CITIBANK, N.A. Two Penns Way Two Penns Way New Castle, DE 19720 New Castle, DE 19720 Attn: Brian Maxwell Attn: Brian Maxwell T: 302 894-6023 T: 302 894-6023 F: 302 894-6120 F: 302 894-6120 -------------------------------------------------------------------------------------------------------------------- BANK OF AMERICA, N.A. 101 N. Tryon Street 101 N. Tryon Street NCI-001-15-03 NCI-001-15-03 Charlotte, NC 28255 Charlotte, NC 28255 Attn: M. Menz Attn: M. Menz T: 704 388-1111 T: 704 388-1111 F: 704 409-0083 F: 704 409-0083 -------------------------------------------------------------------------------------------------------------------- THE CHASE MANHATTAN BANK 999 Broad Street 999 Broad Street Bridgeport, CT 06604 Bridgeport, CT 06604 Attn: Diana Lopez Attn: Diana Lopez T: 203 382-5341 T: 203 382-5341 F: 203 382-5360 F: 203 382-5360 -------------------------------------------------------------------------------------------------------------------- WACHOVIA BANK, N.A. 191 Peachtree Street 191 Peachtree Street Atlanta, GA 30303 Atlanta, GA 30303 Attn: Trudy T. Collins Attn: Trudy T. Collins T: 404 332-6688 T: 404 332-6688 F: 404 332-4320 F: 404 332-4320 -------------------------------------------------------------------------------------------------------------------- </TABLE>

EXHIBIT A-1 - FORM OF REVOLVING CREDIT PROMISSORY NOTE U.S.$_______________ Dated: _______________, 200_ FOR VALUE RECEIVED, the undersigned, THE PERKIN-ELMER CORPORATION, a New York corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________________________ (the "Lender") for the account of its Applicable Lending Office on the Termination Date (each as defined in the Credit Agreement referred to below) the principal sum of U.S.$[amount of the Lender's Commitment in figures] or, if less, the aggregate principal amount of the Revolving Credit Advances made by the Lender to the Borrower pursuant to the Credit Agreement dated as of April 20, 2000 among the Borrower, PE Corporation, the Lender and certain other lenders parties thereto, Salomon Smith Barney Inc., as sole arranger, Wachovia Bank, N.A., as syndication Agent, The Chase Manhattan Bank, as documentation agent, and Citibank, N.A. as Agent for the Lender and such other lenders (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined) outstanding on the Termination Date. The Borrower promises to pay interest on the unpaid principal amount of each Revolving Credit Advance from the date of such Revolving Credit Advance until such principal amount is paid in full, at such interest rates, and payable at such times, as are specified in the Credit Agreement. Both principal and interest are payable in lawful money of the United States of America to Citibank, as Agent, at 399 Park Avenue, New York, New York 10043, in same day funds. Each Revolving Credit Advance owing to the Lender by the Borrower pursuant to the Credit Agreement, and all payments made on account of principal thereof, shall be recorded by the Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Promissory Note. This Promissory Note is one of the Revolving Credit Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, (i) provides for the making of Revolving Credit Advances by the Lender to the Borrower from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of the Borrower resulting from each such Revolving Credit Advance being evidenced by this Promissory Note and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. THE PERKIN-ELMER CORPORATION By ------------------------- Title:

2 ADVANCES AND PAYMENTS OF PRINCIPAL <TABLE> <CAPTION> -------------------------------------------------------------------------------------------------------------------------------- Amount of Date Amount of Principal Paid Unpaid Principal Notation Advance or Prepaid Balance Made By -------------------------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------- </TABLE>

EXHIBIT A-2 - FORM OF COMPETITIVE BID PROMISSORY NOTE U.S.$_______________ Dated: _______________, 200_ FOR VALUE RECEIVED, the undersigned, THE PERKIN-ELMER CORPORATION, a New York corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of _________________________ (the "Lender") for the account of its Applicable Lending Office (as defined in the Credit Agreement dated as of April 20, 2000 among the Borrower, PE Corporation, the Lender and certain other lenders parties thereto, Salomon Smith Barney Inc., as sole arranger, Wachovia Bank, N.A., as syndication agent, The Chase Manhattan Bank, as documentation agent, and Citibank, N.A., as Agent for the Lender and such other lenders (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein being used herein as therein defined)), on _______________, 200_, the principal amount of $_______________. The Borrower promises to pay interest on the unpaid principal amount hereof from the date hereof until such principal amount is paid in full, at the interest rate and payable on the interest payment date or dates provided below: Interest Rate: _____% per annum (calculated on the basis of a year of _____ days for the actual number of days elapsed). Both principal and interest are payable in lawful money of the United States to Citibank, as agent, for the account of the Lender at the office of Citibank, at Two Penns Way, New Castle Delaware 19720 in same day funds. This Promissory Note is one of the Competitive Bid Notes referred to in, and is entitled to the benefits of, the Credit Agreement. The Credit Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events. The Borrower hereby waives presentment, demand, protest and notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder hereof shall operate as a waiver of such rights. This Promissory Note shall be governed by, and construed in accordance with, the laws of the State of New York. THE PERKIN-ELMER CORPORATION By ------------------------- Title:

EXHIBIT B-1 - FORM OF NOTICE OF REVOLVING CREDIT BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below Two Penns Way New Castle, Delaware 19720 [Date] Attention: Bank Loan Syndications Department Ladies and Gentlemen: The undersigned, The Perkin-Elmer Corporation, refers to the Credit Agreement, dated as of April 20, 2000 (as amended or modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, PE Corporation, certain Lenders parties thereto, Salomon Smith Barney Inc., as sole arranger, Wachovia Bank, N.A., as syndication agent, The Chase Manhattan Bank, as documentation agent, and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Revolving Credit Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Revolving Credit Borrowing (the "Proposed Revolving Credit Borrowing") as required by Section 2.02(a) of the Credit Agreement: (i) The Business Day of the Proposed Revolving Credit Borrowing is _____________, 200_. (ii) The Type of Advances comprising the Proposed Revolving Credit Borrowing is [Base Rate Advances] [Eurodollar Rate Advances]. (iii) The aggregate amount of the Proposed Revolving Credit Borrowing is $_____________. [(iv) The initial Interest Period for each Eurodollar Rate Advance made as part of the Proposed Revolving Credit Borrowing is _____ month[s].] The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Revolving Credit Borrowing: (A) the representations and warranties contained in Section 4.01 of the Credit Agreement (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) are correct, before and after giving effect to the Proposed Revolving Credit Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; and

2 (B) no event has occurred and is continuing, or would result from such Proposed Revolving Credit Borrowing or from the application of the proceeds therefrom, that constitutes a Default. Very truly yours, THE PERKIN-ELMER CORPORATION By ------------------------- Title:

EXHIBIT B-2 - FORM OF NOTICE OF COMPETITIVE BID BORROWING Citibank, N.A., as Agent for the Lenders parties to the Credit Agreement referred to below Two Penns Way New Castle, Delaware 19720 [Date] Attention: Bank Loan Syndications Department Ladies and Gentlemen: The undersigned, The Perkin-Elmer Corporation, refers to the Credit Agreement, dated as of April 20, 2000 (as amended or modified from time to time, the "Credit Agreement", the terms defined therein being used herein as therein defined), among the undersigned, PE Corporation, certain Lenders parties thereto, Salomon Smith Barney Inc., as sole arranger, Wachovia Bank, N.A., as syndication agent, The Chase Manhattan Bank, as documentation agent, and Citibank, N.A., as Agent for said Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.03 of the Credit Agreement that the undersigned hereby requests a Competitive Bid Borrowing under the Credit Agreement, and in that connection sets forth the terms on which such Competitive Bid Borrowing (the "Proposed Competitive Bid Borrowing") is requested to be made: (A) Date of Competitive Bid Borrowing _____________________ (B) Amount of Competitive Bid Borrowing _____________________ (C) [Maturity Date] [Interest Period] _____________________ (D) Interest Rate Basis _____________________ (E) Interest Payment Date(s) _____________________ (F) ___________________ _____________________ The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Competitive Bid Borrowing: (a) the representations and warranties contained in Section 4.01 (except the representations set forth in the last sentence of subsection (e) thereof and in subsection (f)(i) thereof) are correct, before and after giving effect to the Proposed Competitive Bid Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; (b) no event has occurred and is continuing, or would result from the Proposed Competitive Bid Borrowing or from the application of the proceeds therefrom, that constitutes a Default; and (c) the aggregate amount of the Proposed Competitive Bid Borrowing and all other Borrowings to be made on the same day under the Credit Agreement is within the aggregate amount of the unused Commitments of the Lenders. The undersigned hereby confirms that the Proposed Competitive Bid Borrowing is to be made available to it in accordance with Section 2.03(a)(v) of the Credit Agreement.

2 Very truly yours, THE PERKIN-ELMER CORPORATION By ------------------------- Title:

EXHIBIT C - FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to the Credit Agreement dated as of April 20, 2000 (as amended or modified from time to time, the "Credit Agreement") among The Perkin-Elmer Corporation, a New York corporation (the "Borrower"), PE Corporation, a Delaware corporation (the "Guarantor"), the Lenders (as defined in the Credit Agreement), Salomon Smith Barney Inc., as sole arranger, Wachovia Bank, N.A., as syndication agent, The Chase Manhattan Bank, as documentation agent, and Citibank, N.A., as agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein with the same meaning. The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit Agreement as of the date hereof (other than in respect of Competitive Bid Advances and Competitive Bid Notes) equal to the percentage interest specified on Schedule 1 hereto of all outstanding rights and obligations under the Credit Agreement (other than in respect of Competitive Bid Advances and Competitive Bid Notes). After giving effect to such sale and assignment, the Assignee's Commitment and the amount of the Revolving Credit Advances owing to the Assignee will be as set forth on Schedule 1 hereto. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Guarantor or the performance or observance by the Borrower or the Guarantor of any of its obligations under the Credit Agreement or any other instrument or document furnished pursuant thereto; and (iv) attaches the Revolving Credit Note, if any, held by the Assignor [and requests that the Agent exchange such Revolving Credit Note for a new Revolving Credit Note payable to the order of [the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto or new Revolving Credit Notes payable to the order of the Assignee in an amount equal to the Commitment assumed by the Assignee pursuant hereto and] the Assignor in an amount equal to the Commitment retained by the Assignor under the Credit Agreement, [respectively,] as specified on Schedule 1 hereto]. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement as are delegated to the Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; (v) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender; and (vi) attaches any U.S. Internal Revenue Service forms required under Section 2.14 of the Credit Agreement. 4. Following the execution of this Assignment and Acceptance, it will be delivered to the Agent for acceptance and recording by the Agent. The effective date for this Assignment and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Agent, unless otherwise specified on Schedule 1 hereto.

2 5. Upon such acceptance and recording by the Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Revolving Credit Notes in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Revolving Credit Notes for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon.

Schedule 1 to Assignment and Acceptance <TABLE> <S> <C> Percentage interest assigned: _____% Assignee's Commitment: $__________ Aggregate outstanding principal amount of Revolving Credit Advances assigned: $__________ [Principal amount of Revolving Credit Note payable to Assignee: $__________] [Principal amount of Revolving Credit Note payable to Assignor: $__________] Effective Date*: _______________, 200_ </TABLE> [NAME OF ASSIGNOR], as Assignor By ------------------------- Title: Dated: _______________, 200_ [NAME OF ASSIGNEE], as Assignee By ------------------------- Title: Dated: _______________, 200_ Domestic Lending Office: [Address] Eurodollar Lending Office: [Address] ----------------- * This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent.

2 Accepted [and Approved]* this __________ day of _______________, 200_ CITIBANK, N.A., as Agent By ------------------------------------------ Title: [Approved this __________ day of _______________, 200_ THE PERKIN-ELMER CORPORATION By ]** ------------------------------------------ Title: ---------------------- * Required if the Assignee is an Eligible Assignee solely by reason of clause (iii) of the definition of "Eligible Assignee". ** Required if the Assignee is an Eligible Assignee solely by reason of clause (iii) of the definition of "Eligible Assignee".

EXHIBIT D - FORM OF OPINION OF COUNSEL FOR THE BORROWER AND THE GUARANTOR April 20, 2000 To each of the Lenders parties to the Credit Agreement dated as of April 20, 2000 among The Perkin-Elmer Corporation, PE Corporation, said Lenders and Citibank, N.A., as Agent for said Lenders, and to Citibank, N.A., as Agent The Perkin-Elmer Corporation ---------------------------- Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 3.01(g)(vi) of the Credit Agreement, dated as of April 20, 2000 (the "Credit Agreement"), among The Perkin-Elmer Corporation (the "Borrower"), PE Corporation (the "Guarantor"), the Lenders parties thereto, and Citibank, N.A., as Agent for said Lenders. Terms defined in the Credit Agreement are used herein as therein defined. I have acted as counsel for the Borrower and the Guarantor in connection with the preparation, execution and delivery of the Credit Agreement. In that connection, I have examined: (1) The Credit Agreement. (2) The documents furnished by the Borrower and the Guarantor pursuant to Article III of the Credit Agreement. (3) The Restated Certificate of Incorporation of the Borrower and all amendments thereto (the "Borrower's Charter"). (4) The by-laws of the Borrower and all amendments thereto (the "Borrower's By-laws").

-2- (5) A certificate of the Secretary of State of New York, dated March 28, 2000, attesting to the continued corporate existence and good standing of the Borrower in that State. (6) The Restated Certificate of Incorporation of the Guarantor and all amendments thereto (the "Guarantor's Charter"). (7) The by-laws of the Guarantor and all amendments thereto (the "Guarantor's By-laws"). (5) A certificate of the Secretary of State of Delaware, dated March 29, 2000, attesting to the continued corporate existence and good standing of the Guarantor in that State. I have also examined the originals, or copies certified to my satisfaction, of such other corporate records of the Borrower and the Guarantor, certificates of public officials and of officers of the Borrower and the Guarantor, and agreements, instruments, and other documents, as I have deemed necessary as a basis for the opinions expressed below. As to questions of fact material to such opinions, I have, when relevant facts were not independently established by me, relied upon certificates of the Borrower, the Guarantor, or their respective officers, or of public officials. I have assumed the due execution and delivery, pursuant to due authorization, of the Credit Agreement by the Initial Lenders and the Agent. My opinions expressed below are limited to the law of the State of New York, the General Corporation Law of the State of Delaware, and the federal law of the United States. Based upon the foregoing and upon such investigation as I have deemed necessary, I am of the following opinion: 1. The Borrower is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York. The Guarantor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. 2. The execution, delivery, and performance by the Borrower and the Guarantor of the Credit Agreement and, in the case of the Borrower, the Notes, and the consummation of the transactions contemplated thereby, are within the Borrower's and the Guarantor's respective corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's Charter, the Borrower's By-laws, the Guarantor's Charter, or the Guarantor's By-laws, (ii) any law, rule, or regulation applicable to the Borrower or the Guarantor (including, without limitation, Regulation X of the Board of Governors of the Federal Reserve System), or (iii) any agreement, judgment, injunction, order, or other instrument known by me to be binding on the Borrower or the Guarantor. The Credit Agreement and the Notes have been duly executed and delivered on behalf of the Borrower. The Credit Agreement has been duly executed and delivered on behalf of the Guarantor.

-3- 3. No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for the due execution, delivery, and performance by the Borrower or the Guarantor of the Credit Agreement and, in the case of the Borrower, the Notes. 4. The Credit Agreement is, and after giving effect to the initial Borrowing, the Notes will be, legal, valid, and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms. The Credit Agreement is the legal, valid, and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms. 5. To the best of my knowledge, there are no pending or overtly threatened actions or proceedings against the Guarantor or any of its Subsidiaries before any court, governmental agency, or arbitrator that purport to affect the legality, validity, binding effect, or enforceability of the Credit Agreement or any of the Notes or the consummation of the transactions contemplated thereby or, except as described in Exhibit 3.01(d) to the Credit Agreement, that are likely to have a materially adverse effect upon the financial condition or operations of the Guarantor and its Subsidiaries taken as a whole. The opinions set forth above are subject to the following qualifications: (a) My opinion in paragraph 4 above as to enforceability is subject to the effect of (i) any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium, or similar law affecting creditors' rights generally and (ii) general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith, and fair dealing (regardless of whether considered in a proceeding in equity or at law). (b) I express no opinion as to (i) Section 2.15 of the Credit Agreement insofar as it provides that any Lender purchasing a participation from another Lender pursuant thereto may exercise set-off or similar rights with respect to such participation, (ii) the effect of the law of any jurisdiction other than the State of New York wherein any Lender may be located or wherein enforcement of the Credit Agreement or the Notes may be sought that limits the rates of interest legally chargeable or collectible, (iii) the effect of any provision of the Credit Agreement which is intended to permit modification thereof only by means of an agreement in writing signed by the parties thereto, (iv) the effect of any provision of the Credit Agreement imposing penalties or forfeitures, (v) the enforceability of any provision of the Credit Agreement to the extent that such provision constitutes a waiver of illegality as a defense to performance of contract obligations, (vi) the effect of any provision of the Credit Agreement relating to indemnification or exculpation in connection with violations of any securities laws or relating to indemnification, contribution, or exculpation in connection with willful, reckless, or criminal acts of the indemnified or exculpated Person or the Person receiving contribution.

-4- This opinion is intended only for the benefit of the addressees and may not be relied upon by any other person without my prior written consent. Very truly yours, Thomas P. Livingston Corporate Secretary



                          THE PERKIN-ELMER CORPORATION

                          SUPPLEMENTAL RETIREMENT PLAN















                                    Effective Date:             August 1, 1979
                                    Amended:                    August 1, 1985
                                                                May 21, 1987
                                                                August 1, 1988
                                                                August 1, 1991
                                                                July 1, 1995


THE PERKIN-ELMER CORPORATION SUPPLEMENTAL RETIREMENT PLAN 1. Purpose. This Supplemental Retirement Plan (hereinafter referred to as the "Plan") is intended to provide covered employees with supplemental retirement benefits from The Perkin-Elmer Corporation (the "Corporation") in recognition of the additional compensation actually received by such employees under the terms of the Corporation's Contingent Compensation Plan for Key Employees and the Incentive Compensation Plan which payments are not included as compensation for benefit purposes under The Employee Pension Plan of The Perkin-Elmer Corporation. This Plan is unfunded, noncontributory and is not qualified under the provisions of the Internal Revenue Code of 1954, as amended. 2. Participants. All key employees of the Corporation or one of its United States subsidiaries selected for participation in the Contingent Compensation Plan for Key Employees or the Incentive Compensation Plan are automatically Participants in the Plan. A key employee who has become a Participant under this Plan shall continue to be considered a Participant, for purposes of this Plan only, so long as the key employee has a right to a benefit under this Plan. 3. Definitions. (a) "Compensation" shall mean payments accrued for a current Fiscal Year and paid in the subsequent Fiscal Year from the Contingent Compensation Plan and the Incentive Compensation Plan. Payments accrued as of the last day of the Fiscal Year will count as Compensation if a Participant retires on the last day of the Fiscal Year but prior to receipt of such payment. (b) "Final Average Compensation" shall mean the Participant's average Compensation received during the three (3) consecutive Fiscal Years out of the ten (10) Fiscal Years prior to and including a Participant's termination of employment which produce the highest average. Rules governing Final Average Compensation are as follows: (i) Only Fiscal Years commencing after June 30, 1995 shall be counted. 1

(ii) Fiscal Years while a Participant during which Compensation is not awarded from the Contingent Compensation Plan and Incentive Compensation shall count as zero for purposes of Compensation and as a Fiscal Year for purposes of averaging. (iii) If a Participant has less than three (3) Fiscal Years Compensation after June 30, 1995, Final Average Compensation shall mean the average of the Compensation received in all Fiscal Years after June 30, 1995 divided by the number of Fiscal Years during which Compensation was accrued unless a Participant meets (ii) above. In which instance, the Participant will have a zero for purposes of Compensation for that Fiscal Year, but a year for purposes of averaging. (c) "Fiscal Year" shall mean the period commencing July 1 of each year and ending on the following June 30. (d) "Pre-July 1, 1995, Accrued Benefit" shall mean the Participant's Accrued Annual Retirement Benefit under the terms of the Plan as of June 30, 1995 and shall include the accrual for Compensation for the Fiscal Year ending June 30, 1995. (e) "Years of Service" shall mean continuous service measured from the later of July 1, 1995 or the date a Participant first participates in the Plan until the first day of the month coincident with or next following the Participant's termination of employment. Months of service while not a Participant in the Contingent Compensation Plan or the Incentive Compensation Plan which occur after initial participation in this Plan will not count as continuous service. 4. Accrued Annual Retirement Benefit. A Participant's Accrued Annual Retirement Benefit payable at age sixty-five (65) in the form of a life annuity shall be the sum of (a) and (b) where: (a) The Participant's pre-July 1, 1995 Accrued Benefit; and (b) The product of (i) times (ii) where: (i) one and one-half percent (1.5%) of the Participant's Final Average Compensation; and 2

(ii) Years of Service. 5. Payment of Benefits. A Participant's accrued annual retirement benefit will be paid as follows: (a) Monthly payments upon retirement at or after the Participant's Normal Retirement Date under the terms of The Employee Pension Plan of The Perkin-Elmer Corporation, adjusted in accordance with the optional form of retirement benefit elected by the Participant under that Pension Plan. (b) Reduced monthly payments upon early retirement, calculated pursuant to terms of The Employee Pension Plan of The Perkin-Elmer Corporation, adjusted in accordance with the optional form of retirement benefit elected by the Participant under the Pension Plan. (c) Reduced monthly payments upon commencement of a deferred vested pension under the terms of The Employee Pension Plan of The Perkin-Elmer Corporation, adjusted in accordance with the optional form of retirement benefit elected by the Participant under the Pension Plan. (d) Upon disability retirement of the Participant under the terms of The Employee Pension Plan of The Perkin-Elmer Corporation, with benefits commencing at the same time and under the same terms as applicable under that Pension Plan. (e) Upon the death of the Participant prior to retirement and on or after attainment of eligibility for early retirement under The Employee Pension Plan of The Perkin-Elmer Corporation, the surviving spouse, if any, will receive a monthly benefit under the same terms as are applicable under the Pension Plan. (f) Upon the death of the Participant prior to retirement and prior to attainment of eligibility for early retirement under The Employee Pension Plan of The Perkin-Elmer Corporation, the surviving spouse, if any, will be entitled to a Surviving Spouse Death Benefit of 50% of the Participant's Deferred Vested pension under the Plan in 3

accordance with the applicable provisions of The Employee Pension Plan of The Perkin-Elmer Corporation. (g) Anything in the Plan to the contrary notwithstanding, in the event the monthly pension payable under this Plan to any Participant or any Contingent Annuitant has a lump sum value less than or equal to the sum stated in The Employee Pension Plan of The Perkin-Elmer Corporation, the Committee may, but shall not be required to, direct that the benefits be payable in one lump sum amount. The factors used to determine the lump sum value of a benefit shall be the same factors as applicable under that Pension Plan. (h) A Participant who does not become entitled to benefits in accordance with sub-paragraphs (a) through (g) above will receive no benefits under this Plan. 6. Financing of Benefits. No separate trust, escrow account or any other similar funding arrangement will be established to prefund the benefits provided under this Plan. Payment of benefits under this Plan will be a general obligation of the Corporation payable from the general funds of the Corporation. 7. Amendment or Termination. The Board of Directors of the Corporation is authorized to amend or modify this Plan, or to suspend or terminate the Plan in whole or in part, at any time in its sole discretion. The rights of all Participants in this Plan shall be subject to the provisions of this Plan as such Plan shall exist at any given time. Notwithstanding the foregoing, accrued benefits under this Plan shall not be forfeitable. 8. Effective Date. This Plan shall become effective on August 1, 1979. 9. Miscellaneous Provisions. This Plan shall be administered by the Pension Plan Committee of the Corporation (hereinafter referred to as the "Committee"), appointed in accordance with the provisions of The Employee Pension Plan of The Perkin-Elmer Corporation. In the administration of this Plan the following considerations shall be applicable: (a) Except as expressly provided herein, this Plan will be administered by the Committee in a manner consistent with the provisions of the Contingent 4

Compensation Plan for Key Employees, the Incentive Compensation Plan and The Employee Pension Plan of The Perkin-Elmer Corporation. (b) No benefit payable under this Plan shall be subject in any manner whatsoever to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge. (c) This Plan shall not be deemed to constitute a contract of employment between the Corporation and any Participant for any purpose whatsoever. (d) All former Participants in the Contingent Compensation Plan for Key Employees who have since retired directly from the employment of the Corporation, and who are alive on the effective date of this Plan, shall be treated as Participants in this Plan. Such former Participants shall be entitled to a benefit under this Plan computed as set forth above, with payments commencing on the first day of the month following the effective date of this Plan. 10. Applicable Law. This Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of New York. 11. Payment in the event of Change in Control. Notwithstanding any other provision of this Plan, if, within three years of a Change in Control, the employment of a Participant is terminated by the Participant for Good Reason or by the Corporation without Cause, then the Participant will be entitled to payment of his accrued annual retirement benefit commencing on or after the date the Participant attains age 55. The Participant may elect, by written notice to the Committee at least 30 days in advance, the date on which this benefit commences and the form of payment of such benefit, which may be any optional form of benefit permitted under The Employee Pension Plan of The Perkin-Elmer Corporation. If a Participant's annual retirement benefit commences prior to what would have been his Normal Retirement Date under the Pension Plan or is paid in a form other than an annuity for his life only, the amount of such benefit shall be adjusted in accordance with the adjustments under the Pension Plan. If the Pension Plan is not in effect on the date benefit payments commence hereunder, all references in this Section to the Pension Plan shall be understood to refer to the terms and conditions of the Pension Plan immediately prior to the date it is terminated. 5

For purposes of this Section: (a) A "Change in Control: shall have occurred if (i) any "person" within the meaning of Section 14(d) of the Securities Exchange Act of 1934 becomes the "beneficial owner" as defined in Rule 13d-3 thereunder, directly or indirectly, of more than 25% of the Corporation's Common Stock, (ii) any "person" acquires by proxy or otherwise, other than pursuant to solicitations by the Incumbent Board (as hereinafter defined), the right to vote more than 35% of the Corporation's Common Stock for the election of directors, for any merger or consolidation of the Corporation or for any other manner or question, (iii) during any two-year period, individuals who constitute the Board of Directors of the Corporation (the "Incumbent Board") as of the beginning of the period cease for any reason to constitute at least a majority thereof, provided that any person becoming a director during such period whose election or nomination for election by the Corporation's stockholders was approved by a vote of at least three-quarters of the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director without objection to such nomination) shall be, for purposes of this clause (iii) considered as though such person were a member of the Incumbent Board, or (iv) the approval by the Corporation's stockholders of the sale of all or substantially all of the assets of the Corporation. (b) Termination by the Corporation of the employment of a Participant for "Cause" shall mean termination upon (i) the willful and continued failure by the Participant to perform substantially his duties with the Corporation (other than any such failure resulting from the Participant's incapacity due to physical or mental illness) after a demand for substantial performance is delivered to the Participant by the Chairman of the Board or President of the Corporation which specifically identifies the manner in which such executive believes that the Participant has not substantially performed his duties, of (ii) the willful engaging by the Participant in illegal conduct which is materially and demonstrably injurious to the Corporation. For purposes of this subparagraph (b), no act, or failure to act, on the part of the Participant shall be considered "willful" unless done, or omitted to be done, by such Participant in bad faith and without reasonable belief that the Participant's action or omission was in, or not opposed to, the best interests of the Corporation. Notwithstanding the foregoing, a Participant shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to such Participant a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to such Participant and an opportunity for him, together with his 6

counsel, to be heard before the Board), finding that in the good faith opinion of the Board such Participant was guilty of the conduct set forth above in (i) or (ii) of this subparagraph (b) and specifying the particulars thereof in detail. (c) Termination by the Participant of employment for "Good Reason" shall mean termination based on: (i) an adverse change in the status of the Participant (other than any such change primarily attributable to the fact that the Corporation may no longer be publicly owned) or position(s) as an officer of the Corporation as in effect immediately prior to the Change in Control, or the assignment to the Participant of any duties or responsibilities which, in his reasonable judgement, are inconsistent with such status position(s), or any removal of the Participant from or any failure to reappoint or reelect him to such position(s) (except in connection with the termination of the Participant's employment for Cause, total disability or retirement on or after attaining age 65 or as a result of death or by the Participant other than for Good Reason); (ii) a reduction by the Corporation in the Participant's base salary as in effect immediately prior to the Change in Control; (iii) a material reduction in the Participant's total annual compensation; a reduction for any year of over 10% of total compensation measured by the preceding year without a substantially similar reduction to other executives shall be considered "material"; provided, however, the failure of the Corporation to adopt or renew a stock option plan or to grant stock options to the Participant shall not be considered a reduction; and (iv) the Corporation's requiring the Participant to be based more than fifty miles from the site to which he regularly reported for work prior to the Change in Control, except for required travel on the Corporation's business to an extent substantially consistent with the business travel obligations which he undertook on behalf of the Corporation prior to the Change in Control. 7

AMENDMENT TO THE PERKIN-ELMER CORPORATION SUPPLEMENTAL RETIREMENT PLAN WHEREAS, The Perkin-Elmer Corporation ("Company") last amended and restated The Perkin-Elmer Corporation Supplemental Retirement Plan (the "Plan") effective as of July 1, 1995; and WHEREAS, the Board of Directors of the Company pursuant to Section 7 may amend the plan from time to time; and WHEREAS, it has been determined that certain amendments are required at this time. NOW, THEREFORE, the Plan be amended effective October 1, 1996 as follows: 1. Section 3(a) of the Plan is amended by adding a new sentence which shall appear as the second sentence and shall now read as follows: "Compensation shall include any amounts of Incentive Compensation or Contingent Compensation which is contributed by the Company pursuant to a salary reduction agreement and which is not includable in the gross income of the Employee because it is made to a deferred compensation plan sponsored by the Company."



                             THE EXCESS BENEFIT PLAN


                                       OF


                          THE PERKIN-ELMER CORPORATION













                            Effective August 1, 1984
                            Restated August 1, 1989
                             Amended June 30, 1993
                            Restated October 1, 1995
                             Amended April 1, 2000
                            Amended August 17, 2000




                                  Working Copy

                Incorporating First and Second Amendments to Plan





INDEX ----- <TABLE> <CAPTION> Page No. -------- <S> <C> <C> ARTICLE 1 Definitions 1 ARTICLE 2 Purpose of Plan 3 ARTICLE 3 Eligibility 4 ARTICLE 4 Benefits 5 ARTICLE 5 Administration 7 ARTICLE 6 Amendment and Termination 8 ARTICLE 7 Miscellaneous 9 </TABLE>

THE EXCESS BENEFIT PLAN OF THE PERKIN-ELMER CORPORATION The Perkin-Elmer Corporation, a New York corporation having its principal place of business in Norwalk, Connecticut, hereby restates as of October 1, 1995 The Excess Benefit Plan of The Perkin-Elmer Corporation which was effective as of August 1, 1984. ARTICLE 1 Definitions The words and phrases defined hereinafter shall have the following meaning: Section 1.1 - Act. The Employee Retirement Income Security Act of 1974. Section 1.2 - Beneficiary. The person or persons named under the provisions of Section 4.4 of this Plan. Section 1.3 - Board of Directors. The Board of Directors of the Company. Section 1.4 - Code. The Internal Revenue Code of 1986, as amended, or as it may be amended from time to time. Section 1.5 - Company. The Perkin-Elmer Corporation, a New York corporation, or any successor to it in ownership of all or substantially all of its assets. Section 1.6 - Committee. The Committee appointed by the Board of Directors as provided for in Article XII of The Employee Pension Plan of The Perkin-Elmer Corporation. Section 1.7 - Effective Date. August 1, 1984. The effective date of this restatement is October 1, 1995. Section 1.8 - Employee. Any person, including any officer or director who is employed in the service of the Company and who is a participant in the Pension Plan or the Savings Plan. 1

Section 1.9 - Pension Plan. The Employee Pension Plan of The Perkin-Elmer Corporation formerly known as the Employee Retirement Plan of The Perkin-Elmer Corporation. Section 1.10 - Plan. The Excess Benefit Plan of The Perkin-Elmer Corporation. Section 1.11 - Plan Year. The period August 1, 1992 through June 30, 1993 shall constitute a short Plan Year. Thereafter, a Plan Year shall mean each twelve (12) consecutive month period from July 1 to the next succeeding June 30. Section 1.12 - Savings Plan. The Employee Savings Plan of The Perkin-Elmer Corporation formerly known as the Profit Sharing and Savings Plan of The Perkin-Elmer Corporation. Any word or phrase that is not a defined term in this section, which is a defined word or term in either the Savings Plan or Pension Plan and is used in this Plan, shall have the same meaning as the Plan in which it appears. 2

ARTICLE 2 Purpose of Plan Section 2.1 - Purpose. This Plan is designed to provide retirement benefits payable out of the general assets of the Company where benefits cannot be paid under the Pension Plan and/or contributions are limited under the Savings Plan because of the application of Code Section 415 and Code Section 401(a)(17) and the provisions of the Pension Plan and/or the Savings Plan which implement such sections. 3

ARTICLE 3 Eligibility Section 3.1 - Eligibility. Any Employee or his Beneficiary shall be eligible for coverage under this Plan if such Employee is an officer of the Company or is highly compensated within the meaning of Code Section 414(q). 4

ARTICLE 4 Benefits Section 4.1 - Amount of Benefits. The benefit payable under this Plan shall be equal to the sum of the following amounts: a) the benefit, if any, which, when calculated under the Pension Plan without taking into account the provisions of the Pension Plan dealing with limits on pensions imposed by Code Section 415 and Code Section 401(a)(17), is in excess of the benefit payable to or on behalf of the Employee under the Pension Plan after taking into account such provisions; and b) an amount equal to the Automatic Company Contributions and/or Company Matching Contributions which would have been allocated on behalf of the Employee under Article III of the Savings Plan if the limitations of Code Sections 401(a)(17) and 415 were inapplicable, adjusted to take into account investment income and gain or loss experienced by Vanguard LifeStrategy Moderate Growth Fund of the Savings Plan. Should any Automatic Company Contributions and/or Company Matching Contributions be inadvertently allocated to the Employee's Account in the Savings Plan in excess of the limitations of Section 401(a)(17) and/or Section 415, upon correction in the Savings Plan, the Employee's account in this Plan will be credited with the actual income and gain or loss experienced in the Savings Plan. Section 4.2 - Form of Benefit Payments. Benefits payable to or on behalf of an Employee or his Beneficiary resulting from the provisions of subsection 4.1(a) shall be paid in monthly installments after adjustment in accordance with the optional form of benefit payable elected under the Pension Plan. Benefits payable to or on behalf of an Employee or his Beneficiary resulting from the provisions of subsection 4.1(b) shall be paid in cash in a single lump sum or in installments in the form of a term-certain annuity, a single life annuity or a joint and survivor annuity, or by a combination of such methods, as determined by the Committee in its discretion. Section 4.3 - Time of Benefit Payments. Benefits due under this Plan shall be paid at such time or times following the Employee's termination, retirement or death as the Committee in its discretion determines. 5

Section 4.4 - Beneficiary in the Event of Death. Upon the death of an Employee, any remaining benefits due under this Plan to an Employee other than benefits resulting from subsection 4.1(a) shall be distributed to (1) the Beneficiary designated by the Employee under this Plan, or if none, (2) the Beneficiary designated by the Employee under the Pension Plan, or if none, (3) the Beneficiary designated by the Employee under the Savings Plan, or if none, (4) the estate of the deceased Employee. The designation of Beneficiary under this Plan shall be made on a form specified by the Committee and may be changed from time to time in the manner prescribed by the Committee. Section 4.5 - Benefits Unfunded. Benefits payable under this Plan shall be paid by the Company each year out of its general assets and shall not be funded in any manner. Section 4.6 - Vesting. An Employee shall not have a right to a benefit under this Plan unless: a) for purposes of the Section 4.1(a) benefit, he has five (5) years of vesting service under the Pension Plan; and b) for purposes of the Section 4.1(b) benefit, he has completed years of vesting service under the Savings Plan in accordance with the following schedule: <TABLE> <CAPTION> Years of Vesting Service Vested Percentage ------------------------ ----------------- <S> <C> Less than 1 0% 1 but less than 2 25% 2 but less than 3 50% 3 but less than 4 75% 4 or more 100% </TABLE> 6

ARTICLE 5 Administration Section 5.1 - Duties of Committee. This Plan shall be administered by the Committee in accordance with its terms and purposes. The Committee shall determine the amount and manner of payments of the benefits due to or on behalf of each Employee and/or his Beneficiary from this Plan and shall cause them to be paid accordingly. Section 5.2 - Finality of Decisions. The decisions made by and the actions taken by the Committee in the administration of this Plan shall be final and conclusive on all persons, and the members of the Committee shall not be subject to individual liability with respect to this Plan. Section 5.3 - Claims Procedure. A claim for benefits under the Plan must be made to the Committee in writing. The Committee shall provide adequate notice in writing within sixty (60) days of the receipt of the claim for benefits to any Participant, Contingent Annuitant or Beneficiary whose claim for benefits under the Plan has been denied, setting forth the specific reasons for such denial, written in as simple language as possible. If a claim is denied, in whole or in part, the Committee shall send the claimant a notice of denial explaining the reasons for denial of the claim. A claimant whose claim has been denied, or his authorized representative, may request a review of the denial, but such a request must be in writing, and must be submitted to the Committee within ninety (90) days after the claimant's receipt of the notice of denial. Upon appeal for review by a claimant whose claim for benefits from the Plan has been denied in whole or in part, the claimant shall be given an opportunity to review the Plan document with a representative of the Committee and shall further be given the opportunity to submit in writing any statement or comments material or relevant to the claim. The review of a claim which has been denied shall be made by the Committee within sixty (60) days of the receipt of the request for review, unless the Committee determines that special circumstances required additional time, in which case a decision shall be rendered not later than one hundred twenty (120) days after receipt of the request for review. The decision of the review shall be in writing and shall include specific reasons for the decision, written in as simple language as possible with specific reference to the pertinent Plan provisions on which the decision is based. 7

ARTICLE 6 Amendment and Termination Section 6.1 - Amendment and Termination. While the Company intends to maintain this Plan in conjunction with the Pension Plan and the Savings Plan for as long as necessary, the Company acting through its Board, reserves the right to amend and/or terminate it at any time for whatever reasons it may deem appropriate. 8

ARTICLE 7 Miscellaneous Section 7.1 - No Employment Rights. Nothing contained in this Plan shall be construed as a contract of employment between the Company and any Employee, or as a right of any Employee to be continued in employment or as a limitation of the right of the Company to discharge any Employee with or without cause. Section 7.2 - Unsecured Creditor. Employees and their Beneficiaries, heirs and successors under this Plan shall have solely those rights of an unsecured creditor of the Company. Any and all assets of the Company shall not be deemed to be held in trust for any Employee, their Beneficiaries, heirs and successors, nor shall any assets be considered security for the performance of obligations of the Company and said assets shall at all times remain unpledged, unrestricted general assets of the Company. The Company's obligation under the Plan shall be an unsecured and unfunded promise to pay benefits at a future date. Section 7.3 - Non-Assignability. The Participant and their Beneficiaries, heirs and successors shall not have any right to commute, sell, pledge, assign, transfer or otherwise convey the right to receive any payment under this Plan. The right to any payment of benefit shall be non-assignable and non-transferable. Section 7.4 - Withholding Taxes. The Committee may take any appropriate arrangements to deduct from all amounts paid under the Plan any taxes required to be withheld by any government or governmental agency. Section 7.5 - Invalidity of Certain Provisions. If any provision of this Plan is held invalid or unenforceable, such invalidity or unenforceabilility shall not affect any other provision hereof and this Plan shall be construed and enforced as if such provision had not been included. Section 7.6 - Incapacity. In the event that any Participant is unable to care for his affairs because of illness or accident, any payment due may be paid to the Participant's spouse, parent, brother, sister or other person deemed by the Committee to have incurred expenses for the care of such Participant, unless a duly qualified guardian or other legal representative has been appointed. 9

Section 7.7 - Law Applicable. This Plan shall be governed by the laws of the State of Connecticut. 10



APPLIED BIOSYSTEMS   Selected Financial Data


<TABLE>
<CAPTION>
(Dollar amounts in thousands except per share amounts)
For the years ended June 30,                     1996            1997            1998            1999            2000
<S>                                         <C>           <C>             <C>             <C>             <C>
=====================================================================================================================
Financial Operations
Net revenues                                $ 642,059     $   767,465     $   940,095     $ 1,221,691     $ 1,388,100
Income from continuing operations               3,899         132,739          24,009         148,365         186,247
   Per share of common stock
     Basic                                                                                        .74             .90
     Diluted                                                                                      .72             .86
Income (loss) from discontinued
   operations (net of income taxes)           (37,833)         27,906          40,694          79,058
Net income (loss)                             (33,934)        160,645          64,703         227,423         186,247
   Per share of common stock
     Basic                                                                                       1.13             .90
     Diluted                                                                                     1.10             .86
Dividends per share                                                                             .0425             .17
=====================================================================================================================
Other Information
Cash and short-term investments             $ 121,145     $   217,222     $    84,091     $   236,530     $   394,608
Working capital                               226,414         355,163         289,151         274,638         395,149
Capital expenditures                           27,125          57,646          68,172          92,077          95,475
Total assets                                  809,856       1,003,810       1,128,937       1,347,550       1,698,156
Note payable to the
   Celera Genomics group                                                                      150,000
Long-term debt                                 33,694          59,152          33,726          31,452          36,115
Total allocated debt                           89,801          89,068          45,825          35,363          51,808
Group equity                                  373,116         507,734         565,507         534,332         934,364
=====================================================================================================================
</TABLE>

The selected financial data should be read with the combined financial
statements and the consolidated financial statements.

The recapitalization of the Company on May 6, 1999 resulted in the issuance of
two new classes of common stock called PE Corporation-PE Biosystems Group
Common Stock and PE Corporation-Celera Genomics Group Common Stock. The PE
Biosystems group is currently doing business as Applied Biosystems and will seek
formal approval of a change to this name at the 2000 annual meeting. The PE
Biosystems group is referred to as Applied Biosystems.

Per share data reflects the two-for-one stock splits effective July 1999 and
February 2000.

A number of items impact the comparability of the data from continuing
operations. Before-tax amounts include:
o Restructuring, other merger costs, and acquisition-related costs of $17.5
  million for fiscal 1996, $48.1 million for fiscal 1998, $6.1 million for
  fiscal 1999, and $2.1 million for fiscal 2000;
o A restructuring reserve adjustment of $9.2 million for fiscal 1999 relating to
  excess fiscal 1998 restructuring liabilities;
o Gains on investments of $11.7 million for fiscal 1996, $64.9 million for
  fiscal 1997, $1.6 million for fiscal 1998, $6.1 million for fiscal 1999, and
  $48.6 million for fiscal 2000;
o Acquired research and development charges of $31.8 million for fiscal 1996 and
  $28.9 million for fiscal 1998;
o Charges for the impairment of assets of $9.9 million for fiscal 1996, $.7
  million for fiscal 1997, and $14.5 million for fiscal 1999;
o Tax benefit and valuation allowance reductions of $22.2 million for fiscal
  1999;
o A charge of $3.5 million for a donation to the Company's charitable foundation
  for fiscal 1999;
o Foreign currency hedge contract-related gain of $2.3 million for fiscal 1999;
o Charges of $4.6 million for fiscal 1999 relating to the recapitalization of
  the Company;
o Charges relating to the acceleration of certain long-term compensation
  programs as a result of the attainment of performance targets of $9.1 million
  for fiscal 1999 and $45.0 million for fiscal 2000; and
o A gain of $8.2 million on the sale of real estate for fiscal 2000.

================================================================================
                                        9      PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Management's Discussion and Analysis Management's Discussion of Continuing Operations PE Corporation ("PE" or "our company") is comprised of two separate business segments in continuing operations: the PE Biosystems group and the Celera Genomics group. The performance of these businesses is reflected separately by two classes of common stock: PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock") and PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock"). The PE Biosystems group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at our company's 2000 annual meeting. We refer to the PE Biosystems group as Applied Biosystems. The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business into the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. You should read this discussion with the combined financial statements and consolidated financial statements. Historical results and percentage relationships are not necessarily indicative of operating results for any future periods. Throughout the following discussion of operations we refer to the impact on our reported results of the movement in foreign currency exchange rates from one reporting period to another as "foreign currency translation." Discontinued Operations Effective May 28, 1999, PE completed the sale of its Analytical Instruments business to EG&G, Inc. Analytical Instruments, formerly a unit of Applied Biosystems, developed, manufactured, marketed, sold, and serviced analytical instruments used in a variety of markets. The aggregate consideration received from the sale was $425 million, consisting of $275 million in cash and one-year secured promissory notes in the aggregate principal amount of $150 million bearing interest at a rate of 5% per annum. The promissory notes were collected in fiscal 2000. In fiscal 1999, our company recognized a net gain on disposal of discontinued operations of $100.2 million, net of $87.8 million of income taxes. Amounts previously reported for Analytical Instruments were reclassified and stated as discontinued operations. See Note 15 to Applied Biosystems' combined financial statements. Events Impacting Comparability Acquisitions, Investments, and Dispositions On January 22, 1998, our company acquired PerSeptive Biosystems, Inc. The acquisition was accounted for as a pooling of interests and, accordingly, Applied Biosystems' financial results were restated to include the combined operations. Our company acquired Molecular Informatics, Inc. and a 14.5% interest, and approximately 52% of the voting rights, in Tecan AG during the second quarter of fiscal 1998. The results of operations for these acquisitions, each of which was accounted for as a purchase, were included in Applied Biosystems' combined financial statements since the date of acquisition. During the fourth quarter of fiscal 1999, our company divested its interest in Tecan. A before-tax gain of $1.6 million was recognized on the sale. A discussion of significant acquisitions, investments, and dispositions is provided in Note 2 to Applied Biosystems' combined financial statements. Restructuring and Other Special Charges During fiscal 2000, Applied Biosystems incurred $2.1 million of before-tax costs associated with acquisitions which were not consummated. In fiscal 1999, Applied Biosystems was allocated non-recurring before-tax special charges of $4.6 million. These costs were incurred in connection with the recapitalization of our company. Applied Biosystems and the Celera Genomics group were each allocated 50% of the $9.2 million total recapitalization costs incurred by our company. See Note 1 to Applied Biosystems' combined financial statements for a discussion of the recapitalization. During fiscal 1998, $48.1 million of before-tax charges were recorded for restructuring and other merger costs to integrate PerSeptive into Applied Biosystems following the acquisition. The objectives of the integration plan were to lower PerSeptive's cost structure by reducing excess manufacturing capacity, achieve broader worldwide distribution of PerSeptive's products, and combine sales, marketing, and administrative functions. The charge included: $33.9 million for restructuring the combined operations; $8.6 million for transaction costs; and $4.1 million of inventory-related write-offs, recorded in cost of sales, associated with the rationalization of certain product lines. Additional merger-related period costs of $6.1 million for fiscal 1999 and $1.5 million for fiscal 1998 were incurred for training, relocation, and communication in connection with the integration. During the fourth quarter of fiscal 1999, Applied Biosystems completed the restructuring actions. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. A discussion of the restructuring program is provided in Note 14 to Applied Biosystems' combined financial statements. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 10

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Acquired Research and Development During the second quarter of fiscal 1998, Applied Biosystems expensed $28.9 million of the Molecular Informatics acquisition cost as in-process research and development, representing 53.6% of the purchase price. This amount was attributed and supported by a discounted probable cash flow analysis on a project-by-project basis. At the acquisition date, the technological feasibility of the acquired technology had not been established and the acquired technology had no future alternative uses. We attributed approximately 10% of the in-process research and development value to BioLIMS, a software system that manages data, initiates analysis programs, and captures the results in a centralized, relational database for sequencing instruments; 6% to GA SFDB, a client-side add-on product to several existing gene sequencing instruments; 38% to BioMERGE, a client-server management and integration system that organizes proprietary, public, and third-party results in a single relational database for the drug discovery and genomic research markets; 9% to BioCLINIC, a client-server management and integration system that organizes proprietary, public, and third-party results generated from DNA and protein sequence analysis in a single database for the clinical trials phase of drug development; and 37% to SDK, an open architecture software platform from which all of Molecular Informatics' future software applications were expected to be derived. As of the acquisition date, all of the major functionality for BioLIMS 2.0 had been completed and the product was subsequently released in September 1998. As of the acquisition date, BioLIMS 3.0 was in the design and scoping phase. As of the acquisition date, GA SFDB was in early alpha phase and had been completed concurrent with the development of BioLIMS 2.0. The product was released in September 1998. As of the acquisition date, BioMERGE 3.0's functional scope was defined and the requirements assessment had been completed. The product was subsequently released in November 1998. As of the acquisition date, the BioCLINIC product requirements had been specified and discussions had begun with two potential customers to begin the specific software modifications. Development efforts were terminated in April 1998 due to unsuccessful marketing efforts. As of the acquisition date, the SDK requirements' assessment had been completed and the functional scope had been defined. We attributed $11.8 million of the purchase price to core technology and existing products, primarily related to the BioMERGE product. We applied a risk-adjusted discount rate to the project's cash flows of 20% for existing technology and 23% for in-process technology. The risk premium of 3% for in-process technologies was determined by management based on the associated risks of releasing these in-process technologies versus the existing technologies for the emerging bioinformatics software industry. The significant risks associated with these products include the limited operating history of Molecular Informatics, uncertainties surrounding the market acceptance of such in-process products, competitive threats from other bioinformatics companies, and other risks. Management is primarily responsible for estimating the fair value of such existing and in-process technology. Asset Impairment During the fourth quarter of fiscal 1999, Applied Biosystems incurred a $14.5 million charge to cost of sales for the impairment of intangible assets associated with the Molecular Informatics business. This impairment resulted primarily from a decline in management's assessment of future cash flows from this business, which included the discontinuance of certain product lines in the fourth quarter. Gain on Investments Fiscal 2000 included a before-tax gain of $48.6 million related to the sale of minority equity investments. Fiscal 1999 and 1998 included before-tax gains of $4.5 million and $1.6 million, respectively, related to the sale and release of contingencies on minority equity investments. As previously described, fiscal 1999 also included a before-tax gain of $1.6 million related to the sale of our company's interest in Tecan. See Note 2 to Applied Biosystems' combined financial statements. Other Events Impacting Comparability Fiscal 2000 and 1999 included charges of $45.0 million and $9.1 million, respectively, to selling, general and administrative expenses, for costs related to the acceleration of certain long-term compensation programs as a result of the attainment of performance targets. During the fourth quarter of fiscal 2000, Applied Biosystems recorded a gain of $8.2 million to other income, net from the sale of real estate. A gain of $2.3 million related to foreign currency hedge contracts was recognized in other income, net during the fourth quarter of fiscal 1999. During the fourth quarter of fiscal 1999, PE made a $3.5 million donation to our company's charitable foundation, which supports educational and other charitable programs. The charge was recorded to Applied Biosystems' selling, general and administrative expenses. The effective income tax rate for fiscal 1999 included certain tax benefit and valuation allowance reductions of $22.2 million. See Note 4 to Applied Biosystems' combined financial statements for a discussion of income taxes. Results of Continuing Operations--2000 Compared With 1999 Applied Biosystems reported income from continuing operations of $186.2 million for fiscal 2000 compared with $148.4 million for fiscal 1999. On a comparable basis, excluding the special items previously described from both fiscal years and Tecan from the prior fiscal year, income from continuing operations increased 35.4% to $186.2 million for fiscal 2000 compared with $137.5 million for fiscal 1999. This increase is attributable primarily to the growth in net revenues and lower operating expenses as a percentage of net revenues. ================================================================================ 11 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Net revenues were $1.4 billion for fiscal 2000 compared with $1.2 billion for fiscal 1999. Excluding the results of Tecan for the prior fiscal year, net revenues increased 24.0%. Increased net revenues for sequence detection systems, including reagents and instrument systems for gene expression analysis and single nucleotide polymorphism ("SNP") detection, mass spectrometry products, and DNA sequencing consumables were contributors. The effects of foreign currency translation decreased net revenues by approximately $1.8 million compared with the prior fiscal year as weakness in the euro was essentially offset by strengthening of the Japanese yen. Net revenues from leased instruments and shipments of consumables and project materials to the Celera Genomics group were $59.8 million for fiscal 2000, or 4.3% of Applied Biosystems' net revenues. For fiscal 1999, net revenues from leased instruments, shipments of instruments and consumables, and contracted R&D services to the Celera Genomics group were $17.3 million and represented less than 2% of Applied Biosystems' net revenues. Geographically, excluding the net revenues of Tecan for fiscal 1999, Applied Biosystems reported revenue growth in all regions for fiscal 2000 compared with the prior fiscal year. Net revenues increased 21.6% in the United States, 18.5% in Europe, 35.8% in the Far East, and 50.7% in Latin America and other markets. Excluding the favorable effects of foreign currency translation in Japan, net revenues increased approximately 23% in the Far East, partly reflecting increased government funding for genomics-related research. Excluding the negative effects of foreign currency translation in Europe, net revenues increased by approximately 27%. Gross margin as a percentage of net revenues was 54.1% for fiscal 2000 compared with 53.9% for fiscal 1999. Excluding Tecan and the asset impairment charge from the prior fiscal year, gross margin as a percentage of net revenues was 54.1% for fiscal 1999. SG&A expenses were $393.9 million for fiscal 2000 compared with $335.9 million for fiscal 1999, an increase of 17.3%. On a comparable basis, excluding the long-term compensation charges for fiscal 2000 and 1999, Tecan, and the $3.5 million charge for a contribution to our company's charitable foundation for fiscal 1999, SG&A expenses for Applied Biosystems increased 20.5%. This increase was due to higher planned worldwide selling and marketing expenses commensurate with the higher revenue growth. As a percentage of net revenues, excluding the special charges from both fiscal years and Tecan from the prior fiscal year, SG&A expenses were 25.1% for fiscal 2000 compared with 25.9% for fiscal 1999. R&D expenses were $141.2 million for fiscal 2000 compared with $133.5 million for fiscal 1999, an increase of 5.7%. Excluding Tecan from the prior fiscal year, R&D expenses for fiscal 2000 increased 18.4% compared with fiscal 1999. As a percentage of net revenues, excluding Tecan from fiscal 1999, R&D expenses were 10.2% for fiscal 2000 compared with 10.7% for the prior fiscal year. The prior fiscal year's R&D expense level was higher as a percentage of net revenues due to the development of new products released in the second half of fiscal 1999. During fiscal 2000, Applied Biosystems incurred $2.1 million of costs associated with acquisitions which were not consummated. Merger-related period costs of $6.1 million were incurred during fiscal 1999 for training, relocation, and communication in connection with the integration of PerSeptive into Applied Biosystems. During the fourth quarter of fiscal 1999, Applied Biosystems completed the restructuring actions associated with integration of PerSeptive following the acquisition. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. See Note 14 to Applied Biosystems' combined financial statements for a discussion of the restructuring. Also during fiscal 1999, Applied Biosystems was allocated a non-recurring charge of $4.6 million for costs incurred in connection with the recapitalization of our company. These costs included investment banking and professional fees. <TABLE> <CAPTION> Operating Income (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Operating income before special items $ 216.5 $ 260.3 Asset impairment (14.5) Long-term compensation programs (9.1) (45.0) Charitable foundation contribution (3.5) Restructuring and other merger costs, net 3.1 Recapitalization costs (4.6) Acquisition-related costs (2.1) ------------------------------------------------------------- Operating income $ 187.9 $ 213.2 ============================================================= </TABLE> Operating income increased to $213.2 million for fiscal 2000 compared with $187.9 million for the prior fiscal year. On a comparable basis, excluding the special items previously described from both fiscal years and Tecan from the prior fiscal year, operating income increased 32.0% for fiscal 2000 compared with fiscal 1999. Applied Biosystems benefited from increased revenues as a result of strong worldwide demand and lower operating expenses as a percentage of net revenues, partially as a result of a slower than planned increase in staffing during the fiscal year. Operating income as a percentage of net revenues, excluding the special items from both fiscal years and Tecan from the prior fiscal year, increased to 18.8% for fiscal 2000 compared with 17.6% for fiscal 1999. Fiscal 2000 and 1999 included before-tax gains of $48.6 million and $4.5 million, respectively, related to the sale of minority equity investments. Fiscal 1999 also included a gain of $1.6 million related to the sale of our company's interest in Tecan. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 12

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Interest expense was $8.1 million for fiscal 2000 compared with $4.5 million for the prior fiscal year. This increase was primarily due to the interest on the $150 million note payable to the Celera Genomics group. Interest income was $18.6 million for fiscal 2000, compared with $2.3 million for the prior fiscal year. The increase in interest income was due to the interest on the note receivable related to the sale of the Analytical Instruments business, higher balances of cash and cash equivalents, and higher interest rates. Other income, net for fiscal 2000 was $3.4 million, primarily related to a gain on the sale of real estate, and was partially offset by costs associated with a portion of our company's foreign currency management program. Other income, net was $.5 million for fiscal 1999, which related primarily to the revaluation of foreign exchange contracts and a legal settlement that were partially offset by the loss on the disposal of certain assets and other non-operating costs. The effective income tax rate was 32% for fiscal 2000 compared with 16% for fiscal 1999. Excluding special items in both fiscal years and Tecan in fiscal 1999, the effective income tax rate was 30% for fiscal 2000 compared with 29% for the prior fiscal year. The effective income tax rate for fiscal 1999 included the release of valuation allowances of $17.4 million. Because the sale of the Analytical Instruments business had been completed, the valuation allowance was reduced as management believed that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. An analysis of the differences between the federal statutory income tax rate and the effective income tax rate is provided in Note 4 to Applied Biosystems' combined financial statements. For fiscal 1999, Applied Biosystems incurred minority interest expense of $13.4 million relating to our company's 14.5% financial interest in Tecan. Results of Continuing Operations--1999 Compared With 1998 Applied Biosystems reported income from continuing operations of $148.4 million for fiscal 1999 compared with $24.0 million for fiscal 1998. On a comparable basis, excluding the special items previously described, income from continuing operations increased 44.8% to $137.5 million for fiscal 1999 compared with $95.2 million for fiscal 1998. Net revenues were $1.2 billion for fiscal 1999 compared with $940.1 million for fiscal 1998, an increase of 30.0%. Excluding the results of Tecan, net revenues for fiscal 1999 increased 25.9% compared with fiscal 1998. The effects of foreign currency translation increased net revenues by less than 1% compared with fiscal 1998. Net revenues from shipments to the Celera Genomics group were $17.3 million for fiscal 1999 and represented less than 2% of Applied Biosystems' net revenues. There were no revenues from shipments to the Celera Genomics group for fiscal 1998. Geographically, excluding the net revenues of Tecan, Applied Biosystems reported revenue growth in all regions for fiscal 1999 compared with fiscal 1998. Revenues increased 32.5% in the United States, 19.5% in Europe, 20.9% in the Far East, and 12.6% in Latin America and other markets, compared with fiscal 1998. Demand for Applied Biosystems' ABI PRISM(R) 3700 DNA Analyzer, which began shipping in the second quarter of fiscal 1999, was strong. Shipments for sequence detection systems and liquid chromatography/mass spectrometry ("LC/MS") products also contributed to the growth. Gross margin as a percentage of net revenues was 53.9% for fiscal 1999 compared with 54.1% for fiscal 1998. Fiscal 1999 gross margin included $14.5 million for the impairment of intangible assets associated with the Molecular Informatics business. Fiscal 1998 gross margin included $4.1 million of inventory-related write-offs associated with the rationalization of certain product lines in connection with the acquisition of PerSeptive. On a comparable basis, excluding the special items from both fiscal years, gross margin as a percentage of net revenues was 55.1% for fiscal 1999 and 54.5% for fiscal 1998. The improved gross margin was primarily the result of a change in product mix. Increased unit sales of reagents to support genetic analysis systems, increased royalty revenues, and continued demand in instrument sales of higher margin genetic analysis product offerings contributed to the growth. SG&A expenses were $335.9 million for fiscal 1999 compared with $276.7 million for fiscal 1998, an increase of 21.4%. Excluding Tecan, SG&A expenses increased 15.6% for fiscal 1999 compared with fiscal 1998. Fiscal 1999 expenses included a charge of $9.1 million for costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization of our company and the attainment of performance targets. Fiscal 1999 expenses also included $3.5 million for a contribution to our company's charitable foundation. On a comparable basis, excluding the special items, SG&A expenses increased 10.8%. This increase was due to higher planned expenses, reflecting the growth in sales and orders. As a percentage of net revenues, excluding Tecan and the special items, SG&A expenses were 25.9% for fiscal 1999 compared with 29.4% for fiscal 1998. R&D expenses increased 26.6% to $133.5 million for fiscal 1999 compared with $105.5 million for fiscal 1998. Excluding Tecan, expenses increased 19.5% compared with fiscal 1998 in support of the introduction of new products and the acceleration of product development. As a percentage of net revenues, excluding Tecan, R&D expenses were 10.7% for fiscal 1999 compared with 11.2% for fiscal 1998. During fiscal 1998, $48.1 million of before-tax charges were recorded for restructuring and other merger-related costs to integrate PerSeptive into Applied Biosystems following the acquisition. The objectives of the integration plan were to lower PerSeptive's cost structure by reducing excess manufacturing capacity; achieve broader worldwide distribution of PerSeptive's products; and combine sales, marketing, and administrative functions. The charge included: $33.9 million for restructuring the combined operations; $8.6 million for transaction costs; and $4.1 million of inventory-related write-offs, recorded in cost of sales, associated with the ================================================================================ 13 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued rationalization of certain product lines. Additional merger-related period costs of $6.1 million for fiscal 1999 and $1.5 million for fiscal 1998 were incurred for training, relocation, and communication costs. The $33.9 million restructuring charge included $13.8 million for severance-related costs and workforce reductions of approximately 170 employees, consisting of 114 employees in production labor and 56 employees in sales and administrative support. The remaining $20.1 million represented facility consolidation and asset-related write-offs that included: $11.7 million for contract and lease terminations and facility-related expenses in connection with the reduction of excess manufacturing capacity; $3.2 million for dealer termination payments, sales office consolidations, and consolidation of sales and administrative support functions; and $5.2 million for the write-off of certain tangible and intangible assets and the termination of certain contractual obligations. Transaction costs of $8.6 million included acquisition-related investment banking and professional fees. During the fourth quarter of fiscal 1999, Applied Biosystems completed the restructuring actions. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. See Note 14 to Applied Biosystems' combined financial statements for a discussion of the restructuring. During fiscal 1999, Applied Biosystems was allocated a before-tax special charge of $4.6 million for costs incurred in connection with the recapitalization of our company. Applied Biosystems and the Celera Genomics group were each allocated 50% of the $9.2 million total recapitalization costs incurred by our company. Fiscal 1998 included $28.9 million of purchased in-process research and development associated with the acquisition of Molecular Informatics. <TABLE> <CAPTION> Operating Income (Dollar amounts in millions) 1998 1999 ============================================================= <S> <C> <C> Operating income before special items $ 130.4 $ 216.5 Asset impairment (14.5) Long-term compensation programs (9.1) Charitable foundation contribution (3.5) Restructuring and other merger costs, net (48.1) 3.1 Recapitalization costs (4.6) Acquired research and development (28.9) ------------------------------------------------------------- Operating income $ 53.4 $ 187.9 ============================================================= </TABLE> Operating income increased to $187.9 million for fiscal 1999 compared with $53.4 million for fiscal 1998. On a comparable basis, excluding the results of Tecan and the special items previously described, operating income increased 60.7% for fiscal 1999 compared with fiscal 1998. Applied Biosystems benefited from increased revenues, higher gross margins, and lower operating expenses as a percentage of net revenues. Higher operating income from sequencing, mapping systems, and LC/MS products were the primary contributors. The effects of foreign currency translation for Applied Biosystems increased operating income by less than 1% for fiscal 1999 compared with fiscal 1998. Operating income as a percentage of net revenues, excluding the results of Tecan and the special items, increased to 17.6% for fiscal 1999 compared with 13.8% for fiscal 1998. For fiscal 1999 and 1998, Applied Biosystems recorded gains of $4.5 million and $1.6 million, respectively, on the sale and release of contingencies on minority equity investments. Fiscal 1999 also included a gain of $1.6 million related to the sale of our company's interest in Tecan. Interest expense was $4.5 million for fiscal 1999 compared with $4.9 million for fiscal 1998. This decrease was primarily due to the refinancing of PerSeptive's 8-1/4% Convertible Subordinated Notes (the "PerSeptive Notes") and lower average interest rates. Fiscal 1999 included $.7 million of interest expense associated with the note payable to the Celera Genomics group. Interest income was $2.3 million for fiscal 1999 compared with $5.9 million for fiscal 1998, primarily because of lower average cash balances during the fiscal year. Other income, net for fiscal 1999 was $.5 million compared with $3.1 million for fiscal 1998. Fiscal 1999 other income, net primarily related to the revaluation of foreign exchange contracts and a legal settlement that were partially offset by the loss on the disposal of certain assets and other non-operating costs. Other income, net for fiscal 1998 resulted from a gain on the sale of certain operating and non-operating assets. The effective income tax rate was 16% for fiscal 1999 and 50% for fiscal 1998. Excluding Tecan, and the special items, the effective income tax rate was 29% for fiscal 1999 and 25% for fiscal 1998. The effective income tax rate for fiscal 1999 included the release of valuation allowances of $17.4 million. Because the sale of the Analytical Instruments business had been completed, the valuation allowance was reduced as management believed that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. An analysis of the differences between the federal statutory income tax rate and the effective income tax rate is provided in Note 4 to Applied Biosystems' combined financial statements. Applied Biosystems incurred minority interest expense of $13.4 million for fiscal 1999 and $5.6 million for fiscal 1998 relating to our company's 14.5% financial interest in Tecan. As previously indicated, our company divested its interest in Tecan during the fourth quarter of fiscal 1999. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 14

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Market Risk Applied Biosystems operates internationally, with manufacturing and distribution facilities in various countries throughout the world. For fiscal 2000 and 1999, Applied Biosystems derived approximately 50% of its revenues from countries outside of the United States. Results continue to be affected by market risk, including fluctuations in foreign currency exchange rates and changes in economic conditions in foreign markets. The risk management strategy for Applied Biosystems utilizes derivative financial instruments, including forward, swap, and purchased option contracts, to hedge certain foreign currency and interest rate exposures, with the intent of offsetting losses and gains that occur on the underlying exposures with gains and losses, respectively, on the derivatives. Applied Biosystems does not use derivative financial instruments for trading purposes, nor is Applied Biosystems a party to leveraged derivatives. At June 30, 2000, outstanding hedge contracts covered approximately 50% of the estimated foreign currency exposures to be realized over the next twelve months. The outstanding hedges were a combination of forward and option contracts maturing over this period. We performed sensitivity analyses as of June 30, 2000 and June 30, 1999. Assuming a hypothetical adverse change of 10% in foreign exchange rates in relation to the U.S. dollar at June 30, 2000, we calculated a hypothetical loss of $1.9 million when comparing the change in fair value of both the foreign currency contracts outstanding and the underlying exposures being hedged. Performing a similar hypothetical calculation at June 30, 1999, we calculated a hypothetical loss of $6.1 million. These hypothetical analyses exclude the impact of foreign currency translation on Applied Biosystems' operations. Actual gains and losses in the future could, however, differ materially from these analyses, based on changes in the timing and amount of foreign currency exchange rate movements and actual exposures and hedges. Interest rate swaps are used to hedge underlying debt obligations. In fiscal 1997, PE executed an interest rate swap, allocated to Applied Biosystems, in conjunction with our company entering into a five-year Japanese yen debt obligation. Under the terms of the swap agreement, we pay a fixed rate of interest at 2.1% and receive a floating LIBOR interest rate. At June 30, 2000, the notional amount of indebtedness covered by the interest rate swap was yen 3.8 billion or $36.1 million. The maturity date of the swap coincides with the maturity of the yen loan in March 2002. A change in interest rates would have no impact on our reported interest expense and related cash payments because the floating rate debt and fixed rate swap contract have the same maturity and are based on the same rate index. Management's Discussion of Financial Resources and Liquidity The following discussion of financial resources and liquidity focuses on the Combined Statements of Financial Position and the Combined Statements of Cash Flows. Cash and cash equivalents were $394.6 million at June 30, 2000 and $236.5 million at June 30, 1999, with total debt of $51.8 million at June 30, 2000 and $185.4 million at June 30, 1999. Fiscal 1999 debt included a $150.0 million note payable to the Celera Genomics group, which was paid during fiscal 2000. Working capital was $395.1 million at June 30, 2000 and $274.6 million at June 30, 1999. Excluding the $150.0 million note payable to the Celera Genomics group, working capital was $424.6 million at June 30, 1999. Debt to total capitalization decreased to 5% at June 30, 2000 from 26% at June 30, 1999. Excluding the note payable, debt to total capitalization was 6% at June 30, 1999. At September 30, 1998, our company allocated to the Celera Genomics group a $330 million short-term note payable from Applied Biosystems. The $330 million note represented an allocation of our company's capital to the Celera Genomics group and did not result in Applied Biosystems holding an equity interest in the Celera Genomics group. Accordingly, no interest was ascribed to the note. The allocation of capital represented management's decision to allocate a portion of our company's capital to the Celera Genomics group and the remaining capital to Applied Biosystems prior to the effective date of the recapitalization. The note payable was liquidated on May 28, 1999 in exchange for a portion of the proceeds received from the sale of the Analytical Instruments business and a new note payable to the Celera Genomics group for $150 million. The new note payable was for a term of one-year, bearing an interest rate of 5% per annum. During fiscal 2000, Applied Biosystems transferred the funds received upon collection of the promissory notes associated with the sale of the Analytical Instruments business to satisfy the note payable to the Celera Genomics group. In addition, our Board of Directors adopted a financing policy, included in Note 1 to Applied Biosystems' combined financial statements, that permits Applied Biosystems to make loans to the Celera Genomics group and to make equity contributions to the Celera Genomics group in exchange for an equity interest in the Celera Genomics group. Significant Changes in the Combined Statements of Financial Position Accounts receivable increased $61.2 million to $367.4 million at June 30, 2000 from $306.2 million at June 30, 1999, reflecting the growth in net revenues. Other long-term assets increased to $469.4 million at June 30, 2000 from $247.1 million at June 30, 1999. The change was primarily a result of a net $251.5 million increase in minority equity investments, offset by a $28.3 million decrease in non-current deferred tax asset. ================================================================================ 15 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued The decrease in non-current deferred tax asset was primarily due to the increase in the tax liability established for unrealized gains on equity securities of minority investments. The tax benefit payable to the Celera Genomics group increased to $16.7 million at June 30, 2000 from $9.9 million at June 30, 1999. See Note 1 to Applied Biosystems' combined financial statements. Accounts payable increased to $173.6 million at June 30, 2000 from $147.7 million at June 30, 1999. The increase was primarily related to higher purchases to support production and operating requirements as a result of revenue growth in fiscal 2000. Accrued salaries and wages increased $36.1 million to $79.4 million at June 30, 2000 from $43.3 million at June 30, 1999, primarily reflecting the timing of payments. Accrued taxes on income increased $17.3 million to $149.5 million at June 30, 2000 from $132.2 million at June 30, 1999, as a result of the increased income before taxes in foreign tax jurisdictions. Combined Statements of Cash Flows Operating activities from continuing operations generated $166.9 million of cash for fiscal 2000 compared with $102.4 million for fiscal 1999 and $74.9 million for fiscal 1998. For fiscal 2000, effective working capital management was the primary contributor to the increase in operating cash flow. For fiscal 2000, net cash provided by investing activities from continuing operations was $117.6 million, compared with $239.3 million for fiscal 1999. For fiscal 2000, Applied Biosystems' capital expenditures were $95.5 million. The capital expenditures included $8.6 million related to improvement of its information technology infrastructure and $21.6 million for the acquisition of a new corporate airplane. Applied Biosystems realized net cash proceeds of $82.8 million from the sale of minority equity investments and real estate during fiscal 2000. Applied Biosystems invested $20.7 million in minority investments in fiscal 2000. The $150 million note receivable resulting from the sale of the Analytical Instruments business was collected during fiscal 2000. For fiscal 1999, Applied Biosystems generated $325.8 million in net cash proceeds from the sale of various assets. Net cash proceeds included $275.0 million from the sale of the Analytical Instruments business, $30.0 million from the sale of Tecan, and $20.8 million from the sale of minority equity investments and certain non-operating assets. The proceeds were partially offset by $92.1 million of capital expenditures, which included $12.9 million as part of the strategic program to improve its information technology infrastructure, $17.5 million for the acquisition of an airplane, and $10.6 million of capital equipment leased to the Celera Genomics group. For fiscal 1999, $4.0 million was used for various acquisitions and investments. For fiscal 1998, net cash used by investing activities from continuing operations was $125.7 million. During fiscal 1998, Applied Biosystems generated $19.5 million in net cash proceeds from the sale of assets and $9.7 million from the collection of a note receivable. The proceeds were more than offset by $68.2 million of capital expenditures, which included $33.7 million as part of the strategic program to improve its information technology infrastructure, and $98.0 million for acquisitions and investments, primarily Tecan and Molecular Informatics. Net cash used by financing activities was $98.9 million for fiscal 2000 compared with $146.4 million for fiscal 1999. For fiscal 2000, Applied Biosystems received $43.4 million of proceeds from stock issued for stock plans compared with $94.9 million for fiscal 1999. Fiscal 1999 included $2.2 million for the purchase of shares of common stock for treasury. No shares were repurchased during fiscal 2000 or 1998. Dividends paid were $26.4 million for fiscal 2000 and $34.2 million for fiscal 1999. Increases in loans payable were $6.7 million for fiscal 2000 compared with a reduction in loans payable and principal payments on long-term debt of $16.4 million for fiscal 1999. During fiscal 2000, Applied Biosystems transferred the $150 million received on the collection of the promissory notes associated with the sale of the Analytical Instruments business to satisfy the note payable to the Celera Genomics group. In connection with the Celera Genomics group's acquisition of Paracel, Inc. during fiscal 2000, the transfer of the Paracel shares allocated to Applied Biosystems resulted in a $27.3 million cash payment from the Celera Genomics group, which represented the fair market value of those shares at the transfer date. See Note 2 to Applied Biosystems' combined financial statements for a discussion of the Paracel transaction. Net cash allocated for fiscal 1999 to the Celera Genomics group was $188.5 million, representing payments against the $330 million note payable established at September 30, 1998 and cash funding for the first quarter of fiscal 1999. During fiscal 1998, Applied Biosystems received $33.6 million of proceeds from stock issued for stock plans. These were more than offset by stockholder dividend payments of $39.1 million and a reduction in loans payable and principal payments on long-term debt of $32.2 million. The fiscal 1998 principal payment on long-term debt included $24.7 million for the redemption of the PerSeptive Notes. Net cash allocated for fiscal 1998 to the Celera Genomics group was $10.5 million. During fiscal 2000, Applied Biosystems made cash payments of $3.5 million for obligations related to restructuring plans. Restructuring liabilities remaining at June 30, 2000 were $2.3 million. See Note 14 to Applied Biosystems' combined financial statements. The funding for the remaining restructuring liabilities will be from current cash balances and funds generated from operating activities. Our company's $100 million revolving credit agreement was replaced effective April 20, 2000 with a new $100 million revolving credit agreement with four banks that matures on ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 16

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued April 20, 2005. Terms of this new revolving credit agreement are substantially similar to those of the previous credit agreement. Applied Biosystems believes its cash and cash equivalents, funds generated from operating activities, and available borrowing facilities are sufficient to provide for its anticipated financing needs for at least the next two years. At June 30, 2000, our company had unused credit facilities totaling $341 million which is available to the groups. Impact of Inflation and Changing Prices Inflation and changing prices are continually monitored. Applied Biosystems attempts to minimize the impact of inflation by improving productivity and efficiency through continual review of both manufacturing capacity and operating expense levels. When operating costs and manufacturing costs increase, Applied Biosystems attempts to recover such costs by increasing, over time, the selling price of its products and services. Applied Biosystems believes the effects of inflation have been appropriately managed and therefore have not had a material impact on its historic operations and resulting financial position. Euro Conversion A single currency called the euro was introduced in Europe on January 1, 1999. Eleven of the fifteen member countries of the European Union agreed to adopt the euro as their common legal currency on that date. Fixed conversion rates between these participating countries' existing currencies (the "legacy currencies") and the euro were established as of that date. The legacy currencies are scheduled to remain legal tender as denominations of the euro until at least January 1, 2002, but not later than July 1, 2002. During this transition period, parties may settle transactions using either the euro or a participating country's legal currency. Applied Biosystems is currently evaluating the impact of the euro conversion on its computer and financial systems, business processes, market risk, and price competition. Applied Biosystems does not expect this conversion to have a material impact on its results of operations, financial position, or cash flows. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Applied Biosystems is required to implement the statements in the first quarter of fiscal 2001. Applied Biosystems estimates that, upon adoption, it will record an immaterial adjustment for a change in accounting principles in its Combined Statements of Operations and in accumulated other comprehensive income in the Combined Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. Applied Biosystems does not expect any impact from the application of SAB No. 101. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of the previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management does not expect the application of FIN No. 44 to have a material impact on Applied Biosystems' combined financial statements. Applied Biosystems continues to apply APB No. 25 in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for these plans, as all options have been issued with an exercise price equal to fair value. The effect of accounting for such plans at fair value, under SFAS No. 123, "Accounting for Stock-Based Compensation," would be to decrease fiscal 2000 income from continuing operations by $46.0 million and diluted earnings per share from continuing operations by $.21. The method used to determine the fair value is the Black-Scholes option pricing model. Accordingly, changes in dividend yield, volatility, interest risk, and option life could have a material effect on the fair value. See Note 8 to Applied Biosystems' combined financial statements for a more detailed discussion regarding the accounting for stock-based compensation. Outlook Applied Biosystems expects to continue to grow and maintain profitability in fiscal 2001. Applied Biosystems should continue to benefit from its customers in basic medical research, pharmaceutical development, and applied markets for sophisticated, automated, and cost-effective life science tools. ================================================================================ 17 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Sales of Applied Biosystems' genetic analysis systems are increasingly moving beyond the basic research markets to a wider group of commercial customers and public agencies. Applied Biosystems should also benefit from shipments of new high-throughput screening products such as the FMAT(TM) 8100 HTS System, the NorthStar(TM) HTS Workstation, and the ABI PRISM(TM) 6700 Automated Nucleic Acid Workstation. Applied Biosystems recently announced new products and initiatives in proteomics and a new genetic analyzer system. Applied Biosystems expects that the ABI PRISM(R) 3100 Genetic Analyzer and the forthcoming MALDI-Q-STAR(TM) for proteomics will be important new products during fiscal 2001. During the next year, Applied Biosystems expects to introduce other new products to serve unmet customer needs in the areas of gene expression, SNP analysis, and proteomics. We remain concerned about adverse currency effects because approximately 50% of our revenues were derived from regions outside the United States in fiscal 2000. Forward-Looking Statements Certain statements contained in this report, including the Outlook section, are forward-looking and are subject to a variety of risks and uncertainties. These statements may be identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential," among others. These forward-looking statements are based on our current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of our businesses include, but are not limited to: Rapidly changing technology in life sciences could make Applied Biosystems' product line obsolete unless it continues to improve existing products and develop new products. A significant portion of the net revenues for Applied Biosystems each year is derived from products that did not exist in the prior year. Applied Biosystems' future success will depend on its ability to continually improve its current products and to develop and introduce, on a timely and cost-effective basis, new products that address the evolving needs of its customers. Applied Biosystems' products are based on complex technology which is subject to rapid change as new technologies are developed and introduced in the marketplace. Unanticipated difficulties or delays in replacing existing products with new products could adversely affect Applied Biosystems' future operating results. A significant portion of sales depends on customers' capital spending policies which may be subject to significant and unexpected decreases. A significant portion of Applied Biosystems' instrument product sales are capital purchases by its customers. Applied Biosystems' customers include pharmaceutical, environmental, research, and chemical companies, and the capital spending policies of these companies can have a significant effect on the demand for Applied Biosystems' products. These policies are based on a wide variety of factors, including the resources available to make purchases, the spending priorities among various types of research equipment, and policies regarding capital expenditures during recessionary periods. Any decrease in capital spending or change in spending policies of these companies could significantly reduce the demand for Applied Biosystems' products. A substantial portion of Applied Biosystems' sales is to customers at universities or research laboratories whose funding is dependent on both the level and timing of funding from government sources. As a result, the timing and amount of revenues from these sources may vary significantly due to factors that can be difficult to forecast. Although research funding has increased during the past several years, grants have, in the past, been frozen for extended periods or otherwise become unavailable to various institutions, sometimes without advance notice. Budgetary pressures, particularly in the United States and Japan, may result in reduced allocations to government agencies that fund research and development activities. If government funding necessary to purchase Applied Biosystems' products were to become unavailable to researchers for any extended period of time, or if overall research funding were to decrease, the business of Applied Biosystems could be adversely affected. Due to rapidly developing technology and lack of legal precedents, Applied Biosystems' products could be subject to claims for patent infringement and trade secret theft. Applied Biosystems' products are based on complex, rapidly developing technologies. These products could be developed without knowledge of previously filed but unpublished patent applications that cover some aspect of these technologies. In addition, there are relatively few decided court cases interpreting the scope of patent claims in these technologies, and Applied Biosystems' belief that its products do not infringe the technology covered by patents and patent applications could be successfully challenged by third parties. Also, in the course of its business, Applied Biosystems may from time to time have access to confidential or proprietary information of third parties, and such parties could bring a theft of trade secret claim against Applied Biosystems asserting that Applied Biosystems' products improperly utilize technologies which are not patented but which are protected as trade secrets. Applied Biosystems has been and could be in the future made a party to litigation regarding intellectual property matters. Applied Biosystems has from time to time been notified that it may be infringing certain patents and other intellectual property rights of others. It may be necessary or desirable in the future to obtain licenses relating to one or more products or relating to current or future technologies, and we cannot assure you that Applied Biosystems will be able to obtain these licenses or other rights on commercially reasonable terms. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 18

APPLIED BIOSYSTEMS Management's Discussion and Analysis continued Since Applied Biosystems' business is dependent on foreign sales, fluctuating currencies will make our revenues and operating results more volatile. Approximately 50% of Applied Biosystems' net revenues during fiscal 2000 were derived from sales to customers outside of the United States. The majority of these sales were based on the relevant customer's local currency. As a result, Applied Biosystems' reported and anticipated operating results and cash flows are subject to fluctuations due to material changes in foreign currency exchange rates that are beyond Applied Biosystems' control. Integrating acquired technologies may be costly and may not result in technological advances. The future growth of Applied Biosystems depends in part on its ability to acquire complementary technologies through acquisitions and investments. Since January 1, 1996, Applied Biosystems has acquired a number of companies, including PerSeptive Biosystems, Inc., Molecular Informatics, Inc., and Tropix, Inc., and made investments in others. The consolidation of employees, operations, and marketing and distribution methods could present significant managerial challenges. For example, Applied Biosystems may encounter operational difficulties in the integration of manufacturing or other facilities. In addition, technological advances resulting from the integration of technologies may not be achieved as successfully or rapidly as anticipated, if at all. Earthquakes could disrupt operations in California. A significant portion of Applied Biosystems' operations is located near major California earthquake faults. The ultimate impact of earthquakes on Applied Biosystems, significant suppliers and the general infrastructure is unknown, but operating results could be materially affected in the event of a major earthquake. ================================================================================ 19 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Combined Statements of Operations <TABLE> <CAPTION> (Dollar amounts in thousands except per share amounts) For the years ended June 30, 1998 1999 2000 ================================================================================================================= <S> <C> <C> <C> Net Revenues $ 940,095 $ 1,221,691 $ 1,388,100 Cost of sales 431,738 562,867 637,693 ----------------------------------------------------------------------------------------------------------------- Gross Margin 508,357 658,824 750,407 ----------------------------------------------------------------------------------------------------------------- Selling, general and administrative 276,674 335,873 393,889 Research, development and engineering 105,485 133,525 141,194 Restructuring and other special charges 43,980 1,500 2,142 Acquired research and development 28,850 ----------------------------------------------------------------------------------------------------------------- Operating Income 53,368 187,926 213,182 Gain on investments 1,605 6,126 48,603 Interest expense 4,905 4,503 8,126 Interest income 5,938 2,344 18,620 Other income, net 3,147 522 3,446 ----------------------------------------------------------------------------------------------------------------- Income Before Income Taxes 59,153 192,415 275,725 Provision for income taxes 29,547 30,688 89,478 Minority interest 5,597 13,362 ----------------------------------------------------------------------------------------------------------------- Income From Continuing Operations 24,009 148,365 186,247 ----------------------------------------------------------------------------------------------------------------- Discontinued Operations, Net Of Income Taxes Income (loss) from discontinued operations 40,694 (21,109) Gain on disposal of discontinued operations 100,167 ----------------------------------------------------------------------------------------------------------------- Net Income $ 64,703 $ 227,423 $ 186,247 ================================================================================================================= Income Per Share From Continuing Operations (see Note 1) Basic $ .74 $ .90 Diluted $ .72 $ .86 Income Per Share From Discontinued Operations Basic $ .39 Diluted $ .38 Net Income Per Share Basic $ 1.13 $ .90 Diluted $ 1.10 $ .86 ================================================================================================================= </TABLE> See accompanying notes to Applied Biosystems' combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 20

APPLIED BIOSYSTEMS Combined Statements of Financial Position <TABLE> <CAPTION> (Dollar amounts in thousands) At June 30, 1999 2000 ==================================================================================================== <S> <C> <C> Assets Current assets Cash and cash equivalents $ 236,530 $ 394,608 Note receivable 150,000 Accounts receivable (less allowances for doubtful accounts of $3,834 and $3,965, respectively) 306,225 367,370 Inventories 149,670 154,491 Prepaid expenses and other current assets 75,801 81,338 ---------------------------------------------------------------------------------------------------- Total current assets 918,226 997,807 Property, plant and equipment, net 182,183 230,940 Other long-term assets 247,141 469,409 ---------------------------------------------------------------------------------------------------- Total Assets $ 1,347,550 $ 1,698,156 ==================================================================================================== Liabilities And Group Equity Current liabilities Loans payable $ 3,911 $ 15,693 Note payable to the Celera Genomics group (see Note 3) 150,000 Tax benefit payable to the Celera Genomics group (see Note 1) 9,935 16,702 Accounts payable 147,704 173,631 Accrued salaries and wages 43,316 79,409 Accrued taxes on income 132,170 149,505 Other accrued expenses 156,552 167,718 ---------------------------------------------------------------------------------------------------- Total current liabilities 643,588 602,658 Long-term debt 31,452 36,115 Other long-term liabilities 138,178 125,019 ---------------------------------------------------------------------------------------------------- Total Liabilities 813,218 763,792 ---------------------------------------------------------------------------------------------------- Commitments and contingencies (see Note 10) Group Equity 534,332 934,364 ---------------------------------------------------------------------------------------------------- Total Liabilities And Group Equity $ 1,347,550 $ 1,698,156 ==================================================================================================== </TABLE> See accompanying notes to Applied Biosystems' combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ 21 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Combined Statements of Cash Flows <TABLE> <CAPTION> (Dollar amounts in thousands) For the years ended June 30, 1998 1999 2000 ================================================================================================================ <S> <C> <C> <C> Operating Activities From Continuing Operations Income from continuing operations $ 24,009 $ 148,365 $ 186,247 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization 35,278 44,309 54,513 Long-term compensation programs 6,853 14,680 9,652 Deferred income taxes 10,234 (25,533) (19,428) Gains from sales of assets (3,052) (6,126) (56,801) Provision for restructured operations and other merger costs 48,080 (9,200) Acquired research and development 28,850 Asset impairment 14,464 Changes in operating assets and liabilities Increase in accounts receivable (23,153) (105,018) (62,186) Increase in inventories (21,362) (22,387) (2,795) Increase in prepaid expenses and other assets (30,858) (43,207) (22,396) Increase in accounts payable and other liabilities 68 92,052 80,061 ---------------------------------------------------------------------------------------------------------------- Net Cash Provided By Operating Activities 74,947 102,399 166,867 ---------------------------------------------------------------------------------------------------------------- Investing Activities From Continuing Operations Additions to property, plant and equipment (net of disposals of $11,339, $9,614, and $1,026, respectively) (56,833) (82,463) (94,449) Acquisitions and investments, net (97,998) (4,025) (20,748) Proceeds from the sale of assets, net 19,496 325,766 82,763 Proceeds from the collection of notes receivable 9,673 150,000 ---------------------------------------------------------------------------------------------------------------- Net Cash Provided (Used) By Investing Activities (125,662) 239,278 117,566 ---------------------------------------------------------------------------------------------------------------- Net Cash From Continuing Operations Before Financing Activities (50,715) 341,677 284,433 ---------------------------------------------------------------------------------------------------------------- Discontinued Operations Net cash provided (used) by operating activities 10,084 (16,297) (15,081) Net cash used by investing activities (40,639) (26,970) ---------------------------------------------------------------------------------------------------------------- Net Cash From Discontinued Operations Before Financing Activities (30,555) (43,267) (15,081) ---------------------------------------------------------------------------------------------------------------- Financing Activities Net change in loans payable (6,797) (9,572) 6,701 Principal payments on long-term debt (25,449) (6,843) Dividends (39,072) (34,156) (26,358) Purchases of common stock for treasury (2,187) Proceeds from stock issued for stock plans 33,629 94,894 43,434 Payment of note payable to the Celera Genomics group (150,000) Net cash allocated (to) from the Celera Genomics group (10,520) (188,535) 27,283 ---------------------------------------------------------------------------------------------------------------- Net Cash Used By Financing Activities (48,209) (146,399) (98,940) ---------------------------------------------------------------------------------------------------------------- Elimination of PerSeptive results from July 1, 1997 to September 30, 1997 (see Note 1) 2,590 Effect Of Exchange Rate Changes On Cash (3,274) 1,654 (12,334) ---------------------------------------------------------------------------------------------------------------- Net Change In Cash And Cash Equivalents (130,163) 153,665 158,078 Cash And Cash Equivalents Beginning Of Year 213,028 82,865 236,530 ---------------------------------------------------------------------------------------------------------------- Cash And Cash Equivalents End Of Year $ 82,865 $ 236,530 $ 394,608 ================================================================================================================ </TABLE> See accompanying notes to Applied Biosystems' combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 22

APPLIED BIOSYSTEMS Combined Statements of Group Equity and Comprehensive Income <TABLE> <CAPTION> Accumulated Other Retained Comprehensive Group (Dollar amounts in thousands) Other Earnings Income (Loss) Equity =================================================================================================================== <S> <C> <C> <C> <C> Balance At June 30, 1997 $ 310,087 $ 200,318 $ (2,671) $ 507,734 Comprehensive income Net income 64,703 64,703 Other comprehensive loss, net of tax Foreign currency translation adjustments (2,747) Minimum pension liability adjustment 354 Unrealized loss on investments, net (4,449) --------- Other comprehensive loss (6,842) (6,842) --------- Comprehensive income 57,861 --------- Cash dividends declared on PE Corporation common stock (31,604) (31,604) Issuances under PE Corporation common stock plans 39,143 (3,468) 35,675 Tax benefit related to employee stock options 2,335 2,335 Stock compensation 1,858 (136) 1,722 Elimination of PerSeptive results from July 1, 1997 to September 30, 1997 (see Note 1) 2,590 2,590 Net cash allocated to the Celera Genomics group (10,520) (10,520) Other (286) (286) ------------------------------------------------------------------------------------------------------------------- Balance At June 30, 1998 342,903 232,117 (9,513) 565,507 Comprehensive income Net income 227,423 227,423 Other comprehensive income, net of tax Foreign currency translation adjustments (5,415) Minimum pension liability adjustment (1,779) Unrealized gain on investments, net 11,887 --------- Other comprehensive income 4,693 4,693 --------- Comprehensive income 232,116 --------- Cash dividends declared on PE Corporation stock (25,479) (25,479) Cash dividends declared on PE Biosystems stock (8,677) (8,677) Issuances under PE Corporation stock plans 89,550 (14,862) 74,688 Issuances under PE Biosystems stock plans 20,157 (1,290) 18,867 Repurchases of PE Biosystems stock (2,187) (2,187) Tax benefit related to employee stock options 15,735 15,735 Stock compensation 1,090 1,207 2,297 Allocated capital to the Celera Genomics group (338,535) (338,535) ------------------------------------------------------------------------------------------------------------------- Balance At June 30, 1999 128,713 410,439 (4,820) 534,332 Comprehensive income Net income 186,247 186,247 Other comprehensive income, net of tax Foreign currency translation adjustments (25,196) Minimum pension liability adjustment (60) Unrealized gain on investments, net 155,522 --------- Other comprehensive income 130,266 130,266 --------- Comprehensive income 316,513 --------- Cash dividends declared on stock (35,220) (35,220) Issuances under common stock plans 43,434 43,434 Tax benefit related to employee stock options 44,618 44,618 Stock compensation 5,190 5,190 Net cash allocated from the Celera Genomics group 27,283 27,283 Allocation of investment to the Celera Genomics group (1,786) (1,786) ------------------------------------------------------------------------------------------------------------------- Balance At June 30, 2000 $ 247,452 $ 561,466 $ 125,446 $ 934,364 =================================================================================================================== </TABLE> See accompanying notes to Applied Biosystems' combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ 23 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements Note 1--Accounting Policies and Practices Basis of Presentation PE Corporation ("PE" or "the Company") is comprised of two separate business segments in continuing operations: the PE Biosystems group and the Celera Genomics group. The PE Biosystems group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the Company's 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business into the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. On January 22, 1998, the Company acquired PerSeptive Biosystems, Inc. The acquisition was accounted for as a pooling of interests and, accordingly, Applied Biosystems' financial results were restated to include the combined operations (see Note 2). Applied Biosystems' fiscal year ended June 30 and PerSeptive's fiscal year ended September 30. The fiscal 1998 Combined Statements of Operations combined Applied Biosystems' operating results for the year ended June 30, 1998 with PerSeptive's operating results for the nine months ended June 30, 1998 and the three months ended September 30, 1997 (PerSeptive's fiscal 1997 fourth quarter). In order to conform PerSeptive to a June 30 fiscal year-end in fiscal 1998, PerSeptive's results of operations for the three months ended September 30, 1997 have been included in Applied Biosystems' Combined Statements of Operations for the fiscal year ended June 30, 1998. Recapitalization The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock") and PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock"). PE Biosystems stock is intended to reflect separately the performance of the Applied Biosystems life sciences business ("Applied Biosystems"), and Celera Genomics stock is intended to reflect separately the performance of the Celera Genomics business ("Celera Genomics group"). As part of the recapitalization, each share of common stock of The Perkin-Elmer Corporation was converted into one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock. The combined financial statements of Applied Biosystems and the Celera Genomics group (individually referred to as a "group") comprise all of the accounts included in the corresponding consolidated financial statements of the Company. Intergroup transactions between Applied Biosystems and the Celera Genomics group have not been eliminated in the Applied Biosystems combined financial statements but have been eliminated in the PE Corporation consolidated financial statements. Applied Biosystems and the Celera Genomics group combined financial statements have been prepared on a basis that management believes to be reasonable and appropriate and reflect (1) the financial position, results of operations, and cash flows of businesses that comprise Applied Biosystems and the Celera Genomics group, with all significant intragroup transactions and balances eliminated, (2) in the case of the Celera Genomics group combined financial statements, corporate assets and liabilities of the Company, and related transactions identified with the Celera Genomics group, including allocated portions of the Company's debt and selling, general and administrative costs, and (3) in the case of Applied Biosystems' combined financial statements, all other corporate assets and liabilities and related transactions of the Company, including allocated portions of the Company's debt and selling, general and administrative costs. Holders of PE Biosystems stock and Celera Genomics stock are stockholders of the Company. Applied Biosystems and the Celera Genomics group are not separate legal entities. As a result, stockholders are subject to all of the risks associated with an investment in the Company and all of its businesses, assets, and liabilities. The issuance of PE Biosystems stock and Celera Genomics stock and the allocations of assets and liabilities between Applied Biosystems and the Celera Genomics group did not result in a distribution or spin-off of any assets or liabilities of the Company or otherwise affect ownership of any assets or responsibility for the liabilities of the Company or any of its subsidiaries. The assets the Company attributes to one group could be subject to the liabilities of the other group, whether such liabilities arise from lawsuits, contracts, or indebtedness attributable to the other group. If the Company is unable to satisfy one group's liabilities out of assets attributed to it, the Company may be required to satisfy these liabilities with assets attributed to the other group. Financial effects arising from one group that affect the Company's results of operations or financial condition could, if significant, affect the results of operations or financial condition of the other group and the market price of the class of common stock relating to the other group. Any net losses of Applied Biosystems or the Celera Genomics group and dividends or distributions on, or repurchases of, PE Biosystems stock or Celera Genomics stock or repurchases of preferred stock of the Company will reduce the assets of the Company legally available for payment of dividends. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 24

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued The management and allocation policies applicable to the preparation of the financial statements of Applied Biosystems and the Celera Genomics group may be modified or rescinded, or additional policies may be adopted, at the sole discretion of the Board of Directors at any time without approval of the stockholders. Applied Biosystems' combined financial statements reflect the application of the management and allocation policies adopted by the Board of Directors to various corporate activities, as described below. Applied Biosystems' combined financial statements should be read in conjunction with the Company's consolidated financial statements. Financing Activities As a matter of policy, the Company manages most financial activities of Applied Biosystems and the Celera Genomics group on a centralized basis. These activities include the investment of surplus cash, the issuance and repayment of short-term and long-term debt, and the issuance and repayment of any preferred stock. As the financing activities of the Celera Genomics group were not significant for any of the periods prior to the recapitalization, all historical cash and debt balances for those periods presented were allocated to Applied Biosystems. The Board of Directors has adopted the following financing policy which will affect the combined statements of Applied Biosystems and the Celera Genomics group. The Company will allocate the Company's debt between Applied Biosystems and the Celera Genomics group ("pooled debt") or, if the Company so determines, in its entirety to a particular group. The Company will allocate preferred stock, if issued, in a similar manner. Cash allocated to one group that is used to repay pooled debt or redeem pooled preferred stock will decrease such group's allocated portion of the pooled debt or preferred stock. Cash or other property allocated to one group that is transferred to the other group will, if so determined by the Board of Directors, decrease the transferring group's allocated portion of the pooled debt or preferred stock and, correspondingly, increase the recipient group's allocated portion of the pooled debt or preferred stock. Pooled debt will bear interest for group financial statement purposes at a rate equal to the weighted average interest rate of the debt calculated on a quarterly basis and applied to the average pooled debt balance during the period. Preferred stock, if issued and if pooled in a manner similar to the pooled debt, will bear dividends for group financial statement purposes at a rate based on the weighted average dividend rate of the preferred stock similarly calculated and applied. Any expense related to increases in pooled debt or preferred stock will be reflected in the weighted average interest or dividend rate of such pooled debt or preferred stock as a whole. If the Company allocates debt for a particular financing in its entirety to one group, that debt will bear interest for group financial statement purposes at the rate determined by the Board of Directors. If the Company allocates preferred stock in its entirety to one group, the Company will charge the dividend cost to that group in a similar manner. If the interest or dividend cost is higher than the Company's actual cost, the other group will receive a credit for an amount equal to the difference as compensation for the use of the Company's credit capacity. Any expense related to debt or preferred stock of the Company that is allocated in its entirety to a group will be allocated in whole to that group. Cash or other property that the Company allocates to one group that is transferred to the other group, could, if so determined by the Board of Directors, be accounted for either as a short-term loan or as a long-term loan. Short-term loans will bear interest at a rate equal to the weighted average interest rate of the Company's pooled debt. If the Company does not have any pooled debt, the Board of Directors will determine the rate of interest for such loan. The Board of Directors will establish the terms on which long-term loans between the groups will be made, including interest rate, amortization schedule, maturity, and redemption terms. Although the Company may allocate its debt and preferred stock between groups, the debt and preferred stock will remain obligations of the Company and all stockholders of the Company will be subject to the risks associated with those obligations. In addition, cash allocated to Applied Biosystems may be contributed to the Celera Genomics group in exchange for an equity interest in the Celera Genomics group. Allocation of Corporate Overhead and Administrative Shared Services A portion of the Company's corporate overhead (such as executive management, human resources, legal, accounting, auditing, tax, treasury, strategic planning, and environmental services) has been allocated to Applied Biosystems based upon the use of services by that group. A portion of the Company's costs of administrative shared services (such as information technology services) has been allocated in a similar manner. Where determination based on use alone is not practical, other methods and criteria were used that management believes are equitable and provide a reasonable estimate of the cost attributable to Applied Biosystems. The totals for these allocations were $38.1 million, $33.7 million, and $45.9 million for fiscal 1998, 1999, and 2000, respectively. It is not practicable to provide a detailed estimate of the expenses which would be recognized if Applied Biosystems were a separate legal entity. Allocation of Federal and State Income Taxes The federal income taxes of the Company and its subsidiaries which own assets allocated between the groups are determined on a consolidated basis. Consolidated federal income tax provisions and related tax payments or refunds are allocated between the groups based principally on the taxable income and tax credits directly attributable to each group. Such allocations reflect each group's contribution (positive or negative) to the Company's consolidated federal taxable income and the consolidated federal tax liability and ================================================================================ 25 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued tax credit position. Tax benefits that cannot be used by the group generating those benefits but can be used on a consolidated basis are credited to the group that generated such benefits. Intergroup transactions are taxed as if each group were a stand-alone company. Tax benefits generated by the Celera Genomics group commencing July 1, 1998, which can then be utilized on a consolidated basis, will be credited to the Celera Genomics group up to a limit of $75 million. As of June 30, 2000, $68.5 million of tax benefits were credited to the Celera Genomics group since July 1, 1998. Had the groups filed separate tax returns, the provision (benefit) for income taxes and net income (loss) for each group would not have differed from the amounts reported in the groups' combined statements of operations for the years ended June 30, 1998, 1999, and 2000. However, the amount of current and deferred taxes and taxes payable or refundable allocated to each group in these historical combined financial statements may differ from those that would have been allocated to each group had they filed separate income tax returns. Depending on the tax laws of the respective jurisdictions, state and local income taxes are calculated on either a consolidated or combined basis between the groups based on their respective contribution to such consolidated or combined state taxable incomes. State and local income tax provisions and related tax payments or refunds which are determined on a separate corporation basis will be allocated between the groups in a manner designed to reflect the respective contributions of the groups to the Company's separate or local taxable income. The discussion of Applied Biosystems' income taxes (see Note 4) should be read in conjunction with the Company's consolidated financial statements and notes thereto. Transfers of Assets Between Groups Transfers of assets can be made between groups without stockholder approval. Such transfers will be made at fair value, as determined by the Company's Board of Directors. The consideration for such transfers may be paid by one group to the other in cash or other consideration, as determined by the Company's Board of Directors. Dividends For purposes of the historical (periods prior to recapitalization) combined financial statements of Applied Biosystems and the Celera Genomics group, all dividends declared and paid by the Company were allocated to Applied Biosystems. Principles of Combination Applied Biosystems' combined financial statements have been prepared in accordance with generally accepted accounting principles and, taken together with the Celera Genomics group's combined financial statements, comprise all the accounts included in the corresponding consolidated financial statements of the Company. Intergroup transactions between Applied Biosystems and the Celera Genomics group have not been eliminated in Applied Biosystems' combined financial statements but have been eliminated in the PE Corporation consolidated financial statements. The combined financial statements of each group reflect the financial condition, results of operations, and cash flows of the businesses included therein. The combined financial statements of Applied Biosystems include the assets and liabilities of the Company specifically identified with or allocated to Applied Biosystems. The preparation of the combined financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Actual results could differ from those estimates. Certain amounts in the combined financial statements and notes have been reclassified for comparative purposes. Discontinued Operations Applied Biosystems' combined financial statements were restated to reflect the net assets and operating results of the Analytical Instruments business as discontinued operations (see Note 15). The operating results are reflected in the Combined Statements of Operations as income (loss) from discontinued operations for fiscal 1998 and fiscal 1999. The accompanying notes, except Note 15, relate only to continuing operations. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Applied Biosystems is required to implement the statements in the first quarter of fiscal 2001. Applied Biosystems estimates that, upon adoption, it will record an immaterial adjustment for a change in accounting principles in the Combined Statements of Operations and in accumulated other comprehensive income in the Combined Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. SAB No. 101 is required to be implemented in the fourth quarter of fiscal 2001. Applied Biosystems does not expect any impact from the application of SAB No. 101. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 26

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB No. 25, the criteria for determining whether a plan qualifies as a noncompensatory plan, the accounting consequence of various modifications to the terms of the previously fixed stock options or awards, and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management does not expect the application of FIN No. 44 to have a material impact on Applied Biosystems' combined financial statements. Earnings Per Share Earnings per share information prior to the recapitalization is omitted from Applied Biosystems' Combined Statements of Operations because PE Biosystems stock was not part of the capital structure of the Company until fiscal 1999. Basic earnings per share is computed by dividing income from continuing operations for the period by the weighted average number of shares of PE Biosystems stock outstanding. Diluted earnings per share is computed by dividing income from continuing operations for the period by the weighted average number of shares of PE Biosystems stock outstanding, including the dilutive effect of PE Biosystems stock equivalents. The following table presents a reconciliation of basic and diluted earnings per share from continuing operations for the years ended June 30, 1999 and 2000: <TABLE> <CAPTION> (Amounts in thousands except per share amounts) 1999 2000 ======================================================================= <S> <C> <C> Weighted average number of common shares used in the calculation of basic earnings per share from continuing operations 200,811 207,010 Common stock equivalents 5,398 10,006 ----------------------------------------------------------------------- Shares used in the calculation of diluted earnings per share from continuing operations 206,209 217,016 ======================================================================= Income from continuing operations used in the calculation of basic and diluted earnings per share from continuing operations $ 148,365 $ 186,247 Income per share from continuing operations Basic $ .74 $ .90 Diluted $ .72 $ .86 ======================================================================= </TABLE> The reconciliation for fiscal 1998 is omitted since PE Biosystems stock was not part of the capital structure of the Company. Options to purchase 40,000 shares and 5.9 million shares of PE Biosystems stock were outstanding at June 30, 1999 and 2000, respectively, but were not included in the computation of diluted earnings per share because the effect was antidilutive. Applied Biosystems' share and per share data reflect the two-for-one stock splits effective July 1999 and February 2000. Foreign Currency Assets and liabilities of foreign operations, where the functional currency is the local currency, are translated into U.S. dollars at the fiscal year-end exchange rates. The related translation adjustments are recorded as a separate component of group equity. Foreign currency revenues and expenses are translated using monthly average exchange rates prevailing during the year. Foreign currency transaction gains and losses, as well as translation adjustments of foreign operations where the functional currency is the U.S. dollar, are included in net income. Transaction losses for the fiscal years ended June 30, 1998, 1999, and 2000 were $2.5 million, $5.6 million, and $.1 million, respectively. Derivative Financial Instruments The Company uses derivative financial instruments to offset exposure to market risks arising from changes in foreign currency exchange rates and interest rates. Derivative financial instruments currently utilized by the Company include foreign currency forward contracts, foreign currency options, and an interest rate swap (see Note 11). All of the Company's derivative financial instruments have been allocated to Applied Biosystems. Cash and Cash Equivalents Cash equivalents consist of highly liquid debt instruments, time deposits, and certificates of deposit with original maturities of three months or less. Accounts Receivable The Company periodically sold accounts receivable arising from business conducted in Japan. During fiscal 1998, 1999, and 2000, Applied Biosystems was allocated all cash proceeds received, $98.8 million, $40.5 million, and $7.8 million, respectively, from the sale of such receivables. There were no sales of accounts receivable after July 28, 1999. Applied Biosystems accounted for such sales in accordance with SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." Investments The equity method of accounting is used for investments in joint ventures that are 20% to 50% owned and the cost method is used for investments that are less than 20% owned. Minority equity investments are generally classified as available-for-sale and carried at market value in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The specific identification method is used to determine the cost of securities disposed of. ================================================================================ 27 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Inventories at June 30, 1999 and 2000 included the following components: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Raw materials and supplies $ 42.8 $ 51.2 Work-in-process 10.3 6.3 Finished products 96.6 97.0 ------------------------------------------------------------- Total inventories $ 149.7 $ 154.5 ============================================================= </TABLE> Property, Plant and Equipment, and Depreciation Property, plant and equipment are recorded at cost and consisted of the following at June 30, 1999 and 2000: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Land $ 11.2 $ 13.5 Buildings and leasehold improvements 88.6 115.3 Machinery and equipment 208.6 267.8 ------------------------------------------------------------- Property, plant and equipment, at cost 308.4 396.6 Accumulated depreciation and amortization 126.2 165.7 ------------------------------------------------------------- Property, plant and equipment, net $ 182.2 $ 230.9 ============================================================= </TABLE> Major renewals and improvements that significantly add to productive capacity or extend the life of an asset are capitalized. Repairs, maintenance, and minor renewals and improvements are expensed when incurred. Provisions for depreciation of owned property, plant and equipment are based upon the expected useful lives of the assets and computed primarily by the straight-line method. Leasehold improvements are amortized over their estimated useful lives or the term of the applicable lease, whichever is less, using the straight-line method. Internal-use software costs are amortized primarily over the expected useful lives, not to exceed 7 years. Machinery and equipment, which included capitalized internal-use software primarily related to the Company's worldwide strategic program to improve its information technology infrastructure, was $53.2 million and $61.8 million at June 30, 1999 and 2000, respectively. Net of accumulated amortization, the capitalized internal-use software was $43.4 million and $43.5 million at June 30, 1999 and 2000, respectively. Capitalized Software Internal software development costs, for software used in Applied Biosystems' products, which are incurred from the time technological feasibility of the software is established until the software is ready for its intended use, are capitalized and included in other long-term assets. The costs are amortized using the straight-line method over a maximum of 3 years or the expected life of the product, whichever is less. At June 30, 1999 and 2000, capitalized software costs, net of accumulated amortization, were $12.5 million and $21.3 million, respectively. Research and development costs and other computer software maintenance costs related to software development are expensed as incurred. Intangible Assets The excess of purchase price over the net asset value of companies acquired is amortized on a straight-line method over periods not exceeding 20 years. Patents and trademarks are amortized using the straight-line method over their expected useful lives. At June 30, 1999 and 2000, other long-term assets included goodwill, net of accumulated amortization, of $17.6 million and $15.8 million, respectively. Accumulated amortization of goodwill was $6.6 million and $8.4 million at June 30, 1999 and 2000, respectively. Asset Impairment Applied Biosystems reviews long-lived assets for impairment, in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are written-down to fair value when the carrying costs exceed this amount. During fiscal 1999, Applied Biosystems recorded a $14.5 million charge to cost of sales for the impairment of assets associated with the Molecular Informatics business (see Note 2). The impairment loss was determined based upon estimated future cash flows and fair values. Revenues Revenues are recorded at the time of shipment of products or performance of services. Revenues from service contracts are recorded as deferred service contract revenues and reflected in net revenues over the term of the contract, generally one year. Research, Development and Engineering Research, development and engineering costs are expensed when incurred. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 28

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued Supplemental Cash Flow Information Cash paid for interest and income taxes and significant non-cash investing and financing activities for the following periods was as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Interest $ 5.7 $ 3.4 $ .9 Interest paid to the Celera Genomics group $ .2 $ 6.8 Income taxes $ 60.5 $ 30.3 $ 48.2 Tax benefits paid to the Celera Genomics group $ 39.1 Significant non-cash investing and financing activities Unrealized gain (loss) on investments $ (4.4) $ 11.9 $ 155.5 Note payable to the Celera Genomics group $ 150.0 Dividends declared not paid $ 8.9 Common shares issued in PerSeptive pooling $ 4.6 Minority interest assumed $ 41.3 ============================================================= </TABLE> Note 2--Acquisitions, Investments, and Dispositions PerSeptive Biosystems, Inc. The merger of Seven Acquisition Corp., a wholly owned subsidiary of the Company, and PerSeptive was consummated on January 22, 1998. PerSeptive develops, manufactures, and markets an integrated line of proprietary consumable products and advanced instrumentation systems for the purification, analysis, and synthesis of biomolecules. As a result of the merger, PerSeptive, which was the surviving corporation of the merger, became a wholly owned subsidiary of the Company on that date. Each outstanding share of PerSeptive common stock was converted into shares of the Company's (predecessor) common stock at an exchange ratio equal to 0.1926. Accordingly, the Company issued 4.6 million shares of its (predecessor) common stock for all outstanding shares of PerSeptive common stock. Each outstanding option and warrant for shares of PerSeptive common stock was converted into options and warrants for the number of shares of the Company's (predecessor) common stock that would have been received if such options and warrants had been exercised immediately prior to the effective time of the merger. All shares of Series A Redeemable Convertible Preferred Stock of PerSeptive outstanding immediately prior to the effective time of the merger were converted in accordance with their terms into shares of PerSeptive common stock which were then converted into shares of the Company's (predecessor) common stock. As a result of the merger, PerSeptive's 8-1/4% Convertible Subordinated Notes due 2001 became convertible into shares of the Company's (predecessor) common stock. On March 23, 1998, the Company redeemed the PerSeptive Notes for a total of $26.1 million, representing $24.7 million of principal and $1.4 million of accrued interest and premium relating to the PerSeptive Notes. Additionally, $2.5 million of the principal amount of the PerSeptive Notes was converted by the holders thereof into 35,557 shares of the Company's (predecessor) common stock. The merger qualified as a tax-free reorganization and was accounted for as a pooling of interests. Tecan AG The Company acquired a 14.5% interest and approximately 52% of the voting rights in Tecan AG during the second quarter of fiscal 1998. Tecan is a leader in the development and manufacturing of automated sample processors, liquid handling systems, and microplate photometry. The acquisition cost was $53.2 million in cash and was accounted for as a purchase with a minority interest of $41.3 million. The excess purchase price over the fair market value of the underlying assets was $46.2 million and was being amortized over 15 years. During the fourth quarter of fiscal 1999, the Company divested its interest in Tecan through a public offering in Switzerland and private sales outside of Switzerland. Net cash proceeds from the divestiture were $53.8 million. Applied Biosystems recognized a before-tax gain of $1.6 million on the divestiture. Molecular Informatics, Inc. In fiscal 1998, the Company acquired Molecular Informatics, Inc., a leader in the development of infrastructure software for the pharmaceutical, biotechnology, and agrochemical industries as well as for applied markets such as forensics and human identification. The acquisition cost was $53.9 million and was accounted for as a purchase. In connection with the acquisition, $28.9 million was expensed as purchased in-process research and development, $9.0 million was allocated to goodwill, and $15.7 million was allocated to other intangible assets. The amortization period was 10 years for the goodwill and 4 to 7 years for the other intangible assets. The $28.9 million expensed as in-process research and development represented 53.6% of the purchase price and was attributed to and supported by a discounted probable cash flow analysis on a project-by-project basis. At the acquisition date, the technological feasibility of the acquired technology had not been established and the acquired technology had no future alternative uses. Approximately 10% of the in-process research and development value was attributed to BioLIMS, a software system that manages data, initiates analysis programs, and captures the results in a centralized, relational database for sequencing instruments; 6% was attributed to GA SFDB, a client-side add-on product to several existing gene sequencing instruments; 38% was attributed to BioMERGE, a client-server management and integration system that organizes proprietary, public, and third-party results in a single relational database for the drug discovery and genomic research markets; 9% was attributed to BioCLINIC, a client-server management and integration system that organizes proprietary, public, and third-party results generated from DNA and protein sequence analysis in a single database for the clinical trials phase of drug development; and 37% was attributed to ================================================================================ 29 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued SDK, an open architecture software platform from which all of Molecular Informatics' future software applications were expected to be derived. As of the acquisition date, all of the major functionality for BioLIMS 2.0 had been completed and the product was subsequently released in September 1998. As of the acquisition date, BioLIMS 3.0 was in the design and scoping phase. As of the acquisition date, GA SFDB was in early alpha phase and had been completed concurrent with the development of BioLIMS 2.0. The product was released in September 1998. As of the acquisition date, BioMerge 3.0's functional scope was defined and the requirements assessment had been completed. The product was subsequently released in November 1998. As of the acquisition date, the BioCLINIC product requirements had been specified and discussions had begun with two potential customers to begin the specific software modifications. Development efforts were terminated in April 1998 due to unsuccessful marketing efforts. As of the acquisition date, the SDK requirements assessment had been completed and the functional scope had been defined. At the date of the acquisition, a total of $11.8 million of the purchase price was attributed to core technology and existing products, primarily related to the BioMERGE product. The risk-adjusted discount rate applied to the project's cash flows was 20% for existing technology and 23% for in-process technology. The risk premium of 3% for in-process technologies was determined by management based upon the associated risks of rolling out these in-process technologies versus the existing technologies for the emerging bioinformatics software industry. The significant risks associated with these products include the limited operating history of Molecular Informatics, uncertainties surrounding market acceptance of such in-process products, competitive threats from other bioinformatics companies, and other risks. Management is primarily responsible for estimating the fair value of such existing and in-process technology. In fiscal 1999, Applied Biosystems incurred a $14.5 million charge to cost of sales for the impairment of intangible assets associated with the Molecular Informatics business. This impairment resulted primarily from a decline in management's assessment of future cash flows from this business which included the discontinuance of certain product lines in the fourth quarter. The charge to cost of sales included $5.6 million for the write-down of goodwill and $8.9 million for the write-down of other intangible assets. The remaining goodwill of $1.9 million and other intangible assets of $1.9 million are being amortized over 4 years. Millennium Pharmaceuticals, Inc. In fiscal 2000, Applied Biosystems recognized a before-tax gain of $41.0 million from the sale of a portion of the Company's equity interest in Millennium Pharmaceuticals, Inc. Net cash proceeds from the sale were $48.0 million. During fiscal 1999 and 1998, Applied Biosystems recorded before-tax gains of $1.9 million and $1.6 million, respectively, in connection with the release of previously existing contingencies on shares of Millennium common stock. Boston Probes, Inc. In fiscal 2000, the Company made a minority equity investment of $6.0 million in Boston Probes, Inc. Additionally, the Company committed to make term loans in the aggregate of up to $2.0 million, subject to market terms and conditions. The loan commitment and the loan maturity may not extend beyond May 1, 2003. Applied Biosystems and Boston Probes are collaborating on the development and commercialization of products employing peptide nucleic acid technology. The acquisition was accounted for under the cost method and was included in Applied Biosystems' Combined Statements of Financial Position. Epoch Biosciences, Inc. The Company made a minority equity investment in Epoch Biosciences, Inc. of $1.0 million in fiscal 2000. The Company also converted into equity $1.0 million of funds advanced to Epoch as part of a licensing transaction in fiscal 1999. Epoch is a biomedical company utilizing nucleoside and nucleotide chemistry to develop molecular tools for genetic analysis. The acquisition was accounted for under the cost method and was included in Applied Biosystems' Combined Statements of Financial Position. Illumina, Inc. In fiscal 2000, the Company made a minority equity investment of $5.0 million in Illumina, Inc. and will provide a portion of the research and development funding for a strategic collaboration. The strategic collaboration is for the purpose of developing, manufacturing, and marketing array-based systems for high-throughput DNA analysis. Under the agreement, Applied Biosystems and Illumina will jointly develop systems based on Illumina's BeadArray technology and Applied Biosystems' proprietary DNA chemistry. The acquisition was accounted for under the cost method and was included in Applied Biosystems' Combined Statements of Financial Position. ACLARA BioSciences, Inc. The Company made a minority equity investment of $2.5 million in ACLARA BioSciences, Inc. in fiscal 1998. Applied Biosystems and ACLARA are collaborating on the development of advanced genetic analysis systems. In fiscal 1999 and fiscal 2000, the Company increased its investment by $3.0 million and $5.0 million, respectively. The acquisition was accounted for under the cost method and was included in Applied Biosystems' Combined Statements of Financial Position. Biometric Imaging, Inc. In fiscal 1998, the Company acquired a minority equity investment in Biometric Imaging, Inc. for $4.0 million. Applied Biosystems and Biometric Imaging were collaborating on the development and manufacturing of a high-throughput screening system for use by pharmaceutical research companies to accelerate the drug discovery process. The Company received exclusive worldwide marketing rights for products developed for that market. In fiscal 1999, Applied Biosystems recorded a ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 30

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued before-tax gain of $2.6 million on the sale of the Company's entire equity interest in Biometric Imaging. Net cash proceeds from the sale were $6.6 million. Hyseq, Inc. In fiscal 1997, the Company entered into a strategic relationship with Hyseq, Inc., acquiring a minority equity interest for a cash investment of $5.0 million. Hyseq applies proprietary DNA array technology to develop gene-based therapeutic product candidates and diagnostic products and tests. In fiscal 1998, Applied Biosystems increased its investment by $5.0 million. During the fourth quarter of fiscal 2000, Applied Biosystems recognized a before-tax gain of $4.4 million from the sale of a portion of the Company's equity interest in Hyseq. Net cash proceeds from the sale were $6.4 million. Paracel, Inc. The Company issued approximately 1.6 million shares of Celera Genomics stock in exchange for all the outstanding shares of Paracel common stock not previously owned by the Company. At the time of the acquisition, the Company owned 14% of Paracel, which was allocated to Applied Biosystems. The transfer of the Paracel shares to the Celera Genomics group resulted in a $27.3 million cash payment to Applied Biosystems, which represented the fair market value of those shares at the transfer date. The Celera Genomics group recorded the previously owned investment at the Company's original cost value. The transfer of the original cost value and the $27.3 million cash payment was recorded as an adjustment to group equity in Applied Biosystems' Combined Statements of Financial Position and the Celera Genomics group's Combined Statements of Financial Position. Other Dispositions In fiscal 2000, Applied Biosystems recognized a before-tax gain of $3.3 million from the sale of the Company's equity interest in various other companies. Net cash proceeds from the sales were $4.3 million. Note 3--Debt and Lines of Credit Allocated Debt Activity Loans payable and long-term debt at June 30, 1999 and 2000 are summarized as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Loans Payable Short-term loans $ 3.9 $ 15.7 ============================================================= Long-Term Debt Yen loan $ 31.5 $ 36.1 ============================================================= </TABLE> The weighted average interest rates at June 30, 1999 and 2000 for loans payable were 4.5% and .6%, respectively. The Company maintains a yen 3.8 billion variable rate long-term loan, which matures in March 2002. Through an interest rate swap agreement (see Note 11), the effective interest rate for the loan is fixed at 2.1%. The Company's $100 million revolving credit agreement was replaced effective April 20, 2000 with a new $100 million revolving credit agreement with four banks that matures on April 20, 2005. Commitment and facility fees are based on public debt ratings, or net worth and leverage ratios. Interest rates on amounts borrowed vary depending on whether borrowings are undertaken in the domestic or eurodollar markets. There were no borrowings outstanding under the facility at June 30, 2000. At June 30, 2000, in addition to the $100 million revolving credit facility, the Company had $241 million of unused credit facilities for short-term borrowings from domestic and foreign banks in various currencies. These credit facilities consist of uncommitted overdraft credit lines that are provided at the discretion of various local banks. A PE Corporation guarantee is usually required if a local unit borrows any funds. Under various debt and credit agreements, the Company is required to maintain certain minimum net worth and leverage ratios. There are no maturities of long-term debt scheduled for fiscal 2001, 2003, 2004, or 2005. The yen 3.8 billion loan matures in fiscal 2002. Note Payable to the Celera Genomics Group At September 30, 1998, the Company allocated to the Celera Genomics group a $330 million note payable of Applied Biosystems. The $330 million note represented an allocation of the Company's capital to the Celera Genomics group and did not result in Applied Biosystems holding an equity interest in the Celera Genomics group. This allocation of capital represented management's decision to allocate a portion of the Company's capital to the Celera Genomics group and the remaining capital to Applied Biosystems prior to the effective date of the recapitalization. The group financial statements do not include any intergroup equity interests. The note payable was liquidated on May 28, 1999 in exchange for a portion of the proceeds received from the sale of the Analytical Instruments business and a new note payable to the Celera Genomics group for $150 million. The new note payable was for a term of one year, bearing an interest rate of 5% per annum, and was payable on demand without penalty. The new note was paid during fiscal 2000. Note 4--Income Taxes Income (loss) before income taxes from continuing operations for fiscal 1998, 1999, and 2000 is summarized below: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> United States $ (25.2) $ 36.5 $ 93.1 Foreign 84.4 155.9 182.6 ------------------------------------------------------------- Total $ 59.2 $ 192.4 $ 275.7 ============================================================= </TABLE> ================================================================================ 31 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued The provision for income taxes from continuing operations includes Applied Biosystems' allocated portion of income taxes currently payable and those deferred because of differences between the financial statement and tax bases of assets and liabilities. Applied Biosystems' provision for income taxes from continuing operations for fiscal 1998, 1999, and 2000 consisted of the following: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Currently Payable Domestic $ 8.3 $ 6.2 $ 60.3 Foreign 17.7 23.5 48.6 ------------------------------------------------------------- Total currently payable 26.0 29.7 108.9 ------------------------------------------------------------- Deferred Domestic 6.1 (2.5) (7.0) Foreign (2.6) 3.5 (12.4) ------------------------------------------------------------- Total deferred 3.5 1.0 (19.4) ------------------------------------------------------------- Total provision for income taxes from continuing operations $ 29.5 $ 30.7 $ 89.5 ============================================================= </TABLE> Significant components of deferred tax assets and liabilities from continuing operations at June 30, 1999 and 2000 are summarized below: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Deferred Tax Assets Inventories $ 2.3 $ 4.0 Postretirement and postemployment benefits 32.2 31.4 Other reserves and accruals 8.8 9.7 Tax credit and loss carryforwards 68.8 136.1 ------------------------------------------------------------- Subtotal 112.1 181.2 Valuation allowance (37.5) (37.2) ------------------------------------------------------------- Total deferred tax assets 74.6 144.0 ------------------------------------------------------------- Deferred Tax Liabilities Depreciation 3.1 14.5 Other reserves and accruals 12.3 4.9 Unrealized gains on investments 89.2 ------------------------------------------------------------- Total deferred tax liabilities 15.4 108.6 ------------------------------------------------------------- Total deferred tax assets, net $ 59.2 $ 35.4 ============================================================= </TABLE> A reconciliation of the federal statutory tax to Applied Biosystems' continuing tax provision for fiscal 1998, 1999, and 2000 is set forth in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Federal statutory rate 35% 35% 35% ============================================================= Tax at federal statutory rate $ 20.7 $ 67.3 $ 96.5 State income taxes (net of federal benefit) .1 .4 .2 Effect on income taxes from foreign operations 1.2 (21.4) (6.2) Effect on income taxes from foreign sales corporation (2.5) (4.8) (7.1) Acquired research and development 10.1 Reorganization, restructuring, and other costs 5.2 6.5 Domestic temporary differences for which benefit is recognized (4.8) (17.4) Effect of goodwill amor- tization and write-off .4 2.1 .3 R&D tax credit (6.0) Long-term compensation 8.7 Recapitalization costs 1.6 Other (.9) 2.9 (3.4) ------------------------------------------------------------- Total provision for income taxes from continuing operations $ 29.5 $ 30.7 $ 89.5 ============================================================= </TABLE> The category "domestic temporary differences for which benefit is recognized" reported in the preceding table reflects the fiscal 1998 and 1999 benefit attributable to a reduction in the valuation allowance. The benefit is primarily due to release of the valuation allowance in fiscal 1999 in the amount of $17.4 million. The valuation allowance was reduced in fiscal 1999 because management believed, once the sale of the Analytical Instruments business was completed, that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. The fiscal 1998 benefit resulted from the utilization of domestic tax credit carryforwards and reversing temporary differences and the recognition of various other deferred tax assets that were previously subject to a valuation allowance. At June 30, 2000, the Company's worldwide valuation allowance of $37.2 million related to foreign tax loss carryforwards, as well as domestic tax loss carryforwards, temporary differences, and tax credit carryforwards. PerSeptive has domestic loss carryforwards of approximately $68 million that will expire between the fiscal years 2003 and 2012 which were allocated to Applied Biosystems. The amount of these net operating loss carryforwards that can be utilized annually to offset future taxable income or tax liability has been limited under the Internal Revenue Code as a result of the acquisition. Applied Biosystems also was allocated a consolidated domestic loss carryforward of $173.0 ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 32

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued million and domestic tax credit carryforwards of $36.7 million, which will expire between the fiscal years 2005 and 2020, and loss carryforwards of approximately $49 million in various foreign countries with varying expiration dates. U.S. income taxes were not provided on approximately $352 million of net unremitted earnings from foreign subsidiaries since the Company intends to permanently reinvest substantially all of such earnings outside the U.S. These earnings include income from manufacturing operations in Singapore, which is tax-exempt through fiscal 2004. In those instances where the Company expects to remit earnings, the effect on Applied Biosystems' results of operations, after considering available tax credits and amounts previously accrued, is not significant. The Company and its subsidiaries are subject to tax examinations in various U.S. and foreign jurisdictions. On December 17, 1998, the Company filed a petition in the U.S. Tax Court which contested a deficiency asserted by the IRS for fiscal 1992. The Company has entered into settlement discussions with the IRS Appeals Office in order to determine whether this dispute can be resolved on a favorable basis to the Corporation without the necessity of a trial. The Company will vigorously contest the proposed adjustments. The Company believes that adequate tax payments have been made and adequate accruals have been recorded for all years. Note 5--Retirement and Other Benefits Pension Plans, Retiree Healthcare, and Life Insurance Benefits The Company maintains or sponsors pension plans that cover a substantial portion of all worldwide employees. Pension benefits earned are generally based on years of service and compensation during active employment. However, the level of benefits and terms of vesting may vary among plans. Pension plan assets are administered by trustees and are principally invested in equity and fixed income securities. The funding of pension plans is determined in accordance with statutory funding requirements. The Company's domestic pension plan covers a substantial portion of U.S. employees. During fiscal 1999, the plan was amended to terminate the accrual of benefits as of June 30, 2004 and to improve the benefit for participants who retire between the ages of 55 and 60. The pension plan is not available to employees hired on or after July 1, 1999. The postretirement benefit plan provides certain healthcare and life insurance benefits to domestic employees hired prior to January 1, 1993, who retire and satisfy certain service and age requirements. Generally, medical coverage pays a stated percentage of most medical expenses, reduced for any deductible and for payments made by Medicare or other group coverage. The cost of providing these benefits is shared with retirees. The plan is unfunded. As the pension and postretirement activity attributable to the Celera Genomics group was not material for the two years ended June 30, 1999, all pension and postretirement amounts recognized in the Company's Consolidated Statements of Financial Position were allocated to Applied Biosystems. The components of net pension and postretirement benefit expenses for fiscal 1998, 1999, and 2000 are set forth in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Pension Service cost $ 4.8 $ 5.2 $ 7.4 Interest cost 36.4 38.7 44.0 Expected return on plan assets (35.6) (38.6) (45.6) Amortization of transition asset (1.9) (1.9) (2.4) Amortization of prior service cost (.4) (.4) Amortization of losses .5 .5 .2 Curtailments and settlements .1 ------------------------------------------------------------- Net periodic expense $ 4.2 $ 3.6 $ 3.2 ============================================================= Postretirement Benefit Service cost $ .1 $ .2 $ .3 Interest cost 4.7 4.8 4.6 Amortization of gains (1.2) (1.5) (1.8) ------------------------------------------------------------- Net periodic expense $ 3.6 $ 3.5 $ 3.1 ============================================================= </TABLE> ================================================================================ 33 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued The following tables set forth the changes in the benefit obligations and the plan assets, the funded status of the plans, and the amounts recognized in Applied Biosystems' Combined Statements of Financial Position at June 30, 1999 and 2000: <TABLE> <CAPTION> Pension Postretirement --------------- --------------- (Dollar amounts in millions) 1999 2000 1999 2000 ===================================================================== <S> <C> <C> <C> <C> Change In Benefit Obligation Benefit obligation, beginning of year $ 560.5 $ 594.1 $ 72.4 $ 62.5 Service cost 5.2 7.4 .2 .3 Interest cost 38.7 44.0 4.8 4.6 Participants' contributions .1 Benefits paid (30.8) (36.7) (5.3) (5.4) Actuarial (gain) loss 17.7 7.9 (3.3) (.1) Variable annuity unit value change 2.8 (12.9) Addition of plan 3.9 Amendments (2.0) Currency translation (.1) (.2) Other 2.0 (6.3) --------------------------------------------------------------------- Benefit obligation $ 594.1 $ 607.5 $ 62.5 $ 61.9 ===================================================================== Change In Plan Assets Fair value of plan assets, beginning of year $ 561.8 $ 600.6 $ - $ - Actual return on plan assets 56.8 47.9 Participants' contributions .1 Company contribution 11.4 5.3 5.4 Benefits paid (29.5) (34.3) (5.3) (5.4) Addition of plan 1.0 Currency translation (.2) --------------------------------------------------------------------- Fair value of plan assets $ 600.6 $ 615.0 $ - $ - ===================================================================== Funded Status Reconciliation Funded status $ 6.5 $ 7.5 $ (62.5) $ (61.9) Unrecognized prior service gain (2.5) (2.0) Unrecognized transition asset (obligation) (2.2) .9 Unrecognized (gains) losses 37.7 29.6 (23.2) (21.5) --------------------------------------------------------------------- Net amount recognized $ 39.5 $ 36.0 $ (85.7) $ (83.4) ===================================================================== Amounts Recognized In The Statement Of Financial Position Prepaid benefit cost $ 48.3 $ 47.4 $ - $ - Accrued benefit liability (11.6) (15.4) (85.7) (83.4) Intangible asset .7 .6 Minimum pension liability adjustment 2.1 3.4 --------------------------------------------------------------------- Net amount recognized $ 39.5 $ 36.0 $ (85.7) $ (83.4) ===================================================================== </TABLE> Other changes in benefit obligation represented changes in benefit obligation related to the Analytical Instruments business for periods prior to the sale. A minimum pension liability adjustment is required when the actuarial present value of accumulated benefits exceeds plan assets and accrued pension liabilities. The projected benefit obligation and accumulated benefit obligation for the pension plans with accumulated benefit obligations in excess of plan assets were $12.1 million and $11.6 million, respectively, at June 30, 1999, and $14.0 million and $12.8 million, respectively, at June 30, 2000. The following actuarial assumptions were used for the pension and postretirement plans: <TABLE> <CAPTION> 1999 2000 ===================================================================== <S> <C> <C> Domestic Plans Discount rate 7-1/2% 8% Compensation increase 5% 6% Expected rate of return 7-1/2 -- 9-1/4% 8 -- 9-1/4% ===================================================================== Foreign Plans Discount rate 5 -- 5-3/4% 3 -- 5-3/4% Compensation increase 4% 2 -- 4% Expected rate of return 6-1/2 -- 9% 4 -- 9% ===================================================================== </TABLE> The Company recorded expenses for foreign defined benefit plans of $1.4 million, $1.7 million and $2.2 million in fiscal 1998, 1999, and 2000, respectively. For measurement purposes, an 8.2% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for plan year 2001, gradually reducing to 5.5% in 2004 and thereafter. A one-percentage-point change in assumed healthcare cost trend rates would have the following effects on postretirement benefits: <TABLE> <CAPTION> One-Percentage- One-Percentage- (Dollar amounts in millions) Point Increase Point Decrease ================================================================= <S> <C> <C> Effect on the total of service and interest cost components $ .4 $ (.4) Effect on postretirement benefit obligation $ 4.8 $ (4.8) ================================================================= </TABLE> Savings Plan The Company provides a 401(k) savings plan, for domestic employees, with automatic Company contributions of 2% of eligible compensation and a dollar-for-dollar matching contribution of up to 4% of eligible compensation. Employees not eligible for the employee pension plan receive an extra 2% contribution in addition to the automatic 2% Company contribution through June 30, 2004, while pension plan participants continue to receive the automatic 2% contribution. The Company contributions allocated to Applied Biosystems for fiscal 1998, 1999, and 2000 were $5.7 million, $8.0 million, and $10.2 million, respectively. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 34

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued Postemployment Benefits The Company provides certain postemployment benefits to eligible employees. These benefits generally include severance, disability, and medical-related costs paid after employment but before retirement. Note 6--Segment, Geographic, and Customer Information Business Segments Applied Biosystems operates in one business segment, which is the manufacturing and marketing of biochemical instrument systems and associated consumable products for life science research and related applications. Geographic Areas Information concerning principal geographical areas for fiscal 1998, 1999, and 2000 follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Net Revenues From External Customers United States $ 452.9 $ 596.5 $ 638.3 Europe 291.9 370.1 376.0 Japan 129.5 154.8 213.6 Other Far East countries 42.0 56.1 60.8 Latin America and other 23.8 26.9 39.6 ------------------------------------------------------------- Combined $ 940.1 $ 1,204.4 $ 1,328.3 ============================================================= </TABLE> Net revenues are attributable to geographic areas based on the region of destination. Information concerning long-lived assets at June 30, 1999 and 2000 follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Long-Lived Assets United States $ 172.6 $ 198.3 Europe 15.1 15.3 Japan 14.1 18.1 Other Far East countries .7 2.1 Other countries .3 .8 ------------------------------------------------------------- Combined $ 202.8 $ 234.6 ============================================================= </TABLE> Long-lived assets exclude goodwill and other intangible assets. Customer Information Applied Biosystems has a large and diverse customer base. No single customer accounted for more than 10% of total net revenues during fiscal 1998, 1999, or 2000. Related-Party Information Sales of Products and Services Between Groups A group will sell products or services to the other group on terms that would be available from third parties in commercial transactions. If terms for such transactions are not available, the purchasing group will pay fair value as determined by the Board of Directors for such products and services or at the cost (including overhead) of the selling group. For fiscal 1999, net revenues from leased instruments, shipments of instruments and consumables, and contracted R&D services to the Celera Genomics group were $17.3 million. For fiscal 2000, net revenues from leased instruments and shipments of consumables and project materials to the Celera Genomics group were $59.8 million. Access to Technology and Know-How Each group has free access to all Company technology and know-how (excluding products and services of the other group) that may be useful in that group's business, subject to obligations and limitations applicable to the Company and to such exceptions that the Board of Directors may determine. The groups consult with each other on a regular basis concerning technology issues that affect both groups. The costs of developing technology remain in the group responsible for its development. Note 7--Group Equity PE Biosystems stock represents a separate class of the Company's common stock. Additional shares of PE Biosystems stock may be issued from time to time upon exercise of stock options or at the discretion of the Company's Board of Directors. In January 2000, the Board of Directors announced a two-for-one split of PE Biosystems stock effective February 2000 in the form of a stock dividend. All Applied Biosystems share data reflect this split and the two-for-one split of PE Biosystems stock effective July 1999. Treasury Stock Common stock repurchases were made in support of Applied Biosystems' various stock plans. During fiscal 1999, 20,000 shares of PE Biosystems stock, before giving effect to the February 2000 stock split, were repurchased to support various stock plans. There were no repurchases of PE Biosystems stock during fiscal 2000. Stock Purchase Warrants As a result of the merger with PerSeptive, each outstanding warrant for shares of PerSeptive common stock was converted into warrants for the number of shares of the Company's common stock that would have been received by the holder if such warrants had been exercised immediately prior to the effective time of the merger. As a result of the recapitalization and subsequent stock splits, each outstanding warrant for shares of PerSeptive common stock was further converted into warrants to acquire .7704 share of PE Biosystems stock and .1926 share of Celera Genomics stock. The warrants are not separately exercisable into solely PE Biosystems stock or Celera Genomics stock. The exercise price and expiration date of each warrant were not affected by the recapitalization or the stock splits. ================================================================================ 35 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued At June 30, 2000, there were 53,799 warrants outstanding at an exercise price of $65.73. Upon exercise of all of the warrants, the holders would receive 215,196 shares of PE Biosystems stock and 53,799 shares of Celera Genomics stock. The warrants expire in September 2003. Stockholders' Rights Plan In connection with the recapitalization, the Company adopted a new Stockholders' Rights Plan (the "Rights Agreement") to protect stockholders against abusive takeover tactics. Under the Rights Agreement, the Company will issue one right for every four shares of PE Biosystems stock (a "PE Biosystems Right"), which will allow holders to purchase one-thousandth of a share of Series A participating junior preferred stock of the Company at a purchase price of $425, subject to adjustment (the "Series A Purchase Price"), and one right for every two shares of Celera Genomics stock (a "Celera Genomics Right"), which will allow holders to purchase one-thousandth of a share of Series B participating junior preferred stock of the Company at a purchase price of $125, subject to adjustment (the "Series B Purchase Price"). A PE Biosystems Right or Celera Genomics Right will be exercisable only if a person or group ("Acquiring Person"): (a) acquires 15% or more of the shares of PE Biosystems stock then outstanding or 15% or more of the shares of Celera Genomics stock then outstanding or (b) commences a tender offer that would result in such person or group owning such number of shares. If any person or group becomes an Acquiring Person, each PE Biosystems Right and each Celera Genomics Right will entitle its holder to purchase, for the Series A Purchase Price or the Series B Purchase Price, a number of shares of the related class of common stock of the Company having a market value equal to twice such purchase price. If following the time a person or group becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction and the Company is not the surviving corporation; any person consolidates or merges with the Company and all or part of the common stock is converted or exchanged for securities, cash, or property of any other person; or 50% or more of the Company's assets or earnings power is sold or transferred, each PE Biosystems Right and each Celera Genomics Right will entitle its holder to purchase, for the Series A Purchase Price or Series B Purchase Price, a number of shares of common stock of the surviving entity in any such merger, consolidation or business combination or the purchaser in any such sale or transfer having a market value equal to twice the Series A Purchase Price or Series B Purchase Price. The rights are redeemable at the Company's option at one cent per right to a person or group becoming an Acquiring Person. Capital Stock The Company's authorized capital stock consists of 500 million shares of PE Biosystems stock, 225 million shares of Celera Genomics stock, and 10 million shares of PE Corporation preferred stock. Of the 10 million authorized shares of preferred stock, the Company has designated 80,000 shares of two series of participating junior preferred stock in connection with the Company's stockholders' rights plan as previously described. Note 8--Stock Plans Stock Option Plans Under the Company's stock option plans, officers, directors, and other key employees may be granted options, each of which allows for the purchase of existing common stock at a price of not less than 100% of fair market value at the date of grant. Prior to the recapitalization, most option grants had a two-year vesting schedule, whereby 50% of the option grant vested at the end of each year from the date of grant. The Board of Directors has extended that schedule for most options granted subsequent to the recapitalization whereby 25% will vest annually, resulting in 100% vesting after four years. Options generally expire ten years from the date of grant. Transactions relating to the stock option plans of the Company follow: <TABLE> <CAPTION> PE Corporation -------------------------- Weighted Number of Average Options Exercise Price ============================================================== <S> <C> <C> Fiscal 1998 Outstanding at June 30, 1997 4,155,603 $ 45.03 Granted 1,997,041 $ 70.41 Exercised 780,994 $ 34.76 Cancelled 154,686 $ 71.42 -------------------------------------------------------------- Outstanding at June 30, 1998 5,216,964 $ 55.51 Exercisable at June 30, 1998 2,936,389 $ 43.12 ============================================================== Fiscal 1999 Granted 37,000 $ 86.61 Exercised 1,549,364 $ 45.74 Cancelled 108,914 $ 67.92 -------------------------------------------------------------- Outstanding at May 5, 1999 3,595,686 $ 60.23 Exercisable at May 5, 1999 2,639,696 $ 55.43 ============================================================== <CAPTION> PE Biosystems Stock -------------------------- Weighted Number of Average Options Exercise Price ============================================================== <S> <C> <C> Fiscal 1999 Outstanding at May 6, 1999 14,382,744 $ 13.67 Granted 5,896,092 $ 27.35 Exercised 1,374,632 $ 13.25 Cancelled 480,958 $ 16.38 -------------------------------------------------------------- Outstanding at June 30, 1999 18,423,246 $ 17.99 Exercisable at June 30, 1999 8,698,906 $ 12.34 ============================================================== Fiscal 2000 Granted 9,000,611 $ 86.06 Exercised 3,146,903 $ 12.37 Cancelled 661,236 $ 26.68 -------------------------------------------------------------- Outstanding at June 30, 2000 23,615,718 $ 44.04 Exercisable at June 30, 2000 9,879,917 $ 15.53 ============================================================== </TABLE> ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 36

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued As a result of the recapitalization, each outstanding stock option under the Company's stock option plans was converted into separately exercisable options to acquire one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock prior to giving effect of PE Biosystems stock splits and the Celera Genomics stock split. The exercise price for the resulting PE Biosystems stock options and Celera Genomics stock options was calculated by multiplying the exercise price under the original option from which they were converted by a fraction, the numerator of which was the opening price of PE Biosystems stock or Celera Genomics stock, as the case may be, on May 6, 1999 (the first date such stocks were traded on the New York Stock Exchange) and the denominator of which was the sum of such PE Biosystems stock and Celera Genomics stock prices. However, the aggregate intrinsic value of the options was not increased, and the ratio of the exercise price per option to the market value per share was not reduced. In addition, the vesting provisions and option periods of the original grants remained the same on conversion. The following tables summarize information regarding options outstanding and exercisable at June 30, 2000: <TABLE> <CAPTION> Weighted Average --------------------- Contractual Life Number of Exercise Remaining (Option prices per share) Options Price in Years ============================================================= <S> <C> <C> <C> Options Outstanding At $.47 - $10.00 2,184,420 $ 6.69 4.0 At $10.01 - $20.00 6,892,195 $ 15.84 6.9 At $20.01 - $50.00 6,453,162 $ 28.12 8.8 At $50.01 - $100.50 8,085,941 $ 90.86 9.6 ============================================================= Options Exercisable At $.47 - $10.00 2,131,665 $ 6.81 At $10.01 - $20.00 6,427,239 $ 15.72 At $20.01 - $50.00 1,286,613 $ 27.05 At $50.01 - $100.50 34,400 $ 89.38 ============================================================= </TABLE> 1999 Stock Incentive Plans The PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan (the "PE Biosystems Group Plan") and the PE Corporation/Celera Genomics Group 1999 Stock Incentive Plan (the "Celera Genomics Group Plan") were approved in April 1999, as amended. The PE Biosystems Group Plan authorizes grants of stock options, stock awards, and performance shares with respect to PE Biosystems stock. The Celera Genomics Group Plan authorizes grants of stock options, stock awards, and performance shares with respect to Celera Genomics stock. Directors, certain officers, and key employees with responsibilities involving both Applied Biosystems and the Celera Genomics group may be granted awards under both incentive plans in a manner which reflects their responsibilities. The Board of Directors believes that granting awards tied to the performance of the group in which the participants work and, in certain cases the other group, is in the best interests of the Company and its stockholders. Employee Stock Purchase Plan The Company's employee stock purchase plans offer U.S. and certain non-U.S. employees the right to purchase shares of PE Biosystems stock and/or Celera Genomics stock. The purchase price in the U.S. is equal to the lower of 85% of the average market price of the applicable class of common stock on the offering date or 85% of the average market price of such class of common stock on the last day of the purchase period. Provisions of the plan for employees in countries outside the U.S. vary according to local practice and regulations. PE Biosystems stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 98,000 shares and 161,000 shares, respectively. Celera Genomics stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 24,000 shares and 303,000 shares, respectively. Common stock issued under the employee stock purchase plans during fiscal 1998 and 1999 totaled 174,000 shares and 168,000 shares, respectively, of PE Corporation (predecessor) common stock. Director Stock Purchase and Deferred Compensation Plan The Company has a Director Stock Purchase and Deferred Compensation Plan that requires non-employee directors of the Company to apply at least 50% of their annual retainer to the purchase of common stock. Purchases of PE Biosystems stock and Celera Genomics stock are made in a ratio approximately equal to the number of shares of PE Biosystems stock and Celera Genomics stock outstanding. The purchase price is the fair market value on the date of purchase. At June 30, 2000, the Company had approximately 341,000 shares of PE Biosystems stock and approximately 85,000 shares of Celera Genomics stock available for issuance under the plan. Restricted Stock As part of the Company's stock incentive plans, key employees may be, and non-employee directors are, granted shares of restricted stock that will vest when certain continuous employment/service restrictions and/or specified performance goals are achieved. The fair value of shares granted is generally expensed over the restricted periods, which may vary depending on the estimated achievement of performance goals. As a result of the recapitalization, each share of restricted stock held was redesignated as one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock prior to giving effect of PE Biosystems stock splits and the Celera Genomics stock split. Restricted stock granted to key employees and non-employee directors during fiscal 2000 totaled 3,600 shares of PE Biosystems stock and 900 shares of Celera Genomics stock. Restricted stock granted prior to the recapitalization to key employees and non-employee directors during fiscal 1998 and 1999 totaled 4,350 shares and 42,900 shares, respectively, of the PE Corporation (predecessor) common stock. Compensation expense of continuing operations recognized by ================================================================================ 37 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued Applied Biosystems for these awards was $1.8 million, $2.3 million, and $5.5 million for fiscal 1998, 1999, and 2000, respectively. Performance Unit Bonus Plan The Company adopted a Performance Unit Bonus Plan in fiscal 1997. The plan utilized stock options and a performance unit bonus pool. Performance units granted under the plan represented the right to receive a cash or stock payment from the Company at a specified date in the future. The amount of the payment was determined on the date of the grant. The performance units vested upon shares of the Company's common stock attaining and maintaining specified price levels for a specified period. As of June 30, 2000, three series of performance units were granted under the plan. Compensation expense recognized under the plan for fiscal 1998, 1999, and 2000 was $5.1 million, $13.5 million, and $53.1 million, respectively. Fiscal 1999 and 2000 compensation expense included $9.1 million and $45.0 million, respectively, related to the acceleration of payments under the plan's three series as a result of the attainment of the performance targets. The vesting of the related stock options was not accelerated. The plan was modified in fiscal 2000 to replace the performance units with performance stock options. Performance stock options vest in equal portions upon the earlier of the shares of PE Biosystems stock attaining and maintaining specified price levels for a specified period of time or after a specified future date. Accounting for Stock-Based Compensation APB No. 25, "Accounting for Stock Issued to Employees," is applied in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for stock option and employee stock purchase plans, as all options have been issued at fair market value. Pro forma net income and earnings per share information, as required by SFAS No. 123, "Accounting for Stock-Based Compensation," have been determined for employee stock plans under the statement's fair value method. The fair value of the options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions: <TABLE> <CAPTION> For the years ended June 30, 1999 2000 ============================================================== <S> <C> <C> Dividend yield .63% .17% Volatility 34.40% 52.68% Risk-free interest rates 5.25% 5.88% Expected option life in years 5.23 4.12 ============================================================== </TABLE> For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. Pro forma information for the years ended June 30, 1999 and 2000 is presented below: <TABLE> <CAPTION> (Dollar amounts in millions, except per share amounts) 1999 2000 ============================================================= <S> <C> <C> Income from continuing operations As reported $ 148.4 $ 186.2 Pro forma $ 127.9 $ 140.2 Basic earnings from continuing operations per share As reported $ .74 $ .90 Pro forma $ .64 $ .68 Diluted earnings from continuing operations per share As reported $ .72 $ .86 Pro forma $ .62 $ .65 ============================================================= </TABLE> Pro forma information for fiscal 1998 is omitted since PE Biosystems stock was not part of the capital structure of the Company at that time. The weighted average fair value of PE Corporation (predecessor) stock options granted was $24.83 and $33.54 for fiscal 1998 and 1999, respectively. The weighted average fair value of PE Biosystems stock options granted was $10.12 and $38.00 for fiscal 1999 and 2000, respectively. Since PE Biosystems stock and Celera Genomics stock were not part of the capital structure of the Company prior to May 6, 1999, there were no stock options outstanding prior to that date. Therefore, the fiscal 1999 pro forma effect of PE Biosystems stock options is not representative of what the effect would be in future years. Note 9--Additional Information Selected Accounts The following table provides the major components of selected accounts of the Combined Statements of Financial Position at June 30, 1999 and 2000: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Other Long-Term Assets Minority equity investments $ 46.2 $ 297.7 Goodwill 17.6 15.8 Other 183.3 155.9 ------------------------------------------------------------- Total other long-term assets $ 247.1 $ 469.4 ============================================================= Other Accrued Expenses Deferred service contract revenues $ 39.7 $ 46.7 Other 116.9 121.0 ------------------------------------------------------------- Total other accrued expenses $ 156.6 $ 167.7 ============================================================= Other Long-Term Liabilities Accrued postretirement benefits $ 80.2 $ 77.9 Other 58.0 47.1 ------------------------------------------------------------- Total other long-term liabilities $ 138.2 $ 125.0 ============================================================= </TABLE> ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 38

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued Note 10--Commitments and Contingencies Future minimum payments at June 30, 2000 under non-cancelable operating leases for real estate and equipment were as follows: <TABLE> <CAPTION> (Dollar amounts in millions) ============================================================= <S> <C> 2001 $ 31.2 2002 26.2 2003 22.1 2004 17.4 2005 13.5 2006 and thereafter 60.0 ------------------------------------------------------------- Total $ 170.4 ============================================================= </TABLE> Rental expense was $28.7 million for fiscal 1998, $34.6 million for fiscal 1999, and $35.6 million for fiscal 2000. In fiscal 1997, the Company entered into a fifteen-year non-cancelable lease for a facility in Foster City, California, effective July 1, 2000. Total lease payments over the fifteen-year period will be approximately $42 million. As a result of the sale of the Analytical Instruments business, EG&G assumed the responsibility for the Company's German employee pension obligations. In the event EG&G fails to fulfill such German obligations, the employees may have recourse against PE Corporation. On November 18, 1997, Amersham Pharmacia Biotech, Inc. ("Amersham") filed a patent infringement action against the Company in the United States District Court for the Northern District of California. The complaint alleges that the Company is directly, contributorily, or by inducement infringing U.S. Patent No. 5,688,648 ("the '648 patent"), entitled "Probes Labelled with Energy Transfer Coupled Dyes." Amersham asserts that the Company's sale of DNA analysis reagents and systems that incorporate "BigDye" fluorescence detection technology would infringe the '648 patent, and seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '648 patent is invalid and that the Company has not infringed the '648 patent. This case is scheduled for trial in January 2001. On March 13, 1998, the Company filed a patent infringement action against Amersham and Molecular Dynamics, Inc. in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 4,811,218) is infringed by reason of Molecular Dynamics' and Amersham's sale of certain DNA analysis systems (e.g., the MegaBACE 1000 System). In response, the defendants have asserted various affirmative defenses and several counterclaims, including that the Company is infringing two patents (U.S. 5,091,652 and U.S. 5,459,325) owned by or licensed to Molecular Dynamics by selling the ABI PRISM(TM) 377 DNA Sequencing Systems. On May 21, 1998, Amersham filed a patent infringement action against the Company in the United States District Court for the Southern District of New York. The complaint alleges that the Company is infringing, contributing to the infringement, and inducing the infringement of U.S. Patent No. 4,707,235 ("the '235 patent") entitled "Electrophoresis Method and Apparatus having Continuous Detection Means." The complaint seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '235 patent is invalid and that the Company does not infringe the '235 patent. The matters described in this paragraph and the immediately preceding paragraph have been consolidated into a single case to be heard in the United States District Court for the Northern District of California. This case has not yet been scheduled for trial. On May 30, 2000, the Company filed a patent infringement action against Amersham in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 5,945,526) is infringed by reason of Amersham's sale of DNA analysis reagents and systems that incorporate ET Terminator fluorescence detection technology. This case is in the early stages of discovery. The Company has been named as a defendant in several legal actions, including patent, commercial, and environmental, arising from conduct of normal business activities. Although the amount of any liability that might arise with respect to any of these matters cannot be accurately predicted, the resulting liability, if any, will not in the opinion of management have a material adverse effect on the financial statements of Applied Biosystems or the Company. The holders of PE Biosystems stock are stockholders of the Company and will continue to be subject to all risks associated with an investment in the Company, including any legal proceedings and claims affecting the Celera Genomics group. Note 11--Financial Instruments Derivatives Applied Biosystems utilizes foreign exchange forward and option contracts and an interest rate swap agreement to manage foreign currency and interest rate exposures. The principal objective of these contracts is to minimize the risks and/or costs associated with global financial and operating activities. Applied Biosystems does not use derivative financial instruments for trading purposes, nor is Applied Biosystems a party to leveraged derivatives. Foreign Currency Risk Management Foreign exchange forward and option contracts are used primarily to hedge reported and anticipated cash flows resulting from the sale of products in foreign locations. Option contracts outstanding at June 30, 2000 were purchased at a cost of $3.1 million. Under these contracts, the Company has the right, but not the obligation, to purchase or sell foreign currencies at fixed rates at various maturity dates. These contracts are utilized primarily when the amount and/or timing of the foreign currency exposures are not certain. ================================================================================ 39 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued At June 30, 1999 and 2000, the Company had forward and option contracts outstanding, as well as synthetic forward contracts outstanding in 1999, for the sale and purchase of foreign currencies at fixed rates as summarized in the following table: <TABLE> <CAPTION> 1999 2000 ---------------- ---------------- (Dollar amounts in millions) Sale Purchase Sale Purchase ================================================================= <S> <C> <C> <C> <C> Japanese Yen $ 104.2 $ 6.0 $ 92.3 $ - Euro 28.2 43.8 8.0 British Pounds 18.6 50.6 31.1 26.4 Singapore Dollars 9.3 3.3 10.0 .8 Australian Dollars 12.0 3.1 German Marks 25.4 Italian Lira 10.4 2.6 Swedish Krona 8.9 Danish Krona 8.1 Swiss Francs 7.5 .7 French Francs 4.3 Netherlands Guilder 16.1 Other 17.1 4.7 ----------------------------------------------------------------- Total $ 254.0 $ 79.3 $ 185.0 $ 35.2 ================================================================= </TABLE> Foreign exchange contracts are accounted for as hedges of firm commitments and anticipated foreign currency transactions. With respect to firm commitments, unrealized gains and losses are deferred and included in the basis of the transaction underlying the commitment. Gains and losses on foreign currency transactions are recognized in income and offset the foreign exchange losses and gains, respectively, on the related transactions. The amount of the contracts covering anticipated transactions is marked to market and recognized in income. Interest Rate Risk Management The Company maintains an interest rate swap in conjunction with a five-year Japanese yen debt obligation (see Note 3). The interest rate swap agreement involves the payment of a fixed rate of interest and the receipt of a floating rate of interest without the exchange of the underlying notional loan principal amount. Under the terms of this contract, the Company will make fixed interest payments of 2.1% while receiving interest at a LIBOR floating rate. No other cash payments will be made unless the contract is terminated prior to maturity, in which case the amount to be paid or received in settlement will be established by agreement at the time of termination. The agreed upon amount usually represents the net present value at current interest rates of the remaining obligation to exchange payments under the terms of the contract. Based on the level of interest rates prevailing at June 30, 2000, the fair value of the Company's floating rate debt approximated its carrying value. There would be a payment of $1.0 million to terminate the related interest rate swap contract, which would equal the unrealized loss. Unrealized gains or losses on debt or interest rate swap contracts are not recognized for financial reporting purposes unless the debt is retired or the contracts are terminated prior to maturity. A change in interest rates would have no impact on the Company's reported interest expense and related cash payments because the floating rate debt and fixed rate swap contract have the same maturity and are based on the same interest rate index. Concentration of Credit Risk The forward contracts, options, and swaps used by the Company in managing its foreign currency and interest rate exposures contain an element of risk in that the counterparties may be unable to meet the terms of the agreements. However, the Company minimizes such risk by limiting the counterparties to a diverse group of highly rated major domestic and international financial institutions with which the Company has other financial relationships. The Company is exposed to potential losses in the event of non-performance by these counterparties; however, the Company does not expect to record any losses as a result of counterparty default. The Company does not require and is not required to place collateral for these financial instruments. Fair Value The fair value of foreign currency forward, option, and synthetic forward contracts, as well as the interest rate swap, is estimated based on quoted market prices of comparable contracts and reflects the amounts the Company would receive (or pay) to terminate the contracts at the reporting date. The following table presents notional amounts and fair values of the Company's derivatives at June 30, 1999 and 2000: <TABLE> <CAPTION> 1999 2000 ---------------- ---------------- Notional Fair Notional Fair (Dollar amounts in millions) Amount Value Amount Value ================================================================= <S> <C> <C> <C> <C> Forward contracts $ 187.9 $ 2.6 $ 103.6 $ .6 Purchased options $ 44.0 $ 3.4 $ 116.6 $ 2.6 Synthetic forwards $ 101.4 $ 2.9 Interest rate swap $ 31.5 $ (1.0) $ 36.1 $ (1.0) ================================================================= </TABLE> The fair value of other significant financial instruments held or owned by the Company is estimated using various methods. Cash and cash equivalents approximate their carrying amount. Fair values of minority equity investments and notes receivable are estimated based on quoted market prices, if available, or quoted market prices of financial instruments with similar characteristics. The fair value of debt is based on the current rates offered to the Company for debt of similar remaining maturities. The following table presents the carrying amounts and fair values of Applied Biosystems' other financial instruments at June 30, 1999 and 2000: ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 40

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued <TABLE> <CAPTION> 1999 2000 ----------------- ----------------- Carrying Fair Carrying Fair (Dollar amounts in millions) Amount Value Amount Value =================================================================== <S> <C> <C> <C> <C> Cash and cash equivalents $ 236.5 $ 236.5 $ 394.6 $ 394.6 Minority equity investments $ 35.7 $ 46.2 $ 42.5 $ 297.7 Note receivable $ 150.0 $ 150.0 Short-term debt $ 3.9 $ 3.9 $ 15.7 $ 15.7 Note payable to the Celera Genomics group $ 150.0 $ 150.0 Long-term debt $ 31.5 $ 31.5 $ 36.1 $ 36.1 =================================================================== </TABLE> Net unrealized gains and losses on minority equity investments are reported as a separate component of accumulated other comprehensive income (loss). Note 12--Quarterly Financial Information (Unaudited) The following is a summary of quarterly financial results: <TABLE> <CAPTION> First Quarter Second Quarter Third Quarter Fourth Quarter (Dollar amounts in millions except ------------------ ------------------- ----------------- -------------------- per share amounts) 1999 2000 1999 2000 1999 2000 1999 2000 ==================================================================================================================================== <S> <C> <C> <C> <C> <C> <C> <C> <C> Net revenues $ 251.2 $ 292.3 $ 296.2 $ 335.9 $ 329.3 $ 368.1 $ 345.0 $ 391.8 Gross margin 139.0 154.8 163.8 180.7 177.9 202.3 178.1 212.6 Income from continuing operations 21.5 29.7 27.6 43.8 46.3 56.1 53.0 56.6 Income (loss) from discontinued operations (0.9) (3.2) 5.2 77.9 Net income 20.6 29.7 24.4 43.8 51.5 56.1 130.9 56.6 ==================================================================================================================================== Dividends per share $ .0425 $ .0425 $ .085 $ .0425 Income per share from continuing operations Basic $ .14 $ .21 $ .27 $ .26 $ .27 Diluted .14 .20 .26 .25 .26 Income per share from discontinued operations Basic $ .38 Diluted .37 Net income per share Basic $ .14 $ .21 $ .27 $ .64 $ .27 Diluted .14 .20 .26 .62 .26 ==================================================================================================================================== Price range of common stock High $ 38-5/16 $ 62-15/16 $ 160 $ 30-5/16 $ 111-7/16 Low $ 26-9/16 $ 30-5/8 $ 50 $ 25 $ 42-13/16 ==================================================================================================================================== </TABLE> Fiscal 1999 price ranges are for the period from May 6, 1999 through June 30, 1999. The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called PE Biosystems stock and Celera Genomics stock. Per share and price range of common stock reflect the two-for-one stock splits effective July 1999 and February 2000. Events Impacting Comparability Fiscal 1999 First, second, third, and fourth quarter results included net before-tax costs of $.9 million, $1.1 million, $1.6 million, and $7.7 million, respectively, related to acquisitions. The fourth quarter charge included a cost of sales write-off of $14.5 million for the impairment of assets associated with Molecular Informatics (see Note 1) and a $9.2 million reduction of liabilities in connection with the PerSeptive acquisition (see Note 14). Second, third, and fourth quarter results included before-tax costs of $.5 million, $.8 million, and $3.3 million, respectively, in connection with the recapitalization of the Company. Third and fourth quarter results included before-tax gains of $2.6 million and $5.8 million, respectively, in non-recurring gains, primarily related to the Company's investments. The fourth quarter gain included a $2.3 million before-tax gain on foreign exchange contracts. Fourth quarter results included before-tax costs of $9.1 million related to the acceleration of certain long-term compensation programs of the Company. Fourth ================================================================================ 41 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued quarter results also included a $3.5 million donation to the Company's charitable foundation. Third and fourth quarter results included certain tax benefits of $4.8 million and $17.4 million, respectively. The tax benefit recorded in the fourth quarter reflected a reduction in the tax valuation allowance (see Note 4). The aggregate after-tax effect of the above items reduced first and second quarter income from continuing operations by $.7 million and $1.4 million, respectively, and increased third and fourth quarter income from continuing operations by $4.9 million and $7.8 million, respectively. The aggregate after-tax effect of the above items increased income from continuing operations by $.04 per diluted share for the fourth quarter. Fiscal 2000 Second and fourth quarter results included before-tax gains of $25.8 million and $22.8 million, respectively, in non-recurring gains primarily related to the sale of a portion of the Company's minority equity investments. Second and fourth quarter results included before-tax charges of $21.6 million and $23.4 million, respectively, related to the acceleration of certain long-term compensation programs. Fourth quarter results included $2.1 million of acquisition-related before-tax costs and a before-tax gain of $8.2 million from the sale of real estate. There was no aggregate after-tax effect of the above items for the second and fourth quarters. Note 13--Accumulated Other Comprehensive Income (Loss) During fiscal 1999, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." The provisions of this statement require disclosure of total comprehensive income. Total comprehensive income includes net income, foreign currency translation adjustments, unrealized gains and losses on available-for-sale investments, and minimum pension liability adjustments. Accumulated other comprehensive income (loss) for fiscal 1998, 1999, and 2000 was as follows: <TABLE> <CAPTION> Foreign Unrealized Minimum Currency Gain Pension Translation (Loss) on Liability (Dollar amounts in millions) Adjustments Investments Adjustment ======================================================================= <S> <C> <C> <C> Balance at June 30, 1997 $ (5.1) $ 3.1 $ (.7) Activity (2.7) (4.5) .3 ----------------------------------------------------------------------- Balance at June 30, 1998 (7.8) (1.4) (.4) Activity (5.4) 11.9 (1.7) ----------------------------------------------------------------------- Balance at June 30, 1999 (13.2) 10.5 (2.1) Activity (25.2) 155.5 (.1) ----------------------------------------------------------------------- Balance at June 30, 2000 $ (38.4) $ 166.0 $ (2.2) ======================================================================= </TABLE> The change in unrealized gain on investments for fiscal 2000 includes reclassification adjustments, net of tax, of $31.6 million of gains realized from the sale of investments. The deferred tax effect on the unrealized gain on investments and minimum pension liability adjustment was an expense of $89.2 million and a benefit of $1.2 million, respectively, in fiscal 2000. The currency translation adjustments are not currently adjusted for income taxes as they relate to indefinite investments in non-U.S. subsidiaries. Note 14--Restructuring and Other Merger Costs During fiscal 1998, Applied Biosystems recorded a $48.1 million before-tax charge for restructuring and other merger costs to integrate PerSeptive into Applied Biosystems following the acquisition. The objectives of the integration plan were to lower PerSeptive's cost structure by reducing excess manufacturing capacity; achieve broader worldwide distribution of PerSeptive's products; and combine sales, marketing, and administrative functions. The charge included: $33.9 million for restructuring the combined operations; $8.6 million for transaction costs; and $4.1 million of inventory-related write-offs, recorded in cost of sales, associated with the rationalization of certain product lines. Additional merger-related period costs of $1.5 million for fiscal 1998 and $6.1 million for fiscal 1999 were incurred for training, relocation, and communication in connection with the integration. The $33.9 million restructuring charge included $13.8 million for severance-related costs and workforce reductions of approximately 170 employees, consisting of 114 employees in production labor and 56 employees in sales and administrative support. The remaining $20.1 million represented facility consolidation and asset-related write-offs and included: $11.7 million for contract and lease terminations and facility-related expenses in connection with the reduction of excess manufacturing capacity; $3.2 million for dealer termination payments, sales office consolidations, and consolidation of sales and administrative support functions; and $5.2 million for the write-off of certain tangible and intangible assets and the termination of certain contractual obligations. Transaction costs of $8.6 million included acquisition-related investment banking and professional fees. During the fourth quarter of fiscal 1999, Applied Biosystems completed the restructuring actions. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 42

APPLIED BIOSYSTEMS Notes to Combined Financial Statements continued The following table details the major components of the fiscal 1998 restructuring plan: <TABLE> <CAPTION> Facility Consolidation and Asset- Related (Dollar amounts in millions) Personnel Write-Offs Total ============================================================= <S> <C> <C> <C> Provision Reduction of excess manufacturing capacity $ 5.1 $ 11.7 $ 16.8 Consolidation of sales and administrative support 8.7 3.2 11.9 Other 5.2 5.2 ------------------------------------------------------------- Total provision $ 13.8 $ 20.1 $ 33.9 ------------------------------------------------------------- Fiscal 1998 Activity Reduction of excess manufacturing capacity $ - $ .4 $ .4 Consolidation of sales and administrative support .3 1.2 1.5 Other 5.1 5.1 ------------------------------------------------------------- Total fiscal 1998 activity $ .3 $ 6.7 $ 7.0 ------------------------------------------------------------- Fiscal 1999 Activity Reduction of excess manufacturing capacity $ .7 $ 6.9 $ 7.6 Adjustment to decrease liabilities originally accrued for excess manufacturing capacity 4.1 3.3 7.4 Consolidation of sales and administrative support 3.4 .9 4.3 Adjustment to decrease liabilities originally accrued for consolidation of sales and administrative support 1.8 1.8 ------------------------------------------------------------- Total fiscal 1999 activity $ 10.0 $ 11.1 $ 21.1 ------------------------------------------------------------- Fiscal 2000 Activity Reduction of excess manufacturing capacity $ .3 $ .5 $ .8 Consolidation of sales and administrative support 2.3 .3 2.6 Other .1 .1 ------------------------------------------------------------- Total fiscal 2000 activity $ 2.6 $ .9 $ 3.5 ------------------------------------------------------------- Balance At June 30, 2000 Reduction of excess manufacturing capacity $ - $ .6 $ .6 Consolidation of sales and administrative support .9 .8 $ 1.7 ------------------------------------------------------------- Balance at June 30, 2000 $ .9 $ 1.4 $ 2.3 ============================================================= </TABLE> Note 15--Discontinued Operations Effective May 28, 1999, the Company completed the sale of its Analytical Instruments business to EG&G, Inc. Analytical Instruments, formerly a unit of Applied Biosystems, developed, manufactured, marketed, sold, and serviced analytical instruments used in a variety of markets. As part of the sale, the rights to the "Perkin-Elmer" name were transferred. The aggregate consideration received by the Company was $425 million, consisting of $275 million in cash and one-year secured promissory notes in the aggregate principal amount of $150 million bearing an interest rate of 5% per annum. The promissory notes were collected in fiscal 2000. In fiscal 1999, the Company recognized a net gain on disposal of discontinued operations of $100.2 million, net of $87.8 million of income taxes. Amounts previously reported for Analytical Instruments were reclassified and stated as discontinued operations. There were no remaining assets, liabilities, or operations within discontinued operations at or for the fiscal year ended June 30, 2000. Summary results prior to discontinuance were as follows: <TABLE> <CAPTION> For the Year For the Eleven Ended Months Ended (Dollar amounts in millions) June 30, 1998 May 28, 1999 ============================================================= <S> <C> <C> Net revenues $ 586.8 $ 479.4 Total costs and expenses 532.6 509.7 Provision (benefit) for income taxes 13.5 (9.2) ------------------------------------------------------------- Income (loss) from discontinued operations $ 40.7 $ (21.1) ============================================================= </TABLE> Income Taxes Income (loss) before income taxes of discontinued operations for fiscal 1998 and the eleven months ended May 28, 1999 consisted of the following: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 ============================================================= <S> <C> <C> United States $ 34.1 $ (36.2) Foreign 20.1 5.9 ------------------------------------------------------------- Total $ 54.2 $ (30.3) ============================================================= </TABLE> The components of the provision (benefit) for income taxes of discontinued operations for fiscal 1998 and the eleven months ended May 28, 1999 consisted of the following: <TABLE> <CAPTION> 1998 1999 ============================================================= <S> <C> <C> Currently Payable Domestic $ (3.7) $ (13.7) Foreign 7.8 4.5 ------------------------------------------------------------- Total currently payable 4.1 (9.2) ------------------------------------------------------------- Deferred Domestic 4.9 Foreign 4.5 ------------------------------------------------------------- Total deferred 9.4 ------------------------------------------------------------- Provision (benefit) for income taxes of discontinued operations $ 13.5 $ (9.2) ============================================================= </TABLE> For fiscal 1998 and the eleven months ended May 28, 1999, the effective tax rates for discontinued operations were 25% and 30%, respectively. The difference between the effective tax rate and the statutory tax rate of 35% was mainly attributed to benefits from the use of U.S. alternative minimum tax credit carryforwards, benefits from the use of a foreign sales corporation and federal research tax credits, and restructuring charges. ================================================================================ 43 PE CORPORATION 2000 ANNUAL REPORT

APPLIED BIOSYSTEMS Report of Management and Report of Independent Accountants Report of Management To the Stockholders of PE Corporation Management is responsible for the accompanying combined financial statements, which have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, it is necessary for management to make informed judgments and estimates which it believes are in accordance with generally accepted accounting principles appropriate under the circumstances. Financial information presented elsewhere in this annual report is consistent with that in the financial statements. In meeting its responsibility for preparing reliable financial statements, the Company maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with corporate policy and management authorization. The Company believes its accounting controls provide reasonable assurance that errors or irregularities which could be material to the financial statements are prevented or would be detected within a timely period. In designing such control procedures, management recognizes judgments are required to assess and balance the costs and expected benefits of a system of internal accounting controls. Adherence to these policies and procedures is reviewed through a coordinated audit effort of the Company's internal audit staff and independent accountants. The Audit/Finance Committee of the Board of Directors is comprised solely of outside directors and is responsible for overseeing and monitoring the quality of the Company's accounting and auditing practices. The independent accountants and internal auditors have full and free access to the Audit/Finance Committee and meet periodically with the committee to discuss accounting, auditing, and financial reporting matters. /s/ Dennis L. Winger Dennis L. Winger Senior Vice President and Chief Financial Officer /s/ Tony L. White Tony L. White Chairman, President, and Chief Executive Officer Report of Independent Accountants To the Stockholders and Board of Directors of PE Corporation In our opinion, the accompanying combined statements of financial position and the related combined statements of operations, of group equity and comprehensive income, and of cash flows present fairly, in all material respects, the financial position of the PE Biosystems group ("Applied Biosystems") of PE Corporation at June 30, 2000 and 1999, and the results of its operations and its cash flows for each of the three fiscal years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the management of PE Corporation; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As described above and more fully in Note 1 to Applied Biosystems' combined financial statements, Applied Biosystems is a group of PE Corporation; accordingly, the combined financial statements of Applied Biosystems should be read in conjunction with the audited financial statements of PE Corporation. /s/PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford, Connecticut July 25, 2000 ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 44

CELERA GENOMICS GROUP Selected Financial Data <TABLE> <CAPTION> (Dollar amounts in thousands except per share amounts) For the years ended June 30, 1996 1997 1998 1999 2000 ========================================================================================================================== <S> <C> <C> <C> <C> <C> Financial Operations Net revenues $ 159 $ 903 $ 4,211 $ 12,541 $ 42,747 Net loss (2,589) (30,247) (8,315) (44,894) (92,737) Per share of common stock Basic and diluted (.89) (1.73) ========================================================================================================================== Other Information Cash and short-term investments $ - $ - $ - $ 71,491 $ 1,111,034 Note receivable from Applied Biosystems 150,000 Working capital (deficit) (340) (421) (1,160) 192,803 1,081,039 Capital expenditures 1,073 411 3,648 94,541 30,673 Total assets 977 2,983 6,339 344,720 1,413,257 Total allocated debt 46,000 Group equity (deficit) 611 (3,464) (1,259) 293,867 1,290,816 ========================================================================================================================== </TABLE> The selected financial data should be read with the combined financial statements and the consolidated financial statements. The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called PE Corporation-Celera Genomics Group Common Stock and PE Corporation-PE Biosystems Group Common Stock. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. Per share data reflects the two-for-one stock split effective February 2000. Items impacting the comparability of information included acquired research and development charges of $2.1 million for fiscal 1996 and $26.8 million for fiscal 1997, and $5.6 million of charges for fiscal 1999 relating to the recapitalization and transformation of the Company. ================================================================================ 45 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Management's Discussion and Analysis Management's Discussion of Operations PE Corporation ("PE" or "our company") is comprised of two separate business segments in continuing operations: the Celera Genomics group and the PE Biosystems group. The performance of these businesses is reflected separately by two classes of common stock: PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock") and PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock"). The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business into the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. The PE Biosystems group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at our company's 2000 annual meeting. We refer to the PE Biosystems group as Applied Biosystems. Operations prior to September 30, 1998 were principally funded from working capital, collaborative arrangements, and contract research services. Net losses for fiscal 2000, 1999, and 1998 were $92.7 million, $44.9 million and $8.3 million, respectively. Fiscal 2000 and 1999 results reflected a significant increase in R&D expenditures to support the genomic sequencing, bioinformatics, and software development activities. Fiscal 1999 included a non-recurring before-tax charge of $4.6 million incurred in connection with the recapitalization of our company and $1.0 million for costs related to the acceleration of certain long-term compensation programs. Results for fiscal 1998 primarily reflected the operations of GenScope and AgGen. In fiscal 1999, these businesses were integrated into the core business of providing genomic information, and related gene discovery and genomics services. You should read this discussion with our combined financial statements and consolidated financial statements. Historical results and percentage relationships are not necessarily indicative of operating results for any future periods. Events Impacting Comparability Acquisitions and Investments During the fourth quarter of fiscal 2000, our company acquired Paracel, Inc. in a stock-for-stock transaction. Paracel produces advanced genomic and text analysis technologies. Its products include a hardware accelerator for sequence comparison, a hardware accelerator for text search, and sequence analysis software tools. Approximately 1.6 million shares of Celera Genomics stock were issued in exchange for the outstanding shares of Paracel common stock not previously owned by our company. At the time of the acquisition, our company owned 14% of Paracel, which was allocated to Applied Biosystems. The transfer of the Paracel shares to the Celera Genomics group resulted in a $27.3 million cash payment to Applied Biosystems, which represented the fair market value of those shares at the transfer date. During the third quarter of fiscal 1999, our company acquired a 49% interest in Agrogene S.A. The investment complements the Celera Genomics group's capabilities in the agricultural genomics field. See Note 2 of the Celera Genomics group's combined financial statements for a further description of acquisitions and investments. Results of Operations--2000 Compared With 1999 The Celera Genomics group reported a net loss of $92.7 million for fiscal 2000 compared with a net loss of $44.9 million for fiscal 1999. The increase in the net loss reflected the increased sequencing activity; increased investment in research and development activities relating to expanded scientific and annotation teams, and bioinformatics staff; and increased operating expenses required to support the expanded product and business development activities. Net revenues for the Celera Genomics group were $42.7 million for fiscal 2000 compared with $12.5 million for fiscal 1999. The increased revenues resulted primarily from database subscription agreements initiated during fiscal 2000 and the second half of fiscal 1999 and an increase in related genomics services revenues. Revenues for genotyping services remained essentially unchanged. R&D expenses increased $119.4 million to $167.8 million for fiscal 2000 from $48.4 million for fiscal 1999, primarily as a result of a full year of sequencing operations and significantly expanded bioinformatics and software development capabilities. The group also continued to expand its scientific and annotation research teams, and bioinformatics and software engineering staff. R&D expenses for fiscal 2000 included $4.5 million of amortization of goodwill and other intangibles primarily associated with the Paracel acquisition. SG&A expenses were $43.0 million for fiscal 2000 compared with $28.3 million for fiscal 1999. The increase was related to the planned scale-up in business development, marketing, and administrative activities in support of the database business. Corporate expenses and administrative shared services were $7.5 million for fiscal 2000 compared with $5.1 million for fiscal 1999. Fiscal 1999 SG&A expenses included $1.0 million for costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization of our company and the attainment of performance targets. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 46

CELERA GENOMICS GROUP Management's Discussion and Analysis continued The Celera Genomics group was allocated a non-recurring before-tax charge of $4.6 million in fiscal 1999. These costs were incurred in connection with the recapitalization of our company. The Celera Genomics group and Applied Biosystems were each allocated 50% of the total recapitalization costs incurred in fiscal 1999. These costs included investment banking and professional fees. See Note 1 to the Celera Genomics group's combined financial statements for a description of the recapitalization. Interest expense was $2.1 million for fiscal 2000 as a result of financing the purchase of the Celera Genomics group's Rockville, Maryland facilities. Interest income was $27.5 million for fiscal 2000 compared with $1.2 million for fiscal 1999. The increase of $26.3 million was attributable to higher balances of cash and cash equivalents, and short-term investments balances, which increased during the third quarter of fiscal 2000 due to a follow-on public offering of Celera Genomics stock and to interest on the $150 million note receivable from Applied Biosystems, which was outstanding for most of fiscal 2000. The effective income tax rate was 35% for fiscal 2000 and 34% for fiscal 1999. Excluding the recapitalization costs, the effective income tax rate for fiscal 1999 was 35%. See Note 1 to the Celera Genomics group's combined financial statements for a discussion of allocation of federal and state income taxes. Results of Operations--1999 Compared With 1998 The Celera Genomics group reported a net loss of $44.9 million for fiscal 1999 compared with a net loss of $8.3 million for fiscal 1998. The significant increase in the net loss reflected the establishment and start-up of operations to support the expanded sequencing, data management, and software development activities of the business. Net revenues for the Celera Genomics group were $12.5 million for fiscal 1999 compared with $4.2 million for fiscal 1998. Net revenues for genotyping and gene discovery services were $8.4 million for fiscal 1999, an increase of $4.5 million over fiscal 1998. The increase included $3.2 million attributable to a three-year contract to provide expression-based gene discovery services in the agricultural market. The contract commenced in the first quarter of fiscal 1999. Revenues from the Celera Genomics group's genomics information and database products were $2.8 million for fiscal 1999, mainly from early-access subscriptions. Revenues for genomics contract services increased $1.0 million for fiscal 1999 as a result of increased contract research services. R&D expenses increased $38.1 million to $48.4 million for fiscal 1999 from $10.3 million for fiscal 1998, primarily as a result of the establishment and operation of the sequencing facility and computing center of the new genomics information business. SG&A expenses were $28.3 million for fiscal 1999 compared with $6.7 million for fiscal 1998. The increase resulted from expenses associated with the start-up and ongoing operations of the new genomics information business. Corporate overhead and administrative shared services were $5.1 million for fiscal 1999 compared with $1.7 million for fiscal 1998. Fiscal 1999 SG&A expenses included $1.0 million for costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization of our company and the attainment of performance targets. During fiscal 1999, the Celera Genomics group was allocated a before-tax charge of $4.6 million for costs incurred in connection with the recapitalization of our company. The Celera Genomics group and Applied Biosystems were each allocated 50% of the $9.2 million total recapitalization costs incurred by our company. Interest income was $1.2 million for fiscal 1999. Interest income included $.5 million of interest on cash and cash equivalents and $.7 million of interest on the $150 million note receivable from Applied Biosystems. The effective income tax rate was 34% for fiscal 1999 and 35% for fiscal 1998. Excluding the recapitalization costs, the effective income tax rate for fiscal 1999 was 35%. See Note 1 to the Celera Genomics group's combined financial statements for a discussion of allocation of federal and state income taxes. Management's Discussion of Financial Resources and Liquidity At September 30, 1998, our company allocated to the Celera Genomics group a $330 million short-term note receivable from Applied Biosystems. The $330 million note represented an allocation of the Company's capital to the Celera Genomics group and did not result in Applied Biosystems holding an equity interest in the Celera Genomics group. Accordingly, no interest was ascribed to the note. The allocation of capital represented management's decision to allocate a portion of our company's capital to the Celera Genomics group and the remaining capital to Applied Biosystems prior to the effective date of the recapitalization. The note receivable was liquidated on May 28, 1999 in exchange for a portion of the proceeds received from the sale of the Analytical Instruments business and a new note receivable from Applied Biosystems for $150 million. The new note receivable was for a term of one-year, bearing an interest rate of 5% per annum. The Celera Genomics group received payment of the note during fiscal 2000. In addition, our Board of Directors adopted a financing policy, included in Note 1 to the Celera Genomics group's combined financial statements, that permits Applied Biosystems to make loans to the Celera Genomics group and to make equity contributions to the Celera Genomics group in exchange for an equity interest in the Celera Genomics group. ================================================================================ 47 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Significant Changes in the Combined Statements of Financial Position Cash and cash equivalents and short-term investments were $1.1 billion at June 30, 2000 compared with $71.5 million at June 30, 1999. In March 2000, our company completed a follow-on public offering of Celera Genomics stock from which net proceeds of $943.3 million were realized. During the first quarter of fiscal 2000, our company obtained financing of $46 million specifically for the purchase of the Celera Genomics group's Rockville, Maryland facilities. At June 30, 2000 and 1999, the Celera Genomics group had tax benefit receivables from Applied Biosystems of $16.7 million and $9.9 million, respectively. The tax benefit receivable is settled on a quarterly basis. See Note 1 to the Celera Genomics group's combined financial statements for a discussion of allocation of federal and state income taxes. Accounts receivable increased $11.6 million to $14.9 million at June 30, 2000 from $3.3 million at June 30, 1999, primarily as a result of increased genomics services revenue. Inventory at June 30, 2000 was $3.3 million pertaining to the operations of Paracel. Other long-term assets increased $151.1 million to $153.5 million at June 30, 2000 from $2.4 million at June 30, 1999, primarily as a result of goodwill and other intangibles, net of accumulated amortization, of $125.3 million associated with the acquisition of Paracel and the recognition of a $23.0 million deferred tax asset due primarily to net operating losses and other tax credits. Accrued salaries and wages increased $6.1 million to $10.3 million at June 30, 2000 from $4.2 million at June 30, 1999. The increase reflected the growth in the number of employees during fiscal 2000 and the timing of payments. Deferred revenues increased $12.2 million to $24.2 million at June 30, 2000 from $12.0 million at June 30, 1999, primarily due to the timing of subscriptions received for database and gene discovery agreements offset by revenue recognized under these agreements. Other long-term liabilities increased $3.7 million to $9.2 million at June 30, 2000 from $5.5 million at June 30, 1999, due to long-term deferred revenues from subscription payments received for periods beyond fiscal 2001. Combined Statements of Cash Flows Net cash used by operating activities was $58.3 million for fiscal 2000 compared with $22.8 million for the prior fiscal year. The increase in net cash used by operating activities resulted primarily from net operating losses, an increase in accounts receivable, and an increase in the tax benefit receivable from Applied Biosystems. This was partially offset by an increase of $15.9 million in deferred revenues and an increase of $6.1 million in accrued salaries and wages. Net cash used by operating activities was $22.8 million for fiscal 1999 compared with $6.9 million for fiscal 1998, reflecting higher net operating losses for fiscal 1999. Net cash used by investing activities was $572.9 million for fiscal 2000 compared with $95.8 million for fiscal 1999. During fiscal 2000, short-term investments of $541.1 million were purchased with funds received from a follow-on public offering. Capital expenditures for fiscal 2000 were $30.7 million. The capital expenditures for fiscal 2000 included payments for software licenses acquired during the fourth quarter of fiscal 1999 and expenditures associated with the continued development of the laboratories, facilities, and data center at the Rockville, Maryland headquarters. Fiscal 2000 capital expenditures also included $.4 million for purchases of instrumentation from Applied Biosystems. The Celera Genomics group's investments during fiscal 2000 included acquisitions of the Panther(TM) technology from Molecular Applications Group and a 47.5% equity interest in Shanghai GeneCore BioTechnologies Co., Ltd. Net cash used by investing activities for fiscal 1999 of $95.8 million was comprised of capital expenditures of $94.5 million and an equity investment in Agrogene of $1.2 million. Capital expenditures for fiscal 1999 increased significantly compared with fiscal 1998 as a result of the establishment and start-up of operations at the Celera Genomics group's Rockville, Maryland facilities. Included in the increase was $46.3 million for land and buildings to house the Celera Genomics group's headquarters and $22.9 million for improvements thereon. Additionally, the increase included $9.0 million for assets received but not yet paid, $8.1 million related to data management software licenses, and $.9 million for facility-related items. Fiscal 1999 capital expenditures also included $8.4 million for the purchase of Applied Biosystems' ABI PRISM(R) 3700 DNA Analyzers and $1.6 million for other instrumentation purchased from Applied Biosystems. Net cash used by investing activities of $3.6 million for fiscal 1998 primarily reflected capital investment in the genomics services business. Net cash provided by financing activities was $1.1 billion for fiscal 2000. In March 2000, our company completed a follow-on public offering of Celera Genomics stock from which net proceeds of $943.3 million were realized. During fiscal 2000, our company obtained financing of $46 million specifically for the purchase of the Rockville, Maryland facilities and received payment of the $150 million note receivable from Applied Biosystems. In connection with the acquisition of Paracel, the transfer of the Paracel shares allocated to Applied Biosystems resulted in a $27.3 million cash payment to Applied Biosystems, which represented the fair market value of those shares at the transfer date. See Note 2 to the Celera Genomics group's combined financial statements for a discussion of the acquisition of Paracel. During fiscal 2000, $17.6 million in proceeds were recognized from stock issued for the Celera Genomics group's stock plans. Net cash provided by financing activities was $190.0 million for fiscal 1999, reflecting the initial capitalization of $330 million partially offset by the $150 million note receivable from Applied Biosystems. Net cash provided by financing activities for fiscal 1998 was $10.5 million, attributable entirely to the funding of that year's operations by Applied Biosystems. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 48

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Our company's $100 million revolving credit agreement was replaced, effective April 20, 2000, with a new $100 million revolving credit agreement with four banks that matures on April 20, 2005. Terms of this new revolving credit agreement are substantially similar to those of the previous credit agreement. At June 30, 2000, our company had unused credit facilities, including the revolving credit agreement, totaling $341 million, which is available to the groups. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Celera Genomics group is required to implement the statements in the first quarter of fiscal 2001. The Celera Genomics group estimates that, upon adoption, there will be no adjustment for a change in accounting principles in its Combined Statements of Operations or in accumulated other comprehensive income in the Combined Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. The Celera Genomics group does not expect any impact from the application of SAB No. 101. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of the previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management does not expect the application of FIN No. 44 to have a material impact on the Celera Genomics group's combined financial statements. The Celera Genomics group continues to apply APB No. 25 in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for these plans, as all options have been issued with an exercise price equal to fair value. The effect of accounting for such plans at fair value, under SFAS No. 123, "Accounting for Stock-Based Compensation," would be to increase fiscal 2000 net loss by $13.9 million and diluted net loss per share by $.25. The method used to determine the fair value is the Black-Scholes option pricing model. Accordingly, changes in dividend yield, volatility, interest risk, and option life could have a material effect on the fair value. See Note 8 to the Celera Genomics group's combined financial statements for a more detailed discussion regarding the accounting for stock-based compensation. Outlook The Celera Genomics group expects to see a continued expansion in its customer base for online genomics information products and related genomics services, with corresponding increases in revenues during fiscal 2001. Revenue growth should come primarily from increasing the customer base among the major pharmaceutical and biotech companies and non-profit research organizations and strengthening our research collaborations and services business. The expected increase in revenues could be offset as the Celera Genomics group contemplates investments in the discovery aspects of the business. The Celera Genomics group expects to continue staffing the organization throughout fiscal 2001. R&D expenses are expected to continue to grow as the research and bioinformatics areas are expanded. SG&A expenses are also expected to increase as a sales and marketing function is established to expand potential customer contact. Our company believes the Celera Genomics group's existing cash and cash equivalents and short-term investments are sufficient to fund its operating expenses and capital requirements related to its original business plan, which relates to the sequencing and assembly of the human genome and the development of information products and related genomics services from this data. While our company intends to use the net proceeds from the Celera Genomics group's follow-on public offering primarily to fund its new product and technology development activities in functional genomics, with an emphasis on proteomics and personalized health/medicine, such funds may not be sufficient to support these new business activities as they develop. The Celera Genomics group's actual future capital uses and requirements with respect to its new activities will depend on many factors, including those discussed under "Forward-Looking Statements." ================================================================================ 49 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Forward-Looking Statements Certain statements contained in this report, including the Outlook section, are forward-looking and are subject to a variety of risks and uncertainties. These statements may be identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential," among others. These forward-looking statements are based on our current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of our businesses include, but are not limited to: The Celera Genomics group has incurred net losses to date and may not achieve profitability. The Celera Genomics group has accumulated net losses of $178.8 million as of June 30, 2000 and expects that it will continue to incur additional net losses for the foreseeable future. These losses may increase as Celera expands its investments in new technology and product development, including the development of its functional genomics and personalized health/medicine efforts. As an early-stage business, the Celera Genomics group faces significant challenges in simultaneously expanding its operations, pursuing key scientific goals, and attracting customers for its information products and services. As a result, there is a high degree of uncertainty that the Celera Genomics group will be able to achieve profitable operations. Celera Genomics' business plan is unique and expanding. No organization has ever attempted to combine in one business organization all of the Celera Genomics group's businesses. In addition, as Celera Genomics moves beyond completion of the sequencing of the human genome, it is expanding its business plan to provide new scientific services to customers in areas such as functional genomics, personalized health/medicine, and proteomics. The offering of genomics databases, functional genomics, proteomics, and personalized health/medicine capabilities targeted at a wide variety of customers, from pharmaceutical companies to university researchers, has a number of risks, including pricing and volume issues, technology and access concerns, computer security, pursuit of key scientific goals, and protection of intellectual property. The addition of the functional genomics, personalized health/medicine, and proteomics efforts will add further complexity and require additional management attention and resources as these new markets are addressed. Celera Genomics' business plan depends heavily on final assembly and annotation of the human genome. The Celera Genomics group is assembling human genome sequence data obtained using "whole genome shotgun sequencing." Although we believe that the Celera Genomics group's sequencing and assembly efforts will be successfully completed based on Celera Genomics' experience to date, Celera Genomics is using mehods, together with data from whole genome shotgun sequencing, which have not previously been applied to complete final assembly of a genome with the size and complexity of the human genome. The Celera Genomics group's ability to retain its existing customers and attract new customers is heavily dependent upon the final assembly and continued annotation of the human genome. This information is essential to the functional genomics and personalized health/medicine components of Celera Genomics' business strategy in which Celera Genomics intends to make substantial investments in the near future. As a result, failure to complete the assembly and annotation efforts in a timely manner may have a material adverse effect on the Celera Genomics group's business. Celera Genomics' revenue growth depends on retaining existing and adding new customers. The Celera Genomics group has a small number of customers, the revenues from which will offset only a small portion of its expenses. In order to generate significant additional revenues, the Celera Genomics group must obtain additional customers and retain its existing customers. Celera Genomics' ability to retain existing and add new customers depends upon customers' continued belief that Celera Genomics' products can help accelerate their drug discovery and development efforts and fundamental discoveries in biology. Although customer agreements typically have multi-year terms, there can be no assurance that any will be renewed upon expiration. The Celera Genomics group's future revenues are also affected by the extent to which existing customers expand their agreements to include new services and database products. In some cases, the Celera Genomics group may accept milestone payments or future royalties on products developed by its customers as consideration for access to Celera Genomics' databases and products in lieu of a portion of subscription fees. Such arrangements are unlikely to produce revenue for the Celera Genomics group for a number of years, if ever, and depend heavily on the research and product development, sales and marketing, and intellectual property protection abilities of the customer. Use of genomics information to develop or commercialize products is unproven. The development of new drugs and the diagnosis of disease based on genomic information is unproven. Few therapeutic or diagnostic products based on genomic discoveries have been developed and commercialized, and to date no one has developed or commercialized any therapeutic, diagnostic, or agricultural products based on the Celera Genomics group's technologies. If the Celera Genomics group's customers are unsuccessful in developing and commercializing products based on the group's databases or other products or services, customers and the group may be unable to generate sufficient revenues, and its business may suffer as a result. Development of such products will be subject to risks of failure, including that such products will be found to be toxic, found to be ineffective, fail to receive regulatory approvals, fail to be developed prior to the successful marketing of similar products by competitors, or infringe on proprietary rights of third parties. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 50

CELERA GENOMICS GROUP Management's Discussion and Analysis continued The genomics industry is intensely competitive and evolving. There is intense competition among entities attempting to sequence segments of the human genome and identify genes associated with specific diseases and develop products, services, and intellectual property based on these discoveries. Celera Genomics faces competition in these areas from genomic, pharmaceutical, biotechnology and diagnostic companies, academic and research institutions, and government or other publicly funded agencies, both in the United States and abroad. A number of companies, other institutions, and government-financed entities are engaged in gene sequencing, gene discovery, gene expression analysis, positional cloning, the study of genetic variation, functional genomics, and other genomic service businesses. Some of these competitors are developing databases containing gene sequence, gene expression, genetic variation, or other biological information and are marketing or plan to market their data to pharmaceutical and biotechnology companies and academic and research institutions. Additional competitors may attempt to establish databases containing this information in the future. The Celera Genomics group has licensed some of its key technology on a non-exclusive basis from third parties, and therefore such technology may be available for license by PE Corporation's competitors. Competitors may also discover, characterize, or develop important genes, drug targets or leads, drug discovery technologies, or drugs in advance of Celera Genomics or its customers, or which are more effective than those developed by Celera Genomics or its customers, or may obtain regulatory approvals of their drugs more rapidly than Celera Genomics' customers do, any of which could have a material adverse effect on any of Celera Genomics' similar programs. Moreover, these competitors may obtain patent protection or other intellectual property rights that would limit Celera Genomics' rights or its customers' ability to use Celera Genomics' products to commercialize therapeutic, diagnostic, or agricultural products. In addition, a customer may use the Celera Genomic group's services to develop products that compete with products separately developed by the Group or its other customers. Future competition will come from existing competitors as well as other companies seeking to develop new technologies for drug discovery, drug development, and diagnostics based on gene sequencing, target gene identification, bioinformatics, and related technologies. In addition, certain pharmaceutical and biotechnology companies have significant needs for genomic information and may choose to develop or acquire competing technologies to meet such needs. Celera Genomics also faces competition from providers of software. A number of companies have announced their intent to develop and market software to assist pharmaceutical companies and academic researchers in managing and analyzing their own genomic data and publicly available data. Celera Genomics' current and potential customers are primarily from, and are subject to risks faced by, the pharmaceutical and biotechnology industries. The Celera Genomics group derives a substantial portion of its revenues from fees paid by pharmaceutical companies and larger biotechnology companies for its information products and services, including Amgen Inc., Novartis Pharma AG, Pharmacia & Upjohn, Pfizer Inc., Takeda Chemical Industries, Ltd., American Home Products Corporation, and Immunex Corporation. The Celera Genomics group expects that pharmaceutical companies and larger biotechnology companies will continue to be the Celera Genomics group's primary source of revenues for the foreseeable future. As a result, the Celera Genomics group is subject to risks and uncertainties that affect the pharmaceutical and biotechnology industries and to reduction and delays in research and development expenditures by companies in these industries. In addition, the Celera Genomics group's future revenues may be adversely affected by mergers and consolidation in the pharmaceutical and biotechnology industries, which will reduce the number of the group's potential customers. Large pharmaceutical and biotechnology customers could also decide to conduct their own genomics programs or seek other providers instead of using Celera Genomics' products and services. Celera Genomics relies on its strategic relationship with Applied Biosystems. The Celera Genomics group believes that its strategic relationship with Applied Biosystems has provided it with a significant competitive advantage in its efforts to date to sequence the human genome. Celera Genomics' timely completion of that work and successful extension of its business into the functional genomics, personalized health/medicine, and proteomics arenas will depend on Applied Biosystems' ability to continue to provide leading-edge, proprietary technology and products, including technologies relating to genetic analysis, protein analysis, and high-throughput screening. If Applied Biosystems is unable to supply these technologies, Celera will need to obtain access to alternative technologies, which may not be available, or may only be available on unfavorable terms. Any change in the relationship with Applied Biosystems that adversely affects the Celera Genomics group's access to Applied Biosystems' technology or failure by Applied Biosystems to continue to develop new technologies or protect its proprietary technology could adversely affect Celera Genomics' business. Introduction of new products may expose Celera Genomics to product liability claims. New products developed by Celera Genomics could expose Celera Genomics to potential product liability risks which are inherent in the testing, manufacturing, and marketing of human therapeutic and diagnostic products. Product liability claims or product recalls, regardless of the ultimate outcome, could require Celera Genomics to spend significant time and money in litigation and to pay significant damages. ================================================================================ 51 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Celera Genomics could incur liabilities relating to hazardous materials that it uses in its research and development activities. Celera Genomics' research and development activities involve the controlled use of hazardous materials and chemicals, and may in the future involve various radioactive materials. In the event of an accidental contamination or injury from these materials, Celera could be held liable for damages in excess of its resources. Celera Genomics' sales cycle is lengthy and it may spend considerable resources on unsuccessful sales efforts or may not be able to complete deals on the schedule anticipated. The Celera Genomics group's ability to obtain new customers for genomic information products, value-added services and licenses to intellectual property depends on its customers' belief that the group can help accelerate their drug discovery efforts. The Celera Genomics group's sales cycle is typically lengthy because the group needs to educate potential customers and sell the benefits of its products and services to a variety of constituencies within such companies. In addition, each agreement involves the negotiation of unique terms. Celera may expend substantial funds and management effort with no assurance that an agreement will be reached with a potential customer. Actual and proposed consolidations of pharmaceutical companies have affected, and may in the future affect, the timing and progress of the Celera Genomics group's sales efforts. Scientific and management staff have unique expertise which is key to Celera Genomics' commercial viability and which would be difficult to replace. Celera Genomics is highly dependent on the principal members of its scientific and management staff, particularly J. Craig Venter, its President. For the sequencing and assembly of the human genome, the Celera Genomics group believes the following members of its staff are essential: Dr. Venter; Mark Adams, Vice President for Genome Programs; and Eugene Myers, Vice President of Informatics Research, who is responsible for the group assembling the genome. None of these individuals are party to employment agreements, non-competition agreements, or non-solicitation agreements with the Celera Genomics group. Additional members of the Celera Genomics group's medical, scientific, and bioinformatics staff are important to the development of information, tools, and services required for implementation of its business plan. Also, in an effort to meet the demands of its growing business, the group recently hired other key management personnel in the areas of operations, sales, marketing, and business development, and the group believes that these persons will be important to the successful growth of the group's business. The loss of any of these persons' expertise would be difficult to replace and could have a material adverse effect on the Celera Genomics group's ability to achieve its goals. Celera Genomics' competitive position may depend on patent and copyright protection, which may not be sufficiently available. The Celera Genomics group's ability to compete and to achieve profitability may be affected by its ability to protect its proprietary technology and other intellectual property. While Celera Genomics' business is currently primarily dependent on revenues from access fees to its discovery and information system, obtaining patent protection may also be important to its business, in that Celera Genomics would be able to prevent competitors from making, using, or selling any of its technology for which it obtains a patent. Patent law affecting Celera Genomics' business, particularly gene sequences, gene function, and polymorphisms, is uncertain, and as a result, the Celera Genomics group is uncertain as to its ability to obtain intellectual property protection covering its information discoveries sufficient to prevent competitors from developing similar subject matter. Patents may not issue from patent applications that the Celera Genomics group may own or license. In addition, because patent applications in the United States are maintained in secrecy until patents issue, third parties may have filed patent applications for technology used by Celera Genomics or covered by Celera Genomics' pending patent applications without Celera Genomics being aware of such applications. Moreover, the Celera Genomics group may be dependent on protecting, through copyright law or otherwise, its databases to prevent other organizations from taking information from such databases and copying and reselling it. Copyright law currently provides uncertain protection regarding the copying and resale of factual data. As such, Celera Genomics is uncertain whether it could prevent such copying or resale. Changes in copyright and patent law could either expand or reduce the extent to which the Celera Genomics group and its customers are able to protect their intellectual property. Celera Genomics' position may depend on its ability to protect trade secrets. The Celera Genomics group relies on trade secret protection for its confidential and proprietary information and procedures, including procedures related to sequencing genes and to searching and identifying important regions of genetic information. The Celera Genomics group currently protects such information and procedures as trade secrets. The Celera Genomics group protects its trade secrets through recognized practices, including access control, confidentiality, and non-use agreements with employees, consultants, collaborators and customers, and other security measures. These confidentiality and non-use agreements may be breached, however, and the group may not have adequate remedies for any such breach. In addition, the group's trade secrets may otherwise become known or be independently developed by competitors. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 52

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Public disclosure of genomics sequence data could jeopardize Celera Genomics' intellectual property protection and have an adverse effect on the value of our products and services. The Celera Genomics group, the federally funded Human Genome Project, and others engaged in similar research have committed to make available to the public basic human sequence data. Such disclosures might limit the scope of the Celera Genomics group's claims or make subsequent discoveries related to full-length genes unpatentable. While the Celera Genomics group believes that the publication of sequence data will not preclude it or others from being granted patent protection on genes, there can be no assurance that such publication has not affected, and will not affect, the ability to obtain patent protection. Customers may conclude that uncertainties of such protection decrease the value of the Celera Genomics group's information products and services and, as a result, it may be required to reduce the fees it charges for such products and services. Celera Genomics may infringe the intellectual property rights of third parties and may become involved in expensive intellectual property litigation. The intellectual property rights of biotechnology companies, including Celera Genomics, are generally uncertain and involve complex legal, scientific, and factual questions. Celera Genomics' success in the functional genomics field may depend, in part, on its ability to operate without infringing on the intellectual property rights of others and to prevent others from infringing on its intellectual property rights. There has been substantial litigation regarding patents and other intellectual property rights in the genomics industry. The Celera Genomics group may become a party to patent litigation or proceedings in the federal courts or at the U.S. Patent and Trademark Office to determine its patent rights with respect to third parties which may include subscribers to Celera Genomics' database information services. Interference proceedings may be necessary to establish which party was the first to discover such intellectual property. Celera Genomics may become involved in patent litigation against third parties to enforce the Celera Genomics group's patent rights, to invalidate patents held by such third parties, or to defend against such claims. The cost to Celera Genomics of any patent litigation or similar proceeding could be substantial, and it may absorb significant management time. If an infringement litigation against Celera Genomics is resolved unfavorably to Celera Genomics, Celera Genomics may be enjoined from manufacturing or selling certain of its products or services without a license from a third party. Celera Genomics may not be able to obtain such a license on commercially acceptable terms, or at all. The U.S. Patent and Trademark Office has issued several patents to third parties relating to single nucleotide polymorphisms ("SNPs"). If other important SNPs receive patents, Celera Genomics will need to obtain rights to those important SNPs in order to develop, use, and sell related assays. Such licenses may not be available to Celera Genomics on commercially acceptable terms, or at all. Celera Genomics' business is dependent on the continuous, effective, reliable, and secure operation of its computer hardware, software, and internet applications and related tools and functions. Because the Celera Genomics group's business requires manipulating and analyzing large amounts of data, and communicating the results of such analysis to customers via the internet, the Celera Genomics group depends on the continuous, effective, reliable, and secure operation of its computer hardware, software, networks, internet servers, and related infrastructure. To the extent that the Celera Genomics group's hardware or software malfunctions or the Celera Genomics group's customers' access to products through the Internet is interrupted, its business could suffer. The Celera Genomics group's computer and communications hardware is protected through physical and software safeguards. However, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, and similar events. In addition, Celera Genomics' database products are complex and sophisticated, and as such, could contain data, design, or software errors that could be difficult to detect and correct. Software defects could be found in current or future products. If the Celera Genomics group fails to maintain and further develop the necessary computer capacity and data to support computational needs and its customers' drug efforts, it could result in loss of or delay in revenues and market acceptance. In addition, any sustained disruption in Internet access provided by third parties could adversely impact the Celera Genomics group's business. Celera Genomics' research and product development depends on access to tissue samples and other biological materials. To continue to build its product base, Celera Genomics will need access to normal and diseased human and other tissue samples, other biological materials, and related clinical and other information, which may be in limited supply. Celera Genomics may not be able to obtain or maintain access to these materials and information on acceptable terms. In addition, government regulation in the United States and foreign countries could result in restricted access to, or use of, human and other tissue samples. If Celera Genomics loses access to sufficient numbers or sources of tissue samples, or if tighter restrictions are imposed on its use of the information generated from tissue samples, its business may be harmed. Ethical, legal, and social issues related to the use of genetic information and genetic testing may cause less demand for our products. Genetic testing has raised issues regarding confidentiality and the appropriate uses of the resulting information. For example, concerns have been expressed toward insurance carriers and employers using such tests to discriminate on the basis of such information, resulting in barriers to the acceptance of such tests by consumers. This could lead to governmental authorities calling for limits on, or regulation of, the use of genetic testing, or prohibit testing for genetic predisposition to certain diseases, particularly those that have no known cure. Any of these scenarios could reduce the potential markets for PE Corporation's products. ================================================================================ 53 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Management's Discussion and Analysis continued Expected rapid growth in the number of its employees could absorb valuable management resources and be disruptive to the development of Celera Genomics' business. The Celera Genomics group expects to grow significantly. This growth will require substantial effort to hire new employees and train and integrate them into the Celera Genomics group's business and to develop and implement management information systems, financial controls, and facility plans. In addition, the Celera Genomics group will be required to create a sales and marketing organization and expand customer support resources as sales of its information products increase. The Celera Genomics group's inability to manage growth effectively would have a material adverse effect on its future operating results. The use of Celera Genomics' products and services by its customers may be subject to government regulation. Within the field of genomics, the use of the Celera Genomics group's products by pharmaceutical and biotechnology customers may be subject to certain U.S. Food and Drug Administration or other regulatory approvals. For example, any new drug developed by the efforts of the Celera Genomics group's customers as a result of their use of the Celera Genomics group's databases must undergo an extensive regulatory review process. This process can take many years and require substantial expense. Within the field of personalized health/medicine, current and future patient privacy and healthcare laws and regulations issued by the FDA may limit the use of polymorphism data. To the extent that use of the Celera Genomics group's databases is limited, or additional costs are imposed on the Celera Genomics group's customers due to regulation, the Celera Genomics group's business may be adversely affected. Furthermore, the Celera Genomics group may be directly subject to the regulations as a provider of diagnostic information. To the extent that such regulations restrict the sale of the Celera Genomics group's products or impose other costs, the Celera Genomics group's business may be materially adversely affected. Future acquisitions may absorb significant resources and may be unsuccessful. As part of the Celera Genomics group's strategy, it expects to pursue acquisitions, investments, and other relationships and alliances. Acquisitions may involve significant cash expenditures, debt incurrence, additional operating losses, dilutive issuances of equity securities, and expenses that could have a material effect on the Celera Genomics group's financial condition and results of operations. For example, to the extent that it elects to pay the purchase price for such acquisitions in shares of Celera Genomics stock, such issuance of additional shares of Celera Genomics stock will be dilutive to holders of Celera Genomics stock. Acquisitions involve numerous other risks, including: o difficulties integrating acquired technologies and personnel into the business of the Celera Genomics group; o diversion of management from daily operations; o inability to obtain required financing on favorable terms; o entry into new markets in which the Celera Genomics group has little previous experience; o potential loss of key employees or customers of acquired companies; o assumption of the liabilities and exposure to unforeseen liabilities of acquired companies; and o amortization of the intangible assets of acquired companies. It may be difficult for the Celera Genomics group to complete such transactions quickly and to integrate such business efficiently into its current business. Any such acquisitions or investments by the Celera Genomics group may ultimately have a negative impact on its business and financial condition. PE Corporation is subject to a purported class action lawsuit relating to its recent offering of shares of Celera Genomics stock which may be expensive and time consuming. As of August 25, 2000, PE Corporation and certain of its officers had been served in five lawsuits purportedly on behalf of purchasers of Celera Genomics stock in PE Corporation's offering of Celera Genomics stock completed on March 6, 2000. In the offering, PE Corporation sold an aggregate of approximately 4.4 million shares of Celera Genomics common stock at a public offering price of $225 per share. The complaints in these lawsuits generally allege that the prospectus used in connection with the offering contained inaccurate and misleading statements in violation of federal securities laws. The complaints seek unspecified damages, rescission, costs and expenses, and such other relief as the court deems proper. All of these lawsuits have been consolidated into a single case. Although PE Corporation believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain. The defense of this case will require management attention and resources. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 54

CELERA GENOMICS GROUP Combined Statements of Operations <TABLE> <CAPTION> (Dollar amounts in thousands except per share amounts) For the years ended June 30, 1998 1999 2000 ========================================================================= <S> <C> <C> <C> Net Revenues $ 4,211 $ 12,541 $ 42,747 ------------------------------------------------------------------------- Costs And Expenses Research and development 10,279 48,448 167,831 Selling, general and administrative 6,725 28,255 43,022 Special charges 4,616 ------------------------------------------------------------------------- Operating Loss (12,793) (68,778) (168,106) Interest expense 2,115 Interest income 1,245 27,548 ------------------------------------------------------------------------- Loss Before Income Taxes (12,793) (67,533) (142,673) Benefit for income taxes 4,478 22,639 49,936 ------------------------------------------------------------------------- Net Loss $ (8,315) $ (44,894) $ (92,737) ========================================================================= Net Loss Per Share (see Note 1) Basic and diluted $ (.89) $ (1.73) ========================================================================= </TABLE> See accompanying notes to the Celera Genomics group's combined financial statements. ================================================================================ 55 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Combined Statements of Financial Position <TABLE> <CAPTION> (Dollar amounts in thousands) At June 30, 1999 2000 ======================================================================================== <S> <C> <C> Assets Current assets Cash and cash equivalents $ 71,491 $ 569,894 Short-term investments 541,140 Note receivable from Applied Biosystems (see Note 7) 150,000 Tax benefit receivable from Applied Biosystems (see Note 1) 9,935 16,702 Accounts receivable 3,276 14,936 Inventories 3,336 Prepaid expenses and other current assets 3,454 2,283 ---------------------------------------------------------------------------------------- Total current assets 238,156 1,148,291 Property, plant and equipment, net 104,192 111,442 Other long-term assets 2,372 153,524 ---------------------------------------------------------------------------------------- Total Assets $ 344,720 $ 1,413,257 ======================================================================================== Liabilities And Group Equity Current liabilities Accounts payable $ 19,861 $ 21,566 Accrued salaries and wages 4,179 10,251 Deferred revenues 12,032 24,169 Other accrued expenses 9,281 11,266 ---------------------------------------------------------------------------------------- Total current liabilities 45,353 67,252 Long-term debt 46,000 Other long-term liabilities 5,500 9,189 ---------------------------------------------------------------------------------------- Total Liabilities 50,853 122,441 ---------------------------------------------------------------------------------------- Commitments and contingencies (see Note 10) Group Equity 293,867 1,290,816 ---------------------------------------------------------------------------------------- Total Liabilities And Group Equity $ 344,720 $ 1,413,257 ======================================================================================== </TABLE> See accompanying notes to the Celera Genomics group's combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 56

CELERA GENOMICS GROUP Combined Statements of Cash Flows <TABLE> <CAPTION> (Dollar amounts in thousands) For the years ended June 30, 1998 1999 2000 ============================================================================================================ <S> <C> <C> <C> Operating Activities Net loss $ (8,315) $ (44,894) $ (92,737) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 650 3,757 29,575 Long-term compensation programs 2,802 883 Deferred income taxes (6,971) Changes in operating assets and liabilities Increase in tax benefit receivable from Applied Biosystems (9,935) (6,767) Increase in accounts receivable (354) (2,520) (11,620) Decrease in inventories 615 Increase in prepaid expenses and other assets (4) (3,458) (446) Increase in accounts payable and other liabilities 1,151 31,496 29,138 ------------------------------------------------------------------------------------------------------------ Net Cash Used By Operating Activities (6,872) (22,752) (58,330) ------------------------------------------------------------------------------------------------------------ Investing Activities Additions to property, plant and equipment (net of disposals of $1,175 for fiscal 2000) (3,648) (94,541) (29,498) Purchases of short-term investments (541,127) Acquisitions and investments, net (1,236) (2,275) ------------------------------------------------------------------------------------------------------------ Net Cash Used By Investing Activities (3,648) (95,777) (572,900) ------------------------------------------------------------------------------------------------------------ Financing Activities Net change in debt 46,000 Net proceeds from follow-on stock offering 943,303 Proceeds from stock issued for Celera Genomics group stock plans 1,485 17,613 Proceeds from the collection of note receivable from Applied Biosystems 150,000 Net cash allocated (to) from Applied Biosystems 10,520 188,535 (27,283) ------------------------------------------------------------------------------------------------------------ Net Cash Provided By Financing Activities 10,520 190,020 1,129,633 ------------------------------------------------------------------------------------------------------------ Net Change In Cash And Cash Equivalents 71,491 498,403 Cash And Cash Equivalents Beginning Of Year 71,491 ------------------------------------------------------------------------------------------------------------ Cash And Cash Equivalents End Of Year $ - $ 71,491 $ 569,894 ============================================================================================================ </TABLE> See accompanying notes to the Celera Genomics group's combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ 57 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Combined Statements of Group Equity and Comprehensive Loss <TABLE> <CAPTION> Accumulated Other Group Accumulated Comprehensive Equity (Dollar amounts in thousands) Other Deficit Income (Deficit) =========================================================================================================== <S> <C> <C> <C> <C> Balance At June 30, 1997 $ 29,372 $ (32,836) $ - $ (3,464) Net loss (8,315) (8,315) Net cash allocated from Applied Biosystems 10,520 10,520 ----------------------------------------------------------------------------------------------------------- Balance At June 30, 1998 39,892 (41,151) (1,259) Net loss (44,894) (44,894) Issuances under stock plans 1,485 1,485 Net cash allocated from Applied Biosystems 8,535 8,535 Allocated capital from Applied Biosystems 330,000 330,000 ----------------------------------------------------------------------------------------------------------- Balance At June 30, 1999 379,912 (86,045) 293,867 Comprehensive loss Net loss (92,737) (92,737) Other comprehensive income, net of tax Unrealized gain on investments, net 8 --- Other comprehensive gain 8 8 ----------- Comprehensive loss (92,729) ----------- Issuances under stock plans 17,613 17,613 Tax benefit related to employee stock options 21,090 21,090 Stock compensation 8,076 8,076 Issuances under follow-on stock offering 943,303 943,303 Purchase business combination 125,093 125,093 Net cash allocated to Applied Biosystems (27,283) (27,283) Allocation of investment from Applied Biosystems 1,786 1,786 ----------------------------------------------------------------------------------------------------------- Balance At June 30, 2000 $ 1,469,590 $ (178,782) $ 8 $ 1,290,816 =========================================================================================================== </TABLE> See accompanying notes to the Celera Genomics group's combined financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 58

CELERA GENOMICS GROUP Notes to Combined Financial Statements Note 1--Accounting Policies and Practices Basis of Presentation PE Corporation ("PE" or "the Company") is comprised of two separate business segments in continuing operations: the Celera Genomics group and the PE Biosystems group. The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business into the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. The PE Biosystems group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the Company's 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. Recapitalization The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock") and PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock"). Celera Genomics stock is intended to reflect separately the performance of the Celera Genomics business ("Celera Genomics group"), and PE Biosystems stock is intended to reflect separately the performance of the Applied Biosystems' life sciences business ("Applied Biosystems"). As part of the recapitalization, each share of common stock of The Perkin-Elmer Corporation was converted into 0.5 of a share of Celera Genomics stock and one share of PE Biosystems stock. The combined financial statements of the Celera Genomics group and Applied Biosystems (individually referred to as a "group") comprise all of the accounts included in the corresponding consolidated financial statements of the Company. Intergroup transactions between the Celera Genomics group and Applied Biosystems have not been eliminated in the Celera Genomics group combined financial statements but have been eliminated in the PE Corporation consolidated financial statements. The Celera Genomics group and Applied Biosystems combined financial statements have been prepared on a basis that management believes to be reasonable and appropriate, and reflect (1) the financial position, results of operations, and cash flows of businesses that comprise the Celera Genomics group and Applied Biosystems, with all significant intragroup transactions and balances eliminated, (2) in the case of the Celera Genomics group's combined financial statements, corporate assets and liabilities of the Company, and related transactions identified with the Celera Genomics group, including allocated portions of the Company's debt and selling, general and administrative costs, and (3) in the case of Applied Biosystems' combined financial statements, all other corporate assets and liabilities and related transactions of the Company, including allocated portions of the Company's debt and selling, general and administrative costs. Holders of Celera Genomics stock and PE Biosystems stock are stockholders of the Company. The Celera Genomics group and Applied Biosystems are not separate legal entities. As a result, stockholders are subject to all the risks associated with an investment in the Company and all of its businesses, assets, and liabilities. The issuance of Celera Genomics stock and PE Biosystems stock and the allocations of assets and liabilities between the Celera Genomics group and Applied Biosystems did not result in a distribution or spin-off of any assets or liabilities of the Company or otherwise affect ownership of any assets or responsibility for the liabilities of the Company or any of its subsidiaries. The assets the Company attributes to one group could be subject to the liabilities of the other group, whether such liabilities arise from lawsuits, contracts, or indebtedness attributable to the other group. If the Company is unable to satisfy one group's liabilities out of assets attributed to it, the Company may be required to satisfy these liabilities with assets attributed to the other group. Financial effects arising from one group that affect the Company's results of operations or financial condition could, if significant, affect the results of operations or financial condition of the other group and the market price of the class of common stock relating to the other group. Any net losses of the Celera Genomics group or Applied Biosystems and dividends or distributions on, or repurchases of, Celera Genomics stock or PE Biosystems stock or repurchases of preferred stock of the Company will reduce the assets of the Company legally available for payment of dividends. The management and allocation policies applicable to the preparation of the financial statements of the Celera Genomics group and Applied Biosystems may be modified or rescinded, or additional policies may be adopted, at the sole discretion of the Board of Directors at any time without approval of the stockholders. The Celera Genomics group's combined financial statements reflect the application of the management and allocation policies adopted by the Board of Directors to various corporate activities, as described below. The Celera Genomics group's combined financial statements should be read in conjunction with the Company's consolidated financial statements. Financing Activities As a matter of policy, the Company manages most financial activities of the Celera Genomics group and Applied Biosystems on a centralized basis. These activities include the investment of surplus cash, the issuance and repayment of short-term and long-term debt, and the issuance and repayment of any preferred stock. As the financing activities of the Celera Genomics group were not significant for any of the periods prior to the recapitalization, all historical cash and debt balances for those periods presented were allocated to Applied Biosystems. ================================================================================ 59 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued The Board of Directors has adopted the following financing policy which will affect the combined statements of the Celera Genomics group and Applied Biosystems. The Company will allocate the Company's debt between the Celera Genomics group and Applied Biosystems ("pooled debt") or, if the Company so determines, in its entirety to a particular group. The Company will allocate preferred stock, if issued, in a similar manner. Cash allocated to one group that is used to repay pooled debt or redeem pooled preferred stock will decrease such group's allocated portion of the pooled debt or preferred stock. Cash or other property allocated to one group that is transferred to the other group will, if so determined by the Board of Directors, decrease the transferring group's allocated portion of the pooled debt or preferred stock and, correspondingly, increase the recipient group's allocated portion of the pooled debt or preferred stock. Pooled debt will bear interest for group financial statement purposes at a rate equal to the weighted average interest rate of the debt calculated on a quarterly basis and applied to the average pooled debt balance during the period. Preferred stock, if issued and if pooled in a manner similar to the pooled debt, will bear dividends for group financial statement purposes at a rate based on the weighted average dividend rate of the preferred stock similarly calculated and applied. Any expense related to increases in pooled debt or preferred stock will be reflected in the weighted average interest or dividend rate of such pooled debt or preferred stock as a whole. If the Company allocates debt for a particular financing in its entirety to one group, that debt will bear interest for group financial statement purposes at the rate determined by the Board of Directors. If the Company allocates preferred stock in its entirety to one group, the Company will charge the dividend cost to that group in a similar manner. If the interest or dividend cost is higher than the Company's actual cost, the other group will receive a credit for an amount equal to the difference as compensation for the use of the Company's credit capacity. Any expense related to debt or preferred stock of the Company that is allocated in its entirety to a group will be allocated in whole to that group. Cash or other property that the Company allocates to one group that is transferred to the other group, could, if so determined by the Board of Directors, be accounted for either as a short-term loan or as a long-term loan. Short-term loans will bear interest at a rate equal to the weighted average interest rate of the Company's pooled debt. If the Company does not have any pooled debt, the Board of Directors will determine the rate of interest for such loan. The Board of Directors will establish the terms on which long-term loans between the groups will be made, including interest rate, amortization schedule, maturity, and redemption terms. Although the Company may allocate its debt and preferred stock between groups, the debt and preferred stock will remain obligations of the Company and all stockholders of the Company will be subject to the risks associated with those obligations. In addition, cash allocated to Applied Biosystems may be contributed to the Celera Genomics group in exchange for an equity interest in the Celera Genomics group. Allocation of Corporate Overhead and Administrative Shared Services A portion of the Company's corporate overhead (such as executive management, human resources, legal, accounting, auditing, tax, treasury, strategic planning, and environmental services) has been allocated to the Celera Genomics group based upon the use of services by that group. A portion of the Company's costs of administrative shared services (such as information technology services) has been allocated in a similar manner. Where determination based on use alone is not practical, other methods and criteria were used that management believes are equitable and provide a reasonable estimate of the cost attributable to the Celera Genomics group. The totals for these allocations were $1.7 million, $5.1 million, and $7.5 million for fiscal 1998, 1999, and 2000, respectively. It is not practicable to provide a detailed estimate of the expenses which would be recognized if the Celera Genomics group were a separate legal entity. Allocation of Federal and State Income Taxes The federal income taxes of the Company and its subsidiaries which own assets allocated between the groups are determined on a consolidated basis. Consolidated federal income tax provisions and related tax payments or refunds are allocated between the groups based principally on the taxable income and tax credits directly attributable to each group. Such allocations reflect each group's contribution (positive or negative) to the Company's consolidated federal taxable income and the consolidated federal tax liability and tax credit position. Tax benefits that cannot be used by the group generating those benefits but can be used on a consolidated basis are credited to the group that generated such benefits. Intergroup transactions are taxed as if each group were a stand-alone company. Tax benefits generated by the Celera Genomics group commencing July 1, 1998, which can then be utilized on a consolidated basis, will be credited to the Celera Genomics group up to a limit of $75 million. As of June 30, 2000, the Celera Genomics group generated $68.5 million of tax benefits utilized by Applied Biosystems since July 1, 1998. Had the groups filed separate tax returns, the provision (benefit) for income taxes and net income (loss) for each group would not have differed from the amounts reported in the groups' combined statements of operations for the years ended June 30, 1998, 1999, and 2000. However, the amount of current and deferred taxes and taxes payable or refundable allocated to each group in these historical ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 60

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued combined financial statements may differ from those that would have been allocated to each group had they filed separate income tax returns. Depending on the tax laws of the respective jurisdictions, state and local income taxes are calculated on either a consolidated or combined basis between the groups based on their respective contribution to such consolidated or combined state taxable incomes. State and local income tax provisions and related tax payments or refunds which are determined on a separate corporation basis will be allocated between the groups in a manner designed to reflect the respective contributions of the groups to the Company's separate or local taxable income. The discussion of the Celera Genomics group's income taxes (see Note 4) should be read in conjunction with the Company's consolidated financial statements and notes thereto. Transfers of Assets Between Groups Transfers of assets can be made between groups without stockholder approval. Such transfers will be made at fair value, as determined by the Company's Board of Directors. The consideration for such transfers may be paid by one group to the other in cash or other consideration, as determined by the Company's Board of Directors. Dividends For purposes of the historical (periods prior to the recapitalization) combined financial statements of the Celera Genomics group and Applied Biosystems, all dividends declared and paid by the Company were allocated to Applied Biosystems. Principles of Combination The Celera Genomics group's combined financial statements have been prepared in accordance with generally accepted accounting principles and, taken together with Applied Biosystems' combined financial statements, comprise all the accounts included in the corresponding consolidated financial statements of the Company. Intergroup transactions between the Celera Genomics group and Applied Biosystems have not been eliminated in the Celera Genomics group's combined financial statements but have been eliminated in the PE Corporation consolidated financial statements. The combined financial statements of each group reflect the financial condition, results of operations, and cash flows of the businesses included therein. The combined financial statements of the Celera Genomics group include the assets and liabilities of the Company specifically identified with or allocated to the Celera Genomics group. The preparation of the combined financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Actual results could differ from those estimates. Certain amounts in the combined financial statements and notes have been reclassified for comparative purposes. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Celera Genomics group is required to implement the statements in the first quarter of fiscal 2001. The Celera Genomics group estimates that, upon adoption, there will be no adjustment for a change in accounting principles in the Combined Statements of Operations or in accumulated other comprehensive income in the Combined Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. SAB No. 101 is required to be implemented in the fourth quarter of fiscal 2001. The Celera Genomics group does not expect any impact from the application of SAB No. 101. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of the previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management does not expect the application of FIN No. 44 to have a material impact on the Celera Genomics group's combined financial statements. Loss Per Share Loss per share information prior to the recapitalization is omitted from the Celera Genomics group's Combined Statements of Operations because Celera Genomics stock was not part of the capital structure of the Company until fiscal 1999. Basic loss per share is computed by dividing net loss for the period by the weighted average number of shares ================================================================================ 61 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued of Celera Genomics stock outstanding. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares of Celera Genomics stock outstanding, including the dilutive effect of Celera Genomics stock equivalents. The following table presents a reconciliation of basic and diluted loss per share for the years ended June 30, 1999 and 2000: <TABLE> <CAPTION> (Amounts in thousands except per share amounts) 1999 2000 ========================================================================== <S> <C> <C> Weighted average number of common shares used in the calculation of basic loss per share 50,200 53,725 Common stock equivalents -------------------------------------------------------------------------- Shares used in the calculation of diluted loss per share 50,200 53,725 ========================================================================== Net loss used in the calculation of basic and diluted loss per share $ (44,894) $ (92,737) Net loss per share Basic and diluted $ (.89) $ (1.73) ========================================================================== </TABLE> The reconciliation for fiscal 1998 is omitted since Celera Genomics stock was not part of the capital structure of the Company. Options and warrants to purchase 11.2 million and 12.3 million shares of Celera Genomics stock were outstanding at June 30, 1999 and 2000, respectively, but were not included in the computation of diluted loss per share because the effect was antidilutive. The Celera Genomics group's share and per share data reflect the two-for-one stock split effective February 2000. Cash and Cash Equivalents and Short-Term Investments Cash equivalents consist of highly liquid debt instruments, time deposits, and certificates of deposit with original maturities of three months or less. Short-term investments have maturities of less than one year, are carried at fair value, and are classified as available for sale with unrealized gains and losses included as a separate component of equity, net of any related tax effect. The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses recorded to other income, net. These short-term investments include certificates of deposit, commercial paper, U.S. government securities, and corporate bonds. These investments are held with two major financial institutions in the Company's name. The fair value of short-term investments at June 30, 2000 was as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 2000 ============================================================= <S> <C> Certificates of deposit $ 107.3 Commercial paper 364.5 U.S. government notes and bonds 49.2 Corporate bonds 20.1 ------------------------------------------------------------- Total short-term investments $ 541.1 ============================================================= </TABLE> There were no short-term investments at June 30, 1999. Gross unrealized gains and losses on short-term investments were each $.1 million at June 30, 2000. There were no realized gains or losses for fiscal 2000. Investments The Company's investments in Shanghai GeneCore BioTechnologies Co., Ltd. and Agrogene S.A. are accounted for under the equity method of accounting. Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Inventories at June 30, 2000 included the following components: <TABLE> <CAPTION> (Dollar amounts in millions) 2000 ============================================================= <S> <C> Raw materials and supplies $ 1.9 Finished products 1.4 ------------------------------------------------------------- Total inventories $ 3.3 ============================================================= </TABLE> There were no inventories at June 30, 1999. Property, Plant and Equipment, and Depreciation Property, plant and equipment are recorded at cost and consisted of the following at June 30, 1999 and 2000: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Land $ 10.0 $ 10.0 Buildings and leasehold improvements 66.4 69.8 Machinery and equipment 33.3 54.6 ------------------------------------------------------------- Property, plant and equipment, at cost 109.7 134.4 Accumulated depreciation and amortization 5.5 23.0 ------------------------------------------------------------- Property, plant and equipment, net $ 104.2 $ 111.4 ============================================================= </TABLE> Major renewals and improvements that significantly add to productive capacity or extend the life of an asset are capitalized. Repairs, maintenance, and minor renewals and improvements are expensed when incurred. Provisions for depreciation of owned property, plant and equipment are based upon the expected useful lives of the assets and computed primarily by the straight-line method. Leasehold improvements are amortized over their estimated useful lives or the term of the applicable lease, whichever is less, using the straight-line method. Internal-use software costs are amortized primarily over the expected useful lives, not to exceed 7 years. Machinery and equipment included $11.6 million and $13.4 million of software licenses at June 30, 1999 and 2000, respectively. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 62

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Intangible Assets The excess of purchase price over the net asset value of companies acquired is amortized on a straight-line method over periods not exceeding 3 years. Purchased technology rights are amortized using the straight-line method over their expected useful lives. At June 30, 1999 and 2000, other long-term assets included goodwill, net of accumulated amortization, of $.9 million and $113.4 million, respectively. Accumulated amortization of goodwill was $.1 million and $3.7 million at June 30, 1999 and 2000, respectively. At June 30, 1999 and 2000, other long-term assets included other intangible assets, net of accumulated amortization, of $1.1 million and $14.1 million, respectively. Accumulated amortization of purchased technology rights was $.3 million and $.9 million at June 30, 1999 and 2000, respectively. Revenues Subscription fees for access to the Company's genomic databases are recognized ratably over the contracted period in accordance with the provisions of the contract. Contract research service revenues are earned and recognized in accordance with the contract provisions. Revenue may be recognized on a percentage of completion, as contract research costs are incurred, or may be contingent upon the achievement of certain milestones. Amounts received in advance of performance are recorded as deferred revenue. Research and Development Costs incurred for internal, contract, and grant-sponsored research and development are expensed when incurred. Supplemental Cash Flow Information Cash paid for interest and income taxes and significant non-cash investing and financing activities for the following periods was as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Interest $ 2.1 Income taxes $ 1.1 Capital expenditures liability $ 8.9 Note receivable from Applied Biosystems $ 150.0 Equity instruments issued in Paracel acquisition $ 125.1 ============================================================= </TABLE> Note 2--Acquisitions and Investments Paracel, Inc. During the fourth quarter of fiscal 2000, the Company acquired Paracel, Inc. in a stock-for-stock transaction. Paracel produces advanced genomic and text analysis technologies. Its products include a hardware accelerator for sequence comparison, a hardware accelerator for text search, and sequence analysis software tools. The Company issued approximately 1.6 million shares of Celera Genomics stock in exchange for all the outstanding shares of Paracel common stock not previously owned by the Company. At the time of the acquisition, the Company owned 14% of Paracel, which was allocated to Applied Biosystems. The transfer of the Paracel shares to the Celera Genomics group resulted in a $27.3 million cash payment to Applied Biosystems, which represented the fair market value of those shares at the transfer date. The Celera Genomics group recorded the previously owned investment at the Company's original cost value. The transfer of the original cost value and the $27.3 million cash payment were recorded as an adjustment to group equity in the Celera Genomics group's Combined Statements of Financial Position and Applied Biosystems' Combined Statements of Financial Position. The acquisition of the shares of Paracel not previously owned by the Company was valued at $125.6 million and was accounted for under the purchase method of accounting. In connection with the acquisition, $115.2 million was allocated to goodwill, including $5.3 million of deferred tax, and $13.6 million was allocated to other intangible assets. The goodwill and the other intangible assets are being amortized on a straight-line method over 3 years. The net assets and results of operations of Paracel were included in the Celera Genomics group's combined financial statements from the date of acquisition. The following selected unaudited pro forma information for the Celera Genomics group assumes the acquisition had occurred at the beginning of fiscal 1999 and fiscal 2000, and gives effect to purchase accounting adjustments: <TABLE> <CAPTION> (Dollar amounts in millions except per share amounts) 1999 2000 ============================================================================== <S> <C> <C> Net revenues $ 22.7 $ 51.1 Net loss $ (90.4) $ (140.5) Net loss per share Basic and diluted $ (1.75) $ (2.54) ============================================================================== </TABLE> The unaudited pro forma data is for informational purposes only and may not be indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of fiscal 1999 or at the beginning of fiscal 2000 or of the future operations of the combined companies. Panther(TM) Technology During the second quarter of fiscal 2000, the Company acquired the Panther(TM) technology from Molecular Applications Group. Panther(TM) is a software tool designed for rapid and accurate determination of gene and protein function. As part of the agreement, members of the Molecular Applications Group research team who developed the Panther(TM) technology became employees of the Celera Genomics group. The cost of the acquisition was $2.5 million and was accounted for under the purchase method of accounting. ================================================================================ 63 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Shanghai GeneCore BioTechnologies Co., Ltd. During the second quarter of fiscal 2000, the Company acquired an additional 47.5% equity interest in Shanghai GeneCore BioTechnologies Co., Ltd., allocated to the Celera Genomics group, from Axys Pharmaceuticals, Inc. for $.5 million. The Company previously owned a 47.5% equity interest in Shanghai GeneCore, which was allocated to Applied Biosystems. Shanghai GeneCore is a genomics service company with expertise in nucleotide synthesis, DNA sequencing, bioinformatics analysis, and mutation detection. The Celera Genomics group's combined financial statements reflect the investment under the equity method of accounting. Agrogene S.A. During the third quarter of fiscal 1999, the Company acquired a 49% interest in Agrogene S.A., an agricultural DNA testing laboratory in France, for $1.2 million. The excess of cost over net assets acquired of $1.0 million is being amortized on a straight-line basis over 3 years. This investment has been accounted for under the equity method of accounting. Note 3--Debt and Lines of Credit Allocated Debt Activity Long-term debt consisted of $46.0 million of commercial paper with an average interest rate of 6.84% at June 30, 2000. The Company established the necessary credit facilities, through its revolving credit agreement, to refinance the commercial paper borrowings on a long-term basis. These borrowings were classified as noncurrent because it is the Company's intent to refinance these obligations on a long-term basis. The Company's $100 million revolving credit agreement was replaced effective April 20, 2000 with a new $100 million revolving credit agreement with four banks that matures on April 20, 2005. Commitment and facility fees are based on public debt ratings, or net worth and leverage ratios. Interest rates on amounts borrowed vary depending on whether borrowings are undertaken in the domestic or eurodollar markets. There were no borrowings outstanding under the facility at June 30, 2000. At June 30, 2000, in addition to the $100 million revolving credit facility, the Company had $241 million of unused credit facilities for short-term borrowings from domestic and foreign banks in various currencies. These credit facilities consist of uncommitted overdraft credit lines that are provided at the discretion of various local banks. A PE Corporation guarantee is usually required if a local unit borrows any funds. Under various debt and credit agreements, the Company is required to maintain certain minimum net worth and leverage ratios. Note 4--Income Taxes Loss before income taxes for fiscal 1998, 1999, and 2000 related to operations in the United States. The benefit for income taxes includes the Celera Genomics group's allocated portion of income taxes currently payable and those deferred because of differences between the financial statement and tax bases of assets and liabilities. The Celera Genomics group's benefit for income taxes for fiscal 1998, 1999, and 2000 consisted of the following: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Currently payable $ (4.5) $ (22.6) $ (42.9) Deferred (7.0) ------------------------------------------------------------- Total benefit for income taxes $ (4.5) $ (22.6) $ (49.9) ============================================================= </TABLE> Significant components of deferred tax assets and liabilities at June 30, 2000 are summarized below: <TABLE> <CAPTION> (Dollar amounts in millions) 2000 ============================================================= <S> <C> Deferred Tax Assets Reserves and accruals $ 2.2 Tax credit and loss carryforwards 26.5 ------------------------------------------------------------- Total deferred tax assets 28.7 ------------------------------------------------------------- Deferred Tax Liabilities Depreciation 1.3 Intangibles 4.6 ------------------------------------------------------------- Total deferred tax liabilities 5.9 ------------------------------------------------------------- Total deferred tax assets, net $ 22.8 ============================================================= </TABLE> There were no deferred tax assets or liabilities at June 30, 1999. A reconciliation of the federal statutory tax to the Celera Genomics group's benefit for income taxes for fiscal 1998, 1999, and 2000 is set forth in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Federal statutory rate 35% 35% 35% ============================================================= Tax at federal statutory rate $ (4.5) $ (23.6) $ (49.9) State income taxes (net of federal benefit) .2 Reorganization, restructuring, and other costs 1.4 Effect of goodwill amortization .2 R&D tax credit (5.4) Recapitalization costs 1.6 Other (.6) 3.6 ------------------------------------------------------------- Total benefit for income taxes $ (4.5) $ (22.6) $ (49.9) ============================================================= </TABLE> The Celera Genomics group was allocated a consolidated domestic loss carryforward of $57.0 million and domestic credit carryforward of $6.5 million, which will expire between the fiscal years 2005 and 2020. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 64

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Note 5--Retirement and Other Benefits Pension Plan The Company maintains or sponsors a pension plan that covers certain employees of the Celera Genomics group. Pension benefits earned are generally based on years of service and compensation during active employment. Pension plan assets are administered by a trustee and are principally invested in equity and fixed-income securities. The funding of the pension plan is determined in accordance with statutory funding requirements. The Company's domestic pension plan covers a substantial portion of U.S. employees. During fiscal 1999, the plan was amended to terminate the accrual of benefits under the plan as of June 30, 2004 and to improve the benefit for participants who retire between the ages of 55 and 60. The pension plan is not available to employees hired on or after July 1, 1999. Pension expense, consisting primarily of service cost allocated to the Celera Genomics group, was $.1 million for fiscal 1998, less than $.1 million for fiscal 1999, and $.3 million for fiscal 2000. Retiree Healthcare and Life Insurance Benefits The postretirement benefit plan provides certain healthcare and life insurance benefits to domestic employees hired prior to January 1, 1993, who retire and satisfy certain service and age requirements. Generally, medical coverage pays a stated percentage of most medical expenses, reduced for any deductible and for payments made by Medicare or other group coverage. The cost of providing these benefits is shared with retirees. The plan is unfunded. The postretirement benefit expense allocated to the Celera Genomics group was not material for fiscal 1998, 1999, and 2000. Amounts allocated to the Celera Genomics group were less than $.1 million for all periods presented. Savings Plan The Company provides a 401(k) savings plan, for domestic employees, with automatic Company contributions of 2% of eligible compensation and a dollar-for-dollar matching contribution of up to 4% of eligible compensation. Employees not eligible for the employee pension plan receive an extra 2% Company contribution in addition to the automatic 2% Company contribution through June 30, 2004, while pension plan participants continue to receive the automatic 2% contribution. The Company contributions allocated to the Celera Genomics group for fiscal 1998, 1999, and 2000 were $.2 million, $.5 million, and $1.9 million, respectively. Postemployment Benefits The Company provides certain postemployment benefits to eligible employees. These benefits generally include severance, disability, and medical-related costs paid after employment but before retirement. Note 6--Segment, Geographic, and Customer Information Business Segments and Geographic The Celera Genomics group operates in one business segment, which is the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business in the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. The Celera Genomics group has a small number of customers and derives a substantial portion of its revenues from fees paid by multinational pharmaceutical companies and larger biotechnology companies. The Celera Genomics group operates in the United States. Note 7--Group Equity and Note Receivable Celera Genomics stock represents a separate class of the Company's common stock. Additional shares of Celera Genomics stock may be issued from time to time upon exercise of stock options or at the discretion of the Company's Board of Directors. There were no repurchases of Celera Genomics stock for fiscal 1999 and 2000. In January 2000, the Board of Directors announced a two-for-one split of Celera Genomics stock effective February 2000 in the form of a stock dividend. All Celera Genomics group share data reflect this split. Note Receivable from Applied Biosystems The initial capitalization of the Celera Genomics group included a $330 million short-term note receivable from Applied Biosystems established at September 30, 1998. The $330 million note represented an allocation of the Company's capital to the Celera Genomics group and did not result in Applied Biosystems holding an equity interest in the Celera Genomics group. Accordingly, no interest was ascribed to the note. The allocation of capital represented management's decision to allocate a portion of the Company's capital to the Celera Genomics group and the remaining capital to Applied Biosystems prior to the effective date of the recapitalization. The group financial statements do not include any intergroup equity interests. The note receivable was liquidated on May 28, 1999 in exchange for a portion of the proceeds received from the sale of the Analytical Instruments business and a new note receivable from Applied Biosystems for $150 million. The new note receivable was for a term of one-year, bearing an interest rate of 5% per annum, and was payable on demand without penalty. The Celera Genomics group received payment of the new note during fiscal 2000. ================================================================================ 65 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Tax Benefit Receivable from Applied Biosystems Applied Biosystems reimburses the Celera Genomics group for tax benefits generated, which then can be utilized on a consolidated basis. These reimbursements are intended to provide additional cash resources to the Celera Genomics group up to a maximum of $75 million. As of June 30, 2000, the Celera Genomics group had generated $68.5 million of tax benefits utilized by Applied Biosystems. At June 30, 1999 and 2000, the tax benefit receivable was $9.9 million and $16.7 million, respectively. Third-Party Equity Transaction In June 1999, the Company granted an option to purchase 2.6 million shares of Celera Genomics stock to a third party and entered into a one-year non-compete agreement with such party. The fair value of such option approximated $7.2 million and was amortized over the life of the non-compete agreement. Stock Purchase Warrants On January 22, 1998, the Company acquired PerSeptive Biosystems, Inc. The acquisition was accounted for as a pooling of interests, and Applied Biosystems' financial results were restated to include the combined operations. As a result of the merger, each outstanding warrant for shares of PerSeptive common stock was converted into warrants for the number of shares of the Company's common stock that would have been received by the holder if such warrants had been exercised immediately prior to the effective time of the merger. As a result of the recapitalization and subsequent stock splits, each outstanding warrant for shares of PerSeptive common stock was further converted into warrants to acquire .1926 share of Celera Genomics stock and .7704 share of PE Biosystems stock. The warrants are not separately exercisable into solely Celera Genomics stock or PE Biosystems stock. The exercise price and expiration date of each warrant were not affected by the recapitalization or the stock splits. At June 30, 2000, there were 53,799 warrants outstanding at an exercise price of $65.73. Upon exercise of all of the warrants, the holders would receive 53,799 shares of Celera Genomics stock and 215,196 shares of PE Biosystems stock. The warrants expire in September 2003. Stockholders' Rights Plan In connection with the recapitalization, the Company adopted a new Stockholders' Rights Plan (the "Rights Agreement") to protect stockholders against abusive takeover tactics. Under the Rights Agreement, the Company will issue one right for every two shares of Celera Genomics stock (a "Celera Genomics Right"), which will allow holders to purchase one-thousandth of a share of Series B participating junior preferred stock of the Company at a purchase price of $125, subject to adjustment (the "Series B Purchase Price"), and one right for every four shares of PE Biosystems stock (a "PE Biosystems Right"), which will allow holders to purchase one-thousandth of a share of Series A participating junior preferred stock of the Company at a purchase price of $425, subject to adjustment (the "Series A Purchase Price"). A Celera Genomics Right or PE Biosystems Right will be exercisable only if a person or group ("Acquiring Person"): (a) acquires 15% or more of the shares of Celera Genomics stock then outstanding or 15% or more of the shares of PE Biosystems stock then outstanding or (b) commences a tender offer that would result in such person or group owning such number of shares. If any person or group becomes an Acquiring Person, each Celera Genomics Right and each PE Biosystems Right will entitle its holder to purchase, for the Series B Purchase Price or the Series A Purchase Price, a number of shares of the related class of common stock of the Company having a market value equal to twice such purchase price. If following the time a person or group becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction and the Company is not the surviving corporation; any person consolidates or merges with the Company and all or part of the common stock is converted or exchanged for securities, cash, or property of any other person; or 50% or more of the Company's assets or earnings power is sold or transferred, each Celera Genomics Right and each PE Biosystems Right will entitle its holder to purchase, for the Series B Purchase Price or Series A Purchase Price, a number of shares of common stock of the surviving entity in any such merger, consolidation or business combination or the purchaser in any such sale or transfer having a market value equal to twice the Series A Purchase Price or Series B Purchase Price. The rights are redeemable at the Company's option at one cent per right to a person or group becoming an Acquiring Person. Capital Stock The Company's authorized capital stock consists of 225 million shares of Celera Genomics stock, 500 million shares of PE Biosystems stock, and 10 million shares of PE Corporation preferred stock. Of the 10 million authorized shares of preferred stock, the Company has designated 80,000 shares of two series of participating junior preferred stock in connection with the Company's stockholders' rights plan as previously described. In March 2000, the Company completed a follow-on public offering of Celera Genomics stock. In this offering, 4.4 million shares of Celera Genomics stock were sold, resulting in net proceeds of $943.3 million. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 66

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Note 8--Stock Plans Stock Option Plans Under the Company's stock option plans, officers, directors, and other key employees may be granted options, each of which allows for the purchase of existing common stock at a price of not less than 100% of fair market value at the date of grant. Prior to the recapitalization, most option grants had a two-year vesting schedule, whereby 50% of the option grant vested at the end of each year from the date of grant. The Board of Directors has extended that schedule for most options granted subsequent to the recapitalization whereby 25% will vest annually, resulting in 100% vesting after four years. Options generally expire ten years from the date of grant. Transactions relating to the stock option plans are summarized below: <TABLE> <CAPTION> PE Corporation -------------------------- Weighted Number of Average Options Exercise Price ============================================================== <S> <C> <C> Fiscal 1998 Outstanding at June 30, 1997 4,155,603 $ 45.03 Granted 1,997,041 $ 70.41 Exercised 780,994 $ 34.76 Cancelled 154,686 $ 71.42 -------------------------------------------------------------- Outstanding at June 30, 1998 5,216,964 $ 55.51 Exercisable at June 30, 1998 2,936,389 $ 43.12 ============================================================== Fiscal 1999 Granted 37,000 $ 86.61 Exercised 1,549,364 $ 45.74 Cancelled 108,914 $ 67.92 -------------------------------------------------------------- Outstanding at May 5, 1999 3,595,686 $ 60.23 Exercisable at May 5, 1999 2,639,696 $ 55.43 ============================================================== <CAPTION> Celera Genomics Stock -------------------------- Weighted Number of Average Options Exercise Price ============================================================== <S> <C> <C> Fiscal 1999 Outstanding at May 6, 1999 3,595,686 $ 5.52 Granted 7,952,036 $ 8.72 Exercised 281,788 $ 5.25 Cancelled 132,606 $ 6.67 -------------------------------------------------------------- Outstanding at June 30, 1999 11,133,328 $ 7.81 Exercisable at June 30, 1999 3,636,232 $ 6.39 ============================================================== Fiscal 2000 Granted 2,838,848 $ 77.55 Exercised 1,392,069 $ 6.44 Cancelled 311,266 $ 11.04 -------------------------------------------------------------- Outstanding at June 30, 2000 12,268,841 $ 20.49 Exercisable at June 30, 2000 3,945,450 $ 7.47 ============================================================== </TABLE> As a result of the recapitalization, each outstanding stock option under the Company's stock option plans was converted into separately exercisable options to acquire one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock prior to giving effect of the Celera Genomics stock split and PE Biosystems stock splits. The exercise price for the resulting PE Biosystems stock options and Celera Genomics stock options was calculated by multiplying the exercise price under the original option from which they were converted by a fraction, the numerator of which was the opening price of PE Biosystems stock or Celera Genomics stock, as the case may be, on May 6, 1999 (the first date such stocks were traded on the New York Stock Exchange) and the denominator of which was the sum of such PE Biosystems stock and Celera Genomics stock prices. However, the aggregate intrinsic value of the options was not increased, and the ratio of the exercise price per option to the market value per share was not reduced. In addition, the vesting provisions and option periods of the original grants has remained the same on conversion. In connection with the acquisition of Paracel, the Company assumed Paracel's stock option plans. Options granted to Paracel employees and directors in exchange for their Paracel options at the acquisition date have been included in Celera Genomics stock options granted amount for fiscal 2000. The following table summarizes information regarding options outstanding and exercisable for the Celera Genomics group at June 30, 2000: <TABLE> <CAPTION> Weighted Average ------------------------ Contractual Life Number of Exercise Remaining (Option prices per share) Options Price in Years =================================================================== <S> <C> <C> <C> Options Outstanding At $.19 - $6.00 812,644 $ 3.49 4.6 At $6.01 - $8.50 1,446,691 $ 6.77 7.2 At $8.51 - $10.00 6,706,186 $ 8.56 8.5 At $10.01 - $135.00 3,303,320 $ 54.91 8.8 =================================================================== Options Exercisable At $.19 - $6.00 797,252 $ 3.52 At $6.01 - $8.50 1,290,681 $ 6.69 At $8.51 - $10.00 1,482,797 $ 8.56 At $10.01 - $135.00 374,720 $ 14.30 =================================================================== </TABLE> 1999 Stock Incentive Plans The PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan (the "PE Biosystems Plan") and the PE Corporation/Celera Genomics Group 1999 Stock Incentive Plan (the "Celera Genomics Plan") were approved in April 1999, as amended. The Celera Genomics Plan authorizes grants of stock options, stock awards, and performance shares with respect to Celera Genomics stock. The PE Biosystems Group Plan authorizes grants of stock options, stock awards, and performance shares with respect to PE Biosystems stock. Directors, certain officers, and key employees with responsibilities involving both Applied Biosystems and the Celera Genomics group may be granted awards under both incentive plans in a manner which reflects their responsibilities. The Board of Directors believes that granting awards tied to the performance of the group in which the participants work and, in certain cases the other group, is in the best interests of the Company and its stockholders. ================================================================================ 67 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Employee Stock Purchase Plans The Company's employee stock purchase plan offers domestic and certain non-U.S. employees the right to purchase shares of Celera Genomics stock and/or PE Biosystems stock. The purchase price in the U.S. is equal to the lower of 85% of the average market price of the applicable class of common stock on the offering date or 85% of the average market price of such class of common stock on the last day of the purchase period. Provisions of the plan for employees in countries outside the U.S. vary according to local practice and regulations. Celera Genomics stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 24,000 shares and 303,000 shares, respectively. PE Biosystems stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 98,000 shares and 161,000 shares, respectively. Common stock issued under the employee stock purchase plans during fiscal 1998 and 1999 totaled 174,000 shares and 168,000 shares, respectively, of PE Corporation (predecessor) common stock. Director Stock Purchase and Deferred Compensation Plan The Company has a Director Stock Purchase and Deferred Compensation Plan that requires non-employee directors of the Company to apply at least 50% of their annual retainer to the purchase of common stock. Purchases of Celera Genomics stock and PE Biosystems stock are made in a ratio approximately equal to the number of shares of Celera Genomics and PE Biosystems stock outstanding. The purchase price is the fair market value on the date of purchase. At June 30, 2000, the Company had approximately 85,000 shares of Celera Genomics stock and 341,000 shares of PE Biosystems stock available for issuance under this plan. Restricted Stock As part of the Company's stock incentive plans, key employees may be, and non-employee directors are, granted shares of restricted stock that will vest when certain continuous employment/service restrictions and/or specified performance goals are achieved. The fair value of shares granted is generally expensed over the restricted periods, which may vary depending on the estimated achievement of performance goals. As a result of the recapitalization, each share of restricted stock held was redesignated as 0.5 of a share of Celera Genomics stock and one share of PE Biosystems stock prior to giving effect of the Celera Genomics stock split and PE Biosystems stock splits. Restricted stock granted to key employees and non-employee directors during fiscal 2000 totaled 900 shares of Celera Genomics stock and 3,600 shares of PE Biosystems stock. Restricted stock granted prior to recapitalization to key employees and non-employee directors during fiscal 1998 and 1999 totaled 4,350 shares and 42,900 shares, respectively, of the PE Corporation (predecessor) common stock. Compensation expense recognized by the Celera Genomics group for these awards was $1.0 million for fiscal 2000. Performance Unit Bonus Plan The Company adopted a Performance Unit Bonus Plan in fiscal 1997. The plan utilized stock options and a performance unit bonus pool. Performance units granted under the plan represented the right to receive a cash or stock payment from the Company at a specified date in the future. The amount of the payment was determined on the date of the grant. The performance units vested upon shares of the Company's common stock attaining and maintaining specified price levels for a specified period. As of June 30, 2000, three series of performance units were granted under the plan. Certain members of the Celera Genomics group senior management participated in the first series of the plan, which was prior to the recapitalization. Compensation expense, pertaining to the first of the series, for the Celera Genomics group was $1.3 million for fiscal 1999. Fiscal 1999 compensation expense included $1.0 million related to the acceleration of payments under the plan as a result of the attainment of the performance targets. The vesting of the related stock options was not accelerated. No compensation expense pertaining to the plan was recognized in fiscal 1998 or 2000. The plan was modified in fiscal 2000 to replace the performance units with performance stock options. Performance stock options vest in equal portions upon the earlier of the shares of PE Biosystems stock attaining and maintaining specified price levels for a specified period of time or after a specified future date. Members of the Celera Genomics group are not participants in this modified plan. Accounting for Stock-Based Compensation APB No. 25, "Accounting for Stock Issued to Employees," is applied in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for stock option and employee stock purchase plans, as all options have been issued at fair market value. Pro forma net income and earnings per share information, as required by SFAS No. 123, "Accounting for Stock-Based Compensation," have been determined for employee stock plans under the statement's fair value method. The fair value of the options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions: <TABLE> <CAPTION> For the years ended June 30, 1999 2000 ============================================================== <S> <C> <C> Dividend yield -% -% Volatility 34.40% 99.30% Risk-free interest rates 5.0% 6.21% Expected option life in years 5.23 3.5 ============================================================== </TABLE> For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 68

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued Pro forma information for fiscal years 1999 and 2000 is presented below: <TABLE> <CAPTION> (Dollar amounts in millions, except per share amounts) 1999 2000 ================================================================================= <S> <C> <C> Net loss As reported $ (44.9) $ (92.7) Pro forma $ (47.5) $ (106.6) Basic and diluted loss per share As reported $ (.89) $ (1.73) Pro forma $ (.95) $ (1.98) ================================================================================= </TABLE> Pro forma information for fiscal 1998 is omitted since Celera Genomics stock was not part of the capital structure of the Company at that time. The weighted average fair value of PE Corporation (predecessor) stock options granted was $24.83 and $33.54 for fiscal 1998 and 1999, respectively. The weighted average fair value of Celera Genomics stock options granted was $4.13 and $46.41 for fiscal 1999 and 2000, respectively. Since Celera Genomics stock and Applied Biosystems were not part of the capital structure of the Company prior to May 6, 1999, there were no stock options outstanding prior to that date. Therefore, the fiscal 1999 pro forma effect of Celera Genomics stock options is not representative of what the effect would be in future years. Note 9--Related-Party Transactions Sales of Products and Services Between Groups A group will sell products or services to the other group on terms that would be available from third parties in commercial transactions. If terms for such transactions are not available, the purchasing group will pay fair value as determined by the Board of Directors for such products and services or at the cost (including overhead) of the selling group. For fiscal 1999 and fiscal 2000, R&D expenses included $15.2 million and $53.9 million, respectively, for purchases of instruments, lease payments on instruments, and the purchase of consumables, and $2.1 million and $.5 million, respectively, of contracted R&D services from Applied Biosystems. Access to Technology and Know-How Each group has free access to all Company technology and know-how (excluding products and services of the other group) that may be useful in that group's business, subject to obligations and limitations applicable to the Company and to such exceptions that the Board of Directors may determine. The groups consult with each other on a regular basis concerning technology issues that affect both groups. The costs of developing technology remain in the group responsible for its development. Note 10--Commitments and Contingencies Future minimum payments at June 30, 2000 under non-cancelable operating leases for real estate and equipment were as follows: <TABLE> <CAPTION> (Dollar amounts in millions) ============================================================= <S> <C> 2001 $ 35.6 2002 14.5 2003 5.1 2004 1.4 2005 1.4 2006 and thereafter 1.1 ------------------------------------------------------------- Total $ 59.1 ============================================================= </TABLE> Rental expense was $.3 million for fiscal 1998, $8.5 million for fiscal 1999, and $30.5 million for fiscal 2000. On November 18, 1997, Amersham Pharmacia Biotech, Inc. ("Amersham") filed a patent infringement action against the Company in the United States District Court for the Northern District of California. The complaint alleges that the Company is directly, contributorily, or by inducement infringing U.S. Patent No. 5,688,648 ("the '648 patent"), entitled "Probes Labelled with Energy Transfer Coupled Dyes." Amersham asserts that the Company's sale of DNA analysis reagents and systems that incorporate "BigDye" fluorescence detection technology would infringe the '648 patent, and seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '648 patent is invalid and that the Company has not infringed the '648 patent. This case is scheduled for trial in January 2001. On March 13, 1998, the Company filed a patent infringement action against Amersham and Molecular Dynamics, Inc. in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 4,811,218) is infringed by reason of Molecular Dynamics' and Amersham's sale of certain DNA analysis systems (e.g., the MegaBACE 1000 System). In response, the defendants have asserted various affirmative defenses and several counterclaims, including that the Company is infringing two patents (U.S. 5,091,652 and U.S. 5,459,325) owned by or licensed to Molecular Dynamics by selling the ABI PRISM(TM) 377 DNA Sequencing Systems. On May 21, 1998, Amersham filed a patent infringement action against the Company in the United States District Court for the Southern District of New York. The complaint alleges that the Company is infringing, contributing to the infringement, and inducing the infringement of U.S. Patent No. 4,707,235 ("the '235 patent") entitled "Electrophoresis Method and Apparatus having Continuous Detection Means." The complaint seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '235 patent is invalid and that the Company does not infringe the '235 patent. The matters described in this paragraph and the immediately preceding paragraph have been consolidated into a single case to be heard in the United States District Court for the Northern District of California. This case has not yet been scheduled for trial. ================================================================================ 69 PE CORPORATION 2000 ANNUAL REPORT

CELERA GENOMICS GROUP Notes to Combined Financial Statements continued On May 30, 2000, the Company filed a patent infringement action against Amersham in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 5,945,526) is infringed by reason of Amersham's sale of DNA analysis reagents and systems that incorporate ET Terminator fluorescence detection technology. This case is in the early stages of discovery. The Company has been named as a defendant in several legal actions, including patent, commercial, and environmental, arising from conduct of normal business activities. Although the amount of any liability that might arise with respect to any of these matters cannot be accurately predicted, the resulting liability, if any, will not in the opinion of management have a material adverse effect on the financial statements of the Celera Genomics group or the Company. The holders of Celera Genomics stock are stockholders of the Company and will continue to be subject to all risks associated with an investment in the Company, including any legal proceedings and claims affecting Applied Biosystems. Note 11--Financial Instruments The fair value of significant financial instruments held or owned by the Company is estimated using various methods. Cash and cash equivalents approximate their carrying amount. Fair values of short-term investments and notes receivable are estimated based on quoted market prices, if available, or quoted market prices of financial instruments with similar characteristics. The fair value of debt is based on the current rates offered to the Company for debt of similar remaining maturities. The following table presents the carrying amounts and fair values of significant financial instruments at June 30, 1999 and 2000: <TABLE> <CAPTION> 1999 2000 ------------------- ------------------ Carrying Fair Carrying Fair (Dollar amounts in millions) Amount Value Amount Value ============================================================================ <S> <C> <C> <C> <C> Cash and cash equivalents $ 71.5 $ 71.5 $ 569.9 $ 569.9 Short-term investments $ 541.1 $ 541.1 Note receivable from Applied Biosystems $ 150.0 $ 150.0 Long-term debt $ 46.0 $ 46.0 ============================================================================ </TABLE> Net unrealized gains and losses on short-term investments are reported as a separate component of accumulated other comprehensive income. Note 12--Quarterly Financial Information (Unaudited) The following is a summary of quarterly financial results: <TABLE> <CAPTION> First Quarter Second Quarter ------------------- --------------------- (Dollar amounts in millions except per share amounts) 1999 2000 1999 2000 ======================================================================= <S> <C> <C> <C> <C> Net revenues $ 3.9 $ 8.3 $ 1.7 $ 8.3 Operating loss (5.6) (32.3) (12.9) (39.3) Net loss (3.6) (19.4) (8.6) (24.3) ======================================================================= Net loss per share Basic and diluted $ (.38) $ (.47) ======================================================================= Price range of common stock High $ 26-29/32 $ 96-13/32 Low $ 7-7/8 $ 15-3/16 ======================================================================= <CAPTION> Third Quarter Fourth Quarter ------------------- --------------------- (Dollar amounts in millions except per share amounts) 1999 2000 1999 2000 ======================================================================= <S> <C> <C> <C> <C> Net revenues $ 1.8 $ 11.1 $ 5.1 $ 15.0 Operating loss (19.3) (42.9) (31.0) (53.6) Net loss (12.8) (24.1) (19.9) (24.9) ======================================================================= Net loss per share Basic and diluted $ (.45) $ (.39) $ (.43) ======================================================================= Price range of common stock High $ 276 $ 11-1/4 $ 151 Low $ 73 $ 7-3/32 $ 50-3/16 ======================================================================= </TABLE> There were no dividends on Celera Genomics stock for the periods presented. Fiscal 1999 price ranges are for the period from May 6, 1999 through June 30, 1999. The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called Celera Genomics stock and PE Biosystems stock. Per share and price range of common stock reflect the two-for-one stock split effective February 2000. Events Impacting Comparability Fiscal 1999 Second, third, and fourth quarter results included before-tax costs of $.6 million, $.8 million, and $3.2 million, respectively, in connection with the recapitalization of the Company. Fourth quarter results also included before-tax costs of $1.0 million related to the acceleration of certain long-term compensation programs of the Company. The aggregate after-tax effect of these items increased second, third, and fourth quarter net loss by $.6 million, $.8 million, and $3.9 million, respectively, and increased fourth quarter net loss by $.08 per diluted share. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 70

CELERA GENOMICS GROUP Report of Management and Report of Independent Accountants Report of Management To the Stockholders of PE Corporation Management is responsible for the accompanying combined financial statements, which have been prepared in conformity with generally accepted accounting principles. In preparing the financial statements, it is necessary for management to make informed judgments and estimates which it believes are in accordance with generally accepted accounting principles appropriate under the circumstances. Financial information presented elsewhere in this annual report is consistent with that in the financial statements. In meeting its responsibility for preparing reliable financial statements, the Company maintains a system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with corporate policy and management authorization. The Company believes its accounting controls provide reasonable assurance that errors or irregularities which could be material to the financial statements are prevented or would be detected within a timely period. In designing such control procedures, management recognizes judgments are required to assess and balance the costs and expected benefits of a system of internal accounting controls. Adherence to these policies and procedures is reviewed through a coordinated audit effort of the Company's internal audit staff and independent accountants. The Audit/Finance Committee of the Board of Directors is comprised solely of outside directors and is responsible for overseeing and monitoring the quality of the Company's accounting and auditing practices. The independent accountants and internal auditors have full and free access to the Audit/Finance Committee and meet periodically with the committee to discuss accounting, auditing, and financial reporting matters. /s/ Dennis L. Winger Dennis L. Winger Senior Vice President and Chief Financial Officer /s/ Tony L. White Tony L. White Chairman, President, and Chief Executive Officer Report of Independent Accountants To the Stockholders and Board of Directors of PE Corporation In our opinion, the accompanying combined statements of financial position and the related combined statements of operations, of group equity and comprehensive loss, and of cash flows present fairly, in all material respects, the financial position of the Celera Genomics group of PE Corporation at June 30, 2000 and 1999, and the results of its operations and its cash flows for each of the three fiscal years in the period ended June 30, 2000, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the management of PE Corporation; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. As described above and more fully in Note 1 to the Celera Genomics group combined financial statements, the Celera Genomics group is a group of PE Corporation; accordingly, the combined financial statements of the Celera Genomics group should be read in conjunction with the audited financial statements of PE Corporation. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP Stamford, Connecticut July 25, 2000 ================================================================================ 71 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Selected Financial Data <TABLE> <CAPTION> (Dollar amounts in thousands except per share amounts) For the years ended June 30, 1996 1997 1998 1999 2000 ============================================================================================================= <S> <C> <C> <C> <C> <C> Financial Operations Net revenues $ 642,218 $ 768,368 $ 944,306 $ 1,216,897 $ 1,371,035 Income from continuing operations 1,310 102,492 15,694 96,797 95,496 Per share of common stock Basic .03 2.16 .32 Diluted .03 2.07 .31 Income (loss) from discontinued operations (net of income taxes) (37,833) 27,906 40,694 79,058 Net income (loss) (36,523) 130,398 56,388 175,855 95,496 Per share of common stock Basic (.80) 2.74 1.16 Diluted (.77) 2.63 1.12 Dividends per share .68 .68 .68 .51 ============================================================================================================= Applied Biosystems Income from continuing operations $ 3,899 $ 132,739 $ 24,009 $ 148,365 $ 186,247 Per share of common stock Basic .74 .90 Diluted .72 .86 Income (loss) from discontinued operations (net of income taxes) (37,833) 27,906 40,694 79,058 Net income (loss) (33,934) 160,645 64,703 227,423 186,247 Per share of common stock Basic 1.13 .90 Diluted 1.10 .86 Dividends per share .0425 .17 ============================================================================================================= Celera Genomics Group Net loss $ (2,589) $ (30,247) $ (8,315) $ (44,894) $ (92,737) Per share of common stock Basic and diluted (.89) (1.73) ============================================================================================================= Other Information Cash and short-term investments $ 121,145 $ 217,222 $ 84,091 $ 308,021 $ 1,505,642 Working capital 229,639 354,742 287,991 471,350 1,479,027 Capital expenditures 28,198 58,057 71,820 176,035 125,815 Total assets 809,856 1,006,793 1,135,276 1,519,307 3,083,315 Long-term debt 33,694 59,152 33,726 31,452 82,115 Total debt 89,801 89,068 45,825 35,363 97,808 Stockholders' equity 373,727 504,270 564,248 821,525 2,220,492 ============================================================================================================= </TABLE> The selected financial data should be read with the consolidated financial statements. The recapitalization of the Company on May 6,1999 resulted in the issuance of two new classes of common stock called PE Corporation-PE Biosystems Group Common Stock and PE Corporation-Celera Genomics Group Common Stock. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. Applied Biosystems per share data reflects the two-for-one stock splits effective July 1999 and February 2000. Celera Genomics group per share data reflects the two-for-one stock split effective February 2000. A number of items impact the comparability of the data from continuing operations. Before-tax amounts include: o Restructuring, other merger costs, and acquisition-related costs of $17.5 million for fiscal 1996, $48.1 million for fiscal 1998, $6.1 million for fiscal 1999, and $2.1 million for fiscal 2000; o A restructuring reserve adjustment of $9.2 million for fiscal 1999 relating to excess fiscal 1998 restructuring liabilities; o Gain on investments of $11.7 million for fiscal 1996, $64.9 million for fiscal 1997, $1.6 million for fiscal 1998, $6.1 million for fiscal 1999, and $48.6 million for fiscal 2000; o Acquired research and development charges of $33.9 million for fiscal 1996, $26.8 million for fiscal 1997, and $28.9 million for fiscal 1998; o Charges for the impairment of assets of $9.9 million for fiscal 1996, $.7 million for fiscal 1997, and $14.5 million for fiscal 1999; o Tax benefit and valuation allowance reductions of $22.2 million for fiscal 1999; o A charge of $3.5 million for a donation to the Company's charitable foundation for fiscal 1999; o Foreign currency hedge contract-related gain of $2.3 million for fiscal 1999; o Charges of $9.2 million for fiscal 1999 relating to the recapitalization of the Company; o Charges relating to the acceleration of certain long-term compensation programs as a result of the attainment of performance targets of $10.1 million for fiscal 1999 and $45.0 million for fiscal 2000; and o A gain of $8.2 million on the sale of real estate for fiscal 2000. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 72

PE CORPORATION Management's Discussion and Analysis Management's Discussion of Continuing Operations PE Corporation ("PE" or "our company") is comprised of two separate business segments in continuing operations: the PE Biosystems group and the Celera Genomics group. The performance of these businesses is reflected separately by two classes of common stock: PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock") and PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock"). The PE Biosystems group manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at our company's 2000 annual meeting. We refer to the PE Biosystems group as Applied Biosystems. The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business into the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. You should read this discussion with our consolidated financial statements. Historical results and percentage relationships are not necessarily indicative of operating results for any future periods. Throughout the following discussion of operations we refer to the impact on our reported results of the movement in foreign currency exchange rates from one reporting period to another as "foreign currency translation." Discontinued Operations Effective May 28, 1999, we completed the sale of our Analytical Instruments business to EG&G, Inc. Analytical Instruments, formerly a unit of Applied Biosystems, developed, manufactured, marketed, sold, and serviced analytical instruments used in a variety of markets. The aggregate consideration received from the sale was $425 million, consisting of $275 million in cash and one-year secured promissory notes in the aggregate principal amount of $150 million bearing interest at a rate of 5% per annum. The promissory notes were collected in fiscal 2000. In fiscal 1999, we recognized a net gain on disposal of discontinued operations of $100.2 million, net of $87.8 million of income taxes. Amounts previously reported for Analytical Instruments were reclassified and stated as discontinued operations. See Note 15 to our consolidated financial statements. Events Impacting Comparability Acquisitions, Investments, and Dispositions During the fourth quarter of fiscal 2000, we acquired Paracel, Inc. in a stock-for-stock transaction. Paracel produces advanced genomic and text analysis technologies. Its products include a hardware accelerator for sequence comparison, a hardware accelerator for text search, and sequence analysis software tools. Approximately 1.6 million shares of Celera Genomics stock were issued in exchange for the outstanding shares of Paracel common stock not previously owned by our company. At the time of the acquisition, our company owned 14% of Paracel. On January 22, 1998, we acquired PerSeptive Biosystems, Inc. The acquisition was accounted for as a pooling of interests and, accordingly, our financial results were restated to include the combined operations. We acquired Molecular Informatics, Inc. and a 14.5% interest, and approximately 52% of the voting rights, in Tecan AG during the second quarter of fiscal 1998. The results of operations for these acquisitions, each of which was accounted for as a purchase, were included in our consolidated financial statements since the date of acquisition. During the fourth quarter of fiscal 1999, we divested our interest in Tecan. A before-tax gain of $1.6 million was recognized on the sale. A discussion of significant acquisitions, investments, and dispositions is provided in Note 2 to our consolidated financial statements. Restructuring and Other Special Charges During fiscal 2000, we incurred $2.1 million of before-tax costs associated with acquisitions for Applied Biosystems which were not consummated. In fiscal 1999, non-recurring before-tax costs of $9.2 million were incurred in connection with the recapitalization of our company. See Note 1 to our consolidated financial statements for a discussion of the recapitalization. During fiscal 1998, $48.1 million of before-tax charges were recorded for restructuring and other merger costs to integrate PerSeptive into our company following the acquisition. The objectives of the integration plan were to lower PerSeptive's cost structure by reducing excess manufacturing capacity, achieve broader worldwide distribution of PerSeptive's products, and combine sales, marketing, and administrative functions. The charge included: $33.9 million for restructuring the combined operations; $8.6 million for transaction costs; and $4.1 million of inventory-related write-offs, recorded in cost of sales, associated with the rationalization of certain product lines. Additional merger-related period costs of $6.1 million for fiscal 1999 and $1.5 million for fiscal 1998 were incurred for training, relocation, and communication in connection with the integration. ================================================================================ 73 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued During the fourth quarter of fiscal 1999, we completed the restructuring actions. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. A discussion of the restructuring program is provided in Note 14 to our consolidated financial statements. Acquired Research and Development During the second quarter of fiscal 1998, we expensed $28.9 million of the Molecular Informatics acquisition cost as in-process research and development, representing 53.6% of the purchase price. This amount was attributed to and supported by a discounted probable cash flow analysis on a project-by-project basis. At the acquisition date, the technological feasibility of the acquired technology had not been established and the acquired technology had no future alternative uses. We attributed approximately 10% of the in-process research and development value to BioLIMS, a software system that manages data, initiates analysis programs, and captures the results in a centralized, relational database for sequencing instruments; 6% to GA SFDB, a client-side add-on product to several existing gene sequencing instruments; 38% to BioMERGE, a client-server management and integration system that organizes proprietary, public, and third-party results in a single relational database for the drug discovery and genomic research markets; 9% to BioCLINIC, a client-server management and integration system that organizes proprietary, public, and third-party results generated from DNA and protein sequence analysis in a single database for the clinical trials phase of drug development; and 37% to SDK, an open architecture software platform from which all of Molecular Informatics' future software applications were expected to be derived. As of the acquisition date, all of the major functionality for BioLIMS 2.0 had been completed and the product was subsequently released in September 1998. As of the acquisition date, BioLIMS 3.0 was in the design and scoping phase. As of the acquisition date, GA SFDB was in early alpha phase and had been completed concurrent with the development of BioLIMS 2.0. This product was released in September 1998. As of the acquisition date, BioMERGE 3.0's functional scope was defined and the requirements assessment had been completed. The product was released in November 1998. As of the acquisition date, the BioCLINIC product requirements had been specified and discussions had begun with two potential customers to begin the specific software modifications. Development efforts were terminated in April 1998 due to unsuccessful marketing efforts. As of the acquisition date, the SDK requirements' assessment had been completed and the functional scope had been defined. We attributed $11.8 million of the purchase price to core technology and existing products, primarily related to the BioMERGE product. We applied a risk-adjusted discount rate to the project's cash flows of 20% for existing technology and 23% for in-process technology. The risk premium of 3% for in-process technologies was determined by management based on the associated risks of releasing these in-process technologies versus the existing technologies for the emerging bioinformatics software industry. The significant risks associated with these products include the limited operating history of Molecular Informatics, uncertainties surrounding the market acceptance of such in-process products, competitive threats from other bioinformatics companies, and other risks. Management is primarily responsible for estimating the fair value of such existing and in-process technology. Asset Impairment During the fourth quarter of fiscal 1999, we incurred a $14.5 million charge to cost of sales for the impairment of intangible assets associated with the Molecular Informatics business. This impairment resulted primarily from a decline in management's assessment of future cash flows from this business, which included the discontinuance of certain product lines in the fourth quarter. Gain on Investments Fiscal 2000 included a before-tax gain of $48.6 million related to the sale of minority equity investments. Fiscal 1999 and 1998 included before-tax gains of $4.5 million and $1.6 million, respectively, related to the sale and release of contingencies on minority equity investments. As previously described, fiscal 1999 also included a before-tax gain of $1.6 million related to the sale of our interest in Tecan. See Note 2 to our consolidated financial statements. Other Events Impacting Comparability Fiscal 2000 and 1999 included charges of $45.0 million and $10.1 million, respectively, to selling, general and administrative expenses, for costs related to the acceleration of certain long-term compensation programs as a result of the attainment of performance targets. During the fourth quarter of fiscal 2000, we recorded a gain of $8.2 million to other income, net from the sale of real estate. A gain of $2.3 million related to foreign currency hedge contracts was recognized in other income, net during the fourth quarter of fiscal 1999. During the fourth quarter of fiscal 1999, we made a $3.5 million donation to our company's charitable foundation, which supports educational and other charitable programs. The charge was recorded to selling, general and administrative expenses. The effective income tax rate for fiscal 1999 included certain tax benefit and valuation allowance reductions of $22.2 million. See Note 4 to our consolidated financial statements for a discussion of income taxes. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 74

PE CORPORATION Management's Discussion and Analysis continued Results of Continuing Operations--2000 Compared With 1999 We reported income from continuing operations of $95.5 million for fiscal 2000 compared with $96.8 million for fiscal 1999. On a segment basis, Applied Biosystems reported income from continuing operations of $186.2 million for fiscal 2000 compared with $148.4 million for fiscal 1999 and the Celera Genomics group reported a net loss of $92.7 million for fiscal 2000 compared with a net loss of $44.9 million for fiscal 1999. Income from continuing operations for our company, on a comparable basis excluding the special items previously described from both fiscal years and Tecan from the prior fiscal year, increased 4.5%, to $95.5 million for fiscal 2000 compared with $91.4 million for fiscal 1999. On a segment basis, Applied Biosystems, excluding the special items from both fiscal years and Tecan from the prior fiscal year, income from continuing operations increased 35.4% to $186.2 million for fiscal 2000 compared with $137.5 million for fiscal 1999. The Celera Genomics group reported a net loss of $92.7 million for fiscal 2000 compared with a net loss of $39.6 million for fiscal 1999, excluding the special items allocated to the group. The special items consisted of a before-tax charge of $4.6 million for costs incurred in connection with the recapitalization of our company and $1.0 million of before-tax costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization and the attainment of performance targets. Net revenues were $1.4 billion for fiscal 2000 compared with $1.2 billion for fiscal 1999, an increase of 12.7%. On a segment basis, net revenues for Applied Biosystems were $1.4 billion for fiscal 2000 compared with $1.2 billion for fiscal 1999. The Celera Genomics group reported net revenues of $42.7 million for fiscal 2000 compared with $12.5 million for fiscal 1999. Net revenues for Applied Biosystems, excluding the results of Tecan for the prior fiscal year, increased 24.0% compared with fiscal 1999. Increased net revenues for sequence detection systems, including reagents and instrument systems for gene expression analysis and single nucleotide polymorphism ("SNP") detection, mass spectrometry products, and DNA sequencing consumables were contributors. The effects of foreign currency translation decreased net revenues by approximately $1.8 million compared with the prior fiscal year as weakness in the euro was essentially offset by strengthening of the Japanese yen. Net revenues from leased instruments and shipments of consumables and project materials to the Celera Genomics group were $59.8 million for fiscal 2000, or 4.3% of Applied Biosystems' net revenues. For fiscal 1999, net revenues from leased instruments, shipments of instruments and consumables, and contracted R&D services to the Celera Genomics group were $17.3 million and represented less than 2% of Applied Biosystems' net revenues. Geographically, excluding the net revenues of Tecan for fiscal 1999, Applied Biosystems reported revenue growth in all regions for fiscal 2000 compared with the prior fiscal year. Net revenues increased 21.6% in the United States, 18.5% in Europe, 35.8% in the Far East, and 50.7% in Latin America and other markets. Excluding the favorable effects of foreign currency translation in Japan, net revenues increased approximately 23% in the Far East, partly reflecting increased government funding for genomics-related research. Excluding the negative effects of foreign currency translation in Europe, net revenues increased by approximately 27%. Net revenues for the Celera Genomics group increased $30.2 million for fiscal 2000 compared with fiscal 1999. The increased revenues resulted primarily from database subscription agreements initiated during fiscal 2000 and the second half of fiscal 1999 and an increase in related genomics services revenues. Revenues for genotyping services remained essentially unchanged. Gross margin as a percentage of net revenues for our company was 55.6% for fiscal 2000 compared with 54.1% for fiscal 1999. Gross margin for Applied Biosystems as a percentage of net revenues was 54.1% for fiscal 2000 compared with 53.9% for fiscal 1999. Excluding Tecan and the asset impairment charge from the prior fiscal year, gross margin as a percentage of net revenues for Applied Biosystems was 54.1% for fiscal 1999. SG&A expenses for our company were $436.9 million for fiscal 2000 compared with $364.1 million for fiscal 1999. On a segment basis, SG&A expenses were $393.9 million and $335.9 million for fiscal 2000 and 1999, respectively, for Applied Biosystems, and $43.0 million and $28.3 million for fiscal 2000 and 1999, respectively, for the Celera Genomics group. SG&A expenses for Applied Biosystems, excluding the long-term compensation charges for fiscal 2000 and 1999, Tecan, and the $3.5 million charge for a contribution to our company's charitable foundation for fiscal 1999, increased 20.5%. This increase was due to higher planned worldwide selling and marketing expenses commensurate with the higher revenue growth. As a percentage of net revenues, excluding the special charges from both fiscal years and Tecan from the prior fiscal year, SG&A expenses were 25.1% for fiscal 2000 compared with 25.9% for fiscal 1999. The Celera Genomics group's SG&A expenses increased to $43.0 million for fiscal 2000 compared with $28.3 million for fiscal 1999. The increase was related to the planned scale-up in business development, marketing, and administrative activities in support of the database business. Fiscal 1999 SG&A expenses included $1.0 million for costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization of our company and the attainment of performance targets. R&D expenses for our company increased to $274.8 million for fiscal 2000 compared with $179.3 million for the prior fiscal year. R&D expenses for Applied Biosystems were $141.2 million for fiscal 2000 compared with $133.5 million for fiscal 1999, an increase of 5.7%. Excluding Tecan from the prior fiscal year, R&D expenses for fiscal 2000 increased 18.4% compared with fiscal 1999. As a percentage of net revenues, excluding Tecan from fiscal 1999, R&D expenses ================================================================================ 75 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued were 10.2% for fiscal 2000 compared with 10.7% for fiscal 1999. The prior fiscal year's R&D expense level was higher as a percentage of net revenues due to the development of new products released in the second half of fiscal 1999. The Celera Genomics group's R&D expenses increased $119.4 million to $167.8 million for fiscal 2000 from $48.4 million for fiscal 1999, primarily as a result of a full year of sequencing operations and significantly expanded bioinformatics and software development capabilities. The group also continued to expand its scientific and annotation research teams, and bioinformatics and software engineering staff. R&D expenses for fiscal 2000 included $4.5 million of amortization of goodwill and other intangibles primarily associated with the Paracel acquisition. During fiscal 2000, our company incurred $2.1 million of costs associated with acquisitions for Applied Biosystems which were not consummated. During fiscal 1999, we incurred merger-related period costs of $6.1 million for training, relocation, and communication in connection with the integration of PerSeptive into Applied Biosystems. During the fourth quarter of fiscal 1999, our company completed the restructuring actions associated with integration of PerSeptive following the acquisition. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, Applied Biosystems recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. See Note 14 to our consolidated financial statements for a discussion of the restructuring. Also during fiscal 1999, our company recorded a non-recurring charge of $9.2 million for costs incurred in connection with the recapitalization of our company. These costs included investment banking and professional fees. On a segment basis, Applied Biosystems and the Celera Genomics group were each allocated 50% of the charge. These costs included investment banking and professional fees. <TABLE> <CAPTION> Operating Income (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Operating income before special items $ 142.8 $ 95.2 Asset impairment (14.5) Long-term compensation programs (10.1) (45.0) Charitable foundation contribution (3.5) Restructuring and other merger costs, net 3.1 Recapitalization costs (9.2) Acquisition-related costs (2.1) ------------------------------------------------------------- Operating income $ 108.6 $ 48.1 ============================================================= </TABLE> Operating income for our company decreased to $48.1 million for fiscal 2000 compared with $108.6 million for fiscal 1999. On a comparable basis, excluding the special items previously described, operating income decreased 33.3% to $95.2 million for fiscal 2000 compared with $142.8 million for fiscal 1999. On a segment basis, operating income for Applied Biosystems increased to $213.2 million for fiscal 2000 compared with $187.9 million for the prior fiscal year. On a comparable basis, excluding the special items previously described from both fiscal years and Tecan from the prior fiscal year, operating income increased 32.0% for fiscal 2000 compared with fiscal 1999. Applied Biosystems benefited from increased revenues as a result of strong worldwide demand and lower operating expenses as a percentage of net revenues, partially as a result of a slower than planned increase in staffing during the fiscal year. Operating income as a percentage of net revenues, excluding the special items from both fiscal years and Tecan from the prior fiscal year, increased to 18.8% for fiscal 2000 compared with 17.6% for fiscal 1999. The operating loss for the Celera Genomics group was $168.1 million for fiscal 2000 compared with $68.8 million for fiscal 1999. The increase in the Celera Genomics group's operating loss reflected: the increased sequencing activity; increased investment in research and development activities related to expanded scientific and annotation teams, and bioinformatics staff; and increased operating expenses required to support the expanded product and business development activities. For fiscal 2000 and 1999, Applied Biosystems recorded before-tax gains of $48.6 million and $4.5 million, respectively, related to the sale of minority equity investments. Fiscal 1999 also included a gain of $1.6 million related to the sale of our interest in Tecan. Interest expense was $3.5 million for fiscal 2000 compared with $3.8 million for fiscal 1999. This decrease was primarily due to lower average interest rates. Interest income was $39.4 million for fiscal 2000 compared with $2.9 million for fiscal 1999. This increase was primarily a result of higher balances of cash and cash equivalents and short-term investments, which increased during the third quarter of fiscal 2000 due to a follow-on public offering of Celera Genomics stock, as well as interest on the note receivable related to the sale of the Analytical Instruments business. Other income, net for fiscal 2000 was $3.4 million, primarily related to a gain on the sale of real estate, and was partially offset by costs associated with a portion of our company's foreign currency management program. Other income, net was $.5 million for fiscal 1999, which related primarily to the revaluation of foreign exchange contracts and a legal settlement that were partially offset by the loss on the disposal of certain assets and other non-operating costs. Our company's effective income tax rate was 30% for fiscal 2000 compared with 4% for the prior fiscal year. Excluding special items in both fiscal years and Tecan in fiscal 1999, the effective income tax rate was 24% for fiscal 2000 compared with 25% for the prior fiscal year. The effective income tax rate for fiscal 1999 included the release of valuation allowances of $17.4 million. Because the sale of the Analytical Instruments business had been completed, the valuation allowance was reduced as management believed that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 76

PE CORPORATION Management's Discussion and Analysis continued An analysis of the differences between the federal statutory income tax rate and the effective income tax rate is provided in Note 4 to our consolidated financial statements. For fiscal 1999, we incurred minority interest expense of $13.4 million relating to our company's 14.5% financial interest in Tecan. Results of Continuing Operations--1999 Compared With 1998 We reported income from continuing operations of $96.8 million for fiscal 1999 compared with $15.7 million for fiscal 1998. On a segment basis, Applied Biosystems reported income from continuing operations of $148.4 million for fiscal 1999 compared with $24.0 million for fiscal 1998 and the Celera Genomics group reported a net loss of $44.9 million for fiscal 1999 compared with $8.3 million for fiscal 1998. Income from continuing operations for our company, on a comparable basis excluding the special items previously described, increased 4.0% to $91.4 million for fiscal 1999 compared with $87.9 million for fiscal 1998. On a segment basis, Applied Biosystems, excluding the special items, reported an increase of 44.8% in income from continuing operations for fiscal 1999 compared with fiscal 1998. Excluding the fiscal 1999 special items allocated to the Celera Genomics group of $4.6 million for costs incurred in connection with the recapitalization and $1.0 million for costs related to the acceleration of certain long-term compensation programs, the group reported a net loss of $39.6 million for fiscal 1999 compared with a net loss of $8.3 million for fiscal 1998. Net revenues were $1.2 billion for fiscal 1999 compared with $944.3 million for fiscal 1998, an increase of 28.9%. On a segment basis, net revenues for Applied Biosystems increased 30.0% to $1.2 billion for fiscal 1999 compared with $940.1 million for fiscal 1998. The Celera Genomics group reported net revenues of $12.5 million for fiscal 1999 compared with $4.2 million for fiscal 1998. Net revenues for Applied Biosystems, excluding the results of Tecan, increased 25.9% compared with fiscal 1998. The effects of foreign currency translation increased net revenues by less than 1% compared with fiscal 1998. Net revenues from shipments to the Celera Genomics group were $17.3 million for fiscal 1999 and represented less than 2% of Applied Biosystems' net revenues. There were no revenues recorded by Applied Biosystems from shipments to the Celera Genomics group for fiscal 1998. Geographically, excluding the net revenues of Tecan, Applied Biosystems reported revenue growth in all regions for fiscal 1999 compared with fiscal 1998. Revenues increased 32.5% in the United States, 19.5% in Europe, 20.9% in the Far East, and 12.6% in Latin America and other markets compared with fiscal 1998. Demand for Applied Biosystems' ABI PRISM(R) 3700 DNA Analyzer, which began shipping in the second quarter of fiscal 1999, was strong. Shipments for sequence detection systems and liquid chromatography/mass spectrometry ("LC/MS") products also contributed to the growth. Net revenues for the Celera Genomics group increased $8.3 million for fiscal 1999 compared with fiscal 1998. Net revenues for contract research services increased $4.5 million, related primarily to expression-based gene discovery services in the agricultural market, and $2.8 million from the group's new genomics information and database products, mainly from early-access subscriptions. Gross margin for our company as a percentage of net revenues was 54.1% for fiscal 1999 compared with 54.3% for fiscal 1998. Applied Biosystems' fiscal 1999 gross margin included $14.5 million for the impairment of intangible assets associated with the Molecular Informatics business. Fiscal 1998 gross margin included $4.1 million of inventory-related write-offs associated with the rationalization of certain product lines in connection with the acquisition of PerSeptive. On a comparable basis, excluding the special items from both fiscal years, gross margin as a percentage of net revenues was 55.1% for fiscal 1999 and 54.5% for fiscal 1998. The improved gross margin was primarily the result of a change in product mix. Increased unit sales of reagents to support genetic analysis systems, increased royalty revenues, and continued demand in instrument sales of higher-margin genetic analysis product offerings contributed to the growth. SG&A expenses for our company were $364.1 million for fiscal 1999 compared with $283.4 million for fiscal 1998, an increase of 28.5%. On a segment basis, SG&A expenses were $335.9 million compared with $276.7 million for fiscal 1999 and 1998, respectively, for Applied Biosystems, and $28.3 million compared with $6.7 million for fiscal 1999 and 1998, respectively, for the Celera Genomics group. SG&A expenses for Applied Biosystems, excluding Tecan, increased 15.6% for fiscal 1999 compared with fiscal 1998. Fiscal 1999 expenses included a charge of $9.1 million for costs related to the acceleration of certain long-term compensation programs as a result of the recapitalization of our company and the attainment of performance targets. Fiscal 1999 expenses also included $3.5 million for a contribution to our company's charitable foundation. On a comparable basis, excluding the special items, SG&A expenses increased 10.8%. This increase was due to higher planned expenses, reflecting the growth in sales and orders. As a percentage of net revenues, excluding Tecan and the special items, SG&A expenses were 25.9% for fiscal 1999 compared with 29.4% for fiscal 1998. The Celera Genomics group's SG&A expenses increased $21.5 million for fiscal 1999 compared with fiscal 1998. The increase was primarily related to the start-up and ongoing operations of the new genomics information business. SG&A expenses for fiscal 1999 included $1.0 million for costs related to the acceleration of certain compensation programs as a result of the recapitalization of our company and the attainment of performance targets. R&D expenses for our company were $179.3 million for fiscal 1999 compared with $115.8 million for fiscal 1998, an increase of 54.9%. R&D expenses for Applied Biosystems increased 26.6% to $133.5 million for fiscal 1999 compared ================================================================================ 77 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued with $105.5 million for fiscal 1998. Excluding Tecan, expenses increased 19.5% compared with fiscal 1998 in support of the introduction of new products and the acceleration of product development. As a percentage of net revenues, excluding Tecan, R&D expenses were 10.7% for fiscal 1999 compared with 11.2% for fiscal 1998. The Celera Genomics group's R&D expenses increased to $48.4 million for fiscal 1999 compared with $10.3 million for fiscal 1998, primarily as a result of the establishment and operation of the sequencing facility and computing center of the new genomics information business. During fiscal 1998, $48.1 million of before-tax charges were recorded for restructuring and other merger costs to integrate PerSeptive into Applied Biosystems following the acquisition. The objectives of the integration plan were to lower PerSeptive's cost structure by reducing excess manufacturing capacity; achieve broader worldwide distribution of PerSeptive's products; and combine sales, marketing, and administrative functions. The charge included: $33.9 million for restructuring the combined operations; $8.6 million for transaction costs; and $4.1 million of inventory-related write-offs, recorded in cost of sales, associated with the rationalization of certain product lines. Additional merger-related period costs of $6.1 million for fiscal 1999 and $1.5 million for fiscal 1998 were incurred for training, relocation, and communication costs. The $33.9 million restructuring charge included $13.8 million for severance-related costs and workforce reductions of approximately 170 employees, consisting of 114 employees in production labor and 56 employees in sales and administrative support. The remaining $20.1 million represented facility consolidation and asset-related write-offs that included: $11.7 million for contract and lease terminations and facility-related expenses in connection with the reduction of excess manufacturing capacity; $3.2 million for dealer termination payments, sales office consolidations, and consolidation of sales and administrative support functions; and $5.2 million for the write-off of certain tangible and intangible assets and the termination of certain contractual obligations. Transaction costs of $8.6 million included acquisition-related investment banking and professional fees. During the fourth quarter of fiscal 1999, our company completed the restructuring actions. The costs to implement the program were $9.2 million below the $48.1 million charge recorded for fiscal 1998. As a result, during the fourth quarter of fiscal 1999, we recorded a $9.2 million reduction of charges required to implement the fiscal 1998 plan. See Note 14 to our consolidated financial statements for a discussion of the restructuring. During fiscal 1999, our company recorded a before-tax special charge of $9.2 million for costs incurred in connection with the recapitalization of our company. On a segment basis, Applied Biosystems and the Celera Genomics group were each allocated 50% of the charge. Fiscal 1998 included $28.9 million of purchased in-process research and development associated with our company's acquisition of Molecular Informatics for Applied Biosystems. <TABLE> <CAPTION> Operating Income (Dollar amounts in millions) 1998 1999 ============================================================= <S> <C> <C> Operating income before special items $ 117.6 $ 142.8 Asset impairment (14.5) Long-term compensation programs (10.1) Charitable foundation contribution (3.5) Restructuring and other merger costs, net (48.1) 3.1 Recapitalization costs (9.2) Acquired research and development (28.9) ------------------------------------------------------------- Operating income $ 40.6 $ 108.6 ============================================================= </TABLE> Operating income for our company increased to $108.6 million for fiscal 1999 compared with $40.6 million for fiscal 1998. On a comparable basis, excluding the special items previously described, operating income increased 21.4% to $142.8 million for fiscal 1999 compared with $117.6 million for fiscal 1998. On a segment basis, operating income for Applied Biosystems increased to $187.9 million for fiscal 1999 compared with $53.4 million for fiscal 1998. On a comparable basis, excluding the results of Tecan and the special items previously described, operating income increased 60.7% for fiscal 1999 compared with fiscal 1998. Applied Biosystems benefited from increased revenues, higher gross margins, and lower operating expenses as a percentage of net revenues. Higher operating income from sequencing, mapping systems, and LC/MS products were the primary contributors. The effects of foreign currency translation for Applied Biosystems increased operating income by less than 1% for fiscal 1999 compared with fiscal 1998. Operating income as a percentage of net revenues, excluding the results of Tecan and the special items, increased to 17.6% for fiscal 1999 compared with 13.8% for fiscal 1998. Operating loss for the Celera Genomics group was $68.8 million for fiscal 1999 compared with $12.8 million for fiscal 1998. Excluding the $4.6 million of special charges for costs incurred in connection with the recapitalization and the $1.0 million of costs related to the acceleration of certain long-term compensation programs, the operating loss was $63.2 million for fiscal 1999. For fiscal 1999 and 1998, Applied Biosystems recorded gains of $4.5 million and $1.6 million, respectively, on the sale and release of contingencies on minority equity investments. Fiscal 1999 also included a gain of $1.6 million related to the sale of our interest in Tecan. Interest expense was $3.8 million for fiscal 1999 compared with $4.9 million for fiscal 1998. This decrease was primarily due to the refinancing of PerSeptive's 8-1/4% Convertible Subordinated Notes (the "PerSeptive Notes") and lower average interest rates. Interest income was $2.9 million for fiscal 1999 compared with $5.9 million for fiscal 1998, primarily because of lower average cash balances during the fiscal year. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 78

PE CORPORATION Management's Discussion and Analysis continued Other income, net for fiscal 1999 was $.5 million compared with $3.1 million for fiscal 1998. Fiscal 1999 other income, net related primarily to the revaluation of foreign exchange contracts and a legal settlement that were partially offset by the loss on the disposal of certain assets and other non-operating costs. The other income, net for fiscal 1998 resulted from a gain on the sale of certain operating and non-operating assets. The effective income tax rate was 4% for fiscal 1999 and 54% for fiscal 1998. Excluding Tecan and the special items, the effective income tax rate was 25% for fiscal 1999 and 24% for fiscal 1998. The effective income tax rate for fiscal 1999 included the release of valuation allowances of $17.4 million. Because the sale of the Analytical Instruments business had been completed, the valuation allowance was reduced as management believed that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. An analysis of the differences between the federal statutory income tax rate and the effective income tax rate is provided in Note 4 to our consolidated financial statements. Applied Biosystems incurred minority interest expense of $13.4 million for fiscal 1999 and $5.6 million for fiscal 1998 relating to our company's 14.5% financial interest in Tecan. As previously indicated, we divested our interest in Tecan during the fourth quarter of fiscal 1999. Market Risk Applied Biosystems operates internationally, with manufacturing and distribution facilities in various countries throughout the world. For fiscal 2000 and 1999, Applied Biosystems derived approximately 50% of its revenues from countries outside of the United States. Results continue to be affected by market risk, including fluctuations in foreign currency exchange rates and changes in economic conditions in foreign markets. Our risk management strategy utilizes derivative financial instruments, including forward, swap, and purchased option contracts to hedge certain foreign currency and interest rate exposures, with the intent of offsetting losses and gains that occur on the underlying exposures with gains and losses, respectively, on the derivatives. We do not use derivative financial instruments for trading purposes, nor are we a party to leveraged derivatives. At June 30, 2000, outstanding hedge contracts covered approximately 50% of the estimated foreign currency exposures to be realized over the next twelve months. The outstanding hedges were a combination of forward and option contracts maturing over this period. We performed sensitivity analyses as of June 30, 2000 and June 30, 1999. Assuming a hypothetical adverse change of 10% in foreign exchange rates in relation to the U.S. dollar at June 30, 2000, we calculated a hypothetical loss of $1.9 million when comparing the change in fair value of both the foreign currency contracts outstanding and the underlying exposures being hedged. Performing a similar hypothetical calculation at June 30, 1999, we calculated a hypothetical loss of $6.1 million. These hypothetical analyses exclude the impact of foreign currency translation on our operations. Actual gains and losses in the future could, however, differ materially from these analyses, based on changes in the timing and amount of foreign currency exchange rate movements and actual exposures and hedges. Interest rate swaps are used to hedge underlying debt obligations. In fiscal 1997, we executed an interest rate swap in conjunction with our company entering into a five-year Japanese yen debt obligation. Under the terms of the swap agreement, we pay a fixed rate of interest at 2.1% and receive a floating LIBOR interest rate. At June 30, 2000, the notional amount of indebtedness covered by the interest rate swap was yen 3.8 billion or $36.1 million. The maturity date of the swap coincides with the maturity of the yen loan in March 2002. A change in interest rates would have no impact on our reported interest expense and related cash payments because the floating rate debt and fixed rate swap contract have the same maturity and are based on the same rate index. Management's Discussion of Financial Resources and Liquidity The following discussion of financial resources and liquidity focuses on our Consolidated Statements of Financial Position and our Consolidated Statements of Cash Flows. Cash and cash equivalents and short-term investments were $1.5 billion at June 30, 2000 and $308.0 million at June 30, 1999, with total debt of $97.8 million at June 30, 2000 and $35.4 million at June 30, 1999. In March 2000, we completed a follow-on public offering of Celera Genomics stock from which net proceeds of $943.3 million were realized. During the first quarter of fiscal 2000, we obtained financing of $46 million specifically for the purchase of the Celera Genomics group's Rockville, Maryland facilities. We received payment of $150 million for the promissory notes associated with the sale of the Analytical Instruments business during the fourth quarter of fiscal 2000. Working capital was $1.5 billion at June 30, 2000 and $471.4 million at June 30, 1999. Debt to total capitalization was 4% at June 30, 2000 and June 30, 1999. Significant Changes in the Consolidated Statements of Financial Position Accounts receivable increased by $71.5 million to $378.6 million at June 30, 2000 from $307.1 million at June 30, 1999, reflecting the growth in net revenues. Other long-term assets increased to $622.9 million at June 30, 2000 from $249.5 million at June 30, 1999. The change was primarily a result of a net $251.5 million increase in minority equity investments and $125.3 million of goodwill and other intangibles, net of accumulated amortization, associated with the acquisition of Paracel. ================================================================================ 79 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued Accounts payable increased to $191.5 million at June 30, 2000 from $165.1 million at June 30, 1999. The increase was primarily related to higher purchases to support production and operating requirements as a result of revenue growth in fiscal 2000. Accrued salaries and wages increased $42.2 million to $89.7 million at June 30, 2000 from $47.5 million at June 30, 1999, primarily reflecting the timing of payments for both groups and increased headcount of the Celera Genomics group. Accrued taxes on income increased $21.3 million to $149.6 million at June 30, 2000 from $128.3 million at June 30, 1999 as a result of Applied Biosystems' increased income before taxes in foreign tax jurisdictions. Other accrued expenses increased by $22.2 million to $200.1 million at June 30, 2000 from $177.9 million at June 30, 1999, primarily due to an increase in deferred revenues. Consolidated Statements of Cash Flows Operating activities from continuing operations generated $108.2 million of cash for fiscal 2000 compared with $69.1 million for fiscal 1999 and $68.1 million for fiscal 1998. For fiscal 2000, higher operating losses of the Celera Genomics group were more than offset by effective working capital management of Applied Biosystems. For fiscal 2000, net cash used by investing activities from continuing operations was $455.0 million compared with net cash provided of $154.1 million for fiscal 1999. During fiscal 2000, we realized $82.8 million in net cash proceeds from the sale of minority equity investments and real estate, and we received payment of the $150.0 million promissory notes associated with the sale of the Analytical Instruments business. During fiscal 2000, short-term investments of $541.1 million were purchased, with funds received from a follow-on public offering of Celera Genomics stock. For fiscal 2000, capital expenditures were $125.8 million. The capital expenditures included $8.6 million related to improvement of our information technology infrastructure and $21.6 million for the acquisition of a new corporate airplane. Fiscal 2000 capital expenditures also included payments for software licenses acquired during the fourth quarter of fiscal 1999 and expenditures associated with the continued development of the laboratories, facilities, and data center at the Celera Genomics group's Rockville, Maryland headquarters. For fiscal 2000, $23.0 million was used for various investments and acquisitions. See Note 2 to the consolidated financial statements for a description of these investments and acquisitions. For fiscal 1999, net cash provided by investing activities from continuing operations was $154.1 million compared with net cash used of $129.3 million for fiscal 1998. During fiscal 1999, we generated $325.8 million in net cash proceeds from the sale of various assets. Net cash proceeds included $275.0 million from the sale of the Analytical Instruments business, $30.0 million from the sale of Tecan, and $20.8 million from the sale of minority equity investments and certain non-operating assets. The proceeds were partially offset by $176.0 million of capital expenditures. Fiscal 1999 capital expenditures were $92.1 million for Applied Biosystems, which included $12.9 million as part of the strategic program to improve our information technology infrastructure, $17.5 million for the acquisition of an airplane, and $10.6 million of capital equipment leased to the Celera Genomics group. Capital expenditures for the Celera Genomics group were $94.5 million for fiscal 1999. The capital expenditures included $46.3 million for the purchase of land and buildings in Rockville, Maryland and $22.9 million for improvements thereon. For fiscal 1999, $5.3 million was used for various acquisitions and investments. See Note 2 to our consolidated financial statements for a description of these acquisitions and investments. For fiscal 1998, we generated $19.5 million in net cash proceeds from the sale of assets and $9.7 million from the collection of a note receivable. The proceeds were more than offset by $71.8 million of capital expenditures by our company, which included $33.7 million as part of the strategic program to improve our information technology infrastructure, and $98.0 million for acquisitions and investments, primarily Tecan and Molecular Informatics. Net cash provided by financing activities was $1.0 billion for fiscal 2000 compared with $43.6 million for fiscal 1999. For fiscal 2000, we completed a follow-on public offering of Celera Genomics stock from which net proceeds of $943.3 million were realized, and we obtained financing of $46 million specifically for the purchase of the Rockville, Maryland facilities. Reduction in loans payable and principal payments on long-term debt were $16.4 million for fiscal 1999. For fiscal 2000, we received $61.0 million of proceeds from stock issued for stock plans compared with $96.4 million for fiscal 1999. Dividends paid were $26.4 million for fiscal 2000 and $34.2 million for fiscal 1999. Fiscal 1999 included $2.2 million for the purchase of shares of common stock for treasury. No shares were repurchased during fiscal 2000 or 1998. During fiscal 1998, we received $33.6 million of proceeds from stock issued for stock plans. These proceeds were offset by stockholder dividend payments of $39.1 million and reduction in loans payable and principal payments on long-term debt of $32.2 million. The fiscal 1998 principal payment on long-term debt included $24.7 million for the redemption of the PerSeptive Notes. During fiscal 2000, we made cash payments of $3.5 million for obligations related to restructuring plans. Restructuring liabilities remaining at June 30, 2000 were $2.3 million. See Note 14 to our consolidated financial statements. The funding for the remaining restructuring liabilities will be from current cash balances and funds generated from operating activities. Our company's $100 million revolving credit agreement was replaced effective April 20, 2000 with a new $100 million revolving credit agreement with four banks that matures on April 20, 2005. Terms of this new revolving credit agreement are substantially similar to those of the previous credit agreement. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 80

PE CORPORATION Management's Discussion and Analysis continued We believe our cash and cash equivalents, short-term investments, funds generated from operating activities, and available borrowing facilities are sufficient to provide for our anticipated financing needs for at least the next two years. At June 30, 2000, we had unused credit facilities totaling $341 million. Impact of Inflation and Changing Prices Inflation and changing prices are continually monitored. We attempt to minimize the impact of inflation by improving productivity and efficiency through continual review of both manufacturing capacity and operating expense levels. When operating costs and manufacturing costs increase, we attempt to recover such costs by increasing, over time, the selling price of our products and services. We believe the effects of inflation have been appropriately managed and therefore have not had a material impact on our historic operations and resulting financial position. Euro Conversion A single currency called the euro was introduced in Europe on January 1, 1999. Eleven of the fifteen member countries of the European Union agreed to adopt the euro as their common legal currency on that date. Fixed conversion rates between these participating countries' existing currencies (the "legacy currencies") and the euro were established as of that date. The legacy currencies are scheduled to remain legal tender as denominations of the euro until at least January 1, 2002, but not later than July 1, 2002. During this transition period, parties may settle transactions using either the euro or a participating country's legal currency. We are currently evaluating the impact of the euro conversion on our computer and financial systems, business processes, market risk, and price competition. We do not expect this conversion to have a material impact on our results of operations, financial position, or cash flows. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. We are required to implement the statements in the first quarter of fiscal 2001. We estimate that, upon adoption, we will record an immaterial adjustment for a change in accounting principles in our Consolidated Statements of Operations and in accumulated other comprehensive income in our Consolidated Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. We do not expect any impact from the application of SAB No. 101. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB Opinion No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of the previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. We do not expect the application of FIN No. 44 to have a material impact on our consolidated financial statements. We continue to apply APB No. 25 in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for these plans, as all options have been issued with an exercise price equal to fair value. The effect of accounting for such plans at fair value, under SFAS No. 123, "Accounting for Stock-Based Compensation," would be to decrease fiscal 2000 income from continuing operations by $59.9 million. The effect of accounting for such plans at fair value would be to decrease Applied Biosystems' fiscal 2000 diluted earnings per share from continuing operations by $.21, and to increase the Celera Genomics group's diluted net loss per share by $.25. The method used to determine the fair value is the Black-Scholes option pricing model. Accordingly, changes in dividend yield, volatility, interest risk, and option life could have a material effect on the fair value. See Note 8 to the consolidated financial statements for a more detailed discussion regarding the accounting for stock-based compensation. Outlook Applied Biosystems expects to continue to grow and maintain profitability in fiscal 2001. Applied Biosystems should continue to benefit from its customers in basic medical research, pharmaceutical development, and applied markets for sophisticated, automated, and cost-effective life science tools. Sales of Applied Biosystems' genetic analysis systems are increasingly moving beyond the basic research markets to a wider group of commercial customers and public agencies. Applied Biosystems should also benefit from shipments of new high-throughput screening products such as the FMAT(TM) 8100 HTS System, the NorthStar(TM) HTS ================================================================================ 81 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued Workstation, and the ABI PRISM(TM) 6700 Automated Nucleic Acid Workstation. Applied Biosystems recently announced new products and initiatives in proteomics and a new genetic analyzer system. Applied Biosystems expects that the ABI PRISM(R) 3100 Genetic Analyzer and the forthcoming MALDI-Q-STAR(TM) for proteomics will be important new products during fiscal 2001. During the next year, Applied Biosystems expects to introduce other new products to serve unmet customer needs in the areas of gene expression, SNP analysis, and proteomics. We remain concerned about adverse currency effects because approximately 50% of Applied Biosystems' revenues were derived from regions outside the United States for fiscal 2000. The Celera Genomics group expects to see a continued expansion in its customer base for online genomics information products and related genomics services, with corresponding increases in revenues during fiscal 2001. Revenue growth should come primarily from increasing the customer base among the major pharmaceutical and biotech companies and non-profit research organizations and strengthening its research collaborations and services business. The expected increase in revenues could be offset as the Celera Genomics group contemplates investments in the discovery aspects of the business. The Celera Genomics group expects to continue staffing the organization throughout fiscal 2001. R&D expenses are expected to continue to grow as the research and bioinformatics areas are expanded. SG&A expenses are also expected to increase as a sales and marketing function is established to expand potential customer contact. We believe the Celera Genomics group's existing cash and cash equivalents and short-term investments are sufficient to fund its operating expenses and capital requirements related to its original business plan, which relates to the sequencing and assembly of the human genome and the development of information products and related genomics services from this data. While we intend to use the net proceeds from the Celera Genomics group's follow-on public offering primarily to fund its new product and technology development activities in functional genomics, with an emphasis on proteomics and personalized health/medicine, such funds may not be sufficient to support these new business activities as they develop. The Celera Genomics group's actual future capital uses and requirements with respect to its new activities will depend on many factors, including those discussed under "Forward-Looking Statements." Forward-Looking Statements Certain statements contained in this report, including the Outlook section, are forward-looking and are subject to a variety of risks and uncertainties. These statements may be identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential," among others. These forward-looking statements are based on our current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of our businesses include, but are not limited to: Factors Relating to Applied Biosystems Rapidly changing technology in life sciences could make Applied Biosystems' product line obsolete unless it continues to improve existing products and develop new products. A significant portion of the net revenues for Applied Biosystems each year is derived from products that did not exist in the prior year. Applied Biosystems' future success will depend on its ability to continually improve its current products and to develop and introduce, on a timely and cost-effective basis, new products that address the evolving needs of its customers. Applied Biosystems' products are based on complex technology which is subject to rapid change as new technologies are developed and introduced in the marketplace. Unanticipated difficulties or delays in replacing existing products with new products could adversely affect Applied Biosystems' future operating results. A significant portion of sales depends on customers' capital spending policies which may be subject to significant and unexpected decreases. A significant portion of Applied Biosystems' instrument product sales are capital purchases by its customers. Applied Biosystems' customers include pharmaceutical, environmental, research, and chemical companies, and the capital spending policies of these companies can have a significant effect on the demand for Applied Biosystems' products. These policies are based on a wide variety of factors, including the resources available to make purchases, the spending priorities among various types of research equipment, and policies regarding capital expenditures during recessionary periods. Any decrease in capital spending or change in the spending policies of these companies could significantly reduce the demand for Applied Biosystems' products. A substantial portion of Applied Biosystems' sales is to customers at universities or research laboratories whose funding is dependent on both the level and timing of funding from government sources. As a result, the timing and amount of revenues from these sources may vary significantly due to factors that can be difficult to forecast. Although research funding has increased during the past several years, grants have, in the past, been frozen for extended periods or otherwise become unavailable to various institutions, sometimes without advance notice. Budgetary pressures, particularly in the United States and Japan, may result in reduced allocations to government agencies that fund research and development activities. If government funding necessary to purchase Applied Biosystems' products were to become unavailable to researchers for any extended period of time, or if overall research funding were to decrease, the business of Applied Biosystems could be adversely affected. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 82

PE CORPORATION Management's Discussion and Analysis continued Due to rapidly developing technology and lack of legal precedents, Applied Biosystems' products could be subject to claims for patent infringement and trade secret theft. Applied Biosystems' products are based on complex, rapidly developing technologies. These products could be developed without knowledge of previously filed but unpublished patent applications that cover some aspect of these technologies. In addition, there are relatively few decided court cases interpreting the scope of patent claims in these technologies, and Applied Biosystems' belief that its products do not infringe the technology covered by patents and patent applications could be successfully challenged by third parties. Also, in the course of its business, Applied Biosystems may from time to time have access to confidential or proprietary information of third parties, and such parties could bring a theft of trade secret claim against Applied Biosystems asserting that Applied Biosystems' products improperly utilize technologies which are not patented but which are protected as trade secrets. Applied Biosystems has been and could in the future be made a party to litigation regarding intellectual property matters. Applied Biosystems has from time to time been notified that it may be infringing certain patents and other intellectual property rights of others. It may be necessary or desirable in the future to obtain licenses relating to one or more products or relating to current or future technologies, and we cannot assure you that Applied Biosystems will be able to obtain these licenses or other rights on commercially reasonable terms. Since Applied Biosystems' business is dependent on foreign sales, fluctuating currencies will make our revenues and operating results more volatile. Approximately 50% of Applied Biosystems' net revenues during fiscal 2000 were derived from sales to customers outside of the United States. The majority of these sales were based on the relevant customer's local currency. As a result, Applied Biosystems' reported and anticipated operating results and cash flows are subject to fluctuations due to material changes in foreign currency exchange rates that are beyond Applied Biosystems' control. Integrating acquired technologies may be costly and may not result in technological advances. The future growth of Applied Biosystems depends in part on its ability to acquire complementary technologies through acquisitions and investments. Since January 1, 1996, Applied Biosystems has acquired a number of companies, including PerSeptive Biosystems, Inc., Molecular Informatics, Inc., and Tropix, Inc., and made investments in others. The consolidation of employees, operations, and marketing and distribution methods could present significant managerial challenges. For example, Applied Biosystems may encounter operational difficulties in the integration of manufacturing or other facilities. In addition, technological advances resulting from the integration of technologies may not be achieved as successfully or rapidly as anticipated, if at all. Earthquakes could disrupt operations in California. A significant portion of Applied Biosystems' operations is located near major California earthquake faults. The ultimate impact of earthquakes on Applied Biosystems, significant suppliers, and the general infrastructure is unknown, but operating results could be materially affected in the event of a major earthquake. Factors Relating to the Celera Genomics Group The Celera Genomics group has incurred net losses to date and may not achieve profitability. The Celera Genomics group has accumulated net losses of $178.8 million as of June 30, 2000 and expects that it will continue to incur additional net losses for the foreseeable future. These losses may increase as Celera expands its investments in new technology and product development, including the development of its functional genomics and personalized health/medicine efforts. As an early-stage business, the Celera Genomics group faces significant challenges in simultaneously expanding its operations, pursuing key scientific goals, and attracting customers for its information products and services. As a result, there is a high degree of uncertainty that the Celera Genomics group will be able to achieve profitable operations. Celera Genomics' business plan is unique and expanding. No organization has ever attempted to combine in one business organization all of the Celera Genomics group's businesses. In addition, as Celera Genomics moves beyond completion of the sequencing of the human genome, it is expanding its business plan to provide new scientific services to customers in areas such as functional genomics, personalized health/medicine, and proteomics. The offering of genomics databases, functional genomics, proteomics, and personalized health/medicine capabilities targeted at a wide variety of customers, from pharmaceutical companies to university researchers, has a number of risks, including pricing and volume issues, technology and access concerns, computer security, pursuit of key scientific goals, and protection of intellectual property. The addition of the functional genomics, personalized health/medicine, and proteomics efforts will add further complexity and require additional management attention and resources as these new markets are addressed. Celera Genomics' business plan depends heavily on final assembly and annotation of the human genome. The Celera Genomics group is assembling human genome sequence data obtained using "whole genome shotgun sequencing." Although we believe that the Celera Genomics group's sequencing and assembly efforts will be successfully completed based on Celera Genomics' experience to date, Celera Genomics is using methods, together with data from whole genome shotgun sequencing, which have not previously been applied to complete final assembly of a genome with the size and complexity of the human genome. The Celera Genomics group's ability to retain its existing customers and attract new customers is heavily dependent upon the final assembly and continued annotation of the human genome. This information is essential to the functional genomics and personalized health/medicine components of Celera Genomics' business strategy, in which Celera Genomics intends to make substantial investments in the near future. As a result, failure to complete the assembly and annotation efforts in a timely manner may have a material adverse effect on the Celera Genomics group's business. ================================================================================ 83 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued Celera Genomics' revenue growth depends on retaining existing and adding new customers. The Celera Genomics group has a small number of customers, the revenues from which will offset only a small portion of its expenses. In order to generate significant additional revenues, the Celera Genomics group must obtain additional customers and retain its existing customers. Celera Genomics' ability to retain existing and add new customers depends upon customers' continued belief that Celera Genomics' products can help accelerate their drug discovery and development efforts and fundamental discoveries in biology. Although customer agreements typically have multi-year terms, there can be no assurance that any will be renewed upon expiration. The Celera Genomics group's future revenues are also affected by the extent to which existing customers expand their agreements to include new services and database products. In some cases, the Celera Genomics group may accept milestone payments or future royalties on products developed by its customers as consideration for access to Celera Genomics' databases and products in lieu of a portion of subscription fees. Such arrangements are unlikely to produce revenue for the Celera Genomics group for a number of years, if ever, and depend heavily on the research and product development, sales and marketing, and intellectual property protection abilities of the customer. Use of genomics information to develop or commercialize products is unproven. The development of new drugs and the diagnosis of disease based on genomic information is unproven. Few therapeutic or diagnostic products based on genomic discoveries have been developed and commercialized, and to date no one has developed or commercialized any therapeutic, diagnostic, or agricultural products based on the Celera Genomics group's technologies. If the Celera Genomics group's customers are unsuccessful in developing and commercializing products based on the group's databases or other products or services, customers and the group may be unable to generate sufficient revenues, and its business may suffer as a result. Development of such products will be subject to risks of failure, including that such products will be found to be toxic, found to be ineffective, fail to receive regulatory approvals, fail to be developed prior to the successful marketing of similar products by competitors, or infringe on proprietary rights of third parties. The genomics industry is intensely competitive and evolving. There is intense competition among entities attempting to sequence segments of the human genome and identify genes associated with specific diseases and develop products, services, and intellectual property based on these discoveries. Celera Genomics faces competition in these areas from genomic, pharmaceutical, biotechnology and diagnostic companies, academic and research institutions, and government or other publicly funded agencies, both in the United States and abroad. A number of companies, other institutions, and government-financed entities are engaged in gene sequencing, gene discovery, gene expression analysis, positional cloning, the study of genetic variation, functional genomics, and other genomic service businesses. Some of these competitors are developing databases containing gene sequence, gene expression, genetic variation, or other biological information and are marketing or plan to market their data to pharmaceutical and biotechnology companies and academic and research institutions. Additional competitors may attempt to establish databases containing this information in the future. The Celera Genomics group has licensed some of its key technology on a non-exclusive basis from third parties, and therefore such technology may be available for license by PE Corporation's competitors. Competitors may also discover, characterize, or develop important genes, drug targets or leads, drug discovery technologies, or drugs in advance of Celera Genomics or its customers, or which are more effective than those developed by Celera Genomics or its customers, or may obtain regulatory approvals of their drugs more rapidly than Celera Genomics' customers do, any of which could have a material adverse effect on any of Celera Genomics' similar programs. Moreover, these competitors may obtain patent protection or other intellectual property rights that would limit Celera Genomics' rights or its customers' ability to use Celera Genomics' products to commercialize therapeutic, diagnostic, or agricultural products. In addition, a customer may use the Celera Genomic group's services to develop products that compete with products separately developed by the Group or its other customers. Future competition will come from existing competitors as well as other companies seeking to develop new technologies for drug discovery, drug development, and diagnostics based on gene sequencing, target gene identification, bioinformatics, and related technologies. In addition, certain pharmaceutical and biotechnology companies have significant needs for genomic information and may choose to develop or acquire competing technologies to meet such needs. Celera Genomics also faces competition from providers of software. A number of companies have announced their intent to develop and market software to assist pharmaceutical companies and academic researchers in managing and analyzing their own genomic data and publicly available data. Celera Genomics' current and potential customers are primarily from, and are subject to risks faced by, the pharmaceutical and biotechnology industries. The Celera Genomics group derives a substantial portion of its revenues from fees paid by pharmaceutical companies and larger biotechnology companies for its information products and services, including Amgen Inc., Novartis Pharma AG, Pharmacia & Upjohn, Pfizer Inc., Takeda Chemical Industries, Ltd., American Home Products Corporation, and Immunex Corporation. The Celera Genomics group expects that pharmaceutical companies and larger biotechnology companies will continue to be the Celera Genomics group's primary source of revenues for the foreseeable future. As a result, the Celera Genomics group is subject to risks and uncertainties that affect the pharmaceutical and biotechnology industries and to reduction and delays in research and development expenditures by companies in these industries. In addition, the Celera Genomics group's future revenues may be adversely affected by mergers and consolidation in the pharmaceutical and biotechnology industries, which will ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 84

PE CORPORATION Management's Discussion and Analysis continued reduce the number of the group's potential customers. Large pharmaceutical and biotechnology customers could also decide to conduct their own genomics programs or seek other providers instead of using Celera Genomics' products and services. Celera Genomics relies on its strategic relationship with Applied Biosystems. The Celera Genomics group believes that its strategic relationship with Applied Biosystems has provided it with a significant competitive advantage in its efforts to date to sequence the human genome. Celera Genomics' timely completion of that work and successful extension of its business into the functional genomics, personalized health/medicine, and proteomics arenas will depend on Applied Biosystems' ability to continue to provide leading-edge, proprietary technology and products, including technologies relating to genetic analysis, protein analysis, and high-throughput screening. If Applied Biosystems is unable to supply these technologies, Celera will need to obtain access to alternative technologies, which may not be available, or may only be available on unfavorable terms. Any change in the relationship with Applied Biosystems that adversely affects the Celera Genomics group's access to Applied Biosystems' technology or failure by Applied Biosystems to continue to develop new technologies or protect its proprietary technology could adversely affect Celera Genomics' business. Introduction of new products may expose Celera Genomics to product liability claims. New products developed by Celera Genomics could expose Celera Genomics to potential product liability risks which are inherent in the testing, manufacturing, and marketing of human therapeutic and diagnostic products. Product liability claims or product recalls, regardless of the ultimate outcome, could require Celera Genomics to spend significant time and money in litigation and to pay significant damages. Celera Genomics could incur liabilities relating to hazardous materials that it uses in its research and development activities. Celera Genomics' research and development activities involve the controlled use of hazardous materials and chemicals, and may in the future involve various radioactive materials. In the event of an accidental contamination or injury from these materials, Celera could be held liable for damages in excess of its resources. Celera Genomics' sales cycle is lengthy and it may spend considerable resources on unsuccessful sales efforts or may not be able to complete deals on the schedule anticipated. The Celera Genomics group's ability to obtain new customers for genomic information products, value-added services and licenses to intellectual property depends on its customers' belief that the group can help accelerate their drug discovery efforts. The Celera Genomics group's sales cycle is typically lengthy because the group needs to educate potential customers and sell the benefits of its products and services to a variety of constituencies within such companies. In addition, each agreement involves the negotiation of unique terms. Celera may expend substantial funds and management effort with no assurance that an agreement will be reached with a potential customer. Actual and proposed consolidations of pharmaceutical companies have affected, and may in the future affect, the timing and progress of the Celera Genomics group's sales efforts. Scientific and management staff have unique expertise which is key to Celera Genomics' commercial viability and which would be difficult to replace. Celera Genomics is highly dependent on the principal members of its scientific and management staff, particularly J. Craig Venter, its President. For the sequencing and assembly of the human genome, the Celera Genomics group believes the following members of its staff are essential: Dr. Venter; Mark Adams, Vice President for Genome Programs; and Eugene Myers, Vice President of Informatics Research, who is responsible for the group assembling the genome. None of these individuals are party to employment agreements, non-competition agreements, or non-solicitation agreements with the Celera Genomics group. Additional members of the Celera Genomics group's medical, scientific, and bioinformatics staff are important to the development of information, tools, and services required for implementation of its business plan. Also, in an effort to meet the demands of its growing business, the group recently hired other key management personnel in the areas of operations, sales, marketing, and business development, and the group believes that these persons will be important to the successful growth of the group's business. The loss of any of these persons' expertise would be difficult to replace and could have a material adverse effect on the Celera Genomics group's ability to achieve its goals. Celera Genomics' competitive position may depend on patent and copyright protection, which may not be sufficiently available. The Celera Genomics group's ability to compete and to achieve profitability may be affected by its ability to protect its proprietary technology and other intellectual property. While Celera Genomics' business is currently primarily dependent on revenues from access fees to its discovery and information systems, obtaining patent protection may also be important to its business, in that Celera Genomics would be able to prevent competitors from making, using, or selling any of its technology for which it obtains a patent. Patent law affecting Celera Genomics' business, particularly gene sequences, gene function, and polymorphisms, is uncertain, and as a result, the Celera Genomics group is uncertain as to its ability to obtain intellectual property protection covering its information discoveries sufficient to prevent competitors from developing similar subject matter. Patents may not issue from patent applications that the Celera Genomics group may own or license. In addition, because patent applications in the United States are maintained in secrecy until patents issue, third parties may have filed patent applications for technology used by Celera Genomics or covered by Celera Genomics' pending patent applications without Celera Genomics being aware of such applications. Moreover, the Celera Genomics group may be dependent on protecting, through copyright law or otherwise, its databases to prevent other organizations from taking information ================================================================================ 85 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Management's Discussion and Analysis continued from such databases and copying and reselling it. Copyright law currently provides uncertain protection regarding the copying and resale of factual data. As such, Celera Genomics is uncertain whether it could prevent such copying or resale. Changes in copyright and patent law could either expand or reduce the extent to which the Celera Genomics group and its customers are able to protect their intellectual property. Celera Genomics' position may depend on its ability to protect trade secrets. The Celera Genomics group relies on trade secret protection for its confidential and proprietary information and procedures, including procedures related to sequencing genes and to searching and identifying important regions of genetic information. The Celera Genomics group currently protects such information and procedures as trade secrets. The Celera Genomics group protects its trade secrets through recognized practices, including access control, confidentiality, and non-use agreements with employees, consultants, collaborators and customers, and other security measures. These confidentiality and non-use agreements may be breached, however, and the group may not have adequate remedies for any such breach. In addition, the group's trade secrets may otherwise become known or be independently developed by competitors. Public disclosure of genomics sequence data could jeopardize Celera Genomics' intellectual property protection and have an adverse effect on the value of our products and services. The Celera Genomics group, the federally funded Human Genome Project, and others engaged in similar research have committed to make available to the public basic human sequence data. Such disclosures might limit the scope of the Celera Genomics group's claims or make subsequent discoveries related to full-length genes unpatentable. While the Celera Genomics group believes that the publication of sequence data will not preclude it or others from being granted patent protection on genes, there can be no assurance that such publication has not affected, and will not affect, the ability to obtain patent protection. Customers may conclude that uncertainties of such protection decrease the value of the Celera Genomics group's information products and services and, as a result, it may be required to reduce the fees it charges for such products and services. Celera Genomics may infringe the intellectual property rights of third parties and may become involved in expensive intellectual property litigation. The intellectual property rights of biotechnology companies, including Celera Genomics, are generally uncertain and involve complex legal, scientific, and factual questions. Celera Genomics' success in the functional genomics field may depend, in part, on its ability to operate without infringing on the intellectual property rights of others and to prevent others from infringing on its intellectual property rights. There has been substantial litigation regarding patents and other intellectual property rights in the genomics industry. The Celera Genomics group may become a party to patent litigation or proceedings in the federal courts or at the U.S. Patent and Trademark Office to determine its patent rights with respect to third parties which may include subscribers to Celera Genomics' database information services. Interference proceedings may be necessary to establish which party was the first to discover such intellectual property. Celera Genomics may become involved in patent litigation against third parties to enforce the Celera Genomics group's patent rights, to invalidate patents held by such third parties, or to defend against such claims. The cost to Celera Genomics of any patent litigation or similar proceeding could be substantial, and it may absorb significant management time. If an infringement litigation against Celera Genomics is resolved unfavorably to Celera Genomics, Celera Genomics may be enjoined from manufacturing or selling certain of its products or services without a license from a third party. Celera Genomics may not be able to obtain such a license on commercially acceptable terms, or at all. The U.S. Patent and Trademark Office has issued several patents to third parties relating to single nucleotide polymorphisms ("SNPs"). If other important SNPs receive patents, Celera Genomics will need to obtain rights to those important SNPs in order to develop, use, and sell related assays. Such licenses may not be available to Celera Genomics on commercially acceptable terms, or at all. Celera Genomics' business is dependent on the continuous, effective, reliable, and secure operation of its computer hardware, software, and internet applications and related tools and functions. Because the Celera Genomics group's business requires manipulating and analyzing large amounts of data, and communicating the results of such analysis to customers via the internet, the Celera Genomics group depends on the continuous, effective, reliable, and secure operation of its computer hardware, software, networks, internet servers, and related infrastructure. To the extent that the Celera Genomics group's hardware or software malfunctions or the Celera Genomics group's customers' access to products through the internet is interrupted, its business could suffer. The Celera Genomics group's computer and communications hardware is protected through physical and software safeguards. However, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, and similar events. In addition, Celera Genomics' database products are complex and sophisticated, and as such, could contain data, design, or software errors that could be difficult to detect and correct. Software defects could be found in current or future products. If the Celera Genomics group fails to maintain and further develop the necessary computer capacity and data to support computational needs and its customers' drug efforts, it could result in loss of or delay in revenues and market acceptance. In addition, any sustained disruption in Internet access provided by third parties could adversely impact the Celera Genomics group's business. Celera Genomics' research and product development depends on access to tissue samples and other biological materials. To continue to build its product base, Celera Genomics will need access to normal and diseased human and other tissue samples, other biological materials, and related clinical and other information, which may be in limited supply. Celera Genomics may not be able to obtain or maintain access to these materials and information on acceptable terms. In addition, government regulation in the United States and foreign countries could result in restricted ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 86

PE CORPORATION Management's Discussion and Analysis continued access to, or use of, human and other tissue samples. If Celera Genomics loses access to sufficient numbers or sources of tissue samples, or if tighter restrictions are imposed on its use of the information generated from tissue samples, its business may be harmed. Ethical, legal, and social issues related to the use of genetic information and genetic testing may cause less demand for our products. Genetic testing has raised issues regarding confidentiality and the appropriate uses of the resulting information. For example, concerns have been expressed toward insurance carriers and employers using such tests to discriminate on the basis of such information, resulting in barriers to the acceptance of such tests by consumers. This could lead to governmental authorities calling for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain diseases, particularly those that have no known cure. Any of these scenarios could reduce the potential markets for PE Corporation's products. Expected rapid growth in the number of its employees could absorb valuable management resources and be disruptive to the development of Celera Genomics' business. The Celera Genomics group expects to grow significantly. This growth will require substantial effort to hire new employees and train and integrate them into the Celera Genomics group's business and to develop and implement management information systems, financial controls, and facility plans. In addition, the Celera Genomics group will be required to create a sales and marketing organization and expand customer support resources as sales of its information products increase. The Celera Genomics group's inability to manage growth effectively would have a material adverse effect on its future operating results. The use of Celera Genomics' products and services by its customers may be subject to government regulation. Within the field of genomics, the use of the Celera Genomics group's products by pharmaceutical and biotechnology customers may be subject to certain U.S. Food and Drug Administration or other regulatory approvals. For example, any new drug developed by the efforts of the Celera Genomics group's customers as a result of their use of the Celera Genomics group's databases must undergo an extensive regulatory review process. This process can take many years and require substantial expense. Within the field of personalized health/medicine, current and future patient privacy and healthcare laws and regulations issued by the FDA may limit the use of polymorphism data. To the extent that use of the Celera Genomics group's databases is limited, or additional costs are imposed on the Celera Genomics group's customers due to regulation, the Celera Genomics group's business may be adversely affected. Furthermore, the Celera Genomics group may be directly subject to the regulations as a provider of diagnostic information. To the extent that such regulations restrict the sale of the Celera Genomics group's products or impose other costs, the Celera Genomics group's business may be materially adversely affected. Future acquisitions may absorb significant resources and may be unsuccessful. As part of the Celera Genomics group's strategy, it expects to pursue acquisitions, investments, and other relationships and alliances. Acquisitions may involve significant cash expenditures, debt incurrence, additional operating losses, dilutive issuances of equity securities, and expenses that could have a material effect on the Celera Genomics group's financial condition and results of operations. For example, to the extent that it elects to pay the purchase price for such acquisitions in shares of Celera Genomics stock, such issuance of additional shares of Celera Genomics stock will be dilutive to holders of Celera Genomics stock. Acquisitions involve numerous other risks, including: o difficulties integrating acquired technologies and personnel into the business of the Celera Genomics group; o diversion of management from daily operations; o inability to obtain required financing on favorable terms; o entry into new markets in which the Celera Genomics group has little previous experience; o potential loss of key employees or customers of acquired companies; o assumption of the liabilities and exposure to unforeseen liabilities of acquired companies; and o amortization of the intangible assets of acquired companies. It may be difficult for the Celera Genomics group to complete such transactions quickly and to integrate such business efficiently into its current business. Any such acquisitions or investments by the Celera Genomics group may ultimately have a negative impact on its business and financial condition. PE Corporation is subject to a purported class action lawsuit relating to its recent offering of shares of Celera Genomics stock which may be expensive and time consuming. As of August 25, 2000, PE Corporation and certain of its officers had been served in five lawsuits purportedly on behalf of purchasers of Celera Genomics stock in PE Corporation's offering of Celera Genomics stock completed on March 6, 2000. In the offering, PE Corporation sold an aggregate of approximately 4.4 million shares of Celera Genomics stock at a public offering price of $225 per share. The complaints in these lawsuits generally allege that the prospectus used in connection with the offering contained inaccurate and misleading statements in violation of federal securities laws. The complaints seek unspecified damages, rescission, costs and expenses, and such other relief as the court deems proper. All of these lawsuits have been consolidated into a single case. Although PE Corporation believes the asserted claims are without merit and intends to defend the case vigorously, the outcome of this or any other litigation is inherently uncertain. The defense of this case will require management attention and resources. ================================================================================ 87 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Consolidated Statements of Operations <TABLE> <CAPTION> (Dollar amounts in thousands except per share amounts) For the years ended June 30, 1998 1999 2000 ========================================================================================================================== <S> <C> <C> <C> Net Revenues $ 944,306 $ 1,216,897 $ 1,371,035 Cost of sales 431,738 558,813 609,054 -------------------------------------------------------------------------------------------------------------------------- Gross Margin 512,568 658,084 761,981 -------------------------------------------------------------------------------------------------------------------------- Selling, general and administrative 283,399 364,128 436,911 Research, development and engineering 115,764 179,275 274,796 Restructuring and other special charges 43,980 6,116 2,142 Acquired research and development 28,850 -------------------------------------------------------------------------------------------------------------------------- Operating Income 40,575 108,565 48,132 Gain on investments 1,605 6,126 48,603 Interest expense 4,905 3,783 3,501 Interest income 5,938 2,869 39,428 Other income, net 3,147 522 3,446 -------------------------------------------------------------------------------------------------------------------------- Income Before Income Taxes 46,360 114,299 136,108 Provision for income taxes 25,069 4,140 40,612 Minority interest 5,597 13,362 -------------------------------------------------------------------------------------------------------------------------- Income From Continuing Operations 15,694 96,797 95,496 -------------------------------------------------------------------------------------------------------------------------- Discontinued Operations, Net Of Income Taxes Income (loss) from discontinued operations 40,694 (21,109) Gain on disposal of discontinued operations 100,167 -------------------------------------------------------------------------------------------------------------------------- Net Income $ 56,388 $ 175,855 $ 95,496 ========================================================================================================================== Applied Biosystems (see Note 1) Income From Continuing Operations $ 24,009 $ 148,365 $ 186,247 Basic per share $ .74 $ .90 Diluted per share $ .72 $ .86 Income From Discontinued Operations $ 40,694 $ 79,058 Basic per share $ .39 Diluted per share $ .38 Net Income $ 64,703 $ 227,423 $ 186,247 Basic per share $ 1.13 $ .90 Diluted per share $ 1.10 $ .86 ========================================================================================================================== Celera Genomics Group (see Note 1) Net Loss $ (8,315) $ (44,894) $ (92,737) Basic and diluted per share $ (.89) $ (1.73) ========================================================================================================================== PE Corporation (see Note 1) Income Per Share From Continuing Operations Basic $ .32 Diluted $ .31 Income Per Share From Discontinued Operations Basic $ .84 Diluted $ .81 Net Income Per Share Basic $ 1.16 Diluted $ 1.12 ========================================================================================================================== </TABLE> See accompanying notes to consolidated financial statements. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. ================================================================================ 88 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Consolidated Statements of Financial Position <TABLE> <CAPTION> (Dollar amounts in thousands except share data) At June 30, 1999 2000 ========================================================================================================================== <S> <C> <C> Assets Current assets Cash and cash equivalents $ 308,021 $ 964,502 Short-term investments 541,140 Note receivable 150,000 Accounts receivable (less allowances for doubtful accounts of $3,834 and $3,965) 307,056 378,593 Inventories 149,670 157,827 Prepaid expenses and other current assets 79,255 83,465 -------------------------------------------------------------------------------------------------------------------------- Total current assets 994,002 2,125,527 Property, plant and equipment, net 275,792 334,855 Other long-term assets 249,513 622,933 -------------------------------------------------------------------------------------------------------------------------- Total Assets $ 1,519,307 $ 3,083,315 ========================================================================================================================== Liabilities And Stockholders' Equity Current liabilities Loans payable $ 3,911 $ 15,693 Accounts payable 165,120 191,484 Accrued salaries and wages 47,495 89,660 Accrued taxes on income 128,261 149,584 Other accrued expenses 177,865 200,079 -------------------------------------------------------------------------------------------------------------------------- Total current liabilities 522,652 646,500 Long-term debt 31,452 82,115 Other long-term liabilities 143,678 134,208 -------------------------------------------------------------------------------------------------------------------------- Total Liabilities 697,782 862,823 -------------------------------------------------------------------------------------------------------------------------- Commitments and contingencies (see Note 10) Stockholders' Equity Capital stock Preferred stock PE Corporation: $.01 par value; 10,000,000 shares authorized at June 30, 1999 and 2000, respectively; no shares issued at June 30, 1999 and 2000 Common stock PE Corporation - PE Biosystems stock: $.01 par value; 500,000,000 shares authorized at June 30, 1999 and 2000, respectively; 102,707,006 shares and 208,651,594 shares issued and outstanding at June 30, 1999 and 2000, respectively 1,027 2,087 PE Corporation - Celera Genomics stock: $.01 par value; 225,000,000 shares authorized at June 30, 1999 and 2000, respectively; 25,658,020 shares and 59,335,885 shares issued and outstanding at June 30, 1999 and 2000, respectively 257 593 Capital in excess of par value 507,341 1,714,362 Retained earnings 317,720 377,996 Accumulated other comprehensive income (loss) (4,820) 125,454 -------------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 821,525 2,220,492 -------------------------------------------------------------------------------------------------------------------------- Total Liabilities And Stockholders' Equity $ 1,519,307 $ 3,083,315 ========================================================================================================================== </TABLE> See accompanying notes to consolidated financial statements. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 89

PE CORPORATION Consolidated Statements of Cash Flows <TABLE> <CAPTION> (Dollar amounts in thousands) For the years ended June 30, 1998 1999 2000 ========================================================================================================================== <S> <C> <C> <C> Operating Activities From Continuing Operations Income from continuing operations $ 15,694 $ 96,797 $ 95,496 Adjustments to reconcile income from continuing operations to net cash provided by operating activities Depreciation and amortization 35,928 48,066 80,699 Long-term compensation programs 6,853 17,482 10,535 Deferred income taxes 10,234 (25,533) (26,399) Gains from sales of assets (3,052) (6,126) (56,801) Provision for restructured operations and other merger costs 48,080 (9,200) Acquired research and development 28,850 Asset impairment 14,464 Changes in operating assets and liabilities Increase in accounts receivable (23,507) (105,093) (72,538) Increase in inventories (21,362) (22,387) (2,180) Increase in prepaid expenses and other assets (30,862) (46,665) (22,842) Increase in accounts payable and other liabilities 1,219 107,259 102,234 -------------------------------------------------------------------------------------------------------------------------- Net Cash Provided By Operating Activities 68,075 69,064 108,204 -------------------------------------------------------------------------------------------------------------------------- Investing Activities From Continuing Operations Additions to property, plant and equipment (net of disposals of $11,339, $9,614, and $2,201, respectively) (60,481) (166,421) (123,614) Purchases of short-term investments (541,127) Acquisitions and investments, net (97,998) (5,261) (23,023) Proceeds from the sale of assets, net 19,496 325,766 82,763 Proceeds from the collection of notes receivable 9,673 150,000 -------------------------------------------------------------------------------------------------------------------------- Net Cash Provided (Used) By Investing Activities (129,310) 154,084 (455,001) -------------------------------------------------------------------------------------------------------------------------- Net Cash From Continuing Operations Before Financing Activities (61,235) 223,148 (346,797) -------------------------------------------------------------------------------------------------------------------------- Discontinued Operations Net cash provided (used) by operating activities 10,084 (16,297) (15,081) Net cash used by investing activities (40,639) (26,970) -------------------------------------------------------------------------------------------------------------------------- Net Cash From Discontinued Operations Before Financing Activities (30,555) (43,267) (15,081) -------------------------------------------------------------------------------------------------------------------------- Financing Activities Net change in loans payable (6,797) (9,572) 52,701 Principal payments on long-term debt (25,449) (6,843) Dividends (39,072) (34,156) (26,358) Purchases of common stock for treasury (2,187) Net proceeds from follow-on stock offering 943,303 Proceeds from stock issued for stock plans 33,629 96,379 61,047 -------------------------------------------------------------------------------------------------------------------------- Net Cash Provided (Used) By Financing Activities (37,689) 43,621 1,030,693 -------------------------------------------------------------------------------------------------------------------------- Elimination of PerSeptive results from July 1, 1997 to September 30, 1997 (see Note 1) 2,590 Effect Of Exchange Rate Changes On Cash (3,274) 1,654 (12,334) -------------------------------------------------------------------------------------------------------------------------- Net Change In Cash And Cash Equivalents (130,163) 225,156 656,481 Cash And Cash Equivalents Beginning Of Year 213,028 82,865 308,021 -------------------------------------------------------------------------------------------------------------------------- Cash And Cash Equivalents End Of Year $ 82,865 $ 308,021 $ 964,502 ========================================================================================================================== </TABLE> See accompanying notes to consolidated financial statements. ================================================================================ 90 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Consolidated Statements of Stockholders' Equity and Comprehensive Income <TABLE> <CAPTION> PE PE Celera Capital in Corporation Biosystems Genomics Excess of Retained (Dollar amounts and shares in thousands) Stock Stock Stock Par Value Earnings ================================================================================================================= <S> <C> <C> <C> <C> <C> Balance at June 30, 1997 $ 50,122 $ - $ - $ 374,423 $ 167,482 Comprehensive income Net income 56,388 Other comprehensive loss, net of tax Foreign currency translation adjustments Minimum pension liability adjustment Unrealized loss on investments, net Other comprehensive loss Comprehensive income Cash dividends declared (31,604) Issuances under stock plans 26 1,358 (3,468) Tax benefit related to employee stock options 2,335 Stock compensation 1,858 (136) Elimination of PerSeptive results from July 1, 1997 to September 30, 1997 (see Note 1) 2,590 Other (286) ----------------------------------------------------------------------------------------------------------------- Balance at June 30, 1998 50,148 379,974 190,966 Comprehensive income Net income 175,855 Other comprehensive income, net of tax Foreign currency translation adjustments Minimum pension liability adjustment Unrealized gain on investments, net Other comprehensive income Comprehensive income Cash dividends declared on PE Corporation stock (25,479) Cash dividends declared on PE Biosystems stock (8,677) Issuances under PE Corporation stock plans 873 43,323 (14,862) Recapitalization (May 6, 1999) (51,021) 510 255 50,256 Repurchases of PE Biosystems stock Issuances under PE Biosystems stock plans 3 17,967 (1,290) Issuances under Celera Genomics stock plans 2 1,483 Tax benefit related to employee stock options 15,735 Stock compensation (883) 1,207 Two-for-one stock split 514 (514) ----------------------------------------------------------------------------------------------------------------- Balance at June 30, 1999 1,027 257 507,341 317,720 Comprehensive income Net income 95,496 Other comprehensive income, net of tax Foreign currency translation adjustments Minimum pension liability adjustment Unrealized gain on investments, net Other comprehensive income Comprehensive income Cash dividends declared on PE Biosystems stock (35,220) Issuances under PE Biosystems stock plans 23 43,411 Issuances under Celera Genomics stock plans 15 17,598 Issuances under Celera Genomics follow-on stock offering 44 943,259 Tax benefit related to employee stock options 65,708 Stock compensation 13,266 Celera Genomics group purchase business combination 16 125,077 Two-for-one stock split 1,037 261 (1,298) ----------------------------------------------------------------------------------------------------------------- Balance at June 30, 2000 $ - $ 2,087 $ 593 $ 1,714,362 $ 377,996 ================================================================================================================= <CAPTION> Accumulated Other Total Comprehensive Treasury Treasury Stock- Income Stock Stock holders' (Dollar amounts and shares in thousands) (Loss) At Cost Shares Equity ==================================================================================================== <S> <C> <C> <C> <C> Balance at June 30, 1997 $ (2,671) $ (85,086) (1,796) $ 504,270 Comprehensive income Net income 56,388 Other comprehensive loss, net of tax Foreign currency translation adjustments (2,747) Minimum pension liability adjustment 354 Unrealized loss on investments, net (4,449) --------- Other comprehensive loss (6,842) (6,842) ----------- Comprehensive income 49,546 ----------- Cash dividends declared (31,604) Issuances under stock plans 37,759 965 35,675 Tax benefit related to employee stock options 2,335 Stock compensation 1,722 Elimination of PerSeptive results from July 1, 1997 to September 30, 1997 (see Note 1) 2,590 Other (286) ---------------------------------------------------------------------------------------------------- Balance at June 30, 1998 (9,513) (47,327) (831) 564,248 Comprehensive income Net income 175,855 Other comprehensive income, net of tax Foreign currency translation adjustments (5,415) Minimum pension liability adjustment (1,779) Unrealized gain on investments, net 11,887 --------- Other comprehensive income 4,693 4,693 ----------- Comprehensive income 180,548 ----------- Cash dividends declared on PE Corporation stock (25,479) Cash dividends declared on PE Biosystems stock (8,677) Issuances under PE Corporation stock plans 45,354 789 74,688 Recapitalization (May 6, 1999) Repurchases of PE Biosystems stock (2,187) (20) (2,187) Issuances under PE Biosystems stock plans 2,187 20 18,867 Issuances under Celera Genomics stock plans 1,485 Tax benefit related to employee stock options 15,735 Stock compensation 1,973 42 2,297 Two-for-one stock split ---------------------------------------------------------------------------------------------------- Balance at June 30, 1999 (4,820) 821,525 Comprehensive income Net income 95,496 Other comprehensive income, net of tax Foreign currency translation adjustments (25,196) Minimum pension liability adjustment (60) Unrealized gain on investments, net 155,530 --------- Other comprehensive income 130,274 130,274 ----------- Comprehensive income 225,770 ----------- Cash dividends declared on PE Biosystems stock (35,220) Issuances under PE Biosystems stock plans 43,434 Issuances under Celera Genomics stock plans 17,613 Issuances under Celera Genomics follow-on stock offering 943,303 Tax benefit related to employee stock options 65,708 Stock compensation 13,266 Celera Genomics group purchase business combination 125,093 Two-for-one stock split ---------------------------------------------------------------------------------------------------- Balance at June 30, 2000 $ 125,454 $ - - $ 2,220,492 ==================================================================================================== </TABLE> See accompanying notes to consolidated financial statements. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 91

PE CORPORATION Notes to Consolidated Financial Statements Note 1--Accounting Policies and Practices Principles of Consolidation The consolidated financial statements include the accounts of all majority-owned subsidiaries of PE Corporation ("PE" or "the Company"). The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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. Actual results could differ from those estimates. Certain amounts in the consolidated financial statements and notes have been reclassified for comparative purposes. On January 22, 1998, the Company acquired PerSeptive Biosystems, Inc. The acquisition was accounted for as a pooling of interests and, accordingly, the Company's financial results were restated to include the combined operations (see Note 2). The Company's fiscal year ended June 30 and PerSeptive's fiscal year ended September 30. The fiscal 1998 Consolidated Statements of Operations combined the Company's operating results for the year ended June 30, 1998 with PerSeptive's operating results for the nine months ended June 30, 1998 and the three months ended September 30, 1997 (PerSeptive's fiscal 1997 fourth quarter). In order to conform PerSeptive to a June 30 fiscal year-end in fiscal 1998, PerSeptive's results of operations for the three months ended September 30, 1997 have been included in the Company's Consolidated Statements of Operations for the fiscal year ended June 30, 1998. Recapitalization The recapitalization of the Company on May 6, 1999 resulted in the issuance of two new classes of common stock called PE Corporation-PE Biosystems Group Common Stock ("PE Biosystems stock") and PE Corporation-Celera Genomics Group Common Stock ("Celera Genomics stock"). PE Biosystems stock is intended to reflect separately the performance of the PE Biosystems life sciences business ("PE Biosystems group"), and Celera Genomics stock is intended to reflect separately the performance of the Celera Genomics business ("Celera Genomics group"). As part of the recapitalization, each share of common stock of The Perkin-Elmer Corporation was converted into one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock. The PE Biosystems group is currently doing business as Applied Biosystems and will seek formal approval of a change to this name at the Company's 2000 annual meeting. The PE Biosystems group is referred to as Applied Biosystems. Holders of PE Biosystems stock and Celera Genomics stock are stockholders of the Company. Applied Biosystems and the Celera Genomics group (individually referred to as a "group") are not separate legal entities. As a result, stockholders are subject to all of the risks associated with an investment in the Company and all of its businesses, assets, and liabilities. Financial effects arising from one group that affect the Company's results of operations or financial condition could, if significant, affect the results of operations or financial condition of the other group and the market price of the class of common stock relating to the other group. Any net losses of Applied Biosystems or the Celera Genomics group and dividends or distributions on, or repurchases of, PE Biosystems stock or Celera Genomics stock or repurchases of preferred stock of the Company will reduce the assets of the Company legally available for payment of dividends. The Company has presented financial statements of each group in addition to the Company's consolidated financial information in order to assist investors in making informed financial statements. Discontinued Operations The Company's consolidated financial statements were restated to reflect the net assets and operating results of the Analytical Instruments business as discontinued operations (see Note 15). The operating results are reflected in the Consolidated Statements of Operations as income (loss) from discontinued operations for fiscal 1998 and fiscal 1999. The accompanying notes, except Note 15, relate only to continuing operations. Recently Issued Accounting Standards In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities," amended in June 2000 by SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities." The provisions of the statements require the recognition of all derivatives as either assets or liabilities in the statement of financial position and the measurement of those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. The Company is required to implement the statements in the first quarter of fiscal 2001. The Company estimates that, upon adoption, it will record an immaterial adjustment for a change in accounting principles in the Consolidated Statements of Operations and in accumulated other comprehensive income in the Consolidated Statements of Financial Position. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements," which provides guidance on the recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB No. 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. SAB No. 101 is required to be implemented in the fourth quarter of fiscal 2001. The Company does not expect any impact from the application of SAB No. 101. In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN No. 44"), "Accounting for Certain Transactions Involving Stock Compensation-An Interpretation ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 92

PE CORPORATION Notes to Consolidated Financial Statements continued of Accounting Principles Board ("APB") Opinion No. 25." FIN No. 44 clarifies the following: the definition of an employee for purposes of applying APB No. 25; the criteria for determining whether a plan qualifies as a noncompensatory plan; the accounting consequence of various modifications to the terms of the previously fixed stock options or awards; and the accounting for an exchange of stock compensation awards in a business combination. FIN No. 44 is effective July 1, 2000, but certain conclusions in FIN No. 44 cover specific events that occurred after either December 15, 1998 or January 12, 2000. Management does not expect the application of FIN No. 44 to have a material impact on the Company's consolidated financial statements. Earnings Per Share Basic earnings per share is computed by dividing income from continuing operations for the period by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing income from continuing operations for the period by the weighted average number of common shares outstanding including the dilutive effect of common stock equivalents. The following tables present a reconciliation of basic and diluted earnings per share from continuing operations: <TABLE> <CAPTION> PE Corporation -------------- (Amounts in thousands except per share amounts) For the year ended June 30, 1998 =============================================================== <S> <C> Weighted average number of common shares used in the calculation of basic earnings per share from continuing operations 48,560 Common stock equivalents 1,592 --------------------------------------------------------------- Shares used in the calculation of diluted earnings per share from continuing operations 50,152 =============================================================== Income from continuing operations used in the calculation of basic and diluted earnings per share from continuing operations $ 15,694 Income per share from continuing operations Basic $ .32 Diluted $ .31 =============================================================== </TABLE> <TABLE> <CAPTION> Applied Biosystems -------------------- (Amounts in thousands except per share amounts) For the years ended June 30, 1999 2000 ===================================================================== <S> <C> <C> Weighted average number of common shares used in the calculation of basic earnings per share from continuing operations 200,811 207,010 Common stock equivalents 5,398 10,006 --------------------------------------------------------------------- Shares used in the calculation of diluted earnings per share from continuing operations 206,209 217,016 ===================================================================== Income from continuing operations used in the calculation of basic and diluted earnings per share from continuing operations $ 148,365 $ 186,247 Income per share from continuing operations Basic $ .74 $ .90 Diluted $ .72 $ .86 ===================================================================== </TABLE> <TABLE> <CAPTION> Celera Genomics Group --------------------- (Amounts in thousands except per share amounts) For the years ended June 30, 1999 2000 ====================================================================== <S> <C> <C> Weighted average number of common shares used in the calculation of basic loss per share 50,200 53,725 Common stock equivalents ---------------------------------------------------------------------- Shares used in the calculation of diluted loss per share 50,200 53,725 ====================================================================== Net loss used in the calculation of basic and diluted loss per share $ (44,894) $ (92,737) Net loss per share Basic and diluted $ (.89) $ (1.73) ====================================================================== </TABLE> Options to purchase 40,000 and 5.9 million shares of PE Biosystems stock were outstanding at June 30, 1999 and 2000, respectively, but were not included in the computation of diluted earnings per share because the effect was antidilutive. Options and warrants to purchase 11.2 million and 12.3 million shares of Celera Genomics stock were outstanding at June 30, 1999 and 2000, respectively, but were not included in the computation of diluted earnings per share because the effect was antidilutive. Options and warrants to purchase 1.4 million shares of the Company's common stock were outstanding at June 30, 1998 but were not included in the computation of diluted earnings per share because the effect was antidilutive. Applied Biosystems' share and per share data reflect the two-for-one stock splits effective July 1999 and February 2000. Celera Genomics group's share and per share data reflect the two-for-one stock split effective February 2000. ================================================================================ 93 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued Foreign Currency Assets and liabilities of foreign operations, where the functional currency is the local currency, are translated into U.S. dollars at the fiscal year-end exchange rates. The related translation adjustments are recorded as a separate component of stockholders' equity. Foreign currency revenues and expenses are translated using monthly average exchange rates prevailing during the year. Foreign currency transaction gains and losses, as well as translation adjustments of foreign operations where the functional currency is the U.S. dollar, are included in net income. Transaction losses for the fiscal years ended June 30, 1998, 1999, and 2000 were $2.5 million, $5.6 million, and $.1 million, respectively. Derivative Financial Instruments The Company uses derivative financial instruments to offset exposure to market risks arising from changes in foreign currency exchange rates and interest rates. Derivative financial instruments currently utilized by the Company include foreign currency forward contracts, foreign currency options, and an interest rate swap (see Note 11). Cash and Cash Equivalents and Short-Term Investments Cash equivalents consist of highly liquid debt instruments, time deposits, and certificates of deposit with original maturities of three months or less. Short-term investments have maturities of less than one year, are carried at fair value and are classified as available for sale with unrealized gains and losses included as a separate component of equity, net of any related tax effect. The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses recorded to other income, net. These short-term investments include certificates of deposit, commercial paper, U.S. government securities, and corporate bonds. These investments are held with two major financial institutions in the Company's name. The fair value of short-term investments at June 30, 2000 was as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 2000 ============================================================= <S> <C> Certificates of deposit $ 107.3 Commercial paper 364.5 U.S. government notes and bonds 49.2 Corporate bonds 20.1 ------------------------------------------------------------- Total short-term investments $ 541.1 ============================================================= </TABLE> There were no short-term investments at June 30, 1999. Gross unrealized gains and losses on short-term investments were each $.1 million at June 30, 2000. There were no realized gains or losses for fiscal 2000. Accounts Receivable The Company periodically sold accounts receivable arising from business conducted in Japan. During fiscal 1998, 1999, and 2000, the Company received cash proceeds of $98.8 million, $40.5 million, and $7.8 million, respectively, from the sale of such receivables. There were no sales of accounts receivable after July 28, 1999. The Company accounted for such sales in accordance with SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." Investments The equity method of accounting is used for investments in joint ventures that are 20% to 50% owned and the cost method is used for investments that are less than 20% owned. Minority equity investments are generally classified as available-for-sale and carried at market value in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The specific identification method is used to determine the cost of securities disposed of. Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or market. Inventories at June 30, 1999 and 2000 included the following components: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Raw materials and supplies $ 42.8 $ 53.1 Work-in-process 10.3 6.3 Finished products 96.6 98.4 ------------------------------------------------------------- Total inventories $ 149.7 $ 157.8 ============================================================= </TABLE> Property, Plant and Equipment, and Depreciation Property, plant and equipment are recorded at cost and consisted of the following at June 30, 1999 and 2000: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Land $ 21.2 $ 23.5 Buildings and leasehold improvements 154.9 185.1 Machinery and equipment 231.4 311.6 ------------------------------------------------------------- Property, plant and equipment, at cost 407.5 520.2 Accumulated depreciation and amortization 131.7 185.3 ------------------------------------------------------------- Property, plant and equipment, net $ 275.8 $ 334.9 ============================================================= </TABLE> Major renewals and improvements that significantly add to productive capacity or extend the life of an asset are capitalized. Repairs, maintenance, and minor renewals and improvements are expensed when incurred. Provisions for depreciation of owned property, plant and equipment are based upon the expected useful lives of the assets and computed primarily by the straight-line method. Leasehold improvements are amortized over their estimated useful lives or the term of the applicable lease, whichever is less, using the straight-line method. Internal-use software costs are amortized primarily over the expected useful lives, not to exceed 7 years. Machinery and equipment, which included capitalized internal-use software primarily related to the Company's worldwide strategic program to improve its information technology infrastructure, was $53.2 million and $61.8 million at June 30, 1999 and 2000, respectively. Net of accumulated amortization, the capitalized internal-use software was $43.4 million and $43.5 million at June 30, 1999 and 2000, respectively. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 94

PE CORPORATION Notes to Consolidated Financial Statements continued Capitalized Software Internal software development costs, for software in the Company's products, which are incurred from the time technological feasibility of the software is established until the software is ready for its intended use, are capitalized and included in other long-term assets. The costs are amortized using the straight-line method over a maximum of 3 years or the expected life of the product, whichever is less. At June 30, 1999 and 2000, capitalized software costs, net of accumulated amortization, were $12.5 million and $21.3 million, respectively. Research and development costs and other computer software maintenance costs related to software development are expensed as incurred. Intangible Assets The excess of purchase price over the net asset value of companies acquired is amortized on a straight-line method over periods not exceeding 20 years. Patents and trademarks are amortized using the straight-line method over their expected useful lives. At June 30, 1999 and 2000, other long-term assets included goodwill, net of accumulated amortization, of $18.5 million and $129.2 million, respectively. Accumulated amortization of goodwill was $6.7 million and $12.1 million at June 30, 1999 and 2000, respectively. Asset Impairment The Company reviews long-lived assets for impairment, in accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Assets are written-down to fair value when the carrying costs exceed this amount. During fiscal 1999, Applied Biosystems recorded a $14.5 million charge to cost of sales for the impairment of assets associated with the Molecular Informatics business (see Note 2). The impairment loss was determined based upon estimated future cash flows and fair values. Revenues Revenues are recorded at the time of shipment of products or performance of services. Revenues from service contracts are recorded as deferred service contract revenues and reflected in net revenues over the term of the contract, generally one year. Subscription fees for access to the Company's genomic databases are recognized ratably over the contracted period in accordance with the provisions of the contract. Contract research service revenues are earned and recognized in accordance with contract provisions. Revenues may be recognized on a percentage of completion, as contract research costs are incurred, or may be contingent upon the achievement of certain milestones. Amounts received in advance of performance are recorded as deferred revenue. Research, Development and Engineering Research, development and engineering costs are expensed when incurred. Supplemental Cash Flow Information Cash paid for interest and income taxes and significant non-cash investing and financing activities for the following periods was as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Interest $ 5.7 $ 3.4 $ 3.0 Income taxes $ 60.5 $ 30.3 $ 49.3 Significant non-cash investing and financing activities Capital expenditures liability $ 8.9 Unrealized gain (loss) on investments $ (4.4) $ 11.9 $ 155.5 Dividends declared not paid $ 8.9 Common shares issued in PerSeptive pooling $ 4.6 Equity instruments issued in Paracel acquisition $ 125.1 Minority interest assumed $ 41.3 ============================================================= </TABLE> Note 2--Acquisitions, Investments, and Dispositions PerSeptive Biosystems, Inc. The merger of Seven Acquisition Corp., a wholly owned subsidiary of the Company, and PerSeptive was consummated on January 22, 1998. PerSeptive develops, manufactures, and markets an integrated line of proprietary consumable products and advanced instrumentation systems for the purification, analysis, and synthesis of biomolecules. As a result of the merger, PerSeptive, which was the surviving corporation of the merger, became a wholly owned subsidiary of the Company on that date. Each outstanding share of PerSeptive common stock was converted into shares of the Company's (predecessor) common stock at an exchange ratio equal to 0.1926. Accordingly, the Company issued 4.6 million shares of its (predecessor) common stock for all outstanding shares of PerSeptive common stock. Each outstanding option and warrant for shares of PerSeptive common stock was converted into options and warrants for the number of shares of the Company's (predecessor) common stock that would have been received if such options and warrants had been exercised immediately prior to the effective time of the merger. All shares of Series A Redeemable Convertible Preferred Stock of PerSeptive outstanding immediately prior to the effective time of the merger were converted in accordance with their terms into shares of PerSeptive common stock which were then converted into shares of the Company's (predecessor) common stock. As a result of the merger, PerSeptive's 8-1/4% Convertible Subordinated Notes Due 2001 became convertible into shares of the Company's (predecessor) common stock. On March 23, 1998, the Company redeemed the PerSeptive Notes for a total of $26.1 million, representing $24.7 million of principal and $1.4 million of accrued interest and premium relating to the PerSeptive Notes. Additionally, $2.5 million of the principal amount of the PerSeptive Notes was ================================================================================ 95 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued converted by the holders thereof into 35,557 shares of the Company's (predecessor) common stock. The merger qualified as a tax-free reorganization and was accounted for as a pooling of interests. Tecan AG The Company acquired a 14.5% interest and approximately 52% of the voting rights in Tecan AG during the second quarter of fiscal 1998. Tecan is a leader in the development and manufacturing of automated sample processors, liquid handling systems, and microplate photometry. The acquisition cost was $53.2 million in cash and was accounted for as a purchase with a minority interest of $41.3 million. The excess purchase price over the fair market value of the underlying assets was $46.2 million and was being amortized over 15 years. During the fourth quarter of fiscal 1999, the Company divested its interest in Tecan through a public offering in Switzerland and private sales outside of Switzerland. Net cash proceeds from the divestiture were $53.8 million. The Company recognized a before-tax gain of $1.6 million on the divestiture. Molecular Informatics, Inc. In fiscal 1998, the Company acquired Molecular Informatics, Inc., a leader in the development of infrastructure software for the pharmaceutical, biotechnology, and agrochemical industries as well as for applied markets such as forensics and human identification. The acquisition cost was $53.9 million and was accounted for as a purchase. In connection with the acquisition, $28.9 million was expensed as purchased in-process research and development, $9.0 million was allocated to goodwill, and $15.7 million was allocated to other intangible assets. The amortization period was 10 years for the goodwill and 4 to 7 years for the other intangible assets. The $28.9 million expensed as in-process research and development represented 53.6% of the purchase price and was attributed to and supported by a discounted probable cash flow analysis on a project-by-project basis. At the acquisition date, the technological feasibility of the acquired technology had not been established and the acquired technology had no future alternative uses. Approximately 10% of the in-process research and development value was attributed to BioLIMS, a software system that manages data, initiates analysis programs, and captures the results in a centralized, relational database for sequencing instruments; 6% was attributed to GA SFDB, a client-side add-on product to several existing gene sequencing instruments; 38% was attributed to BioMERGE, a client-server management and integration system that organizes proprietary, public, and third-party results in a single relational database for the drug discovery and genomic research markets; 9% was attributed to BioCLINIC, a client-server management and integration system that organizes proprietary, public, and third-party results generated from DNA and protein sequence analysis in a single database for the clinical trials phase of drug development; and 37% was attributed to SDK, an open architecture software platform from which all of Molecular Informatics' future software applications were expected to be derived. As of the acquisition date, all of the major functionality for BioLIMS 2.0 had been completed and the product was subsequently released in September 1998. As of the acquisition date, BioLIMS 3.0 was in the design and scoping phase. As of the acquisition date, GA SFDB was in early alpha phase and had been completed concurrent with the development of BioLIMS 2.0. The product was released in September 1998. As of the acquisition date, BioMerge 3.0's functional scope was defined and the requirements assessment had been completed. The product was subsequently released in November 1998. As of the acquisition date, the BioCLINIC product requirements had been specified and discussions had begun with two potential customers to begin the specific software modifications. Development efforts were terminated in April 1998 due to unsuccessful marketing efforts. As of the acquisition date, the SDK requirements assessment had been completed and the functional scope had been defined. At the date of the acquisition, a total of $11.8 million of the purchase price was attributed to core technology and existing products, primarily related to the BioMERGE product. The risk-adjusted discount rate applied to the project's cash flows was 20% for existing technology and 23% for in-process technology. The risk premium of 3% for in-process technologies was determined by management based upon the associated risks of rolling out these in-process technologies versus the existing technologies for the emerging bioinformatics software industry. The significant risks associated with these products include the limited operating history of Molecular Informatics, uncertainties surrounding market acceptance of such in-process products, competitive threats from other bioinformatics companies, and other risks. Management is primarily responsible for estimating the fair value of such existing and in-process technology. In fiscal 1999, the Company incurred a $14.5 million charge to cost of sales for the impairment of intangible assets associated with the Molecular Informatics business. This impairment resulted primarily from a decline in management's assessment of future cash flows from this business which included the discontinuance of certain product lines in the fourth quarter. The charge to cost of sales included $5.6 million for the write-down of goodwill and $8.9 million for the write-down of other intangible assets. The remaining goodwill of $1.9 million and other intangible assets of $1.9 million are being amortized over 4 years. Paracel, Inc. During the fourth quarter of fiscal 2000, the Company acquired Paracel, Inc. in a stock-for-stock transaction. Paracel produces advanced genomic and text analysis technologies. Its products include a hardware accelerator for sequence comparison, a hardware accelerator for text search, and sequence analysis software tools. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 96

PE CORPORATION Notes to Consolidated Financial Statements continued The Company issued approximately 1.6 million shares of Celera Genomics stock in exchange for all the outstanding shares of Paracel common stock not previously owned by the Company. At the time of the acquisition, the Company owned 14% of Paracel. The acquisition of the shares of Paracel not previously owned by the Company was valued at $125.6 million and was accounted for under the purchase method of accounting. In connection with the acquisition, $115.2 million was allocated to goodwill, including $5.3 million of deferred tax, and $13.6 million was allocated to other intangible assets. The goodwill and the other intangible assets are being amortized on a straight-line method over 3 years. The net assets and results of operations of Paracel were included in the Company's consolidated financial statements from the date of acquisition. The following selected unaudited pro forma information assumes the acquisition had occurred at the beginning of fiscal 1999 and fiscal 2000, and gives effect to purchase accounting adjustments: <TABLE> <CAPTION> (Dollar amounts in millions except per share amounts) 1999 2000 ============================================================================== <S> <C> <C> Net revenues $ 1,226.8 $ 1,379.4 Net income $ 130.3 $ 47.7 ============================================================================== Applied Biosystems Net income per share Basic $ 1.13 $ .90 Diluted $ 1.10 $ .86 ============================================================================== Celera Genomics Group Net loss per share Basic and diluted $ (1.75) $ (2.54) ============================================================================== </TABLE> The unaudited pro forma data is for informational purposes only and may not be indicative of the actual results that would have occurred had the acquisition been consummated at the beginning of fiscal 1999 or at the beginning of fiscal 2000 or of the future operations of the combined companies. Millennium Pharmaceuticals, Inc. In fiscal 2000, Applied Biosystems recognized a before-tax gain of $41.0 million from the sale of a portion of the Company's equity interest in Millennium Pharmaceuticals, Inc. Net cash proceeds from the sale were $48.0 million. During fiscal 1999 and 1998, the Company recorded before-tax gains of $1.9 million and $1.6 million, respectively, in connection with the release of previously existing contingencies on shares of Millennium common stock. Boston Probes, Inc. In fiscal 2000, the Company made a minority equity investment of $6.0 million in Boston Probes, Inc. Additionally, the Company committed to make term loans in the aggregate of up to $2.0 million, subject to market terms and conditions. The loan commitment and the loan maturity may not extend beyond May 1, 2003. Applied Biosystems and Boston Probes are collaborating on the development and commercialization of products employing peptide nucleic acid technology. The acquisition was accounted for under the cost method and was included in the Company's Consolidated Statements of Financial Position. Epoch Biosciences, Inc. The Company made a minority equity investment in Epoch Biosciences, Inc. of $1.0 million in fiscal 2000. The Company also converted into equity $1.0 million of funds advanced to Epoch as part of a licensing transaction in fiscal 1999. Epoch is a biomedical company utilizing nucleoside and nucleotide chemistry to develop molecular tools for genetic analysis. The acquisition was accounted for under the cost method and was included in the Company's Consolidated Statements of Financial Position. Illumina, Inc. In fiscal 2000, the Company made a minority equity investment of $5.0 million in Illumina, Inc. and will provide a portion of the research and development funding for a strategic collaboration. The strategic collaboration is for the purpose of developing, manufacturing, and marketing array-based systems for high-throughput DNA analysis. Under the agreement, Applied Biosystems and Illumina will jointly develop systems based on Illumina's BeadArray technology and Applied Biosystems' proprietary DNA chemistry. The acquisition was accounted for under the cost method and was included in the Company's Consolidated Statements of Financial Position. ACLARA BioSciences, Inc. The Company made a minority equity investment of $2.5 million in ACLARA BioSciences, Inc. in fiscal 1998. Applied Biosystems and ACLARA are collaborating on the development of advanced genetic analysis systems. In fiscal 1999 and fiscal 2000, the Company increased its investment by $3.0 million and $5.0 million, respectively. The acquisition was accounted for under the cost method and was included in the Company's Consolidated Statements of Financial Position. Biometric Imaging, Inc. In fiscal 1998, the Company acquired a minority equity investment in Biometric Imaging, Inc. for $4.0 million. Applied Biosystems and Biometric Imaging were collaborating on the development and manufacturing of a high-throughput screening system for use by pharmaceutical research companies to accelerate the drug discovery process. The Company received exclusive worldwide marketing rights for products developed for that market. In fiscal 1999, the Company recorded a before-tax gain of $2.6 million on the sale of the Company's entire equity interest in Biometric Imaging. Net cash proceeds from the sale were $6.6 million. Hyseq, Inc. In fiscal 1997, the Company entered into a strategic relationship with Hyseq, Inc., acquiring a minority equity interest for a cash investment of $5.0 million. Hyseq applies proprietary DNA array technology to develop gene-based therapeutic product candidates and diagnostic products and tests. In fiscal 1998, the Company increased its investment by $5.0 million. During the fourth quarter of fiscal 2000, the Company recognized a before-tax gain of $4.4 million from the sale of a portion of its equity interest in Hyseq. Net cash proceeds from the sale were $6.4 million. ================================================================================ 97 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued Panther(TM) Technology During the second quarter of fiscal 2000, the Company acquired the Panther(TM) technology from Molecular Applications Group. Panther(TM) is a software tool designed for rapid and accurate determination of gene and protein function. As part of the agreement, members of the Molecular Applications Group research team who developed the Panther(TM) technology became employees of the Celera Genomics group. The cost of the acquisition was $2.5 million and was accounted for under the purchase method of accounting. Shanghai GeneCore BioTechnologies Co., Ltd. During the second quarter of fiscal 2000, the Company acquired an additional 47.5% equity interest in Shanghai GeneCore BioTechnologies Co., Ltd. from Axys Pharmaceuticals, Inc. for $.5 million. The Company previously owned a 47.5% equity interest in Shanghai GeneCore. Shanghai GeneCore is a genomics service company with expertise in nucleotide synthesis, DNA sequencing, bioinformatics analysis, and mutation detection. The 95% equity interest in Shanghai GeneCore was accounted for under the purchase method of accounting in the consolidated financial statements of the Company. Agrogene S.A. During the third quarter of fiscal 1999, the Company acquired a 49% interest in Agrogene S.A., an agricultural DNA testing laboratory in France, for $1.2 million. The excess of cost over net assets acquired of $1.0 million is being amortized on a straight-line basis over 3 years. This investment has been accounted for under the equity method of accounting. Other Dispositions In fiscal 2000, the Company recognized a before-tax gain of $3.3 million from the sale of its equity interest in various other companies. Net cash proceeds from the sales were $4.3 million. Note 3--Debt and Lines of Credit Loans payable and long-term debt at June 30, 1999 and 2000 are summarized as follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Loans Payable Short-term loans $ 3.9 $ 15.7 ============================================================= Long-Term Debt Commercial paper $ - $ 46.0 Yen loan 31.5 36.1 ------------------------------------------------------------- Total long-term debt $ 31.5 $ 82.1 ============================================================= </TABLE> The weighted average interest rates at June 30, 1999 and 2000 for loans payable were 4.5% and .6%, respectively. The Company maintains a yen 3.8 billion variable rate long-term loan, which matures in March 2002. Through an interest rate swap agreement (see Note 11), the effective interest rate for the loan is fixed at 2.1%. Long-term debt includes $46.0 million of commercial paper with an average interest rate of 6.84% at June 30, 2000. The Company established the necessary credit facilities, through its revolving credit agreement, to refinance the commercial paper borrowings on a long-term basis. These borrowings were classified as noncurrent because it is the Company's intent to refinance these obligations on a long-term basis. The Company's $100 million revolving credit agreement was replaced effective April 20, 2000 with a new $100 million revolving credit agreement with four banks that matures on April 20, 2005. Commitment and facility fees are based on public debt ratings, or net worth and leverage ratios. Interest rates on amounts borrowed vary depending on whether borrowings are undertaken in the domestic or eurodollar markets. There were no borrowings outstanding under the facility at June 30, 2000. At June 30, 2000, in addition to the $100 million revolving credit facility, the Company had $241 million of unused credit facilities for short-term borrowings from domestic and foreign banks in various currencies. These credit facilities consist of uncommitted overdraft credit lines that are provided at the discretion of various local banks. A PE Corporation guarantee is usually required if a local unit borrows any funds. Under various debt and credit agreements, the Company is required to maintain certain minimum net worth and leverage ratios. There are no maturities of long-term debt scheduled for fiscal 2001, 2003, 2004, or 2005. The yen 3.8 billion loan matures in fiscal 2002. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 98

PE CORPORATION Notes to Consolidated Financial Statements continued Note 4--Income Taxes Income (loss) before income taxes from continuing operations for fiscal 1998, 1999, and 2000 is summarized in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> United States $ (38.0) $ (41.6) $ (46.5) Foreign 84.4 155.9 182.6 ------------------------------------------------------------- Total $ 46.4 $ 114.3 $ 136.1 ============================================================= </TABLE> The Company's provision for income taxes from continuing operations for fiscal 1998, 1999, and 2000 consisted of the following: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Currently Payable Domestic $ 3.8 $ 6.1 $ 18.4 Foreign 17.8 23.5 48.6 ------------------------------------------------------------- Total currently payable 21.6 29.6 67.0 ------------------------------------------------------------- Deferred Domestic 6.1 (29.1) (14.0) Foreign (2.6) 3.6 (12.4) ------------------------------------------------------------- Total deferred 3.5 (25.5) (26.4) ------------------------------------------------------------- Total provision for income taxes from continuing operations $ 25.1 $ 4.1 $ 40.6 ============================================================= </TABLE> Significant components of deferred tax assets and liabilities from continuing operations at June 30, 1999 and 2000 are summarized in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Deferred Tax Assets Inventories $ 2.3 $ 4.0 Postretirement and postemployment benefits 32.2 31.4 Other reserves and accruals 8.8 11.9 Tax credit and loss carryforwards 68.8 162.6 ------------------------------------------------------------- Subtotal 112.1 209.9 Valuation allowance (37.5) (37.2) ------------------------------------------------------------- Total deferred tax assets 74.6 172.7 ------------------------------------------------------------- Deferred Tax Liabilities Depreciation 3.1 15.8 Other reserves and accruals 12.3 4.9 Intangibles 4.6 Unrealized gains on investments 89.2 ------------------------------------------------------------- Total deferred tax liabilities 15.4 114.5 ------------------------------------------------------------- Total deferred tax assets, net $ 59.2 $ 58.2 ============================================================= </TABLE> A reconciliation of the federal statutory tax to the Company's continuing tax provision for fiscal 1998, 1999, and 2000 is set forth in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Federal statutory rate 35% 35% 35% ============================================================= Tax at federal statutory rate $ 16.2 $ 40.0 $ 47.6 State income taxes (net of federal benefit) .1 .4 .4 Effect on income taxes from foreign operations 1.2 (21.4) (6.2) Effect on income taxes from foreign sales corporation (2.5) (4.9) (7.1) Acquired research and development 10.1 Reorganization, restructuring, and other costs 5.2 7.9 Domestic temporary differences for which benefit is recognized (4.8) (17.4) Effect of goodwill amortization and write-off .4 1.2 .5 R&D tax credit (11.4) Long-term compensation 8.7 Recapitalization costs 3.3 Other (.8) 2.9 .2 ------------------------------------------------------------- Total provision for income taxes from continuing operations $ 25.1 $ 4.1 $ 40.6 ============================================================= </TABLE> The category "domestic temporary differences for which benefit is recognized" reported in the preceding table reflects the fiscal 1998 and 1999 benefit attributable to a reduction in the valuation allowance. The benefit is primarily due to release of the valuation allowance in fiscal 1999 in the amount of $17.4 million. The valuation allowance was reduced in fiscal 1999 because management believed, once the sale of the Analytical Instruments business was completed, that it was more likely than not that the deferred tax assets to which the valuation allowance related would be realized. The fiscal 1998 benefit resulted from the utilization of domestic tax credit carryforwards and reversing temporary differences and the recognition of various other deferred tax assets that were previously subject to a valuation allowance. At June 30, 2000, the Company's worldwide valuation allowance of $37.2 million related to foreign tax loss carryforwards, as well as domestic tax loss carryforwards, temporary differences, and tax credit carryforwards. PerSeptive has domestic loss carryforwards of approximately $68 million that will expire between the fiscal years 2003 and 2012. The amount of these net operating loss carryforwards that can be utilized annually to offset future taxable income or tax liability has been limited under the Internal Revenue Code as a result of the acquisition. The Company also has a consolidated domestic loss carryforward of approximately $230 million and consolidated domestic credit carryforwards of $43.2 million that will expire between the fiscal years ================================================================================ 99 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued 2005 and 2020, and loss carryforwards of approximately $49 million in various foreign countries with varying expiration dates. U.S. income taxes were not provided on approximately $352 million of net unremitted earnings from foreign subsidiaries since the Company intends to permanently reinvest substantially all of such earnings outside the U.S. These earnings include income from manufacturing operations in Singapore, which is tax-exempt through fiscal 2004. In those instances where the Company expects to remit earnings, the effect on the results of operations, after considering available tax credits and amounts previously accrued, is not significant. The Company and its subsidiaries are subject to tax examinations in various U.S. and foreign jurisdictions. On December 17, 1998, the Company filed a petition in the U.S. Tax Court which contested a deficiency asserted by the IRS for fiscal 1992. The Company has entered into settlement discussions with the IRS Appeals Office in order to determine whether this dispute can be resolved on a favorable basis to the Corporation without the necessity of a trial. The Company will vigorously contest the proposed adjustments. The Company believes that adequate tax payments have been made and adequate accruals have been recorded for all years. Note 5--Retirement and Other Benefits Pension Plans, Retiree Healthcare, and Life Insurance Benefits The Company maintains or sponsors pension plans that cover a substantial portion of all worldwide employees. Pension benefits earned are generally based on years of service and compensation during active employment. However, the level of benefits and terms of vesting may vary among plans. Pension plan assets are administered by trustees and are principally invested in equity and fixed income securities. The funding of pension plans is determined in accordance with statutory funding requirements. The Company's domestic pension plan covers a substantial portion of U.S. employees. During fiscal 1999, the plan was amended to terminate the accrual of benefits as of June 30, 2004 and to improve the benefit for participants who retire between the ages of 55 and 60. The pension plan is not available to employees hired on or after July 1, 1999. The postretirement benefit plan provides certain healthcare and life insurance benefits to domestic employees hired prior to January 1, 1993, who retire and satisfy certain service and age requirements. Generally, medical coverage pays a stated percentage of most medical expenses, reduced for any deductible and for payments made by Medicare or other group coverage. The cost of providing these benefits is shared with retirees. The plan is unfunded. The components of net pension and postretirement benefit expenses for fiscal 1998, 1999, and 2000 are set forth in the following table: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Pension Service cost $ 4.9 $ 5.2 $ 7.7 Interest cost 36.4 38.7 44.1 Expected return on plan assets (35.6) (38.6) (45.7) Amortization of transition asset (1.9) (1.9) (2.4) Amortization of prior service cost (.4) (.4) Amortization of losses .5 .5 .2 Curtailments and settlements .1 ------------------------------------------------------------- Net periodic expense $ 4.3 $ 3.6 $ 3.5 ============================================================= Postretirement Benefit Service cost $ .1 $ .2 $ .3 Interest cost 4.7 4.8 4.6 Amortization of gains (1.2) (1.5) (1.8) ------------------------------------------------------------- Net periodic expense $ 3.6 $ 3.5 $ 3.1 ============================================================= </TABLE> ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 100

PE CORPORATION Notes to Consolidated Financial Statements continued The following tables set forth the changes in the benefit obligations and the plan assets, the funded status of the plans, and the amounts recognized in the Company's Consolidated Statements of Financial Position at June 30, 1999 and 2000: <TABLE> <CAPTION> Pension Postretirement ------------------ ------------------ (Dollar amounts in millions) 1999 2000 1999 2000 ========================================================================= <S> <C> <C> <C> <C> Change In Benefit Obligation Benefit obligation, beginning of year $ 560.5 $ 594.1 $ 72.4 $ 62.5 Service cost 5.2 7.7 .2 .3 Interest cost 38.7 44.1 4.8 4.6 Participants' contributions .1 Benefits paid (30.8) (36.7) (5.3) (5.4) Actuarial (gain) loss 17.7 7.9 (3.3) (.1) Variable annuity unit value change 2.8 (12.9) Addition of plan 3.9 Amendments (2.0) Currency translation (.1) (.2) Other 2.0 (6.3) ------------------------------------------------------------------------- Benefit obligation $ 594.1 $ 607.9 $ 62.5 $ 61.9 ========================================================================= Change In Plan Assets Fair value of plan assets, beginning of year $ 561.8 $ 600.6 $ - $ - Actual return on plan assets 56.8 47.9 Participants' contributions .1 Company contribution 11.4 5.3 5.4 Benefits paid (29.5) (34.3) (5.3) (5.4) Addition of plan 1.0 Currency translation (.2) ------------------------------------------------------------------------- Fair value of plan assets $ 600.6 $ 615.0 $ - $ - ========================================================================= Funded Status Reconciliation Funded status $ 6.5 $ 7.1 $ (62.5) $ (61.9) Unrecognized prior service gain (2.5) (2.0) Unrecognized transition asset (obligation) (2.2) .9 Unrecognized (gains) losses 37.7 29.6 (23.2) (21.5) ------------------------------------------------------------------------- Net amount recognized $ 39.5 $ 35.6 $ (85.7) $ (83.4) ========================================================================= Amounts Recognized In The Statement Of Financial Position Prepaid benefit cost $ 48.3 $ 47.4 $ - $ - Accrued benefit liability (11.6) (15.8) (85.7) (83.4) Intangible asset .7 .6 Minimum pension liability adjustment 2.1 3.4 ------------------------------------------------------------------------- Net amount recognized $ 39.5 $ 35.6 $ (85.7) $ (83.4) ========================================================================= </TABLE> Other changes in benefit obligation represented changes in benefit obligation related to the Analytical Instruments business for periods prior to the sale. A minimum pension liability adjustment is required when the actuarial present value of accumulated benefits exceeds plan assets and accrued pension liabilities. The projected benefit obligation and accumulated benefit obligation for the pension plans with accumulated benefit obligations in excess of plan assets were $12.1 million and $11.6 million, respectively, at June 30, 1999, and $14.0 million and $12.8 million, respectively, at June 30, 2000. The following actuarial assumptions were used for the Company's pension and postretirement plans: <TABLE> <CAPTION> 1999 2000 ============================================================= <S> <C> <C> Domestic Plans Discount rate 7-1/2% 8% Compensation increase 5% 6% Expected rate of return 7-1/2 -- 9-1/4% 8 -- 9-1/4% ============================================================= Foreign Plans Discount rate 5 -- 5-3/4% 3 -- 5-3/4% Compensation increase 4% 2 -- 4% Expected rate of return 6-1/2 -- 9% 4 -- 9% ============================================================= </TABLE> The Company recorded expenses for foreign defined benefit plans of $1.4 million, $1.7 million, and $2.2 million in fiscal 1998, 1999, and 2000, respectively. For measurement purposes, an 8.2% annual rate of increase in the per capita cost of covered healthcare benefits was assumed for plan year 2001, gradually reducing to 5.5% in 2004 and thereafter. A one-percentage-point change in assumed healthcare cost trend rates would have the following effects on postretirement benefits: <TABLE> <CAPTION> One-Percentage- One-Percentage- (Dollar amounts in millions) Point Increase Point Decrease ================================================================= <S> <C> <C> Effect on the total of service and interest cost components $ .4 $ (.4) Effect on postretirement benefit obligation $ 4.8 $ (4.8) ================================================================= </TABLE> Savings Plan The Company provides a 401(k) savings plan, for domestic employees, with automatic Company contributions of 2% of eligible compensation and a dollar-for-dollar matching contribution of up to 4% of eligible compensation. Employees not eligible for the employee pension plan receive an extra 2% Company contribution in addition to the automatic 2% Company contribution through June 30, 2004, while pension plan participants continue to receive the automatic 2% contribution. The Company's contributions to this plan were $5.9 million, $8.5 million, and $12.1 million for fiscal 1998, 1999, and 2000, respectively. ================================================================================ 101 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued Postemployment Benefits The Company provides certain postemployment benefits to eligible employees. These benefits generally include severance, disability, and medical-related costs paid after employment but before retirement. Note 6--Segment, Geographic, and Customer Information Business Segments The Company operates in the life science industry through two reportable segments, Applied Biosystems and the Celera Genomics group. Applied Biosystems manufactures and markets biochemical instrument systems and associated consumable products for life science research and related applications. The Celera Genomics group is engaged principally in the generation, sale, and support of genomic information and enabling data management and analysis software. The Celera Genomics group's customers use this information for commercial applications in the pharmaceutical and life sciences industries in the specific areas of target identification, drug discovery, and drug development. The Celera Genomics group also provides gene discovery, genotyping, and related genomics services. The Celera Genomics group has recently expanded its business in the emerging fields of functional genomics, in particular, proteomics and personalized health/medicine. As a result of the recapitalization, the Company established two separate stocks to track the individual performance of the reportable segments. Segment operating income (loss) excludes other income (expense), gain on investments, net interest income, provision (benefit) for income taxes, and minority interest. The accounting policies of the operating segments are the same as those described in Note 1. Sales of products and services between segments are based on terms that would be available from third parties in commercial transactions. "Other" consists of the elimination of intersegment activity. Other total assets of $173.0 million for fiscal 1999 included the $150 million Celera Genomics group note receivable from Applied Biosystems. Segment information follows: <TABLE> <CAPTION> Celera Applied Genomics Consol- (Dollar amounts in millions) Biosystems Group Other idated ======================================================================================= <S> <C> <C> <C> <C> 1998 Net revenues from external customers $ 940.1 $ 4.2 $ - $ 944.3 Operating income (loss) $ 53.4 $ (12.8) $ 40.6 Depreciation and amortization expense $ 35.2 $ .7 $ 35.9 Capital expenditures $ 68.2 $ 3.6 $ 71.8 Total assets $ 1,128.9 $ 6.4 $ 1,135.3 ======================================================================================= 1999 Net revenues from external customers $ 1,204.4 $ 12.5 $ - $ 1,216.9 Intersegment revenues 17.3 (17.3) --------------------------------------------------------------------------------------- Total revenues $ 1,221.7 $ 12.5 $ (17.3) $ 1,216.9 ======================================================================================= Operating income (loss) $ 187.9 $ (68.8) $ (10.5) $ 108.6 Depreciation and amortization expense $ 44.3 $ 3.8 $ 48.1 Capital expenditures $ 92.0 $ 94.5 $ (10.5) $ 176.0 Total assets $ 1,347.6 $ 344.7 $ (173.0) $ 1,519.3 ======================================================================================= 2000 Net revenues from external customers $ 1,328.3 $ 42.7 $ - $ 1,371.0 Intersegment revenues $ 59.8 $ (59.8) --------------------------------------------------------------------------------------- Total revenues $ 1,388.1 $ 42.7 $ (59.8) $ 1,371.0 ======================================================================================= Operating income (loss) $ 213.2 $ (168.1) $ 3.0 $ 48.1 Depreciation and amortization expense $ 54.5 $ 29.6 $ (3.4) $ 80.7 Capital expenditures $ 95.5 $ 30.7 $ (.4) $ 125.8 Total assets $ 1,698.2 $ 1,413.3 $ (28.2) $ 3,083.3 ======================================================================================= </TABLE> Events Impacting Comparability Applied Biosystems Fiscal 1998 operating income included $48.1 million related to restructuring and other merger costs and $28.9 million for acquired research and development. Fiscal 1999 operating income included: $9.1 million for costs related to the acceleration of certain long-term compensation programs as a result of the attainment of performance targets; charges of $4.6 million related to the recapitalization of the Company; other merger costs of $6.1 million; a $14.5 million charge for the impairment of assets; a $3.5 million donation to the ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 102

PE CORPORATION Notes to Consolidated Financial Statements continued Company's charitable foundation; and a $9.2 million reduction of charges required to implement the fiscal 1998 restructuring plan. Fiscal 2000 operating income included a charge of $45.0 million related to the acceleration of certain long-term compensation programs as a result of the attainment of performance targets and $2.1 million of acquisition-related costs. Celera Genomics Group Fiscal 1999 operating loss included costs of $5.6 million related to the recapitalization and transformation of the Company. Geographic Areas Information concerning principal geographical areas for fiscal 1998, 1999, and 2000 follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Net Revenues From External Customers United States $ 457.1 $ 609.0 $ 681.0 Europe 291.9 370.1 376.0 Japan 129.5 154.8 213.6 Other Far East countries 42.0 56.1 60.8 Latin America and other 23.8 26.9 39.6 ------------------------------------------------------------- Consolidated $ 944.3 $ 1,216.9 $ 1,371.0 ============================================================= </TABLE> Net revenues are attributable to geographic areas based on the region of destination. Information concerning long-lived assets at June 30, 1999 and 2000 follows: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Long-Lived Assets United States $ 266.2 $ 302.2 Europe 15.1 15.3 Japan 14.1 18.1 Other Far East countries .7 2.1 Latin America and other .3 .8 ------------------------------------------------------------- Consolidated $ 296.4 $ 338.5 ============================================================= </TABLE> Long-lived assets exclude goodwill and other intangible assets. Customer Information The Company has a large and diverse customer base. No single customer accounted for more than 10% of total net revenues during fiscal 1998, 1999, or 2000. Note 7--Stockholders' Equity In January 2000, the Board of Directors announced two-for-one splits of PE Biosystems stock and Celera Genomics stock, effective February 2000 in the form of stock dividends. All Applied Biosystems and Celera Genomics group share data reflect these splits. Applied Biosystems share data also reflect the two-for-one split of PE Biosystems stock effective July 1999. Treasury Stock Common stock repurchases were made in support of the Company's various stock plans and as part of a general share repurchase authorization. During fiscal 1999, 20,000 shares of PE Biosystems stock, before giving effect to the February 2000 stock split, were repurchased to support various stock plans. There were no repurchases of common stock during fiscal 1998 or fiscal 2000. Stock Purchase Warrants As a result of the merger with PerSeptive, each outstanding warrant for shares of PerSeptive common stock was converted into warrants for the number of shares of the Company's common stock that would have been received by the holder if such warrants had been exercised immediately prior to the effective time of the merger. As a result of the recapitalization and stock splits, each outstanding warrant for shares of PerSeptive common stock was further converted into warrants to acquire .7704 share of PE Biosystems stock and .1926 share of Celera Genomics stock. The warrants are not separately exercisable into solely PE Biosystems stock or Celera Genomics stock. The exercise price and expiration date of each warrant were not affected by the recapitalization or the stock splits. At June 30, 2000, there were 53,799 warrants outstanding at an exercise price of $65.73. Upon exercise of the warrants, the holders would receive 215,196 shares of PE Biosystems stock and 53,799 shares of Celera Genomics stock. The warrants expire in September 2003. Stockholders' Rights Plan In connection with the recapitalization, the Company adopted a new Stockholders' Rights Plan (the "Rights Agreement") to protect stockholders against abusive takeover tactics. Under the Rights Agreement, the Company will issue one right for every four shares of PE Biosystems stock (a "PE Biosystems Right"), which will allow holders to purchase one-thousandth of a share of Series A participating junior preferred stock of the Company at a purchase price of $425, subject to adjustment (the "Series A Purchase Price"), and one right for every two shares of Celera Genomics stock (a "Celera Genomics Right"), which will allow holders to purchase one-thousandth of a share of Series B participating junior preferred stock of the Company at a purchase price of $125, subject to adjustment (the "Series B Purchase Price"). ================================================================================ 103 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued A PE Biosystems Right or Celera Genomics Right will be exercisable only if a person or group ("Acquiring Person"): (a) acquires 15% or more of the shares of PE Biosystems stock then outstanding or 15% or more of the shares of Celera Genomics stock then outstanding or (b) commences a tender offer that would result in such person or group owning such number of shares. If any person or group becomes an Acquiring Person, each PE Biosystems Right and each Celera Genomics Right will entitle its holder to purchase, for the Series A Purchase Price or the Series B Purchase Price, a number of shares of the related class of common stock of the Company having a market value equal to twice such purchase price. If following the time a person or group becomes an Acquiring Person, the Company is acquired in a merger or other business combination transaction and the Company is not the surviving corporation; any person consolidates or merges with the Company and all or part of the common stock is converted or exchanged for securities, cash, or property of any other person; or 50% or more of the Company's assets or earnings power is sold or transferred, each PE Biosystems Right and each Celera Genomics Right will entitle its holder to purchase, for the Series A Purchase Price or Series B Purchase Price, a number of shares of common stock of the surviving entity in any such merger, consolidation, or business combination or the purchaser in any such sale or transfer having a market value equal to twice the Series A Purchase Price or Series B Purchase Price. The rights are redeemable at the Company's option at one cent per right to a person or group becoming an Acquiring Person. Capital Stock The Company's authorized capital stock consists of 500 million shares of PE Biosystems stock, 225 million shares of Celera Genomics stock, and 10 million shares of PE Corporation preferred stock. Of the 10 million authorized shares of preferred stock, the Company had designated 80,000 shares of two series of participating junior preferred stock in connection with the Company's stockholders' rights plan as previously described. In March 2000, PE Corporation completed a follow-on public offering of Celera Genomics stock. In this offering, 4.4 million shares of Celera Genomics stock were sold, resulting in net proceeds of $943.3 million. Note 8--Stock Plans Stock Option Plans Under the Company's stock option plans, officers, directors, and other key employees may be granted options, each of which allows for the purchase of existing common stock at a price of not less than 100% of fair market value at the date of grant. Prior to the recapitalization, most option grants had a two-year vesting schedule, whereby 50% of the option grant vested at the end of each year from the date of grant. The Board of Directors has extended that schedule for most options granted subsequent to the recapitalization whereby 25% will vest annually, resulting in 100% vesting after four years. Options generally expire ten years from the date of grant. Transactions relating to the stock option plans of the Company follow: <TABLE> <CAPTION> PE Corporation ------------------------ Weighted Average Number of Exercise Options Price ============================================================== <S> <C> <C> Fiscal 1998 Outstanding at June 30, 1997 4,155,603 $ 45.03 Granted 1,997,041 $ 70.41 Exercised 780,994 $ 34.76 Cancelled 154,686 $ 71.42 -------------------------------------------------------------- Outstanding at June 30, 1998 5,216,964 $ 55.51 Exercisable at June 30, 1998 2,936,389 $ 43.12 ============================================================== Fiscal 1999 Granted 37,000 $ 86.61 Exercised 1,549,364 $ 45.74 Cancelled 108,914 $ 67.92 -------------------------------------------------------------- Outstanding at May 5, 1999 3,595,686 $ 60.23 Exercisable at May 5, 1999 2,639,696 $ 55.43 ============================================================== <CAPTION> PE Biosystems Stock ------------------------- Weighted Average Number of Exercise Options Price ============================================================== <S> <C> <C> Fiscal 1999 Outstanding at May 6, 1999 14,382,744 $ 13.67 Granted 5,896,092 $ 27.35 Exercised 1,374,632 $ 13.25 Cancelled 480,958 $ 16.38 -------------------------------------------------------------- Outstanding at June 30, 1999 18,423,246 $ 17.99 Exercisable at June 30, 1999 8,698,906 $ 12.34 ============================================================== Fiscal 2000 Granted 9,000,611 $ 86.06 Exercised 3,146,903 $ 12.37 Cancelled 661,236 $ 26.68 -------------------------------------------------------------- Outstanding at June 30, 2000 23,615,718 $ 44.04 Exercisable at June 30, 2000 9,879,917 $ 15.53 ============================================================== </TABLE> ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 104

PE CORPORATION Notes to Consolidated Financial Statements continued <TABLE> <CAPTION> Celera Genomics Stock ------------------------- Weighted Average Number of Exercise Options Price ============================================================== <S> <C> <C> Fiscal 1999 Outstanding at May 6, 1999 3,595,686 $ 5.52 Granted 7,952,036 $ 8.72 Exercised 281,788 $ 5.25 Cancelled 132,606 $ 6.67 -------------------------------------------------------------- Outstanding at June 30, 1999 11,133,328 $ 7.81 Exercisable at June 30, 1999 3,636,232 $ 6.39 ============================================================== Fiscal 2000 Granted 2,838,848 $ 77.55 Exercised 1,392,069 $ 6.44 Cancelled 311,266 $ 11.04 -------------------------------------------------------------- Outstanding at June 30, 2000 12,268,841 $ 20.49 Exercisable at June 30, 2000 3,945,450 $ 7.47 ============================================================== </TABLE> As a result of the recapitalization, each outstanding stock option under the Company's stock option plans was converted into separately exercisable options to acquire one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock prior to giving effect of PE Biosystems stock splits and the Celera Genomics stock split. The exercise price for the resulting PE Biosystems stock options and Celera Genomics stock options was calculated by multiplying the exercise price under the original option from which they were converted by a fraction, the numerator of which was the opening price of PE Biosystems stock or Celera Genomics stock, as the case may be, on May 6, 1999 (the first date such stocks were traded on the New York Stock Exchange) and the denominator of which was the sum of such PE Biosystems stock and Celera Genomics stock prices. However, the aggregate intrinsic value of the options was not increased, and the ratio of the exercise price per option to the market value per share was not reduced. In addition, the vesting provisions and option periods of the original grants remained the same on conversion. In connection with the acquisition of Paracel, the Company has assumed Paracel's stock option plans. Options granted to Paracel employees and directors in exchange for their Paracel options at the acquisition date have been included in Celera Genomics stock options granted amount for fiscal 2000. The following tables summarize information regarding options outstanding and exercisable at June 30, 2000: <TABLE> <CAPTION> Weighted Average --------------------- Contractual Life Number of Exercise Remaining (Option prices per share) Options Price in Years =========================================================== <S> <C> <C> <C> PE Biosystems Stock Options Outstanding At $.47 - $10.00 2,184,420 $ 6.69 4.0 At $10.01 - $20.00 6,892,195 $ 15.84 6.9 At $20.01 - $50.00 6,453,162 $ 28.12 8.8 At $50.01 - $100.50 8,085,941 $ 90.86 9.6 =========================================================== Options Exercisable At $.47 - $10.00 2,131,665 $ 6.81 At $10.01 - $20.00 6,427,239 $ 15.72 At $20.01 - $50.00 1,286,613 $ 27.05 At $50.01 - $100.50 34,400 $ 89.38 =========================================================== =========================================================== Celera Genomics Stock Options Outstanding At $.19 - $6.00 812,644 $ 3.49 4.6 At $6.01 - $8.50 1,446,691 $ 6.77 7.2 At $8.51 - $10.00 6,706,186 $ 8.56 8.5 At $10.01 - $135.00 3,303,320 $ 54.91 8.8 =========================================================== Options Exercisable At $.19 - $6.00 797,252 $ 3.52 At $6.01 - $8.50 1,290,681 $ 6.69 At $8.51 - $10.00 1,482,797 $ 8.56 At $10.01 - $135.00 374,720 $ 14.30 =========================================================== </TABLE> 1999 Stock Incentive Plans The PE Corporation/PE Biosystems Group 1999 Stock Incentive Plan (the "PE Biosystems Group Plan") and the PE Corporation/Celera Genomics Group 1999 Stock Incentive Plan (the "Celera Genomics Group Plan") were approved in April 1999, as amended. The PE Biosystems Group Plan authorizes grants of stock options, stock awards, and performance shares with respect to PE Biosystems stock. The Celera Genomics Group Plan authorizes grants of stock options, stock awards, and performance shares with respect to Celera Genomics stock. Directors, certain officers, and key employees with responsibilities involving both Applied Biosystems and the Celera Genomics group may be granted awards under both incentive plans in a manner which reflects their responsibilities. The Board of Directors believes that granting awards tied to the performance of the group in which the participants work and, in certain cases the other group, is in the best interests of the Company and its stockholders. ================================================================================ 105 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued Employee Stock Purchase Plans The Company's employee stock purchase plans offer U.S. and certain non-U.S. employees the right to purchase shares of PE Biosystems stock and/or Celera Genomics stock. The purchase price in the U.S. is equal to the lower of 85% of the average market price of the applicable class of common stock on the offering date or 85% of the average market price of such class of common stock on the last day of the purchase period. Provisions of the plan for employees in countries outside the U.S. vary according to local practice and regulations. PE Biosystems stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 98,000 shares and 161,000 shares, respectively. Celera Genomics stock issued under the employee stock purchase plans during fiscal 1999 and 2000 totaled 24,000 shares and 303,000 shares, respectively. Common stock issued under the employee stock purchase plans during fiscal 1998 and 1999 totaled 174,000 shares and 168,000 shares, respectively, of PE Corporation (predecessor) common stock. Director Stock Purchase and Deferred Compensation Plan The Company has a Director Stock Purchase and Deferred Compensation Plan that requires non-employee directors of the Company to apply at least 50% of their annual retainer to the purchase of common stock. Purchases of PE Biosystems stock and Celera Genomics stock are made in a ratio approximately equal to the number of shares of PE Biosystems stock and Celera Genomics stock outstanding. The purchase price is the fair market value on the date of purchase. At June 30, 2000, the Company had approximately 341,000 shares of PE Biosystems stock and approximately 85,000 shares of Celera Genomics stock available for issuance under this plan. Restricted Stock As part of the Company's stock incentive plans, key employees may be, and non-employee directors are, granted shares of restricted stock that will vest when certain continuous employment/service restrictions and/or specified performance goals are achieved. The fair value of shares granted is generally expensed over the restricted periods, which may vary depending on the estimated achievement of performance goals. As a result of the recapitalization, each share of restricted stock held was redesignated as one share of PE Biosystems stock and 0.5 of a share of Celera Genomics stock prior to giving effect of PE Biosystems stock splits and the Celera Genomics stock split. Restricted stock granted to key employees and non-employee directors during fiscal 2000 totaled 3,600 shares of PE Biosystems stock and 900 shares of Celera Genomics stock. Restricted stock granted prior to the recapitalization to key employees and non-employee directors during fiscal 1998 and 1999 totaled 4,350 shares and 42,900 shares, respectively, of the PE Corporation (predecessor) common stock. Compensation expense of continuing operations recognized by the Company for these awards was $1.8 million, $2.3 million, and $6.5 million for fiscal 1998, 1999, and 2000, respectively. Performance Unit Bonus Plan The Company adopted a Performance Unit Bonus Plan in fiscal 1997. The plan utilized stock options and a performance unit bonus pool. Performance units granted under the plan represented the right to receive a cash or stock payment from the Company at a specified date in the future. The amount of the payment was determined on the date of the grant. The performance units vested upon shares of the Company's common stock attaining and maintaining specified price levels for a specified period. As of June 30, 2000, three series of performance units were granted under the plan. Compensation expense recognized under the plan for fiscal 1998, 1999, and 2000 was $5.1 million, $14.8 million, and $53.1 million, respectively. Fiscal 1999 and 2000 compensation expense included $10.1 million and $45.0 million, respectively, related to the acceleration of payments under the plan's three series as a result of the attainment of the performance targets. The vesting of the related stock options was not accelerated. The plan was modified in fiscal 2000 to replace the performance units with performance stock options. Performance stock options vest in equal portions upon the earlier of the shares of PE Biosystems stock attaining and maintaining specified price levels for a specified period of time or after a specified future date. Accounting for Stock-Based Compensation APB No. 25, "Accounting for Stock Issued to Employees," is applied in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for stock option and employee stock purchase plans, as all options have been issued at fair market value. ================================================================================ PE CORPORATION 2000 ANNUAL REPORT 106

PE CORPORATION Notes to Consolidated Financial Statements continued Pro forma net income and earnings per share information, as required by SFAS No. 123, "Accounting for Stock-Based Compensation," have been determined for employee stock plans under the statement's fair value method. The fair value of the options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions: <TABLE> <CAPTION> For the years ended June 30, 1998 1999 2000 =============================================================== <S> <C> <C> <C> Applied Biosystems Dividend yield .63% .17% Volatility 34.40% 52.68% Risk-free interest rates 5.25% 5.88% Expected option life in years 5.23 4.12 =============================================================== Celera Genomics Group Dividend yield -% -% Volatility 34.40% 99.30% Risk-free interest rates 5.00% 6.21% Expected option life in years 5.23 3.5 =============================================================== PE Corporation Dividend yield .94% .62% Volatility 27.00% 34.40% Risk-free interest rates 5.64% 4.71% Expected option life in years 5.70 5.23 =============================================================== </TABLE> For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's pro forma information for the years ended June 30, 1998, 1999, and 2000 is presented below: <TABLE> <CAPTION> Applied Celera Genomics Biosystems Group ---------------- ----------------- (Dollar amounts in millions, except per share amounts) 1999 2000 1999 2000 =================================================================== <S> <C> <C> <C> <C> Income (loss) from continuing operations As reported $ 148.4 $ 186.2 $ (44.9) $ (92.7) Pro forma $ 127.9 $ 140.2 $ (47.5) $ (106.6) Basic earnings (loss) from continuing operations per share As reported $ .74 $ .90 $ (.89) $ (1.73) Pro forma $ .64 $ .68 $ (.95) $ (1.98) Diluted earnings (loss) from continuing operations per share As reported $ .72 $ .86 $ (.89) $ (1.73) Pro forma $ .62 $ .65 $ (.95) $ (1.98) ==================================================================== </TABLE> <TABLE> <CAPTION> PE Corporation -------------------------- (Dollar amounts in millions, except per share amounts) 1998 1999 2000 ============================================================= <S> <C> <C> <C> Income (loss) from continuing operations As reported $ 15.7 $ 96.8 $ 95.5 Pro forma $ (15.0) $ 73.7 $ 35.6 Basic earnings (loss) from continuing operations per share As reported $ .32 Pro forma $ (.31) Diluted earnings (loss) from continuing operations per share As reported $ .31 Pro forma $ (.31) ============================================================= </TABLE> Pro forma information for Applied Biosystems and Celera Genomics group for fiscal 1998 is omitted since PE Biosystems stock and Celera Genomics stock were not part of the capital structure of the Company at that time. The weighted average fair value of PE Corporation (predecessor) stock options granted was $24.83 and $33.54 per share for fiscal 1998 and 1999, respectively. The weighted average fair value of PE Biosystems stock options granted was $10.12 and $38.00 for fiscal 1999 and 2000, respectively. The weighted average fair value of Celera Genomics stock options granted was $4.13 and $46.41 for fiscal 1999 and 2000, respectively. Note 9--Additional Information Selected Accounts The following table provides the major components of selected accounts of the Consolidated Statements of Financial Position at June 30, 1999 and 2000: <TABLE> <CAPTION> (Dollar amounts in millions) 1999 2000 ============================================================= <S> <C> <C> Other Long-Term Assets Minority equity investments $ 46.2 $ 297.7 Goodwill 18.5 129.2 Other 184.8 196.0 ------------------------------------------------------------- Total other long-term assets $ 249.5 $ 622.9 ============================================================= Other Accrued Expenses Deferred revenues $ 51.7 $ 70.9 Other 126.2 129.2 ------------------------------------------------------------- Total other accrued expenses $ 177.9 $ 200.1 ============================================================= Other Long-Term Liabilities Accrued postretirement benefits $ 80.2 $ 77.9 Other 63.5 56.3 ------------------------------------------------------------- Total other long-term liabilities $ 143.7 $ 134.2 ============================================================= </TABLE> ================================================================================ 107 PE CORPORATION 2000 ANNUAL REPORT

PE CORPORATION Notes to Consolidated Financial Statements continued Third-Party Equity Transactions In June 1999, the Company granted an option to purchase 2.6 million shares of Celera Genomics stock to a third party and entered into a one-year non-compete agreement with such party. The fair value of such option approximated $7.2 million and was amortized over the life of the non-compete agreement. Note 10--Commitments and Contingencies Future minimum payments at June 30, 2000 under non-cancelable operating leases for real estate and equipment were as follows: <TABLE> <CAPTION> (Dollar amounts in millions) ============================================================= <S> <C> 2001 $ 41.6 2002 35.5 2003 26.5 2004 18.1 2005 14.2 2006 and thereafter 60.0 ------------------------------------------------------------- Total $ 195.9 ============================================================= </TABLE> Rental expense was $29.0 million for fiscal 1998, $43.1 million for fiscal 1999, and $45.2 million for fiscal 2000. In fiscal 1997, the Company entered into a fifteen-year non-cancelable lease for a facility in Foster City, California, effective July 1, 2000. Total lease payments over the fifteen-year period will be approximately $42 million. As a result of the sale of the Analytical Instruments business, EG&G assumed the responsibility for the Company's German employee pension obligations. In the event EG&G fails to fulfill such German obligations, the employees may have recourse against PE Corporation. On November 18, 1997, Amersham Pharmacia Biotech, Inc. ("Amersham") filed a patent infringement action against the Company in the United States District Court for the Northern District of California. The complaint alleges that the Company is directly, contributorily, or by inducement infringing U.S. Patent No. 5,688,648 ("the '648 patent"), entitled "Probes Labelled with Energy Transfer Coupled Dyes." Amersham asserts that the Company's sale of DNA analysis reagents and systems that incorporate "BigDye" fluorescence detection technology would infringe the '648 patent, and seeks injunctive and monetary relief. The Company answered the complaint, alleging that the '648 patent is invalid and that the Company has not infringed the '648 patent. This case is scheduled for trial in January 2001. On March 13, 1998, the Company filed a patent infringement action against Amersham and Molecular Dynamics, Inc. in the United States District Court for the Northern District of California. The Company asserts that one of its patents (U.S. 4,811,218) is infringed by reason of Molecular Dynamics' and Amersham's sale of certain DNA analysis systems (e.g., the MegaBACE 1000 System). In response, the defendants have asserted various affirmative defenses and several counterclaims, including that the Company is infringing two patents (U.S. 5,091,652 and U.S. 5,459,325) owned by or licensed to Molecular Dynamics by selling the ABI PRISM(TM) 377 DNA Sequencing Systems. On May 21, 1998, Amersham filed a patent infringement action against the Company in the United States District Court for the Southern