================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A Amendment No. 1 To Form 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: SEPTEMBER 30, 1997. 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: 0-20032 PERSEPTIVE BIOSYSTEMS, INC. (Exact name of registrant as specified in its charter) DELAWARE 04-2987616 (State or other jurisdiction of (I.R.S. employer identification no.) incorporation or organization) 500 OLD CONNECTICUT PATH 01701 FRAMINGHAM, MASSACHUSETTS (Zip code) (Address of principal executive offices) Registrant's telephone number, including area code: (508) 383-7700 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01 PAR VALUE PER SHARE CLASS E WARRANTS TO PURCHASE SHARES OF COMMON STOCK CLASS G WARRANTS TO PURCHASE SHARES OF COMMON STOCK SERIES B JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS (Title of class) Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ---- Indicate by check mark 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. [_] Aggregate market value, as of December 24, 1997, of Common Stock held by non-affiliates of the Company: $253,288,768 based on the last reported sale price on The Nasdaq National Market. NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT DECEMBER 24, 1997: 22,785,758 DOCUMENTS INCORPORATED BY REFERENCE The Company intends to file a definitive proxy statement pursuant to Regulation 14A within 120 days of the end of the fiscal year ended September 30, 1997. Portions of such proxy statement are incorporated by reference in Part III of this Form 10-K. ================================================================================ This Amendment No. 1 on Form 10-K/A to the Registrant's Annual Report on Form 10-K for the year ended September 30, 1997 (the "Report") is being filed to correct typograqphical errors in the Consolidated Statement of Cash Flows for the year ended September 30, 1997 included in the Registrant's Consolidated Financial Statements referenced in Item 8 and Item 14 of the Report. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this item is contained in the financial statements included elsewhere in this Annual Report on Form 10-K. CONSOLIDATED FINANCIAL STATEMENTS. Report of Independent Accountants. Consolidated Balance Sheets at September 30, 1997 and 1996. Consolidated Statements of Operations for the years ended September 30, 1997, 1996 and 1995. Consolidated Statements of Changes in Stockholders' Equity for the years ended September 30, 1997, 1996 and 1995. Consolidated Statements of Cash Flows for the years ended September 30, 1997, 1996 and 1995. Notes to the Consolidated Financial Statements. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (A) 1. CONSOLIDATED FINANCIAL STATEMENTS. For the following financial information included herein, see Index on page F-1: Report of Independent Accountants. Consolidated Balance Sheets at September 30, 1997 and 1996. Consolidated Statements of Operations for the years ended September 30, 1997, 1996 and 1995. Consolidated Statements of Changes in Stockholders' Equity for the years ended September 30, 1997, 1996 and 1995. Consolidated Statements of Cash Flows for the three years ended September 30, 1997, 1996 and 1995. Notes to the Consolidated Financial Statements. 2. FINANCIAL STATEMENT SCHEDULES. For the following financial information included herein, see Index on page F-1: II - Valuation and Qualifying Accounts. All other schedules are omitted because they are not applicable, not required or because the information is included in the Consolidated Financial Statements or Notes to the Consolidated Financial Statements. 3. LIST OF EXHIBITS. Exhibit Number Description of Exhibit ------ ---------------------- 2.1 Agreement and Plan of Reorganization dated as of October 8, 1993 by and among the Company, PV Merger Corporation and Vestec Corporation, as amended (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.2 Agreement and Plan of Merger by and among the Company, PV Merger Corporation and Vestec Corporation (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.3 Escrow and Exchange Agreement by and among the Company, Vestec Corporation, Marvin L. Vestal as the representative of the stockholders of Vestec, American Stock Transfer & Trust Company and the stockholders of Vestec Corporation whose names appear on the signature pages thereto (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.4 Registration Rights Agreement by and among the Company, PV Merger Corporation and Vestec Corporation (filed as Exhibit 2.4 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.5 Asset Purchase Agreement dated as of October 15, 1993 by and between the Company and Advanced Magnetics, Inc. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 15, 1993, as amended and incorporated herein by reference). 2.6 Asset Purchase and Sale Agreement dated as of July 14, 1994 by and among the Company, Millipore Corporation and Millipore Investment Holdings Limited (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended and incorporated herein by reference). 2.7 Registration Rights Agreement by and among the Company, Millipore Corporation and Millipore Investment Holdings Limited dated August 22, 1994 (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended and incorporated herein by reference). 2.8 Registration Rights Agreement by and among the Company, Alex. Brown & Sons Incorporated and Lehman Brothers Inc. dated August 26, 1994 (filed as Exhibit 4.2 to the Company's Registration Statement No. 33-74600 on Form S-3 and incorporated herein by reference). 2.9 Agreement and Plan of Merger, dated as of November 1, 1995 among the Company, PerSeptive Acquisition Corporation and PerSeptive Technologies II Corporation (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 2.10 Amendment No. 1 to Agreement and Plan of Merger, dated January 29, 1996 among the Company, PerSeptive Acquisition Corporation and PerSeptive Technologies II Corporation (filed as Exhibit 2.1 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 2.11 Agreement and Plan of Merger dated as of August 23, 1997 among The Perkin-Elmer Corporation, Seven Acquisition Corp. and PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 26, 1997 and incorporated herein by reference). 3.1 Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.2, 4.2 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 3.2 Certificate of Amendment of Restated Certificate of Incorporation of the Company (filed as Exhibit 4.1 to the Company's Registration Statement No. 33-80856 on Form S-8 and incorporated herein by reference). 3.3 Amended and Restated By-Laws of the Company (filed as Exhibit 3.4, 4.4 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 3.4 Certificate of Designations for the Series A Redeemable Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on August 19, 1994 (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended, and incorporated herein by reference). 3.5 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of the State of Delaware on May 8, 1995 (filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1995 and incorporated herein by reference). 3.6 Certificate of Designations for the Series B Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on March 2, 1995 (exhibit to Exhibit 4.9) (filed as Exhibit 3.6 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 3.7 Amended Certificate of Designation for the Series B Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on October 24, 1995 (filed as Exhibit 3.7 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.1 Description of Capital Stock contained in the Company's Amended and Restated Certificate of Incorporation, as amended, filed as Exhibits 3.1 through 3.7 hereto. 4.2 Form of Class A Warrants for the purchase of the Company's Common Stock dated as of December 23, 1992 issued to the stockholders of PTC-I (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the three-month period ended March 31, 1993 and incorporated herein by reference). 4.3 Form of Class C Warrants for the purchase of the Company's Common Stock dated as of March 15, 1993 issued to the stockholders of PerIsis II (filed as Exhibit 4.3 to the Company's Report on Form 10-Q for the three-month period ended March 31, 1993 and incorporated herein by reference). 4.4 Warrant Agreement relating to the issuance of Class E Warrants of the Company dated as of December 29, 1993, as executed (supersedes Exhibit 4.7 to Amendment No. 1 to the Company's Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3) (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1994 and incorporated herein by reference). 4.5 Specimen Class E Warrant Certificate (filed as Exhibit 4.3 to Amendment No. 1 to the Company's Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3 and incorporated herein by reference). 4.6 Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3 and incorporated herein by reference). 4.7 Indenture dated as of August 26, 1994 between the Company and State Street Bank and Trust Company, as Trustee (filed as Exhibit 4.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994 and incorporated herein by reference). 4.8 Rights Agreement, dated as of March 1, 1995, between the Company and American Stock Transfer & Trust Company, as amended on September 27, 1995 and August 23, 1997. (filed as Exhibit 4.8 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 and incorporated herein by reference) 4.9 Warrant Purchase Agreement relating to the issuance of Class F Warrants (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 4.10 Form of Class F Warrant (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 4.11 Warrant Agreement dated as of September 11, 1995 between the Company and American Stock Transfer & Trust Company relating to the Class G Warrants (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 4.12 Specimen of Class G Warrant Certificate (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 4.13 Form of Amendment to Class C Warrants (filed as Exhibit 4.15 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.14 Class H Warrant dated as of September 1, 1995 (filed as Exhibit 4.19 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.15 Amendment No. 1, dated as of September 27, 1995, to the Rights Agreement, dated as of March 1, 1995, between the Company and American Stock Transfer & Trust Company (filed as Exhibit 4.20 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.16 Form of Warrant Agreement between the Company and American Stock Transfer & Trust Company relating to the Company's Class I Warrants (filed as Exhibit 4.7 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 4.17 Specimen of Class I Warrant Certificate (filed as Exhibit 4.8 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 4.18 Stock Option Agreement dated August 23, 1997 between PerSeptive Biosystems, Inc. and The Perkin-Elmer Corporation (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated as of August 26, 1997 and incorporated by reference herein). 10.1+ 1989 Stock Plan (filed as Exhibit 10.1 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.2+ 1992 Stock Plan of the Company, as amended on January 20, 1997 (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 29, 1997 and incorporated herein by reference). 10.3+ 1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to the Company's Registration Statement No. 33-46871 on Form S- 1 and incorporated herein by reference). 10.4+ 1992 Non-Employee Director Stock Option Plan, as amended on March 11, 1996 (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1996 and incorporated herein by reference). 10.5 Consulting Agreement with Dr. Fred E. Regnier dated June 1, 1988 (filed as Exhibit 10.7 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.6 License Agreement with Purdue Research Foundation dated as of June 16, 1990 (filed as Exhibit 10.8 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.7 Sublease Agreement with the Massachusetts Institute of Technology dated October 1, 1990 (filed as Exhibit 10.10 to the Company's Registration Statement No. 33-46871 on Form S- 1 and incorporated herein by reference). 10.8 Form of Indemnity Agreement with directors and officers (filed as Exhibit 10.15 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.9 Product License and Supply Agreement between Millipore Corporation and the Company granting the Company an exclusive worldwide royalty free license within the Life Science market to use certain patented technology to process membrane products and to carry out certain processes useful to DNA synthesis operations and providing for the supply of membrane products (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.10 OEM Purchase and Supply Agreement between BioSearch, Inc. and the Waters Chromatography Division of Millipore Corporation with respect to the supply of certain high performance liquid chromatography components, machined parts and other materials to BioSearch, Inc. (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.11 Assignment of Settlement Agreement between Millipore Corporation, University Patents, Inc. and Applied Biosystems, Inc. ("ABI") involving cross license of certain patents, granting ABI a license under U.S. Patent No. 4,725,677, "Process for the Preparation of Oligonucleotides" and Millipore a license under U.S. Patent Nos. 4,458,066 and 4,415,732 (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.12 License Agreement dated January 23, 1991 between the University of Minnesota and Millipore Corporation granting Millipore an exclusive worldwide license to make, use and sell products under U.S. Patent Nos. 5,235,028, 5,196,566 and 5,117,009 and related pending applications covering support structures for peptide synthesis operations (filed as Exhibit 10.27 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.13 License Agreement dated January 1, 1988 between Hoffman-La Roche Inc. and Millipore Corporation granting Millipore a non-exclusive license to make, use and sell so-called FMOC chemistries on laboratory instruments (filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.14 License Agreement dated March 9, 1992 between Novabiochem AG and Millipore Corporation granting Millipore a non-exclusive license to make, use and sell instruments for the monitoring of certain peptide reactions related to the synthesis of peptides (filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.15 License Agreement dated December 17, 1991 between Ole Burkhardt, Peter E. Nielsen, Rolf H. Berg, Michael Egholm and Millipore Corporation granting an exclusive, worldwide license Danish Patent Application No. 0986/91 "Oligonucleotide Analogs Termed PNA" and corresponding international counterparts (filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.16 Lease Agreement between the Company and the Massachusetts Institute of Technology dated March 19, 1993 for space located at 12 Emily Street, Cambridge, Massachusetts (filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.17 Lease Agreement between the Company and 500 Old Connecticut Path Limited Partnership for space located at 500 Old Connecticut Path, Framingham, Massachusetts (filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.18 Master Lease Agreement between the Company and Hambrecht & Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 10.19 Security Agreement between the Company and Hambrecht & Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 10.20 Stipulation and Compromise of Settlement dated as of June 14, 1995 relating to the action entitled In re: PerSeptive Biosystems, Inc. Securities Litigation, Civ. Action No. 94- 12575(PBS), brought in the U.S. District Court for the District of Massachusetts (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 10.21 Credit Agreements between the Company's subsidiary PerSeptive Biosystems GmbH - Hamburg (formerly, "BioSearch GmbH") IKB Deutsche Industriebank and Dresdner Bank (filed as Exhibit 10.27 to Form 10K/A Amendment No. 1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 10.22 Master Agreement, dated as of May 7, 1996, between the Company and ChemGenics Pharmaceuticals a d/b/a of Myco Pharmaceuticals Inc. (filed as Exhibit 2 to the Company's Current Report on Form 8-K dated as of June 28, 1996 and incorporated herein by reference). 10.23 Omnibus Amendment Agreement dated December 18, 1996 between the Company and ChemGenics Pharmaceuticals, Inc. 10.24 1997 Non-Qualified Stock Option Plan, as amended (filed as Exhibit 4.1 to the Company's Registration Statement No. 333- 38989, on Form S-8 and incorporated herein by reference). 10.25+ Employment Agreement dated as of January 17, 1997 between PerSeptive Biosystems, Inc. and John F. Smith (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 28, 1997 and incorporated by reference herein). 10.26+ Employment Agreement dated as of January 17, 1997 between PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 28, 1997 and incorporated by reference herein). 21 Subsidiaries of the Company. (filed as Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 and incorporated herein by reference) 23.1* Consent of Coopers & Lybrand L.L.P. 24 Power of Attorney (included in the signature page to the Company's Annual Report on Form 10-K for the year ended September 30, 1997). ________________________________ *Indicates exhibits filed herewith. All other exhibits have been previously filed unless otherwise indicated. +Indicates a management contract or compensatory plan or arrangement. (B) REPORTS ON FORM 8-K. Current Report on Form 8-K dated April 16, 1997, reporting under Item 5, the Company's announcement that the Company had filed a motion to permit an immediate appeal of an April 3, 1997 decision of the United States District Court for the District of Massachusetts (C.A. No. 93-12237-PBS) denying the Company's motion to correct inventorship of three U.S. patents issued to the Company, Nos. 5,019,270, 5,228,989 and 5,384,042, covering the Perfusion Chromatography (R) process and particles and matrix structures used in that process. Current Report on Form 8-K dated August 22, 1997, reporting the Company's announcement that the Company issued 1,019,108 shares of its common stock, $.01 par value per share, to Millipore Corporation in payment of the third $10 million installment due upon the redemption by Millipore Corporation of 1,000 shares of the Company's non-voting Series A Redeemable Convertible Preferred Stock, $.01 par value per share. Current Report on Form 8-K dated August 26, 1997, reporting that the Company, The Perkin-Elmer Corporation, and Seven Acquisition Corp., a wholly owned subsidiary of Perkin-Elmer had entered into an Agreement and Plan of Merger. (C) EXHIBITS. The Company hereby files as exhibits to this Annual Report on Form 10-K those exhibits listed in Item 14(a)(3), above and denoted with an asterisk. (d) FINANCIAL STATEMENT SCHEDULES. The Company hereby files as financial statement schedules to this Annual Report on Form 10-K those financial statement schedules listed in Item 14(a)(2), above, which are attached hereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Amendment to the Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized, in the Town of Framingham, Commonwealth of Massachusetts, on the 6th day of January, 1998. PERSEPTIVE BIOSYSTEMS, INC. By: /s/ Noubar B. Afeyan ------------------------------- Noubar B. Afeyan Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ----- ---- /s/ Noubar B. Afeyan Chief Executive Officer January 6, 1998 - ------------------------ (Principal Executive Noubar B. Afeyan Officer), Director and Chairman of the Board of Directors * President and Director January 6, 1998 - ------------------------ John F. Smith * Senior Vice President January 6, 1998 - ------------------------ and Chief Financial Thomas G. Ruane Officer (Principal Financial and Accounting Officer) * Director January 6, 1998 - ------------------------ Daniel I.C. Wang * Director January 6, 1998 - ------------------------ Edwin M. Kania, Jr. * Director January 6, 1998 - ------------------------ William F. Pounds * Director January 6, 1998 - ------------------------ Bruce J. Ryan * By: /s/ Noubar B. Afeyan ------------------------ Noubar B. Afeyan Attorney-in-fact PERSEPTIVE BIOSYSTEMS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Accountants................................................ F-2 Consolidated Balance Sheets at September 30, 1997 and 1996....................... F-3 Consolidated Statements of Operations for the years ended September 30, 1997, 1996 and 1995............................................... F-4 Consolidated Statements of Changes in Stockholders' Equity for the years ended September 30, 1997, 1996 and 1995............................................... F-5 Consolidated Statements of Cash Flows for the years ended September 30, 1997, 1996 and 1995............................................... F-8 Notes to the Consolidated Financial Statements................................... F-9 Financial Statement Schedules: Report of Independent Accountants................................................ S-1 II - Valuation and Qualifying Accounts......................................... S-2 F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of PerSeptive Biosystems, Inc.: We have audited the accompanying consolidated balance sheets of PerSeptive Biosystems, Inc., as of September 30, 1997 and 1996 and the related consolidated statements of operations, cash flows and stockholders' equity for each of the three years in the period ended September 30, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of PerSeptive Biosystems, Inc. as of September 30, 1997 and 1996 and the consolidated results of their operations and their cash flows for each of the three years in the period ended September 30, 1997, in conformity with generally accepted accounting principles. Boston, Massachusetts Coopers & Lybrand L.L.P. December 1, 1997 F-2 PerSeptive Biosystems, Inc. Consolidated Balance Sheets (in thousands, except share data) September 30, September 30, 1997 1996 -------------- -------------- Assets: Current Assets: Cash and cash equivalents 18,283 5,384 Short-term investments, available for sale 16,646 19,273 Trade accounts receivable, net of allowance for doubtful accounts of $1,963 and $2,386 at September 30, 1997 and 1996, respective 20,814 16,052 Inventories, net 22,602 21,074 Other current assets 3,600 2,107 ----------- ------------ Total current assets 81,945 63,890 Fixed assets, net 27,626 32,017 Patent and license costs, net 5,458 5,913 Goodwill, net 17,478 18,518 Other long-term assets 1,444 1,317 ----------- ------------ Total assets 133,951 121,655 =========== ============ Liabilities and stockholders' equity: Current liabilities: Accounts payable 13,484 9,292 Accrued expenses 10,583 18,699 Current portion of deferred revenue 2,271 1,158 Short-term borrowing 5,055 5,032 Current portion of obligations and other current liabilities 8,004 3,137 ----------- ------------ Total current liabilities 39,397 37,318 Long-term liabilities: Convertible subordinated notes 20,423 27,230 Long-term debt 5,130 5,574 Capital lease obligations, less current portion 281 361 Deferred revenue and other liabilities 1,322 887 ----------- ------------ Total long-term liabilities 27,156 34,052 Commitments & contingencies (Note 12) Stockholders' equity: Redeemable convertible preferred stock, $10 par value; 4000 shares authorized; 1,000 and 2,000 issued and outstanding at September 30, 1997 and 1996, respectively; redemption value $10,000 and $20,000 at September 30, 1997 and 1996, respective 9,480 18,053 Common stock, $.01 par value; 100,000,000 shares authorized; 22,649,980 and 21,315,456 shares issued and outstanding at September 30, 1997 and 1996, respectively 226 213 Additional paid-in-capital 170,669 158,556 Accumulated deficit (111,278) (125,094) ----------- ------------ 69,097 51,728 Cumulative translation adjustment (4,785) (1,373) Unrealized gain (loss) on investments 3,086 (70) ----------- ------------ Total stockholders' equity 67,398 50,285 ----------- ------------ Total liabilities and stockholders' equity 133,951 121,655 =========== ============ The accompanying notes are an integral part of these financial statements F-3 PerSeptive Biosystems, Inc. Consolidated Statements of Operations (in thousands, except per share data) Year ended September 30, ----------------------------------- 1997 1996 1995 ------- ------- ------- Revenue: Product revenue $96,516 $75,916 $69,430 Contract revenue 10,102 19,999 ------- ------- ------- 96,516 86,018 89,429 ------- ------- ------- Cost of goods sold: Cost of product revenue 49,815 37,813 33,169 Cost of contract revenue 8,571 16,968 Other charges 9,906 - ------- ------- ------- 49,815 56,290 50,137 ------- ------- ------- Gross profit 46,701 29,728 39,292 Operating expenses: Research and development 15,215 11,342 6,999 Selling, general and administrative 40,425 39,518 32,771 Other charges 24,239 15,459 Amortization 1,041 2,158 3,080 ------- ------- ------- 56,681 77,257 58,309 ------- ------- ------- Loss from operations (9,980) (47,529) (19,017) ------- ------- ------- Other income (expense): Interest income $ 648 $ 482 $ 1,209 Interest expense (3,534) (3,473) (2,958) Other income, net 28,109 53 196 ------- ------- ------- Net Income (Loss) $15,243 ($50,467) ($20,570) ======= ======= ======= Net income (loss) per common share, primary $ 0.63 ($3.22) ($1.88) ======= ======= ======= Net income per common share, fully diluted $ 0.60 ======= Weighted average common and common equivalent shares outstanding, primary 21,905 16,296 12,340 ======= ======= ======= Weighted average common and common equivalent shares outstanding, fully diluted 25,552 ======= The accompanying notes are an integral part of these financial statements. F-4 PerSeptive Biosystems, Inc. Consolidated Statement of Changes in Stockholders' Equity For the Three Years in the Period Ended September 30, 1997 (in thousands) Redeemable Convertible Preferred Stock Common Stock Shares Par Value Shares Par Value ------ --------- ------ --------- Balance at September 30, 1994 - - 12,097 $120 Modification of warrants in connection with the acquisition of PerIsis II Issuance of warrants pursuant to shareholder litigation settlement Issuance of common stock pursuant to shareholder litigation settlement 494 5 Reclassification of redeemable preferred stock pursuant to the acquisition of the synthesis products business 3,000 $25,709 Conversion of preferred stock into common stock 912 9 Sale of common stock pursuant to stock purchase agreement 158 2 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 249 4 Accretion on redeemable convertible preferred stock 283 Cumulative translation adjustment Amortization of deferred compensation Net loss ---------- ---------- ---------- ---------- Balance at September 30, 1995 3,000 25,992 13,910 140 Issuance of contengent consideration relating to the acquisition of AMI 373 4 Issuance of common stock pursuant to the acquisition of PTC II 2,640 26 Issuance of common stock, through a private placement, net of issuance costs 2,579 26 Conversion of warrants into common stock 331 3 Conversion of preferred stock into common stock (1,000) (10,000) 1,248 12 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 235 2 Accretion on redeemable convertible preferred stock 2,061 Cumulative translation adjustment Unrealized gain (loss) on investments Amortization of deferred compensation Net loss ---------- ---------- ---------- ---------- Balance at September 30, 1996 2,000 18,053 21,316 213 Conversion of preferred stock into common stock (1,000) (10,000) 1,019 10 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 315 3 Accretion on redeemable convertible preferred stock 1,427 Cumulative translation adjustment Unrealized gain on investments Net Income ========== ========== ========== ========== Balance at September 30, 1997 1,000 $9,480 22,650 $226 ========== ========== ========== ========== The accompanying notes are an integral part of these financial statements. F-5 Perspective Biosystems, Inc. Consolidated Statement of Changes in Stockholders' For the Three Years in the Period Ended September 30, 1997 (in thousands) Additional Cumulative Paid-in Accumulated Translation Capital Deficit Adjustment ---------- ----------- ----------- Balance at September 30, 1994 $ 89,743 $ (49,346) Modification of warrants in connection with the acquisition of PerIsis II 1,870 Issuance of warrants pursuant to shareholder litigation settlement 2,000 Issuance of common stock pursuant to shareholder litigation settlement 5,071 Reclassification of redeemable preferred stock pursuant to the acquisition of the synthesis products business 3,000 Conversion of preferred stock into common stock 9,991 Sale of common stock pursuant to stock purchase agreement 1,998 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 699 Accretion on redeemable convertible preferred stock (2,650) Cumulative translation adjustment 225 Amortization of deferred compensation Net loss (20,570) -------- ---------- -------- Balance at September 30, 1995 111,372 (72,566) 225 Issuance of contengent consideration relating to the acquisition of AMI 3,461 Issuance of common stock pursuant to the acquisition of PTC II 15,534 Issuance of common stock, through a private placement, net of issuance costs 16,822 Conversion of warrants into common stock Conversion of preferred stock into common stock 9,988 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 1,379 Accretion on redeemable convertible preferred stock (2,061) Cumulative translation adjustment (1,598) Unrealized loss on investments Amortization of deferred compensation Net loss (50,467) -------- ---------- -------- Balance at September 30, 1996 158,556 (125,094) (1,373) Conversion of preferred stock into common stock 9,990 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 2,123 Accretion on redeemable convertible preferred stock (1,427) Cumulative translation adjustment (3,412) Unrealized gain on investments Net Income 15,243 -------- --------- -------- Balance at September 30, 1997 $170,669 $(111,278) $ (4,785) ======== ========= ======== The accompanying notes are an integral part of these financial statements. F-6 PerSeptive Biosystems, Inc. Consolidated Statement of Changes in Stockholders' For the Three Years in the Period Ended September 30, 1997 (in thousands) Unrealized Gain (Loss) on Deferred Total Investments Compensation Equity ----------- ------------ ------------ Balance at September 30, 1994 ($168) $40,349 Modification of warrants in connection with the acquisition of PerIsis II 1,870 Issuance of warrants pursuant to shareholder litigation settlement 2,000 Issuance of common stock pursuant to shareholder litigation settlement 5,076 Reclassification of redeemable preferred stock pursuant to the acquisition of the synthesis products business 25,709 Conversion of preferred stock into common stock 10,000 Sale of common stock pursuant to stock purchase agreement 2,000 Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 703 Accretion on redeemable convertible preferred stock (2,367) Cumulative translation adjustment 225 Amortization of deferred compensation 112 112 Net loss (20,570) ----------- ------------ ------------ Balance at September 30, 1995 (56) 65,107 Issuance of contengent consideration relating to the acquisition of AMI 3,465 Issuance of common stock pursuant to the acquisition of PTC II 15,560 Issuance of common stock, through a private placement, net of issuance costs 16,848 Conversion of warrants into common stock 3 Conversion of preferred stock into common stock - Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 1,381 Accretion on redeemable convertible preferred stock - Cumulative translation adjustment (1,598) Unrealized loss on investments (70) (70) Amortization of deferred compensation 56 56 Net loss (50,467) ----------- ------------ ------------ Balance at September 30, 1996 (70) - 50,285 Conversion of preferred stock into common stock Sale of common stock pursuant to employee stock purchase plan and exercise of stock options and warrants 2,126 Accretion on redeemable convertible preferred stock - Cumulative translation adjustment (3,412) Unrealized gain on investments 3,156 3,156 Net Income 15,243 -------------------------------------- Balance at September 30, 1997 $3,086 $67,398 ====================================== The accompanying notes are an integral part of these financial statements F-7 PerSeptive Biosystems, Inc. Consolidated Statements of Cash Flows (in thousands) Year ended September 30, ------------------------------------------------------- 1997 1996 1995 ----------- -------------- ------------ Cash flows from operating activities: Net income (loss) 15,243 ($ 50,467) ($ 20,570) Adjustments to reconcile net loss to net cash used in operating activities, net of acquired amounts: Depreciation and amortization 7,862 10,530 11,009 Gain on ChemGenics exchange (27,481) Bad debt expense - 1,275 438 Non-cash portion of other charges - 33,073 8,946 Changes in assets and liabilities: (Increase) decrease in accounts receivable (5,788) 220 (6,589) (Increase) decrease in inventories (2,690) (5,263) 3,059 (Increase) decrease in other assets (1,621) 388 (651) Increase (decrease) in accounts payable 4,192 (59) (2,979) (Decrease) increase in accrued expenses (8,116) (6,935) 2,592 Increase (decrease) in other liabilities 1,548 (2,488) 571 ----------- ------------- ----------- Net cash (used in) operating activities (16,851) (19,726) (4,174) ----------- ------------- ----------- Cash flows from investing activities: Purchase of fixed assets, net (3,483) (10,725) (21,328) Cash and securities available-for-sale acquired from PTC II - 11,851 Proceeds from ChemGenics notes and warrants 4,000 Purchase of securities available-for-sale - (88,498) (53,156) Proceeds from sale and maturities of securities available-for-sale 29,263 80,756 71,615 Increase in patents and licenses - (27) (1,442) ----------- ------------- ----------- Net cash provided by (used in) investing activities 29,780 (6,643) (4,311) ----------- ------------- ----------- Cash flows from financing activities: Proceeds from capital lease financing - 373 5,000 Principal payments under capital lease obligations (2,019) (2,173) (687) Net proceeds from facility financing - 2,404 3,170 Payment of finance costs - (225) (254) Net proceeds from short-term borrowing 320 1,089 3,943 Proceeds from issuance of common stock 2,126 18,298 2,706 ----------- ------------- ----------- Net cash provided by financing activities 427 19,766 13,878 ----------- ------------- ----------- Effect of exchange rate changes on cash and cash equivalents (457) (228) 222 ----------- ------------- ----------- Increase (decrease) in cash and cash equivalents 12,899 (6,831) 5,615 Cash and cash equivalents at beginning of year 5,384 12,215 6,600 ----------- ------------- ----------- Cash and cash equivalents at end of year $ 18,283 $ 5,384 $ 12,215 =========== ============= =========== Supplemental disclosure of cash flow information: Interest paid $ 3,284 $ 3,259 $ 1,203 Supplemental disclosure of non-cash activities: Accretion of Series A Preferred Stock $ 1,427 $ 2,061 $ 2,650 Issuance of stock in exchange for redemption of Series A Preferred Stock 10,000 10,000 10,000 Stock and warrants issued in connection with acquisition of PTC II, net of warrants exchanged - 15,592 - Issuance of stock and warrants pursuant to shareholder litigation settle - 7,076 Stock issued in connection with acquisition of Perlsis II - 1,870 Stock issued to AMI in exchange for remaining acquisition costs - 3,423 - Value of Millennium stock received, net of stock sold 10,575 Value of Millennium stock unrealized Gain 3,108 The accompanying notes are an integral part of these financial statements F-8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION Organization PerSeptive Biosystems, Inc. (the "Company") develops, manufactures, and markets proprietary products and systems for the purification, analysis and synthesis of biomolecules. Pending Merger with Perkin-Elmer Corporation. On August 27, 1997, The Perkin-Elmer Corporation ("Perkin-Elmer"), Seven Acquisition Corp., a wholly-owned subsidiary of Perkin-Elmer, and PerSeptive entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant to the Merger Agreement, all outstanding shares of PerSeptive common stock, $.01 par value per share (the "PerSeptive Common Stock"), will be converted into shares of Perkin-Elmer common stock, $1.00 par value per share (the "Perkin- Elmer Common Stock"), at the exchange rate equal to $13.00 divided by the average of the closing sales prices of Perkin-Elmer Common Stock on the New York Stock Exchange composite tape on each of the 20 consecutive trading days preceding the second trading day prior to the effective date of the merger. In no event, however, will the exchange rate be more than 0.1926, or less than 0.1486, of a share of Perkin-Elmer Common Stock for each share of PerSeptive Common Stock. At the effective time of the merger, PerSeptive will become a wholly-owned subsidiary of Perkin-Elmer. On December 4, 1997, the proposed merger was approved by PerSeptive's stockholders. The completion of the merger is subject to regulatory approvals and other closing conditions. There can be no assurance that the proposed merger will be completed. None of the financial statements reflect the effects of the proposed transaction. Either party has the right to terminate the merger agreement if the merger is not consummated on or before January 31, 1998, unless the parties agree to extend that date on or before January 31, 1998. The Company has incurred costs of $878,000 through September 30, 1997 in connection with the merger, which costs have been deferred until the closing of the merger. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated. Revenue Recognition The Company recognizes revenue upon shipment of its products to the customer. Significant future obligations, such as satisfaction of subjective or more than perfunctory customer-mandated performance criteria, and sales-related contingencies, such as unilateral rights to return product, delay revenue recognition until the obligation is satisfied or the contingency is resolved. Cost of insignificant obligations are accrued when revenue is recognized. The Company recognizes revenue from research contracts as the related costs are incurred on a cost-plus basis and from development contracts using the percentage of completion method. Foreign Currency Effective July 1, 1995, the Company changed the functional currency designation of its foreign subsidiaries from the U.S. dollar to the local currency of its subsidiaries. The change was based on significant changes in the nature of the Company's foreign operations. Accordingly, the Company's foreign subsidiaries translate assets and liabilities at year-end exchange rates and capital accounts at historical exchanges rates. Income and expense accounts are translated at the average exchange rates in effect during the year. The resulting translation gains and losses are F-9 reported as a separate component of stockholders' equity. The functional currency designation in the first three quarters of 1995 and in previous years' financial statements was the U.S. dollar. Monetary assets and liabilities were translated at year-end exchange rates, while nonmonetary items were translated at historical exchange rates. Income and expense accounts were translated at the average exchange rates in effect during the year, except for depreciation, amortization, and cost of revenue which were translated at historical rates. Gains and losses from changes in exchange rates were recognized in the statement of operations. Translation gains and losses prior to the change in functional currency designation were not material. Transaction gains and losses which are immaterial, are included in other income. Cash and Cash Equivalents Cash equivalents consist of investments in money market funds, short term government securities and highly liquid commercial paper of companies in varied industries. Accordingly, these investments are subject to minimal credit and market risk. The Company considers investments with an original maturity of three months or less, at date of acquisition, to be cash equivalents. Investments The Company invests in high credit quality, interest-bearing instruments, primarily government and corporate debt securities and Millennium Pharmaceuticals Inc. common stock. (See Concentrations of Credit and Market Risk, below) Investments that mature within one year or that are expected to be sold within the year to meet cash-flow requirements are classified as current assets. All other investments are classified as long-term assets and are recorded at market value, while securities classified as held-to-maturity are recorded at amortized cost. Unrealized gains and losses on available-for-sale securities are reported as a separate component of stockholders' equity. At September 30, 1997 and 1996, all of the Company's investments are classified as available-for-sale. Investment income consists primarily of interest income, net realized gains and losses from the sale of securities, and the amortization of premiums and discounts. The cost of securities sold is based on the specific identification method. Inventories Inventories are stated at the lower of cost or market with cost being determined on the first-in, first-out basis (FIFO). Fixed Assets Fixed assets are recorded at cost and are depreciated over their estimated useful lives on a straight-line basis. Leasehold improvements are depreciated over their estimated useful lives or the terms of the lease, if shorter. Upon retirement or other disposition of fixed assets the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in income. Additions, renewals and betterments are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. Intangible Assets Organization costs are amortized on a straight-line basis over a five year period. Costs associated with patents and the licensing of patents are capitalized as incurred and amortized on a straight-line basis over the shorter of the legal term or the estimated economic life of the F-10 patent. Purchase options, consisting of the value ascribed to the options to acquire the callable stock of certain research and development corporations, were amortized over the term of the option. All purchase options outstanding at September 30, 1995 were exercised during fiscal year 1996 in connection with the acquisition of PTC-II. Goodwill is amortized on a straight-line basis over 20 years. Intangible assets are shown net of accumulated amortization of $5,744,000 and $5,174,000 at September 30, 1997 and 1996, respectively. Amortization expense for intangible assets amounted to $1,752,000, $3,022,000 and $3,993,000 in fiscal year 1997, 1996 and 1995, respectively. Deferred Financing Costs Deferred financing costs, which consist of the costs associated with the issuance of convertible subordinated notes, and obtaining other sources of financing, are deferred and amortized on a straight-line basis, which approximates the effective interest method, over the term of the debt. Income Taxes The Company accounts for income taxes on the liability method, which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities, measured using the enacted tax rates to be in effect when those differences reverse net of any required valuation allowance. Product Warranty The Company provides customers with up to a one year warranty from the date of installation. Estimated warranty obligations, which are included in the results of operations, are evaluated and provided for at the time of sale. Product warranty costs were not significant. Long-Lived Assets Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if the sum of the estimated future cash flows expected to result from use of the asset is less than the carrying amount of the asset. In 1996, the Company compared the estimated future cash flows expected to result from previous acquisitions and noted that the cash flows were greater than the respective net goodwill amounts associated with those acquisitions, except for the goodwill associated with the fiscal 1994 acquisition of the In Vitro Division of Advanced Magnetics, Inc. which was written off during the fourth quarter of fiscal 1996 (Note 13). Concentrations of Credit and Market Risk Financial instruments which subject the Company to concentrations of credit risk consist primarily of accounts receivable, cash equivalents and investments. The Company is subject to significant market risk through its investment in Millennium stock (see Note 3). In the normal course of business, the Company extends credit, on open accounts, to its customers after credit and business analysis. The Company performs on- going credit evaluation of its customers, does not require collateral and maintains a reserve for potential credit losses. Historically, the Company has not experienced significant losses related to its accounts receivables. In addition, the Company has certain receivables, payables, borrowings and other assets and liabilities denominated in foreign currencies, which are not hedged and therefore are subject to F-11 exchange rate fluctuations. To date, the Company has not incurred significant losses as a result of currency fluctuations. Net Income (Loss) Per Share Net income per share applicable to common shareholders is determined by dividing net income, including accretion on preferred stock, by the weighted average number of common and common equivalent shares outstanding during the period. Net loss per share applicable to common shareholders is determined by dividing net loss, including accretion on preferred stock, by the weighted average common shares outstanding during the period. Common stock equivalents, consisting of options, warrants, contingently issuable shares and shares held in escrow, are included in the per share calculations, where the effect of their inclusion would have been dilutive. Fully diluted earnings per share is calculated under the if converted method which includes preferred stock as if it had been converted to common stock at the beginning of the period. Under the if converted method, accretion is not considered in the calculation of fully diluted earnings per share." Net income (loss) (in thousands) and net income (loss) per common share after preferred stock accretion for the year ended September 30, 1997, 1996 and 1995 are as follows: Year ended September 30, 1997 1996 1995 -------- -------- -------- Net income (loss) before preferred stock $15,243 ($50,467) ($20,570) accretion Accretion of redeemable preferred stock (1,427) (2,061) (2,650) ------- -------- -------- Net income (loss) after preferred stock accretion 13,816 ($52,528) ($23,220) ======= ======== ======== Net income (loss) per common share after preferred stock accretion, primary $0.63 ($3.22) ($1.88) ======= ======== ======== Net income per common share, fully diluted $0.60 ======= Weighted average common and common equivalent shares outstanding, primary 21,905 16,296 12,340 ======= ======== ======== Weighted average common and common equivalent shares outstanding, fully diluted 25,552 ======= New Accounting Pronouncements In February 1997, the Financial Accounting Standards Board issued Statement No. 128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years ended after December 15, 1997, including interim periods. SFAS 128 requires the presentation of basic and diluted earnings per share ("EPS"). Basic EPS, which replaces primary EPS, excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS under the existing rules. SFAS 128 requires restatement of all prior-period earnings per share data presented after the effective date. The Company will adopt SFAS 128 in its fiscal year ended September 30, 1998 and does not F-12 anticipate adoption to have a material effect on the financial statements. In June 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income", which is effective for fiscal years ended after December 15, 1997, including interim periods. SFAS 130 requires the presentation of comprehensive income and its components. Comprehensive income presents a measure of all changes in equity that result from recognized transactions and other economic events of the period other than transactions with owners. SFAS 130 requires restatement of all prior-period statements presented after the effective date. The Company will adopt SFAS 130 in its fiscal year ended September 30, 1998 and has not yet determined the impact of such adoption. In July 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments of an Enterprise and Related Information" which is effective for fiscal years ended after December 15, 1997. The interim reporting disclosures are not required in the first year of adoption. SFAS 131 specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be disclosed. SFAS 131 changes current practice under SFAS 14 by establishing a new framework on which to base segment reporting. The "management" approach expands the required disclosures for each segment. The Company will adopt SFAS 131 in its fiscal year ended September 30, 1998 and has not yet determined the impact of such adoption. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. INVESTMENTS As of September 30, 1997 all securities available-for-sale are stated at market value. These securities consist of U.S. Government and U.S. Government Agency debt securities and Millennium Pharmaceuticals Inc. Common Stock and are included in current assets based on the securities' maturity dates and the Company's expected utilization of the securities. The estimated fair value of investments available for sale, by contractual maturity, at September 30, 1997 is as follows (in thousands): Common Stock $13,678 Due in one year or less 2,968 ------- $16,646 ======= The Common Stock value shown above includes unrealized gain (in thousands) of $3,108. Securities and cash equivalents with an estimated fair market value of approximately $5,500,000 at September 30, 1997 and 1996 are pledged as collateral to secure short-term borrowings. 4. INVENTORIES Inventories consist of the following (in thousands): F-13 September 30, 1997 1996 -------- -------- Raw materials $ 9,450 $ 7,368 Work in progress 2,338 2,751 Finished goods 10,814 10,955 ------- ------- $22,602 $21,074 ======= ======= 5. FIXED ASSETS Fixed assets consist of the following (in thousands): Estimated September 30, useful life (years) 1997 1996 ------------------ ------- -------- Land $ 1,296 $ 1,496 Building 20 8,096 9,084 Construction in progress 488 917 Demonstration equipment 3 4,520 4,317 Laboratory equipment 3-10 7,681 10,762 Computer and office equipment 3-7 5,969 4,814 Production equipment 3-10 6,051 4,970 Leasehold improvements 5 9,992 9,789 -------- -------- 44,093 46,149 Accumulated depreciation and amortization (16,467) (14,132) -------- -------- $ 27,626 $ 32,017 ======== ======== Depreciation and amortization expense amounted to $6,366,000, $7,508,000, and $6,851,000 in fiscal years 1997, 1996, and 1995, respectively. At September 30, 1997 and 1996, laboratory, computer and office equipment under capital leases included in fixed assets amounted to approximately $1,553,000 and $5,891,000 respectively. Accumulated amortization related to assets under capital leases was approximately $670,000 and $2,731,000 at September 30, 1997 and 1996, respectively, and is included in accumulated depreciation and amortization. Fixed assets under capital leases are depreciated over the shorter of the term of the lease or the useful life of the asset. 6. ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): September 30, 1997 1996 -------- --------- Accrued professional fees $ 1,976 $ 5,041 Accrued transaction fees and purchase accounting costs 378 1,732 Accrued warranty costs 1,088 1,297 Accrued wages and commissions 3,402 2,807 Other accrued expenses 3,739 7,822 ------- ------- $10,583 $18,699 ======= ======= F-14 7. INCOME TAXES Pre-tax loss incurred under the following jurisdictions (in thousands): Year ended September 30, 1997 1996 1995 ------- --------- -------- Income (Loss) before income taxes: Domestic $22,361 $(44,777) $(21,781) Foreign (7,118) (5,690) 1,211 ------- -------- -------- $15,243 $(50,467) $(20,570) ======= ======== ======== The provision for income taxes was as follows (in thousands): Year ended September 30, 1997 1996 1995 ------- --------- -------- Current tax expense: State and local $ - $ - $ - Foreign - - 527 ------- -------- ------- Total current $ _ $ - $ 527 ------- -------- ------- Deferred tax expense (benefit) Federal 7,855 $(17,521) $ (898) State 822 (1,947) (148) Foreign (6,966) (974) (527) ------- -------- ------- Total deferred 1,711 (20,442) (1,573) ------- -------- ------- Deferred tax asset valuation allowance (1,711) 20,442 1,046 ------- -------- ------- Total provision $ - $ - $ - ======= ======== ======= Deferred tax assets (liabilities) are comprised of the following (in thousands): Year ended September 30, 1997 1996 ------- -------- Net operating loss carryforwards $ 39,013 $ 32,869 Research and development credit 1,169 863 Expense accruals 1,285 2,607 Depreciation (605) 44 Inventory reserves 2,214 3,553 Millennium stock transaction (4,285) - Patent amortization (344) (355) Accounts receivable 697 888 Warranty reserve 407 536 Other reserves and temporary differences 3,630 3,887 -------- -------- Gross deferred tax assets 43,181 44,892 Deferred tax assets valuation allowance (41,908) (43,619) -------- -------- $ 1,273 $ 1,273 ======== ======== F-15 A reconciliation between the amount of reported income tax expense and the amount computed using the U.S. Federal Statutory rate of 35% is as follows (in thousands): Year ended September 30, 1997 1996 1995 ------- -------- -------- Income/(Loss) at statutory rate $ 5,335 $(20,757) $(7,200) Foreign losses not benefited 2,195 - - Utilization of US NOL's (7,656) Shareholder settlement (2,020) 3,546 Nondeductible amortization 65 - 194 ChemGenics Transaction - 1,250 - PDI book goodwill write-off - 1,446 - Charge for purchased research and development acquired from PTC-II, net of anticipated tax benefit - 2,375 - State tax benefit, net of federal tax liability - (2,613) - R & D Credit - (149) Other 61 26 2 ------- -------- ------- - (20,442) (3,458) Benefit of loss not recognized - 20,442 3,458 ------- -------- ------- Provision for income taxes $ - $ - $ - ======= ======== ======= The Company has provided a valuation allowance for certain deferred tax assets, since it is not more likely than not that future benefits will be realized. If the Company achieves profitability, these deferred assets would be available to offset future income tax liabilities and expense, subject to the limitations described below. At September 30, 1997, the Company has net operating loss carryforwards and research and development tax credits for federal income tax reporting purposes of approximately $64 million and $1,169,000, respectively, which will expire between 2003 and 2012. The net operating loss carryforward is offset by $4,700,450 relating to deductions for non-qualified stock option exercises which will be credited to additional paid-in-capital upon realization. The Company has a net operating loss carryforward for foreign income tax reporting of $12 million some of which will expire between 1998 and 2002 and the rest with an unlimited carryforward period. Ownership changes, as defined in the Internal Revenue Code, resulting from the issuance of Series A, Series B and Series C convertible preferred stock and from the issuance of common stock may have limited the amount of net operating loss and tax credit carryforwards that can be utilized annually to offset future taxable income or tax liability. 8. CREDIT FACILITIES AND BORROWINGS Convertible Subordinated Notes In August 1994, the Company issued $27,230,000 aggregate principal amount of 8- 1/4% Convertible Subordinated Notes Due 2001 (the "Notes"). As of September 30, 1997, $6.8 million, representing the payment that is due on August 15, 1998, is classified as a current liability. The Notes are convertible into the F-16 Company's common stock at any time after the expiration of 60 days following the last date of original issuance through maturity, unless previously redeemed or repurchased, at a conversion price of $13.80 per share, subject to adjustment in certain circumstances. Beginning on August 15, 1998 and on each anniversary date through the year 2000, the Company is required to deposit in a sinking fund, cash sufficient to redeem, on each August 15, 25% of the outstanding principal and accrued interest. Interest on the Notes is payable semi-annually on each February 15 and August 15, commencing on February 15, 1995, and the Notes will mature on August 15, 2001, unless previously redeemed or repurchased. Interest expense in fiscal year 1997, 1996 and 1995 was $2,246,000. The Notes are not redeemable by the Company prior to August 25, 1997. Thereafter, the Notes will be redeemable at the option of the Company, in whole or in part, at any time, at specified redemption prices plus accrued and unpaid interest to the date of redemption. The Notes are unsecured general obligations of the Company and are subordinated to all existing and future senior indebtedness (as defined in the agreement) of the Company. Long-term Debt The Company secured financing totaling 8.5 million DM (approximately $6 million at September 30, 1995) in bank loans from two German banks during fiscal year 1995 to contribute to the construction of the Company's new manufacturing facility in Hamburg, Germany. During fiscal year 1996 additional proceeds were received to complete the construction. At September 30, 1996, total proceeds of 8.5 million DM (approximately $6 million at September 30, 1996) were received from the Facility Financing. The bank loans are payable in semi-annual installments of 363,640 DM (approximately $206,657 at September 30, 1997) beginning March 31, 1997 through September 30, 2007. Interest is calculated at 7.5% per annum and is payable at the end of each year. The bank loans are collateralized by all real estate and buildings owned by the Company in Hamburg, Germany. Short-term Borrowing The Company has secured short-term financing from an investment bank which is collateralized by the Company's short-term investments. The short-term borrowing is classified as a current liability and approximates $5 million at September 30, 1997 and 1996, respectively. Interest is payable monthly and is calculated daily, based on the broker call rate plus a percentage of the amount borrowed. The rate paid in fiscal year 1997, 1996 and 1995 ranged from 6.10% to 8.25%. 9. STOCKHOLDERS' EQUITY Redeemable Convertible Preferred Stock In connection with its acquisition of the synthesis products business acquired from Millipore Corporation ("Millipore"), the Company's Board of Directors authorized the designation and issuance to Millipore of 4,000 shares of a newly designated series of non-voting redeemable convertible preferred stock (the "Series A Preferred Shares"), valued at approximately $33,121,000 as of the acquisition date using an imputed interest rate of 8% (Note 16). The Series A Preferred Shares are redeemable in four equal installments on each of the first four anniversaries of the closing of the acquisition in $10 million installments, payable at the Company's option in cash or the Company's common stock. The Company will have the right to redeem all or any part of the Series A Preferred Shares prior to their stated redemption date by paying cash or by delivering shares of its common stock with a market value equal to the redemption price. The holders of the Series A Preferred Shares will have certain rights to F-17 convert, at the election of holders of 66-2/3% of the Series A Preferred Shares, all, but not less than all, of the outstanding Series A Preferred Shares into shares of common stock in the first year if the market price of the stock exceeds $32.00 per share, and in the second year, if the market price exceeds $38.00 per share. The conversion rate will be determined by dividing the redemption value of the Series A Preferred Shares to be converted by the then fair market value of the common stock at the time of conversion. In August 1995, the Company issued 912,199 shares of common stock at $10.96 per share to satisfy its first redemption payment due August 22, 1995. In August 1996, the Company issued 1,248,050 shares of common stock at $8.01 per share to satisfy its second redemption payment due August 22, 1996. In August 1997, the Company issued 1,019,108 shares of common stock at $9.81 per share to satisfy its third redemption payment due August 22, 1997. Management's intent is to satisfy the remaining installment under this preferred stock arrangement as it becomes due through the issuance of common stock. As a result of the action taken during fiscal year 1995 to convert the first installment of the preferred stock to common stock and management's intent to satisfy future installments with common stock, the remaining fair value of this outstanding security has been reflected as a component of the Company's equity beginning in September 30, 1995. The difference between the fair value of the Series A Preferred Shares recorded at the date of issuance and the redemption value is accreted as a charge to accumulated deficit using the effective interest method. Capital Stock The authorized capital stock of the Company consists of (i) 100,000,000 shares of common stock and (ii) 1,000,000 shares of preferred stock, par value $.01 per share, of which 4,000 shares have been designated Series A Redeemable Convertible Preferred Stock ("Series A Preferred Stock") and 400,000 shares have been designated Series B Junior Participating Preferred Stock ("Series B Preferred Stock"). As of September 30, 1997 the Company had reserved 4,951,672 shares of common stock for use in the Company's 1989, 1992 and 1997 Stock Plans and the Company's 1992 Non-Employee Director Plan (Note 10) and 59,039 shares of common stock for use in the Company's 1992 Employee Stock Purchase Plan (Note 10). Warrants In addition, the Company also has outstanding the following warrants to purchase common stock: Note Number of Exercise Date Expiration Reference Shares Price Exercisable Date ------------------------------------------------------------------------------------------- Class A Warrants 15 401,100 $20.00 December 1992 December 1997 Class C Warrants 15 40,000 7.31 September 1993 March 1999 Class E Warrants 15 41,875 33.00 January 1996 December 1998 Class F Warrants 12 100,000 7.62 March 1996 October 2002 Class G Warrants 13 279,330 12.66 March 1996 September 2003 The exercise prices and the number of shares of the Company's common stock issuable upon exercise of the Class C, E, and G warrants will be appropriately adjusted in the event of stock F-18 splits, combinations, rights offering, stock dividends or certain other special dividends with respect to the Company's common stock. The Class A warrants expired unexercised on December 23, 1997. 10. STOCK OPTION PLANS AND OTHER BENEFITS 1989 and 1992 Stock Plans In June 1989 and March 1992, the Company adopted the 1989 and 1992 Stock Plans, respectively (the "1989 Plan" and the "1992 Plan"), which provide for the granting of incentive stock options, non-qualified stock options, stock purchase rights and awards of stock. The Board of Directors determines the term of each option, option price, number of shares for which each option is granted, whether restrictions will be imposed on the shares subject to options, and the rate at which each option is exercisable. The exercise price for incentive stock options granted generally may not be less than the fair market value per share of the underlying common stock on the date granted. The exercise price per share for non-qualified options will be as determined by the Board of Directors. Additionally, the term of the options cannot exceed ten years (five years for options granted to holders of more than 10% of the voting stock of the Company). The options vest on an annual or quarterly basis from the date of grant over periods determined by the Board of Directors. As a result of the decline in the market price of the Company's common stock, during fiscal year 1995, the Company allowed holders of 1,230,000 options to surrender their existing options having exercise prices ranging from $7.63 to $26.75 in exchange for new options totaling 615,000 at an exercise price of $5.38. Under the 1989 Plan, 984,000 options were authorized for issuance and options covering 130,625 shares are currently outstanding, of which all were exercisable as of September 30, 1997. No further options will be granted under this plan. On June 16, 1993, the Company amended the 1992 Plan to increase the number of shares of common stock authorized for issuance under the 1992 Plan from 800,000 to 1,700,000. On March 10, 1994, May 1, 1995, May 6, 1996 and March 5, 1997 the Company amended the 1992 Plan to increase the number of shares of common stock authorized for issuance to 2,300,000; 2,900,500; 3,585,500; and 4,585,500; respectively. In addition, the 1992 Plan was amended on March 10, 1994 and March 5, 1997 to limit the number of shares of common stock that any participant may purchase under the Plan to 600,000 and 1,400,000, respectively. Under the 1992 Plan, options covering 4,087,017 shares are currently outstanding, of which 1,760,402 options were exercisable and 35,530 were available for grant as of September 30, 1997. 1992 Non-Employee Director Plan During March 1992, the Company adopted the 1992 Non-Employee Director Stock Option Plan. This plan provides for grants of non-qualified options to non- employee members of the Board of Directors. The exercise prices of options granted under this plan will equal the fair market value of the underlying common stock on the date granted. The term of options under this plan is ten years. The original plan provided that Directors receive 1,500 non-qualified options per year, except that persons who were directors on June 1, 1992 received an initial grant of 6,000 options, and persons first elected as directors subsequent to June 1, 1992 receive an initial grant of 10,000 options. On March 11, 1996, the plan was amended to increase the annual automatic grant under the Director Plan from 1,500 to 7,500 shares of the Company' s Common Stock. Initial and annual grants of options will vest in four and three equal annual amounts, respectively, commencing on the grant date. In the event that a director ceases to be a member of the Board of F-19 Directors, any unexercised portion of options granted will terminate. Under this plan, 200,000 shares of common stock have been authorized for issuance, and options covering 107,000 shares are currently outstanding, of which 70,163 options were exercisable and 91,500 were available for grant as of September 30, 1997. 1997 Employee Non-Qualified Stock Option Plan During 1997, the Company adopted the 1997 Non-Qualified Stock Option Plan. This plan provides for grants of non-qualified options to employees, consultants and certain new officers. The number of shares for which each option is granted, whether restrictions will be imposed on the shares subject to options, and the rate at which each is exercisable shall be determined at the discretion of the Board of Directors. The maximum term of options under this plan is ten years. The original plan authorized 200,000 shares of common stock for issuance. On August 21, 1997, the number of shares of common stock authorized for issuance was increased to 550,000. As of September 30, 1997, options covering 474,114 shares are currently outstanding, of which 15,000 options were exercisable, and 25,886 options were available for grant. Stock-based Compensation Plans The Company has adopted the disclosure requirements of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation." The Company continues to recognize compensation costs using the intrinsic value based method described in Accounting Principles Board Opinion No. 25, "Accounting for Stock issued to Employees." Net income (loss) and net income (loss) per share as reported in these consolidated financial statements and on a pro forma basis, as if the fair value based method described in SFAS No. 123 had been adopted, are as follows (in thousands, except per share amounts): Year Ended September 30 ----------------------- 1997 1996 ------ ------ - ---------------------------------------------------------------------------------------- Net income As reported $15,243 $(50,467) Pro forma 12,625 (51,368) Primary net income As reported $ .63 $ (3.22) per share Pro forma .51 (3.28) Fully diluted net As reported $ .60 - income per share Pro forma .44 - The effects of applying SFAS No. 123 in fiscal year 1997 and 1996 are not necessary indicative of the effects on reported net income in future years. The following table summarizes the Company's stock option activity at September 30, 1997, 1996, and 1995, and changes during the years then ended: F-20 1997 1996 1995 ------------------------ ------------------------ ------------------------ - ------------------------------------------------------------------------------------------------------- WEIGHTED- WEIGHTED WEIGHTED SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE UNDER EXERCISE UNDER EXERCISE UNDER EXERCISE OPTION PRICE OPTION PRICE OPTION PRICE - ------------------------------------------------------------------------------------------------------- Outstanding at beginning of year 3,560 $7.83 2,491 $7.37 2,332 $15.79 Granted at fair market value 1,646 7.04 1,604 7.98 1,908 6.39 Exercised (260) 6.22 (180) 5.30 (190) 1.85 Canceled (147) 7.40 (355) 6.83 (1,559) 19.28 - ------------------------------------------------------------------------------------------------------- Outstanding at end of year 4,799 $7.70 3,560 $7.83 2,491 $7.37 - ------------------------------------------------------------------------------------------------------- Options exercisable at September 30, 1997, 1996 and 1995 were 1,976,190, 1,227,458 and 1,208,184, respectively. The weighted-average grant-date fair value of options granted during 1997 and 1996 were $4.19 and $3.99, respectively. The following table summarizes information about stock options outstanding at September 30, 1997: OPTIONS OUTSTANDING OPTIONS EXERCISABLE ------------------- ------------------- Weighted Average Remaining Weighted Weighted Number Contractual Average Number Average Range of Outstanding Life Exercise Outstanding Exercise Exercise prices At 9/30/97 (In Years) Price At 9/30/97 Price - ---------------------------------------------------------------------------------------------------------- $0.39 - $6.10 1,048,762 6.25 $5.11 765,872 $4.98 $6.38 - $6.81 311,525 9.34 $6.61 17,990 $6.57 $7.13 - $7.13 1,117,879 9.32 $7.13 53,632 $7.13 $7.63 - $7.63 1,107,507 8.75 $7.63 364,673 $7.63 $7.81 - $31.50 1,213,084 7.47 $10.81 774,023 $11.68 --------- ---- ------ ---------- ------ $0.39 - $31.50 4,798,756 8.05 $7.70 1,976,190 $8.17 For the purpose of providing pro forma disclosures, the fair values of options granted were estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in 1997 and 1996, respectively: a risk-free interest rate of 6.02 % and 6.13 %, an expected life of 4 years, expected volatility of 57.27 %, and no expected dividends. Employee Stock Purchase Plan On May 29, 1992, the Company adopted the 1992 Employee Stock Purchase Plan. This plan provides eligible employees the opportunity to purchase shares of common stock annually at 85% of the fair market value at the lower of the beginning or ending stock price of the shares during two six-month periods of each year. A maximum of 250,000 shares of common stock have been authorized for issuance under this plan. The term of this plan is ten years. Purchases under this plan were 51,000 shares in fiscal year 1997 at prices ranging between $5.53 and $5.75 per share and 54,000 shares in fiscal year 1996 at prices ranging between $7.50 and $8.25 per share and 188,000 shares since inception through September 30, 1997. The plan was terminated by the Board of Directors effective November 30, 1997. F-21 Savings Plan Effective May 1, 1993 the Company established the PerSeptive Biosystems, Inc. 401(k) Savings Plan (the "Plan") to provide employees the opportunity to defer taxes on their savings. The Plan is a defined contribution plan covering all full-time employees of the Company who have completed six months of service and are age twenty-one or older. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974. The Company is not required to contribute to, and has made no contributions, to the Plan. 11. STOCKHOLDER RIGHTS PLAN Effective March 2, 1995, the Company's Board of Directors implemented a Stockholder Rights Plan by declaring a dividend of one preferred stock purchase right (a "Right") for each outstanding share of the Company's common stock. Each Right entitles the registered holder to purchase from the Company one one- hundredth of a share (a "Unit") of Series B Junior Participating Preferred Stock, $.01 par value per share at a purchase price of $47.00 per Unit (the "Purchase Price"), subject to adjustment. Such rights are transferred with any change in ownership of the Company's common stock. The Rights will be exercisable only upon the occurrence of certain triggering events. Such events would include the acquisition of or a tender offer that, in the aggregate, equals or exceeds 15% of the outstanding shares of common stock of the Company. Until a Right is exercised, the holder thereof will have no rights as a stockholder of the Company. Until a triggering event occurs, the Rights will not trade separately from the Company's common stock. The Rights are not exercisable until the occurrence of a triggering event and will expire at the close of business on March 2, 2005, unless earlier redeemed by the Company. On August 23, 1997, the Stockholder Rights Plan was amended in anticipation of approving a merger pursuant to an Agreement and Plan of Merger with Perkin-Elmer Corporation ("Merger"). This amendment stated that no triggering event has occurred as a result of the approval of the Merger and consequently, no rights have become exercisable. 12. COMMITMENTS AND CONTINGENCIES Commitments The Company has entered into license agreements pursuant to which it pays royalties generally ranging from 1% to 6% on sales of certain consumable products contained in the Company's finished goods. Royalty rates are higher on bulk sales of consumable products to other resellers. Royalty expense incurred in connection with these agreements for the years ended September 30, 1997, 1996 and 1995 totaled $535,000, $398,000 and $367,000, respectively. The Company leases manufacturing facilities, office space and equipment under noncancelable operating and capital leases expiring at various dates through 2009. The approximate minimum rental commitments under all noncancelable leases as of September 30, 1997 are as follows (in thousands): Operating Capital leases leases --------- ------- 1998 $ 3,102 $ 512 1999 2,646 447 2000 2,559 239 2001 1,550 44 F-22 2002 1,352 2 Thereafter 9,536 0 ------- ------ Total minimum lease payments $20,745 1,244 ======= Less-amount representing interest (175) ------ Present value of obligations under $1,069 capital leases ====== Total rent expense was approximately $2,331,000, $2,651,000 and $4,415,000 for the years ended September 30, 1997, 1996, and 1995, respectively. On March 31, 1995, the Company entered into an agreement for the subsequent sale and leaseback of equipment totaling $4,790,000 for $5 million. Under the terms of the lease agreement, the Company has the option to repurchase the equipment and is required to remit 30 equal monthly lease payments of approximately $186,000 commencing March 31, 1995. Interest on the lease is calculated at 9% per annum. For financial accounting purposes this lease had been recorded as a capital lease. At September 30, 1997, the obligation under this lease was fulfilled. The Company currently is negotiating an operating lease for this equipment. In conjunction with the sale and leaseback transaction: (1) Class F warrants to purchase 100,000 shares of the Company's common stock were issued at an initial per share exercise price of $7.25 and were exercised by the lessor during fiscal 1996; (2) the Company did not elect to exercise its right to repurchase the equipment during fiscal 1996 and as a result additional Class F warrants to purchase 100,000 shares of the Company's common stock were issued at an initial per share exercise price of $7.62 and are exercisable any time on or after March 31, 1996 and on or before October 1, 2002. The value of the warrants issued has been determined to be de minimus, and, therefore, no value has been ascribed. Contingencies During 1997 and 1996, the Company sold certain receivables for approximately $17,518,000 and $11,936,000, respectively, to a financial institution with recourse. At September 30, 1997 and 1996, approximately $4,572,018 and $2,636,000, respectively, of the receivables sold had not been collected by the financial institution. The Company paid interest on receivables sold of approximately $78,855 and $55,000 during fiscal year 1997 and 1996, respectively. 13. OTHER CHARGES Other charges consist of costs of the following (in thousands): 1996 1995 ----------------------- In-process research and development (Notes 15,16) $ 6,785 $ 1,879 Other charges 27,360 13,580 ------- ------- $34,145 $15,459 Total other charges ======= ======= 1996 Charges Other charges of $9,900,000 reported as part of costs of goods sold relate to various charges recorded in connection with activities undertaken to realign the Company's product offerings F-23 and to record impairment charges associated with certain underutilized production assets. Other charges of $17,460,000 were recognized during fiscal 1996 and related to charges recorded in connection with the PTC-II acquisition, a provision for the impairment of certain intangible assets, accruals for estimated legal costs related primarily to the enforcement of the ongoing patent enforcement action and other miscellaneous matters. The charge recorded in connection with the PTC- II acquisition related to costs associated with organizational realignment following the acquisition of approximately $3,300,000. The charge also included provisions recorded in connection with ongoing litigation matters totaling $5,200,000. The impairment charge recorded in connection with the write-off of the goodwill associated with the purchase of the In Vitro Division of Advanced Magnetics, Inc. ("AMI") totaled $5,300,000. Charges related to other miscellaneous matters totaled $3,660,000. 1995 Charges On December 26, 1994, the Company announced a restatement of its financial results for its fiscal year ended September 30, 1993 and for the first three quarters of its 1994 fiscal year. Shortly thereafter, a number of class action lawsuits were filed in the U.S. District Court for the District of Massachusetts against the Company and certain of its officers. These lawsuits were consolidated in an amended complaint filed on March 8, 1995. The complaint asserted, on behalf of the class of all purchasers of the Company's common stock from February 2, 1993 through December 26, 1994, violations of federal securities laws and common law consisting of the issuing of allegedly materially false and misleading financial results with respect to the Company's quarterly and year-end fiscal 1993 financial statements and the Company's quarterly financial statements for the first, second and third quarters of fiscal 1994. The complaint sought unspecified damages, interest, costs and fees. On May 8, 1995, the Company filed its answer which denied all of plaintiffs' material allegations and raised several affirmative defenses. On June 14, 1995, the Court entered a preliminary order of approval of a stipulation of compromise and settlement (the "Stipulation") between the defendants in this action and the plaintiff class. On August 11, 1995, the court approved the Stipulation. Pursuant to the terms of the Stipulation, the purchasers of (a) the Company's Class E Warrants, which were originally issued as part of units with the common stock of PerSeptive Technologies II Corporation, and (b) its 8 1/4% Convertible Subordinated Notes due 2001, are included in the plaintiff class in addition to the purchasers of the Company's common stock. In exchange for releases of the defendants, the plaintiff class is entitled to receive: $5,000,000 in cash, a portion of which is paid by third parties; $5,000,000 in shares of the Company's common stock; and $2,000,000 in warrants to purchase shares of the Company's common stock. In August of 1995, the Company issued 493,827 shares of common stock with an aggregate market value of $5,000,000. The final cash payment of $1.5 million due under a promissory note issued pursuant to the Stipulation, together with interest thereon, was made on April 1, 1996. The Company issued the Class G Warrants to purchase up to 279,330 shares of the Company's common stock for $12.66 per share. The warrants became exercisable at any time on or after March 11, 1996 and will expire September 11, 2003. The costs of the settlement, including professional fees associated with the settlement were recorded as a charge during the quarter ended June 30, 1995. 14. LITIGATION The Company has sued Pharmacia Biotech, Inc. and certain of its affiliates, and their parent Pharmacia AB (collectively, "Pharmacia"), now part of Pharmacia & Upjohn Co., Sepracor Inc. F-24 ("Sepracor") and BioSepra Inc. ("BioSepra"), a company partially owned by Sepracor, for willful infringement of three PerSeptive patents (U.S. Nos. 5,019,270, 5,228,989 and 5,384,042), covering the process of Perfusion Chromatography/(R)/ and the manufacture, sale and use of chromatography particles and matrices that enable Perfusion Chromatography (collectively, the "Original Perfusion Patents"). The Company commenced its action against Pharmacia and Sepracor on October 14, 1993, and the consolidated action has been pending in the United States District Court for the District of Massachusetts. BioSepra was added as a party on May 19, 1994. The lawsuit also claims that Sepracor and BioSepra made false and misleading representations of fact with respect to the Company's products, and that BioSepra engaged in false and misleading advertising. The lawsuit, in an amended complaint filed by Purdue University and the Company, also claims that Sepracor and BioSepra infringe a fourth patent ("the Coatings Patent"), licensed exclusively by PerSeptive, covering novel coatings for chromatography media. The lawsuit seeks to enjoin the defendants from infringing the four patents and asks for treble damages, as well as other relief and damages. Pharmacia, Sepracor and BioSepra each have asserted that their products do not infringe the Original Perfusion Patents and that the Original Perfusion Patents are invalid and unenforceable, and have asserted counterclaims against the Company alleging that the Company's assertions that they have infringed the patents, and that statements allegedly made by the Company to customers concerning the litigation, constitute unfair competition, commercial disparagement, unfair trade practices, tortious interference with customer relationships and violation of the Lanham Act, and seeking an unspecified amount of damages, and, under certain asserted claims, double or treble damages, as well as attorneys' fees and expenses. The Company has denied any liability on these counterclaims. On January 9, 1996, the Court entered an order denying the Company's motion for partial summary judgment relating to the inventorship of the Original Perfusion Patents, granting the Defendants' motions for partial summary judgment that inventorship of the Original Perfusion Patents is improper for failure to name one or more persons as additional joint inventors, and requiring the Company to move to correct inventorship or have the patents declared invalid. On March 12, 1996, the Court entered a ruling directing the Company to correct inventorship and placed on the Company the burden of proving the absence of deceptive intent in the designation of inventors at a hearing. The Company moved to correct inventorship. The Company has preserved its right to appeal a number of issues, including the Court's January 9, 1996 order that the Original Perfusion Patents failed to name additional persons as joint inventors and the Court's March 12, 1996 order imposing the burden of proof on PerSeptive. The hearing was held in May and June 1996. On April 3, 1997, the Court issued a ruling denying the Company's motion to correct inventorship, ruling that the Company had not met its burden of proving that two British scientists, who worked for a company that is not a party to the litigation, were not named on the Original Perfusion Patents without deceptive intent within the meaning of Section 256 of Title 35 United States Code, and granted judgment in favor of Sepracor, BioSepra and Pharmacia on the Company's claims relating to the Original Perfusion Patents. On April 16, 1997, the Company filed a motion to permit an immediate appeal of the April 3, 1997 decision, and the related January 9, 1996 and March 12, 1996 decisions, to the United States Court of Appeals for the Federal Circuit, which has exclusive jurisdiction in the United States to hear appeals in patent cases. On April 30, 1997, the defendants filed a motion requesting that the District Court render a decision on the defendants' defense of inequitable conduct prior to permitting the Company's appeal. On July 30, 1997, the Company filed a motion seeking to (i) vacate the Court's April 3, 1997 decision and (ii) enter a final judgment that will permit the F-25 Company to appeal the Court's earlier January 9, 1996 and March 12, 1996 orders that the patents do not name all of the inventors and imposing the burden of proof on PerSeptive. The Company's motion is based on a decision by the Court of Appeals for the Federal Circuit in an unrelated case, Stark v. Advanced ----------------- Magnetics, Inc., issued on July 11, 1997, which the Company contends rendered - -------------- the Court's April 3, 1997 decision erroneous. The defendants filed motions again requesting that the District Court render a decision on their defense of inequitable conduct prior to permitting an appeal. The Court has not rendered a decision on the Company's or the defendants' motions. The Court has not yet considered the issue of infringement of the Original Perfusion Patents or the Coatings Patent. On December 12, 1997, the Company announced that it had settled the litigation with Sepracor and BioSepra. Under the terms of the settlement, the Company received an unspecified amount (which is not material to the financial statements) and BioSepra obtained a non-exclusive license under PerSeptive's Perfusion Chromatography patents. Sepracor and BioSepra were removed as defendants in the litigation. The Company intends to continue to vigorously pursue the litigation against Pharmacia, which remains a defendant. The Company may incur substantial expenses relating to these lawsuits. There can be no assurance that the outcome of the litigation will not have a material adverse effect on the Company. In September 1996 and February 1997, two new United States patents relating to Perfusion Chromatography systems were issued to the Company. Neither of these patents, which cover instruments and systems that perform the high-speed, high resolution chromatography which is the subject of the Original Perfusion Patents, are the subject of the current litigation. Prior to the issuance of these patents, the Company had submitted to the patent examiner the District Court's January 9, 1996 order, and non-confidential portions of related briefs filed by the parties, and the patents were issued naming only PerSeptive's scientific founders as the inventors nonetheless. Since November 1994, the Company has been responding to informal requests for information from the Securities and Exchange Commission relating to certain of the Company's financial matters. In May 1995, the Company was advised by the Commission that it had obtained a formal order of investigation so that, among other matters, it may utilize subpoena powers to obtain information relevant to its inquiry. The Commission has and may in the future utilize its subpoena powers to obtain information from various officers, directors and employees of the Company and from persons not presently associated with the Company. If, after completion of its investigation, the Commission finds that violations of the federal securities laws have occurred, the Commission has the authority to order persons to cease and desist from committing or causing such violations and any future violations. The Commission may also seek administrative, civil and criminal fines and penalties and injunctive relief. The Department of Justice has the authority in respect of criminal matters. There can be no assurance as to the timeliness of the completion of the investigation or as to the final result thereof, and no assurance can be given that the final result of the investigation will not have a material adverse effect on the Company. The Company is cooperating fully with the investigation, and has responded and will continue to respond to requests for information in connection with the investigation. 15. CONTRACT RESEARCH AND CONTRACT DEVELOPMENT PerSeptive Technologies II Corporation F-26 In December 1993, the Company and PerSeptive Technologies II Corporation ("PTC- II") completed an initial public offering of 2,645,000 units for net proceeds of approximately $53.2 million (including the underwriters overallotment). Each unit consisted of one share of callable common stock of PTC-II and one Class E warrant to purchase one share of the Company's common stock. The Company had an option exercisable at any time through December 31, 1997 to purchase all (but not less than all) of the shares of PTC-II common stock that form a part of the units at a premium over the public offering price per unit; the option price per share ranged from $33.83 to $57.23 depending on the date of exercise. The Company also had options to acquire PTC-II's rights under certain development programs at option prices per share ranging from $5.58 to $15.74 depending both on the program acquired and the date of exercise. The option prices may be paid in cash, shares of the company's common stock, or any combination thereof, at the Company's discretion. The Company had no obligation to exercise the stock purchase option or any of the program purchase options. Any warrants not exchanged in the exchange offer discussed below are exercisable at any time from January 1, 1996 through December 31, 1998. The exercise price of the warrants is $33.00 per share. In connection with the unit offering, the Company and PTC-II entered into various agreements, including a technology license agreement and a research and development agreement. Pursuant to the technology license agreement, the Company licensed technology to PTC-II for the development of products for certain life sciences applications. In this respect, the Company received a non-refundable license fee of $4.0 million, recorded as deferred revenue, which was being amortized into income over a 36 month period at a rate of $333,333 per quarter. In accordance with the research and development agreement, PTC-II agreed to use the Company's services exclusively to develop the licensed technology. During the years ended September 30, 1996, 1995, and 1994 the Company recognized $10.1 million, $19.8 million, and $12.8 million respectively, in research and development revenue in connection with these agreements, including the amortization of the license fee. The Company considers the warrants issued to the investors to have been in exchange for the call option on PTC-II's stock. Accordingly, such option has been recorded at the $5.3 million valuation of the warrants in other intangible assets in the accompanying balance sheet and was being amortized over the 36-month life of the option. The value of the warrant remaining as of the acquisition date was included in the extra space in-process research and development charge described below. Effective March 8, 1996, the Company completed an exchange offer in which PTC-II unit holders exchanged 2,603,125 of their units for 2,603,125 shares of the Company's common stock and 2,603,125 new Class I warrants to purchase the Company's common stock exercisable until August 8, 1997 at an exercise price per share of $13.50. The total value of common stock and warrants issued in the exchange offer was approximately $16 million based on the market value of the common stock on March 8, 1996. The Company recorded an in-process research and development charge of approximately $6.8 million, which represents the approximated value of acquired technologies which have not reached commercialization (Note 16). PerIsis II Development Corporation In March 1993, the Company completed a transaction related to the formation of two research and development corporations. In connection with this transaction, the Company and Isis Pharmaceuticals, Inc. ("Isis") licensed certain applications of their technologies to two newly formed research and development corporations. One of these corporations ("PerIsis I") was pursuing the development of products for the purification, analysis and synthesis of oligonucleotides manufactured by Isis and the second corporation ("PerIsis II") was pursuing the development of such products for commercialization and sale to all other entities. Under the F-27 agreements, the Company was paid for performing contract research and development services over a period of approximately two years. During the years ended September 30, 1995 and 1994, the Company recognized research and development revenue totaling $0.2 million and $0.5 million respectively, in connection with these agreements. In exchange for an option to purchase all of the stock of PerIsis II at a price ranging from approximately $2.7 million to $3.6 million, the Company issued Class C warrants to purchase 40,000 shares of the Company's common stock at an exercise price of $25.00 per share, exercisable from the period beginning September 15, 1993 and ending March 15, 1999, and Class D warrants that, if they become exercisable, will be exercisable from the period beginning March 15, 1996 and ending September 15, 2000 for a number of shares ranging from 172,914 to 345,829, determined as defined by the agreement. In April 1995, the Company exercised its option to purchase all of the common stock of PerIsis II. In consideration for all of the stock of PerIsis II, the exercise price of the Class C Warrants was amended to $7.31 per share and the Class D Warrants were amended to be exercisable for 300,573 shares of common stock at an exercise price of $0.01 per share. The Class D Warrants were exercised during fiscal 1996. There were no tangible assets of PerIsis II acquired, therefore, the value of the consideration paid of $1.8 million was recorded an in-process research and development charge during the quarter ended June 30, 1995. 16. ACQUISITIONS Advanced Magnetics, Inc. - In Vitro Diagnostics Division At September 30, 1995, the Company had a liability of approximately $3.4 million for the final settlement of the Company's acquisition of the In Vitro Diagnostics Division of AMI. In December 1995, the Company issued 373,080 shares of common stock with a value of $3.4 million, to satisfy this obligation. Perceptive Technologies II Corporation On November 1, 1995, the Company, PerSeptive Acquisition Corporation ("PAC"), a wholly owned subsidiary of the Company, and PTC-II entered into a definitive agreement pursuant to which the Company agreed to an exchange offer for all of the 2,645,000 outstanding units of PTC-II followed by a merger of PTC-II with PAC. Each PTC-II unit consisted of one share of callable common stock of PTC-II and one Class E Warrant of the Company, exercisable at $33.00 until December 1998. Effective March 8, 1996, the Company acquired 2,603,125 units of PTC-II that were validly tendered and not withdrawn in the exchange offer. The PTC-II shareholders, who participated in the exchange offer, exchanged their units for 2,603,125 shares of the Company's common stock and 2,603,125 new Class I Warrants to purchase the Company's common stock, exercisable until August 8, 1997 at an exercise price per share of $13.50. On March 13, 1996, PTC-II merged with PAC and became a wholly owned subsidiary of the Company. Each of the remaining 41,875 shares of callable common stock of PTC-II not exchanged in the exchange offer were automatically converted into a right to receive one share of the Company's common stock upon the merger of PTC-II with PAC. During the quarter ended June 30, 1996, 36,475 rights were exchanged for an equivalent number of shares of the Company's common stock. The total value of the common stock issued in the exchange offer was approximately $16 million based on the market value of the Company's common stock on March 8, 1996. The transaction has been accounted for as a purchase and the Company has recorded an in-process research and development charge of approximately $6.8 million which represents the value of acquired technologies which have not reached commercialization. F-28 During the six month period ended March 31, 1996, the Company recognized research and development revenue from PTC-II totaling approximately $10.1 million. The following is a summary of the purchase price and the allocation of the purchase price to the net assets acquired, calculated using the closing price of PerSeptive's common stock of $5.875 on March 8, 1996: Purchase Price: (000's) - -------------- ---------- Shares of Common Stock Issued 2,639,600 at $5.875 $15,508 Shares of Common Stock to be Issued 5,400 at $5.875 32 Warrants Issued 2,603,125 at $0.90 2,343 Warrants Returned 2,603,125 at $0.88 (2,291) Provision For Purchase Obligations 1,000 Write off of Purchase Option Cost 1,082 Transaction costs (i) 1,620 ------- Total purchase price $19,294 ======= (i) Amount represents acquisition costs associated with the Transaction which include professional fees, printing costs and regulatory filing fees. Allocation of the Purchase Price: March 8, - -------------------------------- 1996 (000's) ---------- Net asset values: Cash and investments $11,851 Other current assets 693 Accrued expenses (35) In-process research and development 6,785 ------- Allocation of consideration $19,294 ======= The unaudited pro forma results of operations for the years ended September 30, 1996 and 1995 reflecting the acquisition of PTC-II as if the companies had been combined as of September 30, 1995 and 1994, respectively, are as follows (in thousands except for per share data): 1996 1995 --------- --------- Revenue $75,916 $69,613 Net loss ($57,263) ($37,108) Net loss per share ($3.41) ($2.48) ChemGenics Pharmaceuticals Inc. In June 1996, the Company entered into a transaction with ChemGenics Pharmaceuticals Inc. ("ChemGenics") (formerly, Myco Pharmaceuticals Inc.), in which the Company transferred certain assets and employees of the Company's drug discovery program to ChemGenics and granted a non-exclusive license to GemGenics to use the Company's technology (including technology developed through PTC-II) in the field of drug discovery in exchange for shares of F-29 ChemGenics' common stock, $.001 par value per share ("ChemGenics Common Stock") and warrants to purchase additional shares of ChemGenics Common Stock exercisable until June 28, 2000. The warrants were exercisable at $5.00 per share ($13.25 per share after a proposed 2.65-for-1 reverse stock split). The Company was subject to certain contractual restrictions on the sale or distribution of its holdings of ChemGenics Common Stock. In December 1996, the Company and ChemGenics executed amendments to their agreements pursuant to which the Company exchanged a portion of its ChemGenics Common Stock for a promissory note for $3 million payable on the earlier of the closing of ChemGenics' initial public offering or December 31, 2002. The Company held at September 30, 1996 approximately 34% of the outstanding capital stock of ChemGenics, and warrants which, if exercised, would increase the Company's holdings to approximately 47% (of which, warrants sufficient to increase the Company's holdings to approximately 40% were currently exercisable prior to the merger with Millennium). In January, 1997 ChemGenics and Millennium Pharmaceuticals, Inc. ("Millennium") entered into an Agreement and Plan of Merger ("Agreement"). Under the terms of the Agreement, the stockholders of ChemGenics received common stock of Millennium in exchange for their common stock of ChemGenics. At the closing on February 10, 1997, the Company received 1,612,582 shares of Millennium common stock, $.001 par value per share ("Millennium common stock"), in exchange for its shares of ChemGenics common stock. In addition, the Company received $4 million cash in exchange for the warrants for ChemGenics common stock and in satisfaction of the above referenced promissory note. The transaction qualified as a tax-free merger. The Company's shares of Millennium common stock are subject to restrictions on sale which expired in increments between June and September 1997. In connection with this event, the Company recorded a gain of $25.8 million, reflecting the fair market value of the cash received and the Company's investment in Millennium common stock as of March 29, 1997. During the quarter ended June 28, 1997, the Company sold approximately 50% of its investment in Millennium for $12.9 million and realized a gain on the sale of approximately $800,000. During the fourth quarter of fiscal 1997, the Company recognized an additional gain for book purposes of $800,000 in connection with the release of a previously existing contingency on approximately 52,000 shares of Millennium stock. The taxable gain arising from this transaction will be offset by available net operating loss carryforwards with the exception of a portion of the gain potentially subject to the Federal Alternative Minimum Tax. The total gain included in other income was for the year ended September 30, 1997 $27.4 million. 17. SALES TO SIGNIFICANT CUSTOMERS The Company recorded sales to one significant customer, PTC-II, of $10.1 million and $19.8 million for the years ended September 30, 1997 and 1996, respectively. No customer accounted for greater than 10% of revenue for the year ended September 30, 1997. 18. GEOGRAPHICAL INFORMATION The Company's areas of operation outside of the North America include Europe and Asia. Information about the Company's operations in different geographic locations for the fiscal years 1997 and 1996 is shown below (in thousands). The Company's operations in geographic locations other than North America for prior years are not significant. F-30 North America Europe Asia Eliminations Consolidated ----------------------------------------------------------------------------------- 1997 Net sales to unaffiliated customers $ 54,322 $18,052 $24,142 - $ 96,516 Transfer between areas 26,830 9,094 - (35,924) - -------- ------- ------- ------- -------- Total sales 81,152 27,146 24,142 (35,924) 96,516 Net income (loss) 22,361 (2,820) (4,298) - 15,243 Identifiable assets 122,999 12,004 (1,052)(1) - 133,951 (1) Identifiable assets information does not exclude intercompany balances. North America Europe Asia Eliminations Consolidated ------- ------- ------- ------------ ------------ 1996 Net sales to unaffiliated customers $56,480 $13,447 $16,091 $ - $86,018 Transfer between areas 17,004 8,942 - (25,946) - ------- ------- ------- ------------ ------------ Total sales 73,484 22,389 16,091 (25,946) 86,018 Net income (loss) (48,176) (552) (1,739) - (50,467) Identifiable assets 100,906 15,693 5,056 - 121,655 F-31 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES To the Board of Directors and Stockholders of PerSeptive Biosystems, Inc.: Our report on other consolidated financial statements of PerSeptive Biosystems, Inc., is included on page F-2 of this Annual Report on Form 10-K. In connection with our audits of such financial statements, we have also audited the related financial statement schedule for each of the three years in the period ending September 30, 1997, listed in the index of this Annual Report on Form 10-K. In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Boston, Massachusetts December 1, 1997 S-1 PERSEPTIVE BIOSYSTEMS, INC. FINANCIAL STATEMENT SCHEDULES SCHEDULE II - VALUATIONS AND QUALIFYING ACCOUNTS Balance Additions Balance at beginning charges to costs end of Classifications of period and expenses Other Deductions period Allowance for doubtful accounts for the year ended September 30, 1997 $2,386,000 $ 138,000 ($250,000) ($311,000) $1,963,000 1996 $1,699,000 $1,275,000 $ 0 ($588,000) $2,386,000 1995 $1,778,000 $ 438,000 $ 0 ($517,000) $1,699,000 Inventory reserves for the year ended September 30, 1997 $8,877,000 $3,580,000 $ 0 ($6,627,000) $5,829,682 1996 $4,448,000 $6,682,000 $ 0 ($2,253,000) $8,877,000 1995 $4,594,000 $2,327,000 $ 0 ($2,473,000) $4,448,000 S-2 EXHIBIT INDEX Exhibit Number Description of Exhibit - ------ ---------------------- 2.1 Agreement and Plan of Reorganization dated as of October 8, 1993 by and among the Company, PV Merger Corporation and Vestec Corporation, as amended (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.2 Agreement and Plan of Merger by and among the Company, PV Merger Corporation and Vestec Corporation (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.3 Escrow and Exchange Agreement by and among the Company, Vestec Corporation, Marvin L. Vestal as the representative of the stockholders of Vestec, American Stock Transfer & Trust Company and the stockholders of Vestec Corporation whose names appear on the signature pages thereto (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.4 Registration Rights Agreement by and among the Company, PV Merger Corporation and Vestec Corporation (filed as Exhibit 2.4 to the Company's Current Report on Form 8-K dated October 8, 1993, as amended and incorporated herein by reference). 2.5 Asset Purchase Agreement dated as of October 15, 1993 by and between the Company and Advanced Magnetics, Inc. (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated October 15, 1993, as amended and incorporated herein by reference). 2.6 Asset Purchase and Sale Agreement dated as of July 14, 1994 by and among the Company, Millipore Corporation and Millipore Investment Holdings Limited (filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended and incorporated herein by reference). 2.7 Registration Rights Agreement by and among the Company, Millipore Corporation and Millipore Investment Holdings Limited dated August 22, 1994 (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended and incorporated herein by reference). 2.8 Registration Rights Agreement by and among the Company, Alex. Brown & Sons Incorporated and Lehman Brothers Inc. dated August 26, 1994 (filed as Exhibit 4.2 to the Company's Registration Statement No. 33-74600 on Form S-3 and incorporated herein by reference). 2.9 Agreement and Plan of Merger, dated as of November 1, 1995 among the Company, PerSeptive Acquisition Corporation and PerSeptive Technologies II Corporation (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 2.10 Amendment No. 1 to Agreement and Plan of Merger, dated January 29, 1996 among the Company, PerSeptive Acquisition Corporation and PerSeptive Technologies II Corporation (filed as Exhibit 2.1 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 2.11 Agreement and Plan of Merger dated as of August 23, 1997 among The Perkin-Elmer Corporation, Seven Acquisition Corp. And PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the Company's Current Annual Report on Form 8-K dated August 26, 1997 and incorporated herein by reference). 3.1 Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.2, 4.2 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 3.2 Certificate of Amendment of Restated Certificate of Incorporation of the Company (filed as Exhibit 4.1 to the Company's Registration Statement No. 33-80856 on Form S-8 and incorporated herein by reference). 3.3 Amended and Restated By-Laws of the Company (filed as Exhibit 3.4, 4.4 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 3.4 Certificate of Designations for the Series A Redeemable Convertible Preferred Stock filed with the Secretary of State of the State of Delaware on August 19, 1994 (filed as Exhibit 2.2 to the Company's Current Report on Form 8-K dated August 22, 1994, as amended, and incorporated herein by reference). 3.5 Certificate of Amendment of the Amended and Restated Certificate of Incorporation of the Company filed with the Secretary of State of the State of Delaware on May 8, 1995 (filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1995 and incorporated herein by reference). 3.6 Certificate of Designations for the Series B Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on March 2, 1995 (exhibit to Exhibit 4.9) (filed as Exhibit 3.6 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 3.7 Amended Certificate of Designation for the Series B Junior Participating Preferred Stock filed with the Secretary of State of the State of Delaware on October 24, 1995 (filed as Exhibit 3.7 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.1 Description of Capital Stock contained in the Company's Amended and Restated Certificate of Incorporation, as amended, filed as Exhibits 3.1 through 3.7 hereto. 4.2 Form of Class A Warrants for the purchase of the Company's Common Stock dated as of December 23, 1992 issued to the stockholders of PTC-I (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the three-month period ended March 31, 1993 and incorporated herein by reference). 4.3 Form of Class C Warrants for the purchase of the Company's Common Stock dated as of March 15, 1993 issued to the stockholders of PerIsis II (filed as Exhibit 4.3 to the Company's Report on Form 10-Q for the three-month period ended March 31, 1993 and incorporated herein by reference). 4.4 Warrant Agreement relating to the issuance of Class E Warrants of the Company dated as of December 29, 1993, as executed (supersedes Exhibit 4.7 to Amendment No. 1 to the Company's Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3) (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1994 and incorporated herein by reference). 4.5 Specimen Class E Warrant Certificate (filed as Exhibit 4.3 to Amendment No. 1 to the Company's Registration Statement Nos. 33- 71812, 33-71814 on Form S-1/S-3 and incorporated herein by reference). 4.6 Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment No. 1 to the Company's Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3 and incorporated herein by reference). 4.7 Indenture dated as of August 26, 1994 between the Company and State Street Bank and Trust Company, as Trustee (filed as Exhibit 4.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994 and incorporated herein by reference). 4.8 Rights Agreement, dated as of March 1, 1995, between the Company and American Stock Transfer & Trust Company, as amended on August 23, 1997. (filed as Exhibit 4.8 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 and incorporated herein by reference) 4.9 Warrant Purchase Agreement relating to the issuance of Class F Warrants (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 4.10 Form of Class F Warrant (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 4.11 Warrant Agreement dated as of September 11, 1995 between the Company and American Stock Transfer & Trust Company relating to the Class G Warrants (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 4.12 Specimen of Class G Warrant Certificate (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 4.13 Form of Amendment to Class C Warrants (filed as Exhibit 4.15 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.14 Class H Warrant dated as of September 1, 1995 (filed as Exhibit 4.19 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.15 Amendment No. 1, dated as of September 27, 1995, to the Rights Agreement, dated as of March 1, 1995, between the Company and American Stock Transfer & Trust Company (filed as Exhibit 4.20 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 4.16 Form of Warrant Agreement between the Company and American Stock Transfer & Trust Company relating to the Company's Class I Warrants (filed as Exhibit 4.7 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 4.17 Specimen of Class I Warrant Certificate (filed as Exhibit 4.8 to the Company's Registration Statement No. 333-1016 on Form S-4 and incorporated herein by reference). 4.18 Stock Option Agreement dated August 23, 1997 between PerSeptive BioSystems, Inc. and the Perkin-Elmer Corporation (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated as of August 26, 1997). 10.1+ 1989 Stock Plan (filed as Exhibit 10.1 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.2+ 1992 Stock Plan of the Company, as amended on January 20, 1997 (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 29, 1997 and incorporated herein by reference). 10.3+ 1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.4+ 1992 Non-Employee Director Stock Option Plan, as amended on March 11, 1996 (filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 1996 and incorporated herein by reference). 10.5 Consulting Agreement with Dr. Fred E. Regnier dated June 1, 1988 (filed as Exhibit 10.7 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.6 License Agreement with Purdue Research Foundation dated as of June 16, 1990 (filed as Exhibit 10.8 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.7 Sublease Agreement with the Massachusetts Institute of Technology dated October 1, 1990 (filed as Exhibit 10.10 to the Company's Registration Statement No. 33-46871 on Form S-1 and incorporated herein by reference). 10.8 Form of Indemnity Agreement with directors and officers (filed as Exhibit 10.15 to the Company's Registration Statement No. 33- 46871 on Form S-1 and incorporated herein by reference). 10.9 Product License and Supply Agreement between Millipore Corporation and the Company granting the Company an exclusive worldwide royalty free license within the Life Science market to use certain patented technology to process membrane products and to carry out certain processes useful to DNA synthesis operations and providing for the supply of membrane products (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.10 OEM Purchase and Supply Agreement between BioSearch, Inc. and the Waters Chromatography Division of Millipore Corporation with respect to the supply of certain high performance liquid chromatography components, machined parts and other materials to BioSearch, Inc. (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.11 Assignment of Settlement Agreement between Millipore Corporation, University Patents, Inc. and Applied Biosystems, Inc. ("ABI") involving cross license of certain patents, granting ABI a license under U.S. Patent No. 4,725,677, "Process for the Preparation of Oligonucleotides" and Millipore a license under U.S. Patent Nos. 4,458,066 and 4,415,732 (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.12 License Agreement dated January 23, 1991 between the University of Minnesota and Millipore Corporation granting Millipore an exclusive worldwide license to make, use and sell products under U.S. Patent Nos. 5,235,028, 5,196,566 and 5,117,009 and related pending applications covering support structures for peptide synthesis operations (filed as Exhibit 10.27 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.13 License Agreement dated January 1, 1988 between Hoffman-La Roche Inc. and Millipore Corporation granting Millipore a non-exclusive license to make, use and sell so-called FMOC chemistries on laboratory instruments (filed as Exhibit 10.28 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.14 License Agreement dated March 9, 1992 between Novabiochem AG and Millipore Corporation granting Millipore a non-exclusive license to make, use and sell instruments for the monitoring of certain peptide reactions related to the synthesis of peptides (filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.15 License Agreement dated December 17, 1991 between Ole Burkhardt, Peter E. Nielsen, Rolf H. Berg, Michael Egholm and Millipore Corporation granting an exclusive, worldwide license Danish Patent Application No. 0986/91 "Oligonucleotide Analogs Termed PNA" and corresponding international counterparts (filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.16 Lease Agreement between the Company and the Massachusetts Institute of Technology dated March 19, 1993 for space located at 12 Emily Street, Cambridge, Massachusetts (filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.17 Lease Agreement between the Company and 500 Old Connecticut Path Limited Partnership for space located at 500 Old Connecticut Path, Framingham, Massachusetts (filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1994 and incorporated herein by reference). 10.18 Master Lease Agreement between the Company and Hambrecht & Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 10.19 Security Agreement between the Company and Hambrecht & Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995 and incorporated herein by reference). 10.20 Stipulation and Compromise of Settlement dated as of June 14, 1995 relating to the action entitled In re: PerSeptive Biosystems, Inc. Securities Litigation, Civ. Action No. 94- 12575(PBS), brought in the U.S. District Court for the District of Massachusetts (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated as of September 11, 1995 and incorporated herein by reference). 10.21 Credit Agreements between the Company's subsidiary PerSeptive Biosystems GmbH - Hamburg (formerly, "BioSearch GmbH") IKB Deutsche Industriebank and Dresdner Bank (filed as Exhibit 10.27 to Form 10K/A Amendment No. 1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and incorporated herein by reference). 10.22 Master Agreement, dated as of May 7, 1996, between the Company and ChemGenics Pharmaceuticals a d/b/a of Myco Pharmaceuticals Inc. (filed as Exhibit 2 to the Company's Current Report on Form 8-K dated as of June 28, 1996 and incorporated herein by reference). 10.23 Omnibus Amendment Agreement dated December 18, 1996 between the Company and ChemGenics Pharmaceuticals, Inc. (filed as exhibit 10.23 to the Company's Annual Report on Form 10-K for the year ended September 30, 1996 and incorporated herein by reference). 10.24 1997 Non-Qualified Stock Option Plan, as amended (filed as Exhibit 4.1 to the Company's Registration Statement No. 333- 38989, on Form S-8 and incorporated herein by reference). 10.25+ Employment Agreement dated as of January 17, 1997 between PerSeptive Biosystems, Inc. and John F. Smith (filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the period ended June 28, 1997 and incorporated by reference herein. 10.26+ Employment Agreement dated as of January 17, 1997 between PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the period ended June 28, 1997 and incorporated by reference herein. 21 Subsidiaries of the Company (filed as Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 and incorporated herein by reference). 23.1* Consent of Coopers & Lybrand L.L.P. 24 Power of Attorney (included in the signature page to the Company's Annual Report on Form 10-K for the year ended September 30, 1997). ________________________________ *Indicates exhibits filed herewith. All other exhibits have been previously filed unless otherwise indicated. +Indicates a management contract or compensatory plan or arrangement.