Table UNITED STATES SECURITIESof AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Contents

~~FORM 10-K~~UNITED STATES

~~Annual~~SECURITIES ~~Report~~AND ~~Pursuant~~EXCHANGE toCOMMISSION ~~Section 13 Or 15(d) of the Securities Exchange Act of 1934~~

~~For the fiscal year ended June 30~~WASHINGTON, ~~2004~~D.C. 20549

FORM Or 10-K

x ~~Transition~~Annual Report Pursuant to Section 13 Or 15(d) of the Securities Exchange Act of 1934

For the ~~transition~~fiscal ~~period~~year ~~from~~ended ~~__________ to~~June 30, ~~___________~~ 2008

~~Commission File~~Or ~~Number 1-4389~~

¨ ~~Applera Corporation~~Transition Report Pursuant to Section 13 Or 15(~~Exact name~~d) of ~~registrant~~the asSecurities ~~specified~~Exchange inAct ~~its~~of ~~charter)~~1934

DELAWARE	06-1534213
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
301 Merritt 7, Norwalk, Connecticut	06851-1070
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code: 203-840-2000

For the transition period from to

~~Securities registered~~Commission ~~pursuant~~File toNumber ~~Section~~001-04389 ~~12(b) of the Act:~~

Title of Class		Name of Each Exchange on Which Registered
Applera Corporation-Applied Biosystems Group		New York Stock Exchange
Common Stock (par value $0.01 per share)		Pacific Exchange
Rights to Purchase Series A Participating Junior		New York Stock Exchange
Preferred Stock (par value $0.01 per share)		Pacific Exchange
Applera Corporation-Celera Genomics Group Common		New York Stock Exchange
Stock (par value $0.01 per share)		Pacific Exchange
Rights to Purchase Series B Participating Junior		New York Stock Exchange
Preferred Stock (par value $0.01 per share)		Pacific Exchange

Applied Biosystems Inc.

~~Securities registered~~(Exact ~~pursuant~~name toof ~~Section~~registrant ~~12(g)~~as ofspecified ~~the~~in ~~Act:~~its charter)

Title of Class Class G Warrants

DELAWARE

06-1534213

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer Identification No.)

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 No


301 Merritt 7		06851-1070
(Address of principal executive offices)		(Zip Code)

~~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~~Registrant’s ~~knowledge,~~ intelephone ~~definitive~~number, ~~proxy~~including orarea ~~information~~code: ~~statements incorporated by reference in Part III of this Form 10~~203-~~K or any amendment to this Form 10~~840-K. 2000

~~Indicate by~~Securities ~~check~~registered ~~mark~~pursuant ~~whether~~to ~~the registrant is an accelerated filer~~ Section 12(asb) ~~defined in Rule 12b-2~~ of the Act~~). Yes No~~ :

As of December 31, 2003, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of Applera Corporation-Applied Biosystems Group Common Stock (based upon the average of the high and low price) held by non-affiliates was $4,273,700,698, and the aggregate market value of Applera Corporation-Celera Genomics Group Common Stock (based upon the average of the high and low price) held by non-affiliates was $1,021,199,248. As of September 3, 2004, 195,710,205 shares of Applera Corporation-Applied Biosystems Group Common Stock and 73,031,206 shares of Applera Corporation-Celera Genomics Group Common Stock were outstanding.


Title of Each Class		Name of Each Exchange on Which Registered
Applied Biosystems Group Common Stock (par value $0.01 per share)		New York Stock Exchange

Rights to Purchase Series A Participating Junior Preferred Stock (par value $0.01 per share)		New York Stock Exchange

Celera Group Common Stock (par value $0.01 per share)		N/A

Rights to Purchase Series B Participating Junior		N/A

Preferred Stock (par value $0.01 per share)

~~DOCUMENTS INCORPORATED~~Securities BYregistered ~~REFERENCE Annual Report~~pursuant to ~~Stockholders~~Section 12(g) ~~for Fiscal Year ended June 30, 2004 - Parts I, II, and IV. Proxy Statement for 2004 Annual Meeting~~ of ~~Stockholders -~~the ~~Part III.~~Act: None

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

		Page
PART I		1
Item 1.	Business	1
	Company Overview	1
	Scientific Background	4
	Applied Biosystems Group Business	6
	Celera Genomics Group Business	26
	Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics	37
	Applera Genomics Initiative	49
	Employees	50
	Financial Information About Industry Segments	50
	Financial Information About Geographic Areas	50
	Executive Officers of the Registrant	51
Item 2.	Properties	51
Item 3.	Legal Proceedings	53
Item 4.	Submission of Matters to a Vote of Security Holders	59
PART II		59
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	59
	Information about our Common Stock and its Holders	59
	Forward Looking Statements and Risk Factors	61
Item 6.	Selected Financial Data	92
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	93
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	93
Item 8.	Financial Statements and Supplementary Data	93
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	93
PART III		94
Item 10.	Directors and Executive Officers of the Registrant	94
Item 11.	Executive Compensation	97
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	97
Item 13.	Certain Relationships and Related Transactions	97
Item 14.	Principal Accountant Fees and Services	98
PART IV		98
Item 15	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	98
SIGNATURES		103
EXHIBITS, INCLUDING CERTIFICATIONS

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

~~Back~~Indicate by check mark whether the registrant (1) has filed all reports required to ~~Contents~~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 ~~PART~~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 Iproxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

~~Item~~Indicate 1by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. ~~Business~~See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large ~~Company Overview~~ accelerated filer x Accelerated filer ¨ Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ¨

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

~~Applera~~As ~~Corporation~~of ~~conducts~~December 31, ~~business~~2007, ~~through~~the ~~three~~last business ~~segments~~day of the registrant’s most recently completed second fiscal quarter, ~~which~~the ~~are~~aggregate ~~described~~market ~~below.~~value ~~Throughout~~(based ~~this~~upon ~~report~~the average of the high and low price) of our Applied Biosystems Group Common Stock held by non-affiliates was $5,710,983,856, ~~terms~~and ~~such~~the asaggregate ~~“Applera~~market value (based upon the average of the high and low price) of our Celera Group Common Stock held by non-affiliates was $1,”262,121,484. ~~“we~~As of August 25,” ~~“us~~2008,” or169,505,575 “shares of our” ~~may~~Applied beBiosystems ~~used~~Group toCommon ~~refer~~Stock towere ~~Applera~~outstanding, ~~Corporation~~and no shares of Celera Group Common Stock were outstanding.

~~Applied~~DOCUMENTS ~~Biosystems~~INCORPORATED ~~Group. Our~~BY ~~Applied~~REFERENCE Biosystems Group, which we refer to as “Applied Biosystems” throughout this report, serves the life science industry and research community by developing and marketing instrument-based systems, consumables, software, and services. Its customers use these tools to analyze nucleic acids (DNA and RNA), small molecules, and proteins to make scientific discoveries, develop new pharmaceuticals, and conduct standardized testing. A description of this business segment and developments during our 2004 fiscal year is set forth below in this Item 1 under the heading “Applied Biosystems Group Business.”

~~Celera~~Annual ~~Genomics~~Report ~~Group. Our Celera Genomics Group, which we refer~~ to asStockholders ~~“Celera~~for ~~Genomics”~~Fiscal ~~throughout~~Year ~~this report~~ended June 30, is2008—Parts ~~engaged principally in the discovery and development of targeted therapeutics for cancer~~I, ~~autoimmune~~II, and ~~inflammatory diseases~~IV. Celera Genomics is leveraging its proteomic, bioinformatic, and genomic capabilities to identify and validate drug targets, and to discover and develop small molecule therapeutics. It is also seeking to advance therapeutic antibody and selected small molecule drug programs in collaboration with global technology and market leaders. A description of this business segment and developments during our 2004 fiscal year is set forth below in this Item 1 under the heading “Celera Genomics Group Business.”

~~Celera~~Proxy ~~Diagnostics,~~Statement afor ~~50/50~~2008 ~~Joint~~Annual ~~Venture~~Meeting between Applied Biosystems and Celera Genomics. Celera Diagnostics, a joint venture formed by Applied Biosystems and Celera Genomics in April 2001, is focused on the discovery, development, and commercialization of ~~diagnostic~~Stockholders ~~products.~~- APart description of this business segment and developments during our 2004 fiscal year is set forth below in this Item 1 under the heading “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera GenomicsIII.”

InformationTable about the risk factors associated with our business segments is set forth below in Item 5 of Part II of this report under the headings “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Forward Looking Statements and Risk Factors.”Contents

WeTABLE ~~maintain~~OF aCONTENTS ~~corporate staff to provide accounting, tax, treasury, legal, information technology, human resources, and other internal services for Applied Biosystems, Celera Genomics, and Celera Diagnostics.~~

Back to Contents


PART I		1
Item 1.	Business	1
	Company Overview	1
	Available Information	3
	Celera Separation	4
	Invitrogen Merger Agreement	7
	Scientific Background	8
	Products for the Molecular Biology Market	10
	Products for the Cell Biology Market	18
	Products for the Proteomics Market	18
	Products for the Small Molecule Analysis Market	21
	Applied Markets Products	23
	LIMS Products and Services	25
	Service and Support	26
	Marketing and Distribution	26
	Raw Materials	27
	Patents, Licenses, and Franchises	28
	Backlog	29
	Competition	30
	Research and Development	30
	Environmental Matters	30
	Employees	31
	Financial Information About Industry Segments	31
	Financial Information About Geographic Areas	31
	Executive Officers of the Registrant	32
Item 1A.	Risk Factors	32
Item 1B.	Unresolved Staff Comments	41
Item 2.	Properties	41
Item 3.	Legal Proceedings	42
	Commercial Litigation	42
	Other Legal Proceedings	44
	Celera Separation Indemnity Provisions	45
Item 4.	Submission of Matters to a Vote of Security Holders	46

PART II		46
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	46
	Market Information	46
	Holders and Market Value Calculation	46
	Dividends	46
	Sale of Unregistered Securities	47
	Issuer Purchases of Equity Securities	47
Item 6.	Selected Financial Data	48
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	48
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	48
Item 8.	Financial Statements and Supplementary Data	49
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	49
Item 9A.	Controls and Procedures	49
	Disclosure Controls and Procedures	49

Table Corporate History and Structure; Two Classes of Stock Contents

Applera was incorporated in 1998 under the laws of the State of Delaware. Applera is the successor to “The Perkin-Elmer Corporation,” a corporation originally formed in 1939, as a result of a recapitalization completed in May 1999. As part of the 1999 recapitalization, Applera established the following two classes of common stock that were intended to reflect separately the relative performance of the businesses of Applied Biosystems and Celera Genomics, which are business units of Applera and are not separate legal entities:


	Internal Control Over Financial Reporting	49
Item 9B.	Other Information	50

PART III		50
Item 10.	Directors, Executive Officers and Corporate Governance	50
	Identification and Business Experience of Directors	50
	Identification and Business Experience of Executive Officers	51
	Family Relationships	51
	Involvement in Certain Legal Proceedings	52
	Audit Committee and Audit Committee Financial Expert	52
	Recommendation of Nominees to our Board of Directors	52
	Section 16(a) Beneficial Ownership Reporting Compliance	52
	Code of Ethics	52
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	54
	Securities Authorized for Issuance Under Equity Compensation Plans	54
	Security Ownership of Certain Beneficial Owners	55
	Security Ownership of Management	55
	Changes in Control	55
Item 13.	Certain Relationships and Related Transactions, and Director Independence	55
Item 14.	Principal Accountant Fees and Services	55

PART IV		56
Item 15.	Exhibits and Financial Statement Schedules	56
	Financial Statements	56
	Financial Statement Schedule	57
	Exhibits	57

SIGNATURES		65

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENT SCHEDULE		67

APPLIED BIOSYSTEMS INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE FISCAL YEARS ENDED JUNE 30, 2006, 2007, AND 2008		68

EXHIBITS, INCLUDING CERTIFICATIONS

~~• Applera Corporation~~-~~Applied~~ ~~Biosystems~~ii ~~Group Common Stock, which we refer to in this report as “Applera~~-~~Applied~~ ~~Biosystems stock;” and • Applera Corporation-Celera Genomics Group Common Stock, which we refer to in this report as “Applera-Celera stock.”~~

MoreTable information about Applera-Applied Biosystems stock and Applera-Celera stock is set forth below in Item 5 of Part II of this report under the headings “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Information about our Common Stock and its Holders.” Also, information about the risk factors associated with our capital structure and our two classes of stock is set forth below in Item 5 of Part II of this report under the headings “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Forward Looking Statements and Risk Factors.”Contents

PART ~~Available~~I ~~Information~~

~~Websites.~~Item ~~We maintain Internet websites for Applera, Applied Biosystems, Celera Genomics, and Celera Diagnostics~~1. ~~All interested persons can access the following information on these websites, free of charge:~~Business

• our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed with or furnished to the Securities and Exchange Commission; • Section 16 “insider transaction” reports, which include Forms 3, 4, and 5, filed by our officers and directors with the SEC; and • information relating to our corporate governance, including: our Corporate Governance Guidelines; our Code of Business Conduct and Ethics, which is applicable to our officers, directors, and employees; the charters for the Audit/Finance Committee, the Management Resources Committee, and the Nominating/Corporate Governance Committee of our Board of Directors; information on how to communicate with our Board of Directors, including our non-management directors; and information on how to report valid complaints to the Company ~~regarding accounting and related matters.~~Overview

WeThroughout ~~make~~this ~~our~~report, ~~SEC~~terms ~~reports~~such ~~and~~as the ~~insider~~“company,” ~~transaction~~“Applied ~~reports~~Biosystems,” ~~available~~“we,” on“us,” or “our” ~~websites~~may asbe ~~soon~~used asto ~~reasonably~~refer ~~practicable after they are electronically filed with, or furnished~~ to, ~~the~~Applied ~~SEC~~Biosystems Inc.

-Business 2Overview -

~~Back~~We are a global leader in the development and marketing of instrument-based systems, consumables, software, and services for academic research, the life science industry, and commercial markets. We commercialize innovative technology solutions for DNA, RNA, protein, and small molecule analysis. Customers across the disciplines of academic and clinical research, pharmaceutical research, and manufacturing, forensic DNA analysis, and agricultural biotechnology use our products and services to ~~Contents~~accelerate scientific discovery, improve processes related to drug discovery and development, detect potentially pathogenic microorganisms, and identify individuals based on DNA sources. We have a comprehensive service and field applications support team for a global installed base of high-performance genetic and protein analysis solutions. A more complete description of our products and services, and developments during our 2008 fiscal year, is set forth below in this Item 1.

Mr. Stevenson was promoted to ~~The~~President ~~following~~and ~~table~~Chief ~~indicates~~Operating ~~how~~Officer of the company in August 2008. Prior to ~~access~~that, in December 2007, he was promoted to the ~~documents~~positions ~~described~~of ~~above~~Senior onVice President of our ~~websites:~~company and President and Chief Operating Officer of the Applied Biosystems business. Mr. Stevenson previously had been a Vice President of the company and Executive Vice President of the Applied Biosystems business.

~~“Insider~~We ~~Corporate~~derive ~~Transaction”~~more ~~Governance~~than ~~Website~~10% Address SEC Filings Reports Information Applera www.applera.com Click on the link to Click on the link to Click on the link to “SEC Filings” in the “SEC Filings” in the “Corporate “Investors & Media” “Investors & Media” Governance” in the section of ~~the~~our ~~section~~consolidated ofrevenues ~~the~~from ~~website,~~instruments ~~“Corporate” section website,~~ and ~~then and then click again of the website click again on the on the link to “SEC link to “SEC Filings” Insider Filings” Applied Biosystems www~~consumables.~~appliedbiosystems.com~~ ~~Click~~For oninformation ~~the link to Click~~ on ~~the~~revenues ~~link~~from tothese ~~Click~~sources ~~on the link to “SEC Filings”~~ in ~~the~~our ~~“SEC~~2008, ~~Filings” in the “Corporate “Investors” section of “Investors” section of Governance” in the the website~~2007, and ~~then~~2006 ~~the~~fiscal ~~website~~years, ~~and~~refer ~~then~~to ~~“Investors”~~pages ~~section~~28 ~~click~~and ~~again~~31 ~~on the click again on the link~~ of ~~the~~Management’s ~~website~~Discussion ~~link~~and Analysis ~~to “SEC Filings” to “SEC Insider Filings Celera Genomics www.celera.com Click on the link to Click on the link to Click on the link to “SEC Filings”~~ in ~~the~~our ~~“SEC~~2008 ~~Filings”~~Annual ~~in the “Corporate “Investors & Media” “Investors & Media” Governance” in the section of the section of the website~~Report, ~~“Investors~~which &pages ~~Media”~~are ~~website,~~incorporated ~~and~~herein ~~then~~by ~~and~~reference. ~~then click again section of the click again on the on the link to “SEC website link to “SEC Filings” Insider Filings”~~

InThe ~~addition,~~risk ~~you~~factors ~~can~~associated ~~obtain~~with ~~copies~~our ofcompany ~~these~~and ~~materials~~our business, byincluding ~~calling~~ our ~~corporate~~pending ~~Secretary~~merger atwith ~~203-840-2000~~Invitrogen orCorporation bydescribed ~~making~~below, aare ~~request~~set inforth ~~writing~~below ~~mailed~~in ~~to:~~Item 1A ~~Attention:~~of ~~Secretary,~~this ~~Applera~~report ~~Corporation,~~under ~~301~~the ~~Merritt~~headings 7,“Risk PFactors.O.” ~~Box 5435, Norwalk, CT 06856-5435.~~

~~Except~~Corporate ~~for~~History ~~the documents on our websites that are expressly incorporated by reference into this report, the information contained on our websites is not incorporated by reference into this report~~ and ~~should~~Structure; ~~not~~Celera beSeparation considered to be a part of this report. This includes the websites referred to in the table above, as well as other websites that we refer to elsewhere in this report. All of these website addresses are included in this document as inactive textual references only.

~~Information~~We ~~Incorporated~~were byincorporated ~~Reference~~in 1998 under the laws of the State of Delaware. ~~The~~We ~~SEC~~are ~~allows~~the ussuccessor to “~~incorporate~~The byPerkin-Elmer ~~reference~~Corporation,” ~~some~~a ~~information~~corporation ~~from~~originally ~~parts~~formed in 1939, as a result of ~~other~~a ~~documents~~recapitalization completed ~~filed~~in ~~with~~May 1999. As part of the ~~SEC~~1999 recapitalization, ~~including~~we established the following two classes of common stock:

	•	our Annual Report to Stockholders for our 2004 fiscal year, which we refer to in this report as our “2004 Annual Report;” and
	•	our Proxy Statement relating to our Annual Meeting of Stockholders to be held on October 21, 2004, which we refer to in this report as our “2004 Proxy Statement.”

•

Applied Biosystems Group Common Stock, which we refer to in this report as “Applied Biosystems stock”; and

~~When~~• weCelera ~~“incorporate~~Group byCommon ~~reference~~Stock,” ~~that~~which ~~means that~~ we ~~are referring you to important information in other documents that have been filed with the SEC rather than repeating that information in this report. We recommend that you~~ refer to ~~the information that we indicate is contained~~ in ~~the other documents and which is incorporated by reference into~~ this report. ~~The portions of our 2004 Annual Report that are incorporated by reference into this report are included~~ as ~~Exhibit~~“Celera ~~13 to this report~~stock.”

- 3Table -of Contents

~~Back~~These two classes of stock, sometimes referred to ~~Contents~~as tracking stock, were intended to reflect separately the relative performance of our Applied Biosystems group and Celera group businesses. These businesses were operated under our tracking stock structure as separate units of a single company and they were not separate legal entities. As further described below, we have terminated the tracking stock structure and the Celera group business has been separated from our company. The separated Celera group is a diagnostics business delivering personalized disease management through a combination of products and services incorporating proprietary discoveries. This business operates through two principal business units, a clinical laboratory testing service business and an in vitro, meaning outside of the living body, diagnostic products business. The services business, conducted through the recently-acquired subsidiary Berkeley HeartLab, Inc., or BHL, offers a broad portfolio of clinical laboratory tests and disease management services to help healthcare providers improve cardiovascular disease treatment regimens for patients. The in vitro diagnostic, or IVD, products business develops, manufactures, and oversees the commercialization of molecular diagnostic products, most of which are commercialized through an alliance with Abbott Molecular, a subsidiary of Abbott Laboratories. The separated Celera group business also has licensed other relevant diagnostic technologies to clinical laboratories to provide personalized disease management in cancer and liver disease.

~~Scientific~~In ~~Background~~August 2007, we announced that our Board of Directors had retained Morgan Stanley to explore alternatives to the company’s tracking stock structure, including the possibility of creating two independent publicly-traded companies in place of the Applied Biosystems group and Celera group businesses. Further to that announcement, on July 1, 2008, we completed the separation of all of the business, assets, and liabilities of the Celera group from our remaining business. The separation was completed by means of a redemption of each outstanding share of Celera stock in exchange for one share of common stock of Celera Corporation, a Delaware corporation, which now holds all of the business, assets, and liabilities previously attributed to the Celera group. On July 1, 2008, following the consummation of the Celera group separation, Celera Corporation became an independent, publicly-traded company whose shares are listed on The NASDAQ Stock Market under the symbol “CRA.” The Applied Biosystems group became our only business and Applied Biosystems stock became our only class of common stock outstanding. In connection with the Celera separation, we changed our corporate name from Applera Corporation to Applied Biosystems Inc. More information about the separation of the Celera group is set forth below under the heading “Celera Separation.”

~~All~~Pending ~~living~~Invitrogen ~~organisms~~Merger contain biological molecules. The most numerous are in the categories of: nucleic acids, which include DNA and RNA; proteins; carbohydrates; and lipids. Biological molecules are typically much larger and more complex than common molecules, and there is a wide diversity in the types of biological molecules present in living organisms. These characteristics make the analysis of biological molecules significantly more complex than the analysis of smaller compounds. Key advances in therapeutics have historically often come from an understanding of either proteins or DNA.

~~DNA~~On ~~molecules~~June 11, ~~provide~~2008, ~~instructions~~we ~~that~~entered ~~ultimately~~into ~~control~~an ~~the~~Agreement ~~synthesis~~and Plan of ~~proteins~~Merger ~~within~~with aInvitrogen ~~cell~~Corporation and Atom Acquisition, LLC, a ~~process~~direct ~~referred to~~wholly-owned assubsidiary ~~“gene~~of ~~expression~~Invitrogen.” ~~DNA~~Pursuant ~~molecules~~to ~~consist~~the terms and conditions of ~~chemical~~the ~~subunits,~~Invitrogen ~~called~~Merger ~~“nucleotides~~Agreement,” ~~bound~~we inwill ~~two~~merge ~~long~~with ~~strands~~and ~~formed~~into byAtom aAcquisition, ~~chemical~~with ~~“backbone” made~~that upentity ofcontinuing ~~sugar~~as the surviving entity and ~~phosphate~~a ~~molecules.~~direct ~~There~~wholly-owned ~~are~~subsidiary ~~four~~of ~~nucleotides~~Invitrogen. Upon –completion ~~adenine,~~of ~~cytosine,~~the ~~guanine~~transaction, ~~and~~Invitrogen ~~thymine~~will –expand ~~often~~its ~~abbreviated~~board ~~with~~of ~~their~~directors ~~first~~from ~~letters~~nine A,to C,twelve ~~G, and~~members T and ~~often~~appoint ~~referred~~three toof asour ~~“bases.”~~current Indirectors ato ~~DNA molecule,~~ the ~~nucleotides~~board inof ~~the~~Invitrogen. ~~two~~The ~~strands~~parties ~~are~~currently ~~bound~~expect ~~together~~the inmerger ~~pairs~~ to ~~form~~be acompleted ~~structure~~in ~~that~~the ~~resembles a~~fall ~~twisted~~of ~~ladder~~2008, ~~which~~subject isto ~~often~~satisfactions ~~referred~~of tothe asconditions aspecified ~~“double~~in ~~helix.”~~the ~~The~~Merger ~~bound~~Agreement. ~~pairs~~More ofinformation ~~nucleotides,~~about ~~which~~the ~~form~~Invitrogen ~~the~~Merger ~~rungs~~Agreement ofis ~~the~~set ~~“ladder,”~~forth ~~are~~below ~~often~~under ~~referred to~~the asheading “~~base~~Invitrogen ~~pairs~~Merger Agreement.”

~~Genes~~- ~~are~~2 ~~individual~~- segments of these DNA molecules that carry the specific information necessary to construct particular proteins. Genes may contain from several dozen to tens of thousands of nucleotides. The entire collection of DNA in an organism, called the “genome,” may contain a wide range of nucleotides, including as few as 4 million nucleotides in the case of simple bacteria and 3.1 billion base pairs of nucleotides in the case of human beings.

RNATable molecules are similar to DNA in structure and are essential for biological function through a number of biochemical activities within the human body. There are different types of RNA molecules, each of which has a different function. For example, messenger RNA, the most common form of RNA, acts as an intermediary between DNA and protein, transcribing the genetic code from DNA into protein. Contents

~~Principally~~Accelerated ~~driven~~Share byRepurchase; ~~the~~Term ~~“biotechnology~~Loan revolution,” and the increasing focus on DNA, researchers are developing a better understanding of DNA’s role in human disease. An increased appreciation of how DNA ultimately determines the functions of living organisms has generated a worldwide effort to identify and sequence genes of many organisms, including the genes that make up the human genome. We believe the best scientific evidence to date indicates that the number of genes in the human genome that code for proteins is between 25,000 and 35,000, which is significantly less than had been previously thought. The study of genes and other genetic material of organisms is now commonly referred to as “genomics.”

~~The~~On ~~field~~April 26, 2007, we announced that our Board of ~~genomics~~Directors ~~research~~authorized ~~generally~~the ~~includes~~repurchase ~~three~~of ~~broad~~up ~~categories~~to 18,400,000 shares of ~~analysis~~Applied Biosystems stock. On August 8, ~~consisting~~2007, we announced that our Board of ~~sequencing~~Directors increased this authorization to $1.2 billion (in the aggregate, ~~genotyping~~including approximately $100 million of Applied Biosystems stock previously repurchased under the authorization prior to the increase), which at market prices on that date represented approximately 20% of the outstanding shares of Applied Biosystems stock, or double the authorization prior to the increase. The increased authorization has no time restrictions and delegates ~~gene~~to ~~expression~~management ~~studies:~~discretion to purchase shares at times and prices it deems appropriate through open market purchases, privately negotiated transactions, tender offers, exchange offers, or otherwise.

•Subsequent ~~Sequencing~~to isthe ~~performed~~increase toin ~~determine~~ the ~~exact~~authorization, ~~order~~we ofengaged ~~the~~in ~~individual~~an ~~nucleotides~~Accelerated inShare aRepurchase ~~DNA~~Transaction ~~strand.~~with ~~Sequencing~~Morgan ~~was~~Stanley& ~~used~~Co. Incorporated. Pursuant to ~~identify~~this ~~the~~transaction, ~~nucleotides~~we paid Morgan Stanley $600 million, plus transaction costs, in ~~the~~exchange ~~entire~~for ~~human~~a ~~genome~~total ~~and~~of ~~other~~approximately ~~species~~17.9 million Itshares ~~has~~at ~~also~~an ~~been~~average ~~used~~price toper ~~identify~~share ~~naturally~~of ~~occurring~~$33.5276, ~~genetic~~excluding ~~variations~~transaction costs. This transaction was completed in ~~the~~January ~~human~~2008. ~~genome,~~Under ~~which~~the ~~are~~Invitrogen ~~referred~~Merger toAgreement, asdescribed ~~“single~~above, ~~nucleotide~~we ~~polymorphisms”~~are orrestricted ~~“SNPs.”~~from ~~Scientists~~repurchasing ~~believe~~any ~~that~~more ~~SNPs~~shares ~~can~~of beApplied ~~correlated~~Biosystems ~~with,~~stock. ~~for~~

On August 27, 2007, we entered into a Term Loan Agreement with Bank of America, N.A., as administrative agent, and the initial lenders named therein, pursuant to which we received an unsecured term loan in an -aggregate 4amount -of $100,000,000. We funded the Accelerated Share Repurchase transaction using the proceeds of this term loan, borrowings of $175,000,000 under our existing corporate credit facility, and U.S. cash reserves, funds from domestic operations, and other sources. As of the end of our 2008 fiscal year, we had repaid all of the borrowings under our corporate credit facility, and subsequently, in July 2008, we repaid $50,000,000 of the term loan.

~~Back~~Available toInformation ~~Contents~~

~~example,~~Website susceptibility to disease, disease prognosis, therapeutic efficacy, and therapeutic toxicity, and therefore may have diagnostic or therapeutic utility. • Genotyping is performed to determine a particular sequence variant of a gene and its particular association with an individual’s DNA. Genotyping is not performed to determine the complete structure of the gene, but rather is performed to determine if the particular DNA sequence variant, typically a SNP, can be associated with, for example, susceptibility to a particular disease or response to a particular drug. • Gene expression is performed to determine whether a particular gene is expressed, or present, and in some cases at what levels, in a relevant biological material. This analysis can be used, for example, to measure and compare gene activity in various biological samples, such as samples from populations of healthy and diseased individuals, or from populations at different stages of disease development. These types of studies may be useful in the development of diagnostic tests and therapeutic treatments.

AsWe ~~researchers~~maintain ~~learn~~an ~~more~~Internet ~~about~~website ~~DNA~~at and genes, they are also developing a better understanding of the role of proteins in human disease through efforts in the field of “proteomics,” the study of proteins expressed, or coded, by geneswww. ~~Proteins are the products of genes and, along with gene expression and modification, are believed to be key drivers and mediators of cellular function and biological system activity~~appliedbiosystems.com. ~~The understanding~~All ~~and~~interested ~~treatment~~persons ofcan ~~disease~~access ~~today involves~~ the ~~study of genes and~~ ~~the~~following ~~proteins~~information ~~they~~on ~~code~~this ~~for,~~website ~~and~~free ~~frequently involves the measurement~~ of acharge: ~~drug’s ability to bind to specific proteins in the body.~~

~~Although~~• ~~DNA~~our ~~contains~~Annual ~~the~~Reports ~~code~~on ~~for~~Form ~~proteins~~10-K, ~~scientists~~Quarterly ~~have~~Reports ~~discovered~~on ~~that~~Form ~~the body may modify proteins after they have been made in cells. These modifications~~10-Q, ~~referred~~Current toReports ason ~~“post-translational~~Form ~~modifications~~8-K,” ~~can~~and ~~alter~~amendments ~~a protein’s function, leading~~ to ~~changes~~those inreports ~~the~~filed ~~biological~~with ~~reactions~~or ~~that~~furnished ~~take place in cells, which researchers refer~~ to ~~as “biological pathways.” These post-translational modifications complicate~~ the ~~study~~Securities ~~of proteins, because scientists studying proteins~~ and ~~seeking~~Exchange ~~to understand their role in health and disease need a more thorough characterization of proteins than simply knowing their genetic, or DNA, code.~~Commission;

We• ~~believe~~Section ~~that~~16 ~~gene~~“insider ~~and~~transaction” ~~protein~~reports, ~~research~~which ~~will~~include ~~increase~~Forms as3, ~~companies~~4, ~~in the pharmaceutical~~ and ~~biotechnology~~5, ~~industries~~filed ~~seek~~by toour ~~improve~~officers ~~their drug discovery~~ and ~~development efforts.~~directors Wewith ~~also~~the ~~believe~~SEC; ~~that ongoing drug discovery~~ and ~~development efforts will increase research of cells as researchers seek to further understand how drugs work in the body.~~

~~The~~• ~~growth~~information inrelating ~~DNA,~~to ~~protein~~our corporate governance, including: our Corporate Governance Guidelines; our Code of Business Conduct and ~~other~~Ethics, ~~research~~which ~~has~~is ~~created~~applicable to our officers, directors, and employees; the ~~need~~charters for ~~systems~~the ~~that~~Audit/Finance ~~facilitate~~Committee, the ~~collection,~~Management ~~organization~~Resources Committee, and ~~analysis of~~ the ~~large~~Nominating/Corporate ~~amounts~~Governance Committee of ~~data~~our ~~generated~~Board byof ~~this~~Directors; ~~research.~~information ~~This~~on ~~demand~~how ~~has~~to ~~led~~communicate towith ~~the~~our ~~development~~Board of ~~the~~Directors, ~~science~~including ofour ~~“bioinformatics.”~~non-management ~~The~~directors; ~~science~~and ofinformation ~~bioinformatics~~on ~~seeks~~how to ~~blend~~report ~~biology~~valid complaints and ~~computing~~concerns to ~~transform~~the ~~massive~~Company ~~amounts~~regarding ofaccounting, ~~data~~internal ~~into~~accounting ~~useful~~controls, ~~information~~or auditing matters.

- 53 -

BackTable toof Contents

~~Applied~~We ~~Biosystems~~make ~~Group~~our ~~Business~~SEC reports and the insider transaction reports available on our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.

~~Overview~~The following table indicates how to access the documents described above on our website. In addition, you can obtain copies of these materials by calling our corporate Secretary at 203-840-2000 or by making a request in writing mailed to: Attention: Secretary, Applied Biosystems Inc., 301 Merritt 7, Norwalk, CT 06851-1070.

~~Applied~~Website ~~Biosystems~~Address: ~~serves~~www.appliedbiosystems.com ~~the~~SEC ~~life~~Filings: ~~science~~Click ~~industry~~on ~~and~~the ~~research~~link ~~community~~to by“SEC ~~developing~~Filings” ~~and~~in ~~marketing~~the ~~instrument-based~~“Investors ~~systems,~~& ~~consumables,~~Media” ~~software,~~section ~~and~~of ~~services.~~the ~~Its customers use these tools to analyze nucleic acids (DNA and RNA)~~website, ~~small molecules,~~ and ~~proteins~~then toclick ~~make~~again ~~scientific~~on ~~discoveries,~~the ~~develop~~link ~~new~~to ~~pharmaceuticals,~~“SEC ~~and conduct standardized testing~~Filings.” ~~Applied~~“Insider ~~Biosystems’~~Transaction” ~~products~~Reports: ~~are~~Click ~~designed~~on ~~to address~~ the ~~demand~~link ~~for~~to ~~increased~~“SEC ~~automation~~Filings” ~~and efficiency~~ in ~~pharmaceutical~~the ~~and~~“Investors ~~biotechnology~~& ~~laboratories~~Media” bysection ~~combining~~of the ~~detection~~website ~~capabilities of analytical instruments with advances in automation~~ and ~~laboratory~~then ~~work-flow~~click ~~design.~~again ~~The~~on ~~markets for Applied Biosystems’ products span~~ the ~~spectrum~~link ofto ~~the~~“SEC ~~life~~Insider ~~sciences~~Filings.” ~~industry~~Corporate ~~and~~Governance ~~research community, including~~Information: ~~basic~~Click ~~human~~on ~~disease~~the ~~research~~link and genetic analysis performed by universities, government agencies, and other non-profit organizations; pharmaceutical drug discovery, development, and manufacturing; human identification; agriculture; biosecurity, which refers to ~~products~~“Corporate ~~needed~~Governance” in ~~response to~~ the ~~threat~~“Investors of& ~~terrorism;~~Media” ~~and~~section ~~food~~of ~~and~~the ~~environmental testing~~website.

~~Applied~~Except ~~Biosystems~~for ~~expects~~any ~~its~~documents ~~ongoing research and development efforts will increasingly focus~~ on ~~integrated science solutions, which we refer to as “iScience,” to expedite~~ our ~~customers’~~website ~~research~~that ~~and commercial goals. Scientists~~ are ~~increasingly~~expressly ~~adopting~~incorporated ~~approaches~~by ~~that~~reference ~~link~~into ~~technology,~~this ~~computer science~~report, ~~and traditional laboratory research to enable~~ the information ~~study~~contained ofon ~~complex~~our ~~biological~~website ~~systems and disease. This trend~~ is ~~evidenced~~not incorporated by areference ~~growing~~into ~~number~~this ofreport ~~high-profile initiatives~~ and ~~institutions~~should ~~worldwide~~not ~~dedicated~~be toconsidered ~~systems biology, which refers generally~~ to ~~the~~be ~~coordinated, integrated, and interdisciplinary study of the various parts of~~ a ~~biological~~part ~~system rather than just the focused study~~ of ~~individual~~this ~~parts such as genes, proteins, or cells~~report. ~~Applied~~Our ~~Biosystems~~website ~~believes~~address ~~that~~is ~~the~~included ~~increasing availability of high-quality biological data and advances~~ in ~~technology are transforming the study of complex biological systems, but that the overwhelming amount of available biological information creates economic and practical challenges for~~ this ~~study.~~document ~~Consequently,~~as ~~Applied~~inactive ~~Biosystems~~textual isreferences ~~seeking to develop iScience products and services that help customers more easily and cost effectively leverage recent biological information and technological advances~~only.

~~During~~Information ~~our~~Incorporated ~~2004~~by ~~fiscal~~Reference year, Applied Biosystems engaged a leading strategy consulting firm to assist management in an in-depth review of the group’s entire product portfolio. The purpose of this review is to identify opportunities for growth, increased profitability, and shareholder value creation. The first two phases of the project, which have been completed, included: a rigorous fact-based analysis of Applied Biosystems’ current product portfolio; an evaluation of research and development investments in an attempt to achieve optimum alignment with future growth opportunities; and an examination of Applied Biosystems’ business processes with a goal to improving operational efficiency and productivity. A third phase of this review is ongoing, during which Applied Biosystems is seeking to identify and analyze additional internal and external growth opportunities. As part of this business review, Applied Biosystems has been evaluating portfolio decisions, and this process has led to changes in, and may in the future result in further changes in, Applied Biosystems’ product and business mix.

-The 6SEC -allows us to “incorporate by reference” some information from parts of other documents filed with the SEC, including:

~~Back~~• our Annual Report to ~~Contents~~Stockholders for our 2008 fiscal year, which we refer to in this report as our “2008 Annual Report”; and

In• ~~July 2004, subsequent to the end of~~ our ~~2004~~ ~~fiscal~~Proxy ~~year,~~Statement ~~Applied~~relating ~~Biosystems announced a new organization structure which resulted from the strategic review described in the preceding paragraph. The new structure, which is expected~~ to beour ~~substantially~~2008 ~~phased~~Annual inMeeting ~~by the end~~ of ~~September 2004~~Stockholders, ~~will~~which ~~create~~we ~~the~~refer ~~following four business divisions, each led by a division President: Molecular Biology; Proteomics and Small Molecules; Applied Markets; and Service. Applied Biosystems intends~~ to create integrated and fully-functioning divisions with the resources necessary to execute their business plans, including strategic planning, research and development, marketing, and sales professionals. The four new business divisions will be supported by several cross divisional functions, including units focused on Applied Biosystems’ strategic planning and business development, investigation of advanced technologies, and incubation of new businesses in ~~new~~this orreport ~~underserved markets. Also, these operating activities will continue to be supported by a shared service organization responsible for functions such~~ as ~~human~~our ~~resources, finance,~~“2008 ~~communications,~~Proxy ~~legal, and intellectual property~~Statement.”

~~Also,~~When inwe ~~August~~“incorporate ~~2004~~by reference,” ~~subsequent~~that tomeans ~~the~~that ~~end~~we ofare ~~our~~referring ~~2004~~you ~~fiscal~~to ~~year,~~important ~~Applied~~information ~~Biosystems~~in ~~announced~~other documents ~~the~~that ~~retirement~~have ofbeen ~~Michael~~filed W.with ~~Hunkapiller,~~the ~~Ph.D.,~~SEC ~~Senior~~rather ~~Vice~~than ~~President~~repeating ~~and~~that ~~President,~~information ~~Applied~~in ~~Biosystems~~this ~~Group~~report. AtWe recommend that you refer to the ~~same~~information ~~time,~~that ~~Applied~~we ~~Biosystems~~indicate ~~announced~~is contained in the ~~promotion~~other ofdocuments ~~Catherine~~and M.which ~~Burzik,~~is ~~formerly~~incorporated aby ~~Vice~~reference ~~President~~into this report. The portions of ~~Applera~~our ~~and~~2008 ~~Executive~~Annual ~~Vice~~Report ~~President~~that ~~and~~are ~~Chief~~incorporated ~~Operating~~by ~~Officer~~reference ofinto ~~Applied~~this ~~Biosystems,~~report toare ~~the~~included ~~position~~as ~~left~~Exhibit by13 ~~Dr.~~to ~~Hunkapiller~~this report.

~~For~~Celera ~~information~~Separation on revenues from instruments and consumables for our 2002, 2003 and 2004 fiscal years, refer to pages 31 and 33 of Management’s Discussion and Analysis in our 2004 Annual Report, which pages are incorporated herein by reference.

On May 8, 2008, we entered into a Separation Agreement with Celera Corporation, at that time one of our ~~Products~~wholly-owned ~~for~~subsidiaries, to separate all of the ~~Genomics~~business, ~~Market~~assets, and liabilities of the Celera group from our remaining business. This separation was completed on July 1, 2008, by means of a redemption of each outstanding share of Celera stock in exchange for one share of

~~Customers~~- in4 ~~the~~- genomics market use systems for the analysis of nucleic acids for: basic research; pharmaceutical and diagnostic discovery and development; biosecurity; food and environmental testing; analysis of infectious diseases; and human identification and forensic analysis. Applied Biosystems has developed technologies and products to support key applications in genomics research such as sequencing, genotyping, and gene expression studies. Applied Biosystems’ products for the genomics market are described in the following paragraphs.

PCRTable Instruments, including Thermal Cyclers and Real-Time PCR Systems, and Related Consumables. Polymerase chain reaction, commonly referred to as “PCR,” is a process in which a short strand of DNA is copied multiple times, or “amplified,” so that it can be more readily detected and analyzed. Applied Biosystems’ PCR product line includes amplification instruments, known as “thermal cyclers,” several combination thermal cyclers and PCR detection systems, and reagents and software necessary for the PCR amplification and detection process.Contents

~~The~~common ~~Dual~~stock ~~384-Well~~of ~~GeneAmp®~~Celera ~~PCR~~Corp., ~~System~~which ~~9700 thermal~~now ~~cycler~~holds isall of the ~~highest~~business, ~~capacity~~assets, ~~thermal~~and ~~cycler~~liabilities ~~offered~~previously byattributed ~~Applied Biosystems.~~to ~~This~~the ~~instrument~~Celera ~~supports~~group. ~~all~~On ~~key~~July 1, ~~applications in genetic analysis~~2008, ~~and~~following ~~fills~~the aconsummation ~~significant~~of ~~market~~the ~~need~~Celera ~~for~~separation, ~~laboratories~~Celera ~~conducting high-volume genomics research~~Corp. ~~This~~became ~~instrument~~an isindependent, ~~referred to as a “dual 384~~publicly-~~well” instrument~~traded ~~because~~company itwhose ~~can~~shares ~~simultaneously~~are ~~amplify~~listed ~~samples~~on inThe ~~two~~NASDAQ ~~plastic~~Stock ~~trays, referred~~Market tounder bythe ~~researchers~~symbol as “~~microtiter plates,~~CRA.” ~~each~~The ~~having~~Applied ~~wells to~~Biosystems ~~hold~~group ~~384~~became ~~samples.~~our only business and Applied Biosystems ~~also~~stock ~~offers~~became ~~60-~~our ~~and~~only ~~96-well~~class ~~thermal cyclers~~of ~~and~~outstanding acommon ~~dual~~stock. ~~96-well~~In ~~thermal~~connection ~~cycler.~~with ~~Applied~~the ~~Biosystems’~~Celera ~~PCR~~separation, ~~product line~~we ~~also~~changed ~~includes~~our ~~reagents~~corporate ~~for~~name ~~high-fidelity,~~from orApplera ~~high-accuracy,~~Corporation ~~amplification of~~to ~~long~~Applied ~~DNA~~Biosystems ~~segments~~Inc.

Pursuant to the Separation Agreement, we entered into agreements with Celera Corp., each dated as of July 1, 2008, including a Tax Matters Agreement -and 7an -Operating Agreement. The descriptions below of the Tax Matters Agreement and the Operating Agreement are qualified in their entirety by reference to the full text of these agreements, which are exhibits to this report.

~~Back~~Tax toMatters ~~Contents~~Agreement

The Tax ~~These~~Matters ~~are~~Agreement ~~useful~~with inCelera Corp. governs our and Celera Corp.’s respective rights, responsibilities and obligations after the ~~determination~~separation with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a ~~“haplotypes~~result of any failure of the separation,” ~~which~~together ~~are~~with ~~correlated~~certain ~~patterns~~related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of ~~inherited~~Sections ~~DNA~~355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, or ~~mutations~~the Code, including as a result of Section 355(e) of the Code. ~~Scientists~~Under ~~are~~the ~~just~~Tax ~~beginning~~Matters toAgreement, ~~understand~~we ~~haplotypes~~generally will be responsible for the payment of all income and ~~use~~non-income ~~them~~taxes attributable to Celera Corp.’s operations pre-separation inand ~~complex~~Celera ~~disease~~Corp. generally will be responsible for the payment of all income and non-~~gene~~income ~~association~~taxes ~~studies~~attributable to Celera Corp.’s operations post-separation. In addition, we will pay Celera Corp. for certain available tax benefits resulting from U.S. federal and state tax credits and losses attributable to Celera Corp.’s business that arose prior to the separation to the extent such credits are not first utilized by us.

~~Applied~~Notwithstanding ~~Biosystems’~~the ~~real-time~~foregoing, ~~PCR~~under ~~systems~~the ~~product~~Tax ~~line~~Matters Agreement, ~~which~~Celera itCorp. ~~previously~~also ~~referred~~generally towill asbe ~~its~~responsible ~~“Sequence Detection~~for ~~Systems”~~any ~~product~~taxes ~~line,~~imposed ~~includes~~on ~~its~~us ~~ABI~~that ~~PRISM™~~arise from ~~6100~~the ~~Nucleic~~failure ~~Acid~~of ~~PrepStation~~the ~~for~~separation, ~~sample~~together ~~preparation~~with ~~and~~certain ~~its~~related ~~real-time~~transactions, ~~PCR~~to ~~instruments~~qualify as a tax-free exchange for ~~analysis~~U.S. ~~The ABI~~federal ~~PRISM~~income ~~6100~~tax ~~Nucleic~~purposes ~~Acid~~within ~~PrepStation~~the ~~extracts~~meaning ~~DNA~~of Sections 355 and~~/or~~ ~~RNA~~368(a)(1)(D) ~~from~~of ~~whole~~the ~~cells~~Code, ~~blood~~if such failure to qualify is attributable to actions, ~~and~~events ~~other~~or ~~samples~~transactions relating to Celera Corp.’s ~~This~~stock, ~~DNA~~assets or ~~RNA~~business, ~~largely~~or ~~separated~~a ~~from~~breach of the ~~other~~relevant ~~molecules found~~representations or covenants made by Celera Corp. in ~~cells~~the Tax Matters Agreement. In addition, ~~can~~Celera ~~then~~Corp. generally will be ~~analyzed~~responsible infor ~~instruments~~a ~~largely~~percentage ~~without~~of ~~interference~~any taxes that arise from ~~those~~the ~~other~~failure ~~molecules~~of the separation, ~~such~~together aswith ~~proteins.~~certain ~~The~~related ~~ABI~~transactions, ~~PRISM~~to ~~6100~~qualify ~~Nucleic~~as ~~Acid~~a ~~PrepStation was~~tax-free ~~designed~~exchange tofor ~~decrease~~U.S. federal income tax purposes within the ~~labor~~meaning of Sections 355 and ~~cost~~368(a)(1)(D) ~~involved~~of inthe ~~preparing~~Code, ~~DNA~~if ~~and~~such ~~RNA~~failure is for ~~analysis~~any byreason ~~automating~~for ~~some~~which ~~aspects~~neither ofCelera ~~this~~Corp. ~~key~~nor ~~phase~~we inare responsible. Under the ~~sample~~Tax ~~preparation~~Matters ~~process~~Agreement, Celera Corp. will also be required to indemnify us for a portion of our tax cost ~~Applied~~resulting ~~Biosystems~~from ~~had~~our ~~previously~~and ~~marketed~~Celera ~~the~~Corp.’s ~~ABI~~entering ~~PRISM~~into ~~6700~~an ~~Automated~~intellectual ~~Nucleic~~property ~~Acid~~supply ~~Workstation,~~agreement ~~which~~and ~~fully~~other ~~automated~~intellectual ~~several~~property ~~key~~license ~~steps~~agreements in ~~sample~~connection ~~preparation, including~~with the ~~extraction~~separation. ~~process~~The ~~described~~Tax ~~above.~~Matters ~~However,~~Agreement ~~Applied~~also ~~Biosystems~~imposes ~~discontinued~~restrictions ~~this~~on ~~higher-priced~~our ~~instrument~~and Celera asCorp.’s ofability ~~the~~to ~~end~~engage ofin certain actions and sets forth our ~~2004~~and ~~fiscal~~Celera ~~year,~~Corp.’s ~~though it~~obligations ~~continues~~with respect to ~~provide~~the ~~servicing~~filing of tax returns, the administration of tax contests, assistance and ~~support~~cooperation ~~for~~and ~~this~~other ~~instrument~~matters.

~~Applied~~Operating ~~Biosystems~~Agreement offers four real-time PCR instrument systems for the detection and quantitation of nucleic acids: The ABI PRISM® 7900HT Sequence Detection System, the ABI PRISM 7000 Sequence Detection System, the Applied Biosystems 7300 Real-Time PCR System, and the Applied Biosystems 7500 Real-Time PCR System. The model 7900HT system is a flexible, automated analyzer that can be used with 96-well and 384-well plates as well as Applied Biosystems’ TaqMan® Low Density Array, which is described below. In its highest throughput configuration, using 384-well plates and robotics, this system can be used for large-scale gene expression and genotyping studies. Applied Biosystems began marketing the model 7300 and 7500 systems during our 2004 fiscal year. These instruments are designed to provide smaller laboratories with a more economical, yet versatile system for a broad range of applications, with the model 7500 system offering additional features and capabilities in comparison to the model 7300 system. These are next generation systems that have been designed with technological improvements that enhance performance and flexibility, though they are less automated than the model 7900HT system and do not have the same throughput capability because they use only 96-well plates. The model 7000 system is an older instrument that was also designed for the needs of smaller laboratories, and was the precursor to the model 7300 and 7500 systems. Limited demand for this product is expected to continue because some research and applied markets applications require the use of a system such as the model 7000 system that has been previously validated, or demonstrated acceptable, by users for those applications.

The ~~All~~Operating ofAgreement ~~the~~includes ~~real-time~~operating ~~PCR~~principles ~~Systems~~that ~~are~~govern ~~modified~~our ~~versions~~and ofCelera ~~Applied Biosystems~~Corp.’s ~~thermal~~conduct ~~cyclers~~concerning, ~~which are described above,~~ and use ~~TaqMan® chemistry~~of, aspecified ~~unique~~instruments ~~PCR technology designed by the Roche Group~~ and ~~developed~~other bytechnologies ~~Applied~~that ~~Biosystems.~~were TaqMan chemistry can be used both for measurement of gene expression and for genotyping. TaqMan chemistry detects the product of PCR amplification and quantifies the initial sample during the amplification process. This technique is referred to as “quantitative real-time PCR.” The real-time PCR systems analyze a sample by measuring fluorescence resulting from the reaction of the TaqMan chemistry and the sample. This product line has been widely accepted in the pharmaceutical discovery research market. Applied Biosystems’ TaqMan Gene Expression ~~Assays and SNP Genotyping Assays are TaqMan chemistry-based assays designed for use on Applied Biosystems’ real-time PCR systems. These products are described below in Item 1 of this report~~

- 85 -

BackTable toof Contents

~~under~~utilized ~~the~~by ~~headings~~one “or both of the Applied Biosystems ~~Group~~and ~~Business~~Celera –groups ~~Products for~~prior to the ~~Genomics~~separation. ~~Market~~A –summary ~~Genomic~~of ~~Assays~~these operating principles is set forth below.”

~~Applied~~Instruments Biosystems offers a proprietary TaqMan Low Density Array (which it formerly referred to as its “Micro Fluidic Card” system), which was jointly developed with 3M Company, and a modified version of its model 7900HT system to support the Low Density Arrays for gene expression analysis. The Low Density Arrays are consumable laminated plastic sheets containing 384 microscopic fluid channels and wells. They are designed for use instead of microtiter plates, which are used in many types of laboratory analyses, including gene expression or genotyping studies on Applied Biosystems’ instruments. The microscopic fluid channel design of the Low Density Arrays enables researchers to automatically route a sample to the reaction wells rather than doing this by hand or using expensive and complex robotics as is required when using microtiter plates. Applied Biosystems is currently offering the Low Density Arrays pre-loaded with its human, mouse, and rat TaqMan Gene Expression Assays, which are described below in Item 1 of this report under the headings “Applied Biosystems Group Business – Products for the Genomics Market – Genomic Assays.” Using an on-line ordering system, customers can customize the cards by selecting the assays that are pre-loaded onto the Low Density Arrays.

Celera ~~Genetic~~Corp. ~~Analysis~~will ~~Instruments;~~have ~~Genotyping~~continued ~~and~~access ~~Resequencing~~to ~~Systems.~~our ~~Applied~~capillary ~~Biosystems’~~electrophoresis, ~~genetic~~or ~~analysis instruments~~CE, ~~referred~~sequencers toand associated consumables as ~~DNA~~they orhad ~~genetic~~been ~~analyzers,~~provided ~~can~~by bethe ~~used~~Applied Biosystems group prior to ~~perform~~the ~~both~~separation ~~DNA~~in ~~sequencing~~connection ~~and~~with ~~fragment~~the ~~analysis~~alliance with Abbott Laboratories. ~~DNA~~Celera ~~sequencing~~Corp. iswill ~~used~~also tohave ~~determine~~access ~~the~~to ~~exact~~our ~~order~~current ofand ~~nucleotides~~future inCE asequencers ~~strand~~and ofassociated ~~DNA.~~consumables ~~DNA~~in ~~fragment~~the ~~analysis~~same ismanner ~~used~~as toour ~~determine~~other ~~the~~customers. ~~size,~~We ~~quantity,~~expect orthat ~~pattern~~Celera ofCorp. ~~DNA~~will indevelop a ~~strand~~new ~~of DNA~~U.S. ~~DNA~~Food ~~sequencing~~and ~~instruments~~Drug ~~have~~Administration, ~~been~~or ~~used~~FDA, compliant ~~extensively~~diagnostic toinstrument ~~obtain~~based ~~the~~on ~~DNA~~our ~~sequence~~CE oftechnology. ~~the~~Celera ~~human~~Corp. ~~genome~~will ~~and~~pay the ~~genomes~~costs of ~~other~~developing ~~species~~this ~~and~~new toinstrument, ~~identify~~including ~~SNPs~~any ~~and~~incremental ~~other~~costs ~~genetic~~that ~~mutations~~we incur.

~~Applied~~We ~~Biosystems’~~will ~~genetic~~be ~~analysis~~permitted ~~instruments use “electrophoresis”~~ to ~~analyze~~sell ~~molecules.~~our ~~During~~CE ~~electrophoresis,~~sequencers ~~the~~to ~~molecules~~any ~~being~~end-user ~~analyzed~~for ~~are~~any ~~placed~~purpose. inWe awill ~~separation~~also ~~medium,~~be ~~usually~~permitted ato ~~gel,~~sell ~~and~~our ~~then~~CE ~~subjected~~sequencers toas an ~~electric~~original equipment ~~charge.~~manufacturer, ~~The~~or ~~molecules~~OEM, ~~will~~except ~~pass~~that ~~through~~we ~~the~~will ~~gel~~not atbe ~~different~~able ~~speeds~~to ~~because~~OEM the ~~molecules~~CE ~~have~~sequencers ~~different~~for ~~lengths~~commercialization ~~and~~of ~~electrical~~human ~~charges.~~diagnostic ~~Typically,~~tests ~~the~~for ~~molecules~~specified ~~being~~conditions ~~analyzed~~for ~~are~~a ~~labeled,~~period orof ~~chemically~~three ~~linked,~~years ~~with~~after ~~fluorescent “tags” before being subjected to~~ the ~~electrophoresis,~~date ~~with each~~ of the ~~four~~separation ~~different~~outside ~~nucleotides~~of ~~– A~~Asia, CAfrica, the GMiddle East, and TSouth –America. ~~being~~We ~~labeled~~will ~~with~~generally anot ~~different~~ourself ~~color~~commercialize ~~tag.~~these ~~During~~same ~~electrophoresis,~~tests ~~the~~anywhere ~~genetic~~in ~~analysis instrument can analyze~~ the ~~molecules~~world, byor ~~using~~enter into an ~~optical~~agreement ~~device~~with ~~that~~a ~~can~~third ~~“read”~~party ~~the~~to ~~fluorescent~~co-promote ~~tags.~~or ~~Applied~~co-market ~~Biosystems~~CE ~~offers~~sequencers ~~several~~to ~~sequencing~~be ~~chemistries~~used ~~optimized~~with ~~for~~these ~~various~~same ~~customer~~tests ~~requirements.~~outside ~~Samples~~of ~~prepared~~Asia, ~~using~~Africa, ~~these~~the ~~chemistries~~Middle ~~are~~East, ~~then~~and ~~analyzed~~South onAmerica, ~~Applied~~for ~~Biosystems~~the ~~genetic~~same ~~analysis~~three-year ~~instruments~~period.

~~All~~We ofwill ~~Applied~~be ~~Biosystems~~the preferred supplier of Celera Corp.’s ~~genetic~~next ~~analysis~~generation ~~instruments~~real-time ~~now~~instrument. ~~use~~If ~~capillaries,~~we ~~which~~and Celera Corp. are ~~tubes~~unable ~~through~~to ~~which~~agree aon ~~DNA~~terms ~~sample~~for ~~moves~~this ~~during~~instrument, ~~electrophoresis~~Celera Corp. ~~Capillary~~will ~~systems~~be ~~have~~given ~~higher~~access ~~throughput~~to ~~and~~our ~~greater~~intellectual ~~automation~~property ~~than~~to ~~those~~the ~~based~~extent onnecessary ~~slab-gels,~~to anmake ~~older~~or ~~and~~to ~~less~~have ~~efficient~~a ~~technology.~~next ~~Applied~~generation real-time ~~Biosystems~~system ~~offers~~made ~~the~~for ~~following~~Celera ~~genetic~~Corp. ~~analysis~~by ~~instruments:~~a third party.

Instrument	Description
Applied Biosystems 3730xl DNA Analyzer	96 capillary sequencer
Applied Biosystems 3730 DNA Analyzer	48 capillary sequencer
ABI PRISM® 3100 Genetic Analyzer	16 capillary sequencer
ABI PRISM® 3100-Avant Genetic Analyzer	4 capillary sequencer
ABI PRISM® 310 Genetic Analyzer	1 capillary sequencer

There will be no restrictions on development or commercialization of next generation sequencing instruments for either party. Except for the restrictions under a supply agreement between us and Abbott relating to Abbott’s m2000™ system, we will be permitted to sell real-time instruments to any end user for any purpose. Except as provided under the Abbott supply arrangement, we will not OEM real-time instruments to any third party for use in the human in vitro, meaning outside the living body, diagnostics, or HIVD, field unless the third party has obtained a license to our real-time intellectual property in the HIVD field. However, the OEM customer can not commercialize human diagnostic tests for specified conditions on these instruments for a period of three years after the date of the separation.

-Reagents ~~9 -~~

~~Back~~In togeneral, ~~Contents~~we will not knowingly commercialize any sequence-specific primers and probes

~~Applied~~• ~~Biosystems~~for ~~provides~~incorporation ~~servicing~~by ~~and~~a ~~customer~~third ~~support~~party ~~for~~product ~~these~~manufacturer ~~instruments.~~into its human diagnostic products, or

~~The~~• ~~model 3730xl DNA Analyzer has superseded the 96 capillary model 3700 DNA Analyzer, which is no longer offered for sale by Applied Biosystems although Applied Biosystems continues~~ to ~~provide~~a ~~servicing~~clinical ~~and~~laboratory ~~support~~ for ~~this~~performing ~~instrument. At the time of its introduction in 1999, the model 3700 instrument represented a significant advance in DNA sequencing technology because it could perform high~~“home-~~throughput~~brew” ~~analysis of samples in unattended operation. The model 3700 instrument was the principal instrument used by Celera Genomics for sequencing~~ human ~~and~~diagnostic other genomes, and we believe the model 3700 instrument is also the principal instrument used by the Human Genome Project for its sequencing projects. The model 3730xl instrument offers significant advances in data quality, throughput, and cost effectiveness over the model 3700 instrument. Because of these advances, the model 3730xl instrument is able to read longer DNA fragments than its predecessor. For a given sequencing project, this means that customers using the model 3730xl instrument will need to process fewer samples, lowering their preparation costs. Also, by incorporating a more sensitive optical design, the model 3730xl instrument is able to complete the same analysis with lower reagent consumption per sample. The 48-capillary model 3730 instrument, which incorporates the same technological advances as the model 3730xl instrument, can be upgraded to become a 96-capillary model 3730xl instrument.testing

for ~~The~~performing ~~16-capillary~~testing ~~model~~for ~~3100~~specified ~~Genetic~~conditions ~~Analyzer was designed~~ for ~~use~~three byyears ~~academic~~after ~~programs and commercial laboratories. It was~~ the ~~technological~~date ~~precursor~~ of the ~~model 3730 DNA Analyzer and incorporates many of the same features, though it has lower throughput and is less expensive~~separation. ~~The~~This ~~4-capillary~~restriction ~~model~~does ~~3100-Avant~~not ~~Genetic~~apply ~~Analyzer is a reduced capacity instrument derived from the model 3100 Genetic Analyzer and has a lower cost than the model 3100 instrument. A model 3100-Avant Genetic Analyzer can be upgraded~~ to aAsia, ~~model 3100 Genetic Analyzer. Applied Biosystems has discontinued sales of its ABI PRISM 377 DNA Sequencer~~Africa, the ~~last~~Middle ~~of its instruments to use slab-gel technology~~East, ~~although~~or ~~Applied~~South ~~Biosystems~~America. ~~continues~~In toaddition, ~~provide~~we ~~servicing~~will ~~and support for this instrument.~~

In January 2004, Applied Biosystems began marketing the SNPlex™ Genotyping System. The SNPlex system uses “multiplexing,” a scientific term that refers to multiple reactions in a single tube or well, to rapidly identify large numbers of target SNPs in a single biological sample. Using this system, customers can perform studies based on Applied Biosystems’ proprietary SNP reference library or their own customized set of reference SNPs. The system consists of reagents and software for use on the Applied Biosystems 3730 and 3730xl DNA Analyzers. The high-~~throughput~~ ~~genotyping~~6 ~~capabilities of this new system complement the PCR~~-~~based~~ genotyping that can be performed by the Applied Biosystems’ real-time PCR instrument systems. Applied Biosystems expects that researchers seeking to perform genotyping will choose between these alternative technologies based on a variety of factors, including the type of studies they are performing, the scientific requirements of these studies, their access to the needed instrumentation, and their budgets.

InTable February 2004, Applied Biosystems began marketing the VariantSEQr™ Reseqencing System. This system is a comprehensive solution for researchers seeking to perform resequencing, which refers to a method by which the DNA sequence information of one or multiple DNA samples is compared to a known reference sequence to determine whether any genetic variations are present. Scientists may use this information to, for example, better understand the causes and prevention of disease, facilitate the development of better and moreContents

-generally 10not -ourself commercialize, directly or through a distributor, analyte specific reagents, or ASRs, or human diagnostic kits for testing the same specified conditions for a period of three years after the date of the separation.

~~Back~~Licensing ~~to Contents~~

~~targeted~~We ~~therapies~~ and ~~diagnostics, and~~Celera ~~understand individual response to treatment~~Corp. ~~Applied Biosystems believes that the VariantSEQr system~~ will ~~enable~~work ~~scientists~~together ~~to perform~~in ~~resequencing~~licensing ~~studies~~specified ~~that~~Applied ~~were~~Biosystems ~~previously~~intellectual ~~impractical~~property ~~and too expensive~~ to ~~perform~~third ~~because~~parties ofin the ~~amount~~HIVD ~~of time, labor, and expertise needed for experiment setup~~field. ~~The~~Revenues ~~VarianSEQr system integrates reagents and software for use on the Applied~~from ~~Biosystems~~these ~~3730~~licenses ~~and~~will ~~3730xl~~be ~~DNA~~shared ~~Analyzers~~equally ~~and~~between ~~3100~~us and ~~3100-Avant~~Celera ~~Genetic Analyzers~~Corp. Using this system, researchers can perform resequencing of more than four thousand human genes. Applied Biosystems intends to introduce additional resequencing sets for this system that will enable the resequencing of more human genes as well as DNA of non-human genes such as pathogens.

~~Genomic~~Other ~~Assays.~~Provisions Our genomic assays are chemical tests used to measure a DNA or RNA target. A genomic assay combines a set of pre-selected “oligonucleotides” or “oligos,” which are synthetic single-stranded pieces of DNA, with other analytical reagents that allow a researcher to measure differences between samples of genetic material. For example, a gene expression assay is a chemical test to measure how much RNA is being produced from a specific gene in the cells of a tissue sample. A genotyping assay is a chemical test to measure the presence or absence of a specific genetic sequence variation or mutation among DNA samples from different populations that can be used to correlate genetic traits with physical traits such as disease susceptibility or drug response. Applied Biosystems’ genomic assays include several products and services for both gene expression and genotyping, which are described in the following table.

~~Gene~~We ~~Expression~~will ~~Assays~~not ~~Description~~have ~~TaqMan~~any ~~Gene®~~rights ~~Expression~~to ~~Assays~~Celera ~~Ready-made gene expression assays that can be ordered from Applied Biosystems~~Corp.’s ~~inventory~~proprietary ~~TaqMan®~~diagnostic ~~Pre-Designed~~markers ~~Gene~~in ~~Expression~~the ~~Assays~~HIVD ~~Pre-designed~~field, ~~gene~~and ~~expression~~there ~~assays~~will ~~that can~~ be ~~made~~no torestrictions ~~order Custom TaqMan® Gene Expression Assays Service for the manufacture of custom TaqMan chemistry-based gene expression assays based~~ on ~~targets~~Celera Corp.’s ~~supplied~~ability byto ~~researchers~~license ~~SNP~~its ~~Genotyping~~proprietary ~~Assays~~diagnostic ~~Description~~marker ~~TaqMan®~~intellectual ~~SNP~~property. ~~Genotyping~~Celera ~~Assays~~Corp. ~~Ready-made~~will ~~SNP~~not ~~genotyping~~commercialize, ~~assays~~directly ~~that~~or ~~can~~through bea ~~ordered~~distributor, ~~from~~products ~~Applied~~in ~~Biosystems’~~forensics ~~inventory~~and ~~TaqMan®~~applied ~~Pre-Designed~~markets ~~SNP Genotyping Assays Pre-designed SNP genotyping assays~~ that ~~can~~incorporate beintellectual ~~made~~property ~~to order TaqMan® Coding SNP Genotyping Assays Ready-made SNP genotyping assays within protein coding regions of genes~~ that ~~can~~we own beor ~~ordered~~control, ~~from~~unless ~~Applied~~Celera ~~Biosystems’~~Corp. ~~inventory~~obtains ~~Custom~~a ~~TaqMan®~~license ~~SNP~~to ~~Genotyping Assays Service for~~ the ~~manufacture~~relevant ofintellectual ~~custom~~property ~~TaqMan~~from ~~chemistry-based~~us ~~SNP genotyping assays based~~ on ~~targets~~standard ~~supplied~~third-party byterms. ~~researchers~~

~~Since~~In addition, the ~~initial~~three ~~launch~~year oftime ~~its~~restrictions ~~genomic~~on ~~assays~~us indescribed ~~our~~above ~~2002~~do ~~fiscal~~not ~~year, Applied~~apply ~~Biosystems has continued~~ to ~~increase~~ the ~~number~~commercialization of ~~assays~~a ~~available~~competing ~~and~~product ~~currently~~acquired ~~offers~~as apart ~~large library~~ of ~~ready-made~~an ~~and pre-designed~~acquisition ~~SNP~~of ~~genotyping~~a ~~and~~third ~~gene~~party ~~expression~~by ~~assays. This library includes over 1.5 million human SNP genotyping assays~~us, ~~and over~~nor ~~300,000~~would ~~gene~~it ~~expression~~prohibit ~~assays~~an ~~including~~acquiror assays for the human, mouse, and rat genomes. The ability to study the mouse and rat genomes is important to researchers involved in, for example, therapeutic research and development because mice and rats have genes that are believed to correspond to human genes and the results of ~~disease~~us ~~research~~from orcontinuing ~~safety, toxicology, or other studies on mice or rats may therefore be correlated~~ to ~~humans with corresponding genetic characteristics. Applied Biosystems originally~~ ~~launched~~commercialize ~~its~~a ~~genomic~~competing ~~assay~~ product ~~and~~following ~~service~~an ~~lines~~acquisition. ~~under the names “Assays-on-Demand,” which included its ready-made assays, and “Assays-by-Design,” which~~

-Invitrogen 11Merger -Agreement

~~Back~~On June 11, 2008, we entered into an Agreement and Plan of Merger with Invitrogen Corporation and Atom Acquisition, LLC, a direct wholly-owned subsidiary of Invitrogen. Pursuant to ~~Contents~~the Invitrogen Merger Agreement, we will merge with and into Atom Acquisition, with that entity continuing as the surviving entity and a direct wholly-owned subsidiary of Invitrogen.

~~included~~Under ~~its~~the ~~service~~terms ~~for~~of the ~~manufacture~~Invitrogen Merger Agreement, holders of ~~custom~~Applied ~~assays~~Biosystems stock will receive $17.10 in cash and 0.4543 shares of Invitrogen ~~During~~common ~~our~~stock ~~2004~~for ~~fiscal~~each ~~year~~share of Applied Biosystems stock they own. Alternatively, holders of Applied Biosystems ~~renamed~~stock ~~these~~may ~~product~~elect ~~lines~~to ~~and~~receive ~~expanded~~either ~~them~~$38.00 in cash, or 0.8261 shares of Invitrogen common stock, for each share of Applied Biosystems stock they own, subject to ~~include~~proration. If the ~~pre~~20-~~designed~~day ~~assays~~volume-weighted average price per share, or VWAP, of Invitrogen’s common stock is below $46.00 three business days prior to the close of the transaction, each holder of Applied Biosystems stock will ~~described~~also ~~above~~receive an additional cash payment of up to $2.31 with respect to each share of Invitrogen common stock it receives in the merger. The actual amount of this additional cash payment will be based on a formula set forth in the Merger Agreement, and is intended to maintain a total value of $38.00 per share of Applied Biosystems stock, for holders who are paid all or part of the merger consideration in shares of Invitrogen common stock, if the Invitrogen VWAP three business days prior to the closing is within the range of $43.69 to $46.00.

~~Researchers~~Upon ~~traditionally~~completion ~~have~~of ~~used~~the ~~“home brew” assays~~transaction, ~~which~~Invitrogen ~~are~~will ~~assays~~expand ~~that~~its ~~researchers~~board ~~both~~of ~~design~~directors ~~and~~from nine ~~prepare~~to ~~themselves~~twelve inmembers ~~their~~and ~~laboratories,~~appoint athree ~~process~~of ~~that~~our iscurrent ~~relatively~~directors ~~time~~to ~~consuming~~the ~~and~~board ~~expensive~~of Invitrogen. ~~Applied~~The ~~Biosystems~~parties ~~believes~~currently ~~that~~expect ~~its~~the ~~ready-made~~merger ~~and pre-designed genomic assays offer significant advantages~~ to ~~researchers~~be ~~compared~~completed ~~with~~in ~~home~~the ~~brew~~fall ~~assay~~of ~~design~~2008. ~~These advantages include:~~

•- ~~facilitation~~7 of- experiments with many genes in parallel; • substantial reduction in experiment setup time; • decreased assay cost; and • creation of a set of standard and validated assays that enable comparisons of data between laboratories.

Table Applied Biosystems’of SNP genotyping and gene expression assays are designed to be used with Applied Biosystems’ real-time PCR systems.Contents

~~Microarrays.~~Completion ~~Applied~~of ~~Biosystems offers~~ the ~~Applied~~Invitrogen ~~Biosystems~~merger ~~Expression~~is ~~Array~~subject ~~System~~to ~~for~~conditions ~~gene~~specified ~~expression~~in ~~analysis.~~the ~~This~~Merger ~~system~~Agreement, ~~combines~~including (i) adoption ~~“microarray”~~of ~~technology~~the ~~and~~Merger aAgreement ~~proprietary~~by ~~“chemiluminescence”~~the ~~technology~~Company’s ~~and~~stockholders, ~~was~~(ii) Invitrogen ~~designed~~stockholders’ toapproval ~~detect~~of the ~~expression~~issuance of ashares ~~greater~~of ~~number~~Invitrogen’s ofcommon ~~genes,~~stock ~~with~~in ~~higher~~the ~~sensitivity~~merger and ~~specificity,~~approval ~~while~~of ~~using~~an ~~less~~amendment ~~biological~~to Invitrogen’s ~~sample,~~certificate ~~than~~of ~~existing~~incorporation ~~commercially-available~~to ~~microarray~~increase ~~technologies.~~the ~~This~~number ~~system~~of isauthorized ~~highly~~shares ~~sensitive~~of ~~because~~Invitrogen’s itcommon ~~can~~stock, ~~detect~~(iii) the ~~low~~effectiveness ~~levels~~ of ~~gene~~Invitrogen’s ~~expression,~~registration ~~and~~statement ~~highly~~on ~~specific~~Form ~~because~~S-4 ofwith ~~its~~respect ~~accuracy~~to inthe ~~identifying~~merger and the issuance ~~presence~~ of ~~expressed~~Invitrogen’s ~~genes~~common ~~without~~stock ~~falsely~~in ~~“reading”~~the merger, and (iv) the ~~presence~~receipt of ~~expression~~approval ~~from~~for ~~other~~the ~~genes.~~European ~~Applied~~Community ~~Biosystems~~Merger ~~commenced~~Regulation ~~sales~~as ofwell ~~this~~as ~~product~~certain inother ~~April~~foreign ~~2004~~antitrust or competition laws.

~~Microarray~~We ~~technology~~and ~~involves~~Invitrogen ~~the~~have ~~miniaturization~~each ofmade ~~reactions~~customary onrepresentations, awarranties, ~~single~~and ~~consumable~~covenants ~~product~~in tothe ~~enable~~Merger ~~a large~~Agreement, ~~number~~including, ofamong ~~simultaneous~~others, ~~reactions~~that (a) each orof ~~analyses.~~we ~~Applied~~and ~~Biosystems’~~Invitrogen ~~microarrays~~will ~~are~~cause ~~small,~~a ~~porous~~meeting ~~nylon~~of ~~plates~~its ~~that~~stockholders ~~can~~to be ~~used~~held to ~~analyze~~consider ~~in parallel~~ the ~~expression of~~adoption ~~approximately~~and ~~28,000~~approval ~~human~~of ~~genes in a sample. The microarrays are used in combination with~~ the ~~1700~~Merger ~~Chemiluminescent~~Agreement ~~Microarray~~and ~~Analyzer,~~approval anof ~~instrument~~Invitrogen’s ~~that~~issuance ~~measures~~of ~~gene expression~~its bycommon ~~detecting~~stock ~~chemiluminescence,~~in ~~which is~~ the ~~conversion~~merger, ~~of chemical energy stored within a molecule into light. DNA “probes~~respectively,” ~~which are single-stranded~~and ~~pieces~~(b) our ~~of DNA, are chemically attached to the microarray~~ and ~~designed~~Invitrogen’s toboards ~~cause a chemiluminescent reaction in the presence~~ of ~~expression~~directors ~~targets.~~will ~~The~~recommend ~~DNA~~that ~~probes~~their ~~used~~stockholders ~~for~~adopt ~~this application~~and ~~are~~approve ~~approximately~~the 60Merger ~~bases~~Agreement ~~long.~~and ~~Applied~~approve ~~Biosystems~~Invitrogen’s ~~believes~~issuance ~~the use~~ of ~~chemiluminescence~~its ~~rather~~common ~~than~~stock ~~fluorescence,~~in ~~and~~ the ~~use~~merger, ~~of longer~~as ~~probes~~applicable, ~~results~~subject into ~~higher~~some ~~sensitivity~~exceptions applicable ~~and~~to ~~specificity~~us ~~compared~~specified toin ~~existing~~the ~~commercially-available~~Merger ~~microarray systems~~Agreement.

~~Applied~~The ~~Biosystems~~Merger ~~designed~~Agreement ~~this~~may ~~system~~be terminated under certain circumstances, including, subject to ~~complement~~the terms of the ~~gene~~Merger ~~expression~~Agreement, ~~capabilities~~if our Board of ~~its~~Directors ~~TaqMan chemistry-based~~determines ~~real-time~~to ~~PCR~~accept ~~System~~an ~~products.~~unsolicited ~~Researchers~~“superior ~~performing~~proposal” ~~whole~~(as ~~genome~~that ~~expression~~term ~~studies~~is ~~using~~defined in the ~~Expression~~Merger ~~Array~~Agreement). ~~System~~The ~~can~~Merger ~~validate~~Agreement ~~their~~provides ~~results~~that, if the Merger Agreement is ~~and~~terminated ~~perform~~under ~~further~~certain ~~analysis~~circumstances, onwe ~~Applied~~or ~~Biosystems’~~Invitrogen ~~real-time~~will ~~PCR~~be ~~systems~~required to pay the other a termination fee of $150 million.

The -foregoing 12description -of the Merger Agreement is qualified in its entirety by reference to the Merger Agreement. The Merger Agreement, which is included as an exhibit to this report, provides investors with information regarding its terms and contains representations and warranties of each of us and Invitrogen. The assertions embodied in those representations and warranties are qualified by information in a confidential disclosure schedule delivered in connection with the signing of the Merger Agreement but which is not part of the exhibit. The disclosure schedule contains information that modifies, qualifies, and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties were made as of a specific date, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for purposes of allocating risk between the respective parties rather than establishing matters as facts. Investors should read the Merger Agreement together with the other information concerning us and Invitrogen that each company publicly files in reports and statements with the United States Securities and Exchange Commission.

~~Back~~Scientific toBackground ~~Contents~~

InAll ~~May~~living ~~2004,~~organisms ~~Applied~~contain ~~Biosystems~~biological ~~commenced~~molecules. ~~commercial~~The ~~sales~~most ofnumerous ~~whole~~are ~~genome~~in ~~expression~~the ~~arrays~~categories ~~for~~of: ~~the~~nucleic ~~mouse genome~~acids, ~~and~~which ~~plans~~include toDNA ~~introduce~~and aRNA; ~~whole~~proteins; carbohydrates; ~~genome~~and ~~expression~~lipids. ~~array~~Biological ~~for~~molecules ~~the~~are ~~rat~~typically ~~genome~~much inlarger ~~the~~and ~~future.~~more ~~The~~complex ~~ability~~than tocommon ~~study~~molecules, ~~mouse~~ and ~~rat~~there ~~genomes~~ is ~~important~~a towide ~~researchers~~diversity ~~involved~~ in ~~therapeutic~~the ~~research~~types ~~and~~of ~~development~~biological ~~because~~molecules ~~mice~~present ~~and~~in ~~rats~~living ~~have~~organisms. ~~genes~~These ~~that~~characteristics ~~are~~make ~~believed~~the toanalysis of ~~correspond~~biological tomolecules ~~human~~significantly ~~genes~~more ~~and~~complex than the ~~results~~analysis of ~~disease~~smaller ~~research~~compounds. orKey ~~safety,~~advances ~~toxicology,~~in ortherapeutics ~~other~~have ~~studies~~often oncome ~~mice~~from oran ~~rats~~understanding ~~may~~of ~~therefore~~either beproteins ~~correlated~~or ~~to humans with corresponding genetic characteristics~~DNA.

~~DNA Synthesis. DNA synthesizers produce synthetic single~~-~~stranded~~ ~~pieces~~8 of DNA for genetic analysis. These molecules, referred to as “oligonucleotides” or “oligos,” are an essential reagent for PCR and DNA sequencing and are also used in drug discovery applications. DNA synthesis is used both by companies performing high-~~throughput~~ synthesis as a service as well as individual laboratories that synthesize DNA for their own use. Applied Biosystems offers several models of synthesizers and supporting reagents for the needs of its different customers. Applied Biosystems also provides custom synthesis, in which oligonucleotides are made to order and shipped to customers.

PNA.Table Applied Biosystems has a license, which is exclusive for some applications, to manufacture and sell peptide nucleic acid within various markets including the molecular biology research market. Peptide nucleic acid, which is often referred to as “PNA,” resembles DNA in its chemical structure except that it has a neutral peptide-like “backbone,” whereas DNA has a negatively charged sugar phosphate backbone. The unique chemical structure of PNA enhances its affinity and specificity as a DNA or RNA “probe.” Probes are used in various types of analysis, and are used to “search” for DNA and RNA sequences in a sample by binding to those sequences if they are present. PNA may be used in many areas, including basic research, pharmaceutical discovery, diagnostic development, and food and environmental testing. During our 2002 fiscal year, Applied Biosystems acquired additional rights to PNA technology, particularly exclusive rights in the field of diagnostics, through its acquisition of Boston Probes, Inc. and a party related to Boston Probes. During the fourth quarter of our 2004 fiscal year, Applied Biosystems recorded pre-tax charges of $14.9 million relating to Boston Probes. These charges are described in Note 2 to our fiscal 2004 Consolidated Financial Statements, which are incorporated by reference into Item 8 of this report.Contents

DNA molecules provide instructions that ultimately control the synthesis of proteins within a cell, a ~~Products~~process ~~for~~referred to as gene expression. DNA molecules consist of chemical subunits, called nucleotides, bound in two long strands formed by a chemical “backbone” made up of sugar and phosphate molecules. There are four nucleotides in DNA – adenine, cytosine, guanine, and thymine – often abbreviated with their first letters A, C, G, and T and often referred to as bases. In a DNA molecule, the ~~Proteomics~~nucleotides ~~Market~~in the two strands are bound together in pairs to form a structure that resembles a twisted ladder, which is often referred to as a double helix. The bound pairs of nucleotides, which form the rungs of the ladder, are often referred to as base pairs.

Genes ~~code~~are ~~for~~individual ~~proteins~~segments inof ~~biological~~these ~~organisms,~~DNA ~~and~~molecules ~~proteins~~that ~~are~~carry the ~~key~~specific ~~biological~~information ~~molecules~~necessary ~~that~~to ~~function~~perform inparticular ~~all~~biological ~~aspects~~functions ofincluding, for ~~living~~example, ~~things~~to ~~such~~construct asparticular ~~growth,~~proteins. ~~development,~~Genes ~~and~~may ~~reproduction.~~contain ~~The~~from ~~body~~several ~~may~~dozen ~~also~~to ~~modify~~tens ~~proteins~~of ~~after~~thousands ~~they~~of ~~are~~nucleotides. ~~made~~The entire collection of DNA in ~~cells~~an organism, ~~and~~called ~~such~~the ~~modifications~~genome, ~~referred~~may tocontain asa ~~“post-translation~~wide ~~modifications~~range of nucleotides,” ~~often~~including ~~alter~~as few as 4 million nucleotides in the ~~function~~case of ~~the~~simple ~~modified~~bacteria ~~protein~~and 3.1 ~~These~~billion ~~post-translational~~base ~~modifications~~pairs of nucleotides in the case of human beings. Proteins are ~~not~~the ~~encoded~~key biological molecules that function in ~~the~~all ~~protein’s~~aspects ~~genetic,~~of orliving ~~DNA~~things such as growth, ~~code~~development, and reproduction.

~~Differences~~RNA inmolecules ~~the~~are ~~types~~similar orto ~~amounts~~DNA ~~of specific proteins~~ in ~~biological~~ ~~systems~~structure and are ~~thought~~essential tofor bebiological ~~the~~function ~~primary~~through ~~differences~~a ~~between~~number ~~healthy~~of ~~and~~biochemical activities ~~diseased~~within ~~systems~~the orhuman ~~organs~~body. AThere ~~majority~~are different types of ~~drugs~~ toRNA ~~treat~~molecules, ~~human~~each ~~disease~~of ~~bind~~which tohas ~~and~~a ~~affect~~different ~~proteins~~function. ~~Proteins~~For ~~are~~example, ~~large~~messenger ~~biological~~RNA, ~~molecules~~or ~~made~~mRNA, upthe most widely understood form of ~~peptides~~RNA, acts as an intermediary between DNA and protein, ~~peptides~~transcribing ~~are~~the ~~made~~genetic upcode offrom ~~amino~~DNA ~~acids~~into ~~chemically~~proteins. ~~linked~~Another ~~together~~example inis ~~long~~microRNA, ~~chains~~or ~~and~~miRNA, ~~frequently~~a ~~modified~~class of small RNA molecules discovered by scientists during the ~~addition~~last ~~of chemical~~few ~~units~~years ~~such~~which asare ~~“sugar~~thought ~~chains”~~to orregulate ~~“phosphate~~the ~~groups.”~~activity ~~Customers~~of inmore ~~the~~than ~~proteomics~~half ~~research~~of ~~market~~all known ~~need~~genes. ~~systems~~Several ~~for~~research ~~the~~groups ~~analysis~~have ofprovided ~~proteins~~evidence ~~and~~that ~~peptides~~miRNAs ~~for~~may ~~the~~act ~~purpose~~as ofkey ~~discovery~~regulators of ~~drug~~processes ~~targets,~~such ~~protein~~as ~~therapeutics,~~cell proliferation and ~~diagnostics.~~ ~~Applied~~differentiation, ~~Biosystems~~apoptosis, ~~has~~or ~~developed~~cell ~~products~~death, ~~for~~and ~~the~~fat ~~identification,~~metabolism. ~~characterization,~~

Principally driven by the “biotechnology revolution” and the increasing focus on DNA, researchers are developing a better understanding of -DNA’s 13role -in human disease. An increased appreciation of how DNA ultimately determines the functions of living organisms has generated a worldwide effort to identify and sequence genes of many organisms, including the genes that make up the human genome. We believe the best scientific evidence to date indicates that the number of genes in the human genome that code for proteins is between 25,000 and 30,000. The study of genes and other genetic material of organisms is now commonly referred to as genomics.

~~Back~~The tofield ~~Contents~~of genomics research generally includes three broad categories of analysis, consisting of sequencing, genotyping, and gene expression studies:

~~and~~• ~~measurement~~Sequencing ofis ~~expression~~ performed to determine the exact order of ~~proteins~~the ~~and~~individual ~~peptides~~nucleotides in a DNA strand. ~~Applied~~Sequencing ~~Biosystems’~~was ~~products~~used ~~for~~to identify the ~~proteomics~~nucleotides ~~market~~in ~~are~~the ~~described~~entire human genome and other species. It has also been used to identify naturally occurring genetic variations in the ~~following paragraphs~~human genome, which are referred to as single nucleotide polymorphisms, or SNPs. Scientists believe that SNPs can be correlated with, for example, susceptibility to disease, disease prognosis, therapeutic efficacy, and therapeutic toxicity, and therefore may have diagnostic or therapeutic utility.

~~Mass~~• ~~Spectrometry.~~Genotyping ~~Mass~~is ~~spectrometry~~performed ~~has~~to ~~become very~~determine useful for the analysis of large molecules of biological importance such as proteins. Analysis of proteins and other molecules by mass spectrometry involves the very accurate measurement of the mass, or size, of components in a ~~sample,~~particular ~~such~~sequence asvariant ~~the measurement~~ of ~~the multiple different peptides that make up~~ a ~~defective~~gene ~~protein. The technique involves the measurement of these molecules in instruments using very high vacuum~~ and ~~sensitive~~its ~~electronics~~particular ~~capable~~association ofwith ~~measuring~~an ~~extremely~~individual’s ~~fine~~DNA. ~~differences~~Genotyping ~~in very~~is ~~small~~not ~~quantities~~performed ofto ~~complex~~determine ~~samples~~the ~~with~~complete ~~multiple~~structure ~~components. The technique~~ of ~~mass spectrometry requires that~~ the ~~following~~gene, ~~key~~but ~~elements~~rather beis ~~incorporated~~performed ~~into~~to ~~the instrument:~~determine if

•- A9 ~~unique~~- sample preparation process called “ionization” to charge the molecules for analysis. Applied Biosystems sells instruments with ionization by either a laser based system called “MALDI,” which refers to “matrix assisted laser desorption ionization,” or a high voltage electric system called “ESI,” which refers to “electrospray ionization.” • Mass analysis and detection, which involves the separation and electronic measurement of the mass of molecules and the measurement of the relative amounts present. Applied Biosystems has a variety of mass analysis technologies which separate and measure the mass of molecules in a sample. These include “TOF,” which refers to “time of flight,” which measures mass based on flight time in an electric field under vacuum; and “quadrupole” or “quad,” and “linear ion trap,” both of which measure mass using radio frequencies and electric charges though using related but different technologies.

MassTable spectrometry products are often referred to or named based on their sample preparation and mass analysis technologies. For example, a “MALDI TOF” instrument is an instrument that uses MALDI to charge molecules for analysis and TOF for mass analysis. Also, mass spectrometry instruments are often referred to or named based on whether they are connected to liquid chromatography separation devices, which are used for sample preparation prior to analysis using mass spectrometry. For example, an “LC/MS” system is a liquid chromatography device connected directly to a mass spectrometry instrument, and an “LC/MS/MS” system is a liquid chromatography device coupled with tandem mass spectrometry instruments. Tandem mass spectrometry enables a more detailed and accurate analysis of the components of the molecules being studied.Contents

~~The~~the ~~market~~particular ~~for~~DNA ~~mass~~sequence ~~spectrometry~~variant, istypically ~~served by~~ a ~~wide~~SNP, ~~range~~can ofbe ~~instrument~~associated ~~types~~with, ~~based on a variety of technologies~~ for ~~both ionization and mass analysis and combined together in different combinations in different instruments. The different instrument types~~example, ~~technologies, and~~susceptibility ~~combinations~~to ~~result~~a ~~in differing performance characteristics and price levels, and the suitability of any~~ particular ~~system~~disease ~~for any researcher~~ or ~~research~~response ~~laboratory will~~to ~~depend~~a onparticular ~~the nature of the work being performed and the capital budget of the researcher or research laboratory~~drug.

~~Applied~~• ~~Biosystems~~Gene expression is performed to determine whether a particular gene is expressed, or present, and ~~Applied~~in ~~Biosystems/MDS~~some ~~SCIEX~~cases ~~Instruments~~at what levels, in a ~~joint~~relevant ~~venture~~biological ~~between~~material. ~~Applied~~This ~~Biosystems~~analysis can be used, for example, to measure and ~~MDS~~compare ~~Inc.~~gene ofactivity ~~Canada~~in various biological samples, ~~supply~~such aas ~~broad~~samples ~~family~~from populations of ~~mass~~healthy ~~spectrometry~~and ~~products~~diseased ~~for~~individuals, ~~the proteomics~~or ~~market~~from ~~that~~populations ~~involve~~at different ~~combinations~~stages of ~~these~~disease development. These types of studies may be useful in the development of diagnostic tests and therapeutic treatments.

As researchers learn -more 14about -DNA and RNA, they are also developing a better understanding of the role of proteins in human disease through efforts in the field of proteomics, the study of proteins expressed, or coded, by genes. Proteins are the products of genes and, along with gene expression and modification, are believed to be key drivers and mediators of cellular function and biological system activity. Proteins are large biological molecules made up of peptides, and peptides are made up of amino acids chemically linked together in long chains and frequently modified by the addition of chemical units such as “carbohydrate groups” or “phosphate groups.” The understanding and treatment of disease today involves the study of genes and the proteins they code for, and frequently involves the measurement of a drug’s ability to bind to specific proteins in the body.

~~Back~~Although DNA contains the code for proteins, scientists have discovered that the body may modify proteins after they have been made in cells. These modifications, referred to ~~Contents~~as post-translational modifications, can alter a protein’s function, leading to changes in the biological reactions that take place in cells, which researchers refer to as biological pathways. These post-translational modifications complicate the study of proteins, because scientists studying proteins and seeking to understand their role in health and disease need to know more about the characterization of proteins than just their amino acid sequence, which comes from their genetic, or DNA, code.

~~technologies.~~We ~~Customers~~believe ~~select~~that ~~from~~gene ~~this~~and ~~range~~protein ofresearch ~~product~~will ~~types based~~increase onas ~~their~~companies ~~budgets,~~in ~~workflows,~~the ~~sample~~pharmaceutical ~~types, preferences,~~ and ~~experience.~~biotechnology ~~Under~~industries ~~the~~seek ~~terms~~to ofimprove ~~the~~their ~~joint~~drug discovery ~~venture~~and ~~agreement~~development ~~with MDS Inc~~efforts., ~~Applied~~We ~~Biosystems~~also ~~has~~believe ~~the~~that ~~exclusive~~ongoing ~~worldwide~~drug ~~distribution~~discovery ~~rights~~and todevelopment ~~the~~efforts ~~LC/MS~~will ~~systems~~increase ~~manufactured~~research ~~for~~of ~~the~~cells ~~joint venture~~as byresearchers ~~the~~seek ~~MDS~~to ~~SCIEX~~further ~~Division~~understand ofhow ~~MDS~~drugs ~~Inc.~~work ~~for~~in the ~~analytical instruments market~~body.

The ~~following~~growth ~~table~~in ~~summarizes~~DNA, ~~the~~protein, ~~mass~~and ~~spectrometry instruments~~other ~~offered~~life byscience ~~Applied~~research ~~Biosystems,~~has ~~including~~created ~~those~~the ~~manufactured~~need ~~through~~for ~~its~~systems ~~MDS~~that ~~SCIEX~~facilitate ~~Instruments~~the ~~joint~~collection, ~~venture~~organization, and analysis ~~for~~of the ~~proteomics~~large ~~market:~~amounts of data generated by this research. This demand has led to the development of the science of bioinformatics. The science of bioinformatics seeks to blend biology and computing to transform massive amounts of data into useful information.

Instrument Name	Ionization	Mass Analyzer
Voyager™-DE PRO Biospectrometry Workstation	MALDI	TOF
Voyager™-DE STR Biospectrometry Workstation	MALDI	TOF
4700 Proteomics Discovery System	MALDI	TOF/TOF™ Optics
QSTAR® XL Hybrid LC/MS/MS System	ESI or MALDI	Hybrid quad/TOF (often referred to as a Qq-TOF)
Q TRAP® LC/MS/MS System	ESI	Hybrid quad/linear ion trap
4000 Q TRAP® LC/MS/MS System	ESI or MALDI	Hybrid quad/linear ion trap

Products for the Molecular Biology Market

~~The~~Customers ~~4700 Proteomics Discovery System and the 4000 Q TRAP LC/MS/MS System, both introduced~~ in ~~our 2003 fiscal year, are~~ the ~~most~~molecular ~~recent additions~~biology tomarket ~~this~~use ~~product~~systems ~~line.~~for ~~The 4700 Proteomics Discovery System was designed to address~~ the ~~needs~~analysis of ~~proteomic~~nucleic ~~researchers~~acids ~~for~~including ~~increased~~DNA ~~speed~~ and ~~throughput as well as enhanced data quality and molecular information~~RNA. ~~The~~We ~~4700~~have ~~Proteomics~~developed ~~Discovery~~technologies, ~~System incorporates a high speed MALDI system with a tandem TOF~~instrument ~~mass~~systems, ~~analyzer.~~and ~~Applied~~consumables ~~Biosystems/MDS~~products ~~SCIEX~~that ~~Instruments~~address ~~introduced~~ the ~~4000~~needs Qof ~~TRAP~~a ~~LC/MS/MS~~wide ~~System~~array toof ~~complement the~~applications Qwithin ~~TRAP~~this ~~system. The 4000 Q TRAP system is based on the same linear ion trap technology introduced with the Q TRAP system but the 4000 Q TRAP system~~market, aincluding ~~higher-priced~~for ~~instrument,~~example: ~~has~~basic ~~enhanced~~research; ~~qualitative~~pharmaceutical and ~~quantitative analysis~~diagnostic ~~capabilities.~~discovery ~~Applied~~and ~~Biosystems~~development; ~~believes~~biosecurity ~~these enhancements will enable researchers to combine experiments in a single~~testing, ~~automated~~including ~~system that previously required multiple mass spectrometry instruments~~infectious ordisease ~~were~~analysis; ~~not~~human ~~practical~~identity totesting, ~~perform~~including atforensic ~~all.~~and ~~This~~paternity ~~instrument~~testing; ~~became~~and ~~commercially~~food ~~available~~and ~~during~~environment ~~our~~quality ~~2003 fiscal year~~ and ~~Applied~~ ~~Biosystems/MDS~~safety ~~SCIEX~~testing. ~~Instruments~~These ~~achieved~~technologies, ~~full production capacity in January 2004.~~

~~The~~- ~~4700~~10 ~~Proteomics~~- system, QSTAR system, Q TRAP system, and 4000 Q TRAP system all incorporate mass spectrometry instrumentation with an online link to relevant biological information available by subscription from Applied Biosystems, including annotated protein and genome information, and bioinformatics analysis tools. Applied Biosystems believes that these system enhancements, part of its iScience strategy, will facilitate researchers’ efforts to characterize proteins and their functions in biological systems, including the human body.

InTable September 2004, subsequent to the end of our 2004 fiscal year, Applied Biosystems announced the signing of a definitive agreement with MDS Inc. to expand the scope of their Applied Biosystems/MDS SCIEX Instruments joint venture. Under the terms of the agreement, MDS has agreed to pay U.S. $40 million for a 50 percent interest in intellectual property assets related to current Applied Biosystems MALDI TOF mass spectrometry systems and next-generation products under development, together with a 100 percent interest in some MALDI TOF product-related manufacturing and research and development assets. The parties will each contribute the MALDI TOF and related intellectual property to the joint venture. Applied Biosystems, as part of its responsibilities to the joint venture, will continue to market, sell,Contents

-systems, 15and -consumable products support key methods of analysis, including DNA sequencing, genotyping, and gene expression studies, which are described in further detail above in Item 1 of this report under the heading “Scientific Background.”

~~Back~~PCR toand ~~Contents~~Real-Time PCR Systems and Related Consumables

~~service,~~Polymerase ~~support~~chain reaction, ~~and~~commonly ~~provide~~referred ~~research~~to ~~support~~as ~~for~~PCR, ~~MALDI~~is ~~TOF products. Following~~ a ~~transition~~process ~~period,~~in ~~MDS~~which ~~Inc.,~~a ~~through~~short ~~its~~strand ~~MDS Sciex Division, as part~~ of DNA ~~its~~is ~~responsibilities~~copied tomultiple ~~the~~times, ~~joint~~or ~~venture~~amplified, ~~will~~so ~~assume~~that ~~primary~~it ~~research~~can ~~and~~be ~~development~~more asreadily ~~well~~detected asand ~~full~~analyzed. ~~manufacturing~~Our ~~responsibility~~PCR ~~for MALDI TOF~~ product ~~lines.~~line ~~The existing~~includes ~~products~~amplification ~~covered by this agreement include the Voyager~~ instruments, ~~and~~known ~~the~~as ~~4700~~thermal ~~Proteomics~~cyclers, ~~Discovery~~several ~~System~~combination ~~referred~~thermal tocyclers inand ~~the~~PCR ~~table~~detection ~~above.~~systems, ~~The~~known ~~other products~~as ~~referred~~real-time toPCR ~~in the table are already included within the joint venture. The transaction is subject to customary closing conditions~~systems, ~~including approval by regulatory authorities in the U.S.~~ and ~~Canada~~reagents, disposables, and issoftware ~~expected~~necessary tofor ~~close in or before~~ the ~~fourth~~PCR ~~calendar~~amplification ~~quarter~~and ofdetection ~~2004~~process.

In addition to the range of mass spectrometry instruments and software used to operate those instruments, Applied Biosystems has developed and commercialized reagents for quantifying, or measuring, levels of molecules in one or more samples, including reagents using ICAT® reagent technology created by Dr. Ruedi Aebersold and others while at the University of Washington. The ICAT chemistry “tags” or affixes a chemical marker to a peptide containing a specific type of amino acid known as “cysteine.” This process, when used with various mass spectrometry systems, enables the quantitation and identification of proteins in experiments that compare normal and diseased cells or samples. In our 2004 fiscal year, Applied Biosystems expanded its family of quantitiationfollowing ~~chemistries~~table ~~for~~lists ~~molecular identification with~~ the ~~development~~thermal ~~and~~cyclers commercialization of iTRAQ™ reagents. Using the iTRAQ™ reagents, researchers can affix chemical markers to all types of peptides within a protein-rich mixture, enabling the quantitation of a greater number of proteins, including the ability to detect post-translational modifications, and enabling the comparison of expression patterns within up to four samples in the same experiment. Applied Biosystems believes these new reagents complement the ICAT reagents because they enable experimentation that inwe ~~many cases cannot be accomplished with the ICAT reagents. The ICAT and iTRAQ™ reagents~~ offer: ~~laboratories a way of running protein experiments using mass spectrometry and are the foundation of an expanding family of Applied Biosystems consumables, software, and systems for proteomics.~~

Biochromatography. Biochromatography is an important step in both research applications and manufacturing of “biopharmaceuticals,” which refers to protein-based pharmaceutical products. Researchers studying complex protein samples through mass spectrometry must first prepare these samples and separate them into the components to be analyzed. A common and important technique for the separation, and in some cases purification, of biological molecules is generally referred to as “biochromatography,” a process by which molecules are separated according to one or more of their physical properties such as their size, shape, charge, or affinity to other molecules.


Instrument		Capacity/Speed

9800 Fast PCR System		96 well/Fast
GeneAmp^® PCR System 9700 Thermal Cyclers		60, 96, Dual 96, and Dual 384 well
Applied Biosystems 2720 Thermal Cycler		96 well
Veriti™ 96-Well Fast Thermal Cycler		96 well/Fast

~~Applied~~Technologically, ~~Biosystems’~~these ~~biochromatography~~instruments ~~media~~are ~~products~~distinguished ~~are~~among ~~used~~each inother ~~“liquid~~primarily ~~chromatography.”~~based ~~Liquid~~on: their capacity for ~~chromatography~~simultaneously isprocessing amultiple ~~process~~samples, ~~that~~determined ~~separates~~based ~~molecules~~on bythe ~~passing~~number ~~them,~~of inconsumable a“wells” ~~liquid,~~that ~~across~~can abe ~~stationary~~accommodated; orthe ~~solid~~speed ~~medium~~at ~~such~~which asthe ~~chemically~~thermal ~~modified~~cycling ~~plastic~~process ~~beads~~is ~~specially~~completed; and features supporting the development of ~~designed~~experimentation ~~for~~protocols ~~this~~to increase the accuracy and efficiency of the PCR process. ~~Separation~~The ~~occurs~~Veriti ~~because~~thermal ~~different~~cycler ~~molecules~~uses our first-of-its-kind Veriflex™ Blocks temperature-control technology, which ~~have~~allows ~~different~~users ~~affinities~~to simultaneously control the temperature in six separate blocks within the thermal cycler to determine the ~~beads,~~optimum ~~will~~temperature ~~migrate,~~protocols orfor ~~pass,~~the ~~across~~particular sample being copied. This temperature control technology differentiates the ~~beads~~Veriflex atBlocks ~~different~~from current gradient ~~rates~~technologies offered by other companies, which less-precisely regulate gradients of temperature across a single block within the instrument.

~~Applied~~The ~~Biosystems’~~following ~~biochromatography~~table ~~media~~lists ~~products such as its POROS® beads are used in~~ the ~~proteomics~~PCR ~~discovery~~systems ~~process~~that ~~and~~we ~~in the development and manufacturing of biopharmaceuticals. Applied Biosystems believes its biochromatography products~~ offer ~~productivity~~: ~~advantages, enabled by high speed separation combined with high capacity and resolution, over competitive product offerings.~~

- 16 -


Instrument		Capacity/Speed

Applied Biosystems 7900HT Real-Time PCR System		96 or 384 well/Fast
Applied Biosystems 7500 Real-Time PCR System		96 well/Available as Fast
Applied Biosystems 7300 Real-Time PCR System		96 well
StepOne™ Plus Real-Time PCR System		96 well/Fast
StepOne™ Real-Time PCR System		48 well/Fast

~~Back~~All of these real-time PCR instruments are enhanced versions of our thermal cyclers, which are described above. However, unlike a general PCR instrument, which is used only to ~~Contents~~amplify a sample, these instruments are used to detect and for some applications quantify a sample during the PCR amplification process for purposes of conducting, for example, gene expression or genotyping analysis. Technologically, these instruments are distinguished among each other primarily based on: their capacity for simultaneously processing multiple samples, determined based on the number of consumable “wells” that can be accommodated; the speed at which the detection and quantification process is completed and the level of automation; and the applications for which the instruments can be used.

~~Protein~~- ~~Sequencing~~11 ~~and~~- Synthesis.Proteins are large biological molecules and are made of peptides, and peptides are made of amino acids chemically linked together in long chains. Protein sequencers provide information about the sequence of amino acids that make up a given protein by chemically disassembling the protein and analyzing the amino acids. The Procise® Protein Sequencing system uses a protein sequencing chemistry known as Edman chemistry to sequence a peptide, one amino acid at a time, and in turn to identify or characterize the protein that contains the peptide.

SyntheticallyTable produced peptides are used in understanding antibody reactions and as potential drugs or drug analogs. The Applied Biosystems 433A Peptide Synthesis system is designed for the quality synthesis of peptides, peptide analogs, and small proteins. Applied Biosystems also manufactures and sells proprietary synthesis reagents and chemicals for use with this and other products.Contents

The model 7900HT Fast system and the model 7500 Fast system are our most advanced real-time PCR systems, ~~Products~~and can complete the detection and quantification process substantially faster than other instruments that we offer. The model 7900HT systems can incorporate optional robotics to enable large-scale gene expression and genotyping studies. The StepOne™ and higher capacity StepOne™ Plus systems were developed in response to demand for highly functional but easy to use and less expensive real-time PCR systems. The StepOne Plus system was added to the ~~Small~~product ~~Molecule~~line ~~Analysis~~in ~~Market~~our 2008 fiscal year.

~~Applied~~Generally, ~~Biosystems~~the ~~has~~PCR aand ~~number~~real-time ofPCR ~~mass~~product ~~spectrometry~~lines ~~products~~are ~~that~~designed ~~life~~to ~~science~~offer ~~researchers~~instruments suitable for use toby ~~analyze~~a wide range of ~~small~~users, ~~molecules~~from individual researchers to research laboratories conducting high-volume research. ~~Small~~The ~~molecules~~suitability ~~studied~~of inany ~~life~~particular ~~science~~system for any researcher or research ~~are~~laboratory ~~typically~~will ~~smaller~~depend ~~than~~on ~~peptides~~the nature of the work being performed and ~~include,~~the capital budget of the researcher or research laboratory. We provide servicing and customer support for ~~example:~~the PCR and real-time PCR systems described above, as well as some previously-marketed systems that remain in use by some customers.

•Our ~~some~~PCR ~~drugs;~~product •line ~~metabolites,~~also includes reagents and disposables for use in the ~~compounds~~PCR ~~resulting~~process. ~~from~~PCR reagents include specialized enzymes used to enable the ~~body’s~~PCR amplification ~~acting~~process. ~~upon~~Enzymes represent a ~~drug,~~class ~~and~~of ~~present~~proteins inwhich ~~bodily~~activate ~~fluids~~biological ~~such~~processes. asPCR ~~blood~~enzymes orare ~~urine;~~optimized •to ~~other~~efficiently ~~small~~make ~~biological~~copies ~~molecules~~of ~~found~~a ~~naturally~~segment inof DNA while exposed to the ~~human~~high ~~body~~temperatures ~~such~~required asby ~~hormones,~~the ~~which~~PCR ~~affect~~process. ~~physiological~~We ~~activity~~offer bya range ~~sending~~of ~~signals~~products tocontaining ~~cells~~these ~~and~~PCR ~~organs,~~enzymes. ~~and~~These ~~cholesterol,~~include ~~which~~products ~~the~~for ~~body~~use ~~uses~~in general PCR, as well as special formulations designed for ~~example,~~real-time PCR applications. Disposables include plastic devices which are used to ~~build~~hold ~~cells~~DNA samples and ~~produce~~PCR reagents ~~hormones;~~throughout ~~and~~the •PCR ~~various~~amplification ~~trace~~process. ~~contaminants~~A innumber ~~food,~~of ~~beverage,~~different ordisposable ~~environmental~~devices ~~applications~~are available for use with our full range of PCR and real-time PCR instruments.

~~Mass~~Our ~~spectrometry~~real-time ~~instruments~~PCR ~~are~~systems ~~especially~~enable ~~important~~TaqMan® ~~for~~chemistry, ~~pharmaceutical~~a ~~researchers~~unique ~~studying~~PCR ~~“pharmacokinetics,”~~technology ~~the~~that can be used both for measurement of gene expression and for genotyping. TaqMan gene expression chemistry detects the ~~bodily~~product ~~absorption,~~of ~~distribution,~~PCR ~~metabolism,~~amplification and ~~excretion,~~quantifies orthe ~~elimination,~~amount of the ~~drugs~~target gene sequence present in the sample during the amplification process. ~~The~~This Utechnique is referred to as quantitative real-time PCR.S. ~~Food~~The ~~and~~real-time ~~Drug~~PCR ~~Administration~~systems ~~and~~analyze ~~other~~a ~~regulatory~~sample ~~agencies~~by ~~require~~measuring ~~pharmacokinetic~~fluorescence ~~information~~resulting ~~for~~from the ~~approval~~reaction of ~~drugs~~the TaqMan chemistry and the sample. This ~~application~~product ~~requires~~line ~~instruments~~has ~~which~~been ~~have~~widely aaccepted ~~high~~in ~~resolution,~~the orscientific ~~the~~research ~~ability~~market. toOur ~~distinguish~~TaqMan ~~among~~Gene ~~different~~Expression ~~molecules~~Assays ~~with~~and ~~similar~~SNP ~~masses,~~Genotyping ~~and~~Assays ~~high~~are ~~sensitivity,~~TaqMan orchemistry-based ~~the~~assays ~~ability~~designed tofor ~~identify~~use ~~very~~on ~~small~~our ~~quantities~~real-time ofPCR systems. ~~molecules,~~These ~~because~~products are described below under the ~~amounts~~heading of“Products for the ~~drugs~~Molecular ~~and~~Biology ~~their~~Market–Genomic ~~metabolites~~Assays.” ~~are~~TaqMan ~~very~~chemistry ~~low~~is our most sensitive and ~~the~~specific ~~mixtures~~method ~~are~~for ~~very~~real-time ~~complex~~PCR. ~~Researchers~~However, ~~can~~our ~~perform~~real-time ~~the~~PCR ~~required~~systems also ~~pharmacokinetic~~support ~~analysis~~some ~~with~~other ~~LC/MS/MS~~commonly ~~systems~~used ~~that~~real-time ~~have~~PCR ~~been~~methods ~~developed~~ and ~~refined~~we byprovide ~~Applied~~reagents ~~Biosystems/MDS~~to ~~SCIEX~~enable ~~Instruments~~those other methods.

We offer a proprietary ~~Mass~~TaqMan ~~spectrometry~~Array, ~~instruments~~which ~~are~~was ~~growing~~jointly indeveloped ~~importance~~with in3M ~~food~~Company, ~~beverage,~~ and ~~environmental~~a modified version of our model 7900HT system to support the TaqMan Arrays for real-time PCR applications. ~~Various~~The ~~regulatory~~TaqMan ~~bodies~~Arrays ~~worldwide~~are ~~monitor~~consumable ~~quality~~laminated plastic and metal sheets containing 384 fluid channels and wells, sometimes referred to by scientists as microfluidic cards. They are designed for use instead of ~~food~~plastic trays with sample wells generically referred to as microtiter plates, ~~beverages~~which are used in many types of laboratory analyses, including gene expression or genotyping studies on our instruments. The fluid channel design of the TaqMan Arrays enables researchers to automatically route a sample to the reaction wells rather than doing this by hand or using expensive and ~~water~~complex robotics as is required when using microtiter plates. ~~For~~We ~~these~~offer ~~applications,~~the weTaqMan ~~believe~~Arrays ~~that~~pre-loaded ~~speed~~with ofour ~~data~~inventoried ~~acquisition~~human, ~~increased sensitivity~~mouse, and ~~high~~rat ~~resolution~~TaqMan ~~together~~Gene ~~with~~Expression ~~ease~~Assays. ofUsing ~~use~~an ~~are~~on-line ~~critical~~ordering system, customers can select the assays to ~~satisfying~~be pre-loaded ~~customer~~onto, ~~needs.~~

- 1712 -

BackTable toof Contents

~~Applied~~as ~~Biosystems/MDS~~well ~~SCIEX~~as ~~Instruments~~the ~~offers~~configuration of those assays on, the TaqMan Arrays. We also offer a ~~broad~~limited ~~product~~selection ~~line~~of inventoried TaqMan Arrays that are pre-loaded with a fixed panel of ~~mass~~gene ~~spectrometry~~expression ~~instruments~~assays. ~~for~~For ~~small~~example, ~~molecule~~we offer Gene Signature Panels used to detect and ~~pharmacokinetics~~quantify ~~researchers:~~the expression of difficult-to-detect genes that we believe are important to the drug research needs of the pharmaceutical industry. We also offer Human and Rodent MicroRNA Panels used to identify and quantify some of the most prevalent microRNAs. Our TaqMan assays are described below under the heading “Products for the Molecular Biology Market–Genomic Assays.”

Instrument Name	Ionization	Mass Analyzer
API 2000™ LC/MS/MS System	ESI or MALDI	Triple quad
API 3000™ LC/MS/MS System	ESI	Triple quad
API 4000™ LC/MS/MS System	ESI	Triple quad
QSTAR® XL Hybrid LC/MS/MS System	ESI or MALDI	Hybrid quad/TOF (often referred to as a Qq-TOF)
Q TRAP® LC/MS/MS System	ESI	Hybrid quad/linear ion trap
4000 Q TRAP® LC/MS/MS System	ESI or MALDI	Hybrid quad/linear ion trap

Genomic Assays

~~The~~Our ~~API~~genomic ~~product line~~assays ~~instruments~~are ~~offer~~chemical atests ~~range~~used ofto ~~sensitivity~~measure ata ~~varying~~DNA ~~costs,~~or ~~the~~RNA ~~API 4000 system being the most sensitive~~target. ~~This~~A ~~product~~genomic ~~line~~assay ~~has~~combines been widely accepted by pharmaceutical researchers, and we believe the API 4000 system is the most sensitive triple quad mass spectrometry instrument available to this research market. The 4000 Q TRAP System has the same triple quad sensitivity but is a ~~more~~set ~~versatile instrument because~~ of ~~its~~ ~~hybrid~~pre-selected ~~mass analyzer. The QSTAR XL Hybrid LC/MS/MS System offers higher resolution and mass accuracy~~oligonucleotides, ~~or the~~sometimes ~~ability~~referred to ~~accurately~~as ~~determine the mass of a molecule~~oligos, ~~than the API 2000, API 3000, API 4000, and Q TRAP systems,~~ which ~~is particularly~~are ~~useful~~synthetic tosingle-stranded ~~researchers seeking~~pieces ~~to identify~~of ~~unknown molecules such as metabolites. General information about mass spectrometry instruments and the technologies they incorporate~~DNA, ~~and~~with ~~also additional~~other ~~information~~analytical ~~about~~reagents ~~some~~that ofallow ~~the~~a ~~instruments referred~~researcher to inmeasure ~~the~~differences ~~table~~between ~~above,~~samples ~~is set forth above in Item 1~~ of ~~this~~genetic ~~report~~material. ~~under the~~This ~~headings~~product ~~“Applied~~line ~~Biosystems Group~~includes ~~Business – Products for~~ the ~~Proteomics~~following ~~Market~~types –of ~~Mass~~assays: ~~Spectrometry.”~~

In• ~~our~~Gene ~~2004~~expression ~~fiscal year~~assays, ~~the~~which ~~Applied~~are ~~Biosystems/MDS~~chemical ~~SCIEX~~tests ~~Instruments~~used ~~joint venture announced a novel “Tissue Imaging” technology for the QSTAR XL Hybrid LC/MS/MS System that allows researchers~~ to ~~generate~~measure ~~precise~~how ~~2-dimensional~~much ~~and~~messenger ~~3-dimensional~~RNA, ~~images~~or ~~of low molecular weight drug compounds in tissue samples~~mRNA, ~~and~~is ~~displays~~being ~~the~~produced ~~spatial distribution of drugs within tissue samples~~ from a ~~human~~specific orgene ~~other~~in ~~animal.~~the ~~This~~cells ~~information~~of ~~can be used to determine whether~~ a ~~drug is reaching its intended target site within the~~ tissue sample ~~or is accumulating in the targeted tissue~~. Traditionally researchers attached radioactive molecules to small molecule drugs to track where the drug went and accumulated in the body. However, attaching the radioactive molecules can alter the drug properties, including where it goes in the body, frequently leading to inaccurate tissue distribution and toxicology information. Applied Biosystems believes Tissue Imaging by mass spectrometry represents a breakthrough technology for monitoring the safety and efficacy of small molecule drugs because it does not alter the properties of the drugs being studied.

~~Cell~~• ~~Biology~~MicroRNA assays, which are gene expression assays used for the detection and ~~Functional~~quantitation ~~Proteomics~~of ~~Products~~a particular type of RNA referred to as microRNA.

~~Applied~~• ~~Biosystems~~Genotyping ~~has developed~~assays, ~~and~~which ~~expects~~are tochemical ~~continue developing,~~tests ~~products~~ used ~~for the study of cell and biological molecule function. Applied Biosystems intends~~ to ~~market existing~~measure ~~products~~the ~~and~~presence ~~develop~~or ~~new~~absence ~~products~~of ~~within~~a ~~this~~specific ~~field.~~genetic ~~These~~sequence ~~products~~variation ~~are~~or ~~intended~~mutation ~~for~~among ~~use~~DNA bysamples ~~researchers~~from ~~studying the~~different ~~complex~~populations ~~biological reactions~~ that ~~take~~can ~~place~~be inused ~~cells, which researchers refer~~ to ascorrelate ~~“biological~~genetic ~~pathways,” and~~traits ~~how~~with ~~these~~physical ~~pathways~~traits ~~relate~~such toas ~~human~~ disease. ~~These~~susceptibility ~~studies~~or ~~are needed in a variety of fields, including in particular~~ drug ~~discovery and development~~response. ~~Applied~~The ~~Biosystems~~sequence ~~currently~~variants ~~offers~~that ~~the~~our ~~8200~~genotyping ~~Cellular Detection~~assays ~~System,~~test ~~which~~for isare ~~used~~referred ~~by researchers~~ to ~~study cellular function. The system uses proprietary scanning technology to rapidly detect and measure fluorescence associated with objects~~ as ~~small as a~~ single ~~cell.~~nucleotide ~~Applied Biosystems~~polymorphisms, ~~also~~or ~~markets a line of Tropix® chemiluminescent reagent products used by~~ SNPs.

The following table provides further detail on the assays that we offer. These assays are designed to be used with our TaqMan® chemistry-based 18real-time PCR systems, and some of them can be ordered on the TaqMan® Arrays, which are discussed above in this description of our business under the heading “PCR and Real-Time PCR Systems and Related Consumables.”

~~Back~~- to13 ~~Contents~~-

researchersTable studying cell function. Chemiluminescence is the conversion of chemical energy stored within a molecule into light, and the detection of chemiluminescence is another technology used to study cellular function. Applied Biosystems also licenses its chemiluminescence technology for adaptation for various types of diagnostic tests and drug discovery assays. These chemiluminescent-based tests and assays can be used in combination with a variety of detection instruments. Contents

~~During~~Gene ~~our~~Expression ~~2002~~Assays ~~fiscal~~Description ~~year,~~TaqMan® ~~Applied~~Gene ~~Biosystems~~Expression ~~entered~~Assays ~~into~~(Inventoried) aReady-made ~~licensing,~~gene ~~supply,~~expression ~~and~~assays ~~collaboration agreement~~that ~~with~~can ~~HTS~~be ~~Biosystems,~~ordered ~~Inc.~~from toour ~~jointly~~inventory ~~develop~~TaqMan® ~~and~~Gene ~~commercialize~~Expression aAssays ~~functional~~(Made ~~proteomics~~to ~~system~~order) ~~based~~Pre-designed ongene ~~HTS~~expression ~~Biosystems’~~assays ~~“surface~~that ~~plasmon resonance”~~can ~~and~~be ~~“high-throughput~~made ~~affinity~~to ~~screening”~~order ~~technologies.~~Custom ~~Pursuant~~TaqMan® toGene ~~this~~Expression ~~agreement,~~Assays Service for the ~~parties~~manufacture ~~developed,~~of ~~and~~custom ~~Applied~~TaqMan ~~Biosystems~~chemistry-based ~~began marketing,~~gene aexpression ~~proteomics~~assays ~~instrument~~based ~~referred~~on totargets assupplied ~~the~~by ~~8500~~researchers ~~Affinity~~TaqMan® ~~Chip~~MicroRNA ~~Analyzer.~~Assays ~~However,~~Ready-made inmicroRNA ~~June~~expression ~~2004~~assays ~~Applied~~that ~~Biosystems~~can ~~decided~~be toordered ~~exit~~from ~~this~~our ~~product~~inventory ~~line~~SNP ~~based on~~Genotyping aAssays ~~strategic~~Description ~~analysis~~TaqMan® ofPre-Designed ~~various~~SNP ~~business~~Genotyping ~~and~~Assays ~~technology~~Pre-designed ~~investments.~~SNP ~~Accordingly,~~genotyping ~~Applied~~assays ~~Biosystems~~that ~~exercised~~can ~~its~~be ~~right~~made to ~~terminate~~order Custom TaqMan® SNP Genotyping Assays Service for the ~~agreement~~manufacture ~~with~~of ~~HTS~~custom ~~Biosystems and~~TaqMan ~~return~~chemistry-based ~~rights~~SNP togenotyping ~~the~~assays ~~product~~based ~~line~~on ~~and~~targets ~~related~~supplied ~~technology~~by toresearchers ~~HTS~~TaqMan® ~~Biosystems.~~Drug ~~The~~Metabolism ~~termination~~Genotyping ~~will~~Assays beReady-made ~~effective~~SNP nogenotyping ~~later~~assays ~~than~~specifically ~~November~~targeting ~~30,~~genes ~~2004.~~involved in drug metabolism that can be ordered from our inventory

Our library of ready-made and pre-designed SNP genotyping and gene expression assays includes ~~Applied~~millions ~~Genetic~~of ~~Analysis~~human ~~Products~~SNP genotyping assays and almost one million gene expression assays for the human, mouse, rat, Arabidopsis (plant), Drosophila (fruit fly), C. elegans (worm), Rhesus (monkey), zebrafish (fish), canine (dog), and bovine (cow) genomes. The ability to study the mouse and rat genomes is important to researchers involved in, for example, therapeutic research and development. Mice and rats have genes that are believed to correspond to human genes and the results of disease research or safety, toxicology, or other studies on mice or rats may therefore be correlated to humans with corresponding genetic characteristics. The other species for which we provide assays are also scientifically important model organisms, used in for example medical, agricultural, plant science, or other research. We continue to evaluate the addition of other species based on research needs.

~~Applied~~The ~~Biosystems~~microRNA ~~has~~assays ~~developed,~~product ~~and~~line ~~expects~~currently toincludes ~~continue~~over ~~developing~~1,500 ~~products~~human, mouse, rat, Arabidopsis, Drosophila, and ~~services~~C. ~~specially designed~~elegans ~~for~~miRNA ~~specific~~assays. ~~markets~~Currently, ~~with~~all aof ~~focus~~these assays are based on sequences in the ~~areas~~Wellcome ofTrust Sanger ~~human~~Institute ~~identification,~~miRNA ~~biosecurity~~Registry, ~~and~~which ~~environmental~~is ~~and~~the ~~food~~industry ~~testing~~standard reference miRNA database. We offer some of these assays as fixed panel TaqMan Arrays.

~~For~~The ~~example,~~availability ~~Applied~~of ~~Biosystems~~our ~~develops~~genomic ~~systems~~assays ~~that~~offers ~~are~~advantages ~~used by crime laboratories and other agencies~~ to ~~identify individuals based on their DNA~~researchers, ~~commonly~~particularly ~~referred~~those towho asmight ~~forensic~~otherwise ~~analysis.~~seek Applied Biosystems’ forensic analysis systems are used in criminal cases where DNA extracted from biological evidence found at the crime scene is compared with DNA from suspects or profiles stored in databases of potential suspects. The use of DNA in some criminal investigations has been shown to ~~help~~design ~~solve crimes~~ and ~~reduce~~then ~~the~~prepare ~~cost~~assays ofon ~~the~~their ~~investigation~~own, ~~and we believe there is~~ a ~~growing~~relatively ~~recognition~~time ofconsuming ~~the validity of the use of DNA testing~~ and ~~DNA~~expensive ~~databases for this purpose~~process. We ~~This~~believe isthat ~~evidenced in particular by a growing number of governmental initiatives in~~ the U.S. and abroad to finance the analysis of DNA from crime scenes, including the existing backlog of samples from past crimes, and build databases of potential suspects. This is also evidenced by the increasing use of ~~DNA~~our ~~analysis~~assays tocan ~~exonerate~~reduce ~~individuals~~experiment ~~previously~~setup ~~convicted of crimes by testing archived evidence. Applied Biosystems’ forensic analysis systems are also used to identify human remains~~time, ~~and~~decrease ~~for~~assay ~~paternity testing. During our 2004 fiscal year~~cost, ~~Applied Biosystems began marketing a new system to increase the efficiency~~ and ~~effectiveness~~accordingly offacilitate ~~forensic~~experiments ~~analysis~~with bymany ~~providing~~genes ~~a qualitative and quantitative assessment of DNA~~ in ~~a sample prior to forensic analysis~~parallel. ~~This assessment can be used by scientists and technicians performing forensic analysis to facilitate proper sample preparation for analysis~~Also, ~~which can reduce~~ the ~~risk~~use ~~that~~of ~~analysis~~sets ~~must~~of bestandard ~~repeated,~~ and ~~Applied~~validated ~~Biosystems~~assays ~~believes~~facilitates ~~its~~comparisons ~~new~~of ~~system~~data between ~~provides more accurate and useful results than systems offered by other companies that are used for forensic analysis~~laboratories.

~~Also,~~CE ~~Applied~~Instruments ~~Biosystems is developing technologies for bacterial~~ and ~~fungal detection, characterization, and identification. It offers~~ the ~~MicroSeq®~~ ~~Microbial~~SOLiD™ ~~Identification~~ System toNext ~~accurately~~Generation ~~identify~~Sequencing ~~microorganisms. It~~System also offers TaqMan® Pathogen Detection Systems, which operate on real-time PCR systems instruments, to rapidly detect bacterial contamination and detect and analyze genetically modified organisms in foods.

Our genetic analysis instruments include our capillary electrophoresis, or CE, instruments and our new SOLiD™ System. Our CE instruments have been -used 19extensively -to obtain the DNA sequence of the human genome and the genomes of other species and to identify SNPs and other

~~Back~~- to14 ~~Contents~~-

AppliedTable Biosystems has entered into several contracts to manufacture products needed in response to the threat of biological terrorism, often referred to as the “biothreat” or “biosecurity” market. For example, Applied Biosystems entered into a contract to manufacture an Anthrax bacteria detection product that another company has contracted to install and maintain in select U.S. Postal Service mail sorting centers. Applied Biosystems is evaluating the market for biosecurity products and may develop or manufacture other products for this market if and when it identifies other opportunities.Contents

~~Information~~genetic mutations. With the completion of human genome sequencing and the completion of the sequencing of other important genomes, we believe that ~~Products~~researchers are transitioning to performing an increasing amount of resequencing, ~~including~~which is also referred to by some researchers as medical or directed sequencing or resequencing. Resequencing involves the ~~Celera~~sequencing ~~Discovery~~of ~~System™~~a selected segment or segments of a genome, such as a pre-selected set of genes, in one or more organisms after a reference genome for that organism has been determined. The DNA sequence information of these organisms is then compared to the known reference sequence to determine whether any genetic variations are present. Scientists may use this information, for example, to better understand the causes and prevention of disease, facilitate the development of better and more targeted therapies and diagnostics, and understand individual response to treatment. This may be particularly true with a disease such as cancer, which scientists are finding to be associated with a large number of unique DNA mutations that may not be identified using commercially-available genotyping tools, including ours.

~~Applied~~We ~~Biosystems currently~~expect ~~offers,~~that ~~and~~our ~~intends~~CE togenetic ~~further~~analysis ~~develop,~~instruments ~~products~~and ~~that~~associated ~~offer~~systems ~~information content~~and ~~designed~~consumables will continue to ~~assist~~service ~~research~~a ~~and~~diverse ~~development~~range ~~efforts~~of genetic applications for the foreseeable future. ~~The~~We ~~information products~~believe that ~~Applied~~the ~~Biosystems~~technology ~~currently~~will ~~licenses~~remain tovital ~~customers~~for ~~include~~some ~~the Celera~~existing ~~Discovery~~applications ~~System,~~such as ~~well~~medical assequencing, ~~software~~forensics, ~~for~~and ~~use~~quality inand ~~combination~~safety ~~with~~testing. ~~the~~However, CE genetic ~~Applied~~analysis ~~Biosystems~~instruments ~~assay~~generally ~~products,~~are ~~designed~~subject to ~~facilitate~~inherent ~~and~~technological ~~make~~limitations ~~more~~that ~~efficient experiment~~restrict ~~design~~the extent to which the speed, capacity, and ~~biological~~cost-efficiency ~~data~~of the genetic analysis. ~~The~~can ~~Celera~~be ~~Discovery~~increased. ~~System~~Accordingly, ~~is an~~for ~~online~~some ~~information~~potential ~~and~~applications ~~discovery~~CE genetic ~~system~~analysis ~~through~~is ~~which~~not ~~users~~well ~~can~~suited ~~access~~or ~~genomic and~~cannot ~~related~~be ~~biological~~performed and ~~medical~~a ~~information~~faster, higher throughput, and ~~which~~more ~~links~~cost-effective ~~users~~technology tois ~~information on~~needed. ~~Applied~~As ~~Biosystems~~a ~~genomics~~result, ~~products.~~within ~~The~~the ~~system~~scientific ~~was~~community ~~originally~~and ~~developed~~molecular biology industry there has been increasing interest and ~~marketed~~investment byin ~~Celera~~the ~~Genomics,~~development ~~but~~of ~~Applied~~so-called ~~Biosystems~~“next-generation” issequencing ~~now~~technologies that meet the ~~exclusive distributor~~needs of ~~this~~these ~~system~~applications ~~pursuant~~without tosacrificing anthe ~~agreement~~quality ~~that~~of isanalytical ~~described~~results. ~~below~~Scientists inand ~~Item~~researchers sometimes refer to the 1ultimate goal of ~~this~~these ~~report~~efforts ~~under~~as being the ~~headings~~ “~~Applied~~$1,000 ~~Biosystems~~genome,” ~~Group~~which ~~Business~~is –the ~~Marketing and~~ability ~~Distribution~~to ~~Agreement~~sequence ~~with~~the ~~Celera~~entire ~~Genomics~~genome of an individual person at a cost of $1,000.”

InCE ~~February 2004,~~Instruments. ~~Applied~~CE ~~Biosystems~~instruments ~~launched~~use aelectric ~~new~~current ~~release~~to ofdraw ~~the~~molecules ~~Celera~~through ~~Discovery~~a ~~System that~~separation ~~includes enhanced~~medium, ~~visualization~~for ~~and~~example ~~analysis~~a ~~tools~~liquid, ~~for~~direct ~~comparing~~a ~~the~~laser ~~human,~~at ~~mouse,~~the ~~and rat~~molecules ~~genomes~~being ~~and~~drawn ~~additional~~through ~~data~~the ~~integration.~~liquid, ~~Significant~~and ~~features~~then ~~added~~use ~~with~~an optical ~~this~~device ~~new~~to ~~release~~detect ~~include~~ the ~~ability~~light toemitted ~~directly~~by ~~compare~~fluorescent ~~the~~tags ~~versions~~with ofvarying ~~these three~~colors ~~genomes~~ that have been ~~sequenced~~attached byto ~~Celera Genomics and~~ the ~~publicly-funded Human~~molecules ~~Genome~~being ~~Project~~analyzed. ~~Also,~~We asoffer ~~part~~systems ofthat ~~Applied~~incorporate ~~Biosystems’~~advanced ~~iScience~~CE ~~strategy and~~sequencing ~~mission~~technology ofthat ~~providing~~we ~~“whole-product”~~believe ~~solutions~~represent tothe ~~its~~leading ~~customers,~~industry ~~Applied~~standard ~~Biosystems~~for ~~now~~high-throughput ~~offers~~CE ~~several~~sequencing. ~~systems~~We ~~with~~offer ~~online links to relevant biological information available by subscription, including~~ the ~~1700~~following ~~Chemiluminescent~~CE ~~Microarray Analyzer,~~genetic ~~4700~~analysis ~~Proteomics Discovery System~~instruments, ~~QSTAR®~~along ~~XL Hybrid~~with ~~LC/MS/MS~~several ~~System,~~sequencing Qchemistries ~~TRAP®~~optimized ~~LC/MS/MS System,~~for ~~and~~various ~~the~~customer ~~4000~~requirements: ~~Q Trap® LC/MS/MS System.~~

Informatics Products and Services


Instrument		Capacity
Applied Biosystems 3730xl DNA Analyzer		96 capillaries
Applied Biosystems 3730 DNA Analyzer		48 capillaries
ABI PRISM^® 3130xl Genetic Analyzer		16 capillaries
ABI PRISM^® 3130 Genetic Analyzer		4 capillaries
ABI PRISM^® 310 Genetic Analyzer		1 capillary

~~Applied~~Technologically, ~~Biosystems~~these ~~develops,~~systems ~~markets, and~~are ~~distributes~~distinguished ~~informatics~~among ~~software~~each ~~and~~other ~~services~~primarily ~~used~~based toon ~~integrate~~their sequencing capacity and ~~automate~~level ~~life~~of ~~sciences research~~automation, ~~development,~~ ~~and~~with ~~manufacturing~~the ~~laboratories~~3730xl ~~with~~being the ~~goal~~highest ofcapacity ~~increasing~~instrument ~~their~~with ~~efficiency~~the ~~and~~most ~~effectiveness~~automation. ~~Users~~ ofThe ~~Applied~~sequencing ~~Biosystems’ informatics products and services are typically involved in gene mapping~~capacity, ~~drug~~ ~~discovery,~~or ~~drug development~~throughput, ~~and~~is ~~drug~~determined ~~manufacturing.~~primarily ~~Applied~~by ~~Biosystems~~the ~~offers~~number ~~various~~of ~~software products for laboratory information management systems~~capillaries, ~~often~~each ~~referred~~of towhich ascan ~~“LIMS.” These products are designed~~be toused ~~facilitate sample tracking, data collection, data analysis, and data mining, and are generally designed~~ to ~~assist~~ ~~researchers~~simultaneously inanalyze ~~transforming~~a ~~data~~separate ~~into~~DNA ~~useful information~~segment. ~~Applied~~The ~~Biosystems~~product ~~also~~line ~~offers~~includes ~~informatics consulting~~instruments ~~services~~suitable ~~directly~~for ~~through~~use ~~its~~by ~~Professional~~a ~~Services~~wide ~~Group~~range ~~and~~of ~~through~~users, ~~alliances~~from ~~with~~individual ~~other~~researchers ~~companies. These~~to ~~consulting~~research ~~services are designed for~~ laboratories ~~seeking~~conducting ~~greater~~high-volume ~~automation and integration of lab processes~~research. ~~Applied~~ ~~Biosystems~~The ~~consultants principally provide installation and customization of Applied Biosystems’ LIMS~~ ~~software offerings, and also can assist customers in selecting and~~

- 2015 -

BackTable toof Contents

~~integrating~~ suitability ~~technologies~~of toany ~~streamline~~particular instrument for any researcher or research laboratory will depend on the nature of the work being performed and ~~accelerate~~the capital ~~their~~budget ~~genomics,~~of ~~proteomics~~the researcher or research laboratory. Although it does not incorporate our advanced sequencing technology, ~~and~~we ~~high~~continue to offer the one capillary model 310 Genetic Analyzer because it continues to be a cost-effective choice for small laboratories or individual researchers that do not require a high-throughput ~~screening~~instrument ~~activities~~or do not have a budget for a more expensive instrument. We provide servicing and customer support for all of these instruments, as well as some previously-marketed instruments that remain in use by some customers.

We offer several products for use with our genetic analysis ~~Service~~instruments to enable particular applications. For example, we offer the SNPlex™ Genotyping System to perform genotyping studies. The system uses multiplexing, a scientific term that refers to multiple reactions in a single tube or well, to rapidly identify large numbers of target SNPs in a single biological sample. This system can be used with the Applied Biosystems 3730, 3730xl, and ~~Support~~3130xl DNA Analyzers to perform studies based on customers’ own customized set of reference SNPs. The suitability of SNPlex for any particular researcher or research project, compared to our real-time PCR-based genotyping systems and products, depends on several factors, including the type of study being performed, scientific requirements, access to the needed instrumentation, and cost considerations.

~~Applied~~SOLiD™ ~~Biosystems~~System ~~provides~~Next ~~warranties~~Generation onSequencing. During ~~all~~our ~~equipment~~2008 atfiscal ~~the~~year, ~~time~~we ofcommercially ~~sale,~~launched ~~for~~the ~~periods~~SOLiD™ ofSystem, ~~time~~our ~~ranging~~next-generation upsequencing tosystem ~~two~~that ~~years~~arose from ~~the~~our ~~date~~fiscal of2007 ~~sale~~acquisition ~~depending~~of onAgencourt ~~the~~Personal ~~product~~Genomics. ~~subject~~We toannounced ~~warranty.~~the ~~The~~formal ~~warranties~~launch ~~cover~~of ~~equipment~~the ~~installation,~~system ~~customer~~in ~~training~~October 2007, and ~~application~~then ~~support.~~launched ~~Applied~~an ~~Biosystems~~upgraded ~~also~~version ~~offers~~of ~~service~~the ~~contracts~~system toin ~~its~~May ~~customers~~2008 that ~~are~~enables ~~generally~~customers ~~one~~to ~~year~~more ~~after~~than double the ~~original~~throughput ~~warranty~~while ~~period,~~reducing ~~but~~run ~~may~~times ~~range~~as upcompared to ~~three years after~~ the original ~~warranty period~~system. ~~Applied~~Also ~~Biosystems~~in ~~provides both repair services and routine maintenance services under these arrangements~~May, ~~and~~we ~~also~~announced ~~offers repair and maintenance services on~~ a ~~time~~collaboration ~~and~~with ~~material~~the ~~basis~~Wellcome Sanger Institute to ~~customers~~study ~~that~~cancer dogenomics ~~not~~using ~~have service contracts. Service in~~ the ~~U.S.~~SOLiD ~~and major markets outside of the U~~System.S. ~~is provided by Applied Biosystems’ service staff. In some foreign countries, service is provided through distributorship arrangements.~~

The SOLiD System offers a substantial increase in throughput and ~~Marketing~~reduction in relative cost as compared to CE genetic analysis. In March 2008 we announced that we had sequenced a human genome for under $60,000 in reagent costs, setting a new standard for experimental value. Although the SOLiD System is not at this time the $1,000 genome solution, we are continuing to seek ways to improve the system and ~~Distribution~~bring it closer to this goal. We believe that our SOLiD System offers the highest throughput and accuracy of any next-generation sequencing system commercially available today. The capabilities of the SOLiD System are particularly suited for the study of complex diseases like cancer, which is characterized by a wide range of genetic variation and chromosomal abnormalities.

~~General.~~We ~~The~~believe ~~markets~~that ~~for Applied~~the ~~Biosystems’~~SOLiD ~~products~~System ~~and~~will ~~services~~be ~~span~~complementary ~~the~~to ~~spectrum~~our ofCE ~~the~~genetic ~~life~~analysis ~~sciences~~instruments ~~industry~~because ~~and~~it ~~research~~will ~~community,~~enable ~~including:~~applications ~~basic~~that ~~human~~could ~~disease~~not ~~research and genetic~~be ~~analysis~~ performed by ~~universities,~~CE ~~government~~instruments ~~agencies,~~or ~~and~~for ~~other~~which ~~non-profit~~CE ~~organizations;~~instruments ~~pharmaceutical~~are ~~drug~~not ~~discovery,~~well ~~development,~~suited ~~and~~because ~~manufacturing;~~of ~~human identification;~~their ~~agriculture;~~technological ~~biosecurity;~~limitations. ~~and~~Also, ~~food~~the ~~and~~new ~~environmental~~SOLiD ~~testing.~~System ~~Each~~has ofbeen ~~these~~designed ~~markets~~for ~~has~~very ~~unique~~high-throughput ~~requirements~~applications and ~~expectations~~the ~~that~~cost-efficiencies ~~Applied~~expected ~~Biosystems~~from ~~seeks to~~its ~~address~~use inmay ~~its~~not ~~product~~be ~~offerings.~~realized ~~Applied~~for ~~Biosystems’~~lower-throughput ~~customers~~applications. ~~are~~Thus, ~~continually~~we ~~searching~~think for ~~processes~~the ~~and~~next ~~systems~~several ~~that~~years ~~can~~users ~~perform~~will ~~tests~~be ~~faster~~primarily genome centers, ~~more~~large ~~efficiently~~academic labs, academic core labs, and at acommercial ~~lower~~service ~~cost~~labs. ~~Applied~~However, ~~Biosystems~~we ~~believes~~do ~~that~~not ~~its~~expect ~~focus~~the onnew technology ~~automated~~to ~~and~~be used exclusively for new applications or only by these high-~~throughput~~volume ~~systems~~users, ~~enables~~and itthus tobelieve ~~respond~~that tofor ~~these~~some ~~needs~~users of CE genetic analysis and for some existing CE applications the new system will be preferred and used instead of CE genetic analysis.

~~The~~- ~~size~~16 ~~and~~- ~~growth of Applied Biosystems’ markets are influenced by a number of factors, including:~~

•Table technological innovation in methods for analyzing biological data; • government funding for basic and disease-related research, such as in heart disease, AIDS, and cancer; • application of biotechnology to basic agricultural processes; • increased awareness of biological contamination in food and the environment; and • research and development spending by biotechnology and pharmaceutical companies.Contents

InRNA ~~the~~Consumables ~~U.S., Applied Biosystems markets the largest portion of its products directly through its own sales~~ and ~~distribution~~RNAi organizations, although some products are marketed through independent distributors and sales representatives. Sales to major markets outside of the U.S. are generally made by Applied Biosystems’ foreign-based sales and service staff, but are also made directly from the U.S. to foreign customers in some cases. In some foreign countries, sales are made through various representative and distributorship arrangements. Applied

We offer a broad range of products for the study and analysis of RNA and its role in disease -development 21and -progression. This product line was substantially expanded with our fiscal 2006 acquisition of the Research Products Division of Ambion, Inc., and is now marketed under the Ambion brand name. The product line includes reagents associated with RNA interference, referred to as RNAi, and products for the analysis of microRNA, referred to as miRNA. These products are used to study the gene expression process and could lead to advances in human healthcare, possibly forming the basis of future therapeutic or diagnostic products. In April 2008, we announced the development of a set of analysis tools to help researchers profile expression levels of human, mouse, and rat miRNAs from trace amounts of sample. These new tools may be particularly useful in advancing the study of cancer, in which miRNAs are believed to play a critical regulatory role. Cancer researchers are often faced with the challenge of being able to obtain only tiny amounts of RNA from cancerous samples. The new tools, TaqMan® microRNA Arrays and Megaplex™ Pools, were released for sale in August 2008.

~~Back~~The Ambion product line also includes: sample preparation products, used for example to ~~Contents~~isolate and purify RNA before analysis; reagents used to convert an RNA sample into DNA, a process referred to as reverse transcription, which is often a necessary step for RNA analysis; and reagents for PCR amplification, or copying, which is often necessary so that researchers have enough sample to perform their desired analysis on small or limited samples, like tumor biopsies or blood stains. Many of the Ambion brand products can be used in combination with our other products as part of a workflow solution to solve cost, speed, or other difficulties encountered by some researchers in laboratory experimentation and analysis.

~~Biosystems~~RNA ~~owns~~interference, or ~~leases~~RNAi, ~~sales~~refers ~~and~~to ~~service~~the ~~offices~~use inof specialized reagents to limit or restrict the Utranslation of the genetic code from RNA into proteins by degrading the messenger RNA molecule prior to its translation.S. ~~and~~Using inproducts such as small interfering RNA, sometimes denoted as siRNA, scientists can ~~foreign~~reduce, ~~countries~~or ~~through~~“silence,” ~~its~~the ~~foreign~~expression ~~sales~~of ~~subsidiaries~~a ~~and~~particular ~~distribution~~gene ~~operations~~in mammalian cell systems, in some instances by 90% or more. ~~None~~Gene ofsilencing ~~Applied~~induced ~~Biosystems’~~by siRNA is widely used by researchers to analyze the effect that the silenced gene has on ~~products~~cellular function. Some researchers are ~~distributed~~also ~~through~~studying ~~retail~~whether ~~outlets~~gene silencing could be used for therapeutic purposes.

~~Applied~~MicroRNA, ~~Biosystems~~or ~~Portal.~~miRNA, ~~During~~is ~~our~~a ~~2003~~class ~~fiscal~~of ~~year,~~small ~~Applied~~RNA ~~Biosystems~~molecules ~~decided~~discovered by scientists during the last few years which are thought to ~~expand~~regulate the ~~role~~activity of ~~the~~more ~~Internet~~than inhalf ~~both~~of all known genes. Researchers also believe that some individual miRNAs may regulate the ~~marketing~~activity ~~and~~of ~~distribution~~multiple genes. Several research groups have provided evidence that miRNAs may act as key regulators of ~~its~~processes ~~products~~such ~~and~~as ~~services~~cell proliferation and ~~also~~differentiation, ~~generally~~apoptosis, ~~educating~~or ~~and~~cell ~~interacting~~death, ~~with~~and ~~its~~fat ~~customers~~metabolism. InThe ~~furtherance~~Ambion ofRNA ~~that~~product ~~decision,~~line ~~Applied~~includes ~~Biosystems’~~sample ~~has~~preparation ~~since~~products ~~developed~~used anby ~~Internet~~researchers ~~“Portal,”~~to ~~which~~isolate ~~consists~~microRNA ~~primarily~~molecules ofprior to ~~the~~analysis ~~following~~with ~~two~~our ~~linked~~TaqMan® ~~websites:~~MicroRNA Assays.

	•	The Applied Biosystems website for electronic commerce, or “e-commerce,” which is located at www.appliedbiosystems.com. This website existed prior to the initiation of the Portal strategy but it was updated during our 2004 fiscal year.
	•	The myScienceSM website, an Internet virtual research community which is located at myscience.appliedbiosystems.com. This website, which was launched during our 2004 fiscal year, is a free online resource that offers access to search tools and graphical viewers intended to help scientists plan their experiments, including selection of genomic reagents such as the Applied Biosystems TaqMan® gene expression and genotyping assays. The myScience Internet website also offers fee-based access to the entire Celera Discovery System™ for an in-depth interpretation and analysis of experimental results.

DNA Synthesis

~~Applied~~Oligonucleotides, ~~Biosystems~~sometimes ~~designed~~referred ~~its Portal~~ to ~~link research~~as ~~resources~~oligos, ~~directly~~are tosynthetic ansingle-stranded ~~online~~pieces ~~ordering~~of ~~system~~DNA ~~for~~that ~~Applied~~are ~~Biosystems~~essential ~~products,~~for PCR and ~~it has become a~~DNA ~~source~~sequencing ofand ~~direct~~some ~~sales,~~drug ~~particularly~~discovery ~~of its genomics products~~applications. ~~The~~DNA ~~myScience~~synthesis ~~website~~is ~~now~~needed ~~includes~~by ~~features~~companies ~~to browse~~performing ~~and~~high-throughput ~~select~~synthesis ~~for~~as ~~purchase~~ a ~~number~~service ofas ~~Applied~~well ~~Biosystems~~as ~~products,~~by ~~including~~individual ~~TaqMan®~~laboratories ~~Gene~~that ~~Expression~~synthesize ~~and~~DNA ~~SNP Genotyping~~for ~~Assays,~~their ~~TaqMan®~~own ~~Low~~use. ~~Density~~We ~~Arrays,~~sell ~~the~~reagents ~~SNPlex™~~used ~~Genotyping~~for ~~System, and~~ the ~~VariantSEQr™ Resequencing~~DNA ~~System.~~synthesis ~~Applied~~process ~~Biosystems~~and ~~intends~~we toprovide ~~phase~~custom ~~additional~~synthesis ~~features~~services, ~~into~~whereby ~~its~~oligonucleotides ~~Portal~~are ~~over~~made ~~the~~to ~~next~~order ~~several fiscal years,~~ and ~~may~~shipped ~~consult~~to ~~or partner with third parties for this with the goal of creating a more effective Internet presence~~customers.

~~Marketing~~- ~~and~~17 ~~Distribution~~- ~~Agreement with Celera Genomics~~

DuringTable our 2002 fiscal year, Applied Biosystems formed a Knowledge Business to develop and market products and services designed to meet the needs of life science researchers in performing specific biological analysis applications. The Knowledge Business was focused on generating value to life science customers through products and services with high information content that support improved experimental work-flows. Concurrently with Applied Biosystems’ formation of the Knowledge Business, in April 2002, Celera Genomics and Applied Biosystems entered into a ten-year marketing and distribution agreement pursuant to which Applied Biosystems became the exclusive distributor of Celera Genomics’ Celera Discovery System™ and related human genetic and other biological and medical information. As a result of this arrangement, Applied Biosystems has been integrating the Celera Discovery System and other genomic and biological information into its product offerings. During the second quarter of our 2004 fiscal year, Applied Biosystems reorganized its internal operations and, among other things, integrated the operations of the former Knowledge Business into other business units of Applied Biosystems. However, Applied Biosystems and Celera Genomics continue to operate under the marketing and distribution agreement on the same terms and conditions as in effect prior to the reorganization.Contents

-Products 22for -the Cell Biology Market

~~Back~~We have developed, and expect to ~~Contents~~continue developing, products used for the study of cell and biological molecule function. These products are intended for use by researchers studying the complex biological reactions that take place within and between cells, which researchers refer to as biological pathways, and how these pathways relate to human disease. These studies are needed in a variety of fields, including in particular drug discovery and development. This product line includes Tropix® chemiluminescent reagent products used by researchers studying cell function. Chemiluminescence is the conversion of chemical energy stored within a molecule into light, and the detection of chemiluminescence is another technology used to study cellular function. This technology also has other applications, and we use it in some of our products for the molecular biology market and we license it to others for adaptation for various types of diagnostic tests and drug discovery assays. These chemiluminescent-based tests and assays can be used in combination with a variety of detection instruments.

InProducts ~~exchange~~ for the ~~rights~~Proteomics itMarket acquired under the marketing and distribution agreement, Applied Biosystems agreed to pay royalties to Celera Genomics based on revenues generated by sales of some Applied Biosystems products from July 1, 2002, through the end of our 2012 fiscal year. The royalty rate is progressive, up to a maximum of 5%, with the level of sales through our 2008 fiscal year. The royalty rate becomes a fixed percentage of sales starting in our 2009 fiscal year, and the rate declines each succeeding fiscal year through our 2012 fiscal year. The products subject to the royalties include:

•Differences ~~TaqMan®~~in ~~Gene~~the ~~Expression~~types or amounts of specific proteins in biological systems are thought to be one of the primary differences between healthy and diseased ~~SNP~~systems ~~Genotyping~~or ~~Assays,~~organs. ~~TaqMan®~~A ~~Pre-Designed~~majority ~~Gene~~of ~~Expression~~drugs to treat human disease bind to and ~~SNP~~affect ~~Genotyping~~proteins. ~~Assays,~~Customers in the proteomics research market need systems for the analysis of proteins and ~~Custom~~the ~~TaqMan®~~peptides ~~Gene~~that ~~Expression~~make up proteins for the purpose of discovery of drug targets, protein therapeutics, and ~~SNP~~diagnostics. ~~Genotyping~~Through ~~Assays;~~a •joint ~~Some~~venture ~~reagents~~with MDS Inc., we have developed products for ~~arrays;~~the identification, characterization, and •measurement ~~New~~of ~~database~~expression ~~subscriptions~~of ~~sold~~proteins byand ~~Applied~~peptides. ~~Biosystems~~Our joint venture and our products for the proteomics market are described in the following paragraphs.

~~Under~~Mass ~~the~~Spectrometry terms of the marketing and distribution agreement, Celera Genomics receives all revenues under, and is responsible for all costs and expenses associated with, Celera Discovery System and related information contracts that were entered into on or prior to June 30, 2002. However, Applied Biosystems took full responsibility for marketing and contracting for the Celera Discovery System and related products after that date. Accordingly, Celera Genomics does not expect any revenues from the Celera Discovery System and related products and services other than under contracts existing on that date, so long as they remain in effect, and from potential royalty payments from Applied Biosystems under the marketing and distribution agreement. Applied Biosystems has agreed to reimburse Celera Genomics for any shortfall in earnings before interest, taxes, depreciation, and amortization from these contracts below $62.5 million during the four fiscal years ending with the 2006 fiscal year, if the shortfall is due to the actions of Applied Biosystems including changes in marketing strategy for the Celera Discovery System. However, this commitment is also subject to Celera Genomics otherwise continuing to perform under these contracts, and does not protect Celera Genomics from lost revenue due to other circumstances such as customer bankruptcy or default.

Mass spectrometry has become very useful for the analysis of large molecules of biological importance such as proteins. Analysis of proteins and other ~~Raw~~molecules ~~Materials~~by mass spectrometry involves the very accurate measurement of the mass, or size, of components in a sample, such as the measurement of the multiple different peptides that make up a protein of interest. The sensitive electronics of mass spectrometry instruments can measure fine differences in very small quantities of complex samples having multiple components. Mass spectrometry instruments incorporate the following key technological processes:

~~There~~• ~~are~~A nosample ~~specialized~~preparation ~~raw~~process ~~materials~~called ~~that~~ionization ~~are particularly~~to ~~essential~~electrically tocharge the ~~operation~~molecules offor ~~Applied~~analysis. ~~Biosystems’~~We ~~business.~~sell ~~Applied~~instruments ~~Biosystems’~~with ~~manufacturing~~ionization ~~operations~~by ~~require~~either a ~~wide~~laser ~~variety~~based ofsystem ~~raw~~called ~~materials~~MALDI, ~~electronic~~ ~~and mechanical components, chemical and biochemical materials, and other supplies, some of~~ which ~~are~~refers ~~occasionally found~~ to bematrix inassisted ~~short~~laser ~~supply.~~desorption ~~Applied Biosystems has multiple commercial sources for most components and supplies~~ionization, ~~but~~or ~~it is dependent on single sources for~~ a ~~limited~~high ~~number~~voltage ofelectric ~~such~~system ~~items~~called ESI, in which ~~case~~refers ~~Applied~~to ~~Biosystems normally~~electrospray ~~secures long-term supply contracts~~ionization. ~~In some cases, if a supplier discontinues a product, it could temporarily interrupt the business of Applied Biosystems.~~

~~Patents~~• Mass analysis and detection, ~~Licenses~~which involves the separation and electronic measurement of the mass of molecules and the measurement of the relative amounts present. We have a variety of mass analysis technologies which separate and measure the mass of molecules in a sample. These include TOF, which refers to time of flight, which measures mass based on flight time in an electric field under vacuum; and ~~Franchises~~quadrupole or quad, and linear ion trap, both of which measure mass using radio frequencies and electric charges though using related but different technologies.

~~Applied~~- ~~Biosystems’~~18 ~~products are~~- based on complex, rapidly developing technologies. Some of these technologies are covered by patents owned by Applied Biosystems, and others are owned by third parties and are used by Applied Biosystems under license. Applied Biosystems has pursued a policy of seeking patent protection in the U.S. and other countries for

-Table 23of -Contents

~~Back~~Mass spectrometry instruments are often referred to ~~Contents~~or named based on their sample preparation and mass analysis technologies. For example, a “MALDI TOF” instrument is an instrument that uses MALDI to charge molecules for analysis and TOF for mass analysis. Also, mass spectrometry instruments are often referred to or named based on whether they are connected to liquid chromatography separation devices, which are used for sample preparation before analysis using mass spectrometry. For example, an “LC/MS” system is a liquid chromatography device connected directly to a mass spectrometry instrument, and an “LC/MS/MS” system is a liquid chromatography device coupled with tandem mass spectrometry instruments. Tandem mass spectrometry enables a more detailed and accurate analysis of the components of the molecules being studied. The market for mass spectrometry is served by a wide range of instrument types, based on a variety of technologies for both ionization and mass analysis, which are combined together in different combinations in different instruments.

~~developments~~Currently, ~~improvements,~~all ~~and~~of ~~inventions~~our ~~originating within~~mass ~~its~~spectrometry ~~organization~~systems ~~that~~for the proteomics market are ~~incorporated~~manufactured ~~into~~and sold through Applied Biosystems/MDS Analytical Technologies Instruments, formerly named Applied Biosystems’/MDS ~~products or~~SCIEX ~~that~~Instruments, ~~fall~~a ~~within~~50/50 ~~its~~joint ~~fields~~venture between us and MDS Inc. of ~~interest~~Canada. ~~Applied~~This ~~Biosystems’~~joint ~~business depends~~venture onsupplies ~~its~~a ~~ability~~broad tofamily ~~continue~~of ~~developing~~mass ~~new~~spectrometry ~~technologies~~products ~~which~~for ~~can~~the beproteomics ~~patented~~market, orand ~~licensing~~some ~~new~~of ~~technologies~~its ~~from~~instruments ~~third~~are ~~parties~~also ~~that~~used ~~own~~for ~~patents in~~small ~~desired~~molecule ~~technologies.~~analysis, ~~The~~which ~~rights~~is ~~that~~described ~~Applied~~below ~~Biosystems~~in ~~considers~~this ~~important to~~description ~~its~~of ~~current~~our business ~~include~~under the ~~following:~~heading “Products for the Small Molecule Analysis Market.”

	•	Applied Biosystems licenses rights to PCR technology under a series of agreements with Hoffmann-La Roche Inc. and its affiliates, which own some of the patents covering the PCR process. Applied Biosystems receives royalties from third-party sales of products incorporating this technology through a series of licensing programs that it has established for industry access to some of its intellectual property. The first of these patents expires in March 2005 in the U.S., and in March 2006 in Europe and some other jurisdictions. The expiration of these patents may result in reduced royalty payments to Applied Biosystems. However, Applied Biosystems expects that a possible reduction in PCR royalties would be offset to a substantial degree by income from real-time PCR and other PCR-related technologies that it owns or licenses. In addition, Applied Biosystems has rights to multiple other PCR-related patents that should support a PCR-related royalty stream beyond our 2005 and 2006 fiscal years. Taken together, Applied Biosystems believes these factors should mitigate the effects of the patent expirations. The agreements with Hoffmann-LaRoche Inc. and its affiliates are the subject of legal proceedings described below in Item 3 of this report under the heading “Roche.” The outcome of legal proceedings is inherently uncertain, and an adverse outcome in these proceedings could negatively affect the value of our PCR rights.
	•	Applied Biosystems also licenses rights under some patents assigned to the California Institute of Technology relating to DNA sequencing. These patents expire between 2009 and 2018 in the U.S., and in 2005 in Europe and some other jurisdictions.

The Applied Biosystems/MDS Analytical Technologies Instruments joint venture was originally formed in 1986 and renewed in 2001 for a term to expire on October 31, 2011. The joint venture agreement includes provisions for earlier termination at the election of a partner for events such as those resulting from material breaches, a disagreement over a fundamental issue requiring consent of both partners, or a partner becoming subject to the control of another entity through acquisition or merger (including possibly the pending merger with Invitrogen). Under the agreement, notwithstanding the expiration of the term or early termination, the affairs of the partnership shall continue with respect to all products developed prior to expiration or termination, or for any products whose development can be completed within one year following expiration or termination. Such products will continue to be manufactured and sold (and the profits and losses divided equally by the partners) for the life of the products, and the partnership agreements governing purchase and distribution of the products shall be deemed to continue in full force and effect.

~~From~~Originally, ~~time~~the tojoint ~~time~~venture covered only LC/MS systems, ~~Applied~~but ~~Biosystems~~during ~~has~~our ~~asserted~~2005 ~~that~~fiscal ~~various~~year ~~competitors~~the ~~and~~parties ~~others~~amended ~~are~~the ~~infringing~~joint venture ~~its~~agreement ~~patents;~~to ~~and~~expand ~~similarly,~~the ~~from~~joint ~~time~~venture to ~~time~~also include MALDI TOF systems, ~~others~~a ~~have~~product ~~asserted~~line that ~~Applied~~previously ~~Biosystems~~had ~~was~~been ormanufactured isand ~~infringing~~marketed ~~patents~~by ~~owned~~us byindependent ~~them~~of the joint venture. ~~These~~Under ~~claims~~the ~~are~~terms ~~sometimes~~of ~~settled~~the byamended ~~mutual~~joint venture agreement, onMDS ais responsible ~~satisfactory~~for ~~basis~~manufacturing these LC/MS and ~~result~~MALDI inTOF systems, and we are the ~~granting~~exclusive distributor of ~~licenses~~these bysystems, orwith toresponsibility ~~Applied~~for ~~Biosystems~~sales and marketing and service and support. ~~However,~~The wetwo ~~cannot~~companies ~~make~~conduct ~~any~~separate ~~assurances~~but ascoordinated research and development activities for these systems. In consideration for the amendment to the ~~outcome~~joint venture and our contribution of ~~any~~MALDI ~~pending~~TOF orassets, ~~future~~we ~~claims~~received, among other things, $8 million in cash and a $30 million promissory note, which is payable in five annual installments beginning in October 2006.

Pursuant to agreed upon procedures, the parties to the joint venture conduct ~~Backlog~~coordinated activities with respect to the development, manufacture, marketing, sale, service, and support of our mass spectrometry systems under the supervision of co-managers, who are senior executives of each partner. The coordinated activities include the sharing of internal technical and business

~~Applied Biosystems’~~- ~~total~~19 ~~recorded~~- backlog at June 30, 2003, was $252.5 million, which included $1.2 million of orders from Celera Genomics and $3.1 million of orders from Celera Diagnostics. Applied Biosystems’ total recorded backlog at June 30, 2004, was $237.9 million, which included $1.5 million of orders from Celera Genomics and $1.8 million of orders from Celera Diagnostics. Recorded backlog may not result in sales because of cancellation or other factors. It is anticipated that most of the orders included in backlog at June 30, 2004, will be delivered before the close of our 2005 fiscal year.

-Table 24of -Contents

~~Back~~ results toand ~~Contents~~the establishment of collaborations with third parties regarding the technology and instrumentation that the joint venture products will use. Under the profit sharing arrangement of the joint venture, each partner tracks its costs associated with the functions and activities performed on behalf of the venture. Such costs are reconciled on a regular basis and applied against revenues generated by the partnership, with resultant profits or losses being shared equally by the partners.

The following table summarizes the ~~Competition~~mass spectrometry instruments for the proteomics market offered by the Applied Biosystems/MDS Analytical Technologies Instruments joint venture:

The markets in which Applied Biosystems operates are highly competitive and are characterized by the application of advanced technology. A number of Applied Biosystems’ competitors are well known manufacturers with a high degree of technical proficiency. In addition, competition is intensified by the ever-changing nature of the technologies in the industries in which Applied Biosystems is engaged.


Instrument Name	Ionization	Mass Analyzer
4800 Plus MALDI TOF/TOF™ Analyzer	MALDI	TOF/TOF™ Optics
QSTAR^® Elite LC/MS/MS System	ESI or MALDI	Hybrid quad/TOF (often referred to as a Qq-TOF)
4000 Q TRAP^® LC/MS/MS System	ESI	Hybrid quad/linear ion trap
3200 Q TRAP^® LC/MS/MS System	ESI	Hybrid quad/linear ion trap

~~Applied~~Technologically, ~~Biosystems’~~these ~~principal~~systems ~~competition~~are ~~comes~~distinguished ~~from~~primarily ~~specialized~~based ~~manufacturers~~on ~~that~~their: ~~have~~sensitivity, ~~strengths~~or inability to ~~narrow~~identify ~~segments~~very small quantities of ~~the~~molecules ~~life~~within ~~science~~a ~~markets.~~sample; ~~Applied~~resolution, ~~Biosystems~~or ~~competes~~ability ~~principally~~to indistinguish ~~terms~~among several different types of molecules within a complex sample; mass accuracy, or ability to accurately quantify or determine the ~~breadth~~mass of the molecules being studied; throughput; and ~~quality~~overall ease of ~~its~~use. ~~product~~These ~~offerings,~~systems offer a range of these quantitative and ~~its~~qualitative ~~service~~performance characteristics in different combinations and ~~distribution~~at ~~capabilities~~varying costs. ~~While~~The ~~the~~product ~~absence~~line includes systems that are suitable for a wide range of ~~reliable~~proteomics ~~statistics~~applications ~~makes~~and itusers, ~~difficult~~from individual researchers to ~~determine~~large ~~Applied~~research ~~Biosystems’~~laboratories. ~~relative~~The ~~market~~suitability ~~position~~of inany ~~its~~particular ~~industry~~system ~~segment,~~for ~~Applied~~any ~~Biosystems~~researcher ~~believes~~or itresearch islaboratory ~~one~~depends on the nature of the ~~principal~~work ~~suppliers~~being performed inand ~~its~~the ~~fields,~~capital ~~marketing~~budget aof ~~broad~~the ~~line~~researcher or research laboratory. Several of these instruments ~~and~~incorporate ~~life~~proprietary ~~science~~advanced ~~systems~~technologies that result in industry-leading performance characteristics for some applications.

In addition to the range of mass spectrometry instruments and software used to operate those ~~Research~~instruments, ~~Development~~we have developed and commercialized various reagent products used with mass spectrometry to identify and quantify amino acids, peptides, and ~~Engineering~~proteins. These products label particular types of molecules with a chemical marker which can be detected in the mass spectrometry process. The product line includes ICAT®, iTRAQ™, and mTRAQ™ reagents and Amino Acid quantification kits. These products have varying capabilities that make them suited to particular types of research or experimentation. The mTRAQ reagents and Amino Acid kits were added to the product line during our 2008 fiscal year, and we introduced a new version of the iTRAQ reagents during our 2008 fiscal year that doubled the experimentation capacity of these reagents.

~~Applied~~Biochromatography Biosystems is actively engaged in basic and applied research, development, and engineering programs designed to develop new products and to improve existing products. Research, development, and engineering expenses for Applied Biosystems totaled $219.6 million in our 2002 fiscal year, $238.4 million in our 2003 fiscal year, and $233.8 million in our 2004 fiscal year. Applera expensed $381.9 million in our 2002 fiscal year, $401.5 million in our 2003 fiscal year, and $377.1 million in our 2004 fiscal year for Applera research, development, and engineering activities.

~~Applied~~Biochromatography ~~Biosystems’~~is ~~new~~an important step in both research applications and manufacturing of biopharmaceuticals, which refers to protein-based pharmaceutical products. ~~generally~~Researchers ~~originate~~studying ~~from~~complex ~~four~~protein ~~sources:~~samples through mass spectrometry must ~~internal~~first ~~research~~prepare these samples and ~~development~~separate ~~programs;~~them ~~external~~into ~~collaborative~~the ~~efforts~~components ~~with~~to ~~technology~~be ~~companies~~analyzed. A common and ~~individuals~~important technique for the separation, and in ~~academic~~some ~~institutions;~~cases ~~devices~~purification, orof ~~techniques~~biological ~~that~~molecules is generally referred to as biochromatography, a process by which molecules are ~~generated~~separated inaccording ~~customers’~~to ~~laboratories;~~one ~~and~~or ~~business~~more ~~and~~of ~~technology~~their ~~acquisitions~~physical properties such as their size, shape, electric charge, or affinity to other molecules.

~~Research~~- ~~and~~20 ~~development projects at Applied Biosystems include: the development of improved electrophoresis techniques for DNA analysis; real~~-~~time~~ ~~PCR for nucleic acid quantification; innovative approaches to cellular analysis; sample preparation; information technologies; and mass spectrometry.~~

EnvironmentalTable Mattersof Contents

~~Applied~~Our ~~Biosystems~~biochromatography ismedia ~~subject~~products toare ~~federal, state,~~used ~~and~~in ~~local~~liquid ~~laws~~chromatography. ~~and~~Liquid ~~regulations~~chromatography ~~regulating~~is ~~the~~a process ~~discharge~~that ofseparates ~~materials~~molecules ~~into~~by ~~the~~passing ~~environment~~them, orin ~~otherwise~~a ~~relating~~liquid, toacross ~~the~~a ~~protection~~stationary ofor ~~the~~solid ~~environment,~~medium insuch ~~those jurisdictions~~as ~~where~~chemically ~~Applied~~modified ~~Biosystems~~plastic ~~operates~~beads orspecially ~~maintains~~designed ~~facilities.~~for ~~Applied~~this ~~Biosystems~~process. ~~does~~Separation ~~not~~occurs ~~believe~~because ~~that~~different ~~any liability arising under~~molecules, orwhich ~~compliance~~have ~~with,~~different ~~environmental~~affinities ~~laws~~to orthe ~~regulations~~beads, will ~~have~~migrate, aor ~~material effect on its business~~pass, ~~and~~across nothe ~~material~~beads ~~capital~~at ~~expenditures~~different ~~are expected for environmental control~~rates.

Our biochromatography media products, such as POROS® beads, are used in the proteomics discovery process and in the development and manufacturing of biopharmaceuticals. We believe -that 25our -biochromatography products offer productivity advantages, enabled by high speed separation combined with high capacity and resolution, over competitive product offerings. This product line includes our POROS® MabCapture™ A Media, a bead which can substantially increase the speed and reduce the cost of the liquid chromatography process for some applications, including particularly the manufacturing of some antibody therapeutics.

~~Back~~Protein toSequencing ~~Contents~~and Synthesis

We manufacture and sell proprietary reagents and chemicals used to synthetically produce peptides and small proteins. Researchers use these peptides and small proteins in a variety of research and drug discovery ~~Celera~~applications. ~~Genomics~~We ~~Group~~also ~~Business~~manufacture and sell proprietary reagents used for protein sequencing. Protein sequencing is performed to identify or characterize a given protein by chemically disassembling the protein and analyzing the amino acids that make up the protein.

We previously manufactured the 433A Peptide Synthesis system, and ~~Overview~~the Procise® Protein Sequencing system, but discontinued both of these systems during our 2008 fiscal year. We intend to sell our remaining inventory of the discontinued systems during our 2009 fiscal year, and provide customer support for existing systems for approximately 5 years.

~~Celera~~Products ~~Genomics is engaged principally in the discovery and development of targeted therapeutics~~ for cancer, autoimmune, and inflammatory diseases. Celera Genomics is leveraging its proteomic, bioinformatic, and genomic capabilities to identify and validate drug targets, and to discover and develop small molecule therapeutics. Celera Genomics expects to use these capabilities, along with its molecular and cell biology, medicinal and computational chemistry, pharmacology, and other drug development technologies to optimize the ~~potency,~~Small Molecule ~~selectivity,~~Analysis ~~and~~Market physical properties of new drug candidates. Celera Genomics is also seeking to advance therapeutic antibody and selected small molecule drug programs in collaboration with global technology and market leaders.

~~Celera~~We ~~Genomics~~have ~~and Celera Diagnostics are pursuing, in cooperation with each other,~~ a ~~strategy~~number ~~that~~of wemass ~~refer~~spectrometry toproducts ~~as “targeted medicine.” This strategy is based on the belief~~ that aanalyze ~~better~~small ~~understanding~~molecules ofboth ~~the~~quantitatively ~~genetic basis of biology~~ and qualitatively ~~disease~~for islife ~~key~~science ~~to improved diagnosis and treatment of many common complex diseases. Celera Genomics and Celera Diagnostics are applying~~ research and ~~development~~other ~~tools and methods to analyze biological information, including genetic variations discovered through the Applera Genomics Initiative, in an attempt to discover associations between genes and diseases~~applications. The ~~Applera~~small ~~Genomics~~molecules ~~Initiative~~studied isare ~~described~~typically ~~below~~smaller inthan ~~Item~~peptides ~~1 of this report under the heading “Applera Genomics Initiative.” Celera Genomics may use this information to select~~ and ~~validate therapeutic targets for new drugs~~include, and to stratify patient populations in clinical trials to increase the proportion of patients who have an efficacious response to drug treatment. Celera Diagnostics intends to develop new diagnostic tests based on known and newly-identified genetic and proteomic markers to help physicians predict an individual’s predisposition to, better characterize, monitor progression of, and select appropriate therapy for, ~~common complex diseases. The ultimate goal of this targeted medicine approach is to~~example:

• ~~identify~~some ~~new and improved targets for drug discovery and development~~drugs; • facilitate more efficient clinical trials of new therapeutics; • develop diagnostic tests that address unmet medical needs in predicting, detecting, characterizing, and monitoring diseases; and • use diagnostics to select a form of therapy that is likely to be more effective and possibly safer in a particular patient population.

~~Celera~~• ~~Genomics~~drug ~~may~~metabolites, ~~pursue~~the ~~both~~compounds ~~“antibody”~~resulting ~~and~~from ~~“small~~the ~~molecule”~~body’s ~~therapeutics.~~acting ~~Antibodies are~~upon a ~~type of protein produced by the human immune system that bind to potentially harmful substances~~drug, ~~such as viruses~~ and ~~bacteria,~~present in ~~order~~bodily tofluids ~~disable~~such ~~and~~as ~~eliminate~~blood ~~them. Antibody~~or therapeutics, thus, are protein-based biological compounds that are designed to similarly bind to and interfere with the activities of a particular target. Celera Genomics has initially chosen to focus on the discovery of proteins found primarily on the surface of tumorurine;

-• 26other -small biological molecules found naturally in the human body such as hormones, which affect physiological activity by sending signals to cells and organs, and cholesterol, which the body uses, for example, to build cells and produce hormones; and

~~Back~~• tovarious ~~Contents~~trace contaminants in foods, beverages, or the environment.

~~cells~~Small asmolecule ~~potential~~analysis ~~targets~~is particularly important for ~~antibody~~pharmaceutical ~~therapeutics. Small~~development, ~~molecule~~but ~~therapeutics~~is ~~are~~also ~~generally~~necessary ~~low~~for ~~molecular~~other ~~weight,~~applications ~~synthetically~~such ~~derived~~as ~~chemical~~some ~~compounds~~food, ~~designed~~beverage, toand ~~bind~~environmental totesting and ~~interfere~~human ~~with~~forensic ~~the~~and ~~activities~~toxicology testing. In early stages of ~~particular targets~~drug discovery, ~~such~~researchers asneed ~~proteins~~to identify drug metabolites, ~~DNA~~a process that requires instruments that have good resolution, orwhich ~~RNA.~~is

~~Development~~- of21 ~~Therapeutics~~- ~~Business~~

CeleraTable Genomics was originally formed for the purpose of generating and commercializing information to accelerate the understanding of biological processes and to assist the research endeavors of pharmaceutical, biotechnology, and life science research entities. A key component of Celera Genomics’ original business strategy was the development and sale of its Celera Discovery System™, an online information and discovery system through which users can access Celera Genomics’ genomic and related biological and medical information. The Celera Discovery System is now marketed by Applied Biosystems under a marketing and distribution agreement, which is described above in Item 1 of this report under the headings “Applied Biosystems Group Business – Marketing and Distribution Agreement with Celera Genomics.”Contents

~~During~~ the ~~our~~ability ~~2001~~to ~~fiscal~~distinguish ~~year, Celera~~among ~~Genomics~~several ~~expanded~~different ~~its~~types ~~operations~~of tomolecules ~~include~~within ~~therapeutics~~a ~~discovery~~complex sample, and ~~development~~mass inaccuracy, ~~addition~~which tois ~~its~~the ~~online~~ability ~~database business,~~to ~~and~~accurately ~~since~~quantify or ~~then~~determine ~~has established~~ the ~~therapeutics~~mass ~~business~~of asthe ~~its~~molecules ~~primary~~being ~~focus~~studied. In ~~December~~later ~~2002~~stages of drug discovery, ~~Celera~~researchers ~~Genomics announced~~need ato ~~refined~~study ~~business~~drug metabolism and ~~scientific~~pharmacokinetics, ~~plan~~the ~~for~~measurement ~~its~~of ~~therapeutics~~the ~~business~~bodily ~~which~~absorption, ~~generally~~distribution, ~~provides~~metabolism, ~~for~~and ~~increased~~excretion, or ~~investment~~elimination, inof ~~clinical~~drugs. ~~development~~Pharmacokinetic ~~capabilities,~~analysis ~~and~~requires ~~greater~~instruments ~~efficiency~~that ~~and~~have ~~economy~~a inhigh ~~target discovery~~sensitivity, ~~while~~or ~~continuing~~ the ability to ~~place~~accurately ~~emphasis~~detect onand ~~Celera~~quantitate ~~Genomics’~~very ~~cash~~small asquantities of molecules within a ~~strategic~~sample, ~~asset.~~because Inthe ~~support~~amounts of ~~this~~the ~~plan, Celera~~drugs ~~Genomics~~and ~~has~~their metabolites ~~hired~~are ~~key~~very ~~managers~~low and ~~staff~~the ~~for~~mixtures are very complex. Researchers can perform the ~~therapeutics~~required ~~business~~drug metabolism and pharmacokinetic analysis with LC/MS/MS systems that have been developed by Applied Biosystems/MDS Analytical Technologies Instruments.

~~During~~The ~~our~~Applied ~~2004~~Biosystems/MDS ~~fiscal~~Analytical ~~year,~~Technologies ~~Celera~~Instruments ~~Genomics~~joint ~~continued~~venture tooffers ~~develop~~the ~~its~~following ~~therapeutics~~broad ~~business.~~product ~~Celera~~line ~~Genomics’~~of ~~scientists~~mass spectrometry ~~advanced~~instruments ~~several~~for small molecule ~~therapeutic~~and ~~programs~~pharmacokinetics researchers, including ~~its histone deacetylase, or HDAC, program~~ for ~~cancer and its Factor VIIa anticoagulation program, both of which are described below in Item 1 of this report under~~ the ~~headings~~applications “Celera Genomics Group Business – Small Molecule Drug Programs – Compound Development Programs.” Also, during our 2004 fiscal year, Celera Genomics made significant progress in its proteomic studies of pancreatic, lung, and colon cancer and began processing breast tissue samples. These studies are described ~~below~~above: ~~in Item 1 of this report under the headings “Celera Genomics Group Business – Target Discovery Programs; Proteomics and Genomics Research – Proteomics Studies.”~~

Also, in July 2004, subsequent to the end of our 2004 fiscal year, Celera Genomics announced several developments in its business, which are described below:


Instrument Name	Ionization	Mass Analyzer
API 5000™ LC/MS/MS System	ESI	Triple quad
API 4000™ LC/MS/MS System	ESI	Triple quad
API 3200™ LC/MS/MS System	ESI	Triple quad
API 2000™ LC/MS/MS System	ESI	Triple quad
QSTAR^® Elite LC/MS/MS System	ESI or MALDI	Hybrid quad/TOF (often referred to as a Qq-TOF)
4000 Q TRAP^® LC/MS/MS System	ESI	Hybrid quad/linear ion trap
3200 Q TRAP^® LC/MS/MS System	ESI	Hybrid quad/linear ion trap
FlashQuant™ Workstation	MALDI	Triple quad

•Technologically, ~~Celera~~these ~~Genomics~~systems ~~announced~~are ~~the~~distinguished ~~formation~~primarily based on their sensitivity, resolution, mass accuracy, throughput, and overall ease of use. These systems offer a ~~strategic~~range ~~collaboration~~of ~~with~~these ~~Abbott~~quantitative ~~Laboratories~~and toqualitative ~~discover,~~performance ~~develop,~~characteristics in different combinations and ~~commercialize~~at ~~therapies~~varying costs. The product line includes systems that are suitable for a ~~the~~wide ~~treatment~~range of ~~cancer~~small molecule applications and users, from individual researchers to large research laboratories. The ~~collaboration~~suitability ~~will~~of ~~encompass~~any particular system for any researcher or research laboratory depends on the ~~development~~nature of ~~various~~the ~~therapeutic~~work ~~approaches,~~being ~~including~~performed and ~~antibodies~~the ~~and~~capital ~~small~~budget ~~molecule~~of ~~drugs~~the ~~targeted~~researcher ~~against~~or ~~differentially-expressed~~research ~~cell-surface~~laboratory. ~~proteins~~The ~~that~~API ~~have~~product ~~been~~line ~~associated~~offers quantitation with ~~cancer~~a range of sensitivity at varying costs, and ~~validated~~has asbeen ~~therapeutic~~widely ~~targets~~accepted ~~through~~by ~~Celera~~pharmaceutical ~~Genomics’~~researchers. ~~proteomics~~The API 5000 system is the most sensitive of the API systems and we believe it is the most sensitive triple quad mass spectrometry instrument currently available to this research market. •In ~~Celera~~addition ~~Genomics~~to ~~announced~~the ~~along~~systems ~~with~~described ~~Celera~~above, ~~Diagnostics~~the aApplied Biosystems/MDS Analytical Technologies Instruments joint ~~research~~venture ~~collaboration~~offers ~~with~~enhancements, ~~General~~including ~~Electric~~reagent ~~Company~~kits ~~intended~~and tosoftware, ~~accelerate~~that enable particular applications on the systems or increase the performance of the systems for particular applications.

We introduced the FlashQuant™ Workstation in our 2007 fiscal year and began delivering systems to customers in March 2008. The Workstation, our -newest 27system for this market, is a first-of-its-kind system that enables researchers to combine MALDI ionization with triple quad mass analysis. The Workstation was developed to help pharmaceutical companies increase the speed, and reduce the cost, of conducting small molecule drug and drug metabolite screening in early stage drug discovery research.

~~Back~~Information about the Applied Biosystems/MDS Analytical Technologies Instruments joint venture, general information about mass spectrometry instruments, and additional information about some of the instruments referred to ~~Contents~~in the table above, is set forth above in this

		discovery and development of new products for personalized, or targeted, medicine. The parties will seek to understand and differentiate disease at the molecular level, which is expected to lead to new diagnostics and treatments that are tailored for a specific disease or patient population. The first project outlined in the research collaboration is intended to support General Electric’s development of novel imaging agents that selectively target cell surface proteins that Celera Genomics has identified to be associated with cancer. A second project is intended to apply bioinformatics techniques to the prioritization of targets for diagnostic and therapeutic use.
	•	Celera Genomics announced receipt of a milestone payment from Merck & Co. Inc. under the cathepsin K inhibitor collaboration agreement between the companies. This research program is described below in Item 1 of this report under the headings “Celera Genomics Group Business – Small Molecule Drug Programs – Compound Development Programs.” This payment recognizes Merck’s advancement of a cathepsin K inhibitor into Phase I clinical trials as a potential treatment for osteoporosis. If this compound or others developed under the cathepsin K collaboration are successfully developed and advanced toward commercialization, which requires several other clinical trials if Phase I trials are successful, Celera Genomics will receive additional milestone payments and royalties on net sales from Merck.
	•	Celera Genomics announced a strategic collaboration with Seattle Genetics, Inc. to jointly discover and develop antibody-based therapies for cancer. Pursuant to the collaboration, the parties will jointly designate a number of cell-surface proteins discovered and validated through Celera Genomics’ proteomics research as targets. Seattle Genetics will carry out initial screening to generate and select the appropriate corresponding antibodies for joint development and commercialization. Antibodies developed under this collaboration may include Seattle Genetics’ proprietary “antibody-drug conjugates,” which are antibodies carrying cell-killing drugs. These antibodies may not be potent enough to kill cancer cells but can target cancer cells and deliver the cell-killing or “cytotoxic,” drugs.

- 22 -

TargetTable Discoveryof Programs; Proteomics and Genomics Research Contents

~~Overview. Therapeutic target discovery,~~ ~~including~~description ~~identification and validation research, continues to be an important part~~ of ~~Celera~~our ~~Genomics’~~ business, although it has directed its resources primarily to small molecule therapeutics development. Therapeutic “targets” are biological points of intervention for a therapeutic designed to affect a particular disease or medical condition. “Validation” refers to the process whereby the biological relevance of a particular target, and, therefore, its potential therapeutic relevance, is confirmed by conducting additional, complementary testing or analysis. Celera Genomics is focusing its target discovery research efforts in two areas: proteomics studies, which are described further below under the heading “~~Proteomics~~Products ~~Studies,”~~for ~~and analysis of~~ the ~~results~~Proteomics of Celera Diagnostics’ gene-disease association studies, which are described below in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics Market– ~~Research~~Mass ~~and Development~~Spectrometry.” ~~Celera Genomics believes that these research efforts may lead to several possible commercial uses, which are described below:~~

-Applied 28Markets -Products

~~Back~~We have established an Applied Markets division focused exclusively on developing and marketing products for use in some markets outside of life science research, which we refer to ~~Contents~~as applied markets. The current focus of our products for these markets, which are discussed below in further detail, is in the areas of: forensic testing and human identification; quality and safety testing, such as testing required for food and pharmaceutical manufacturing; and biosecurity, which refers to products needed in response to the threat of biological terrorism and other malicious, accidental, and natural biological dangers. We believe that there is an opportunity to leverage our experience and success in forensic testing and human identification into other applied markets. In addition, some applied markets applications require instrument platforms such as our TaqMan® chemistry-based real-time PCR systems, genetic analysis instruments, and mass spectrometry systems, and accordingly the marketing of these systems for use in applied markets is within the focus of the Applied Markets division.

	•	Currently, the primary purpose of these research efforts is to identify and validate targets for antibody therapeutics and small molecule therapeutics. Celera Genomics has entered into collaborations to support these development efforts, including an antibody and small molecule therapeutic collaboration with Abbott Laboratories, and an antibody therapeutic collaboration with Seattle Genetics. Both of these collaborations are for development of therapeutics targeted to cell-surface proteins associated with cancer. These collaborations are described above in Item 1 of this report under the headings “Celera Genomics Group Business – Development of Therapeutics Business.” Generally, Celera Genomics is seeking to defer the need to partner on small molecule drugs, if at all, other than those covered by the Abbott Laboratories collaboration. On the other hand, Celera Genomics believes it will likely collaborate with other companies on most or all antibody therapeutics that it may pursue as it is not currently seeking to build the infrastructure needed for their internal development. Celera Genomics’ development capabilities and expansion plans are described below in Item 1 of this report under the headings “Celera Genomics Group Business – Small Molecule Drug Programs.”
	•	Validated targets discovered through Celera Genomics’ research may be useful as in vitro or in vivo diagnostics, whether or not they result in efficacious therapeutics. In vitro refers to testing or other activities performed outside the living body, and in vivo refers to testing or other activities performed in the living body. In July 2004, Celera Genomics and Celera Diagnostics announced a collaboration with General Electric pursuant to which General Electric may develop novel in vivo imaging agents targeted to cell surface proteins that Celera Genomics has identified to be associated with cancer. This collaboration is described above in Part I of this report under the headings “Celera Genomics Group Business – Development of Therapautics Business.” Celera Genomics expects that any in vitro diagnostics derived from Celera Genomics’ research would be commercialized, if at all, through Celera Diagnostics because these types of diagnostics are currently within Celera Diagnostics’ field of business.

Forensic Testing and Human Identification

~~Also, Celera~~We ~~Genomics~~develop issystems ~~seeking~~that toare ~~incorporate~~used ~~its~~to ~~study~~identify ofindividuals ~~“pharmacogenomics”~~based ~~into~~on ~~the~~their ~~design of clinical studies. Pharmacogenomics~~DNA, acommonly ~~term~~referred ~~which refers~~ to ~~the~~as ~~combination~~forensic ofanalysis. ~~pharmacology~~Forensic ~~and~~analysis ~~genomics,~~ is ~~the~~often used, ~~study~~for ofexample, ~~how~~in ancriminal ~~individual’s~~investigations, ~~genetic~~to ~~inheritance~~identify ~~affects~~human ~~the~~remains, ~~body’s~~and ~~response~~for topaternity ~~drugs~~testing. ~~Celera~~We ~~Genomics~~offer ~~believes~~an ~~that~~extensive ~~its~~product ~~pharmacogenomics~~line ~~research,~~addressing ~~which~~key ~~includes~~needs ~~its~~for ~~analysis~~this ~~of the results of Celera Diagnostics’ gene-disease association studies~~application, ~~may~~and ~~generate~~this ~~information~~product ~~that~~line ishas ~~useful~~been inwidely ~~stratifying patient~~accepted ~~populations~~by toinvestigators ~~increase the proportion of patients who have an efficacious~~and ~~response~~laboratories toperforming ~~drug~~forensic ~~treatment~~analysis.

~~Proteomics~~Our ~~Studies.~~forensic ~~Celera~~analysis ~~Genomics~~systems ~~uses high-throughput~~are ~~proteomics~~used toin ~~identify~~criminal ~~proteins~~cases ~~that~~where ~~are~~DNA ~~associated~~extracted ~~with~~from ~~disease.~~biological evidence ~~These~~found ~~proteins~~at ~~may~~the becrime ~~targets~~scene ~~for~~is ~~therapeutic~~compared ~~intervention.~~with ~~Celera~~DNA ~~Genomics’~~from ~~current proteomics~~suspects ~~efforts~~or ~~are~~profiles ~~focused~~stored onin ~~analyzing~~databases ~~proteins~~of onpotential ~~the~~suspects. ~~surface~~The use of ~~cells~~DNA ~~from~~in ~~both~~some ~~healthy~~criminal ~~and~~investigations ~~diseased~~has ~~individuals,~~been ~~seeking~~shown to ~~identify~~help ~~proteins~~solve ~~that~~crimes, ~~can~~exonerate beinnocent ~~associated~~individuals, and ~~with~~reduce ~~particular~~the ~~diseases~~cost of the investigation. ~~These~~We ~~cell~~believe ~~surface~~that ~~proteins,~~today ~~which~~there ~~are~~is ~~referred~~general torecognition asby ~~“differentially-expressed~~scientific, ~~cell-surface~~law ~~proteins~~enforcement,” ~~are~~and ~~the~~judicial ~~class~~organizations and institutions worldwide of ~~proteins~~the ~~believed to~~validity ~~represent~~of the ~~most~~use ~~promising~~of ~~targets~~DNA testing and DNA databases for ~~near-term~~these purposes. ~~drug~~This ~~candidates~~is evidenced in ~~the~~particular ~~form~~by a growing number of ~~therapeutic~~governmental ~~antibodies.~~initiatives ~~However,~~in ~~Celera~~the ~~Genomics~~U.S. ~~has~~and ~~recently~~abroad ~~begun~~to ~~studying~~finance ~~proteins~~the ~~that are~~analysis ~~“shed”~~of DNA from ~~cancer~~crime ~~cells~~scenes, ~~within~~including the ~~body,~~existing asbacklog itof ~~believes~~samples ~~this~~from ~~may~~past ~~also~~crimes, beand abuild ~~class~~databases of potential ~~proteins~~suspects. ~~that~~Many ~~could~~jurisdictions ~~result~~in the U.S. and in ~~drug~~Europe ~~targets~~have passed legislation creating mandated DNA databasing of individuals that are arrested and/or ~~diagnostic~~convicted ~~tests~~of crimes. The ~~diseases~~growing ~~that~~recognition ~~Celera~~of ~~Genomics~~the ~~has~~validity ~~initially~~of ~~selected~~the ~~for~~use of DNA in criminal matters is also evidenced by the increasing use of DNA analysis to exonerate individuals previously convicted of crimes by testing archived evidence.

Our AmpF - STR® 29kit -product line, the core of our forensic analysis offerings, is used to produce a genetic profile of a sample based on specific DNA fragments known as short tandem repeats, or STRs. The kit used most extensively for STR analysis and offender databasing worldwide is the AmpF STR® Identifiler® PCR Amplification Kit. We also offer other kits designed to cover standards established by authorities in particular countries or regions, such as in the European Union. We also produce kits that analyze specific types of markers within samples, such as the AmpF STR® Yfiler® PCR Amplification Kit and the MiniFiler™ PCR Amplification Kit, described below.

~~Back~~- to23 ~~Contents~~-

proteomicsTable studyof are pancreatic, lung, colon, and breast cancer. Celera Genomics conducts its proteomics research at its own proteomics facility, which became fully operational during our 2003 fiscal year.Contents

~~During~~The ~~our~~AmpF STR®Yfiler™ ~~2004~~PCR ~~fiscal~~Amplification ~~year,~~Kit ~~Celera~~is ~~Genomics~~a ~~made~~forensic ~~significant~~identification ~~progress~~kit inthat ~~its~~enables ~~proteomic~~forensic ~~studies~~scientists ofto ~~pancreatic,~~detect ~~lung,~~low ~~and~~levels ~~colon~~of ~~cancer~~male ~~and~~DNA ~~began~~in ~~processing~~the ~~breast~~presence of ~~tissue~~large ~~samples.~~amounts ~~As a result~~ of ~~these~~female ~~studies~~DNA, ~~Celera~~a ~~Genomics~~situation ~~successfully~~routinely ~~identified~~encountered ~~over~~in ~~200~~cases ~~differentially-expressed~~of ~~proteins~~sexual onassault. ~~the~~Identifying, ~~surface~~segregating, ofand ~~cancer~~analyzing ~~cells.~~male ~~Its~~DNA ~~scientists~~in ~~are~~cases ~~now~~involving ~~completing~~complex ~~validation~~evidence ~~studies~~containing ~~for~~mixtures ~~several~~ of ~~these~~male ~~proteins~~and asfemale ~~potential~~DNA ~~therapeutic~~has ~~targets~~been ~~for~~a ~~treating~~significant challenge ~~pancreatic~~for ~~cancer~~forensic analysts. ~~They~~The ~~have~~sensitivity ~~also~~and ~~selected~~specificity ~~additional~~of ~~differentially~~this ~~expressed~~kit ~~proteins~~provides ~~for~~an ~~validation,~~additional ~~including~~tool ~~our~~for ~~first~~the ~~potential~~analysis ~~therapeutic~~of ~~targets~~this ~~related~~type toof ~~lung~~complex ~~and colon cancers~~evidence.

InThe ~~order~~AmpF STR® toMiniFiler™ ~~identify~~PCR ~~differentially~~Amplification ~~expressed~~Kit ~~cell-surface~~is ~~proteins,~~the ~~Celera~~world’s ~~Genomics~~first ~~has~~commercially ~~designed~~available ~~advanced~~reagent ~~methods~~kit tofor ~~separate~~generating ~~cellular~~genetic ~~and~~profiles ~~subcellular~~from ~~components~~aged, compromised, ofor ~~biological~~damaged DNA samples. ~~Celera~~The ~~Genomics~~kit ~~uses~~was ~~advanced~~developed ~~mass~~in ~~spectrometer~~response ~~systems~~to ~~that~~the ~~are~~growing ~~amenable~~backlog toof ~~high-throughput~~samples ~~quantitation~~recovered from crime scene investigations and ~~identification~~other instances of ~~proteins~~DNA ~~from~~collection ~~separated~~in ~~biological~~which the samples could not previously be identified because of poor sample quality. ~~Celera~~The ~~Genomics~~kit is ~~also~~expected ~~using~~to ~~its~~enable ~~assembled~~an ~~human~~increase ~~genome~~in ~~and~~the ~~proprietary~~number ~~software~~of ~~and~~solved ~~algorithms~~criminal cases, in addition to ~~identify~~aiding ~~proteins~~in ~~associated~~the ~~with~~investigation ~~diseases~~of missing person occurrences and mass disasters.

~~For~~In ~~target~~addition ~~validation,~~to ~~Celera~~the ~~Genomics~~STR ~~uses~~product aline, ~~variety~~our offorensic ~~methodologies.~~testing Inproduct ~~collaboration~~line ~~with~~includes ~~other~~the Quantifiler® ~~companies~~Human DNA Quantification Kit, ~~Celera~~a ~~Genomics~~system ~~uses~~designed ~~“immunohistochemistry,”~~to orincrease the ~~identification~~efficiency and effectiveness of ~~proteins~~forensic inanalysis ~~tissues~~by providing a qualitative and ~~cells~~quantitative ~~using~~assessment ~~antibodies,~~of toDNA in ~~refine~~a ~~its~~sample ~~understanding~~before offorensic ~~therapeutic~~analysis. ~~targets~~This ofassessment ~~interest~~can be used by scientists and, technicians performing forensic analysis to facilitate proper sample preparation for ~~example~~analysis, towhich ~~identify~~can ~~protein~~reduce ~~expression~~the ~~profiles~~risk that ~~would~~analysis ~~support~~must orbe ~~preclude~~repeated. ~~meaningful~~In ~~progression~~April 2008, ofwe ~~the~~began ~~drug~~offering ~~targets.~~a ~~For~~new ~~targets~~Quantifiler® ofDuo ~~interest~~DNA Quantification Kit, ~~Celera~~which ~~Genomics~~was ~~intends~~developed to ~~perform~~help ~~tests~~improve results from sexual assault cases and other challenging samples. The kit can be used to ~~determine~~quickly ~~their~~identify ~~relevance~~low ~~across~~amounts aof ~~broad~~male ~~range~~DNA present in samples containing high quantities of ~~tissues~~female ~~and~~DNA, ~~diseases.~~which ~~Celera~~can ~~Genomics~~be ~~expects~~used to ~~continue~~guide ~~accessing~~selection ~~further~~of ~~validation~~the ~~capabilities~~optimal ~~through~~DNA ~~collaborations~~profiling chemistry kit.

~~Bioinformatics.~~In AsDecember a2007, ~~result~~we ofannounced ~~its prior activities in sequencing~~ the ~~human~~availability ~~and~~of ~~other~~our ~~genomes~~new ~~and~~GeneMapper® ~~creating~~ID-X ~~and~~software ~~maintaining the Celera Discovery System, Celera Genomics has substantial bioinformatics resources~~application. ~~Using~~ ~~these~~This ~~resources,~~software ~~Celera~~streamlines ~~Genomics expects to develop~~ the ~~capability~~routine toreview ~~perform~~of ~~simulated,~~data ~~computer-based~~required ~~experimentation,~~for ~~which~~DNA ~~Celera~~analysis ~~Genomics~~by ~~believes~~automating ~~would minimize~~ the ~~need~~separation toof ~~perform~~those ~~more~~DNA ~~labor-intensive~~samples ~~experiments in the laboratory. Also, Celera Genomics believes~~ that itrequire ~~can~~further ~~develop~~review ~~proprietary~~by ~~algorithms~~a ~~for~~forensic ~~use in its large scale~~analyst ~~computing infrastructure for the extraction of data~~ from ~~proteomics~~those ~~experiments~~that ~~and~~do ~~the~~not. ~~integration~~The ofsoftware ~~this~~was ~~data~~developed ~~with~~in ~~genome,~~response ~~gene~~to ~~expression,~~a ~~and~~growing ~~protein~~need ~~characterization information,~~by ~~scientific~~some ~~literature,~~law ~~and~~enforcement ~~the~~agencies ~~patent~~to ~~status~~increase ~~of possible targets. Celera Genomics believes~~ the ~~application~~efficiency of ~~these~~their ~~algorithms~~forensic tolaboratories ~~this~~in ~~data~~response ~~could be used~~ to ~~facilitate~~ the ~~identification~~increasing numbers of ~~targets.~~DNA ~~However,~~samples ~~Celera~~they ~~Genomics’~~receive ~~ability to develop these capabilities is unproven, and, if developed, their utility in the~~for ~~therapeutics discovery and development process is uncertain~~analysis.

~~Genomics~~In ~~Studies.~~September ~~Also as a result of its prior activities~~2007, ~~Celera~~ ~~Genomics~~we ~~has~~began ~~substantial genomics capabilities. As~~ a ~~complementary~~new ~~approach~~service toprogram ~~the~~for ~~proteomics~~forensic ~~methods~~DNA ~~and the disease association studies described above~~laboratories, ~~Celera~~which ~~Genomics~~is ~~uses~~intended ~~genomics~~to inmake ~~its~~it ~~efforts~~faster ~~to identify~~ and ~~validate~~easier ~~therapeutic~~for ~~targets.~~forensic ~~Celera~~DNA ~~Genomics~~laboratories ~~intends~~ to ~~further~~comply ~~characterize~~with ~~recently~~quality ~~discovered~~assurance ~~genes,~~standards ~~including those for which we have been issued patents or for which we have filed patent applications, by conducting in vitro cell studies~~ and invalidation ~~vivo animal studies~~guidelines. ~~Celera~~Validation ~~Genomics~~refers ~~expects~~ to ~~incorporate~~the ~~its~~documented, ~~bioinformatics~~scientific ~~capabilities into~~evaluation ~~this~~of ~~process.~~the ~~After~~performance ~~the~~and ~~functions~~analysis of ~~genes~~DNA ~~are~~technologies ~~determined,~~that ~~Celera~~provides ~~Genomics~~objective ~~intends~~evidence to demonstrate ~~establish~~ the ~~priorities of~~validity ~~these~~and ~~genes~~reliability orof ~~their gene products as targets based on~~ the ~~families~~forensic ofDNA ~~proteins~~test ~~they~~results. ~~encode, the~~

-Quality 30and -Safety Testing

~~Back~~Many manufacturers, including in particular those involved in the manufacture of food and pharmaceuticals, need to ~~Contents~~operate the manufacturing process in a controlled environment free of contaminants such as bacteria and fungus. These contaminants can spoil food or a drug being manufactured and can be harmful to human health. The U.S. Food and Drug Administration, or FDA, and the U.S. Department of Agriculture regulate the quality and safety standards for food manufacturers, and the FDA regulates the quality and safety standards for drug manufacturers. As a result, these manufacturers need to carefully and routinely monitor the manufacturing process, including their manufacturing environment, raw materials, and finished product, for the presence and identification of contaminants. We have developed DNA-based testing products for this

~~association~~- ~~of the~~24 ~~expression~~- ~~of these genes with specific diseases, and the functional importance of the gene products to cells.~~

SmallTable Moleculeof Drug Programs Contents

~~Celera~~purpose, ~~Genomics~~primarily ~~has~~for apathogens, ~~small~~which ~~molecule~~are ~~drug~~a ~~discovery~~class ~~and~~of ~~development~~contaminants ~~facility~~that inare ~~South~~potentially ~~San~~lethal. ~~Francisco~~In March 2008, ~~California.~~we Atannounced ~~this~~that ~~facility,~~we ~~Celera~~were ~~Genomics~~expanding isour presence ~~performing~~in ~~research~~the tofood ~~identify~~safety and ~~validate~~testing ~~potential~~market ~~small~~and ~~molecule~~planned ~~therapeutic~~to ~~targets~~provide ~~and~~pathogen ~~develop~~detection ~~small~~kits ~~molecule~~directly ~~therapeutic~~to ~~compounds~~food companies. ~~Celera~~We ~~Genomics~~offer ~~originally~~several ~~acquired~~different ~~some~~pathogen ofdetection ~~these~~kits, ~~capabilities~~and ~~with~~kits ~~its~~for ~~acquisition~~the detection of ~~Axys~~additional ~~Pharmaceuticals,~~pathogens ~~Inc.~~are inunder ~~November 2001~~development. In ~~Since~~February ~~the acquisition~~2008, ~~Celera~~our ~~Genomics~~salmonella ~~has~~test ~~developed~~became ~~additional~~the ~~capabilities~~first ~~and~~of ~~intends~~our topathogen ~~continue~~tests ~~doing~~to ~~so,~~receive ~~particularly~~certification byfrom ~~expanding~~the ~~its~~Association ~~small~~of ~~molecule~~Analytical ~~drug development capabilities~~Communities. ~~Celera~~This ~~Genomics’~~certification ~~small~~is ~~molecule~~required ~~drug~~for ~~research~~use ~~and~~of ~~development~~a ~~expertise~~pathogen ~~and~~test ~~programs~~at ~~are~~a ~~described~~food ~~below~~manufacturing site.

~~Scientific Expertise~~ For ~~Lead~~ ~~Compound~~pharmaceutical ~~Identification. Celera~~manufacturing ~~Genomics~~quality ~~has~~assurance aand ~~range~~quality ofcontrol, ~~chemistry~~we ~~and~~offer ~~biology~~the MicroSeq® ~~capabilities~~Microbial ~~which have~~Identification ~~been~~System ~~used~~to ~~primarily~~accurately ~~for~~characterize ~~therapeutic~~and ~~compound~~identify ~~discovery~~bacteria and ~~development~~fungus. To ~~date,~~This aproduct ~~primary~~is ~~focus~~used ofon ~~Celera~~one ~~Genomics’~~of ~~chemists~~our ~~and~~genetic ~~biologists has~~analysis ~~been~~instruments ~~lead~~to ~~compound~~test ~~discovery~~raw materials and ~~development~~finished ~~using~~product. aFor ~~variety~~the offood ~~methods.~~processing ~~“Lead”~~market, ~~compounds are~~we ~~those~~offer ~~within~~TaqMan® aPathogen ~~series~~Detection oftests ~~related compounds~~ that werapidly ~~believe~~detect ~~are~~food ~~the most~~pathogens, ~~promising~~ and ~~which~~other wetests ~~would~~that ~~seek~~detect ~~to move into preclinical~~ and ~~clinical development.~~analyze ~~Currently,~~genetically ~~Celera~~modified ~~Genomics’~~organisms ~~lead~~in ~~compound~~foods. ~~discovery~~These ~~and~~tests ~~development~~operate ~~efforts are focused~~ on ~~both~~our ~~“structure~~TaqMan® chemistry-based ~~drug~~real-time ~~design”~~PCR ~~and “high-throughput screening~~systems.” ~~These methods are generally described as follows:~~

	•	“Structure-based Drug Design.” Structure-based drug design is a process whereby medicinal chemists attempt to develop compounds that will bind to a therapeutic target based on the physical 3-dimensional structure of the target molecule. Our medicinal chemists obtain this information by analyzing pictures of the molecule taken through X-ray crystallography and also by performing molecular modeling based on the known properties of the components of the target molecule.
	•	“High-Throughput Screening.” High-throughput screening involves the screening of thousands of compounds against a disease target, usually a protein, to determine whether and how any of them bind to the target. Axys developed and purchased compound libraries for these studies and Celera Genomics has continued to diversify its compound libraries through the purchase of additional compound collections.

Biosecurity

~~Compound~~We ~~Development~~believe ~~Programs.~~there ~~Using~~is ~~the technologies described above, Celera Genomics has developed~~ a ~~general expertise in discovering and~~ developing ~~potential~~market ~~therapeutic~~for ~~compounds~~new ~~that~~products ~~target~~for ~~“proteases,”~~surveillance aand ~~known druggable class~~ detection of ~~proteins~~biosecurity threats. ~~Proteases~~This ~~are~~market ~~enzymes~~is ~~that~~substantially ~~break~~dependent ~~down~~on ~~chemical~~government ~~bonds~~initiatives ~~in proteins~~ and ~~are~~funding, ~~essential~~but toheightened ~~the~~awareness ~~body’s~~of ~~physiological~~biological ~~processes~~terrorism, ~~such~~combined aswith ~~inflammation.~~outbreaks ~~Proteases~~of ~~are~~emerging ~~generally~~infectious ~~classified~~diseases, byhas ~~how~~caused ~~they~~the ~~break down a protein’s chemical bonds~~U.S. ~~“Cysteine”~~government ~~and~~to increase ~~“serine”~~funding ~~proteases~~in ~~are~~this ~~two~~area ~~classes~~in ofrecent ~~these enzymes~~years.

~~Celera~~We ~~Genomics~~have ~~has~~developed, ~~discovered~~and ~~“inhibitors”~~expect ofto continue ~~some~~developing, products designed to detect and identify biosecurity threats. For example, we offer TaqMan® Influenza A/H5 Detection Kits. These kits are used for rapidly detecting multiple strains of ~~the~~avian ~~proteases~~influenza, ~~that~~an itinfectious disease that has ~~studied~~become a substantial worldwide health concern in recent years. ~~Inhibitors~~The tests are ~~natural~~for oruse ~~synthetic~~on ~~compounds~~our ~~that~~TaqMan® chemistry-based real-time PCR systems, and can ~~bind~~detect toan ~~the~~infected ~~protein~~sample ~~molecule~~in ~~and change~~hours rather than in the ~~way~~two itor ~~will~~more ~~perform~~days that is typically required for other more traditional testing methods. Generally, we sell these kits in major markets throughout the ~~body~~world other than the U.S., and insales ~~particular~~are restricted to surveillance and research use only to comply with regulatory restrictions. In the U.S, ~~can~~regulatory restrictions generally prevent ~~the~~our ~~function~~sale of ~~the~~these ~~target~~kits ~~protease~~except for a limited research use exception that is ~~causing~~ ornot ~~contributing~~expected to generate significant sales. Also, through a ~~particular~~collaboration ~~disease~~with orCepheid, ~~condition.~~we ~~Celera~~provide ~~Genomics~~reagents isused ~~developing~~in ~~several~~assays ~~inhibitors~~for onthe ~~its~~detection ~~own,~~of ~~and~~anthrax ~~has~~for ~~two collaborations~~use ~~with~~in ~~major~~U.S. ~~pharmaceutical~~Postal Service Biohazard Detection Systems.

-LIMS 31Products -and Services

~~Back~~We develop, market, and distribute software products for laboratory information management systems, often referred to ~~Contents~~as LIMS. Our principal LIMS product is referred to as SQL*LIMS®, and is offered along with several optional additional software products, some sourced from other manufacturers, which are designed to enhance its functionality for particular applications.

~~companies~~LIMS ~~for~~is ~~the~~used to integrate and automate research and development and manufacturing laboratories with the goal of ~~therapeutics~~increasing ~~for inflammatory~~their ~~diseases~~efficiency and effectiveness. ~~These~~For ~~internal~~ some laboratories, large and ~~partnered~~small, ~~programs~~LIMS ~~include~~has become an essential part of the ~~following~~laboratory design, enabling or facilitating, for example: sample tracking; sample prioritization; organization and review of laboratory work lists; integration of laboratory instrumentation with software applications; generation of reports; and ensuring data integrity.

•- ~~Celera~~25 Genomics has an internal program to develop inhibitors of Factor VIIa, a serine protease, as an anticoagulant for the treatment of indications such as deep vein thrombosis, with the goal of improved balance between bleeding time and therapeutic efficacy compared to existing therapies. • Celera Genomics has another internal program to develop inhibitors of histone deacetylase, or HDAC. HDAC is an enzyme that is involved in the regulation of histone acetylation, a biological process that influences gene expression. Inhibition of HDAC leads to an increase in gene expression in a number of genes, some of which are related to cell cycle arrest and cell death. Medicinal chemists at Celera Genomics have applied structure based drug design to generate compounds that possess potent in vitro inhibition of HDAC activity, and in vivo efficacy in models of cancer. • Celera Genomics has two partnered programs that it acquired with Axys Pharmaceuticals. The first is a collaboration with Merck & Co. Inc. to develop small molecule inhibitors of cathepsin K, a cysteine protease, for the treatment of osteoporosis. Osteoporosis is a major risk factor for bone fractures and associated disability that affects over 10 million Americans, especially post-~~menopausal~~ women. The second is a collaboration with Aventis Pharmaceuticals to develop inhibitors of cathepsin S, another type of cysteine protease. Celera Genomics’ portion of both programs has been completed, and further development of therapeutics is now the responsibility of the partners, who will make clinical development decisions. In July 2004, Celera Genomics announced receipt of a milestone payment from Merck & Co. Inc. under the cathepsin K program. This payment recognizes Merck’s advancement of a cathepsin K inhibitor into Phase I clinical trials as a potential treatment for osteoporosis. Under U.S. Food and Drug Administration regulations, if these trials are successful several other clinical trials would be required before the compound could be commercialized. • Celera Genomics also has an internal program to develop inhibitors of tryptase, a serine protease, for the treatment of asthma. Celera Genomics previously had a collaboration with Bayer AG but during the 2003 fiscal year purchased all rights to the compounds subject to the collaboration. Since then, Celera Genomics discontinued its development of the lead compound series that had been acquired from Bayer and has shifted its efforts in this program to new proprietary compounds developed using, in part, technology and expertise obtained from the Bayer collaboration and the purchase of rights from Bayer.

DevelopmentTable of Preclinical and Clinical Resources and Expertise. A key element of Celera Genomics’ business and scientific plan is to increase its therapeutic development capabilities for both preclinical and clinical activities so that its most promising therapeutic programs can be advanced into clinical trials without having to partner with other companies. At Celera Genomics, a compound is considered to be in preclinical development when it has been identified as a lead compound within a series of compounds and Celera Genomics begins its efforts to assess and enable the effectiveness of the compound within the human body; and is considered to be in clinical development when clinical trials begin. Celera Genomics’ preclinicalContents

Use of LIMS for these functions is particularly important for laboratories involved in a high volume of -repetitive 32and -systematic testing procedures or other tasks, such as laboratories conducting testing for pharmaceuticals that are in advanced human clinical trials. This is also the case with pharmaceutical, food and beverage, and chemical manufacturing facilities, which need to regularly and systematically conduct testing for quality assurance and quality control.

~~Back~~This product line includes software solutions designed to ~~Contents~~address the specific needs of some of our customers. For example, our Forensics Solution software product for SQL*LIMS is an optional enhancement that modifies the SQL*LIMS to address the specific needs of the forensics laboratory environment. Also, in September 2007, we announced the SQL*LIMS Plug and Play Pharma Package™ to help pharmaceutical companies maintain regulatory compliance and decrease the cost of managing their manufacturing operations.

~~programs~~We ~~are~~also ~~described~~offer ~~above~~consulting inservices ~~Item~~to 1customers ofusing ~~this~~SQL*LIMS. ~~report~~These ~~under~~consulting ~~the~~services ~~headings~~are ~~“Celera~~designed ~~Genomics Group~~for ~~Business~~laboratories –seeking ~~Small~~greater ~~Molecule~~automation ~~Drug~~and ~~Programs~~integration –of ~~Compound~~lab ~~Development Programs~~processes.” ItOur ~~does~~consultants ~~not~~principally ~~currently~~assist ~~have~~with installation, configuration, and implementation of the SQL*LIMS and any ~~non-partnered~~optional ~~compounds~~software inenhancements ~~clinical~~purchased ~~development~~along with the SQL*LIMS.

~~When~~Service ~~acquired by Celera Genomics, Axys had some preclinical development capabilities, particularly in the scientific area of pharmacokinetics,~~ and noSupport significant clinical development capabilities. Since the Axys acquisition, Celera Genomics has substantially increased its scientific personnel to support preclinical and clinical activities, particularly the following:

•We ~~drug~~generally ~~metabolism,~~provide ~~pharmacokinetics~~limited warranties on all equipment at the time of sale, ~~and~~for ~~other~~periods ~~personnel~~of time ranging up to ~~evaluate~~two ~~how~~years afrom ~~compound~~the isdate ~~absorbed~~of ~~into~~sale depending on the ~~body;~~product ~~distributed~~subject ~~within~~to ~~the~~warranty. ~~body;~~However, ~~metabolized~~warranties included with any sale can vary, orand ~~broken~~may ~~down~~be excluded altogether, ~~once~~depending ~~introduced~~on ~~into~~the particular circumstances of the ~~body;~~sale. ~~and~~The ~~excreted~~sale of some equipment includes installation, orbasic ~~eliminated~~user training, byand/or ~~the~~application ~~body;~~support. •We ~~toxicology~~also ~~personnel~~offer service contracts to ~~perform~~our ~~studies~~customers that are generally one to ~~determine~~five years in duration after the ~~safety~~original ofwarranty ~~compounds;~~period. ~~and~~We •provide ~~pharmaceutical~~both ~~sciences~~repair ~~personnel~~services toand ~~focus~~routine onmaintenance ~~the~~services ~~conversion~~under ofthese aarrangements, ~~compound~~and ~~into~~also anoffer ~~acceptable~~repair ~~physical~~and ~~form~~maintenance ~~for~~services on ~~administration~~a time and material basis to ~~animals~~customers orthat ~~humans,~~do ~~for~~not ~~example~~have anservice ~~injection~~contracts. Service in the ~~skin~~U.S. orand amajor ~~pill~~markets oroutside ~~liquid~~of ~~taken~~the ~~orally~~U.S. is provided by our service staff. In some foreign countries, service is sometimes provided through distributorship arrangements.

InMarketing addition to the areas of scientific expertise described above, Celera Genomics has hired limited personnel in other areas that are important for drug development, including: clinical sciences personnel, who are involved in the overall direction and ~~management~~Distribution of clinical development and the execution of clinical trials; regulatory affairs personnel, who have expertise in U.S. Food and Drug Administration and other pertinent regulations; and project management personnel, who help integrate the different drug development project teams and facilitate communications among these different teams.

~~Marketing~~General ~~and Distribution Agreement with Applied Biosystems; Celera Discovery System™~~

InThe ~~April~~markets ~~2002,~~for our ~~Celera~~products ~~Genomics~~ and ~~Applied~~services ~~Biosystems~~span ~~entered~~the ~~into~~spectrum aof ~~ten-year marketing and distribution agreement pursuant to which Applied Biosystems became~~ the ~~exclusive~~ ~~distributor of~~life ~~Celera~~sciences ~~Genomics’~~industry ~~Celera~~and ~~Discovery~~research ~~System.~~community, ~~Applied~~including: ~~Biosystems~~basic ishuman ~~continuing~~disease toresearch ~~integrate the Celera Discovery System~~ and ~~other~~genetic ~~genomic~~analysis ~~and~~performed ~~biological~~by ~~information~~universities, ~~into~~government ~~its~~agencies, ~~products~~ and ~~services.~~other ~~The~~non-profit ~~agreement has enabled Celera~~organizations; ~~Genomics’~~pharmaceutical ~~executive~~drug ~~team to focus on therapeutics~~ discovery, ~~and~~ development~~. The~~, ~~agreement~~and ismanufacturing; ~~described above in Item 1 of this report under the headings “Applied Biosystems Group Business – Marketing~~ and ~~Distribution Agreement~~agriculture ~~with Celera Genomics~~research.” ~~Important~~Our ~~information~~products ~~about this agreement~~ also ~~appears~~serve ~~later~~the inneeds ~~Item~~of 5some ~~of Part~~markets IIoutside of ~~this~~life ~~report~~science ~~under~~research, ~~the~~which ~~headings~~we ~~“Market~~refer ~~for~~to ~~Registrant’s~~as ~~Common~~applied ~~Equity~~markets, ~~Related~~such ~~Stockholder Matters~~as ~~and~~the ~~Issuer~~fields ~~Purchases~~ of: ~~Equity~~human ~~Securities~~identity testing –(forensic ~~Forward Looking Statements~~ and ~~Risk~~paternity ~~Factors.” Under~~testing); ~~the marketing~~quality and ~~distribution~~safety ~~agreement~~testing, ~~Celera~~such ~~Genomics~~as ~~continues~~testing torequired ~~have~~for ~~access~~food toand ~~all~~pharmaceutical ~~data~~manufacturing; and biosecurity, which ~~may~~refers ~~include formats not available~~ to ~~third~~products ~~parties,~~needed ~~and other~~in ~~intellectual~~response ~~property~~to ~~associated with~~ the ~~Celera~~threat ~~Discovery System~~of ~~for~~biological ~~its~~terrorism ~~therapeutic programs. Celera Genomics expects that such data~~ and ~~intellectual property will have~~other amalicious, ~~significant~~accidental, ~~role~~and innatural ~~its~~biological ~~product research and development~~dangers.

The various markets served by our products and services have unique and often-changing 33requirements -and expectations. Our customers are continually searching for processes and systems that: can perform experiments and tests faster, more efficiently, and at a lower cost; and that can be used to perform new tasks in response to scientific, regulatory, and other developments. We seek to address these customer needs by focusing on the development and improvement of automated

~~Back~~- to26 ~~Contents~~-

RawTable Materialsof Contents

~~Celera~~and ~~Genomics’~~high-throughput ~~operations require a variety of raw materials~~systems, ~~such as chemical~~ and ~~biochemical~~the ~~materials~~development ~~and other supplies, some~~ of ~~which~~new ~~are~~applications ~~occasionally~~for ~~found to be in short supply. Any interruption in the availability of~~ these ~~materials could adversely affect Celera Genomics’ operations~~systems. ~~In particular~~Also, ~~Celera~~we ~~Genomics~~seek ~~needs access~~ to ~~human~~expand ~~and~~the ~~other~~markets ~~tissue~~served ~~samples~~by ~~from~~our ~~diseased~~products and ~~healthy individuals~~ services, ~~other biological materials,~~ and ~~related~~address clinical and other information, which may be in limited supply. Celera Genomics may not be able to obtain or maintain access to these materials and information on acceptable terms, or may not be able to obtain needed consents from individuals providing tissue or other samples. In addition, government regulation in the ~~U.S.~~unmet ~~and~~needs ~~foreign countries could result in restricted access to, or use~~ of, ~~human~~new ~~and other tissue samples. If Celera Genomics loses access to sufficient numbers or sources of tissue samples or other required biological materials~~markets, orby ifdeveloping ~~tighter~~new ~~restrictions are imposed on its use of related clinical~~ or ~~other~~improved ~~information~~systems orand ~~the~~new ~~information~~applications ~~generated~~for ~~from~~existing ~~tissue samples or other biological materials, its business may be harmed~~systems.

The ~~Patents,~~size ~~Licenses~~and growth of our markets are influenced by a number of factors, ~~Franchises~~including ~~and~~but ~~other~~not ~~Intellectual~~limited ~~Property~~to:

~~Through~~• ~~its~~technological ~~internal~~innovation ~~research programs and collaborative programs, Celera Genomics anticipates that it will develop an increasing portfolio of intellectual property. Celera Genomics may use this intellectual property~~ in ~~its~~methods ~~internal development programs or may license such intellectual property to third party collaborators or customers~~ for ~~some~~analyzing ~~combination~~biological ~~of license fees, milestone payments, and royalty payments.~~ data;

~~Celera~~• ~~Genomics’~~government ~~competitive~~funding position depends on maintaining its intellectual property protection and obtaining licenses to intellectual property it may need from others. Celera Genomics’ ability to compete and to achieve and maintain profitability depends on its ability to protect its proprietary discoveries and technologies, in large part, through obtaining and enforcing patent rights, obtaining copyright protection, maintaining its trade secrets, and operating without infringing the intellectual property rights of others. Celera Genomics’ ability to obtain patent protection for ~~its~~basic ~~inventions is uncertain. The patentability of biotechnology~~ and ~~pharmaceutical~~disease-related ~~inventions involves complex factual and legal questions. As a result~~research, itsuch isas ~~difficult to predict whether patents will be issued or the breadth of claims that will be allowed~~ in ~~biotechnology~~ ~~and~~heart ~~pharmaceutical patents. This may be particularly true with regard to the patenting of gene sequences~~disease, ~~gene functions~~AIDS, and genetic variations. In this regard, the U.S. Patent and Trademark Office has adopted guidelines for use in the review of the utility of inventions, particularly biotechnology inventions. These guidelines increased the amount of evidence required to demonstrate utility in order to obtain a patent in the biotechnology field, making patent protection more difficult to obtain. Although others have been successful in obtaining patents to biotechnology inventions, since the adoption of these guidelines, these patents have been issued with increasingly less frequency. As a result, patents may not be issued for patent applications that Celera Genomics may own or license if the applicant is unable to satisfy the new guidelines. Celera Genomics recognizes that many of the intellectual property laws are directly suitable for application to these discoveries while other protections may not be available or extend to cover genomic and/or proteomic-based discoveries.cancer;

~~Celera~~• ~~Genomics also~~research ~~cannot~~and ~~ensure~~development ~~that~~spending ~~changes~~by ~~in policies or to laws, or interpretations thereof, relevant to the patenting of~~ biotechnology ~~inventions, including for example inventions relating to DNA, including SNP, protein, therapeutic,~~ and ~~diagnostic discoveries,~~pharmaceutical ~~will not adversely affect its patent position worldwide. Celera Genomics anticipates that there may be~~companies;

-• 34awareness -of biological contamination in food and the environment;

~~Back~~• governmental response to ~~Contents~~the threat of biological terrorism and other malicious, accidental, and natural biological dangers, including efforts to develop surveillance and detection capabilities; and

~~significant~~• ~~opposition~~application ~~worldwide~~of ~~regarding intellectual property rights for~~ biotechnology inventions. This opposition may result in stricter standards for obtaining or enforcing biotechnology patent rights. Celera Genomics may become involved in opposition proceedings or litigation in order to ~~obtain~~basic oragricultural ~~enforce it intellectual property rights~~processes. If Celera Genomics becomes involved in these proceedings or litigation, it could consume a substantial portion of Celera Genomics’ resources, and Celera Genomics may not ultimately prevail and may not be able to prevent a competitor from making, using, or selling products or technology similar or identical to its own.

~~Celera~~In ~~Genomics~~the ~~itself~~U.S., ~~may~~we ~~become~~market ~~involved~~our inproducts ~~litigation~~and ~~with~~services adirectly ~~third~~through ~~party~~our ~~seeking~~own tosales ~~enforce~~and ~~its~~distribution ~~own~~organizations. ~~intellectual~~In ~~property~~major ~~rights~~markets outside of the U.S., Ifwe ~~Celera~~also ~~Genomics~~generally ~~does~~market ~~not~~our ~~prevail~~products inand aservices ~~patent~~directly ~~litigation~~through our ~~dispute~~own sales and distribution organizations, italthough ~~may~~some beproducts ~~required~~and toservices ~~pay~~are ~~damages~~marketed orthrough ~~royalties~~various representative and distributorship arrangements that we have established. We own or tolease ~~take~~sales ~~measures~~and toservice ~~avoid~~offices ~~any~~in ~~future~~the ~~infringement~~U.S. and in foreign countries through our foreign sales subsidiaries and distribution operations. None of our products are distributed through retail outlets.

~~Celera~~Applied ~~Genomics~~Biosystems ~~has~~E-Business filed for patent protection worldwide for inventions relating to its discoveries. Celera Genomics expects to continue seeking patent protection for inventions relating to its DNA, including SNP, protein, therapeutic, and diagnostic discoveries. Celera Genomics’ current strategy is to apply for patent protection for inventions that are made relating to novel pharmaceuticals and any novel formulations or methods of manufacture thereof, and novel methods of treating and diagnosing disease, as well as any novel inventions that may be made relating to DNA, including SNP, and protein discoveries. Although obtaining patent protection for inventions relating to its DNA, protein, and diagnostic discoveries might enhance Celera Genomics’ business, Celera Genomics does not believe that its commercial success will be materially dependent on its ability to do so. However, Celera Genomics’ failure to receive patent protection for its therapeutic inventions could adversely affect the commercial value of these discoveries. Celera Genomics currently owns 170 U.S. patents claiming inventions relating to its DNA, protein and therapeutic discoveries.

We have established an ~~Celera~~electronic ~~Genomics~~commerce, ~~also~~or ~~relies~~“e-commerce,” onweb ~~trade~~site ~~secret~~located ~~protection~~on ~~for~~the ~~its~~Internet ~~confidential~~at ~~and~~www.appliedbiosystems.com. ~~proprietary~~We ~~information~~use ~~and~~our ~~procedures.~~website ~~Celera~~to ~~Genomics~~market ~~protects~~our ~~its~~full ~~trade~~range ~~secrets~~of ~~through~~products ~~recognized~~and ~~practices~~services, ~~including~~and ~~access~~most ~~control,~~of ~~confidentiality~~our ~~and~~products ~~nonuse~~are ~~agreements~~also ~~with~~available ~~employees~~for purchase directly online. To date, ~~consultants~~customers typically, ~~collaborators~~but ~~and~~not ~~customers~~exclusively, ~~and~~have ~~other~~been ~~security~~using ~~measures.~~the ~~These~~Applied ~~confidentiality~~Biosystems ~~and~~website ~~nonuse~~to ~~agreements~~purchase ~~may~~their beconsumable ~~breached~~products such as TaqMan® Gene Expression and SNP Genotyping Assays, ~~however~~TaqMan® Arrays, and ~~Celera~~siRNAs. ~~Genomics~~Website ~~may~~users ~~not~~can ~~have~~access ~~adequate~~search ~~remedies~~tools ~~for~~and agraphical ~~breach.~~viewers Inintended ~~addition,~~to ~~Celera~~help ~~Genomics’~~them ~~trade~~plan ~~secrets~~experiments ~~may~~and ~~otherwise~~purchase ~~become~~our ~~known~~corresponding orproducts. beWe also ~~independently~~offer ~~developed~~businesses, byacademic ~~competitors.~~and ~~Accordingly~~research institutions, itand isother ~~uncertain~~clients ~~whether~~the ~~Celera~~capability ~~Genomics’~~to ~~reliance~~integrate ontheir ~~trade~~own ~~secret~~electronic ~~protection~~purchasing ~~will~~systems bewith ~~adequate~~our toe-commerce ~~safeguard~~website, ~~its~~which ~~confidential~~we ~~and~~believe ~~proprietary~~simplifies ~~information~~the ~~and~~ordering ~~procedures.~~process for researchers.

~~Backlog~~Raw Materials

~~Celera~~There ~~Genomics’~~are ~~total~~no ~~recorded~~specialized ~~backlog~~raw atmaterials ~~June~~that ~~30,~~are ~~2003,~~particularly ~~was~~essential ~~$80.1~~to ~~million~~the operation of our business. ~~Celera~~Our ~~Genomics’~~manufacturing ~~total~~operations ~~recorded~~require ~~backlog~~a atwide ~~June~~variety ~~30,~~of ~~2004~~raw materials, ~~was~~electronic ~~$25.2~~and ~~million.~~mechanical ~~Recorded~~components, ~~backlog~~chemical ~~may~~and ~~not~~biochemical materials, ~~result~~and inother ~~sales~~supplies, ~~because~~some of ~~cancellation~~which orare ~~other~~occasionally ~~factors~~found to be in short supply. ItWe ismay ~~anticipated~~not ~~that~~be ~~most~~able ofto ~~the~~obtain ~~orders~~or ~~included~~maintain inaccess ~~backlog~~to atthese ~~June~~supplies ~~30,~~on ~~2004,~~acceptable ~~will~~terms. beAny ~~delivered~~interruption ~~before~~in the ~~close~~availability of ~~our~~these ~~2005~~materials ~~fiscal~~could ~~year.~~

- 3527 -

BackTable toof Contents

~~Competition~~harm our operations. We have multiple commercial sources for most components and supplies, but we are dependent on single sources for a limited number of these items, in which case we normally secure long-term supply contracts. In some cases, if a supplier stops offering a product, our business could be temporarily interrupted.

~~The~~Patents, ~~pharmaceutical~~Licenses, ~~industry is competitive~~ and ~~evolving.~~Franchises ~~There is intense competition among pharmaceutical and biotechnology companies attempting to discover candidates for potential new therapeutic products. These companies may:~~

•Our ~~develop~~products ~~new~~are ~~therapeutic~~based ~~products~~on incomplex, rapidly ~~advance~~developing technologies. Some of ~~Celera~~these ~~Genomics~~technologies orare ~~its~~covered ~~collaborators;~~by •patents ~~develop~~we ~~therapeutic~~own, ~~products~~and ~~which~~others are ~~more~~owned ~~effective~~by orthird ~~more~~parties ~~cost-effective~~and ~~than~~are ~~those~~used ~~developed~~ by ~~Celera~~us ~~Genomics~~under orlicense. ~~its~~We ~~collaborators;~~have •pursued ~~obtain~~a ~~regulatory~~policy ~~approvals~~ of ~~their~~seeking ~~therapeutic~~patent ~~products~~protection ~~more~~in ~~rapidly~~the ~~than~~U.S. ~~Celera~~and ~~Genomics~~other orcountries for ~~its~~developments, ~~collaborators;~~improvements, orand •inventions ~~obtain~~originating ~~patent~~within ~~protection~~our ororganization ~~other~~that ~~intellectual~~are ~~property~~incorporated ~~rights~~into our products or that ~~would~~fall ~~limit~~within ~~the~~our ~~ability~~fields of ~~Celera~~interest. ~~Genomics~~Our orbusiness ~~its~~depends ~~collaborators~~on our ability to ~~develop~~continue ~~and~~developing ~~commercialize~~new ~~therapeutic~~technologies ~~products~~which can be patented, or licensing new technologies from others that own patents in desired technologies.

We are currently, and could in the ~~Research~~future be, subject to lawsuits, arbitrations, investigations, and ~~Development~~other legal actions with private parties and governmental entities, particularly involving claims for infringement of patents and other intellectual property rights. From time to time, we have asserted that various competitors and others are infringing our patents; and similarly, from time to time, others have asserted that we were or are infringing patents owned by them. These claims are sometimes settled by mutual agreement on a satisfactory basis and result in the granting of licenses by or to us or the cessation of the alleged infringing activities. However, we cannot make any assurances as to the outcome of any pending or future claims. More information about the risk factors associated with our reliance on intellectual property is set forth below in Item 1A of this report under the heading “Risk Factors.” Also, more information about our legal proceedings that involve our intellectual property is set forth below in Item 3 of this report under the heading “Legal Proceedings.”

~~Celera~~PCR ~~Genomics is actively engaged in basic~~ and Real-Time ~~applied~~PCR research and development programs designed to develop new therapeutic products and support the commitments of existing online/information contracts. Research and development expenses for Celera Genomics totaled $132.7 million in our 2002 fiscal yearReagents, ~~$120.8 million in our 2003 fiscal year~~Methods, and ~~$104.6~~Instruments million in our 2004 fiscal year. Applera expensed $381.9 million in our 2002 fiscal year, $401.5 million in our 2003 fiscal year, and $377.1 million in our 2004 fiscal year for Applera research, development, and engineering activities. Celera Genomics’ new products are expected to originate from three sources: internal research and development programs, external collaborative efforts or alliances, and business and technology acquisitions.

PCR, which refers to polymerase chain reaction, is a process in which a short ~~Environmental~~strand ~~Matters~~of DNA is copied multiple times, or amplified, so that it can be more readily detected and analyzed. We own some patents to PCR-related technology and we derive other rights to PCR technology under a series of agreements with Hoffmann-La Roche Inc. and its affiliates, which own some of the patents covering PCR-related technology, and an agreement with Epoch BioSciences, which owns intellectual property relating to chemicals used in the PCR process.

~~Celera~~The ~~Genomics~~broadest isPCR-related ~~subject~~patents tocovered ~~federal,~~the ~~state~~basic PCR method, ~~and~~which ~~local~~we ~~laws~~refer ~~and~~to ~~regulations~~as ~~regulating~~the foundational PCR patents. The last of the ~~discharge~~foundational patents expired in Spain in March 2007, but we have many other patents in our portfolio of ~~materials~~PCR-related ~~into~~patents. These other patents cover for example: improvements to the ~~environment~~basic PCR method, orsuch ~~otherwise~~as ~~relating~~real-time PCR, which is used to ~~the~~detect ~~protection~~and offor some applications quantify a sample during the ~~environment,~~PCR inamplification ~~those~~process; ~~jurisdictions~~polymerase ~~where~~enzymes ~~Celera~~useful ~~Genomics~~in ~~operates~~PCR orand ~~maintains~~real-time ~~facilities.~~PCR; ~~Celera~~methods ~~Genomics~~related ~~does~~to ~~not~~PCR; ~~believe~~and ~~that~~instrumentation ~~any~~related ~~liability~~to ~~arising~~PCR ~~under,~~and orreal-time ~~compliance~~PCR. ~~with,~~Our ~~environmental~~remaining ~~laws~~patents orin ~~regulations~~this portfolio will expire ~~have~~at avarying ~~material~~times ~~effect~~between onnow ~~its~~and ~~business,~~2016 ~~and~~in nothe ~~material~~U.S. ~~capital~~and ~~expenditures~~various ~~are~~other ~~expected~~jurisdictions ~~for~~throughout ~~environmental~~the ~~control~~world.

We have established -licensing 36programs for industry access to some of our owned and in-licensed PCR intellectual property, and have granted some individual licenses for some of the intellectual property not included in those programs. We receive royalties from other companies

~~Back~~- to28 ~~Contents~~-

CeleraTable Diagnostics,of a 50/50 Joint Venture between Applied Biosystems and Celera Genomics Contents

~~Overview~~for their sales of products incorporating the intellectual property that we license to these other companies.

~~Celera~~DNA ~~Diagnostics~~Sequencing ~~is engaged principally in the discovery, development,~~ and ~~commercialization~~Capillary ofElectrophoresis ~~diagnostic products. In particular~~Reagents, ~~Celera Diagnostics is studying SNPs and gene expression patterns in human biological tissues and blood samples and their association with specific common~~Methods, ~~complex diseases. These SNPs~~ and ~~gene~~Instruments expression patterns are often referred to as “genetic markers.” Celera Diagnostics’ gene-disease association studies are currently focused on the following disease areas: heart disease; breast cancer; Alzheimer’s disease; autoimmune and inflammatory diseases, including rheumatoid arthritis; liver disease; and diabetes. In addition, Celera Diagnostics is conducting “host response studies” to identify genetic associations with patient response to treatments. Specifically, Celera Diagnostics is conducting these types of studies in patients infected with the Hepatitis C virus to identify patients who respond positively to interferon treatment, and in patients with heart disease to identify patients who respond to various types of treatment for that disease. Celera Diagnostics plans to conduct similar studies of this type in the future for other treatments and diseases. Celera Diagnostics expects that the discoveries resulting from its research will provide genetic information which may lead to earlier and more effective diagnosis and treatment of disease. Celera Diagnostics expects that the primary end-users of its products will be reference laboratories, hospitals, and medical clinics worldwide that perform diagnostic testing for human healthcare.

~~Celera~~Capillary ~~Diagnostics and Celera Genomics are pursuing~~electrophoresis, inor ~~cooperation with each other~~CE, ~~a strategy that we refer to as “targeted medicine.” This strategy~~ is ~~based on the belief that~~ a ~~better~~process ~~understanding~~used ofto ~~the~~analyze ~~genetic~~DNA ~~basis~~molecules offor ~~biology~~DNA ~~and~~sequencing ~~disease is key to improved diagnosis~~ and ~~treatment~~other ofapplications. ~~many~~We ~~common~~own ~~complex~~several ~~diseases.~~patents ~~Celera~~covering DNA ~~Diagnostics~~sequencing and ~~Celera~~fragment ~~Genomics~~analysis ~~are~~with ~~applying~~CE ~~research~~technology, and ~~development~~we ~~tools~~derive ~~and~~other ~~methods~~rights to ~~analyze~~components ~~biological~~of ~~information,~~DNA ~~including~~sequencing ~~genetic~~and ~~variations~~CE ~~discovered~~technologies ~~through~~under ~~the~~a ~~Applera~~series ~~Genomics~~of ~~Initiative,~~agreements inand ancollaborations ~~attempt~~with toother ~~discover~~companies ~~associations between genes~~ and ~~diseases~~institutions. ~~The~~These ~~Applera~~companies ~~Genomics~~and institutions ~~Initiative~~include, isfor ~~described~~example, ~~below~~the inCalifornia ~~Item~~Institute 1 of ~~this~~Technology, ~~report~~Perkin-Elmer, ~~under~~Inc., ~~the~~GE ~~heading~~Healthcare ~~“Applera~~Bio-Sciences ~~Genomics Initiative~~Corp.”, ~~Celera~~Iowa ~~Diagnostics~~State ~~intends~~Research toFoundation, ~~develop~~Beckman ~~new~~Coulter, ~~diagnostic~~Inc., ~~tests~~Promega ~~based~~Corporation, ~~on known~~ and ~~newly~~Hitachi High-~~identified~~Technologies ~~genetic~~Corp. The owned and ~~proteomic~~licensed ~~markers~~patents tocover, ~~help~~for ~~physicians~~example, ~~predict~~methods anand ~~individual’s~~reagents ~~predisposition~~for tosequencing, ~~better characterize~~modification, ~~monitor progression of~~separation, and ~~select~~detection, ~~appropriate~~along ~~therapy~~with instruments for separation, ~~common~~detection, ~~complex~~and ~~diseases~~analysis. ~~Celera~~Within ~~Genomics may use~~ this ~~information~~portfolio toof ~~select and validate therapeutic targets for new drugs~~patents, ~~and~~the topatents ~~stratify~~that ~~patient~~we believe ~~populations~~are inmaterial ~~clinical trials~~ to ~~increase~~our ~~the~~business ~~proportion~~will ofexpire ~~patients~~at ~~who~~varying ~~have~~times anbetween ~~efficacious~~2009 ~~response~~and to2023 ~~drug~~in ~~treatment~~the U.S. ~~The~~and ~~ultimate~~various ~~goal~~other ofjurisdictions ~~this~~throughout ~~targeted~~the ~~medicine~~world. ~~approach is to:~~

•Mass ~~identify~~Spectrometry ~~new~~Instrument ~~and improved targets for drug discovery and development; • facilitate more efficient clinical trials of new therapeutics; • develop diagnostic tests that address unmet medical needs in predicting~~Systems, ~~detecting~~Reagents, ~~characterizing,~~ and ~~monitoring~~Methods ~~diseases; and~~

We and our joint venture partner, -MDS 37Inc. of Canada, own and operate a joint venture in the field of mass spectrometry known as Applied Biosystems/MDS Analytical Technologies Instruments. We and MDS own several patents to mass spectrometry instrument design and operation, including software technology, that we and MDS Inc. make available to Applied Biosystems/MDS Analytical Technologies Instruments. Among these patents is a fundamental mass spectrometry patent, U.S. Patent No. 4,963,736, which will expire in 2009 in the U.S., and corresponding foreign patents that will also expire in 2009. These patents pertain to improved ion transmission for improving sensitivity in the use of mass spectrometry technology for later stage drug development and discovery and metabolite identification processes. The joint venture derives additional rights to mass spectrometry technology, which we believe are material to the joint venture business, under license agreements with other companies and institutions. These rights include, for example, exclusive rights to orthogonal time-of-flight mass spectrometry technology from the University of Manitoba.

~~Back~~Independent of the joint venture, we have a portfolio of patents and patent applications pertaining to ~~Contents~~our mass spectrometry consumable reagents business and our mass spectrometry workflow solutions, which refer to methods and applications used by researchers to solve problems encountered in laboratory experimentation and analysis.

•Backlog ~~use diagnostics to select a form of therapy that is likely to be more effective and possibly safer in a particular patient population.~~

Our total recorded backlog at June 30, 2008, was $352.5 million. This number reflects the backlog attributed to our Applied Biosystems group segment ~~Development~~at that date, including $0.3 million of ~~Diagnostics~~orders ~~Business~~from our former Celera group business segment, but excluding $2.9 million in backlog that we attributed to the Celera group business at that date. Our total recorded backlog at June 30, 2007, was $288.3 million, including $0.7 million of orders from the Celera group business, but excluding $0.2 million we attributed to the Celera group business at that date. Recorded backlog may not result in sales because of cancellation or other factors. It is anticipated that most of the orders included in backlog at June 30, 2008, will be delivered before the close of our 2009 fiscal year.

Celera Diagnostics was formed during our 2001 fiscal year pursuant to a joint venture agreement between Applied Biosystems and Celera Genomics. A description of that agreement is set forth below in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Summary of Joint Venture Agreement.” Since its formation, Celera Diagnostics has achieved a number of important milestones in the development of its business including, among others: establishment of headquarters in Alameda, California; hiring of key personnel in areas of discovery research, product development, manufacturing, quality assurance, regulatory affairs, and marketing; construction of discovery laboratories and manufacturing facilities; commencement of large-~~scale~~ ~~study~~29 programs; formation of several important alliances, collaborations, and other third party relationships to support its research, development, and commercialization of products, including particularly its strategic alliance with Abbott Laboratories; and receipt of several marketing clearances for its ViroSeq™ HIV-1 ~~Genotyping System from the U.S. Food and Drug Administration, or FDA. Key developments during our 2004 fiscal year included the following:~~

•Table Between September 2003 and June 2004, Celera Diagnostics announced the discovery of, and publicly identified, a total of six genes that are markers associated with an increased risk for myocardial infarction, or heart attack. None of these genes were in a previously recognized disease pathway associated with myocardial infarction. • In October 2003, Celera Diagnostics announced a research collaboration with Merck & Co., Inc. to identify and validate genetic markers useful in Celera Diagnostics’ development of diagnostic tests and Merck’s development of therapeutics for selected cancers. Pursuant to this collaboration agreement, the parties have agreed to share data and other intellectual property for use in their separate research and development efforts. The collaboration is initially focused on breast cancer but may be expanded to other cancers by mutual consent. • In November and December, 2003, at scientific meetings Celera Diagnostics and its collaborators presented selected results from three genomic studies, including preliminary findings regarding risk of distant metastasis in breast cancer, interferon responsiveness in hepatitis C patients, and Alzheimer’s disease. • In February 2004, Celera Diagnostics announced that it obtained clearance from the FDA for expanded claims related to its ViroSeq™ HIV-1 Genotyping System. The ViroSeq system is described in further detail below in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Celera Diagnostics Products –ViroSeq HIV-1 Genotyping System.” • In June 2004, Celera Diagnostics announced the discovery of, and publicly identified, a SNP in a gene that is a marker associated with an increased risk for rheumatoid arthritis and its potential use as a new drug target.Contents

-Competition ~~38 -~~

~~Back~~While the absence of reliable statistics makes it difficult to ~~Contents~~determine our relative market position in its industry segments, we believe we are one of the principal suppliers in our fields, marketing a broad line of life science systems, consumables, software, and services. However, the markets for these products and services are highly competitive and are characterized by the application of advanced technology. Competition is intensified by the ever-changing nature of the technologies used in these markets. New technologies in life sciences could make our products and services obsolete unless we continue to develop new and improved products and services and pursue new market opportunities. Given the breadth of our product and service offerings, our competition comes from a wide array of competitors with a high degree of technical proficiency, ranging from specialized companies that have strengths in narrow segments of the life science markets to well known manufacturers offering a broad array of biotechnology products and services. We compete principally in terms of the technology incorporated into our products and services, the breadth and quality of our product and service offerings, and our service and distribution capabilities.

•Research ~~In June 2004, Celera Diagnostics announced, along with Applied Biosystems, a patent license agreement with Cepheid relating to real time thermal cycler instruments for research, diagnostic,~~ and ~~other~~Development uses. The terms of the agreement require Cepheid to pay Applera a license fee of $11.5 million over a two year period, the majority of which relates to the diagnostic rights granted to Cepheid and will be recorded by Celera Diagnostics. Also, under the terms of the agreement, Cepheid is obligated to pay ongoing royalties on sales of its products incorporating Applera intellectual property based on the field of use. We anticipate that the majority of sales will be in the diagnostic field and the corresponding royalties will be recorded by Celera Diagnostics.

~~Also,~~We ~~subsequent to~~are ~~the~~actively ~~end~~engaged ~~of our 2004 fiscal year,~~ in ~~July~~basic ~~2004,~~and ~~Celera~~applied ~~Diagnostics announced along with Celera Genomics a joint~~ research ~~collaboration~~and ~~with General Electric~~development ~~Company~~programs ~~intended~~designed to ~~accelerate~~develop ~~the discovery and development of~~ new products ~~for~~ ~~personalized, or targeted, medicine. The parties will seek to understand~~ and ~~differentiate disease at the molecular level, which is expected~~ to ~~lead to~~improve ~~new~~existing ~~diagnostics and treatments that are tailored for a specific disease or patient population~~products. ~~The~~Our ~~first project outlined in the~~ research ~~collaboration is~~and ~~intended to support General Electric’s~~ development ofexpenses ~~novel~~during ~~imaging agents~~our ~~that~~2008, ~~selectively~~2007, ~~target~~and ~~cell~~2006 ~~surface~~fiscal ~~proteins~~years ~~that~~were ~~Celera~~as ~~Genomics~~follows: ~~has identified to be associated with cancer. A second project is intended to apply bioinformatics techniques to the prioritization of targets for diagnostic and therapeutic use.~~

~~Also~~• in2008 ~~July~~fiscal ~~2004,~~year: ~~Celera~~$196.1 ~~Diagnostics~~million ~~announced~~for athe ~~collaboration~~Applied ~~agreement~~Biosystems ~~with Merck & Co.~~group, ~~Inc~~$40.9 tomillion ~~identify~~for ~~novel drug targets and diagnostic markers related to Alzheimer’s disease. Pursuant to~~ the ~~collaboration, Merck will fund~~ Celera ~~Diagnostics’~~group, ~~performance~~and ~~of expanded Alzheimer’s gene-disease association research~~$235.3 ~~Merck~~million ~~will~~for beour ~~entitled~~company toon ~~the~~a ~~therapeutic~~consolidated ~~rights~~basis toafter ~~targets identified for~~ the ~~treatment~~effects of ~~Alzheimer’s~~($1.7) ~~disease~~million ~~and~~related ~~some other neurological disorders, and Celera Diagnostics will retain rights~~ to ~~all~~intercompany ~~diagnostic applications for markers identified.~~eliminations;

~~Summary~~• 2007 fiscal year: $203.9 million for the Applied Biosystems group, $51.7 million for the Celera group, and $254.0 million for our company on a consolidated basis after the effects of ~~Joint~~($1.6) ~~Venture~~million ~~Agreement~~related to intercompany eliminations; and

~~Celera~~• ~~Diagnostics~~2006 ~~was formed during our 2001~~ fiscal year as: ~~a joint venture between Applied Biosystems and Celera Genomics~~$180.3 Inmillion ~~connection~~for ~~with~~ the ~~formation of Celera Diagnostics,~~ Applied Biosystems ~~contributed~~group, ~~among other things, its then-existing molecular diagnostics business to Celera Diagnostics, and Celera Genomics contributed, among other things, access to its genome databases~~$94.3 ~~Also, Celera Genomics agreed to fund all of the cash operating losses of Celera Diagnostics up to a maximum of $300~~ million ~~(“initial~~for ~~losses”), after which, operating losses, if any, will be shared equally by Applied Biosystems and Celera Genomics. Celera Diagnostics’ profits, if any, will be shared in~~ the ~~ratio of 65 percent to~~ Celera ~~Genomics and 35 percent to Applied Biosystems until the cumulative profits of Celera Diagnostics equal the initial losses. Subsequently~~group, ~~profits~~ and ~~losses and cash flows would be shared equally between Applied Biosystems and Celera Genomics~~$271.4 ~~Applied~~million ~~Biosystems and Celera Genomics will fund Celera Diagnostics’ capital expenditures and working capital requirements equally. Applied Biosystems will reimburse Celera Genomics~~ for ~~all~~our ~~tax~~company ~~benefits generated~~on bya ~~Celera~~consolidated ~~Diagnostics~~basis toafter the ~~extent~~effects ~~such~~of ~~tax benefits are utilized by Applied Biosystems~~($3.2) Inmillion ~~the~~related ~~event of liquidation of the assets attributable~~ to ~~Celera~~intercompany Diagnostics, including sale of these assets, the proceeds upon liquidation would be distributed to Applied Biosystems and Celera Genomics based on a proportion similar to their relative investment accountseliminations. ~~If the~~

Our new products generally originate from four -sources: 39internal -research and development programs; external collaborative efforts with technology companies and individuals in academic institutions; devices or techniques that are generated in customers’ laboratories; and business and technology acquisitions.

~~Back~~Environmental toMatters ~~Contents~~

~~proceeds~~We ~~upon~~are ~~liquidation~~subject ~~are~~to infederal, ~~excess~~state, ofand local laws and regulations regulating the ~~groups’~~discharge ~~combined~~of ~~investment~~materials ~~accounts,~~into the ~~excess~~environment, ~~liquidation proceeds~~or ~~would~~otherwise berelating ~~shared~~to inthe protection of the ~~ratio~~environment, ofin 65those ~~percent~~jurisdictions towhere ~~Celera~~we ~~Genomics~~operate ~~and~~or 35maintain ~~percent~~facilities. toWe ~~Applied~~do ~~Biosystems~~not ~~until~~believe ~~the cumulative~~that ~~amount~~any ofliability ~~the~~arising ~~distributed~~under, ~~excess~~or ~~proceeds~~compliance ~~equals~~with, ~~the~~environmental ~~initial~~laws ~~losses~~or ~~funded~~regulations bywill ~~Celera~~have ~~Genomics.~~a ~~Any~~material ~~additional liquidation~~effect ~~proceeds~~on ~~would~~our bebusiness, ~~allocated~~and ~~equally~~no tomaterial ~~Celera~~capital ~~Genomics~~expenditures ~~and~~are ~~Applied~~expected ~~Biosystems~~for environmental control.

~~Abbott~~- ~~Laboratories~~30 ~~Strategic~~- ~~Alliance~~

InTable June 2002, Celera Diagnostics announced a long-term strategic alliance with Abbott Laboratories, one of the world’s largest diagnostics companies, to discover, develop and commercialize a broad range of in vitro diagnostic products for disease detection, prediction of disease predisposition, disease progression monitoring, and therapy selection. In vitro diagnostic products are diagnostic products that are used for testing outside of the living body. The agreement with Abbott Laboratories is limited to diagnostic products that detect nucleic acids, for example DNA or RNA. Under the agreement, Abbott Laboratories and Celera Diagnostics are obligated to work exclusively with each other in the commercialization of nucleic acid diagnostic products, except for specific products that the parties mutually agree to exclude from the alliance, if any. Diagnostic products based on the detection of proteins, rather than nucleic acids, is another potential business area for Celera Diagnostics but is not a part of the agreement with Abbott Laboratories.Contents

~~Under~~Employees the Abbott Laboratories agreement, Celera Diagnostics and Abbott Laboratories will jointly fund their separate but coordinated research and development activities that are within the scope of the alliance. Generally, Abbott Laboratories will market products developed and manufactured by the parties that are covered by the alliance. Celera Diagnostics believes that Abbott Laboratories’ expertise in the diagnostics industry and its global distribution system will enhance Celera Diagnostics’ ability to bring products to market. Our alliance with Abbott Laboratories, including the economic arrangements, covers all nucleic acid diagnostic products marketed by Abbott Laboratories, including any of those products manufactured by other companies.

~~Celera~~As ~~Diagnostics~~of ~~expects to rely substantially on its alliance with Abbott Laboratories for~~ the ~~success~~end of ~~its~~our ~~business~~2008 ~~strategy~~fiscal ~~for~~year, ~~the~~we ~~foreseeable~~had ~~future.~~approximately ~~Although~~5,160 ~~this~~employees, isincluding aapproximately ~~long-term alliance~~4,930 ~~the~~employees ~~alliance~~attributed ~~agreement~~to ~~contains provisions that could result in early termination for reasons that include~~ the ~~following:~~Applied ~~breach~~Biosystems bybusiness ~~either~~and ~~company;~~approximately a230 ~~change~~employees in ~~control~~our ofcorporate staff, ~~either~~who ~~company;~~provide ~~either~~accounting, ~~company’s~~tax, ~~dissatisfaction~~treasury, ~~with~~legal, ~~the~~information ~~performance~~technology, ofhuman ~~the~~resources, ~~alliance~~and ~~according~~other toservices ~~specific timelines for such judgments set forth~~ in ~~the~~support ~~alliance~~of ~~agreement; or by either company if~~ the ~~other~~Applied ~~party~~Biosystems ~~fails~~business tooperations. ~~meet~~These ~~performance~~numbers ~~criteria~~include ~~applicable~~part totime ~~the~~employees ~~other~~based ~~party~~on ~~set~~their ~~forth~~part intime ~~the alliance agreement. Also~~commitment, and ~~Celera~~also ~~Diagnostics~~include ~~cannot~~temporary ~~ensure~~workers ~~that~~on ~~Abbott~~our ~~Laboratories~~payroll. ~~will~~None ~~perform~~of ~~its~~our ~~obligations as expected~~U.S. Ifemployees ~~Abbott~~are ~~Laboratories~~subject ~~terminates the alliance or otherwise fails~~ to ~~conduct~~collective ~~its~~bargaining ~~collaborative~~agreements. ~~activities~~We ingenerally aconsider ~~timely~~our ~~manner,~~relations ~~Celera~~with ~~Diagnostics’ development~~our oremployees ~~commercialization~~to ~~of diagnostics products may~~ be ~~delayed or otherwise adversely affected~~good.

Also, we note that as of the end of our 2008 fiscal year we employed approximately 580 additional individuals who transferred to Celera Corporation in ~~Information~~connection ~~about~~with the ~~marketing~~separation ~~and~~of ~~distribution~~the ~~aspects~~Celera group business to Celera Corp. We had attributed most of ~~this~~these ~~strategic~~individuals ~~alliance~~to isthe ~~described~~Celera ~~below~~group business, including approximately 360 that worked in ~~Item~~the 1Berkeley HeartLab business that was acquired in October 2007, but 9 of ~~this~~them ~~report~~had ~~under~~been part of our corporate staff. Upon completion of the ~~headings~~separation ~~“Celera~~on ~~Diagnostics~~July 1, a2008, ~~50/50~~these ~~Joint~~individuals ~~Venture~~became ~~between~~employees ~~Applied~~of ~~Biosystems~~Celera ~~and~~Corp. More information on the Celera ~~Genomics~~group –separation ~~Marketing~~is ~~and~~set ~~Distribution~~forth above in Item 1 of this report under the heading “Celera Separation.”

-Financial 40Information -About Industry Segments

~~Back~~A summary of net revenues from external customers and operating income (loss) attributable to ~~Contents~~each of our industry segments for our fiscal years ended June 30, 2008, 2007, and 2006 is incorporated herein by reference to Note 17 to our consolidated financial statements on pages 81 through 92 of our 2008 Annual Report. Total assets as of June 30, 2008, 2007, and 2006 were as follows:

~~Research~~• June 30, 2008: $2,398.6 million for the Applied Biosystems group, $663.3 million for the Celera group, and ~~Development~~$3,061.4 million for our company on a consolidated basis after the effects of ($0.5) million related to intercompany eliminations;

~~Overview.~~• ~~During~~June ~~our 2002 fiscal year~~30, ~~Celera~~2007: ~~Diagnostics’ first full fiscal year of operations~~$2,386.6 ~~Celera~~million ~~Diagnostics~~for ~~focused~~the ~~its~~Applied ~~activities~~Biosystems ~~on staffing and completing its high-volume discovery laboratories~~group, ~~and~~$768.7 ~~then~~million ~~began research and development~~ for ~~products~~the ~~that~~Celera ~~detect infectious diseases and human genetic disorders. During our 2003 fiscal year~~group, ~~Celera Diagnostics substantially expanded its research~~ and ~~development efforts~~$3, ~~initiating nine large-scale studies~~152.5 ~~During~~million for our ~~2004~~company ~~fiscal~~on ~~year,~~a ~~Celera~~consolidated ~~Diagnostics~~basis ~~continued~~after ~~expanding~~the ~~its~~effects ~~research and development activities, including advancement~~ of ~~its original studies and addition of new studies~~($2.8) Inmillion ~~performing~~related ~~these studies, Celera Diagnostics is seeking~~ to ~~leverage~~intercompany ~~its~~eliminations; ~~genotyping~~ and ~~gene expression capabilities with the SNP data from the Applera Genomics Initiative.~~

~~Celera~~• ~~Diagnostics’~~June is30, ~~currently conducting gene-disease association studies in the following areas~~2006: ~~Alzheimer’s disease; autoimmune and inflammatory diseases~~$2, ~~including rheumatoid arthritis; breast cancer; heart disease; liver disease; and diabetes~~245.8 ~~Most~~million offor ~~these studies involve~~ the ~~analysis~~Applied ofBiosystems ~~large numbers of samples from healthy and diseased individuals~~group, ~~while a smaller number of these studies involve analysis of large numbers of samples from only diseased individuals~~$773.7 ~~The~~million ~~goal of most of these studies is to identify SNPs that serve as genetic markers~~ for ~~a specific disease. In~~ the ~~breast~~Celera ~~cancer study~~group, ~~the~~and ~~goal is to identify gene expression patterns associated with breast cancer metastasis~~$3,013.0 ~~which~~million ~~refers~~for toour ~~the~~company ~~transmission~~on ofa ~~cancer~~consolidated ~~cells~~basis ~~from~~after ~~their original site to other sites within~~ the ~~body.~~effects ~~In addition, Celera Diagnostics is conducting host response studies~~ of ~~SNPs and gene expression patterns in cells from patients infected with the Hepatitis C virus and patients with heart disease~~($6.5) ~~The~~million ~~goal~~related ~~of these studies is~~ to ~~identify~~intercompany ~~responsiveness to one or more forms of treatment~~eliminations.

~~During~~Financial ~~our~~Information ~~2004 fiscal year, Celera Diagnostics continued to advance its large-scale studies. They are all~~About ~~ongoing~~Geographic ~~and~~Areas are at different stages of progression. In the case of the Alzheimer’s disease study, Celera diagnostics is continuing its research pursuant to the collaboration with Merck & Co., Inc. described above in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Development of Diagnostics Business.” A key aspect of Celera Diagnostics’ disease study program is to seek validation of results through replication by repeating its analysis on a second population of human tissue and blood samples after the initial analysis is completed. In several studies, Celera Diagnostics has replicated results for particular markers associated with increased risk for disease that it had previously identified. Celera Diagnostics, working in cooperation with Celera Genomics, is evaluating the diagnostic and therapeutic value of the novel markers and potential therapeutic targets found, and is discussing the findings with collaborators, preparing product plans, and making patent filings to seek legal protection for its rights in the new information it has discovered.

~~Celera~~A ~~Diagnostics~~summary ~~and~~of ~~Abbott~~net ~~Laboratories~~revenues ~~maintain~~from ~~separate~~external ~~research~~customers and ~~development~~long-lived ~~organizations~~assets ~~and~~attributed to each ~~is pursuing the development~~ of ~~molecular~~our ~~diagnostic~~geographic ~~products~~areas tofor our ~~be manufactured and marketed by their alliance. However~~2008, ~~they coordinate their ongoing research and development activities~~2007, ~~which coordination includes the sharing of scientific results~~ and ~~collaboration~~2006 ~~regarding~~fiscal ~~the~~years ~~technology~~is ~~and~~incorporated ~~instrumentation~~herein ~~that~~by ~~their~~reference ~~alliance~~to ~~products~~Note ~~will~~17 ~~use.~~to ~~The~~our ~~alliance~~consolidated ~~agreement~~financial ~~with~~statements ~~Abbott~~on ~~Laboratories~~pages ~~permits~~81 ~~Celera~~through ~~Diagnostics~~92 toof ~~form~~our ~~collaborations~~2008 ~~and~~Annual ~~relationships with other companies to support its research activities~~Report.

~~Research~~Our ~~and~~consolidated ~~development~~net ~~expenses~~revenues ~~for~~from ~~Celera~~external ~~Diagnostics totaled~~customers ~~$39.0 million~~ in ~~our~~countries ~~2002~~other ~~fiscal~~than ~~year,~~the ~~$49~~U.0S. ~~million~~for in our ~~2003~~2008, ~~fiscal year~~2007, and ~~$43.8~~2006 ~~million~~fiscal inyears ~~our~~were ~~2004~~as ~~fiscal~~follows: ~~year.~~

- 4131 -

BackTable toof Contents

~~Applera~~• ~~expensed~~2008: $~~381.9 million in our 2002 fiscal year~~1, ~~$401~~337.5 million ~~in our 2003 fiscal year~~, ~~and~~or ~~$377~~56.16% ~~million in~~of our ~~2004~~consolidated ~~fiscal~~net ~~year for Applera research, development, and engineering activities.~~revenues;

~~Collaborations and~~• ~~Other~~2007: ~~Relationships Supporting Research~~$1,204.8 ~~Since the beginning of our 2004 fiscal year~~million, ~~Celera~~ ~~Diagnostics~~or ~~has entered into several new research collaboration agreements, including with Merck & Co~~56.,5% ~~Inc. and with General Electric Company. These agreements are described above in Item 1~~ of ~~this~~our ~~report~~consolidated ~~under~~net ~~the~~revenues; ~~headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems~~ and ~~Celera Genomics – Development of Diagnostics Business.”~~

~~Also,~~• ~~Celera~~2006: ~~Diagnostics has entered into collaboration~~$1, research, and material transfer agreements with more than 20 other companies and academic institutions to support its large-scale gene-disease association and host response studies, including ongoing studies as well as studies Celera Diagnostics plans to conduct in the future060.7 ~~Through these relationships~~million, ~~Celera~~or ~~Diagnostics has gained access to over 45,000 samples from human subjects~~54.4% ~~Following is a description~~ of ~~these~~our ~~relationships~~consolidated ~~that~~net ~~Celera Diagnostics has publicly announced:~~revenues.

•Our anmanufacturing ~~agreement~~facilities ~~with~~outside ~~Bristol-Myers~~the ~~Squibb~~continental ~~Company~~U.S. toare ~~study~~located ~~genes that may be useful~~ in the ~~diagnosis~~United ~~and treatment of heart disease and diabetes; • a research initiative with the University of California~~Kingdom, ~~San Francisco~~Japan, ~~Comprehensive Cancer Center to develop new diagnostic tools for breast cancer;~~ and ~~• an agreement with Genomics Collaborative, Inc~~Singapore. ~~to support Celera Diagnostics’ efforts to identify genetic patterns associated with rheumatoid arthritis.~~

~~Product~~Executive ~~Development~~Officers ~~Collaborations.~~of ~~If Celera Diagnostics’ gene-disease association studies are successful, Celera Diagnostics expects to develop and market reagents that detect~~ the ~~newly~~Registrant ~~discovered genetic markers. Celera Diagnostics has entered into the following research collaborations to support its efforts to develop these products:~~

•Information aconcerning ~~collaboration~~our ~~with~~executive ~~Quest~~officers ~~Diagnostics~~is ~~Incorporated~~incorporated toby ~~establish~~reference to the ~~clinical~~description in ~~utility~~Item 10 of ~~laboratory~~this ~~tests~~report ~~based~~under onthe ~~novel~~heading ~~diagnostic~~“Directors, ~~markers~~Executive ~~for~~Officers ~~heart disease~~ and ~~diabetes;~~Corporate Governance–Identification and •Business aExperience ~~collaboration with Laboratory Corporation~~ of ~~America~~Executive ~~Holdings~~Officers” toon ~~establish~~page ~~the~~51 ~~clinical utility~~ of ~~laboratory~~this ~~tests based on novel diagnostic markers for Alzheimer’s disease, breast cancer, and prostate cancer~~report.

~~Celera~~Item ~~Diagnostics’~~1A. ~~Products~~Risk Factors

~~Celera~~Some ~~Diagnostics~~statements ~~plans~~contained toin, ~~develop~~or incorporated ~~products~~by ~~that~~reference ~~provide useful~~in, ~~genetic~~this ~~information~~report toare ~~facilitate~~forward-looking ~~disease~~and ~~detection,~~are ~~prediction~~subject ofto ~~disease~~a ~~predisposition,~~variety ~~monitoring~~ of ~~disease progression,~~risks and ~~disease~~uncertainties. ~~severity~~Similarly, ~~and~~the ~~determination~~press ofreleases ~~patient~~we ~~responsiveness~~issue toand ~~treatments. These~~other ~~products~~public ~~are~~statements ~~expected~~we make from time to ~~include~~time inmay ~~vitro~~contain ~~diagnostic~~language ~~test~~that ~~kits,~~is forward-looking. ~~which~~These forward-looking statements may be ~~labeled~~identified ~~for~~by the use ~~in diagnosing~~of ~~specific~~forward-looking ~~diseases~~words or ~~other~~phrases ~~conditions,~~such as ~~well~~“forecast,” as“believe,” ~~products~~“expect,” ~~referred~~“intend,” ~~to as~~ “~~analyte~~anticipate,” ~~specific~~“should,” ~~reagents~~“plan,” ~~which~~“estimate,” ~~may~~and be“potential,” ~~used~~among byothers. ~~appropriately~~The forward-~~licensed~~looking ~~clinical~~statements ~~laboratories~~contained ~~for~~in ~~clinical~~this ~~laboratory~~report, including statements regarding the pending merger with Invitrogen corporation, are based on our current ~~testing~~expectations, ~~after~~and ~~they~~those ~~independently~~made ~~establish~~at ~~the~~other ~~performance~~times ~~characteristics~~will ofbe based on our expectations when the statements are made. We cannot guarantee that any forward-looking statements will be realized.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. To comply with the terms of the safe harbor, we note that a variety of factors could cause actual results and experience to differ materially from anticipated results or other expectations expressed in forward-looking 42statements. We also note that achievement of anticipated results or expectations in forward-looking statements is subject to the possibility that assumptions underlying forward-looking statements will prove to be inaccurate. Investors should bear this in mind as they consider forward-looking statements.

~~Back~~The risks and uncertainties that may affect the operations, performance, development, and results of our business include, but are not limited to, ~~Contents~~those described below. We note that our business could be affected by other factors that we have not disclosed because we think they are immaterial. Also, there may be additional risks and uncertainties that could affect our business but which are not currently known to us.

~~reagents~~- ~~but~~32 ~~which~~- ~~may not be labeled by Celera Diagnostics for use in diagnosing any specific disease or condition.~~

WhileTable the sale of in vitro diagnostic test kits requires clearance or approval by the FDA, analyte specific reagents are a class of products defined by the agency’s regulations which may be sold without any regulatory submission. However, analyte specific reagents must be manufactured and marketed in compliance with the requirements of the agency’s Quality System Regulations, such as Good Manufacturing Practices, and must be sold in compliance with FDA regulations regarding their sale, distribution, and use. These FDA regulations are intended to ensure, among other things, that purchasers are aware that the utilities and performance characteristics of these products have not been established. Because analyte specific reagents are not subject to FDA clearance or approval, Celera Diagnostics believes they can generally be commercialized sooner than diagnostic test kits. However, the regulatory restrictions on the marketing, distribution, and sale of analyte specific reagents, and on its customers’ use of these products, would likely affect their marketing and distribution and market acceptance.Contents

~~Celera~~Failure ~~Diagnostics~~to iscomplete ~~currently~~our ~~offering~~pending ~~five~~merger ~~products through its alliance~~ with ~~Abbott~~Invitrogen ~~Laboratories,~~will ~~which~~subject isus ~~described~~to ~~above~~financial inrisks ~~Item~~and 1could cause ~~of this report under~~ the ~~headings~~price ~~“Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Abbott Laboratories Strategic Alliance” and below in Item 1~~ of ~~this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between~~ Applied Biosystems ~~and~~stock ~~Celera~~to ~~Genomics – Marketing and Distribution~~decline.” ~~Celera Diagnostics is manufacturing all of these products, and except as noted below they are marketed and distributed by Abbott Laboratories.~~

	•	ViroSeq HIV-1 Genotyping System. The genome of human immunodeficiency virus, commonly known as HIV, undergoes mutations in an infected patient, especially in response to anti-viral drug treatment. Some of the mutations have been shown to render the virus resistant to the action of some drugs, thereby diminishing the effectiveness of the treatment. Therefore, the detection of mutations in HIV that correlate with drug resistance provides useful information to physicians in monitoring the course of treatment and selecting the most effective regimen for each individual HIV-infected patient.
		Celera Diagnostics’ ViroSeq HIV-1 Genotyping System was developed as an aid to physicians in monitoring and treating HIV-1 infection. HIV-1 is one of the most prevalent strains of HIV. This system is for use in testing human blood samples and was designed to detect specific mutations in the HIV-1 genome that correlate with drug resistance. The product includes reagents for identifying key mutations of the HIV-1 genome designed for use on an Applied Biosystems automated DNA sequencing instrument in conjunction with Celera Diagnostics’ ViroSeq® HIV-1 Genotyping System Software. The system currently can be used to test for resistance to up to 19 drugs used to treat HIV-1 infected patients, including the four drugs covered by the February 2004 FDA clearance described in the following paragraph.
		Through its alliance with Abbott Laboratories, Celera Diagnostics is marketing the system in the U.S. and the European Union. During our 2002 and 2003 fiscal years, Celera Diagnostics submitted three 510(k) filings to the FDA for the ViroSeq HIV-1 Genotyping System. A 510(k) filing is a pre-market notification to the FDA that Celera Diagnostics intends to market this product as an in vitro diagnostic test kit. The product could not be marketed in the U.S. until the FDA provided clearance.

On June 11, 2008, we entered into a merger agreement with Invitrogen Corporation and Atom Acquisition, LLC, a direct wholly-owned subsidiary of Invitrogen. The proposed merger is subject to review by regulatory agencies in the EU and some other foreign jurisdictions, and we cannot provide assurances as to whether we will obtain the necessary clearances or approvals from these agencies or whether those clearances or approvals will impose any conditions on the company resulting from the merger. Also, we cannot assure our stockholders that the merger agreement will be approved and adopted by our stockholders or that the other conditions to the completion of the merger set forth in the merger agreement will be satisfied. We are subject to a number of other risks associated with the pending merger, including the following:

-• 43the -current market price of Applied Biosystems stock may reflect a market assumption that the merger will occur, and a failure to complete the merger could result in a decline in the market price of Applied Biosystems stock;

~~Back~~• the announcement of the merger and our planning for integration of our business with Invitrogen could: disrupt our business plans and operations; adversely affect our ability to ~~Contents~~retain key employees; and divert the attention of our management from opportunities that could be beneficial to our business;

		During our 2003 fiscal year, the FDA granted marketing clearances for the system for use on the Applied Biosystems ABI PRISM® 377 DNA Sequencer, 3100 Genetic Analyzer, and 3700 DNA Analyzer. In February 2004, the FDA granted a clearance for expanded claims, clearing the use of the system on the 3100 Genetic Analyzer and the 3700 DNA Analyzer to test for resistance to four additional drugs used to treat HIV-1 infected patients. The model 377, 3100, and 3700 instruments are discussed above in Item 1 of this report under the headings “Applied Biosystems Group Business – Products for the Genomics Market – Genetic Analysis Instruments; Genotyping and Resequencing Systems.”
		During our 2004 fiscal year, Celera Diagnostics received its CE mark registration of the ViroSeq HIV-1 Genotyping System for use on the ABI PRISM 3100 Genetic Analyzer for marketing in the EU. The system had previously been marketed in several other jurisdictions for research use purposes only, which does not require regulatory clearance or approval. However, this research use only version of the ViroSeq system was discontinued during our 2004 fiscal year.
		Additional information regarding the regulation of Celera Diagnostics’ products is set forth below in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Regulation of Diagnostic Products.”
	•	Cystic Fibrosis Analyte Specific Reagents. Cystic fibrosis is an inherited genetic disorder that affects children and young adults. It is caused by a number of mutations in the cystic fibrosis gene. The American College of Obstetricians and Gynecologists currently recommends that couples planning a pregnancy or seeking prenatal care be screened for cystic fibrosis gene mutations to help them make informed reproductive decisions. Celera Diagnostics sells analyte specific reagents that can be used by appropriately licensed clinical laboratories to identify mutations in the cystic fibrosis gene. Laboratories using the reagents for this purpose must first independently establish the performance characteristics of any test they develop using Celera Diagnostics’ analyte specific reagents.
	•	HLA Sequencing-Based Typing Kits. Transplantation of tissues and organs between genetically-unrelated individuals usually results in rejection of the donor “graft,” or tissue, by the recipient. Such rejection is due to differences in some genes between a donor and a recipient. These genes have been mapped to a region of the human genome known as HLA. Analysis of HLA genes to match donor-recipient pairs with minimal differences in these genes has greatly improved the success of transplantation.
		Celera Diagnostics’ HLA-typing products detect specific DNA sequences in several HLA genes that are known to be involved in transplantation rejection, and thus provide useful information regarding the likelihood of transplant rejection by a recipient. Celera Diagnostics has not sought or received marketing clearance or regulatory approval from the FDA for these products, and does not manufacture these products in accordance with FDA requirements. Accordingly, these products can be sold only for research use and cannot be sold for diagnostic purposes either as diagnostic kits or as analyte specific reagents. Although these products are covered by the Abbott Laboratories alliance, currently Celera Diagnostics is responsible for

•

the announcement of the merger could adversely affect our relationships with customers, suppliers and other parties;

-• 44the -occurrence of some events, changes, or other circumstances described in the merger agreement could cause a termination of the merger agreement;

~~Back~~• under the merger agreement, we could be required to ~~Contents~~pay Invitrogen a termination fee of $150 million if the merger agreement is terminated in some circumstance involving an alternative transaction proposal by another company or a change in our board’s recommendation of the Invitrogen merger to our stockholders in a manner that is adverse to Invitrogen;

~~sales~~• ~~and marketing in~~ the ~~U.S.~~benefits ~~because~~we ~~Abbott~~expect ~~Laboratories~~our ~~does~~stockholders ~~not~~to ~~specialize~~realize infrom the ~~sale~~merger ofmay ~~products~~not tobe ~~the~~realized, ~~research~~including ~~market.~~as ~~Celera~~a ~~Diagnostics~~result ~~intends~~of ~~to discontinue~~ the ~~sale~~difficulties ofor ~~these~~delays ~~products~~in ~~during~~Invitrogen’s ~~our~~ability ~~2005~~to ~~fiscal~~successfully ~~year,~~integrate ~~and~~its ~~Abbott~~businesses ~~Laboratories~~with ~~has~~our ~~contributed~~business afollowing ~~different HLA-typing product to~~ the ~~alliance to replace this product.~~merger;

• ~~Hepatitis~~we Cexpect ~~Virus~~to ~~Analyte~~incur ~~Specific~~significant ~~Reagents.~~legal, ~~Hepatitis~~accounting, Cfinancial virus causes a chronic liver disease. Hepatitis C virus infection is currently the leading reason that patients need liver transplants. There are several distinct strains of Hepatitis C virus having different genotypesadvisory, and ~~some~~other ofcosts, these genotypes are more susceptible to currently-available treatments than others. Celera Diagnostics manufactures two analyte specific reagent products for Abbott Laboratories for Hepatitis C virus. One of these products can be used to measure “viral loadfees,” ~~which~~expenses ~~refers~~and tocharges ~~the~~related ~~quantity of the virus found in a tissue sample. The other product can be used~~ to ~~identify~~ the ~~genotypes~~merger; of the different strains of the Hepatitis C virus. Only appropriately-licensed clinical laboratories can use these analyte specific reagents for these purposes after they independently establish the performance characteristics of any test they develop using Celera Diagnostics’ analyte specific reagents.and

In• ~~addition~~The toInvitrogen ~~the~~merger ~~products~~agreement ~~described~~contains ~~above,~~restrictions ~~Celera~~on ~~Diagnostics~~activities ~~performs~~that ~~contract~~are ~~manufacturing~~not ~~and technology development services~~ in ~~collaboration with appropriately licensed clinical laboratories. These services are for~~ the ~~development~~ordinary ~~and~~course ~~manufacture~~ of ~~reagents~~our ~~for~~business, ~~use~~subject byto ~~the~~limited ~~clinical~~exceptions ~~laboratories~~specified in the ~~performance~~merger ofagreement, ~~clinical~~and ~~testing~~these ~~services.~~restrictions ~~Some~~could ofprevent ~~these~~us ~~contract~~from ~~manufacturing~~pursuing ~~and~~important ~~technology~~business ~~development~~opportunities, ~~services~~such ~~fall~~as ~~outside~~business ofor ~~Celera~~technology ~~Diagnostics’~~acquisitions, ~~alliance~~while ~~with~~the ~~Abbott~~merger ~~Laboratories~~is pending.

~~Also,~~- ~~Abbott~~33 ~~Laboratories~~- is currently marketing several other nucleic acid diagnostic products that are being manufactured by other companies. Our alliance with Abbott Laboratories, including the economic arrangements, covers all nucleic acid diagnostic products marketed by Abbott Laboratories, including these products.

RegulationTable of Diagnostic Products Contents

InBecause the ~~U.S.~~market ~~and~~price inof ~~other~~Invitrogen’s ~~countries,~~common ~~diagnostic~~stock ~~products~~will ~~are~~fluctuate ~~heavily~~prior ~~regulated~~to bycompletion ~~governmental~~of ~~agencies.~~the Invitrogen ~~These~~merger, ~~requirements~~we ~~vary~~cannot ~~from~~assure ~~country~~our tostockholders ~~country.~~as ~~Currently,~~to ~~Celera~~the ~~Diagnostics’~~market ~~principal~~value ~~markets~~of ~~are~~ the ~~U.S.~~shares ~~and~~of ~~the~~Invitrogen ~~European~~common ~~Union,~~stock ~~and~~that ~~the~~they ~~regulatory~~will ~~requirements~~receive inupon ~~those~~completion ~~jurisdictions~~of ~~are~~the ~~described below~~merger.

InThe market price of Invitrogen common stock at the ~~U.S.,~~time of completion of the ~~FDA~~merger ~~classifies~~may ~~Celera~~vary ~~Diagnostics’~~significantly infrom ~~vitro~~the ~~diagnostic~~price ~~products~~when aswe ~~“devices”~~signed ~~and~~the merger agreement, the ~~FDA’s~~price ~~Center~~when ~~for~~the ~~Devices~~per share merger consideration was determined, or the price when we and ~~Radiological~~Invitrogen ~~Health~~conduct ~~regulates~~our ~~these~~special ~~products~~stockholder meetings to seek approval of the merger. ~~Although~~Pursuant ~~some~~to the merger agreement, if the arithmetic average of the volume-weighted average price of Invitrogen’s common stock on each trading day during the ~~products~~20 ~~that~~consecutive ~~Celera~~trading ~~Diagnostics~~days ~~expects~~immediately preceding the third business day prior to ~~market~~the ~~may~~effective ~~not~~time ~~require~~of ~~regulatory~~the ~~clearance~~merger, or ~~approval~~the 20-day VWAP, ~~its~~is ~~current~~less ~~business~~than $46.00 ~~strategy~~per isshare, tothen ~~develop~~holders ~~and~~of ~~market~~Applied Biosystems stock who receive all or a ~~number~~portion of ~~products~~their ~~that~~consideration in shares of Invitrogen stock will bealso ~~“devices”~~receive ~~and~~an ~~require~~additional ~~this~~cash ~~clearance~~amount orof ~~approval~~up to $2.31 ~~For~~per ~~Celera~~share ~~Diagnostics~~of toInvitrogen ~~market~~common ~~its~~stock which they receive in ~~vitro~~the ~~diagnostic~~merger. ~~products~~If, ~~with~~however, ~~clinical~~the ~~claims~~20-day VWAP is less than $43.69 per share, there will not be any cash paid in addition to the Uamount described above.S. Because the date when the merger is completed may be later than the date of the special meetings, ~~Celera~~our ~~Diagnostics~~stockholders ormay ~~its~~not ~~collaborators~~know ~~generally~~the ~~must~~exact ~~first~~value ~~obtain~~of ~~clearance~~the ~~from~~Invitrogen common stock that will be issued in the ~~FDA~~merger ~~pursuant~~at tothe time they vote on the merger proposal. As a ~~process~~result, ~~known~~if asthe market price of Invitrogen common stock at the completion of ~~510(k)~~the ~~premarket~~merger ~~notification~~is less than $43.69, orthe ~~must~~value ~~obtain~~of ~~FDA~~the ~~approval~~per ~~through~~share merger consideration received by our stockholders who receive a ~~more~~portion ~~demanding~~of ~~premarket~~the ~~approval~~merger consideration in Invitrogen common stock will be lower than $38.00, orthe ~~PMA~~value of the per share merger consideration for stockholders, ~~process~~if any, who receive only cash.

InRapidly ~~order~~changing totechnology ~~obtain~~in alife ~~510(k)~~sciences ~~premarketing~~could ~~clearance,~~make our product line ~~which~~obsolete ~~refers~~unless we continue to ~~Section~~develop ~~510(k)~~and ofmanufacture ~~the~~new ~~Federal~~and ~~Food,~~improved ~~Drug~~products and ~~Cosmetic Act~~services, orand ~~FFDCA,~~pursue ~~Celera~~new ~~Diagnostics~~market oropportunities. ~~its collaborators~~

A significant portion of the net revenues for us each year is derived from products and services that did not exist in the prior year. We sell our products in several industries that are characterized by rapid and significant technological changes, frequent new product and service introductions and enhancements, and evolving industry standards. Our future success depends on our ability to continually improve our current products and services, develop and introduce, on a timely and cost-effective 45basis, new products and services that address the evolving needs of its customers, and pursue new market opportunities that develop as a result of technological and scientific advances in life sciences. These new market opportunities may be outside the scope of our proven expertise or in areas which have unproven market demand, and the utility and value of new products and services developed by us may not be accepted in the markets served by the new products. This includes, for example, new products under development for the clinical diagnostics market, which are described in the immediately following paragraph. The inability to gain market acceptance of new products and services could harm our future operating results. Our future success also depends on our ability to manufacture these improved and new products to meet customer demand in a timely and cost-effective manner, including our ability to resolve in a timely manner manufacturing issues that may arise from time to time as we commence production of these complex products. Unanticipated difficulties or delays in replacing existing products and services with new products and services or in manufacturing improved or new products in sufficient quantities to meet customer demand could diminish future demand for our products and services and our future operating results.

~~Back~~- to34 ~~Contents~~-

generallyTable must file a notice with the FDA with clinical data demonstrating that the device subject to the notification and its intended purpose are “substantially equivalent” to a diagnostic device that is already cleared or approved for marketing by the FDA. The 510(k) clearance process usually takes from three to twelve months, but can take longer. For example, the FDA may require further information, including additional clinical data, to make a determination regarding “substantial equivalence” to a legally marketed device. Celera Diagnostics has successfully applied for and received 510(k) clearances for its ViroSeq HIV-1 Genotyping System, and a description of the clearances it has received is set forth above in Item 1 of this report under the headings “Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics – Celera Diagnostics’ Products.” From time to time, we may publicly refer to “special” 510(k) clearances from the FDA. A special 510(k) clearance is an alternative to the traditional 510(k) method of premarket notification. It is the least burdensome mechanism for reporting significant modifications to a previously cleared diagnostic device and can be used when the modifications do not change the intended use of the previously cleared diagnostic device.Contents

IfWe ~~the~~may ~~“substantially~~not ~~equivalent”~~successfully ~~standard~~develop isinstruments ~~not met~~ for ause ~~510(k)~~in ~~premarketing clearance, a PMA application must be filed pursuant to~~ the ~~FFDCA.~~clinical ~~The~~diagnostics ~~PMA~~market, ~~process~~and iseven ~~much~~if ~~more~~we do ~~demanding~~develop ~~than~~these ~~the 510(k) premarket notification process. A PMA application~~products, ~~which~~they ismay ~~intended~~not toreceive ~~demonstrate~~needed ~~that~~regulatory aclearances ~~device~~or isapprovals ~~safe~~ and ~~effective,~~we ~~must~~may not be ~~supported~~able byto ~~more~~manufacture ~~extensive~~these ~~information~~products ~~than~~in ~~required~~accordance ~~for~~with aregulatory ~~510(k) notification~~requirements. ~~The PMA application process is more costly, lengthy, and uncertain and usually takes one to three years, but can take longer.~~

~~Following~~We ~~FDA~~intend ~~clearance~~to orcommit ~~approval~~significant resources to the development of ainstruments ~~device~~for ~~allowing~~use ~~its~~in ~~commercial~~the ~~distribution,~~clinical ~~numerous~~diagnostics ~~regulatory~~market. ~~requirements~~Although ~~apply,~~we ~~including:~~have ~~the~~experience ~~Quality~~in developing ~~System~~and ~~Regulations,~~commercializing ~~which~~instrumentation ~~require~~for ~~manufacturers~~the tolife ~~follow~~science ~~elaborate~~research ~~design~~market, ~~testing,~~we ~~control,~~have ~~documentation,~~only ~~and~~limited ~~other~~prior ~~quality~~experience ~~assurance~~with ~~procedures~~products ~~during~~of any type for use in the ~~manufacturing~~regulated ~~process;~~clinical ~~labeling~~diagnostics ~~regulations;~~market. ~~and~~This ~~the~~is ~~Medical~~an ~~Device~~emerging ~~Reporting~~business ~~regulation~~area for us, ~~which~~and we ~~requires~~may ~~that~~not have or be able to obtain the ~~manufacturers~~necessary ~~report~~expertise to successfully develop instruments for use in this market. In addition, in the ~~FDA~~U.S. ifand ~~their~~other ~~device~~countries, ~~may~~instruments ~~have~~cannot ~~caused~~be marketed for clinical diagnostics use until they first receive regulatory clearance or ~~contributed~~approval. toThe aregulatory ~~death~~review and clearance or ~~serious~~approval ~~injury~~process can be time consuming and require substantial expense and may not be successful. Even if we obtain regulatory clearance or ~~malfunctioned~~approval for an instrument for use in athe ~~way~~clinical diagnostics market, the manufacture, sale, and distribution of that ~~would~~product ~~likely~~may be subject to ongoing regulatory requirements. The inability to comply with these requirements could cause us to suspend the manufacture or ~~contribute~~sale of tothese aproducts ~~death~~and delay or ~~serious~~prevent ~~injury~~us iffrom itgenerating ~~were~~revenues tofrom ~~reoccur~~the sale of these products.

~~Failure~~We torely ~~comply~~on ~~with~~other ~~the~~companies ~~applicable~~for ~~U.S.~~the manufacture ~~regulatory~~of ~~requirements~~some ~~for~~of inour ~~vitro diagnostic~~ products ~~could~~and ~~result~~also ~~in,~~for ~~among~~the ~~other~~supply ~~things, warning letters, fines, injunctions, civil penalties, recalls, or seizure~~ of ~~products,~~some ~~total~~components ~~or partial suspension~~ of ~~production,~~ the ~~FDA’s~~products ~~refusal~~we tomanufacture ~~grant~~on ~~future~~our ~~premarket clearances or approvals, withdrawals of current product applications, and criminal prosecution~~own.

InAlthough ~~addition,~~we have ~~distribution~~contracts ~~and~~with ~~sale~~most of ~~all~~these ~~diagnostic products~~manufacturers inand ~~the~~suppliers, ~~European~~their ~~Union~~operations ~~are~~could ~~subject~~be todisrupted. ~~regulatory requirements~~These ~~that~~disruptions ~~became~~could ~~effective~~be oncaused ~~December~~by 7,conditions ~~2003.~~unrelated ~~Pursuant~~ to ~~these~~our ~~requirements,~~business ~~Celera~~or ~~Diagnostics’~~operations, ~~in vitro~~including ~~diagnostic products exported to~~ the EUbankruptcy ~~must~~of ~~comply with~~ the ~~“In~~manufacturer ~~Vitro~~or ~~Diagnostics~~supplier. ~~Directive”~~Although ~~and~~we ~~bear~~have ~~the~~our ~~“CE~~own ~~mark.”~~manufacturing ~~The~~facilities, ~~Directive~~and ~~describes~~generally ~~criteria~~believe ~~that~~we ~~must~~might be ~~met~~able ~~and~~to ~~steps~~manufacture ~~that~~some ~~must~~of bethe ~~taken for in vitro diagnostic~~ products toand ~~be qualified~~components ~~for~~currently ~~sale~~sourced infrom EUother ~~countries.~~companies, ~~The~~we CEalso ~~mark~~believe ~~is a symbol indicating~~ that ~~products~~it ~~conform~~could totake ~~the~~considerable ~~essential~~time ~~requirements of the Directive,~~ and ~~can~~resources for beus ~~commercially distributed~~to ~~throughout~~establish the ~~EU.~~capability ~~In order~~ to ~~demonstrate~~do ~~compliance~~so. Accordingly, ~~Celera~~if ~~Diagnostics~~these isother ~~required~~manufacturers ~~to either self-certify~~ or ~~provide~~suppliers ~~documented~~are ~~evidence~~unable toor afail ~~certification organization referred~~ to ~~as a~~fulfill ~~“Notified~~their ~~Body”~~obligations ~~that the products~~ to ~~be marketed meet all of the applicable essential requirements. Once Celera Diagnostics has satisfied the compliance requirements~~us, ~~the~~we CEmight ~~mark~~not ~~may~~ be ~~affixed~~able onto ~~the~~satisfy ~~products~~customer ~~concerned.~~demand ~~However,~~ in ~~order~~a totimely ~~maintain use of the CE mark for some products~~manner, ~~Celera~~and ~~Diagnostics~~our ~~will~~business becould ~~subject~~be ~~to continuing review by the Notified Body, if applicable~~harmed.

A significant portion of our sales depends on customers’ capital spending policies that may be subject to significant and -unexpected 46decreases. -

~~Back~~A significant portion of our instrument product sales are capital purchases by our customers. Our customers include pharmaceutical, environmental, research, biotechnology, and chemical companies, and the capital spending policies of these companies can have a significant effect on the demand for our products. These policies are based on a wide variety of factors, including the resources available to ~~Contents~~make purchases, the spending priorities among various types of research equipment, and policies regarding capital expenditures during recessionary periods. Any decrease in capital spending or change in spending policies of these companies could significantly reduce the demand for our products.

~~During~~- ~~our~~35 ~~2004 fiscal year, Celera Diagnostics received CE mark registration for its ViroSeq HIV~~-1 Genotyping System for use on the ABI PRISM 3100 Genetic Analyzer, and is in the process of completing, or intends to prepare, required documentation for CE mark registration for some of its other products. However, Celera Diagnostics cannot assure that the CE mark registration will be granted for Celera Diagnostics’ other products or that it will maintain its compliance with these requirements. Celera Diagnostics’ failure to meet these requirements may prevent it from generating revenue from the sale of diagnostic products in the EU.

MarketingTable andof Distribution Contents

~~Celera~~A ~~Diagnostics~~substantial ~~expects~~portion ~~that reference laboratories, hospitals, and medical clinics that perform diagnostic testing will be the primary users~~ of ~~its~~our ~~products.~~sales ~~Celera~~is ~~Diagnostics does not expect~~ to ~~develop~~customers ~~its~~at ~~own~~universities ~~marketing~~or ~~and~~research ~~distribution~~laboratories ~~organization~~whose funding for the foreseeable future. Under the terms of its strategic alliance with Abbott Laboratories, Abbott Laboratories will serve as Celera Diagnostics’ exclusive worldwide distributor of nucleic acid-based diagnostic products developed under the agreement. The Abbott Laboratories alliance agreement is ~~discussed~~dependent ~~above~~on inboth ~~Item 1 of this report under~~ the ~~headings~~amount ~~“Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems~~ and ~~Celera~~timing ~~Genomics~~of –funding ~~Abbott~~from ~~Laboratories~~government ~~Strategic Alliance~~sources.”

~~Pursuant~~As toa result, the ~~Abbott~~timing ~~Laboratories~~and ~~strategic~~amount ~~alliance,~~of onrevenues from ~~October~~these 1,sources ~~2002,~~may ~~Abbott~~vary ~~Laboratories~~significantly ~~commenced~~due ~~the~~to ~~marketing,~~factors ~~distribution,~~that ~~and~~can ~~end-user~~be ~~sale~~difficult ofto ~~most~~forecast. ~~existing~~Research ~~Celera~~funding ~~Diagnostic~~for ~~products.~~life ~~Celera~~science ~~Diagnostics~~research ~~expects~~has ~~that~~increased ~~most~~more ofslowly ~~its~~during ~~nucleic~~the ~~acid~~past ~~testing~~several ~~products~~years ~~for~~compared ~~the~~to ~~foreseeable~~previous ~~future~~years ~~will~~and behas ~~covered~~declined byin ~~the~~some countries, ~~Abbott~~and ~~Laboratories~~some ~~agreement~~grants sohave ~~long~~been asfrozen itfor ~~remains~~extended inperiods ~~effect~~or ~~and~~otherwise ~~will~~become beunavailable ~~marketed,~~to ~~distributed~~various institutions, ~~and~~sometimes ~~sold~~without ~~through~~advance ~~Abbott Laboratories~~notice. ~~However,~~Budgetary ~~Celera~~pressures ~~Diagnostics~~ may ~~develop~~result ~~products~~in ~~not~~reduced ~~covered~~allocations byto ~~the~~government ~~agreement,~~agencies inthat ~~which~~fund research ~~case~~and ~~Celera~~development ~~Diagnostics~~activities. ~~would~~If ~~have~~government funding necessary to ~~develop~~purchase ~~its~~our ~~own~~products ~~marketing~~were ~~and~~to ~~distribution~~become ~~capability~~unavailable to researchers for any extended period of time, or ~~find~~if ~~other~~overall ~~distributors~~research ~~for~~funding ~~these~~were ~~products~~to decrease, our business could be harmed.

~~Raw~~We ~~Materials~~may become involved in legal proceedings to enforce our intellectual property rights.

The intellectual property rights of biotechnology companies, including us, involve complex factual, scientific, and legal questions. Even though we may ~~Celera~~believe ~~Diagnostics’~~that ~~operations~~we ~~require~~have a ~~variety~~valid patent on a particular technology, other companies have from time to time taken, and may in the future take, actions that we believe violate our patent rights. Although we have licensing programs to provide industry access to some of ~~raw~~our ~~materials~~patent rights, ~~such~~other ascompanies ~~chemical~~have in the past refused to participate in these licensing programs and ~~biochemical~~companies ~~materials~~may refuse to participate in them in the future, resulting in a loss of potential licensing revenue. Legal actions to enforce these patent rights can be expensive and ~~other~~may ~~supplies~~involve the diversion of significant management time. Our enforcement actions may not be successful, and furthermore they could give rise to legal claims against us and could result in the invalidation of some of ~~which~~our intellectual property rights or legal determination that they are ~~occasionally~~not ~~found~~enforceable. Also, other companies may seek to beinvalidate inour ~~short~~intellectual ~~supply~~property rights through other proceedings, such as by challenging the validity and scope of a patent with the United States Patent and Trademark Office, or USPTO, or foreign patent offices. ~~Any~~For ~~interruption~~example, U.S. Patent No. 6,814,934, which relates to instruments for real-time PCR detection, is the subject of a reexamination proceeding in the ~~availability~~USPTO and EP 872562, the European counterpart of the ’934 patent, is the subject of an opposition proceeding in the European Patent Office. These proceedings, which have resulted from requests made by other companies to these ~~materials~~patent authorities, could ~~adversely~~result ~~affect~~in ~~Celera~~amendments ~~Diagnostics’~~to ~~operations~~or rejection of the patents.

InWe ~~particular~~are currently, ~~Celera Diagnostics needs access to human tissue~~ and ~~blood~~could ~~samples~~in ~~from~~the future ~~diseased~~be, ~~and~~subject ~~healthy~~to ~~individuals~~lawsuits, ~~other~~arbitrations, ~~biological materials~~investigations, and ~~related clinical and~~ other ~~information,~~legal ~~which~~actions ~~may~~with beprivate inparties ~~limited supply. Celera Diagnostics may not be able to obtain or maintain access to these materials~~ and ~~information~~governmental ~~on acceptable terms~~entities, orparticularly ~~may~~involving ~~not~~claims befor ~~able~~infringement toof ~~obtain~~patents ~~needed~~and ~~consents~~other ~~from~~intellectual ~~individuals~~property ~~providing tissue or blood samples. In addition~~rights, ~~government regulation in the U.S.~~ and ~~foreign~~we ~~countries~~may ~~could result in restricted access~~ need to, orobtain ~~use~~licenses ~~of, human tissue or blood samples. If Celera Diagnostics loses access~~ to ~~sufficient~~intellectual ~~numbers~~property ~~or sources of tissue or blood samples, or if tighter restrictions are imposed on its use of the information generated~~ from ~~tissue or blood samples, its business may be harmed~~others.

We believe that we have meritorious defenses against the claims currently ~~Patents~~asserted against us and intend to defend them vigorously. However, ~~Licenses~~the outcome of legal actions is inherently uncertain, and ~~Franchises~~we cannot be sure that we will prevail in any of these actions. An adverse determination in some of our current legal actions, particularly the cases described below, could harm our business and financial condition.

~~Through~~Our ~~its~~products ~~internal~~are ~~research~~based ~~programs~~on ~~and collaborative programs~~complex, rapidly ~~including~~developing ~~the~~technologies. ~~Applera~~These ~~Genomics~~products ~~Initiative,~~could ~~Celera~~be ~~Diagnostics~~developed ~~anticipates~~without ~~that~~knowledge itof ~~will~~previously ~~develop~~filed anpatent ~~increasing~~applications that mature into

- 4736 -

BackTable toof Contents

~~portfolio~~ patents that cover some aspect of ~~intellectual~~these ~~property~~technologies. ~~Celera~~In ~~Diagnostics~~addition, because patent litigation is complex and the outcome inherently uncertain, our belief that our products do not infringe valid and enforceable patents owned by others could be successfully challenged. We have from time to time been notified that we may ~~use~~be ~~such~~infringing patents and other intellectual property inrights ~~its~~of ~~internal~~others. ~~development~~Also, in the ~~programs~~course orof our business, we may ~~license~~from ittime to ~~third~~time ~~parties~~have oraccess ~~customers~~to ~~for~~confidential ~~some~~or ~~combination~~proprietary information of ~~license~~others, ~~fees~~and they could bring a claim against us asserting that we had misappropriated their technologies, ~~milestone~~which ~~payments~~though not patented are protected as trade secrets, and ~~royalty~~ ~~payments~~had improperly incorporated those technologies into our products.

Due to these factors, there remains a ~~Celera~~constant ~~Diagnostics’~~risk ~~products~~of ~~are~~intellectual ~~based~~property onlitigation ~~complex~~and other legal actions affecting us, ~~rapidly~~which ~~developing~~could ~~technologies~~include antitrust claims. ~~Some~~We have been made a party to litigation and have been subject to other legal actions regarding intellectual property matters, which have included claims of ~~these~~violations ~~technologies~~of ~~are~~antitrust ~~covered~~laws. byThese ~~patents~~actions ~~owned~~currently byinclude ~~Applied~~the ~~Biosystems~~legal proceedings described in the following paragraph, some of which, if determined adversely, could harm our business and ~~Celera~~financial ~~Genomics~~condition. To avoid or settle legal claims, it may be necessary or desirable in the future to obtain licenses relating to one or more products or relating to current or future technologies, and we may not be able to obtain these licenses or other ~~patents~~rights ~~are~~on commercially ~~owned~~reasonable byterms, ~~third~~or ~~parties~~at ~~and~~all. ~~used~~In bysome ~~Celera~~situations ~~Diagnostics~~settlement ~~under~~of ~~license~~claims may require an agreement to cease allegedly infringing activities.

InWe ~~addition,~~are ~~Celera~~involved ~~Diagnostics’~~in ~~alliance~~several ~~with~~legal ~~Abbott~~actions ~~Laboratories~~that ~~provides~~could ~~Celera~~affect ~~Diagnostics~~our ~~with rights to some~~ intellectual property ~~owned~~rights orand ~~licensed~~our byproducts ~~Abbott~~and ~~Laboratories~~services, ~~that~~including ~~Celera~~the ~~Diagnostics~~following: ~~needs for its business and products.~~

~~Competition~~• Enzo Biochem, Inc., Enzo Life Sciences, Inc., and Yale University have filed a lawsuit against us alleging that we are infringing six patents due to the sale of sequencing reagent kits, TaqMan® genotyping and gene expression assays, and the gene expression microarrays used with our Expression Array System.

~~The~~• ~~diagnostics~~Michigan ~~industry~~Diagnostics inLLC ~~which~~has ~~Celera~~filed ~~Diagnostics~~claims ~~operates~~against isus ~~competitive~~seeking a declaratory judgment of non-infringement, invalidity, and ~~evolving.~~unenforceability ~~There~~of isapproximately ~~intense~~60 ~~competition~~patents ~~among~~related ~~healthcare,~~to ~~biotechnology~~chemiluminescent products and methods, and ~~diagnostic~~asserting ~~companies~~antitrust ~~attempting~~claims tobased ~~discover~~on ~~candidates~~our ~~for~~alleged ~~potential~~misconduct ~~new~~in ~~diagnostic~~our ~~products.~~alleged ~~These~~enforcement ~~companies~~of ~~may:~~those patents.

• ~~develop~~Molecular ~~new diagnostic products in advance of Celera~~ Diagnostics orLaboratories ~~its~~has ~~collaborators;~~filed •a ~~develop~~class ~~diagnostic~~action ~~products~~complaint ~~which~~against ~~are~~us, ~~more effective or more cost~~Hoffmann-~~effective~~La ~~than~~Roche ~~those~~Inc., ~~developed~~and byRoche ~~Celera~~Molecular ~~Diagnostics~~Systems, orInc. ~~its~~alleging ~~collaborators;~~anticompetitive •conduct ~~obtain~~in ~~regulatory~~connection ~~clearance~~with orthe ~~approval~~sale of ~~their~~Taq ~~diagnostic~~DNA ~~products~~polymerase. ~~more~~The ~~rapidly~~anticompetitive ~~than~~conduct ~~Celera~~is ~~Diagnostics~~alleged orto ~~its~~arise ~~collaborators;~~from orthe •prosecution ~~obtain~~and ~~patent~~enforcement ~~protection~~of orU.S. ~~other~~Patent ~~intellectual~~No ~~property~~4,889,818. ~~rights~~This ~~that~~patent ~~would~~is ~~limit~~assigned ~~Celera~~to ~~Diagnostics’~~Roche orMolecular ~~its~~Systems, ~~collaborators’~~with ~~ability~~whom towe ~~develop~~have ~~and~~a ~~commercialize,~~commercial orrelationship ~~their~~covering, ~~customers’~~among ~~ability~~other ~~to use~~things, ~~Celera~~this ~~Diagnostics’~~patent and ~~its~~the ~~collaborators’~~sale ~~diagnostic~~of ~~products~~Taq DNA polymerase.

~~Celera~~• ~~Diagnostics~~In ~~competes~~response ~~with~~to ~~companies~~claims inmade ~~the U.S.~~by ~~and~~us ~~abroad~~against ~~that~~Solexa, ~~are~~Inc., ~~engaged~~Illumina, inInc., ~~the development~~ and ~~commercialization~~a offormer ~~products~~chief ~~and~~patent ~~services~~counsel ~~that~~to ~~provide genetic~~our ~~information. These companies may develop products that are competitive with the products offered by Celera Diagnostics or its collaborators~~company, ~~such~~Solexa ashas ~~analyte~~filed ~~specific~~counterclaims ~~reagents~~against orus ~~diagnostic~~alleging ~~test kits~~ that ~~perform~~we ~~the~~infringe ~~same~~U.S. orPatent ~~similar purposes as Celera Diagnostics’ or its collaborators’ products~~Nos. ~~Also~~5,750,341, ~~clinical~~5,969,119, ~~laboratories may offer testing services that are competitive with the products sold by Celera Diagnostics or its collaborators. For example~~6,306,597 abased ~~clinical~~on ~~laboratory~~our ~~can use either reagents purchased from manufacturers other than Celera Diagnostics~~making, ~~or use its own internally developed reagents~~using, ~~to make diagnostic tests. If clinical laboratories make tests in this manner for a particular disease~~selling, ~~they~~and ~~could~~offering ~~offer testing services~~ for ~~that~~sale ~~disease~~DNA assequencing ~~an alternative to~~ products ~~sold by Celera Diagnostics used to test for the same disease~~. The testing services offered by clinical laboratories may be easier to develop and market than test kits developed by Celera Diagnostics or its collaborators because the testing services are not subject to the same clinical validation requirements that are applicable to FDA-cleared or approved diagnostic test kits. The diagnostic testing services market is dominated by a small number of large clinical

-• 48In -response to a claim that we, MDS, Inc., and our Applied Biosystems/MDS Analytical Technologies Instruments joint venture with MDS filed against Thermo Electron Corporation, Thermo Electron has filed a counterclaim seeking a declaratory judgment that our U.S. Patent No. 4,963,736 is invalid. After the filing of this action

~~Back~~- to37 ~~Contents~~-

testingTable laboratories, including Laboratory Corporation of America Holdings, Quest Diagnostics Inc., and Specialty Laboratories, Inc.Contents

~~Also~~against Thermo Electron, aits ~~substantial~~subsidiary ~~portion~~Thermo ofFinnigan ~~all~~LLC ~~sales~~filed ofa ~~diagnostic~~lawsuit ~~products are~~against ~~made~~us toalleging athat ~~small~~we ~~number~~are infringing one of ~~clinical~~its ~~reference~~patents ~~laboratories,~~as ~~including~~a ~~those~~result ~~identified~~of, ~~above~~for example, ~~and~~our ~~therefore~~commercialization ~~Celera~~of ~~Diagnostics expects~~the toABI ~~rely~~PRISM® on3700 ~~these~~Genetic ~~laboratories~~Analyzer. ~~for~~Thermo Finnigan subsequently filed a ~~substantial~~second ~~portion~~lawsuit ofagainst ~~its~~us, ~~sales.~~MDS, ~~Celera~~and ~~Diagnostics’~~the ~~inability~~Applied toBiosystems/MDS ~~establish~~Analytical orTechnologies ~~maintain one~~Instruments orjoint ~~more~~venture alleging that we and the other defendants have infringed one of ~~these~~Thermo ~~laboratories~~Finnigan’s patents as a ~~customer~~result ~~could~~of, ~~adversely~~for ~~affect~~example, ~~its~~our ~~business,~~commercialization ~~financial~~of ~~condition,~~the ~~and~~API ~~operating~~5000™ ~~results~~LC/MS/MS system.

~~Environmental~~• ~~Matters~~Fluidigm Corporation and Corbett Life Science, Corbett Robotics Inc., and Corbett Research Pty Ltd. have filed complaints against us seeking declaratory judgments of non-infringement and invalidity of our U.S. Patent No. 6,814,934, which relates to instruments for real-time PCR detection. The complaint filed by the Corbett parties also seeks a declaratory judgment that this patent is unenforceable.

~~Celera~~These ~~Diagnostics~~cases isare ~~subject~~described toin ~~federal,~~further ~~state,~~detail ~~and~~below ~~local~~in ~~laws~~Item 3 ~~and~~of ~~regulations~~this ~~regulating~~report under the ~~discharge~~heading “Legal Proceedings–Commercial Litigation.” The cost of ~~materials~~litigation ~~into~~and the ~~environment,~~amount orof ~~otherwise~~management ~~relating~~time toassociated ~~the~~with ~~protection~~these ofcases ~~the~~is ~~environment,~~expected into ~~those~~be ~~jurisdictions~~significant. ~~where~~These ~~Celera~~matters ~~Diagnostics~~might ~~operates~~not orbe ~~maintains~~resolved ~~facilities~~favorably. ~~Celera~~If ~~Diagnostics~~they ~~does~~are not ~~believe~~resolved ~~that~~favorably, ~~any~~we could ~~liability~~be ~~arising~~enjoined ~~under,~~from orselling ~~compliance~~the ~~with,~~products ~~environmental~~or ~~laws~~services orin ~~regulations~~question ~~will~~or ~~have~~other aproducts ~~material~~or ~~effect~~services onas ~~its~~a ~~business~~result, and nomonetary ~~material~~or ~~capital~~other ~~expenditures~~damages ~~are~~could ~~expected~~be ~~for~~assessed ~~environmental~~against ~~control~~us. These outcomes could harm our business or financial condition.

~~Applera~~Some ~~Genomics~~of ~~Initiative~~the intellectual property that is important to our business is owned by other companies or institutions and licensed to us, and legal actions against them could harm our business.

InEven ~~July~~if ~~2001~~we are not a party to these legal actions, an adverse outcome could harm our business because it might prevent these other companies or institutions from continuing to license intellectual property that we ~~announced~~may aneed ~~collaboration~~for ~~among~~our ~~Celera~~business. ~~Genomics~~Furthermore, ~~Applied~~an ~~Biosystems~~adverse outcome could result in infringement or other legal actions being brought directly against us. For example, on November 8, 2006, a patent interference proceeding was declared by the United States Patent and ~~Celera~~Trademark Office between Enzo Diagnostics, ~~for~~Inc. ~~commercializing~~and ~~products~~the ~~derived~~California ~~from~~Institute ~~information~~of ~~obtained~~Technology, ~~through~~or ~~analysis~~Caltech, concerning ofa ~~variations~~patent inapplication ~~the~~owned ~~human~~by ~~genome~~Enzo and U.S. ~~This~~Patent ~~collaboration~~No. 5,821,058, ~~which~~owned weby ~~refer~~Caltech. The ’058 patent is exclusively licensed to asus and claims methods for DNA sequencing. The Patent Office has declared the ~~“Applera~~interference ~~Genomics~~in ~~Initiative,”~~order ~~was~~to resolve ~~commenced~~competing ~~primarily~~claims to ~~develop~~inventorship aof ~~portfolio~~the subject matter of ~~validated~~the ~~SNPs~~interference. Although we are not a party to bethis ~~used~~proceeding, as exclusive licensee we are involved in the ~~basis~~prosecution ~~for~~of ~~these~~the ~~products~~interference, in cooperation with Caltech, and we are funding a substantial portion of the cost of the prosecution. ~~The~~If ~~Applera~~Enzo ~~Genomics~~prevails ~~Initiative~~in ~~was~~the ~~completed~~interference, ~~during~~the ~~our~~Patent ~~2003~~Office ~~fiscal~~could ~~year~~revoke the claims of the ’058 patent from Caltech and ~~was~~award ~~jointly~~substantially ~~funded~~similar byclaims ~~all~~to ~~three~~Enzo, ~~business~~which ~~segments~~Enzo might then assert against our DNA sequencing products and possibly other products.

~~Pursuant~~Since to the Applera Genomics Initiative, Celera Genomics prioritized and resequenced approximately 25,000 genes from 39 individuals and a chimpanzee. From this resequencing, Celera Genomics identified over 294,000 SNPs in genes, of which we believe approximately 75% are novel SNPs not previously identified by other researchers. Based on our ~~analysis~~business ofis ~~the~~dependent ~~location of these SNPs~~ on ~~the~~foreign ~~human genome~~sales, ~~we believe that over 45,000 of the novel SNPs could affect the amount, stability, or function of proteins. SNPs that have these properties are referred to as~~fluctuating ~~“functional”~~currencies ~~SNPs~~will ~~and~~make ~~may~~revenues ~~have the greatest biological~~ and ~~medical~~operating ~~value.~~results ~~The~~more ~~Applera Genomics Initiative also included Applied Biosystems’ SNP validation studies~~volatile. SNP validation was performed to confirm that publicly available SNPs are true genetic variations rather than sequencing errors, and to determine the frequency of SNPs across multiple racial and ethnic populations to confirm their utility in life science research.

WeApproximately ~~believe~~57% ~~the~~of ~~SNP~~our ~~information~~net ~~that~~revenues wefor ~~have~~our ~~generated~~2008 ~~through~~fiscal ~~the~~year ~~Applera~~were derived ~~Genomics~~from ~~Initiative~~sales ~~will~~to becustomers anoutside ~~important~~of ~~asset~~the ~~for~~U.S. ~~all~~The ~~three~~majority of ~~our~~these ~~business~~sales ~~segments.~~were ~~Applied~~based ~~Biosystems~~on ~~is incorporating~~ the ~~SNP~~relevant ~~data~~customer’s ~~into~~local ~~new SNP assay products for the research market~~currency. ~~Celera~~A ~~Diagnostics~~significant isportion ~~using~~of ~~this~~our ~~information~~related incosts ~~disease~~are ~~association~~based ~~studies~~on ~~aimed~~the atU.S. ~~identifying~~dollar. ~~new~~As ~~diagnostic~~a ~~markers.~~result, ~~Celera~~our ~~Genomics~~reported isand anticipated ~~using~~operating ~~the~~results ~~SNP~~and ~~information~~cash inflows ~~its~~are ~~proteomics~~subject ~~discovery~~to ~~efforts~~fluctuations ~~and~~due ~~may~~to ~~also~~material ~~benefit~~changes ~~from~~in ~~therapeutic~~foreign ~~implications~~currency ofexchange ~~findings~~rates ~~from~~that ~~the~~are ~~disease~~beyond ~~association~~our ~~studies~~control.

- 4938 -

BackTable toof Contents

Our future growth depends in part on our ability to acquire complementary technologies through ~~Employees~~acquisitions, investments, or other strategic relationships or alliances, which may absorb significant resources, may be unsuccessful, and could dilute holders of Applied Biosystems stock.

Acquisitions, investments and other strategic relationships and alliances, if pursued, may involve significant cash expenditures, debt incurrence, and Asexpenses that could have a material effect on our financial condition and operating results. If we pursue these types of ~~June~~transactions, 30it may be difficult for us to complete these transactions quickly and to integrate these acquired operations efficiently into our current business operations. Potential technological advances resulting from the integration of technologies may not be achieved as successfully or rapidly as anticipated, ~~2004~~if at all. Any acquisitions, weinvestments ~~had~~or ~~approximately~~other strategic 5relationships and alliances by us may ultimately harm our business and financial condition. In addition,~~360~~ ~~employees~~future ~~allocated~~acquisitions may not be as ~~follows:~~successful as we originally anticipated and may result in impairment charges. We have incurred these charges in recent years in relation to acquisitions. For example, we have incurred charges for impairment of goodwill, intangibles and other assets and other charges of $14.9 million related to our acquisition of Boston Probes, Inc. In addition, acquisitions and other transactions may involve the issuance of a substantial amount of Applied Biosystems stock without the approval of our stockholders. Any issuances of this nature could be dilutive to our stockholders.

Business/Function		Number
Applied Biosystems		4,400
Celera Genomics		530
Celera Diagnostics		220
Corporate Staff		210

Our business, particularly the development and marketing of information-based products and services, depends on the continuous, effective, reliable, and secure operation of our computer hardware, software, and Internet applications and related tools and functions.

Our ~~corporate~~business requires ~~staff~~manipulating ~~provides~~and ~~accounting,~~analyzing ~~tax,~~large ~~treasury,~~amounts ~~legal~~of data, ~~information~~and ~~technology,~~communicating ~~human~~the ~~resources,~~results ~~and~~of ~~other~~the analysis to our internal ~~services~~research ~~for~~personnel ~~Applied~~and ~~Biosystems,~~to ~~Celera~~our ~~Genomics~~customers via the Internet. Also, we rely on a global enterprise software system to operate and manage ~~Celera~~our ~~Diagnostics~~business. ~~None~~Our ofbusiness ~~Applied~~therefore ~~Biosystems’~~depends ~~U.S.~~on ~~employees~~the continuous, effective, reliable, and ~~none~~secure operation of ~~Celera~~our ~~Genomics’~~computer orhardware, ~~Celera~~software, ~~Diagnostics’~~networks, ~~employees~~Internet orservers, and related infrastructure. To the extent that our ~~corporate~~hardware ~~staff~~or ~~employees,~~software malfunctions ~~are~~or ~~subject~~access to ~~collective~~our ~~bargaining~~data ~~agreements.~~by Weinternal ~~generally~~research ~~consider~~personnel ~~our~~or ~~relations~~customers ~~with~~through ~~our~~the ~~employees~~Internet tois beinterrupted, ~~good~~our business could suffer.

Our computer and communications hardware is protected through physical and software safeguards. However, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, ~~Financial~~software ~~Information~~viruses, ~~About~~and ~~Industry~~similar ~~Segments~~events. In addition, our online products and services are complex and sophisticated, and as such, could contain data, design, or software errors that could be difficult to detect and correct. Software defects could be found in current or future products. If we fail to maintain and further develop the necessary computer capacity and data to support our computational needs and our customers’ access to information-based product and service offerings, we could experience a loss of or delay in revenues or market acceptance. In addition, any sustained disruption in Internet access provided by other companies could harm our business.

A- ~~summary~~39 of- net revenues from external customers and operating income (loss) attributable to each of our industry segments for our fiscal years ended June 30, 2002, 2003, and 2004, is incorporated herein by reference to Note 15 on pages 73 through 85 of our 2004 Annual Report. Total assets as of June 30, 2002, 2003, and 2004 were as follows:

•Table June 30, 2002: $1,818.6 million for Applied Biosystems, $1,250.0 million for Celera Genomics, $21.8 million for Celera Diagnostics, and $3,075.4 million for Applera after the effects of ($15.0) million related to intercompany eliminations; • June 30, 2003: $2,126.7 million for Applied Biosystems, $1,122.1 million for Celera Genomics, $35.9 million for Celera Diagnostics, and $3,257.5 million for Applera after the effects of ($27.2) million related to intercompany eliminations; and • June 30, 2004, were $1,947.8 million for Applied Biosystems, $1,017.7 million for Celera Genomics, $36.9 million for Celera Diagnostics, and $2,972.9 million for Applera after the effects of ($29.5) million related to intercompany eliminations.Contents

Our operations involve the use, manufacture, sale, and distribution of hazardous materials, and the ~~Celera~~mishandling ~~Diagnostics~~of ~~was~~these ~~first~~hazardous ~~presented~~materials ascould aresult ~~segment~~in ~~during~~substantial ~~our~~liabilities ~~2002~~and ~~fiscal~~harm ~~year~~to our business.

Our research ~~Financial~~and ~~Information~~development ~~About~~and ~~Geographic~~manufacturing ~~Areas~~activities involve the controlled use of potentially hazardous materials, including biological materials, chemicals, and various radioactive compounds. Also, some of our products are hazardous materials or include hazardous materials. We cannot completely eliminate the risk of accidental or other contamination or injury from these materials, and we could be held liable for resulting damages, which could be substantial. Under some laws and regulations, a party can be subject to “strict liability” for damages caused by some hazardous materials, which means that a party can be liable without regard to fault or negligence. In addition, we are subject to federal, state, local, and foreign laws, regulations, and permits governing the use, storage, handling, and disposal of hazardous materials and specified waste products, as well as the shipment and labeling of materials and products containing hazardous materials. If we fail to comply with any of these laws, regulations, or permits, we could be subject to substantial fine or penalty, payment of remediation costs, loss of permits, and/or other adverse governmental action. Any of these events could harm our business and financial condition.

AEarthquakes ~~summary~~could ofdisrupt ~~net~~operations ~~revenues~~in from external customers and long-lived assets attributed to each of our geographic areas for our 2002, 2003, and 2004 fiscal years is incorporated herein by reference to Note 15 on pages 73 through 85 of our 2004 Annual ReportCalifornia.

Our ~~consolidated~~management ~~net~~and ~~revenues~~principal ~~from~~operations ~~external~~are ~~customers~~located in ~~countries~~the ~~other~~San ~~than~~Francisco ~~the~~Bay Uarea, a region near major California earthquake faults.S. ~~for~~The ultimate impact of earthquakes on our ~~2002~~business, ~~2003~~our significant suppliers, and ~~2004~~the ~~fiscal~~general ~~years~~infrastructure ~~were~~is asunknown, ~~follows:~~but our business and operating results could be harmed if a major earthquake occurs.

•The ~~$878.6~~price ~~million, or 51.6%~~ of ~~our~~Applied ~~consolidated~~Biosystems ~~net~~stock ~~revenues,~~may ~~for~~be ~~our~~volatile. ~~2002 fiscal year;~~

The market price of Applied Biosystems stock has in the past been, and may in the future continue to be, volatile due to the risks and uncertainties described in this risk factors section of this report, as well as -other 50factors -that may have affected or may in the future affect the market price, such as:

~~Back~~• toconditions ~~Contents~~and publicity regarding the genomics, biotechnology, pharmaceutical, or life sciences industries generally;

	•	$891.3 million, or 50.2% of our consolidated net revenues, for our 2003 fiscal year; and
	•	$956.7 million, or 52.4% of our consolidated net revenues, for our 2004 fiscal year.

•

price and volume fluctuations in the stock market at large which do not relate to our operating performance; and

~~Our~~• ~~manufacturing~~comments ~~facilities~~by ~~outside~~securities ~~the~~analysts ~~continental~~or ~~U.S.~~government ~~are~~officials, ~~located~~including inwith regard to the ~~United~~viability ~~Kingdom,~~or ~~Japan~~profitability of the biotechnology sector generally or with regard to intellectual property rights of life science companies, ~~and~~or ~~Singapore~~our ability to meet market expectations.

The stock market has from time to time experienced extreme price and volume fluctuations that are unrelated to the operating performance of particular companies or the industries in which they compete. In addition, our ability to achieve previously-announced ~~Executive~~financial ~~Officers~~targets is subject to a number of risks, uncertainties, and other factors affecting our business and the ~~Registrant~~genomics, biotechnology, pharmaceutical, and life sciences industries generally, many of which are beyond our control. These factors may cause actual results to differ materially. We describe a number of

~~Information~~- ~~concerning~~40 ~~our~~- executive officers is incorporated by reference to the description in Part III, Item 10 of this report under the heading “Identification and Business Experience of Executive Officers” on pages 94 and 95 of this report.

ItemTable 2. Propertiesof Contents

these factors throughout this document, including in these risk factors. We cannot assure you that we will meet these targets. If we are not able to meet these targets, it could harm the market price of Applied Biosystems ~~Group~~stock. ~~Facilities~~

~~Applied~~Our ~~Biosystems’~~stockholder ~~headquarters~~rights ~~are~~plan ~~located~~could indiscourage leased facilities in Foster City, California. Applied Biosystems owns or leases various other facilities worldwide for manufacturing, distribution, warehousing, research and development, sales and demonstration, service, and administration. The following is a ~~list~~change of control ~~Applied Biosystems’ principal~~ and ~~other~~the ~~material~~payment ~~operating facilities. Except as otherwise noted below, substantially all~~ of ~~the~~a ~~space~~premium infor ~~these~~stockholders’ ~~facilities is used by Applied Biosystems, and these facilities are maintained in good working order~~shares. ~~This table does not reflect facilities that are leased by Applied Biosystems, or unused space in facilities leased by Applied Biosystems, that Applied Biosystems is seeking to sublease.~~

Location (Approximate Floor Area in Sq. Ft.)	Owned or Leased (Expiration Date of Leases)
Foster City, CA (655,000) – several buildings	Leased (several leases expiring 2004-2015)
Hayward, CA (66,000)	Leased (2009)
Pleasanton, CA (149,000) – three buildings	Owned
San Jose, CA (81,000)	Owned
Bedford, MA (104,000) – four buildings	Leased (several leases expiring 2004, 2007, 2011, and 2023)
Framingham, MA (140,000)	Leased (2009)
Houston, TX (50,000)	Leased (2009)
Warrington, United Kingdom (88,000) – two buildings	Owned
Rotterdam, Netherlands (64,000)	Leased (2010)
Singapore (45,000)	Leased (several leases expiring 2005-2006)
Narita, Japan (24,000)	Owned

Our stockholder rights plan could delay or prevent other parties from seeking to acquire our company, which would prevent stockholders from profiting from an increase in the market value of their shares as a result of a change in control.

~~Applied~~Item ~~Biosystems purchased an 80-acre property in Pleasanton, California, in September 2000 on which it could construct facilities of up to 960,000 square feet~~1B. ~~Applied~~ ~~Biosystems~~Unresolved ~~currently~~Staff intends to construct new facilities on this property with up to approximately 600,000 square feet for research and development, manufacturing, and administrative purposes as may be required by the future growth of our business. The Pleasanton facilities reflected in the table above include a manufacturing facility, as well as two additional buildings that had been erected to support construction but which Applied Biosystems is currently using for maintenance and warehousing. Applied Biosystems has also completed construction of the shell of a building at the same site comprised of approximately 164,000Comments

-Not ~~51 -~~Applicable.

~~Back~~Item to2. ~~Contents~~Properties

~~square~~Our ~~feet~~corporate headquarters are located in a leased facility in Norwalk, Connecticut. The Applied Biosystems ~~intends~~business tooperations ~~construct improvements~~are ~~needed~~headquartered ~~for~~in ~~occupancy~~leased and owned facilities in ~~this~~Foster ~~building~~City, asCalifornia. ~~additional~~We ~~space~~own isor ~~needed~~lease approximately 60 facilities worldwide for ~~its~~manufacturing, ~~operations~~distribution, orwarehousing, ~~possibly~~research ~~the~~and ~~operations~~development, sales and demonstration, service, and administration. The following is a list of ~~our~~the principal and other ~~businesses~~material operating facilities. Except as otherwise noted below, we use substantially all of the space in these facilities and they are maintained in good working order.

Applied Biosystems also owns approximately 15 acres of undeveloped land in Vacaville, California.


Location (Approximate Floor Area in Sq. Ft.)		Owned or Leased (Expiration Date of Leases)

Foster City, CA (320,000) – several buildings		Leased (several leases expiring 2009-2015)
Foster City, CA (280,000) – several buildings		Owned
Pleasanton, CA (149,000) – three buildings		Owned
Austin, TX (117,000) – three buildings		Leased (2010)
Framingham, MA (90,000) – two buildings		Leased (2014)
Warrington, United Kingdom (88,000) – two buildings		Owned
Rotterdam, Netherlands (71,000)		Leased (2010)
Darmstadt, Germany (66,000)		Leased (2011)
Hayward, CA (66,000)		Leased (2009)
Singapore (63,000)		Leased (two leases expiring 2008 and 2011)
Bedford, MA (59,000) – two buildings		Leased (two leases expiring 2010 and 2023)
Norwalk, CT (51,000)		Leased (2011)
Rockville, MD (34,000)		Leased (2010)
Tokyo, Japan (31,000)		Leased (2010)
Narita, Japan (24,000)		Owned
Shanghai, China (19,000)		Leased (2010)

The Pleasanton, California facilities listed in the table above are located on an 80-acre property that we own. The listed facilities include a manufacturing facility that we constructed, as well as two warehouses that we acquired with the property and that we intend to use to support further construction on the site, if any. We have also completed construction of the shell of another building at the same site with approximately 164,000 square feet. We intend to construct improvements needed for occupancy in this other building as additional space is needed for our operations or ~~Celera~~possibly ~~Genomics~~the ~~Group~~operations ~~Facilities~~of our other businesses. We may construct additional

~~Celera~~- ~~Genomics’~~41 ~~business~~- is primarily located in owned facilities in Rockville, Maryland, and leased and owned facilities in South San Francisco, California. The Rockville facilities are used for administrative purposes and to house Celera Genomics’ bioinformatics data center and proteomics laboratory. The South San Francisco facilities contain Celera Genomics’ therapeutic discovery and development operations and administrative offices. The following is a list of Celera Genomics’ principal and other material operating facilities. Except as otherwise noted below, substantially all of the space in these facilities is used by Celera Genomics, and these facilities are maintained in good working order.

Location (Approximate Floor Area in Sq. ft.)	Owned or Leased (Expiration Date of Leases)
Rockville, MD (220,000) – two buildings	Owned
South San Francisco, CA (70,000)	Leased (2006)
South San Francisco, CA (44,000)	Owned
South San Francisco, CA (14,000)	Leased (2006)
South San Francisco, CA (24,000)	Leased (2006)

~~Celera~~research ~~Genomics~~and isdevelopment, ~~using~~manufacturing, ~~approximately 75% of the space in Rockville~~administrative, ~~Maryland.~~or ~~The~~other ~~Rockville~~ facilities ~~are~~at ~~located on a parcel of land we own that includes approximately 5 undeveloped acres that are suitable for development. Celera Genomics is seeking to sell~~ this property, ~~and~~up ~~intends~~ to ~~either~~a ~~lease~~maximum ~~back~~of ~~needed~~approximately ~~space~~700,000 ~~after~~additional ~~any~~square feet, ~~sale~~as ormay ~~lease~~be ~~facilities~~required infor ~~a nearby location depending on~~ the ~~terms~~future growth of ~~any~~our ~~sale that may occur~~businesses.

As of the end of our 2008 fiscal year, we leased and owned other properties that were part of our former Celera ~~Genomics~~group ~~also~~business ~~leases~~but which have been transferred to Celera Corporation with the separation of the Celera group business. The transfer included facilities with an 85aggregate of approximately 222,000 square feet, ~~foot~~located in Alameda, Burlingame, and South San Francisco, California, and Rockville, Maryland, used by the Celera group business for research and development, manufacturing, clinical laboratory services, and administration. The transfer also included a leased facility in Pasadena, California., and an owned a facility in South San Francisco, California, that we had attributed to the Celera ~~Genomics~~group. ~~has~~These facilities had been vacated ~~most~~prior to our 2008 fiscal year. As of the ~~space~~end inof ~~this~~our ~~facility~~2008 fiscal ~~and~~year, asubstantially ~~portion~~all of the ~~vacated~~Pasadena ~~space~~facility ~~has~~had been subleased., ~~Celera~~and ~~Genomics~~the isSouth ~~evaluating~~San ~~its~~Francisco ~~alternatives~~facility was being marketed for sale. More information about the ~~remaining~~Celera ~~vacated~~group ~~space~~separation ~~until~~is ~~the~~set ~~expiration~~forth above in Item 1 of this report under the ~~lease~~heading in“Celera ~~2011~~Separation.”

~~The~~Our ~~owned~~Rockville facility listed in ~~South~~the ~~San~~table ~~Francisco,~~above ~~California,~~is space that is ~~located~~leased onby ~~land~~Celera Corp. and that we ~~lease~~share with Celera Corp. under aan ~~long~~arrangement that is similar to an inter-~~term~~group ~~ground~~sharing ~~lease~~arrangement in place prior to the Celera separation.

-Item 523. -Legal Proceedings

~~Back~~We are involved in various lawsuits, arbitrations, investigations, and other legal actions from time to ~~Contents~~time with both private parties and governmental entities. These legal actions currently involve, for example, commercial, intellectual property, antitrust, environmental, securities, and employment matters. The following is a description of some claims we are currently defending, including some counterclaims brought against us in response to claims filed by us against others. We believe that we have meritorious defenses against the claims currently asserted against us, including those described below, and intend to defend them vigorously. However, the outcome of legal actions is inherently uncertain, and we cannot be sure that we will prevail in our defense of claims currently asserted against us. An adverse determination in the cases we are currently defending, particularly the claims against us described below under the heading “Commercial Litigation,” could harm us.

~~Celera~~Commercial ~~Diagnostics~~Litigation ~~Facilities~~

Enzo WeBiochem, ~~have~~Inc., ~~leased~~Enzo ~~the~~Life ~~following~~Sciences, ~~three~~Inc., ~~facilities~~and toYale ~~serve~~University asfiled a patent infringement action against us in the ~~principal~~U.S. ~~facilities~~District Court for ~~Celera~~the ~~Diagnostics~~District of Connecticut on June 7, ~~which~~2004. ~~Celera~~The ~~Diagnostics~~complaint isalleges ~~using~~that aswe ~~its~~are ~~headquarters~~infringing assix ~~well~~patents. Four asof ~~for~~these ~~research~~patents are assigned to Yale University and ~~development~~licensed exclusively to Enzo Biochem, ~~manufacturing~~i.e., U.S. Patent No. 5,476,928, entitled “Modified Nucleotides and ~~administrative~~Polynucleotides ~~purposes~~and Complexes Form Therefrom,” U.S. Patent No. 5,449,767, entitled “Modified Polynucleotides and Methods of Preparing Same,” U.S. Patent No. 5,328,824 entitled “Methods of Using Labeled Nucleotides,” and U.S. Patent No. 4,711,955, entitled “Modified Nucleotides and Methods of Preparing and Using Same.” These ~~facilities~~four patents have since expired. The other two patents are ~~maintained~~assigned into ~~good~~Enzo ~~working~~Life ~~order~~Sciences, i.e., U.S. Patent No. 5,082,830 entitled “End Labeled Nucleotide Probe” and U.S. Patent No. 4,994,373 entitled “Method and Structures Employing Chemically – Labelled Polynucleotide Probes.” The

Location (Approximate Floor Area in Sq. Ft.)	Owned or Leased (Expiration Date of Leases)
Alameda, CA (48,000)	Leased (2006)
Alameda, CA (19,000)	Leased (2006)
Alameda, CA (8,000)	Leased (2006)

- 42 -

CeleraTable Diagnostics is using all of the space in the first facility listed above. Celera Diagnostics is using all of the space in the second facility listed above, but the building containing this facility includes approximately 9,000 more square feet of space that is currently occupied by a sub-tenant and which Celera Diagnostics intends to occupy during the 2005 fiscal year after the sub-tenant leaves the space. The space in the third facility listed above is a portion of a 32,000 square foot facility that was vacated by a defaulting subtenant and occupied by Celera Diagnostics. Contents

~~Corporate~~allegedly ~~Facilities~~infringing products include our sequencing reagent kits, our TaqMan® genotyping and gene expression assays, and the gene expression microarrays used with our Expression Array System. Enzo Biochem, Enzo Life Sciences, and Yale University are seeking monetary damages, costs, expenses, injunctive relief, and other relief as the court deems proper. In August and September, 2007, the court issued a series of orders favorable to us and dismissing all of these claims, but Enzo may seek to appeal those orders to the United States Court of Appeals for the Federal Circuit.

~~Our~~Molecular ~~corporate~~Diagnostics ~~headquarters~~Laboratories isfiled ~~located~~a inclass aaction ~~facility~~complaint inagainst ~~Norwalk~~us, ~~Connecticut~~Hoffmann-La Roche Inc., ~~under~~and aRoche ~~lease~~Molecular ~~that~~Systems, ~~expires~~Inc. in ~~2011~~the U.S. District WeCourt ~~lease~~for ~~approximately~~the 51District of Columbia on September 23,~~000~~ ~~square~~2004, ~~feet~~and atfiled ~~this~~an ~~facility~~amended complaint on July 5, ~~substantially~~2006. ~~all~~The amended complaint alleges anticompetitive conduct in connection with the sale of ~~which~~Taq weDNA ~~use~~polymerase. ~~for~~The ~~corporate~~anticompetitive conduct ~~staff~~is alleged to arise from the prosecution and ~~related~~enforcement ~~support~~of ~~functions~~U.S. Patent No. 4,889,818. This ~~facility~~patent is ~~maintained~~assigned into ~~good~~Roche ~~working~~Molecular ~~order~~Systems, Inc., with whom we have a commercial relationship covering, among other things, this patent and the sale of Taq DNA polymerase. The complaint seeks monetary damages, costs, expenses, injunctive relief, and other relief as the court deems proper. On July 5, 2006, the court certified the case as a class action.

We ~~also~~are ~~own~~involved ~~another~~in ~~facility~~several inlegal ~~Norwalk~~actions with Thermo Electron Corporation and ~~Wilton~~its subsidiary Thermo Finnigan LLC. These legal actions commenced when we, ~~Connecticut~~together with MDS, Inc. and our Applied Biosystems/MDS Analytical Technologies Instruments joint venture with anMDS, ~~area~~formerly named Applied Biosystems/MDS SCIEX Instruments, filed a patent infringement action against Thermo Electron in the U.S. District Court for the District of ~~approximately~~Delaware ~~402~~on September 3,~~000~~ ~~square~~2004. ~~feet~~The complaint alleges infringement by Thermo Electron of U.S. ~~This~~Patent ~~facility~~No. 4,963,736, ~~was~~and ~~previously~~seeks ~~used~~monetary damages, costs, expenses, and other relief as the court deems proper. Thermo Electron has answered the complaint and counterclaimed for declaratory relief that the ’736 patent is invalid, not infringed, and unenforceable, and is seeking dismissal of our complaint, ~~corporate~~a ~~headquarters~~judgment that the ’736 patent is invalid, not infringed, and ~~manufacturing~~unenforceable, ~~but~~costs and expenses, and other relief as the court deems proper. After the filing of the action against Thermo Electron, on December 8, 2004, Thermo Finnigan filed a patent infringement action against us in the U.S. District Court for the District of Delaware. The complaint alleges that we have infringed U.S. Patent No. 5,385,654 as a result of, for example, our commercialization of the ABI PRISM® 3700 Genetic Analyzer. Thermo Finnigan is ~~currently~~seeking ~~vacant~~monetary damages, costs, expenses, and other relief as the court deems proper. We have answered the complaint and counterclaimed for declaratory relief that the ’654 patent is invalid, not infringed, and unenforceable, and are ~~holding~~seeking ~~this~~dismissal ~~facility~~of Thermo Finnigan’s complaint, a judgment that the ’654 patent is invalid, not infringed, and unenforceable, costs and expenses, and other relief as the court deems proper. Thermo Finnigan subsequently filed a second patent infringement action against us, MDS, and the Applied Biosystems/MDS Analytical Technologies Instruments joint venture in the U.S. District Court for ~~sale~~the orDistrict ~~long~~of ~~term~~Delaware ~~lease~~on February 23, 2005. ~~This~~The ~~facility~~complaint alleges that we and the other defendants have infringed U.S. Patent No. 6,528,784 as a result of, for example, our commercialization of the API 5000™ LC/MS/MS system. Thermo Finnigan is ~~expected~~seeking tomonetary ~~remain~~damages, ~~vacant~~costs, ~~pending~~expenses, ~~completion~~and other relief as the court deems proper. We have answered the complaint and counterclaimed for declaratory relief that the ’784 patent is invalid and not infringed, and are seeking dismissal of ~~such~~Thermo Finnigan’s complaint, a ~~sale~~judgment orthat ~~lease~~the ’784 patent is invalid and not infringed, costs and expenses, and other relief as the court deems proper.

~~Item~~We 3filed a complaint for patent infringement against Michigan Diagnostics LLC on March 26, 2007, in the U.S. ~~Legal~~District ~~Proceedings~~Court for the District of Massachusetts. We amended the complaint

We are involved in various legal proceedings from time to time, including actions with respect to commercial, intellectual property, antitrust, environmental, securities, and employment matters. The following is a description of some claims we are currently defending. We believe that we have meritorious defenses against the claims currently asserted against us, including those described below, and intend to defend them vigorously. However, the outcome of litigation is inherently uncertain, and we cannot be sure that we will prevail in any of the cases described below or in our other current litigation. An adverse determination in some of our current litigation, particularly the cases described below under the headings “Securities Litigation,” “MJ Research and Henry Huang,” “Promega,” “Beckman Coulter,” “Genetic Technologies,” “On-~~Line~~ ~~Technologies,”~~43 ~~“Roche,” “Enzo Biochem,” and “Bio~~-~~Rad”~~ ~~could have a material adverse effect on us.~~

-Table 53of -Contents

~~Back~~ on April 5, 2007. The amended complaint alleges infringement by Michigan Diagnostics of U.S. Patent Nos. 6,514,717, 6,322,727 and 6,107,024, which are related to ~~Contents~~chemiluminescent products and methods, and seeks monetary damages, costs, expenses, injunctive, and other relief as the court deems proper. Michigan Diagnostics filed an answer and counterclaims to our complaint on January 7, 2008, seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of approximately 60 patents related to chemiluminescent products and methods, and including antitrust claims based on our alleged misconduct in our alleged enforcement of those patents.

We filed a complaint on May 31, 2007, in the U.S. District Court for the Northern District of California against Illumina, Inc., Solexa Inc., and a former chief patent counsel to our company, seeking an injunction restoring to us patents and patent applications that were filed by the former chief patent counsel but are on their face assigned to Solexa, which was acquired by Illumina in January 2007. The complaint also seeks a declaration of our rights and duties regarding infringement of these patents, in addition to monetary damages, costs, expenses, and other relief as the court deems proper. On August 13, 2007, Solexa filed its answer to the complaint and counterclaimed that we make, use, sell, and offer for sale DNA sequencing products that infringe the patents, U.S. vPatent Nos. ~~Davis~~5,750,341, 5,969,119, 6,306,597. Solexa is seeking monetary damages, costs, expenses, injunctive relief, and other relief as the court deems proper.

WeOn ~~are~~June 9, a2008, ~~party~~Fluidigm Corporation tofiled ~~the~~a ~~action~~complaint ~~U.S.~~against v.us ~~Davis, pending~~ in the U.S. District Court for the Southern District of ~~Rhode~~New ~~Island.~~York Weseeking ~~were~~a ~~brought~~declaratory ~~into~~judgment ~~the~~of ~~case~~non-infringement ~~along~~and ~~with~~invalidity ~~numerous other companies as a result~~ of aour ~~third party complaint filed by United Technologies Corporation (“UTC”) seeking contribution for environmental cleanup costs imposed by the~~ U.S. ~~government.~~Patent ~~In December 1998~~No. 6, ~~the District Court found us liable to UTC along with certain~~814, ~~but not all~~934, ofwhich ~~the~~relates ~~defendants in the case. We believe the amount of such liability~~ to beinstruments ~~less~~for real-time ~~than~~PCR ~~$200,000, which will be determined when all appeals have been concluded~~detection. ~~Both~~The ~~UTC~~complaint ~~and~~also weseeks ~~appealed the District Court’s decision. In August 2001~~costs, ~~the~~expenses ~~U.S. Court of Appeals for the First Circuit affirmed the District Court’s decision~~ and ~~remanded~~other ~~the~~relief ~~case~~as to the ~~District~~court ~~Court~~deems ~~for further proceedings~~proper.

On June 30, 2008, ~~Securities~~Corbett ~~Litigation~~Life Science, Corbett Robotics Inc., and Corbett Research Pty Ltd. filed a complaint against us in the U.S. District Court for the Northern District of California seeking a declaratory judgment of non-infringement, invalidity, and unenforceability of our U.S. Patent No. 6,814,934, which relates to instruments for real-time PCR detection. The complaint also seeks costs, expenses and other relief as the court deems proper.

~~Our~~Other ~~company~~Legal ~~and~~Proceedings some of our officers were served in five lawsuits between April and May, 2000, purportedly on behalf of purchasers of Applera-Celera stock in our follow-on public offering of Applera-Celera stock completed on March 6, 2000. In the offering, we sold an aggregate of approximately 4.4 million shares of Applera-Celera stock at a public offering price of $225 per share. All of these lawsuits have been consolidated into a single case and are pending in the U.S. District Court for the District of Connecticut, and an amended consolidated complaint was filed on August 21, 2001. The consolidated complaint generally alleges that the prospectus used in connection with the offering was inaccurate or misleading because it failed to adequately disclose the alleged opposition of the Human Genome Project and two of its supporters, the governments of the U.S. and the U.K., to providing patent protection to our genomic-based products. Although Celera Genomics has never sought, or intended to seek, a patent on the basic human genome sequence data, the complaint also alleges that we did not adequately disclose the risk that Celera Genomics would not be able to patent this data. The consolidated complaint seeks monetary damages, rescission, costs and expenses, and other relief as the court deems proper.

We MJand ~~Research~~some of our officers are defendants in a lawsuit brought on behalf of purchasers of Celera stock in our follow-on public offering of Celera stock completed on March 6, 2000. In the offering, we sold an aggregate of approximately 4.4 million shares of Celera stock at a public offering price of $225 per share. The lawsuit, which was commenced with the filing of several complaints in April and ~~Henry~~May ~~Huang~~2000, is pending in the U.S. District Court for the District of Connecticut, and an amended consolidated complaint was filed on August 21, 2001. The consolidated complaint generally alleges that the prospectus used in connection with the offering was inaccurate or misleading because it failed to adequately disclose the alleged opposition of the Human Genome Project and two of its supporters, the governments of the U.S. and the U.K., to providing patent protection to our genomic-based products. Although our former Celera group never sought, or intended to seek, a patent on the basic human genome sequence data, the complaint also alleges that we did not adequately disclose the risk that the Celera group would not be able to patent this data. The consolidated complaint seeks monetary damages, rescission, costs and expenses, and other relief as the court deems proper. On March 31, 2005, the court certified the case as a class action.

We- ~~are~~44 ~~involved~~- in several litigation matters with MJ Research, Inc., which commenced with our filing claims against MJ Research based on its alleged infringement of some polymerase chain reaction, or “PCR,” patents. In response to our claims, MJ Research filed counterclaims including, among others, allegations that we have licensed and enforced these patents through anticompetitive conduct in violation of federal and state antitrust laws, and MJ Research is seeking injunctive relief, monetary damages, costs and expenses, and other relief. A trial on these matters commenced in March 2004. The court elected to hold the trial in two phases: a patent phase and an antitrust phase. In the patent phase, which has concluded, the jury found that MJ Research infringed U.S. Patent Nos. 4,683,195, 4,683,202 and 4,965,188 (each relates to PCR process technology) and U.S. Patent Nos. 5,656,493, 5,333,675 and 5,475,610 (each relates to thermal cycler instrument technology). The jury found the infringement of the ’195, ’202, ’188 and ’493 patents to be willful. In addition to direct infringement by MJ Research of the ’610 and ’675 patents, the jury found that MJ Research induced its customers to infringe all of the patents and contributed to infringement by its customers of the ’610 and ’675 patents. In April 2004, the jury awarded damages to us and Roche Molecular Systems, also a party to the litigation, in the amount of $19.8 million. We intend to seek, with Roche Molecular Systems, an enhancement of damages, including legal fees, since several infringements were found to be willful. Additionally,

-Table 54of -Contents

~~Back~~We are a party to ~~Contents~~the action U.S. v. Davis, pending in the U.S. District Court for the District of Rhode Island. We were brought into the case along with numerous other companies as a result of a third party complaint filed by United Technologies Corporation (“UTC”) seeking contribution for environmental cleanup costs imposed by the U.S. government for a property in Rhode Island. Our involvement in this legal action arises from allegations that some of our company’s hazardous waste was deposited at this property in the 1970s. In December 1998, the District Court found us liable to UTC along with certain, but not all, of the defendants in the case. We appealed this decision to the U.S. Court of Appeals for the First Circuit, but the appeals court affirmed the decision. Until recently, we expected the cleanup of this property to be limited to soil contamination and we had expected that the amount of our liability for this property would be less than $200,000. In December 2007, we were notified by the U.S. Environmental Protection Agency, or EPA, that it intends to conduct a study of groundwater contamination at the property, rejecting the conclusions of a study of the site that had been performed by one of our co-defendants, Ashland Chemical. We, along with some other co-defendants, may be required to contribute substantial additional funds to the cleanup of the groundwater, depending on the findings of the EPA study and whether it orders a cleanup plan. Also, Ashland Chemical has sued us and other co-defendants for contribution towards the approximately $2 million it allegedly incurred for its groundwater study as well as future groundwater cleanup costs.

weIn ~~intend~~May 2007, the California Regional Water Quality Control Board issued an administrative order that requires us to ~~seek~~conduct an ~~injunction~~environmental ~~against~~investigation MJand ~~Research~~remediation, or cleanup, at a property in Mountain View, California. The property was occupied from 1963 ~~which~~through ~~filed~~1984 ~~for~~by ~~bankruptcy~~one ~~court~~of ~~protection~~our former operating divisions that was discontinued shortly after it vacated the property. The order is based on ~~March~~allegations ~~29,~~of ~~2004~~environmental contamination at the site caused by the former division in the 1960s and 1970s. The proceedings ~~antitrust~~before ~~phase~~the Board formally commenced in November 2006, and in May 2007 the Board issued a final order that named us and the current property owner as the responsible parties. Under the terms of an agreement between us and the ~~trial~~current property ~~has~~owner, ~~not~~we ~~yet~~are responsible for the costs associated with cleanup of the property, but we believe these costs, other than a portion of our legal fees, will be covered by insurance. We have commenced cleanup activities pursuant to and in accordance with the order. We previously considered appealing the order but we are no longer pursuing that appeal.

Celera ~~Subsequent~~Separation toIndemnity ~~the~~Provisions filing of our claims against MJ Research which are described in the preceding paragraph, on September 21, 2000, MJ Research filed an action against us in the U.S. District Court for the District of Columbia. This complaint is based on the allegation that the patents underlying our DNA sequencing instruments were improperly obtained because one of the alleged inventors, whose work was funded in part by the U.S. government, was knowingly omitted from the patent applications. Our patents at issue are U.S. Patent Nos. 5,171,534, entitled “Automated DNA Sequencing Technique,” 5,821,058, entitled “Automated DNA Sequencing Technique,” 6,200,748, entitled “Tagged Extendable Primers and Extension Products,” and 4,811,218, entitled “Real Time Scanning Electrophoresis Apparatus for DNA Sequencing.” The complaint asserts violations of the federal False Claims Act and the federal Bayh Dole Act, invalidity and unenforceability of the patents at issue, patent infringement, and various other civil claims against us. MJ Research is seeking monetary damages, costs and expenses, injunctive relief, transfer of ownership of the patents in dispute, and other relief as the court deems proper. MJ Research claims to be suing in the name of the U.S. government although the government has to date declined to participate in the suit. On October 9, 2003, the case against us was dismissed but MJ Research has filed an appeal.

~~Henry~~On Huang (an individual) filed an action against us and Applied Biosystems and the other parties described below in the U.S. District Court for the Central District of California on February 19May 8, ~~2003. Mr. Huang’s complaint seeks to change inventorship of the patents described below~~2008, ~~and~~we ~~claims~~entered ~~breach~~into ofa ~~contract, fraud,~~Separation ~~conversion,~~Agreement ~~and~~with ~~unjust~~Celera ~~enrichment. The complaint relates to U.S. Patent Nos. 5~~Corporation,~~171,534,~~ ~~entitled~~at ~~“Automated~~that ~~DNA~~time ~~Sequencing Technique,” 5,821,058,~~one ~~entitled~~of ~~“Automated~~our ~~DNA~~wholly-owned ~~Sequencing Technique~~subsidiaries,” 6,200,748, entitled “Tagged Extendable Primers and Extension Products,” and 4,811,218, entitled “Real Time Scanning Electrophoresis Apparatus for DNA Sequencing.” U.S. Patent Nos. 5,171,534, 5,821,058, and 6,200,748 are assigned to ~~the~~separate ~~California Institute~~all of ~~Technology and licensed by Applied Biosystems. U.S. Patent No. 4,811,218 is assigned to Applied Biosystems. Also named in~~ the ~~complaint are the California Institute of Technology~~business, ~~Lloyd Smith~~assets, ~~Leroy Hood, Michael Hunkapiller, Timothy Hunkapiller, Charles Connell, John Lytle, William Mordan,~~ and ~~John Bridgham.~~liabilities ~~Lloyd~~of ~~Smith, Leroy Hood, Michael Hunkapiller, Timothy Hunkapiller, and Charles Connell are~~ the ~~inventors~~Celera ~~named~~group onfrom ~~U.S.~~our ~~Patent~~remaining ~~Nos~~business. ~~5,171,534, 5,821,058,~~This ~~and~~separation ~~6,200,748.~~was ~~Michael~~completed ~~Hunkapiller,~~on ~~Charles Connell~~July 1, ~~John Lytle, William Mordan,~~ and ~~John~~Celera ~~Bridgham are the inventors named on U~~Corp.S. ~~Patent~~is ~~No. 4,811,218.~~now ~~The~~an ~~issues~~independent ~~involved~~company ~~in this litigation are related to the issues in the MJ Research, Inc. litigation~~ that ~~was~~holds ~~filed September 21, 2000, which~~all isof ~~described above. Mr. Huang is alleging that he is~~ the ~~sole inventor on U.S. Patent Nos. 5~~business,~~171,534,~~ 5assets,~~821,058,~~ ~~6,200,748,~~ and ~~4,811,218.~~liabilities Hepreviously isattributed ~~seeking~~ to ~~substitute himself for~~ the ~~named~~Celera ~~inventors~~group. onMore ~~the~~information ~~relevant~~about ~~patents, and to have himself named as~~ the ~~sole~~Celera ~~assignee~~group ofseparation ~~the patents, and~~ is ~~also~~set ~~seeking~~forth ~~monetary~~above ~~damages, costs, expenses, and other relief as the court deems proper. A trial was completed on December 22, 2003, and on February 18, 2004, the judge issued a decision~~ in ~~our~~Item 1 ~~favor finding that Mr. Huang was not an inventor~~ of ~~the~~this ~~patents~~report ~~at issue.~~under ~~Mr. Huang had appealed~~ the ~~decision,~~heading ~~but~~“Celera ~~on July 22, 2004, he filed a stipulation with the court withdrawing his appeal, resulting in the termination of this litigation~~Separation. ”

Under the terms of the Separation Agreement, Celera Corp. has agreed to indemnify us for losses we incur in connection with the class action lawsuit ~~Promega~~relating to the 2000 offering of Celera stock, described above. Celera Corp. has also agreed to indemnify us for losses we incur in connection with the Enzo Biochem/Enzo Life Sciences/Yale University, Molecular Diagnostics, Fluidigm, and Corbett legal actions described above, but only to the extent that, after a final resolution of these matters, the losses are determined to relate to the business, assets, or liabilities of the Celera group. This determination, however, would require the agreement of Celera Corp., and if agreement could not be reached we would need to seek to resolve any dispute pursuant to the procedures set forth in the Separation Agreement. Accordingly, we cannot provide any assurances

~~Promega~~- ~~Corporation~~45 ~~filed~~- ~~a patent infringement action against Lifecodes Corporation, Cellmark Diagnostics, Genomics International Corporation, and us in the U.S. District Court for~~

-Table 55of -Contents

~~Back~~ as to ~~Contents~~whether or to what extent we may seek or obtain indemnity payments from Celera Corp. for losses incurred in connection with the Enzo Biochem/Enzo Life Sciences/Yale University, Molecular Diagnostics, Fluidigm, or Corbett legal actions. The Separation Agreement contains similar provisions for future legal actions against us that may involve both the Applied Biosystems and Celera businesses, and for the same reasons it is inherently uncertain whether we would be able to seek or recover any indemnity payments from Celera Corp. for losses incurred in any future legal actions. Under the Separation Agreement the amount of any indemnity payable to us for losses from any of these legal actions would be reduced by the amount of any insurance proceeds we receive covering the underlying loss, as well as the tax benefit realized because of the loss.

~~the~~Item ~~Western District of Wisconsin on April 24, 2001~~4. ~~The~~Submission ~~complaint alleges that the defendants are infringing Promega’s U.S. Patent Nos. 6,221,598 and 5,843,660, both entitled “Multiplex Amplification~~ of ~~Short~~Matters ~~Tandem Repeat Loci,” due~~ to ~~the~~a ~~defendants’ sale~~Vote of ~~forensic~~Security identification and paternity testing kits. Promega is seeking monetary damages, costs and expenses, injunctive relief, and other relief as the court deems proper. The defendants answered the complaint on July 9, 2001, and we asserted counterclaims alleging that Promega is infringing our U.S. Patent No. 6,200,748, entitled “Tagged Extendable Primers and Extension Products,” due to Promega’s sale of forensic identification and paternity testing kits. As a result of settlement negotiations, the case was dismissed without prejudice on October 29, 2002, but could be re-filed against us if settlement negotiations are not successful.Holders

~~Promega~~Not ~~Corporation filed an action against us and some of our affiliates and Roche Molecular Systems, Inc~~applicable. and Hoffmann-La Roche, Inc. in the U.S. District Court for the Eastern District of Virginia on April 10, 2000. The complaint asserts violations of the federal False Claims Act. On November 12, 2003, the court issued an order to have the complaint, which had previously been sealed, served on us and the other defendants. On February 9, 2004, we waived service of the complaint, which initiated our direct involvement in the case. The complaint alleges that we and Hoffmann-La Roche overcharged the U.S. government for thermal cyclers and PCR reagents. The overcharges are alleged to be the result of a licensing program based in part on U.S. Patent No. 4,889,818. Promega is asserting that U.S. Patent No. 4,889,818 was obtained fraudulently and that the licensing program run by us and Hoffmann-La Roche is the cause of the alleged overcharging. Promega is seeking monetary damages. Promega claims to be suing in the name of the U.S. government although the government has to date declined to participate in the suit. On June 29, 2004, the court granted our motion to dismiss for failure to state a claim upon which relief could be granted, but gave Promega the right to file an amended complaint. Promega filed an amended complaint on July 13, 2004, and we filed another motion to dismiss on August 6, 2004. The court granted our second motion to dismiss on August 20, 2004, but we have not yet received the written court opinion and therefore do not know the full scope of that decision.

~~Beckman~~PART ~~Coulter~~II

~~Beckman~~Item ~~Coulter, Inc~~5. ~~filed~~Market ~~a patent infringement action against us in the U.S. District Court~~ for ~~the Central District of California on July 3, 2002. The complaint alleges that we are infringing Beckman Coulter~~Registrant’s ~~U.S.~~Common ~~Patent Nos. RE 37~~Equity,~~606~~ ~~and~~Related ~~5,421,980,~~Stockholder ~~both~~Matters ~~entitled “Capillary Electrophoresis Using Replaceable Gels,”~~ and ~~U.S.~~Issuer ~~Patent~~Purchases No. 5,552,580, entitled “Heated Cover Device.” The allegedly infringing products are Applied Biosystems’ capillary electrophoresis sequencing and genetic analysis instruments, and PCR and real-time PCR systems. Since Beckman Coulter filed this claim, U.S. Patent No. 5,421,980 has been reissued as U.S. Patent No. RE 37,941, entitled “Capillary Electrophoresis Using Replaceable Gels.” On January 13, 2003, the court permitted Beckman Coulter to make a corresponding amendment to its complaint. Beckman Coulter is seeking monetary damages, costs and expenses, injunctive relief, and other relief as the court deems proper. On February 10, 2003, we filed our answer to Beckman Coulter’s allegations, and counterclaimed for declaratory relief that the Beckman Coulter patents underlying Beckman Coulter’s claim are invalid, unenforceable, and not infringed. We are seeking dismissal of ~~Beckman~~Equity ~~Coulter’s complaint, costs and expenses, declaratory and injunctive relief, and other relief as the court deems proper.~~Securities

-Market 56Information -

~~Back~~The principal U.S. market where shares of Applied Biosystems stock are traded is the New York Stock Exchange. Applied Biosystems stock is listed on the New York Stock Exchange under the trading symbol “ABI.” We also previously were the issuer of Celera stock, but all of the outstanding shares of this class of stock were redeemed and exchanged pursuant to ~~Contents~~the separation of the Celera group business, which is described above in Item 1 of this report under the heading “Celera Separation.”

The high and low sales prices of Applied Biosystems stock and Celera stock for each quarterly period during our 2008 and ~~Genetic~~2007 ~~Technologies~~fiscal years is incorporated herein by reference to Note 13 to our consolidated financial statements on pages 78 and 79 of our 2008 Annual Report.

~~Genetic~~Holders Technologies Limited filed a patent infringement action against us in the U.S. District Court for the Northern District of California on March 26, 2003. They filed an amended complaint against us on August 12, 2003. The amended complaint alleges that we are infringing U.S. Patent No. 5,612,179, entitled “Intron Sequence Analysis Method for Detection of Adjacent and ~~Remote~~Market ~~Locus~~Value ~~Alleles~~Calculation as Haplotypes,” and U.S. Patent No. 5,851,762, entitled “Genomic Mapping Method by Direct Haplotyping Using Intron Sequence Analysis.” The allegedly infringing products are cystic fibrosis reagent kits, TaqMan® genotyping and gene expression assay products for non-coding regions, TaqMan genotyping and gene expression assay services for non-coding regions, and the Celera Discovery System™. The complaint also alleges that haplotyping analysis performed by our businesses infringes the patents identified above. Genetic Technologies Limited is seeking monetary damages, costs, expenses, injunctive relief, and other relief as the court deems proper.

On August 25, 2008, the approximate number of holders of Applied Biosystems stock was 4,773. The approximate number of holders is based upon the actual number of holders registered in our records at such date and excludes holders of shares in “street name” or persons, partnerships, associations, corporations, or other entities identified in security position listings maintained by depository trust companies. The calculation of the market value of shares of Applied Biosystems stock and Celera stock held by non-~~Line~~affiliates ~~Technologies~~as of December 31, 2007, shown on the cover of this report, was made on the assumption that there were no affiliates other than executive officers and directors as of the date of calculation.

~~On-Line~~Dividends Technologies, Inc. (since acquired by MKS Instruments, Inc.) filed claims for patent infringement, trade secret misappropriation, fraud, breach of contract and unfair trade practices against PerkinElmer, Inc., Sick UPA, GmbH, and us in the U.S. District Court for the District of Connecticut on or about November 3, 1999. The complaint alleged that products called the Spectrum One and the MCS100E manufactured by former divisions of Applied Biosystems, which divisions were sold to the co-defendants in this case, were based on allegedly proprietary information belonging to On-Line Technologies and that the MCS100E infringed U.S. Patent No. 5,440,143. On-Line Technologies sought monetary damages, costs, expenses, injunctive relief, and other relief. On April 2, 2003, the U.S. District Court for the District of Connecticut granted our summary judgment motion and dismissed all claims brought by On-Line Technologies, Inc., though On-Line Technologies has filed an appeal with the U.S. Court of Appeals for the Federal Circuit seeking reinstatement of its claims.

Information ~~Roche~~about the amount of quarterly dividends paid on Applied Biosystems stock during our 2008 and 2007 fiscal years is incorporated herein by reference to Note 13 to our consolidated financial statements on pages 78 and 79 of our 2008 Annual Report. Under the

~~We filed claims against Roche Molecular Systems, Inc., Hoffmann~~-La ~~Roche,~~46 ~~Inc., Roche Probe, Inc., F. Hoffmann~~-La Roche Ltd., and other potential defendants affiliated with the named defendants (“Roche”) in California Superior Court on October 9, 2003. Our complaint asserts, among other things, breach of contract and other contract claims against the defendants arising from agreements relating to polymerase chain reaction, or PCR, technology rights entered into between us and the defendants. Our complaint also asserts various tort claims against the defendants, including breach of trust, breach of fiduciary duty, and unfair competition, relating to our PCR rights. The defendants’ acts and omissions that form the basis of the complaint include, among other things, the: (i) defendants’ failure to abide by contractual provisions intended to allow us to effectively compete with the defendants with respect to (a) sales of diagnostic PCR products and (b) conveyance of diagnostic PCR rights to third parties; (ii) defendants’ failure to pay us requisite royalties for sales by them of thermal cyclers and other products; (iii) defendants’ failure to negotiate in good faith new agreements directed at modifying the relationship between the parties in accordance with principles set forth in an existing letter agreement that states the intended framework for the negotiations (the “Letter Agreement”); (iv) defendants’ failure to provide us with diagnostic PCR rights on a nondiscriminatory basis as required by a European Union commission decree; (v) defendants’ failure to comply with their

-Table 57of -Contents

~~Back~~ Invitrogen Merger Agreement, we are allowed to ~~Contents~~continue paying our regular quarterly dividend of $0.0425 per share of Applied Biosystems stock but are otherwise restricted from paying any dividends on our stock. More information about the Merger Agreement is set forth above in Item 1 of this report under the heading “Invitrogen Merger Agreement.”

~~agreement~~We tonever ~~assign~~paid ~~ownership~~any todividends uson ~~of some~~Celera ~~PCR~~stock ~~instrument~~prior ~~patents~~to ~~and~~the ~~patent~~redemption ~~applications,~~ and ~~(vi)~~exchange ~~defendants’~~of ~~mishandling~~all ofoutstanding ~~the prosecution~~shares of ~~patent~~Celera ~~applications~~stock ~~that~~pursuant to the ~~defendants~~separation ~~were~~of the ~~obligated~~Celera togroup ~~assign to us~~business, inwhich ais ~~manner~~described ~~that~~above ~~damaged~~in ~~us and~~Item ~~precluded~~1 ~~us from obtaining the full potential scope~~ of ~~patent~~this ~~protection~~report ~~for~~under ~~our~~the ~~instrument~~heading ~~rights~~“Celera Separation.”

~~Contemporaneously~~Sale ~~with our filing~~ of ~~this~~Unregistered ~~complaint,~~Securities we also commenced arbitration proceedings with the American Arbitration Association against the defendants asserting, among other things, patent infringement claims (both direct infringement, contributory infringement and infringement by inducing third parties to infringe), breach of contract and other contract claims, and tort claims such as breach of fiduciary duty, breach of trust, and unfair competition. The arbitration is based on our allegation that the defendants (i) have infringed our exclusive rights to PCR patents in fields exclusively licensed to us pursuant to agreements with the defendants; and (ii) by their acts and omissions, have undermined the value of our exclusive PCR rights. In both the legal complaint and the arbitration, we are seeking monetary damages, costs, expenses, injunctive relief, and other relief as the court or arbitrator deems proper.

OnWe ~~December~~have ~~15,~~not ~~2003,~~sold ~~Roche~~any ~~filed~~equity asecurities ~~motion~~during ~~in California Superior Court to compel arbitration of~~ our ~~state~~2008 ~~court~~fiscal ~~complaint~~year and to stay the litigation. Concurrently with the motion to compel arbitration, Roche also filed with the American Arbitration Association its response to our notice of arbitration in which Roche denied all of our claims against it. Roche’s response included counterclaims asserting, among other things, that ~~our exclusive patent rights under some PCR patents licensed from Roche under an existing distribution agreement~~ were ~~converted~~not ~~into~~registered ~~nonexclusive rights by the Letter Agreement, which was entered into subsequent to the distribution agreement. Roche also alleges that (i) we breached our contractual obligation~~ under the ~~Letter~~Securities ~~Agreement,~~Act ~~including~~of ~~our obligation to source certain enzymes exclusively from Roche; and (ii) we failed to pay Roche the full royalties required pursuant to the distribution agreement~~1933. ~~In its counterclaim, Roche is seeking a request for declaratory judgment confirming its assertions, interest, costs, and other relief as the arbitrator deems proper.~~

~~The~~Issuer ~~claims~~Purchases ~~and~~of ~~counterclaims~~Equity ~~described~~Securities ~~above involve PCR rights used by Applied Biosystems and also rights that Applied Biosystems has contributed to Celera Diagnostics.~~

OnThis ~~March~~table 1,provides ~~2004,~~information ~~the~~about ~~Superior~~our ~~Court~~purchases ~~denied~~of ~~Roche’s~~shares ~~motion~~of toApplied ~~compel~~Biosystems ~~arbitration,~~stock ~~but~~during ~~Roche has appealed~~ the ~~decision~~fourth ~~and~~quarter ~~both~~of ~~the~~our ~~arbitration~~2008 ~~and~~fiscal ~~the litigation have been stayed pending the outcome of the appeal~~year.

Enzo Biochem

Period

Total Number
of Shares
Purchased

Average Price
Paid per
Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1) (2) (3)

April 1-30, 2008

—

$500 million

May 1-31, 2008

—

$500 million

June 1-30, 2008

—

$500 million

Total

—

$500 million

~~Enzo~~(1) ~~Biochem~~On April 26, ~~Inc.~~2007, ~~Enzo~~we ~~Life~~announced ~~Sciences~~that our Board of Directors authorized the repurchase of up to 18,400,000 ~~Inc~~shares of Applied Biosystems stock, in addition to the authorization described in footnote (2) below. On August 8, ~~and~~ ~~Yale~~2007, ~~University~~we ~~filed~~announced athat ~~patent~~our ~~infringement~~Board ~~action~~of ~~against~~Directors usincreased this authorization to $1.2 billion (in the ~~U.S.~~aggregate, ~~District~~including ~~Court~~approximately ~~for~~$100 ~~the~~million ~~District~~ of ~~Connecticut~~Applied onBiosystems ~~June~~stock 8previously repurchased under the authorization prior to the increase), ~~2004.~~which ~~The~~at ~~complaint~~market ~~alleges~~prices on that wedate ~~are~~represented ~~infringing~~approximately ~~six~~20% ~~patents.~~of ~~Four~~the outstanding shares of ~~these~~Applied ~~patents are~~Biosystems ~~assigned~~stock, or double the authorization prior to ~~Yale~~the ~~University~~increase. The increased authorization has no time restrictions and ~~licensed~~delegates ~~exclusively~~to Company management discretion to ~~Enzo~~purchase ~~Biochem,~~shares ~~i.e.,~~at ~~U.S.~~times ~~Patent~~and ~~No.~~prices 4it deems appropriate through open market purchases,~~476~~ privately negotiated transactions,~~928~~ tender offers, ~~entitled~~ ~~“Modified~~exchange ~~Nucleotides~~offers, ~~and~~or ~~Polynucleotides~~otherwise. ~~and~~Subsequent ~~Complexes~~to ~~Formed~~the ~~Therefrom~~increase in the authorization,~~” U~~ we engaged in an Accelerated Share Repurchase Transaction with Morgan Stanley & Co.S Incorporated. ~~Patent~~Pursuant ~~No.~~to 5this transaction,~~449~~ we paid Morgan Stanley $600 million,~~767,~~ ~~entitled~~plus ~~“Modified~~transaction ~~Nucleotides~~costs, ~~and~~in ~~Polynucleotides~~exchange ~~and~~for ~~Methods~~a total of ~~Preparing~~ ~~Same,”~~approximately U17.S.9 ~~Patent~~million ~~No.~~shares ~~5,328,824~~at ~~entitled~~an ~~“Methods~~average ofprice ~~Using~~per ~~Labeled~~share ~~Nucleotides~~of $33.5276,” ~~and U~~excluding transaction costs.S. ~~Patent~~This Notransaction was completed in January 2008. ~~4,711,955,~~The ~~entitled~~dollar ~~“Modified~~value ~~Nucleotides~~reported ~~and~~in ~~Polynucleotides~~this ~~and~~column ~~Methods~~represents the maximum dollar value of ~~Preparing~~shares ~~and Using~~that ~~Same.”~~could ~~The~~have ~~other~~been ~~two~~repurchased ~~patents~~under ~~are~~the ~~assigned~~increased toauthorization ~~Enzo~~at ~~Life~~the ~~Sciences,~~end ~~i.e., U.S.~~of ~~Patent~~each ~~No.~~month ~~5,082,830~~of ~~entitled~~the ~~“End~~fourth ~~Labeled~~fiscal ~~Nucleotide~~quarter ~~Probe”~~taking ~~and~~into ~~U.S. Patent~~account Nothe completed Accelerated Share Repurchase Transaction. ~~4,994,373~~More ~~entitled~~information ~~“Methods~~about ~~and~~the ~~Structures~~Accelerated ~~Employing~~Share ~~Compoundly~~Repurchase –Transaction ~~Labeled Polynucleotide~~is ~~Probes.”~~set ~~The~~forth ~~allegedly~~above ~~infringing~~in ~~products~~Item ~~include~~1 ~~Applied~~of ~~Biosystems’~~this report under the heading “Company Overview-Accelerated Share Repurchase; Term Loan.”

-(2) 58We -previously announced that our Board of Directors has authorized the repurchase of shares of Applied Biosystems stock from time to time to replenish shares issued under our various employee stock benefit plans. This authorization has no set dollar or time limits and delegates to our management discretion to

~~Back~~- to47 ~~Contents~~-

sequencingTable reagentof kits, its TaqMan® genotyping and gene expression assays, and the gene expression microarrays used with its Expression Array System. Enzo Biochem, Enzo Life Sciences, and Yale University are seeking monitary damages, costs, expenses, injunctive relief, and other relief as the court deems proper.Contents

~~Bio-Rad~~purchase shares at times and prices it deems appropriate through open market or negotiated purchases. Accordingly, the amounts in this column do not reflect this authorization. No shares were purchased under this authorization during the fourth quarter of our 2008 fiscal year.

~~Bio-Rad~~(3) ~~Laboratories,~~Under ~~Inc. filed a patent infringement, trademark infringement, and unfair competition action against us in~~ the ~~U.S.~~Invitrogen ~~District~~Merger ~~Court for the Northern District of California on December 26~~Agreement, ~~2002. The complaint alleges that~~ we are ~~infringing~~restricted ~~Bio-Rad’s~~from ~~U.S. Pat.~~repurchasing ~~No.~~shares ~~5,089,011,~~of ~~entitled~~Applied ~~“Electrophoretic~~Biosystems ~~Sieving in Gel-Free Media with Dissolved Polymers~~stock,” ~~and~~including ~~infringing Bio-Rad’s~~pursuant ~~“Bio-Rad” trademark. They filed a third amended complaint against us on May 30, 2003. The allegedly infringing products according~~ to the ~~third~~authorizations ~~amended~~described ~~complaint~~in ~~are~~footnotes ~~instruments~~(1) ~~using,~~ and ~~reagents~~(2) ~~used for, capillary electrophoresis, and products using the BioCAD name~~above. ~~Bio-Rad~~More ~~submitted~~information ~~its~~about ~~final infringement contentions under~~ the ~~local~~Merger ~~court~~Agreement ~~rules on April 22, 2004, and the parties held a court-ordered mediation conference on July 19, 2004. Bio-Rad~~ is ~~seeking~~set ~~monetary~~forth ~~damages,~~above ~~costs,~~in ~~expenses,~~Item ~~injunctive~~1 ~~relief,~~of ~~and~~this ~~other relief~~report asunder the ~~court~~heading ~~deems~~“Invitrogen ~~proper~~Merger Agreement.”

~~Item~~This 4.table ~~Submission~~provides information about our purchases of ~~Matters~~shares toof aCelera ~~Vote~~stock during the fourth quarter of ~~Security~~our ~~Holders~~2008 fiscal year.

Not applicable.

Period

Total Number
of Shares
Purchased

Average Price
Paid per
Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)

April 1-30, 2008

—

May 1-31, 2008

—

June 1-30, 2008

—

Total

—

~~PART~~(1) IIWe previously announced that our Board of Directors had authorized the repurchase of shares of Celera stock from time to time to replenish shares issued under our various employee stock benefit plans. This authorization had no set dollar or time limits and delegated to our management discretion to purchase shares at times and prices it deemed appropriate through open market or negotiated purchases. Accordingly, the amounts in this column do not reflect this authorization. No shares were purchased under this authorization during the fourth quarter of our 2008 fiscal year. We no longer issue Celera stock because of the separation of the Celera group business described earlier in Item 1 of this report under the heading “Celera Separation.” Therefore, this authorization is no longer relevant.

Item 56. ~~Market~~Selected ~~for~~Financial ~~Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~Data

~~Information~~We ~~about~~incorporate ~~our~~herein ~~Common~~by reference ~~Stock~~pages 6 and ~~its~~7 ~~Holders~~of our 2008 Annual Report.

~~Market~~Item ~~Information~~7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~The~~We ~~principal~~incorporate ~~U.S.~~herein ~~market~~by ~~where~~reference ~~our~~pages ~~Applera-Applied~~8 ~~Biosystems~~through ~~stock~~39 ~~and~~of ~~Applera-Celera stock are traded is the New York Stock Exchange, although~~ our ~~stock~~2008 isAnnual ~~also traded on the Pacific Exchange~~Report.

~~Applera-Applied~~Item ~~Biosystems stock is listed on the New York Stock Exchange under the trading symbol “ABI” and is intended to reflect the relative performance of Applied Biosystems~~7A. ~~Applera-Celera~~Quantitative ~~stock is listed on the New York Stock Exchange under the trading symbol “CRA”~~ and isQualitative ~~intended~~Disclosures toabout ~~reflect~~Market ~~the relative performance of Celera Genomics. There is no single security that represents our performance as a whole, nor is there a separate security traded for Celera Diagnostics.~~Risk

~~Holders~~We ofincorporate ~~Applera-Applied~~herein ~~Biosystems~~by ~~stock~~reference ~~and~~pages ~~Applera-Celera~~38 ~~stock are stockholders of Applera. Applied Biosystems~~ and ~~Celera~~39 ~~Genomics are not separate legal entities, and holders~~ of ~~these~~our ~~stocks~~2008 ~~are~~Annual ~~stockholders of a single company, Applera~~Report. ~~As a result, holders of these stocks are subject to all of the risks associated with an investment in Applera and all of its businesses, assets, and liabilities.~~

- 5948 -

BackTable toof Contents

~~The~~Item ~~high~~8. ~~and~~Financial ~~low~~Statements ~~sales prices of Applera-Applied Biosystems stock~~ and ~~Applera-Celera~~Supplementary ~~stock for each quarterly period during our 2003 and 2004 fiscal years is incorporated herein by reference to Note 12, page 71, of our 2004 Annual Report.~~ Data

The ~~Holders~~following financial statements and the supplementary financial information included in our 2008 Annual Report are incorporated herein by reference: the Consolidated Financial Statements and the report thereon of PricewaterhouseCoopers LLP dated August 27, 2008, on pages 40 through 94 of our 2008 Annual Report, including Note 13 on pages 78 and 79, which contains unaudited quarterly financial information.

~~On September~~Item ~~3, 2004, the approximate number of holders of Applera-Applied Biosystems stock was 6090, and the approximate number of holders of Applera-Celera stock was 6390~~9. ~~The~~Changes ~~approximate number of holders is based upon the actual number of holders registered~~ in ~~our records at such date~~ and ~~does~~Disagreements ~~not~~with ~~include~~Accountants holders of shares in “street name” or persons, partnerships, associations, corporations, or other entities identified in security position listings maintained by depository trust companies. The calculation of the market value of shares held by non-affiliates shown on ~~the~~ ~~cover~~Accounting ~~of this report was made on the assumption that there were no affiliates other than executive officers~~ and ~~directors~~Financial ~~as of the date of calculation.~~ Disclosure

~~Dividends~~Not applicable.

~~Information~~Item ~~regarding~~9A. ~~the~~Controls ~~amount of quarterly dividends during our 2003~~ and ~~2004 fiscal years is incorporated herein by reference to Note 12, page 71, of our 2004 Annual Report.~~Procedures

Disclosure ~~Sale~~Controls ofand ~~Unregistered~~Procedures ~~Securities~~

We ~~have~~are ~~not~~responsible ~~sold~~for ~~any~~maintaining ~~securities~~disclosure ~~during~~controls ~~our~~and ~~2004~~procedures, ~~fiscal~~as ~~year~~defined by the Securities and Exchange Commission in its Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Disclosure controls and procedures are controls and other procedures designed to ensure that ~~were~~the ~~not~~information ~~registered~~required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated the effectiveness of ~~1933~~our disclosure controls and procedures as of the end of our 2008 fiscal year, the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to achieve their stated purpose. However, there is no assurance that our disclosure controls and procedures will operate effectively under all circumstances.

Internal ~~Issuer~~Control ~~Purchases~~Over ofFinancial ~~Equity~~Reporting ~~Securities~~

General. We are responsible for maintaining internal control over financial reporting, as ~~This~~defined ~~table~~by ~~provides~~the ~~information~~Securities and Exchange Commission in its Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of our ~~purchases~~financial reporting and the preparation of ~~shares~~our financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of ~~Applera-Applied~~records ~~Biosystems~~that ~~stock~~in ~~during~~reasonable detail accurately and fairly reflect the ~~fourth~~transactions ~~quarter~~and dispositions of our ~~2004~~assets; ~~fiscal~~(2) provide ~~year.~~reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted

				Total Number of	Approximate Dollar Value
				Shares Purchased	of Shares that May Yet Be
	Total Number	Average Price		as Part of Publicly	Purchased Under the
	of Shares	Paid per		Announced Plans	Plans or Programs (2)(3)
Period	Purchased (1)	Share		or Programs	(in millions)
April 1-30, 2004	197,499		$18.54	175,000		$97
May 1-31, 2004	3,892,298		$18.79	3,889,800		$24
June 1-30, 2004	2,437,576		$20.07	2,426,908		$—
Total	6,527,373		$19.26	6,491,708		$—

- 49 -

(1)	The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced plans or programs consists of shares repurchased from employees in connection with the exercise of employee stock options, the payment of taxes relating to stock option exercises, and the payment of taxes relating to the vesting of restricted stock.
(2)	We previously announced that our Board of Directors has authorized the repurchase of shares of Applera-Applied Biosystems stock from time to time to replenish shares issued under our various employee stock benefit plans. This authorization has no set dollar or time limits and delegates to our management discretion to purchase shares at times and prices it deems appropriate through open market or negotiated purchases. Accordingly, the amounts in this column do not reflect this authorization.
(3)	On April 5, 2004, we announced a share repurchase authorization from our Board of Directors. Under this authorization, we were authorized to repurchase up to an additional $100 million in Applera-

-accounting 60principles, -and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

~~Back~~Management toReport ~~Contents~~on Internal Control Over Financial Reporting. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of the end of our 2008 fiscal year, the period covered by this report. The report of our management on internal control over financial reporting, based on this evaluation, appears on page 93 of our 2008 Annual Report. The management report is incorporated into this report by reference.

~~Applied~~Attestation ~~Biosystems~~Report ~~stock~~of our Independent Registered Public Accounting Firm. WeThe ~~completed~~report of our ~~repurchases~~independent ~~under~~registered ~~this~~public ~~authorization~~accounting ~~during~~firm on the effectiveness ~~fourth~~of ~~quarter~~our internal control over financial reporting appears on page 94 of our ~~2004~~2008 ~~fiscal~~Annual ~~year~~Report. The attestation report is incorporated into this report by reference.

~~This~~Changes ~~table~~in ~~provides~~Internal ~~information~~Control ~~regarding~~Over Financial Reporting. Based on our ~~purchases~~management’s review of ~~shares~~internal ofcontrol ~~Applera-Celera~~over ~~stock~~financial reporting as described above, we have not identified any changes made to our internal control over financial reporting during the fourth fiscal quarter of our ~~2004~~2008 fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

				Total Number of	Approximate Dollar Value
				Shares Purchased	of Shares that May Yet Be
	Total Number	Average Price		as Part of Publicly	Purchased Under the
	of Shares	Paid per		Announced Plans	Plans or Programs (2)
Period	Purchased (1)	Share		or Programs	(in millions)
April 1-30, 2004	8,299		$14.21	—	$—
May 1-31, 2004	526		$11.17	—	$—
June 1-30, 2004	3,556		$11.41	—	$—
Total	12,381		$13.28	—	$—

Item 9B.

Other Information

(1)

Consists of shares repurchased from employees in connection with the exercise of employee stock options, the payment of taxes relating to stock option exercises, and the payment of taxes relating to the vesting of restricted stock.

(2)

We previously announced that our Board of Directors has authorized the repurchase of shares of Applera-Celera stock from time to time to replenish shares issued under our various employee stock benefit plans. This authorization has no set dollar or time limits and delegates to our management discretion to purchase shares at times and prices it deems appropriate through open market or negotiated purchases. Accordingly, the amounts in this column do not reflect this authorization. No shares were purchased under this authorization during the fourth quarter of our 2004 fiscal year.

Not applicable.

~~Forward~~PART ~~Looking~~III ~~Statements and Risk Factors~~

~~Some~~Item ~~statements contained in, or incorporated by reference in, this report are forward-looking~~10. ~~Similarly~~Directors, ~~the~~Executive ~~press~~Officers ~~releases we issue~~ and ~~other~~Corporate public statements we make from time to time may contain language that is forward-looking. These forward-looking statements may be identified by the use of forward-looking words or phrases such as “forecast,” “believe,” “expect,” “intend,” “anticipate,” “should,” “plan,” “estimate,” and “potential,” among others. The forward-looking statements contained in this report are based on our current expectations, and those made at other times will be based on our expectations when the statements are made. We cannot guarantee that any forward-looking statements will be realized.Governance

~~The Private Securities Litigation Reform Act of 1995 provides a “safe~~ ~~harbor”~~Identification ~~for forward-looking statements. In order to comply with the terms of the safe harbor, we note that a variety of factors could cause actual results~~ and ~~experience~~ toBusiness ~~differ~~Experience ~~materially from anticipated results or other expectations expressed in forward-looking statements. We also note that achievement~~ of ~~anticipated~~Directors results or expectations in forward-looking statements is subject to the possibility that assumptions underlying forward-looking statements will prove to be inaccurate. Investors should bear this in mind as they consider forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of our business include, but are not limited to, those described below under the headings “Factors Relating to Applied Biosystems,” “Factors Relating to Celera Genomics,” and “Factors Relating to Celera Diagnostics, a 50/50 Joint Venture between Applied Biosystems and Celera Genomics.”

With respect to the identification and business experience of our directors and -persons 61nominated -to become directors, we incorporate herein by reference the information contained in our 2008 Proxy Statement under the heading “Proposal 1–Election of Directors.”

~~Back~~- to50 ~~Contents~~-

Also,Table we note that owners of Applera-Applied Biosystems stock and Applera-Celera stock are subject to risks arising from their ownership of common stock of a corporation with two separate classes of common stock. The risks and uncertainties that arise from our capital structure, particularly our two separate classes of common stock, include, but are not limited to, those described below under the heading “Risks Relating to a Capital Structure with Two Separate Classes of Common Stock.”Contents

~~Factors~~Identification ~~Relating~~and toBusiness ~~Applied~~Experience ~~Biosystems~~of Executive Officers

~~Rapidly~~The ~~changing~~following ~~technology~~is ina ~~life~~list ~~sciences~~of ~~could~~our ~~make~~executive ~~Applied~~officers, ~~Biosystems’~~identifying ~~product~~as ~~line~~of ~~obsolete~~August 27, ~~unless~~2008, ittheir: ~~continues~~ages; tocorporate ~~develop~~offices presently held and ~~manufacture~~year ~~new~~first elected ~~and~~to ~~improved~~those ~~products,~~offices; and ~~pursue~~other ~~new~~positions ~~market~~currently ~~opportunities~~held.

A significant portion of the net revenues for Applied Biosystems each year is derived from products that did not exist in the prior year. Applied Biosystems’ products are based on complex technology which is subject to rapid change as new technologies are developed and introduced in the marketplace. Applied Biosystems’ future success depends on its ability to continually improve its current products, develop and introduce, on a timely and cost-effective basis, new products that address the evolving needs of its customers, and pursue new market opportunities that develop as a result of technological and scientific advances in life sciences. These new market opportunities may be outside the scope of the group’s proven expertise or in areas which have unproven market demand. For example, Applied Biosystems has committed significant resources to researching, developing, marketing, and distributing new products and services designed to integrate laboratory experimentation with relevant scientific information, and to new Internet web sites devoted to promoting the group’s products and supporting customer research and development activities. These are emerging business areas for Applied Biosystems, and there can be no assurance that there will be market acceptance of the utility and value of these products and services. The inability to gain market acceptance of new products and services could adversely affect the group’s future operating results. The group’s future success also depends on its ability to manufacture these improved and new products to meet customer demand in a timely and cost-effective manner, including its ability to resolve in a timely manner manufacturing issues that may arise from time to time as the group commences production of these complex products. Unanticipated difficulties or delays in replacing existing products with new products or in manufacturing improved or new products in sufficient quantities to meet customer demand could adversely affect future demand for the group’s products and its future operating results.


Name	Age	Present Corporate Offices (Year First Elected)
Ugo D. DeBlasi	46	Vice President and Controller (2003)
Barbara J. Kerr	62	Senior Vice President, Human Resources (2008)
William B. Sawch	53	Senior Vice President (1997) and General Counsel (1993)
Mark P. Stevenson	45	President and Chief Operating Officer (2008)
Tony L. White	62	Chairman and Chief Executive Officer (1995)
Dennis L. Winger	60	Senior Vice President and Chief Financial Officer (1997)

~~Applied~~Each ~~Biosystems~~of ~~relies~~the onexecutive ~~third~~officers ~~parties~~identified ~~for~~above was most recently elected to the ~~manufacture~~corporate ofoffices identified ~~some~~above by our Board of ~~its~~Directors ~~products~~at ~~and~~a ~~also~~meeting ~~for~~held ~~the~~on ~~supply~~August 21, 2008. The term of ~~some~~each ~~components~~officer will continue until their successors have been duly elected or, if earlier, their death, resignation, or removal. Each of the ~~products~~executive officers ithas ~~manufactures~~been onemployed ~~its~~by ~~own~~us or a subsidiary in one or more executive or managerial capacities for at least the past five years.

At Although Applied Biosystems has contracts with most of these manufacturers and suppliers, there can be no assurance that their operations will not be disrupted. Applied Biosystems does not currently have alternative third party manufacturing or supply arrangements for some of the ~~key~~August ~~products~~Board ~~and key components manufactured or supplied by third parties. Although Applied Biosystems has its own manufacturing facilities~~meeting, ~~and believes it might be able to manufacture some of~~ the ~~products~~Board ~~and~~took ~~components~~several ~~currently~~actions ~~sourced~~regarding ~~from~~our ~~third~~executive ~~parties,~~officers: it also believes that it would take considerable time and resources to establish the capability to do so. Accordingly, if third party manufacturers or suppliers are unable or fail to fulfill their obligations to Applied Biosystems, Applied Biosystems might not be able to satisfy customer demand in a timely manner, and its business could be adversely affected.

-• 62The -Board promoted Mr. Stevenson to the position of President and Chief Operating Officer of the company. Mr. White accordingly relinquished his position as President of the company but continues to be our Chairman and Chief Executive Officer. Prior to Mr. Stevenson’s August 2008 promotion, he was promoted to the positions of Senior Vice President of the company and President and Chief Operating Officer of the Applied Biosystems Group in December 2007. Prior to that, he served as one of our Vice Presidents since 2004.

~~Back~~• The Board promoted Barbara J. Kerr to ~~Contents~~the position of Senior Vice President, Human Resources, of the company. Prior to the promotion, Ms. Kerr had served as Vice President, Human Resources, since 2000.

A• ~~significant~~The ~~portion~~Board ofdetermined ~~sales~~that ~~depends~~Sandeep onNayyar, ~~customers’~~an ~~capital~~Assistant ~~spending~~Controller ~~policies~~of ~~that~~the ~~may~~company, should no longer be ~~subject~~designated toas ~~significant~~one ~~and~~of ~~unexpected~~our ~~decreases~~executive officers. This determination, which resulted solely from the Celera separation, did not affect Mr. Nayyar’s employment or corporate office.

AIn ~~significant~~connection ~~portion~~with ofthe ~~Applied~~separation ~~Biosystems’~~of ~~instrument~~the ~~product~~Celera ~~sales~~group ~~are~~business ~~capital~~described ~~purchases~~in byItem 1 ~~its~~of ~~customers.~~this ~~Applied Biosystems’ customers include pharmaceutical~~report, ~~environmental,~~the ~~research,~~following ~~biotechnology~~individuals, ~~and~~previously ~~chemical~~executive ~~companies,~~officers ~~and the capital spending policies~~ of ~~these companies can have a significant effect on~~ the ~~demand~~company, ~~for~~terminated ~~Applied~~their ~~Biosystems’~~employment ~~products.~~with ~~These~~us ~~policies are based~~ on ~~a wide variety of factors~~ July 1, ~~including the resources available to make purchases~~2008, ~~the~~and ~~spending~~became ~~priorities~~executive ~~among~~officers ~~various~~of ~~types~~Celera ofCorporation: ~~research~~Joel ~~equipment~~Jung, ~~and~~formerly ~~policies~~Assistant ~~regarding~~Controller; ~~capital~~and ~~expenditures~~Kathy ~~during recessionary periods~~P. ~~Any~~Ordoñez, ~~decrease~~formerly inSenior ~~capital~~Vice ~~spending~~President orand ~~change~~President, inCelera ~~spending policies of these companies could significantly reduce the demand for Applied Biosystems’ products~~Group.

AFamily ~~substantial~~Relationships ~~portion of Applied Biosystems’ sales is to customers at universities or research laboratories whose funding is dependent on both the amount and timing of funding from government sources.~~

To ~~As a result,~~ the ~~timing~~best ~~and amount~~ of ~~revenues~~our ~~from~~knowledge ~~these~~and ~~sources~~belief, ~~may~~there ~~vary~~is ~~significantly~~no ~~due~~family torelationship ~~factors~~between ~~that~~any ~~can~~of beour ~~difficult to forecast. Although research funding has increased during the past several years~~directors, ~~grants~~executive ~~have~~officers, inor ~~the~~persons ~~past,~~nominated ~~been frozen for extended periods~~ or ~~otherwise~~chosen ~~become~~by ~~unavailable~~us to various institutions, sometimes without advance notice. Budgetary pressures may result in reduced allocations to government agencies that fund research and development activities. If government funding necessary to purchase Applied Biosystems’ products were to become ~~unavailable~~a todirector ~~researchers for any extended period of time,~~ or ifan ~~overall~~executive ~~research funding were to decrease, the business of Applied Biosystems could be adversely affected~~officer.

~~Applied~~- ~~Biosystems~~51 is- ~~currently and could in the future be subject to claims for infringement of patents and other intellectual property rights.~~

AppliedTable Biosystems’ products are based on complex, rapidly developing technologies. These products could be developed without knowledge of previously filed patent applications that mature into patents that cover some aspect of these technologies. In addition, there are relatively few decided court cases interpreting the scope of patent claims in these technologies, and Applied Biosystems’ belief that its products do not infringe the technology covered by valid and enforceable patents could be successfully challenged by third parties. Also, in the course of its business, Applied Biosystems may from time to time have access to confidential or proprietary information of third parties, and these parties could bring a claim against Applied Biosystems asserting that Applied Biosystems had misappropriated their technologies, which though not patented are protected as trade secrets, and had improperly incorporated such technologies into Applied Biosystems’ products. Applied Biosystems has been made a party to litigation regarding intellectual property matters, including the litigation described in the following paragraph and elsewhere in this report, some of which, if determined adversely, could have a material adverse effect on Applied Biosystems. Due to the fact that Applied Biosystems’ business depends in large part on rapidly developing and dynamic technologies, there remains a constant risk of intellectual property litigation affecting the group. Applied Biosystems has from time to time been notified that it may be infringing patents and other intellectual property rights of others. It may be necessary or desirable in the future to obtain licenses relating to one or more products or relating to current or future technologies, and Applied Biosystems cannot be assured that it will be able to obtain these licenses or other rights on commercially reasonable terms.Contents

-Involvement 63in -Certain Legal Proceedings

~~Back~~To the best of our knowledge and belief, none of our directors, persons nominated to ~~Contents~~become directors, or executive officers has been involved in any proceedings during the past five years that are material to an evaluation of the ability or integrity of such persons to be our directors or executive officers.

~~Several~~Audit ~~legal~~Committee ~~actions have been filed against us that could affect the intellectual property rights of Applied Biosystems~~ and ~~its~~Audit ~~products~~Committee ~~and~~Financial ~~services,~~Expert ~~including the following:~~

•We ~~In response to claims by us against MJ Research, Inc., MJ Research filed counterclaims against us including, among others, allegations that we~~ have ~~licensed~~a ~~and~~separately ~~enforced~~designated ~~some~~standing audit ~~polymerase~~committee ~~chain~~of ~~reaction,~~our orBoard ~~“PCR,”~~of ~~patents~~Directors ~~through~~established ~~anticompetitive conduct~~ in ~~violation~~accordance ofwith ~~federal and state antitrust laws. Subsequently, MJ Research filed~~ Section 3(a)(58)(A) ~~lawsuit~~of ~~against us based on~~ the ~~allegation~~Securities ~~that~~Exchange ~~four~~Act ~~patents~~of ~~underlying Applied Biosystems’ DNA sequencing instruments were invalidly obtained because an alleged inventor, whose work was funded in part by the U~~1934.S. ~~government,~~We ~~was~~have ~~knowingly~~named ~~omitted~~that ~~from~~committee ~~the~~our ~~patent~~“Audit/Finance ~~applications~~Committee.” MJThe ~~Research~~members ~~claims~~of tothat becommittee ~~suing~~as ~~in the name~~ of the ~~U.S. government although the government has to~~ date ~~declined~~of tothis ~~participate~~report inare ~~the~~George ~~lawsuit~~F. ~~The~~Adam, ~~case was dismissed but the decision has been appealed by MJ Research~~Jr. ~~• Promega Corporation has filed a lawsuit against us alleging that Applied Biosystems~~, ~~along~~Robert ~~with some other named defendants, is infringing two Promega patents due to the sale of forensic identification and paternity testing kits~~H. •Hayes ~~Beckman Coulter~~(co-chair), ~~Inc.~~Theodore ~~has filed a lawsuit against us alleging that Applied Biosystems is infringing three Beckman Coulter patents~~E. ~~The allegedly infringing products are Applied Biosystems’ capillary electrophoresis sequencing and genetic analysis instruments~~Martin, and ~~PCR~~James ~~and~~R. ~~real-time~~Tobin ~~PCR systems~~(co-chair). •Our ~~Genetic~~Board ~~Technologies~~of ~~Limited~~Directors has ~~filed~~determined ~~a lawsuit against us alleging~~ that weMessrs. ~~are infringing two of its patents due to the sale of cystic fibrosis reagent kits~~Adam, ~~some of our TaqMan® genotyping and gene expression products and services~~Martin, and ~~the~~Tobin ~~Celera~~are ~~Discovery~~“audit ~~System™.~~committee ~~Genetic~~financial ~~Technologies~~experts” as ~~has also alleged~~ that ~~haplotyping~~term ~~analysis~~has ~~performed~~been bydefined ~~our businesses infringes these patents. • In response to an arbitration claim filed~~ by usthe ~~against~~Securities ~~Roche~~and ~~Molecular~~Exchange ~~Systems,~~Commission ~~Inc.,~~in ~~Hoffmann-LaRoche,~~Item 407(d)(5) ~~Inc.,~~of ~~Roche~~its ~~Probe,~~Regulation ~~Inc., F. Hoffmann~~S-~~LaRoche Ltd~~K., ~~and~~The ~~other~~designation ~~potential~~of ~~defendants~~members ~~affiliated~~of ~~with those defendants, they have asserted counterclaims against us in the arbitration that could affect~~ our ~~exclusive~~Audit/Finance ~~rights~~Committee toas ~~some~~“audit ~~PCR~~committee ~~patents~~financial ~~licensed~~experts” ~~from~~does ~~them.~~not •impose ~~Enzo~~on ~~Biochem,~~those members ~~Inc.,~~any ~~Enzo Life Sciences~~duties, ~~Inc.~~obligations, ~~and~~or ~~Yale~~liabilities ~~University have filed a lawsuit against us alleging~~ that we are ~~infringing~~greater ~~six~~than ~~patents~~those ~~due~~generally toimposed ~~the~~on ~~sale~~them ofas ~~sequencing~~members ~~reagent~~of ~~kits,~~our ~~TaqMan®~~Audit/Finance ~~genotyping~~Committee and ~~gene~~Board ~~expression~~of ~~assays~~Directors, and ~~the~~does ~~gene~~not ~~expression~~affect ~~microarrays used with~~ the ~~Applied~~duties, ~~Biosystems Expression Array System. • Bio-Rad Laboratories~~obligations, ~~Inc.~~or ~~has~~liabilities ~~filed~~of aany ~~lawsuit~~other ~~against~~member of usour ~~alleging~~Audit/Finance ~~that~~Committee weor ~~are~~Board ~~infringing one~~ of ~~its~~Directors. ~~patents~~Additional ~~due~~information toabout our ~~sale~~Audit/Finance ofCommittee ~~instruments~~is ~~using,~~incorporated ~~and~~by ~~reagents~~reference ~~used~~to ~~for,~~the ~~capillary~~information ~~electrophoresis,~~contained ~~and~~in ~~one~~our of2008 ~~its~~Proxy ~~trademarks~~Statement ~~due~~under tothe ~~our~~heading ~~use~~“Board of ~~the~~Directors ~~BioCAD~~and Committees–Board ~~name~~Committees–Audit/Finance Committee.”

-Recommendation 64of -Nominees to our Board of Directors

~~Back~~Information concerning our procedures by which security holders may recommend nominees to ~~Contents~~our Board of Directors is incorporated herein by reference to the information contained in our 2008 Proxy Statement under the heading “Board of Directors and Committees–Board Committees–Nominating/Corporate Governance Committee.” We have not made any material changes to these procedures since they were last disclosed in our Proxy Statement relating to our 2007 Annual Meeting of Stockholders.

These cases are described in further detail above in Item 3 of this report under the heading “Legal Proceedings.” The cost of litigation and the amount of management time associated with these cases is expected to be significant. There can be no assurance that these matters will be resolved favorably; that we will not be enjoined from selling the products or services in question or other products or services as Section 16(a) ~~result;~~Beneficial orOwnership ~~that~~Reporting ~~any~~Compliance ~~monetary or other damages assessed against us will not have a material adverse effect on the financial condition of our company, Applied Biosystems, Celera Genomics, or Celera Diagnostics.~~

We are required to identify any ~~Since~~officer, director, or beneficial owner of more than 10% of our Applied Biosystems’ ~~business~~stock isor ~~dependent~~Celera stock who failed to timely file with the Securities and Exchange Commission and the New York Stock Exchange a required report relating to beneficial ownership of stock under Section 16(a) of the Securities Exchange Act of 1934. Based solely on ~~foreign~~a ~~sales~~review of information provided to us, ~~fluctuating~~all ~~currencies~~persons ~~will~~subject ~~make~~to ~~revenues~~these ~~and~~reporting ~~operating~~requirements ~~results~~filed ~~more~~the ~~volatile~~required reports on a timely basis for our 2008 fiscal year.

~~Approximately~~Code ~~50%~~ of ~~Applied~~Ethics Biosystems’ net revenues for our 2004 fiscal year were derived from sales to customers outside of the U.S. The majority of these sales were based on the relevant customer’s local currency. A significant portion of the related costs for Applied Biosystems are based on the U.S. dollar. As a result, Applied Biosystems’ reported and anticipated operating results and cash flows are subject to fluctuations due to material changes in foreign currency exchange rates that are beyond Applied Biosystems’ control.

We have adopted a code of ethics that applies to our officers, directors, and employees. Our code of ethics, which we refer to as our “Code of Business Conduct and Ethics,” was designed to comply with the ~~Integrating~~definition ~~acquired~~of ~~technologies~~“code ~~may~~of beethics” ~~costly~~adopted by the Securities and ~~may~~Exchange ~~not~~Commission ~~result~~as inapplicable ~~technological~~to ~~advances.~~our Chief Executive Officer (our principal executive officer), our Chief Financial Officer (our principal financial officer), and our Controller (our principal

~~The~~- ~~future~~52 ~~growth~~- of Applied Biosystems depends in part on its ability to acquire complementary technologies through acquisitions and investments. The consolidation of employees, operations, and marketing and distribution methods could present significant managerial challenges. For example, Applied Biosystems may encounter operational difficulties in the integration of manufacturing or other facilities. In addition, technological advances resulting from the integration of technologies may not be achieved as successfully or rapidly as anticipated, if at all.

AppliedTable Biosystems’ businesses, particularly those focused on developing and marketing information-based products and services, depend on the continuous, effective, reliable, and secure operation of its computer hardware, software, and Internet applications and related tools and functions.Contents

~~Applied~~ accounting ~~Biosystems’ business requires manipulating and analyzing large amounts of data, and communicating the results of the analysis to its internal research personnel and to its customers via the Internet~~officer). ~~Also,~~This ~~Applied~~definition ~~Biosystems~~is ~~relies~~contained onin aItem 406(b) ~~global enterprise software system to operate and manage its business. Applied Biosystems’ business therefore depends on the continuous, effective, reliable, and secure operation~~ of ~~its computer hardware, software, networks, Internet servers, and related infrastructure. To~~ the ~~extent that Applied Biosystems~~SEC’s ~~hardware~~Regulation ~~or software malfunctions or access to Applied Biosystems’ data by internal research personnel or customers through the Internet is interrupted, Applied Biosystems’ business could suffer~~S-K. ~~Also,~~Our acode ~~recent upgrade~~ of ~~our~~ethics ~~global enterprise software system~~ was ~~performed~~also ~~and~~designed ~~we do not believe we will be able~~ to ~~adequately~~meet ~~assess~~ the ~~success~~ code of ~~the~~business ~~upgrade~~conduct and ~~the operation~~ethics ofrequirements ~~the~~promulgated ~~software~~by ~~until~~the weNew ~~complete~~York ~~our~~Stock ~~first quarterly financial close following the upgrade~~Exchange, which ~~close~~requirements ~~will~~are ~~occur~~set ~~during~~forth ~~September~~in ~~2004~~Section 303A.10 Ifof ~~we encounter difficulties with~~ the ~~upgrade~~NYSE orListed ifCompany ~~we determine that the upgraded software does not operate effectively, these circumstances could interfere with our business operations~~Manual.

Our Code of Business Conduct and Ethics is posted on our Internet website, which is located at www.appliedbiosystems.com. Also, we intend to post any amendments to or waivers from the code that are applicable to our officers or directors on our Internet website as required to satisfy SEC and New York Stock Exchange disclosure requirements applicable to amendments and waivers. This information can be accessed on our website free of charge as described in Part I, Item 1 of this report on pages 3 and 4 under the heading “Available Information.” In addition, you can obtain this information free of charge by calling our corporate Secretary at 203-840-2000 65or by making a request in writing mailed to: Applied Biosystems Inc., Attention: Secretary, Applied Biosystems Inc., 301 Merritt 7, Norwalk, CT 06851-1070.

~~Back~~Item to11. ~~Contents~~Executive Compensation

~~Applied~~Information ~~Biosystems’~~concerning executive ~~computer~~compensation ~~and communications hardware~~ is ~~protected~~incorporated ~~through~~herein ~~physical~~by ~~and~~reference ~~software safeguards. However, it is still vulnerable~~ to ~~fire,~~the ~~storm,~~information ~~flood,~~contained ~~power~~in ~~loss,~~our ~~earthquakes,~~2008 ~~telecommunications~~Proxy ~~failures,~~Statement ~~physical~~under orthe ~~software~~heading ~~break-ins,~~“Executive ~~software viruses, and similar events~~Compensation.” InWe ~~addition,~~also ~~Applied~~incorporate ~~Biosystems’~~by ~~online~~reference ~~products~~the ~~and~~information ~~services~~contained ~~are complex and sophisticated, and as such, could contain data, design, or software errors that could be difficult to detect and correct. Software defects could be found~~ in ~~current~~our or2008 ~~future products. If Applied Biosystems fails to maintain and further~~Proxy ~~develop~~Statement under the ~~necessary~~heading ~~computer~~“Corporate ~~capacity~~Governance–Compensation ~~and~~Committee ~~data~~Interlocks ~~to support its computational needs~~ and ~~its~~Insider ~~customers’~~Participation,” ~~access to information-based product~~ and ~~service~~the ~~offerings,~~report ~~it could experience a loss~~ of orthe ~~delay~~Management inResources ~~revenues~~Committee orof ~~market~~our ~~acceptance.~~Board Inof ~~addition,~~Directors ~~any~~contained ~~sustained disruption~~ in ~~Internet~~our ~~access~~2008 ~~provided~~Proxy byStatement ~~third~~under the ~~parties~~heading ~~could~~“Executive ~~adversely affect~~Compensation–Compensation ~~Applied~~Committee ~~Biosystems~~Report.”

~~Earthquakes~~- ~~could~~53 ~~disrupt~~- ~~operations in California.~~

TheTable headquarters and principal operations of Applied Biosystems are located in the San Francisco Bay area, a region near major California earthquake faults. The ultimate impact of earthquakes on Applied Biosystems, its significant suppliers, and the general infrastructure is unknown, but operating results could be materially affected in the event of a major earthquake.Contents

~~Applera-Applied~~Item ~~Biosystems~~12. ~~stock~~Security ~~price~~Ownership isof ~~volatile.~~Certain Beneficial Owners and Management and Related Stockholder Matters

~~The~~Securities ~~market~~Authorized ~~price~~for ofIssuance ~~Applera-Applied~~Under ~~Biosystems~~Equity ~~stock~~Compensation ~~has~~Plans been and may continue to be volatile due to the risks and uncertainties described in this section of this report, as well as other factors that may have affected or may in the future affect the market price, such as:

•The following ~~conditions~~table ~~and~~provides ~~publicity~~information ~~regarding~~about ~~the~~shares ~~genomics,~~of ~~biotechnology,~~Applied ~~pharmaceutical,~~Biosystems orstock ~~life~~that ~~sciences~~may ~~industries~~be ~~generally;~~issued •under ~~price~~our ~~and~~equity ~~volume~~compensation ~~fluctuations~~plans, inincluding ~~the~~compensation ~~stock~~plans ~~market~~that atwere ~~large~~approved ~~which~~by doour ~~not~~stockholders ~~relate~~as towell ~~Applied~~as ~~Biosystems’~~compensation ~~operating~~plans ~~performance;~~that ~~and~~were •not approved ~~comments~~ by ~~securities~~our ~~analysts~~stockholders. orInformation ~~government~~in ~~officials, including with regard to~~ the ~~viability~~table oris ~~profitability~~as of the ~~biotechnology~~end ~~sector generally or with regard to intellectual property rights~~ of ~~life~~our ~~science~~2008 ~~companies,~~fiscal ~~or Applied Biosystems’ ability to meet market expectations~~year.

The stock market has from time to time experienced extreme price and volume fluctuations that are unrelated to the operating performance of particular companies. In the past, companies that have experienced volatility have sometimes been the subjects of securities class action litigation. If litigation was instituted on this basis, it could result in substantial costs and a diversion of management’s attention and resources.


Plan Category	Number of shares to be issued upon exercise of outstanding options, warrants, and rights (a)	Weighted-average exercise price of outstanding options, warrants, and rights (b)	Number of shares remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by stockholders	20,386,759¹	$37.1514²	9,049,762³
Equity compensation plans not approved by stockholders	0	0	0
Total	20,386,759¹	$37.1514²	9,049,762³

(1) The number in this column includes: 18,230,620 shares of Applied Biosystems stock issuable upon the exercise of options outstanding under The Perkin-Elmer 66Corporation 1998 Stock Incentive Plan and our Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan; 1,980,635 restricted stock units (“RSUs”) outstanding under the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan, each of which represents the right to receive one share of Applied Biosystems stock at the time the RSU vests; and 175,504 units outstanding under the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan and the Amended and Restated 1993 Director Stock Purchase and Deferred Compensation Plan, each of which represents a full share of stock deferred by non-management directors. The number in this column does not include outstanding rights under our 1999 Employee Stock Purchase Plan (the “ESPP”), which are discussed in footnote (3) below.

~~Back~~(2) The weighted-average exercise price calculation does not take into account the RSUs and deferred stock units referred to ~~Contents~~in note 1 to this table because the conversion or settlement of these rights into stock does not require the payment of consideration.

~~Factors~~(3) ~~Relating~~The number in this column includes: 7,742,215 shares of Applied Biosystems stock issuable pursuant to ~~Celera~~options ~~Genomics~~and other rights authorized for future issuance under our Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan; 288,302 shares of Applied Biosystems stock remaining available for future issuance under our 1993 Director Stock Purchase and Deferred Compensation Plan; and 1,019,245 shares of Applied Biosystems stock remaining available for future issuance under our ESPP. As of the end of our 2008 fiscal year, we had open ESPP purchase periods in several foreign countries which could result in the future issuance of shares out of the 1,019,245 reserve under that plan. However, the total number of shares that are subject to purchase in relation to these ESPP purchase periods will vary depending on the final determination of the applicable per share purchase price and fluctuations in exchange rates between local currencies and the U.S. Dollar.

We note that, as of the end of our 2008 fiscal year, we had equity compensation plans under which shares of our Celera ~~Genomics~~stock ~~has~~could ~~incurred~~have ~~net~~been ~~losses~~issued. However, effective as of July 1, 2008, we no longer issue Celera stock because of the separation of the Celera group business described earlier in Item 1 of this report under the heading “Celera Separation.” All of the options, warrants, and rights to ~~date~~acquire Celera stock that were outstanding on June 30 were assumed by Celera Corporation pursuant to the Celera separation, and ~~may~~we ~~not~~will ~~achieve~~no ~~profitability.~~longer issue any shares of

~~Celera~~- ~~Genomics~~54 ~~has~~- accumulated net losses of approximately $717 million as of June 30, 2004, and expects that it will continue to incur net losses for the foreseeable future. These cumulative losses are expected to increase as Celera Genomics continues to make investments in new technology and product development, including its investments in the discovery and development of therapeutic products, as well as investments in diagnostics through Celera Diagnostics, its joint venture with Applied Biosystems. Celera Genomics will record all initial cash operating losses of Celera Diagnostics up to a maximum of $300 million, after which any additional operating losses would be shared equally by Celera Genomics and Applied Biosystems. However, Applied Biosystems reimburses Celera Genomics for all tax benefits generated by Celera Diagnostics to the extent such tax benefits are used by Applied Biosystems, and the effect of recording Celera Diagnostics’ operating losses on Celera Genomics’ net losses will be partially offset by this reimbursement. Celera Diagnostics has accumulated cash operating losses of approximately $125 million as of June 30, 2004. As an early stage business, Celera Genomics faces significant challenges in expanding its business operations into the discovery and development of therapeutic products. As a result, there is a high degree of uncertainty that Celera Genomics will be able to achieve profitable operations.

TheTable marketingof and distribution agreement with Applied Biosystems may not generate significant royalty payments. Contents

~~Applied Biosystems became the exclusive distributor of the~~ Celera ~~Discovery~~stock, ~~System™ and~~or ~~Celera~~options, Genomics’ related human genomic and other biological and medical information under the terms of a ten-year marketing and distribution agreement that was effective in April 2002. Under the terms of that agreementwarrants, ~~Applied Biosystems~~or isrights ~~obligated~~ to ~~pay a royalty to~~ Celera ~~Genomics based on sales of some products sold by Applied Biosystems on and after July 1~~stock, ~~2002. This~~pursuant ~~royalty rate and the corresponding payments~~ to beany ~~made to Celera Genomics were based on the sales~~ of ~~these~~our ~~products~~equity ~~that~~compensation ~~the groups anticipated at the time of the execution of the agreement~~plans. ~~Applied Biosystems has not guaranteed any minimum royalty payments to Celera Genomics~~Accordingly, ~~and~~ the ~~actual~~table ~~amount~~above ofdoes ~~royalty payments to be paid to Celera Genomics depends on Applied Biosystems’ ability to successfully commercialize the products subject to the royalty. Applied Biosystems has~~ not ~~proven~~include ~~its~~information ~~ability~~regarding tooptions, ~~successfully commercialize these products. Celera Genomics believes that in order for Applied Biosystems’ sales of these products to meet original expectations~~warrants, ~~Applied~~or ~~Biosystems~~rights ~~will have~~ to ~~continue~~purchase ~~devoting a significant amount of its resources to researching, developing, marketing, and distributing them. However,~~ Celera ~~Genomics~~stock ~~has~~outstanding noat ~~control over~~ the ~~amount~~end ~~and timing~~ of ~~Applied Biosystems’ use~~our of2008 ~~its~~fiscal ~~resources,~~year ~~including~~or ~~for products subject to~~ the ~~royalty.~~equity Incompensation ~~addition, the~~plans ~~market~~under ~~for~~which ~~these~~shares ~~products~~of isCelera ~~intensely~~stock ~~competitive,~~could ~~and~~have ~~there~~been ~~can~~issued beas ~~no assurance that there will be market acceptance~~ of the ~~utility~~end ~~and value~~ of ~~these~~our ~~product~~2008 ~~offerings~~fiscal year.

-Security 67Ownership -of Certain Beneficial Owners

~~Back~~Information concerning the security ownership of certain beneficial owners is incorporated herein by reference to ~~Contents~~the information contained in our 2008 Proxy Statement under the heading “Ownership of Company Stock–Greater than 5% Beneficial Owners.”

Security ~~Celera~~Ownership ~~Genomics has not sought any new customers for its Celera Discovery System and related information products and services since June 30, 2002, and therefore its future revenues from its sale~~ of ~~these~~Management ~~products and services will be limited.~~

~~Under~~Information ~~the~~concerning ~~terms of~~ the ~~marketing~~security ~~and~~ownership ~~distribution~~of ~~agreement~~management ~~between Celera Genomics and Applied Biosystems described in the preceding paragraph, Celera Genomics receives all revenues under, and~~ is ~~responsible~~incorporated ~~for~~herein ~~all~~by ~~costs~~reference ~~and expenses associated with, Celera Discovery System and related information contracts that were entered into on or prior~~ to ~~June 30, 2002. However,~~ the ~~Applied Biosystems took full responsibility for marketing and contracting~~ ~~for~~information ~~the~~contained Celera Discovery System and related products and services after that date. Accordingly, Celera Genomics does not expect any revenues from the Celera Discovery System and related products and services other than under contracts existing on June 30, 2002, so long as they remain in ~~effect,~~our ~~and~~2008 ~~from~~Proxy ~~potential~~Statement ~~royalty payments from Applied Biosystems~~ under the ~~marketing~~heading ~~and~~“Ownership distribution agreement. Applied Biosystems has agreed to reimburse Celera Genomics for any shortfall in earnings before interest, taxes, depreciation, and amortization from these contracts below a total of ~~$62.5~~Company ~~million~~Stock–Directors during the four fiscal years ending with the 2006 fiscal year, if the shortfall is due to the actions of Applied Biosystems including changes in marketing strategy for the Celera Discovery System. However, this commitment is also subject to Celera Genomics otherwise continuing to perform under these contracts, and ~~does~~Executive ~~not protect Celera Genomics from lost revenue due to other circumstances such as a customer bankruptcy or default~~Officers.” Although under some contracts with existing Celera Discovery System customers Celera Genomics is entitled to milestone payments or future royalties based on products developed by its customers, Celera Genomics believes these arrangements are unlikely to produce any significant revenue for the group.

~~Because~~Changes ofin ~~the~~Control close working relationship between Celera Genomics and Applied Biosystems under the marketing and distribution agreement, it may be difficult to ascertain responsibility for claims, liabilities, or other issues that may arise under Celera Discovery System contracts or the marketing and distribution agreement.

~~Under~~On ~~the~~June 11, ~~marketing and distribution agreement described above~~2008, ~~the~~we ~~two~~entered ~~groups~~into ~~have~~an ~~agreed~~Agreement ~~to cooperation guidelines to enable Celera Genomics to perform its obligations under existing Celera Discovery System agreements~~ and toPlan ~~facilitate the development~~ of ~~Applied~~Merger ~~Biosystems’~~with ~~products~~Invitrogen ~~covered~~Corporation byand ~~the~~Atom Acquisition, ~~agreement.~~LLC, ~~These~~a ~~guidelines~~direct ~~provide~~wholly-owned ~~for~~subsidiary ~~the application~~ of ~~relevant~~Invitrogen. ~~resources~~Pursuant ~~and~~to ~~expertise of~~ the ~~groups~~Invitrogen toMerger ~~the relationship~~Agreement, ~~and~~subject ~~have led~~ to aconditions ~~close~~specified ~~working~~in ~~relationship among personnel within~~ the ~~two~~Merger ~~groups. Because of this working relationship~~Agreement, ifwe ~~any~~will ~~customers~~merge ~~assert~~with ~~any~~and ~~claims~~into ~~under~~Atom ~~Celera Discovery System contracts~~Acquisition, itwith ~~may~~that becompany ~~difficult~~continuing toas ~~determine~~the surviving ~~which~~company ~~group~~and ~~was~~a ~~responsible~~direct ~~for~~wholly-owned ~~the~~subsidiary ~~actions~~of ~~that~~Invitrogen. ~~gave~~More ~~rise~~information toabout the ~~claim.~~Merger InAgreement ~~addition,~~is ~~Applied~~set ~~Biosystems~~forth ~~may~~above ~~from time to time take good faith actions~~ in ~~pursuit~~Item 1 of ~~its~~this ~~marketing~~report ~~strategy~~under ~~that~~the ~~affect~~heading ~~Celera~~“Invitrogen ~~Discovery~~Merger ~~System~~Agreement.” ~~contracts~~We ~~that~~otherwise ~~were~~know inof ~~existence~~no arrangements, onincluding ~~June~~any ~~30,~~pledge ~~2002.~~by ~~Because~~any person of ~~the~~ ~~working~~our ~~relationship~~securities, ~~between~~ the ~~two~~operation ~~groups,~~of itwhich may beat ~~difficult~~a tosubsequent ~~determine~~date ~~whether~~result ~~the~~in ~~actions~~a ofchange ~~Applied~~in ~~Biosystems~~control ~~are within the scope~~ of ~~the~~our ~~reimbursement obligation described above~~company.

-Item 6813. -Certain Relationships and Related Transactions, and Director Independence

~~Back~~Information concerning certain relationships and related party transactions and director independence is incorporated herein by reference to ~~Contents~~the information contained in our 2008 Proxy Statement under the headings “Corporate Governance–Related Party Transactions” and “Corporate Governance–Director Independence.”

~~Celera~~Item ~~Genomics’~~14. ~~ability~~Principal toAccountant ~~develop~~Fees and ~~commercialize proprietary therapeutic products is unproven.~~Services

Information Asconcerning ~~Celera~~fees ~~Genomics~~billed ~~expands~~by ~~its~~PricewaterhouseCoopers ~~business~~LLP, ~~operations~~our inindependent ~~the~~registered ~~area~~public ofaccounting ~~therapeutic product discovery and development~~firm, itduring ~~faces~~our ~~the~~2008 ~~difficulties inherent in developing~~ and ~~commercializing~~2007 ~~these~~fiscal ~~products. It is possible that Celera Genomics’ discovery and development efforts will not result in any commercial products. In particular~~years, ~~Celera Genomics~~ and ~~its collaborators are seeking to develop new therapeutic products based on~~ information ~~derived~~concerning ~~from~~ the ~~study~~pre-approval ofpolicies ~~the genetic material of organisms, or genomics,~~ and ~~the~~procedures ~~study~~ of ~~proteins, or proteomics. Also pursuant to its current business and scientific plan, Celera Genomics is seeking to capitalize on its relationship with Celera Diagnostics through~~ the ~~evaluation~~Audit/Finance ofCommittee ~~the therapeutic relevance~~ of ~~targets that~~our ~~Celera~~Board ~~Diagnostics~~of ~~may~~Directors, ~~identify in the disease association studies it~~ is ~~performing~~incorporated onherein ~~its~~by ~~own~~reference ~~behalf as well as additional disease association studies it has agreed~~ to ~~perform specifically~~the ~~for~~information ~~Celera~~contained ~~Genomics.~~in To our ~~knowledge,~~2008 noProxy ~~one~~Statement tounder ~~date has developed or commercialized any therapeutic products based on~~ the ~~Celera~~heading ~~Genomics’~~“Proposal ~~genomics~~2–Ratification ~~or proteomics technologies or Celera Diagnostics’ disease association studies, and therefore the benefit~~ of ~~these technologies and studies to~~ the ~~development~~Selection of ~~therapeutics~~ isIndependent ~~unproven.~~Registered InPublic ~~addition,~~Accounting while Celera Diagnostics has agreed to perform some studies specifically for Celera Genomics, Celera Diagnostics is not obligated to continue the disease association studies that it performs on its own behalfFirm. ~~If Celera Diagnostics discontinues in whole or in part its disease association study program,~~” or if this program or the studies performed specifically for Celera Genomics do not result in any targets with therapeutic relevance, Celera Genomics’ business and scientific plan could be adversely affected.

~~Therapeutic~~- ~~product~~55 ~~candidates~~- ~~may never result in a commercialized product.~~

AllTable of Celera Genomics’ therapeutic product candidates are in various stages of research and development and will require significant additional research and development efforts by Celera Genomics or its collaborators before they can be marketed. These efforts include extensive preclinical and clinical testing and lengthy regulatory review and clearance or approval by the U.S. Food and Drug Administration, or FDA, and comparable agencies in other countries. Celera Genomics’ development of therapeutic products is highly uncertain and subject to a number of significant risks. To date, Celera Genomics has not commercialized a therapeutic product and Celera Genomics does not expect any of its therapeutic product candidates to be commercially available for a number of years, if ever. Therapeutic product candidates that appear to be promising at early stages of development may not be developed into commercial products, or may not be successfully marketed, for a number of reasons, including:Contents

•PART ~~Celera~~IV Genomics or its collaborators may not successfully complete any research and development efforts; • Celera Genomics or its collaborators may not successfully build the necessary preclinical and clinical development organizations; • any therapeutic product candidates that Celera Genomics or its collaborators develop may be found during preclinical testing or clinical trials to be ineffective or to cause harmful side effects; • Celera Genomics or its collaborators may fail to obtain required regulatory approvals for products they develop; • Celera Genomics or its collaborators may be unable to manufacture enough of any potential products at an acceptable cost and with appropriate quality; • Celera Genomics or its collaborators may fail to build necessary distribution channels; • Celera Genomics’ or its collaborators’ products may not be competitive with other existing or future products; • adequate reimbursement for Celera Genomics’ or its collaborators products may not be available to healthcare providers and patients from the government or insurance companies; and

-Item 6915. -Exhibits and Financial Statement Schedules

~~Back~~ Financial toStatements ~~Contents~~

•The ~~Celera~~following ~~Genomics~~financial orstatements, ~~its~~together ~~collaborators~~with ~~may~~the bereport ~~unable~~thereon toof ~~obtain~~PricewaterhouseCoopers ~~necessary~~LLP ~~intellectual~~dated August ~~property~~27, ~~protection~~2008, orappearing ~~third~~in ~~parties~~our ~~may~~2008 ~~own~~Annual ~~proprietary~~Report, ~~rights~~are incorporated by reference in this report. With the exception of the aforementioned information and that ~~prevent~~which ~~Celera~~is ~~Genomics~~specifically orincorporated ~~its~~in ~~collaborators~~Parts ~~from~~I ~~commercializing~~and ~~their~~II ~~products~~of this report, our 2008 Annual Report is not to be deemed filed as part of this report.

If Celera Genomics fails to maintain its existing collaborative relationships and enter into new collaborative relationships, or if collaborators do not perform under collaboration agreements, development of its therapeutic product candidates could be delayed.


		Annual Report Page No.
Consolidated Statements of Operations Fiscal years 2008, 2007, and 2006		40

Consolidated Statements of Financial Position At June 30, 2008 and 2007		41

Consolidated Statements of Cash Flows Fiscal years 2008, 2007, and 2006		42

Consolidated Statements of Stockholders’ Equity Fiscal years 2008, 2007, and 2006		43

Notes to Consolidated Financial Statements		44–92

Reports of Management		93

Report of Independent Registered Public Accounting Firm		94

~~Celera~~- ~~Genomics’~~56 ~~strategy~~- for the discovery, development, clinical testing, manufacturing and commercialization of most of its therapeutic product candidates includes entering into collaborations with partners. Although Celera Genomics has expended, and continues to expend, time and money on internal research and development programs, it may be unsuccessful in creating therapeutic product candidates that would enable it to form additional collaborations and receive milestone and/or royalty payments from collaborators.

EachTable of Celera Genomics’ existing collaboration agreements may be canceled under some circumstances. In addition, the amount and timing of resources to be devoted to research, development, clinical trials and commercialization activities by Celera Genomics’ collaborators in some cases are not within Celera Genomics’ control. Celera Genomics cannot ensure that its collaborators will perform their obligations as expected. If any of Celera Genomics’ collaborators terminate their agreements or otherwise fail to conduct their collaborative activities in a timely manner, the development or commercialization of therapeutic products may be delayed or otherwise adversely affected. If in some cases Celera Genomics assumes responsibilities for continuing programs on its own after termination of a collaboration, Celera Genomics may be required to devote additional resources to product development and commercialization or Celera Genomics may need to cancel some development programs.Contents

IfFinancial ~~Celera~~Statement ~~Genomics~~Schedule or its collaborators fail to satisfy regulatory requirements for any therapeutic product candidate, Celera Genomics or its collaborators will be unable to complete the development and commercialization of that product.

~~Celera~~The ~~Genomics~~following isadditional ~~currently~~financial ~~developing~~data ~~its~~should ~~internal capability~~be toread ~~move potential products through clinical testing, manufacturing and the approval processes of the FDA and comparable agencies~~ in ~~other~~conjunction ~~countries.~~with In the ~~U.S.,~~consolidated ~~either~~financial ~~Celera~~statements ~~Genomics or its collaborators must show through pre-clinical studies and clinical trials that each of Celera Genomics’ or its collaborators’ therapeutic product candidates is safe and effective~~ in ~~humans~~our ~~for~~2008 ~~each~~Annual ~~indication before obtaining regulatory clearance from the FDA for the commercial sale of that product~~Report. ~~Outside~~Schedules ~~of the U.S., the regulatory requirements vary from country to country. If Celera~~not ~~Genomics~~included orwith ~~its~~this ~~collaborators~~additional ~~fail~~financial todata ~~adequately~~have ~~show~~been ~~the~~omitted ~~safety~~because ~~and~~they ~~effectiveness of a therapeutic product, regulatory clearance or approval could be delayed or denied. The results from pre-clinical studies may be different from the results that~~ are ~~obtained~~not inapplicable ~~clinical trials. Celera Genomics cannot be certain that it~~ or ~~its collaborators will show sufficient safety and effectiveness in their clinical trials to allow them to obtain~~ the ~~needed~~required ~~regulatory clearance~~information oris ~~approval~~shown ~~for any therapeutic product candidate. The regulatory review and approval process can take many years and require substantial expense and may not be successful. Many companies~~ in the ~~therapeutic industry,~~consolidated ~~including~~financial ~~biotechnology~~statements ~~companies,~~or ~~have~~notes ~~suffered significant setbacks in advanced clinical trials, even after promising results in earlier studies~~thereto.

- 70 -


		10-K Page No.
Report of Independent Registered Public Accounting Firm on Financial Statement Schedule		67

Schedule II – Valuation and Qualifying Accounts and Reserves		68

~~Back~~Exhibits ~~to Contents~~

Even if Celera Genomics or its collaborators obtain regulatory clearance or approval for a particular therapeutic product, that product will be subject to risks and uncertainties relating to regulatory compliance, including post-approval clinical studies and inability to meet the compliance requirements of the FDA’s Good Manufacturing Practices regulations. In addition, identification of some adverse side effects after a therapeutic product is on the market or the occurrence of manufacturing problems could cause subsequent suspension of product manufacture or withdrawal of approval, or could require reformulation of a therapeutic product, additional testing, or changes in labeling of the product. This could delay or prevent Celera Genomics from generating revenues from the sale of that therapeutic product.


Exhibit No.
2.1		Agreement and Plan of Merger dated March 10, 1999, among The Perkin-Elmer Corporation, a New York corporation, the company, and PE Merger Corp., a New York corporation (incorporated by reference to Exhibit 2.1 to our Registration Statement on Form S-4 (No. 333-67797)).

2.2		Agreement and Plan of Merger dated as of December 24, 2005, by and among Ambion, Inc., the company, Ambion Acquisition Corp., and Matthew M. Winkler, in his capacity as Representative (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2005 (Commission file number 001-04389)).

2.3		Agreement and Plan of Merger dated as of August 31, 2007, among the company, Barolo Acquisition, Inc., Berkeley HeartLab, Inc., and James Caccavo as the Shareholder Representative (incorporated by reference to Exhibit 2.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 (Commission file number 001-04389)).

2.4		Agreement and Plan of Merger dated as of June 11, 2008, among Invitrogen Corporation, Atom Acquisition, LLC, and the company (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K/A dated June 11, 2008, and filed June 23, 2008 (Commission file number 001-04389)).

3.1.1		Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K dated November 30, 2006, and filed December 1, 2006 (Commission file number 001-04389)).

3.1.2		Certificate of Designations of Series A Participating Junior Preferred Stock and Series B Participating Junior Preferred Stock (incorporated by reference to Exhibit A to Exhibit 4.1 to our Registration Statement on Form S-4 (No. 333-67797)).

3.2		By-laws as amended through August 21, 2008 (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K dated August 21, 2008, and filed August 26, 2008 (Commission file number 001-04389)).

~~For~~- ~~some~~57 of- Celera Genomics’ research and product development programs, particularly its proteomics efforts, Celera Genomics needs access to human and other tissue samples from diseased and healthy individuals, other biological materials, and related clinical and other information, which may be in limited supply.

CeleraTable Genomics may not be able to obtain or maintain access to these materials and information on acceptable terms, or may not be able to obtain needed consents from individuals providing tissue or other samples. In addition, government regulation in the U.S. and foreign countries could result in restricted access to, or use of, human and other tissue samples. If Celera Genomics loses access to sufficient numbers or sources of tissue samples or other required biological materials, or if tighter restrictions are imposed on the use of related clinical or other information or information generated from tissue samples or other biological materials, these research and development programs and Celera Genomics’ business could be adversely affected.Contents

The pharmaceutical industry is intensely competitive and evolving.


4.1.1		Stockholder Protection Rights Agreement dated as of April 28, 1999, between the company and BankBoston, N.A. (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-4 (No. 333-67797)).

4.1.2		Amendment to Rights Agreement dated as of April 17, 2002, among BankBoston, N.A., EquiServe Trust Company, N.A., and the company (incorporated by reference to Exhibit 4.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (Commission file number 001-04389)).

4.1.3		Second Amendment to Rights Agreement dated as of June 11, 2008, by and between the company and EquiServe Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated June 11, 2008, and filed June 12, 2008 (Commission file number 001-04389)).

4.2		Credit Agreement dated as of May 25, 2007, among the company, the initial lenders named therein, Citigroup Global Markets Inc., as sole arranger, JPMorgan Chase Bank, N.A., as syndication agent, Bank of America, N.A. and ABN AMRO Bank N.V., as co-documentation agents, and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated May 25, 2007, and filed May 31, 2007 (Commission file number 001-04389)).

4.3		Term Loan Agreement dated as of August 27, 2007, among the company, Bank of America, N.A., as administrative agent, and the initial lenders named therein (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K dated August 27, 2007, and filed August 28, 2007 (Commission file number 001-04389)).

10.1.1		The Perkin-Elmer Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 99 to our Registration Statement on Form S-8 (No. 333-38713)).*

10.1.2		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to The Perkin-Elmer Corporation 1997 Stock Incentive Plan (incorporated by reference to Exhibit 10.4.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.2.1		The Perkin-Elmer Corporation 1998 Stock Incentive Plan (incorporated by reference to Exhibit B to our Proxy Statement for our 1998 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.2.2		Form of Director Stock Option Agreement pursuant to The Perkin-Elmer Corporation 1998 Stock Incentive Plan (incorporated by reference to Exhibit 10.5.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.3		1999 Employee Stock Purchase Plan, as amended October 18, 2007 (incorporated by reference to Annex A to Schedule 14A, filed September 6, 2007, containing our definitive Proxy Statement for our 2007 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.4.1		Applied Biosystems Group 1999 Stock Incentive Plan, as amended through August 21, 2003 (incorporated by reference to Exhibit 10.7 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 (Commission file number 001-04389)).*

10.4.2		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Applied Biosystems Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.4.3		Form of Incentive Stock Option Agreement for executive officers pursuant to the Applied Biosystems Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7.3 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.4.4		Forms of Stock Option Agreements for executive officers pursuant to the Applied Biosystems Group 1999 Stock Incentive Plan, relating to non-qualified options issued in conjunction with

~~There~~- is58 ~~intense~~- ~~competition among pharmaceutical and biotechnology companies attempting to discover candidates for potential new therapeutic products. These companies may:~~

•Table develop new therapeutic products in advance of Celera Genomics or its collaborators; • develop therapeutic products which are more effective as therapeutics, or more cost-effective than those developed by Celera Genomics or its collaborators; • obtain regulatory approvals of their therapeutic products more rapidly than Celera Genomics or its collaborators; or • obtain patent protection or other intellectual property rights that would limit the ability of Celera Genomics or its collaborators to develop and commercialize therapeutic products.Contents

Introduction of new products may expose Celera Genomics to product liability claims.


		awards under the Performance Unit Bonus Plan (incorporated by reference to Exhibit 10.7.4 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.4.5		Form of Director Stock Option Agreement pursuant to the Applied Biosystems Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7.6 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.4.6		Forms of Performance Stock Option Agreements for executive officers pursuant to the Applied Biosystems Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7.7 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.5.1		Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan, effective October 21, 2004 (incorporated by reference to Annex B to Schedule 14A, filed September 17, 2004, containing our definitive Proxy Statement for our 2004 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.5.2		Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan, as amended on October 19, 2006 (incorporated by reference to Annex A to Schedule 14A, filed September 11, 2006, containing our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.5.3		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.8.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.5.4		Form of Incentive Stock Option Agreement for executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.8.3 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.5.5		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan, as amended on October 19, 2006 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 (Commission file number 001-04389)).*

10.5.6		Form of Restricted Stock Bonus Agreement for executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.8.4 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.5.7		Form of Restricted Stock Unit Award Agreement for awards to executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan relating to performance during the 2006 through 2009 fiscal years (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2005 (Commission file number 001-04389)).*

10.5.8		Form of Restricted Stock Unit Award Agreement for awards to executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan that vest based on performance (incorporated by reference to Exhibit 10.8.6 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2006 (Commission file number 001-04389)).*

10.5.9		Form of Performance Share Award Agreement for executive officers pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan relating to performance during the 2007 through 2009 fiscal years (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (Commission file number 001-04389)).*

~~New~~- ~~products~~59 ~~developed~~- by Celera Genomics or its collaborators could expose Celera Genomics to potential product liability risks that are inherent in the testing, manufacturing, marketing and sale of human therapeutic products. Product liability claims or product recalls, regardless of the ultimate outcome, could require Celera Genomics to spend significant time and money in litigation and to pay significant damages. Although Celera Genomics expects to seek and maintain product liability insurance to cover claims relating to the testing and use of therapeutic products, there can be no assurance that such insurance will be available on commercially reasonable terms, if at all, or that the amount of coverage obtained will be adequate to cover losses from any particular claim.

-Table 71of -Contents

Back to Contents



10.5.10		Form of Director Stock Option Agreement pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 to our Current Report on Form 8-K dated October 21, 2004, and filed October 27, 2004 (Commission file number 001-04389)).*

10.5.11		Form of Director Stock Award Agreement pursuant to the Applied Biosystems Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K dated October 21, 2004, and filed October 27, 2004 (Commission file number 001-04389)).*

10.6.1		Celera Group 1999 Stock Incentive Plan, as amended through August 21, 2003 (incorporated by reference to Exhibit 10.8 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 (Commission file number 001-04389)).*

10.6.2		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Celera Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.9.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.6.3		Form of Incentive Stock Option Agreement for executive officers pursuant to the Celera Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.9.3 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.6.4		Forms of Stock Option Agreements for executive officers pursuant to the Celera Group 1999 Stock Incentive Plan, relating to non-qualified options issued in conjunction with awards under the Performance Unit Bonus Plan (incorporated by reference to Exhibit 10.9.4 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.6.5		Form of Director Stock Option Agreement pursuant to the Celera Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.9.6 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.6.6		Form of Scientific Advisory Board Stock Option Agreement pursuant to the Celera Group 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.9.7 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.7.1		Celera Group Amended and Restated 1999 Stock Incentive Plan, effective October 21, 2004 (incorporated by reference to Annex C to Schedule 14A, filed September 17, 2004, containing our definitive Proxy Statement for our 2004 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.7.2		Celera Group Amended and Restated 1999 Stock Incentive Plan, as amended on October 19, 2006 (incorporated by reference to Annex B to Schedule 14A, filed September 11, 2006, containing our definitive Proxy Statement for our 2006 Annual Meeting of Stockholders (Commission file number 001-04389)).*

10.7.3		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.10.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.7.4		Form of Incentive Stock Option Agreement for executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.10.3 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.7.5		Form of Non-Qualified Stock Option Agreement for executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan, as amended on October 19, 2006 (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2007 (Commission file number 001-04389)).*

~~Therapeutics~~- ~~discovery~~60 ~~and~~- ~~development is a highly technical field and there is a competitive market for personnel with the expertise needed for the expansion of Celera Genomics’ business operations within this field.~~

CeleraTable Genomics believes that in order to develop and commercialize therapeutic products, it will need to recruit and retain scientific and management personnel having specialized training or advanced degrees, or otherwise having the technical background, necessary for an understanding of therapeutic products. There is a shortage of qualified scientific and management personnel who possess this technical background. Celera Genomics competes for these personnel with other pharmaceutical and biotechnology companies, academic institutions and government entities. If Celera Genomics is unable to retain and attract qualified scientific and management personnel, the growth of the group’s business operations in the area of therapeutic product discovery and development could be delayed or curtailed.Contents

Celera Genomics could incur liabilities relating to hazardous materials that it uses in its research and development activities.


10.7.6		Form of Restricted Stock Bonus Agreement for executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.10.4 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.7.7		Form of Restricted Stock Unit Award Agreement for awards to executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan that vest based on performance (incorporated by reference to Exhibit 10.10.5 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2006 (Commission file number 001-04389)).*

10.7.8		Form of Performance Share Award Agreement for executive officers pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan relating to performance during the 2007 through 2009 fiscal years (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (Commission file number 001-04389)).*

10.7.9		Form of Director Stock Option Agreement pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 to our Current Report on Form 8-K dated October 21, 2004, and filed October 27, 2004 (Commission file number 001-04389)).*

10.7.10		Form of Director Stock Award Agreement pursuant to the Celera Group Amended and Restated 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K dated October 21, 2004, and filed October 27, 2004 (Commission file number 001-04389)).*

10.8		The Perkin-Elmer Corporation Supplemental Retirement Plan effective as of August 1, 1979, as amended through October 1, 1996 (incorporated by reference to Exhibit 10(22) to our Annual Report on Form 10-K for the fiscal year ended June 30, 2000 (Commission file number 001-04389)).*

10.9		Supplemental Executive Retirement Plan effective as of December 31, 2005, as amended and restated as of August 28, 2006 (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (Commission file number 001-04389)).*

10.10		Excess Benefit Plan, as amended and restated effective July 1, 2004 (incorporated by reference to Exhibit 10.10 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2004 (Commission file number 001-04389)).*

10.11		Amended and Restated 1993 Director Stock Purchase and Deferred Compensation Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated February 8, 2008, and filed February 11, 2008 (Commission file number 001-04389)).*

10.12.1		Performance Unit Bonus Plan, as amended through August 21, 2003 (incorporated by reference to Exhibit 10.14 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 (Commission file number 001-04389)).*

10.12.2		Forms of Performance Unit Agreements for executive officers pursuant to the Performance Unit Bonus Plan (incorporated by reference to Exhibit 10.14.2 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.13		Estate Enhancement Plan (incorporated by reference to Exhibit 10(22) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1997 (Commission file number 001-04389)).*

10.14.1		Deferred Compensation Plan, as amended and restated effective as of January 1, 2002 (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2001 (Commission file number 001-04389)).*

10.14.2		Amendment, dated as of November 17, 2005, to the Deferred Compensation Plan (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2005 (Commission file number 001-04389)).*

~~Celera~~- ~~Genomics’~~61 ~~research~~- and development activities involve the controlled use of hazardous materials, chemicals and various radioactive materials. In the event of an accidental contamination or injury from these materials, Celera Genomics could be held liable for damages in excess of its resources.

CeleraTable Genomics’ business depends on the continuous, effective, reliable, and secure operation of its computer hardware, software, and Internet applications and related tools and functions.Contents

Celera Genomics’ business requires manipulating and analyzing large amounts of data, and communicating the results of the analysis to its internal research personnel and to its customers via the Internet. Also, Celera Genomics relies on a global enterprise software system to operate and manage its business. Celera Genomics’ business therefore depends on the continuous, effective, reliable, and secure operation of its computer hardware, software, networks, Internet servers, and related infrastructure. To the extent that Celera Genomics’ hardware or software malfunctions or access to Celera Genomics’ data by Celera Genomics’ internal research personnel or customers through the Internet is interrupted, the group’s business could suffer. Also, a recent upgrade of our global enterprise software system was performed and we do not believe we will be able to adequately assess the success of the upgrade and the operation of the software until we complete our first quarterly financial close following the upgrade, which close will occur during September 2004. If we encounter difficulties with the upgrade or if we determine that the upgraded software does not operate effectively, these circumstances could interfere with our business operations.


10.15		Axys Pharmaceuticals, Inc. 1989 Stock Plan, as amended through May 21, 1997 (incorporated by reference to Exhibit 10.2 to Annual Report on Form 10-K of Axys Pharmaceuticals, Inc. for the fiscal year ended December 31, 1996 (Commission file number 0-22788)).*

10.16		Axys Pharmaceuticals, Inc. 1997 Equity Incentive Plan, as amended through May 14, 2001 (incorporated by reference to Exhibit 10.30 to our Registration Statement on Form S-8 (No. 333-73980)).*

10.17		Axys Pharmaceuticals, Inc. 1997 Non-Officer Equity Incentive Plan, as amended through October 16, 1998 (incorporated by reference to Exhibit 10.31 to our Registration Statement on Form S-8 (No. 33-73980)).*

10.18		Form of notice to directors, officers, and other employees regarding January 20, 2005, acceleration of stock option vesting, including notice to directors and executive officers regarding restrictions imposed on their accelerated options (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004 (Commission file number 001-04389)).*

10.19		Form of notice to executive officers and other employees regarding June 2, 2005, acceleration of performance unit bonus plan stock option vesting, including notice regarding restrictions imposed on their accelerated options (incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.20.1		Employment Agreement dated as of September 12, 1995, between the company and Tony L. White (incorporated by reference to Exhibit 10(21) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1995 (Commission file number 001-04389)).*

10.20.2		Amendment dated August 17, 2001, to the Employment Agreement dated as of September 12, 1995, between the company and Tony L. White (incorporated by reference to Exhibit 10.l4 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2001 (Commission file number 001-04389)).*

10.20.3		Amendment dated August 28, 2006, to the Employment Agreement dated as of September 12, 1995, between the company and Tony L. White (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (Commission file number 001-04389)).*

10.20.4		Transition Services Agreement dated as of June 11, 2008, between the company and Tony L. White.*

10.21		Change of Control Agreement dated as of September 12, 1995, between the company and Tony L. White (incorporated by reference to Exhibit 10(16) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1995 (Commission file number 001-04389)).*

10.22		Employment Agreement dated as of November 16, 1995, between the company and William B. Sawch (incorporated by reference to Exhibit 10(16) to our Annual Report on Form 10-K for fiscal year ended June 30, 1998 (Commission file number 001-04389)).*

10.23		Deferred Compensation Contract dated as of July 15, 1993, between the company and William B. Sawch (incorporated by reference to Exhibit 10(19) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (Commission file number 001-04389)).*

10.24.1		Letter dated June 24, 1997, from the company to Dennis L. Winger (incorporated by reference to Exhibit 10(18) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (Commission file number 001-04389)).*

10.24.2		Employment Agreement dated as of September 25, 1997, between the company and Dennis L. Winger (incorporated by reference to Exhibit 10(17) to our Annual Report on Form 10-K for the fiscal year ended June 30, 1998 (Commission file number 001-04389)).*

~~Celera~~- ~~Genomics’~~62 computer and communications hardware is protected through physical and software safeguards. However, it is still vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-~~ins,~~ software viruses, and similar events. In addition, Celera Genomics’ online products are complex and sophisticated, and as such, could contain data, design, or software errors that could be difficult to detect and correct. Software defects could be found in current or future products. If Celera Genomics fails to maintain and further develop the necessary computer capacity and data to support its therapeutic products discovery and development programs and its online products, it could experience a loss of or delay in revenues. In addition, any sustained disruption in Internet access provided by third parties could adversely affect Celera Genomics’ business.

-Table 72of -Contents

Back to Contents


10.24.3		Letter dated August 21, 2003, from the company to Dennis L. Winger regarding the letter dated June 24, 1997, from the company to Dennis L. Winger (incorporated by reference to Exhibit 10.33 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2003 (Commission file number 001-04389)).*

10.24.4		Letter dated August 28, 2006, from the company to Dennis L. Winger, supplementing employment letters from the company to Dennis L. Winger dated June 24, 1997, and August 21, 2003 (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2006 (Commission file number 001-04389)).*

10.25		Employment Agreement dated as of December 1, 2000, between the company and Kathy P. Ordoñez (incorporated by reference to Exhibit 10.35 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (Commission file number 001-04389)).*

10.26		Employment Agreement dated as of September 5, 2000, between the company and Barbara J. Kerr (incorporated by reference to Exhibit 10.37 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.27		Employment Agreement dated as of December 2, 1996, between the company and Ugo D. DeBlasi (incorporated by reference to Exhibit 10.38 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2005 (Commission file number 001-04389)).*

10.28		Employment offer letter to Joel R. Jung dated January 13, 2006 (incorporated by reference to Exhibit 10.41 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2006 (Commission file number 001-04389)).*

10.29		Executive Perquisites Policy provisions applicable to members of the company’s Management Executive Committee, including “named executive officers” as such term is defined by SEC rules (incorporated by reference to Exhibit 10.29 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2007 (Commission file number 001-04389)).*

10.30.1		Employment Agreement dated as of September 1, 2007, between the company and Mark P. Stevenson (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007 (Commission file no. 001-04389)).*

10.30.2		Amendment No. 1 to Employment Agreement between the company and Mark P. Stevenson dated as of June 11, 2008.*

10.31		Executive Severance Pay Policy.*

10.32.1		Celera Diagnostics Joint Venture Agreement dated as of April 1, 2001, among the company, its Applied Biosystems Group, its Celera Group, Foster City Holdings, LLC, and Rockville Holdings, LLC (incorporated by reference to Exhibit 10.36 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (Commission file number 001-04389)).

10.32.2		Amendment, dated as of June 22, 2004, to Celera Diagnostics Joint Venture Agreement dated as of April 1, 2001, among the company, its Applied Biosystems Group, its Celera Group, Foster City Holdings, LLC, and Rockville Holdings, LLC (incorporated by reference to Exhibit 10.34 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2004 (Commission file no. 001-04389)).

10.32.3		Celera Diagnostics Reorganization Agreement dated as of April 22, 2006, and effective as of January 1, 2006, among the company, its Applied Biosystems group, its Celera group, Foster City Holdings, LLC, and Rockville Holdings, LLC (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 (Commission file no. 001-04389)).

10.33.1		Celera/Applied Biosystems Marketing and Distribution Agreement dated as of February 27, 2003, and effective as of April 1, 2002, among the company, its Applied Biosystems group, and its Celera group (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003 (Commission file no. 001-04389)).

~~Celera~~- ~~Genomics’~~63 ~~competitive~~- ~~position depends on maintaining its intellectual property protection and obtaining licenses to intellectual property it may need from others.~~

CeleraTable Genomics’ ability to compete and to achieve and maintain profitability depends on its ability to protect its proprietary discoveries and technologies, in large part, through obtaining and enforcing patent rights, obtaining copyright protection, maintaining its trade secrets, and operating without infringing the intellectual property rights of others. Celera Genomics’ ability to obtain patent protection for the inventions it makes is uncertain. The patentability of biotechnology and pharmaceutical inventions involves complex factual and legal questions. As a result, it is difficult to predict whether patents will issue or the breadth of claims that will be allowed in biotechnology and pharmaceutical patents. This may be particularly true with regard to the patenting of gene sequences, gene functions, and genetic variations. In this regard, the U.S. Patent and Trademark Office has adopted guidelines for use in the review of the utility of inventions, particularly biotechnology inventions. These guidelines increased the amount of evidence required to demonstrate utility in order to obtain a patent in the biotechnology field, making patent protection more difficult to obtain. Although others have been successful in obtaining patents to biotechnology inventions, since the adoption of these guidelines, these patents have been issued with increasingly less frequency. As a result, patents may not issue from patent applications that Celera Genomics may own or license if the applicant is unable to satisfy the new guidelines.Contents

The U.S. Patent and Trademark Office has issued several patents to third parties covering inventions involving single nucleotide polymorphisms or “SNPs,” naturally occurring genetic variations that scientists believe can be correlated with susceptibility to disease, disease prognosis, therapeutic efficiency, and therapeutic toxicity. These inventions are subject to the same new guidelines as other biotechnology inventions. In addition, Celera Genomics may need to obtain rights to patented SNPs in order to develop, use and sell analyses of the overall human genome or particular full-length genes. These licenses may not be available to Celera Genomics on commercially acceptable terms, or at all.


10.33.2		Amended and Restated Celera/Applied Biosystems Marketing and Distribution Agreement dated as of June 22, 2004 among the company, its Applied Biosystems group, and its Celera group (incorporated by reference to Exhibit 10.36 to our Annual Report on Form 10-K for the fiscal year ended June 30, 2004 (Commission file no. 001-04389)).

10.33.3		Amendment, dated as of February 4, 2005, to Celera/Applied Biosystems Marketing and Distribution Agreement among the company, its Applied Biosystems group, and its Celera group (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2004 (Commission file no. 001-04389)).

10.34		Restated Strategic Alliance Agreement, effective as of January 9, 2006, among the company, Celera Diagnostics, LLC, and Abbott Laboratories (incorporated by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006 (Commission file no. 001-04389)).**

10.35		Letter Agreement regarding Fixed Dollar Collar Accelerated

Table UNITED STATES SECURITIESof AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Contents

Table Corporate History and Structure; Two Classes of Stock Contents

- 3Table -of Contents

BackTable toof Contents

BackTable toof Contents

Table Applied Biosystems’of SNP genotyping and gene expression assays are designed to be used with Applied Biosystems’ real-time PCR systems.Contents

BackTable toof Contents

BackTable toof Contents

-Table 23of -Contents

-Table 24of -Contents

EnvironmentalTable Mattersof Contents

TargetTable Discoveryof Programs; Proteomics and Genomics Research Contents

proteomicsTable studyof are pancreatic, lung, colon, and breast cancer. Celera Genomics conducts its proteomics research at its own proteomics facility, which became fully operational during our 2003 fiscal year.Contents

SmallTable Moleculeof Drug Programs Contents

RawTable Materialsof Contents

BackTable toof Contents

CeleraTable Diagnostics,of a 50/50 Joint Venture between Applied Biosystems and Celera Genomics Contents

BackTable toof Contents

RegulationTable of Diagnostic Products Contents

MarketingTable andof Distribution Contents

BackTable toof Contents

testingTable laboratories, including Laboratory Corporation of America Holdings, Quest Diagnostics Inc., and Specialty Laboratories, Inc.Contents

BackTable toof Contents

ItemTable 2. Propertiesof Contents

Table of Contents

-Table 53of -Contents

-Table 54of -Contents

-Table 55of -Contents

-Table 57of -Contents

BackTable toof Contents

Table of Contents

TheTable marketingof and distribution agreement with Applied Biosystems may not generate significant royalty payments. Contents

-Table 71of -Contents

CeleraTable Genomics’ business depends on the continuous, effective, reliable, and secure operation of its computer hardware, software, and Internet applications and related tools and functions.Contents

-Table 72of -Contents

Filing Compare · APPLIED BIOSYSTEMS INC.