The accompanying unaudited notes are an integral part of these consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

The accompanying unaudited notes are an integral part of these consolidated financial statements.

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PERKINELMER, INC. AND SUBSIDIARIES

(1) Nature of Operations

     PerkinElmer, Inc. (the “Company”) is a high-technologyglobal technology company, operating in four businesses — Life Sciences, Optoelectronics, Instrumentswhich provides products and Fluid Sciences.systems to the drug discovery, genetic screening, pharmaceutical research, telecommunications, chemical, semiconductor, medical, aerospace and photographic markets. The Company has operations in over 100125 countries and is a component of the S&P 500 Index. The Company’s continuing operations are classified into four operating segments: Life Sciences, Optoelectronics, Instruments, and Fluid Sciences.

     The operating segments and their principal products and services are:

     Life Sciences: Helps solve the complex analytical problems encountered in drug discovery and genetic screening laboratories by providing solutions, including measuring instrumentation with interfacing software and a wide range of reagents and consumables. Within the field of drug discovery, Life Sciences focuses on customers engaged in pharmaceutical, biotechnology and academia laboratory research and has a strong presence in research and high throughput screening technologies.research. In genetic screening the subject of the screen is a human patient, typically a large number of patients. Customers include public health authorities in the United States and around the world.

     Optoelectronics: Produces a broad spectrum of optoelectronic customer solutions, including, optical fiber communication components and test equipment, imaging devices, CCD cameras, thermopile arrays and large area amorphous silicon detectors, sensor products including high-volumesingle photon counting modules and Positron Emission Tomography (PET) sensors used in life sciences applications, and high-performance specialty lighting sources detectors, optical fiber communication components, emitters and receivers, mux arrays, imaging devices and large area amorphous silicon detectors..

     Instruments: Develops, manufactures and markets sophisticated analytical instruments and imaging detection systems for pharmaceutical companies, research laboratories, academia, medical institutions, government agencies and a wide range of industrial applications designed to provide industry-specific “sample to answer” solutions. Analytical Instruments provides world class analytical solutions employing technologies such as molecular and atomic spectroscopies, high pressure liquid chromatography, mass spectrometry, gas chromatography, and thermal and elemental analysis. Detection Systems provides a broad range of products, including walk through weapons detection systems, advanced explosive detection systems, and large cargo inspection systems.

     Fluid Sciences: Solves critical sealing and sealing system needs for customers in aerospace, semiconductor processing and power generation equipment manufacturing. Provides proprietary coating services and testing for semiconductor process equipment, OEMs and users. The Companysegment designs and manufactures static and dynamic seals, sealing systems, solenoid valves, bellows devices, coatings, advanced pneumatic components, systems and assemblies and sheet metal-formed products for original equipment manufacturers and end users. These products improve equipment efficiency and reliability, lower cost-of-ownership of equipment, reduce harmful emissions and prevent contamination.

(2) Basis of Presentation

     The consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in footnote disclosures normally included in financial statements has been condensed or omitted in accordance with the rules and regulations of the SEC. These statements should be read in conjunction with the Company’s Annual Report for the fiscal year ended December 31, 2000, filed on Form 10-K with the SEC (the(as supplemented by the Form 8-K filed with the SEC on August 3, 2001, the “2000 Form 10-K”). The balance sheet amounts at December 31, 2000 in this report were extracted from the Company’s audited 2000 financial statements included in the 2000 Form 10-K. Certain prior period amounts have been reclassified to conform to the current-year financial statement presentation. The information set forth in these statements may be subject to normal year-end adjustments. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods indicated. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and

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assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues

4

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and expenses during the reporting period. The results of operations for the threesix months ended AprilJuly 1, 2001 are not necessarily indicative of the results for the entire fiscal year.

(3) Acquisitions

      On January 14, 2000,In 2001, the Company completed its acquisitionBoard of Vivid Technologies, Inc. (Vivid) for an aggregate purchase priceDirectors approved a plan to sell the Security and Detection Systems business. The results of approximately $67 million. Detailsoperations of the transactionSecurity and Detection Systems business were previously reported as part of the Instruments segment. The Company has accounted for the plan to sell its Security and Detection Systems business as a discontinued operation in accordance with APB Opinion No. 30,Reporting the Results of Operationsand, accordingly, the results of operations of the Security and Detection Systems business have been segregated from continuing operations and reported as a separate line on the Company’s Consolidated Income Statements and Statements of Cash Flows. The net assets of the Security and Detection Systems business are discussed more fullyreflected as Net Assets of Discontinued Operations in the 2000 Form 10-K.accompanying Consolidated Balance Sheets.

     At the Company’s April 24, 2001 Annual Meeting of Stockholders, an increase in the number of authorized shares of common stock from 100,000,000 shares to 300,000,000 shares was approved. At the April 24, 2001 Board of Directors’ meeting, a two-for-one stock split was approved and was effected on June 1, 2001 by means of a 100% stock dividend to stockholders of record as of May 15, 2001.

(3) Acquisitions

     On July 31, 2000, the Company completed its acquisition onof NEN Life Sciences, Inc. (NEN), a provider of state-of-the-art drug discovery products, services, reagents and technologies to the life sciences industry. Details of the transaction and pro forma financial information were reported on a Current Report on Form 8-K filed with the SEC on August 1, 2000 and in the 2000 Form 10-K. The Company purchased NEN from an investor group led by Genstar Capital LLC for an aggregate purchase price of approximately $400 million. In connection with the acquisition, the Company paid approximately $350 million in cash and issued warrants to purchase approximately 300,000 shares of the Company’s common stock in exchange for all outstanding shares, options and warrants of NEN. In addition, the Company repaid approximately $50 million of outstanding indebtedness of NEN. The Company financed the acquisition and repayment of the outstanding indebtedness with $410 million of commercial paper borrowings with a weighted-average interest rate of 7%. These short-term borrowings were repaid in early August with proceeds from the issuance of long-term convertible debentures.

      NEN’s operations, included in the consolidated results of the Company from the date of acquisition, are reported in the Life Sciences segment. The acquisition was accounted for as a purchase under Accounting Principles Board (APB) Opinion No. 16,Business Combinations. In accordance with APB Opinion No. 16, the Company allocated the purchase price of NEN based on the fair values of the net assets acquired and liabilities assumed. The allocation of the purchase price has not yet been finalized, however, the Company does not expect material changes. Portions of the purchase price, including intangible assets, were valued by independent appraisers utilizing customary valuation procedures and techniques. These intangible assets included approximately $24.3 million for acquired in-process research and development (R&D) for projects that had not reached technological feasibility as of the acquisition date and for which no alternative use existed. This allocation represents the estimated fair value based on risk-adjusted cash flows related to the in-process R&D projects; these costs were expensed in the third quarter of 2000. Other acquired intangibles totaling $75.9 million included the fair value of trade names, trademarks, patents and developed technology. Goodwill of $270.8 million resulting from the acquisition of NEN is being amortized over 20 years. Approximately $4 million has been recorded as accrued restructuring costs in connection with the acquisition of NEN. The restructuring plans include initiatives to integrate the operations of the Company and NEN, and reduce overhead. The primary components of these plans related to employment costs, consolidation of certain facilities, and the termination of certain leases and other contractual obligations. The Company will finalize these plans during fiscal 2001, and the majority of the restructuring actions are expected to occur during fiscal 2001.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

      The components of NEN’s purchase price and preliminary allocation are as follows:

     Unaudited pro forma operating results for the Company for the threesix months ended AprilJuly 2, 2000, assuming the acquisition of NEN was completed as of January 3, 2000, would be as follows: Salessales of $431.3$855.0 million; net income of $8.4$43.2 million; basic and diluted earnings of $.17$.43 and $.42 per share.share, respectively.

     The unaudited pro forma financial information is provided for informational purposes only. It is not necessarily indicative of the Company’s operating results that would have occurred had the acquisitionsacquisition been consummated on the date for which the consummation of the acquisitionsacquisition is being given effect, nor is it necessarily indicative of the Company’s future operating results. The unaudited pro forma financial information does not give effect to acquisitions, other than NEN, does not adjust for businesses divested or exited, norand does itnot adjust for foreign exchange. The pro forma amounts exclude acquisition related charges of $24.3 million for purchased in-process R&Dresearch and development related to NEN. Pro forma amounts for the Vivid acquisition are not included as their effect is not material to the Company’s consolidated financial statements.

(4) Restructuring Charges

     Consistent with the strategic direction of the Company and concurrent with the reevaluation of existing restructuring plans at the time, the Company developed additional plans during the third quarter of 1999 to restructure certain businesses to continue to improve the Company’s performance. These plans resulted in a pre-tax restructuring charge of $23.5 million recorded in the third quarter of 1999. The specific details of the actions and charges by operating segment are discussed more fully in the Company’s Annual Report on2000 Form 10-K for the fiscal year ended January 2, 2000.10-K.

     As a result of a strategic review of the businesses to be restructured in the Company’s Fluid Sciences segment, continued aggressive actions during the first quartersix months of 2001 by the Company to improve the cost structure of the respective businesses, and lower than anticipated costs related to employee separation costs, the Company adjusted its original estimate of restructuring costs and recorded a creditpre-tax credits of $1.5$2.5 million during the first quarter of 2001.

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      The following table summarizesduring the first six months of 2001. Accrued restructuring activity relatedcosts relating to the 1999 plan:

     During the fourth quarter of 2000, the Company reevaluated its 1999 restructuring plan due to the substantial completion of the respective actions and the continuing transformation of the portfolio of businesses during 2000. This resulted in the recording of a pre-tax restructuring charge of $15.1 million for actions to be completed in 2001 (the “2000 plan”). These charges related to the Company’s Life Sciences and Optoelectronics segments. The principal actions in the restructuring plans included close-down or consolidation of a number of offices and facilities, transfer of assembly activities to lower cost geographic locations, disposal of underutilized assets and general cost reductions. Details of the 2000 plan are discussed more fully in the 2000 Form 10-K.

     The following table summarizes the restructuring activity related to the 2000 plan:

     The Company finalized its restructuring plans related to its acquisition of the Analytical Instruments Division (AI) of PE Corp. (May 1999) during 2000. Additionally, the Company recorded approximately $4 million as accrued restructuring costs in connection with the NEN acquisition in August 2000. These plans include actions primarily to integrate the operations of the acquired businesses and improve their cost structures through consolidation or shutdown of certain facilities, workforce and overhead reductions and the termination of certain leases and other contractual obligations. The majority of the remaining restructuring actions are expected to occur through fiscal 2001.

     The following table summarizes the restructuring activity related to the AI and NEN acquisitions:

     Cash outlays during the threesix months ended AprilJuly 1, 2001 were $9.8$14.5 million for all of these plans. The Company expects to incur at least $20 to $25 million of cash outlays in connection with these plans throughout fiscal 2001. Most of the actions remaining at AprilJuly 1, 2001 are expected to occur in fiscal 2001.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(5) Gains on Dispositions

     During the first quarter of 2000, theThe Company sold its micromachined sensors and specialty semiconductor businesses for cash of $24.3 million, resulting inrealized a pre-tax gain of $6.7 million. Combined financial resultsapproximately $4.5 million relating to the disposition of its Space Valves product line in the divested businesses for the firstsecond quarter of 2000 were not material to the consolidated results of the Company. During the first quarter of 2000, primarily in connection with the 1999 disposition of the Company’s Structural Kinematics business, the Company recognized $1.1 million of pre-tax gains from the previously deferred sales proceeds as a result of the favorable resolution of certain events and contingencies.

      When supported by representations and warranties in the purchase and sale agreements related to businesses sold, the Company appropriately defers sales proceeds and records reserves for the contingencies related to the respective representations and warranties. A portion or all of the deferred gain is recorded in the period in which the respective representations and warranties expire, lapse or are favorably settled by the Company.2001. During the first quarter of 2001, the Company recognized previously deferred pre-tax deferred gains of $3.9 million. These gains related to certain businesses previously divested by the Company and were comprisedCompany. The financial results of the following: $1 million relateddivested businesses for all periods were not material to the 1998 disposition of its Rotron division; approximately $2 million related to the 1999 disposition of its KT Aerofab and Structural Kinematics businesses; and approximately $1 million related to the 2000, disposition of its IC Sensors business.

(6)  Other Expense

      Other expense, net, consistedconsolidated results of the following:

     This net increaseDuring the first six months of 2000, the Company sold its micromachined sensors and specialty semiconductor businesses, resulting in other expense was due primarily to the higher interest expense on increased debt levels resulting from acquisitions.

(7)  Accounts Receivable

      Accounts receivable were neta pre-tax gain of reserves for doubtful accounts of $12.6$6.7 million and $15.0recognized $2.5 million as of April 1, 2001 and December 31, 2000, respectively.pre-tax

(8)  Inventories

      Inventories consisted of the following:

87

(9)  Property, Plant and Equipmentgains from previously deferred sales proceeds. The financial results of the divested businesses for all periods were not material to the consolidated results of the Company.

(6) Inventories

     Inventories consisted of the following:

Property, plant and equipment, at cost, consisted of the following:

(10)(8) Intangible Assets

     Intangible assets consist mainly of goodwill from acquisitions accounted for using the purchase method of accounting, representing the excess of cost over the fair market value of the net assets of the acquired businesses. Goodwill is being amortized over periods of 10 to 40 years. Goodwill, net of accumulated amortization, was $682$656 million and $688$660 million at AprilJuly 1, 2001 and December 31, 2000, respectively. Other identifiable intangible assets from acquisitions include patents, trademarks, trade names and developed technology and are being amortized over periods of 10 to 40 years. Other identifiable intangible assets, net of accumulated amortization, were $262$255 million and $263$258 million at AprilJuly 1, 2001 and December 31, 2000, respectively.

      Intangible assets consisted of the following:

(11)(9) Debt

     Short-term debt at AprilJuly 1, 2001 was $228$229 million and was comprised primarily of commercial paper borrowings of $220$222 million. In March 2001, the Company’sThe Company also has a $300 million revolving credit facility was refinanced and will now expirewhich expires in March 2002. The Company also refinanced the existing2002 and a $100 million revolving credit facility which now expiresexpiring in March 2006. These agreements, serve as backup facilities for the commercial paper borrowings. There were no amounts outstanding under these linesbalances on either facility at AprilJuly 1, 2001 or December 31, 2000.

Long-term debt at AprilJuly 1, 2001 was approximately $586$590 million, consisting of $115 million of unsecured notes which mature in 2005 and $471$475 million of convertible debentures. In early August 2000, the Company sold zero coupon senior convertible debentures with an aggregate purchase price of $460 million. The Company used the offering’s net proceeds of approximately $448 million to repay a portion of its commercial paper borrowings, which had been increased temporarily to finance the NEN acquisition. Deferred issuance costs of $12 million were recorded as a noncurrent asset and are being amortized over three years. The debentures, which were offered by a prospectus supplement pursuant to the Company’s effective shelf registration statement, are due August 2020 and were priced with a yield to maturity of 3.5%. At maturity, the Company will repay $921 million, comprised of $460 million of original purchase price plus accrued original issue discount. The Company may redeem some or all of the debentures at any time on or after August 7, 2003

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

at a redemption price equal to the issue price plus accrued original issue discount through the redemption date. Holders of the debentures may require the Company to repurchase some or all of the debentures in August 2003 and August 2010, or at any time when there is a change in control of the Company, as is customary and ordinary for debentures of this nature, at a repurchase price equal to the initial price plus accrued original issue discount through the date of repurchase. The debentures are currently convertible into 5.410.8 million shares of the Company’s common stock at approximately $85$42.50 per share. Conversion of the debentures was not assumed in the computation of diluted earnings per share because the effect of conversion would have been antidilutive.

(12) Accrued Expenses8

(10) Comprehensive Income

     Accrued expenses consisted of the following:

(13) Comprehensive Income

Comprehensive income consisted of the following:

     The components of accumulated other comprehensive loss were as follows:

(14)(11) Industry Segment Information

     The Company’s businesses are reported as four reportable segments which reflect the Company’s management and structure under four strategic business units (SBUs). The segments’ principal products and services are described in Note 1 of this Form 10-Q. The accounting policies of the reportable segments are the same as those described in Note 1 of the 2000 Form 10-K. The Company evaluates the performance of its operating segments based on operating profit. Intersegment sales and transfers are not significant. Unaudited

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

sales and operating profit information by segment for the first threesix months of 2001 and 2000 are showndiscussed in Item 2 of this Quarterly Report on Form 10-Q and are considered an integral part of this note.

(15)9

(12) Discontinued Operations

The results of operations of the Security and Detection Systems business were previously reported as part of the Instruments segment. The Company has accounted for the plan to sell the Security and Detection Business as a discontinued operation in accordance with APB Opinion No. 30 and, accordingly, the results of operations of the Security and Detection Business have been segregated from continuing operations and reported as a separate line on the Company’s Consolidated Income Statements and Statements of Cash Flows. The net assets of the Security and Detection Business are reflected as Net Assets of Discontinued Operations in the accompanying Consolidated Balance Sheets.

     The reported loss from discontinued operations for the six month period ended July 2, 2000, included an in-process research and development charge of $8.1 million and a charge for the revaluation of acquired inventory of $1.1 million in connection with the Company’s acquisition of Vivid Technologies, Inc. in January 2000. The specifics of this acquisition are discussed more fully in the Company’s 2000 Form 10-K.

(13) New Accounting Pronouncements

     The Company adopted Financial Accounting Standards Board Statement of Financial Accounting Standards (SFAS) No. 137,Accounting for Derivative Instruments and Hedging Activities — Deferral of the Effective Date of SFAS No. 133,, effective January 1, 2001. The statement requires companies to record derivatives on the balance sheet as assets or liabilities, measured at fair value. Gains or losses resulting from changes in the values of those derivatives are accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. If a derivative inis a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The Company immediately records in earnings the extent to which a hedge is not effective in achieving offsetting changes in fair value. The adoption of SFAS No. 133 did not have a material effect on the Company’s results of operations or financial position.

     Forward currency exchange contracts are used byIn July 2001, the Company primarily to hedge certain operational (cash-flow hedges) Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 141,Business Combinations,and balance sheet (fair value hedges) exposures resultingSFAS No. 142,Goodwill and Other Intangible Assets.Under these new Standards the FASB eliminated accounting for any mergers and acquisitions as poolings of interests, eliminated amortization of goodwill and indefinite life intangible assets, and established new impairment measurement procedures for goodwill. For calendar-year reporting companies, the standards become effective for all acquisitions completed on or after June 30, 2001. Changes in financial statement treatment for goodwill and intangible assets arising from changes in currency exchange rates. Such exposures result from sales that are denominated in currencies other than the functional currencies of the respective operations. The Company enters into these currency exchange contracts to hedge anticipated product salesmergers and recorded accounts receivable made in the normal course of business, and accordingly, the hedges are not speculative in nature. As part of the Company’s overall strategy to manage the level of exposure to the risk of currency exchange fluctuations, certain operating units hedge a portion of their currency exposures anticipated over the ensuing twelve month period, using exchange contracts that have maturities of twelve months or less. The Company does not hold or engage in transactions involving derivative instruments for purposes other than risk management.acquisitions

      The Company records its forward currency exchange contracts at fair value in its consolidated balance sheet as other current assets or other accrued expenses and, for cash flow hedges, the related gains or losses on these contracts are deferred as a component of other comprehensive items in the accompanying balance sheet. These deferred gains and losses are recognized in income in the period in which the underlying anticipated transaction occurs. At April 1,2001, the Company had no deferred gains recorded. Unrealized gains and losses resulting from the impact of currency exchange rate movements on fair value hedges are recognized in earnings in the period in which the exchange rates change and offset the currency gains and losses on the underlying exposure being hedged.

(16) Subsequent Event

      At the Company’s April 24, 2001 Annual Meeting of Stockholders, an increase in the number of authorized shares of common stock from 100,000,000 shares to 300,000,000 shares was approved. At the April 24, 2001 Board of Directors meeting, a two-for-one stock split was approved and will be effected by means of a 100% stock dividend to stockholders of record as of May 15, 2001, on June 1, 2001.

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completed prior to June 30, 2001 become effective January 1, 2002. The pro formaCompany is currently assessing the impact of implementing these standards.

(14) Subsequent Event

On July 16, 2001, the two-for-oneCompany announced its proposed acquisition of Packard BioScience Company pursuant to an Agreement and Plan of Merger dated as of July 13, 2001. In connection with this acquisition, the Company agreed to issue 0.311 shares of PerkinElmer common stock splitfor each outstanding share of Packard BioScience common stock. The Company also agreed to assume all outstanding options to purchase Packard BioScience common stock, which will become exercisable for shares of PerkinElmer common stock following the merger after giving effect to the same exchange ratio as offered to the Packard BioScience common stockholders. The transaction will be accounted for as a purchase in accordance with recently issued SFAS No. 141,Business Combinations, and SFAS No. 142,Goodwill and Other Intangible Assets, effective for any business combination that is completed after June 30, 2001. These statements requires the use of the purchase method of accounting and the allocation of the purchase price to assets and liabilities assumed based on earnings per sharetheir respective fair values. The transaction is subject to certain customary closing conditions and weighted average sharesregulatory approvals, as well as the approval of the shareholders of Packard BioScience and PerkinElmer, and is as follows: