Back to GetFilings.com
================================================================================
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:
Name of each exchange
Title of class on which registered
- ---------------------------------------------- ---------------------------------------------
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
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:
Owned or Leased
Location (Approximate Floor Area in Sq. Ft.) (Expiration Dates of Leases)
- -------------------------------------------- ------------------------------
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
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:
Owned or Leased
Location (Approximate Floor Area in Sq. Ft.) (Expiration Date of Leases)
- -------------------------------------------- ---------------------------
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)
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.
Name Age Present Positions and Year First Elected
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)
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.
PE Biosystems Group
Annual Report
Page No.
------------------
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
-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)
ALLOWANCE FOR
DOUBTFUL ACCOUNTS
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
=======
(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.