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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1 To Form 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: SEPTEMBER 30, 1997.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission File Number: 0-20032
PERSEPTIVE BIOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2987616
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
500 OLD CONNECTICUT PATH 01701
FRAMINGHAM, MASSACHUSETTS (Zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (508) 383-7700
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE PER SHARE
CLASS E WARRANTS TO PURCHASE SHARES OF COMMON STOCK
CLASS G WARRANTS TO PURCHASE SHARES OF COMMON STOCK
SERIES B JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
(Title of class)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
Aggregate market value, as of December 24, 1997, of Common Stock held by
non-affiliates of the Company: $253,288,768 based on the last reported sale
price on The Nasdaq National Market.
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT DECEMBER 24, 1997:
22,785,758
DOCUMENTS INCORPORATED BY REFERENCE
The Company intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended September 30,
1997. Portions of such proxy statement are incorporated by reference in Part
III of this Form 10-K.
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This Amendment No. 1 on Form 10-K/A to the Registrant's Annual Report on Form
10-K for the year ended September 30, 1997 (the "Report") is being filed to
correct typograqphical errors in the Consolidated Statement of Cash Flows for
the year ended September 30, 1997 included in the Registrant's Consolidated
Financial Statements referenced in Item 8 and Item 14 of the Report.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item is contained in the financial
statements included elsewhere in this Annual Report on Form 10-K.
CONSOLIDATED FINANCIAL STATEMENTS.
Report of Independent Accountants.
Consolidated Balance Sheets at September 30, 1997 and 1996.
Consolidated Statements of Operations for the years ended September 30, 1997,
1996 and 1995.
Consolidated Statements of Changes in Stockholders' Equity for the years
ended September 30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended September 30, 1997,
1996 and 1995.
Notes to the Consolidated Financial Statements.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) 1. CONSOLIDATED FINANCIAL STATEMENTS.
For the following financial information included herein, see
Index on page F-1:
Report of Independent Accountants.
Consolidated Balance Sheets at September 30, 1997 and 1996.
Consolidated Statements of Operations for the years ended
September 30, 1997, 1996 and 1995.
Consolidated Statements of Changes in Stockholders' Equity for
the years ended September 30, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the three years ended
September 30, 1997, 1996 and 1995.
Notes to the Consolidated Financial Statements.
2. FINANCIAL STATEMENT SCHEDULES.
For the following financial information included herein, see
Index on page F-1:
II - Valuation and Qualifying Accounts.
All other schedules are omitted because
they are not applicable, not required or
because the information is included in the
Consolidated Financial Statements or Notes
to the Consolidated Financial Statements.
3. LIST OF EXHIBITS.
Exhibit
Number Description of Exhibit
------ ----------------------
2.1 Agreement and Plan of Reorganization dated as of October 8,
1993 by and among the Company, PV Merger Corporation and
Vestec Corporation, as amended (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated October 8, 1993,
as amended and incorporated herein by reference).
2.2 Agreement and Plan of Merger by and among the Company, PV
Merger Corporation and Vestec Corporation (filed as Exhibit
2.2 to the Company's Current Report on Form 8-K dated
October 8, 1993, as amended and incorporated herein by
reference).
2.3 Escrow and Exchange Agreement by and among the Company,
Vestec Corporation, Marvin L. Vestal as the representative
of the stockholders of Vestec, American Stock Transfer &
Trust Company and the stockholders of Vestec Corporation
whose names appear on the signature pages thereto (filed as
Exhibit 2.3 to the Company's Current Report on Form 8-K
dated October 8, 1993, as amended and incorporated herein by
reference).
<PAGE>
2.4 Registration Rights Agreement by and among the Company, PV
Merger Corporation and Vestec Corporation (filed as Exhibit
2.4 to the Company's Current Report on Form 8-K dated
October 8, 1993, as amended and incorporated herein by
reference).
2.5 Asset Purchase Agreement dated as of October 15, 1993 by and
between the Company and Advanced Magnetics, Inc. (filed as
Exhibit 2.1 to the Company's Current Report on Form 8-K
dated October 15, 1993, as amended and incorporated herein
by reference).
2.6 Asset Purchase and Sale Agreement dated as of July 14, 1994
by and among the Company, Millipore Corporation and
Millipore Investment Holdings Limited (filed as Exhibit 2.1
to the Company's Current Report on Form 8-K dated August 22,
1994, as amended and incorporated herein by reference).
2.7 Registration Rights Agreement by and among the Company,
Millipore Corporation and Millipore Investment Holdings
Limited dated August 22, 1994 (filed as Exhibit 2.3 to the
Company's Current Report on Form 8-K dated August 22, 1994,
as amended and incorporated herein by reference).
2.8 Registration Rights Agreement by and among the Company,
Alex. Brown & Sons Incorporated and Lehman Brothers Inc.
dated August 26, 1994 (filed as Exhibit 4.2 to the Company's
Registration Statement No. 33-74600 on Form S-3 and
incorporated herein by reference).
2.9 Agreement and Plan of Merger, dated as of November 1, 1995
among the Company, PerSeptive Acquisition Corporation and
PerSeptive Technologies II Corporation (filed as Exhibit
10.26 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1995 and incorporated herein by
reference).
2.10 Amendment No. 1 to Agreement and Plan of Merger, dated
January 29, 1996 among the Company, PerSeptive Acquisition
Corporation and PerSeptive Technologies II Corporation
(filed as Exhibit 2.1 to the Company's Registration
Statement No. 333-1016 on Form S-4 and incorporated herein
by reference).
2.11 Agreement and Plan of Merger dated as of August 23, 1997
among The Perkin-Elmer Corporation, Seven Acquisition Corp.
and PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated August 26, 1997
and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of the
Company (filed as Exhibit 3.2, 4.2 to the Company's
Registration Statement No. 33-46871 on Form S-1 and
incorporated herein by reference).
<PAGE>
3.2 Certificate of Amendment of Restated Certificate of
Incorporation of the Company (filed as Exhibit 4.1 to the
Company's Registration Statement No. 33-80856 on Form S-8
and incorporated herein by reference).
3.3 Amended and Restated By-Laws of the Company (filed as
Exhibit 3.4, 4.4 to the Company's Registration Statement No.
33-46871 on Form S-1 and incorporated herein by reference).
3.4 Certificate of Designations for the Series A Redeemable
Convertible Preferred Stock filed with the Secretary of
State of the State of Delaware on August 19, 1994 (filed as
Exhibit 2.2 to the Company's Current Report on Form 8-K
dated August 22, 1994, as amended, and incorporated herein
by reference).
3.5 Certificate of Amendment of the Amended and Restated
Certificate of Incorporation of the Company filed with the
Secretary of State of the State of Delaware on May 8, 1995
(filed as Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q for the period ended June 30, 1995 and
incorporated herein by reference).
3.6 Certificate of Designations for the Series B Junior
Participating Preferred Stock filed with the Secretary of
State of the State of Delaware on March 2, 1995 (exhibit to
Exhibit 4.9) (filed as Exhibit 3.6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1995
and incorporated herein by reference).
3.7 Amended Certificate of Designation for the Series B Junior
Participating Preferred Stock filed with the Secretary of
State of the State of Delaware on October 24, 1995 (filed as
Exhibit 3.7 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1995 and incorporated herein by
reference).
4.1 Description of Capital Stock contained in the Company's
Amended and Restated Certificate of Incorporation, as
amended, filed as Exhibits 3.1 through 3.7 hereto.
4.2 Form of Class A Warrants for the purchase of the Company's
Common Stock dated as of December 23, 1992 issued to the
stockholders of PTC-I (filed as Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the three-month period
ended March 31, 1993 and incorporated herein by reference).
4.3 Form of Class C Warrants for the purchase of the Company's
Common Stock dated as of March 15, 1993 issued to the
stockholders of PerIsis II (filed as Exhibit 4.3 to the
Company's Report on Form 10-Q for the three-month period
ended March 31, 1993 and incorporated herein by reference).
<PAGE>
4.4 Warrant Agreement relating to the issuance of Class E
Warrants of the Company dated as of December 29, 1993, as
executed (supersedes Exhibit 4.7 to Amendment No. 1 to the
Company's Registration Statement Nos. 33-71812, 33-71814 on
Form S-1/S-3) (filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended
March 31, 1994 and incorporated herein by reference).
4.5 Specimen Class E Warrant Certificate (filed as Exhibit 4.3
to Amendment No. 1 to the Company's Registration Statement
Nos. 33-71812, 33-71814 on Form S-1/S-3 and incorporated
herein by reference).
4.6 Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment
No. 1 to the Company's Registration Statement Nos. 33-71812,
33-71814 on Form S-1/S-3 and incorporated herein by
reference).
4.7 Indenture dated as of August 26, 1994 between the Company
and State Street Bank and Trust Company, as Trustee (filed
as Exhibit 4.9 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1994 and incorporated
herein by reference).
4.8 Rights Agreement, dated as of March 1, 1995, between the
Company and American Stock Transfer & Trust Company, as
amended on September 27, 1995 and August 23, 1997. (filed as
Exhibit 4.8 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1997 and incorporated herein by
reference)
4.9 Warrant Purchase Agreement relating to the issuance of Class
F Warrants (filed as Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1995 and
incorporated herein by reference).
4.10 Form of Class F Warrant (filed as Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the period ended
March 31, 1995 and incorporated herein by reference).
4.11 Warrant Agreement dated as of September 11, 1995 between the
Company and American Stock Transfer & Trust Company relating
to the Class G Warrants (filed as Exhibit 4.1 to the
Company's Current Report on Form 8-K dated as of September
11, 1995 and incorporated herein by reference).
4.12 Specimen of Class G Warrant Certificate (filed as Exhibit
4.2 to the Company's Current Report on Form 8-K dated as of
September 11, 1995 and incorporated herein by reference).
4.13 Form of Amendment to Class C Warrants (filed as Exhibit 4.15
to the Company's Annual Report on Form 10-K for the year
ended September 30, 1995 and incorporated herein by
reference).
4.14 Class H Warrant dated as of September 1, 1995 (filed as
Exhibit 4.19 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1995 and incorporated herein by
reference).
<PAGE>
4.15 Amendment No. 1, dated as of September 27, 1995, to the
Rights Agreement, dated as of March 1, 1995, between the
Company and American Stock Transfer & Trust Company (filed
as Exhibit 4.20 to the Company's Annual Report on Form 10-K
for the year ended September 30, 1995 and incorporated
herein by reference).
4.16 Form of Warrant Agreement between the Company and American
Stock Transfer & Trust Company relating to the Company's
Class I Warrants (filed as Exhibit 4.7 to the Company's
Registration Statement No. 333-1016 on Form S-4 and
incorporated herein by reference).
4.17 Specimen of Class I Warrant Certificate (filed as Exhibit
4.8 to the Company's Registration Statement No. 333-1016 on
Form S-4 and incorporated herein by reference).
4.18 Stock Option Agreement dated August 23, 1997 between
PerSeptive Biosystems, Inc. and The Perkin-Elmer Corporation
(filed as Exhibit 4.1 to the Company's Current Report on
Form 8-K dated as of August 26, 1997 and incorporated by
reference herein).
10.1+ 1989 Stock Plan (filed as Exhibit 10.1 to the Company's
Registration Statement No. 33-46871 on Form S-1 and
incorporated herein by reference).
10.2+ 1992 Stock Plan of the Company, as amended on January 20,
1997 (filed as Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the Quarterly Period ended March 29, 1997
and incorporated herein by reference).
10.3+ 1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to
the Company's Registration Statement No. 33-46871 on Form S-
1 and incorporated herein by reference).
10.4+ 1992 Non-Employee Director Stock Option Plan, as amended on
March 11, 1996 (filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the Quarterly Period ended
March 31, 1996 and incorporated herein by reference).
10.5 Consulting Agreement with Dr. Fred E. Regnier dated June 1,
1988 (filed as Exhibit 10.7 to the Company's Registration
Statement No. 33-46871 on Form S-1 and incorporated herein
by reference).
10.6 License Agreement with Purdue Research Foundation dated as
of June 16, 1990 (filed as Exhibit 10.8 to the Company's
Registration Statement No. 33-46871 on Form S-1 and
incorporated herein by reference).
10.7 Sublease Agreement with the Massachusetts Institute of
Technology dated October 1, 1990 (filed as Exhibit 10.10 to
the Company's Registration Statement No. 33-46871 on Form S-
1 and incorporated herein by reference).
<PAGE>
10.8 Form of Indemnity Agreement with directors and officers
(filed as Exhibit 10.15 to the Company's Registration
Statement No. 33-46871 on Form S-1 and incorporated herein
by reference).
10.9 Product License and Supply Agreement between Millipore
Corporation and the Company granting the Company an
exclusive worldwide royalty free license within the Life
Science market to use certain patented technology to process
membrane products and to carry out certain processes useful
to DNA synthesis operations and providing for the supply of
membrane products (filed as Exhibit 10.24 to the Company's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994 and incorporated herein by reference).
10.10 OEM Purchase and Supply Agreement between BioSearch, Inc.
and the Waters Chromatography Division of Millipore
Corporation with respect to the supply of certain high
performance liquid chromatography components, machined parts
and other materials to BioSearch, Inc. (filed as Exhibit
10.25 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein
by reference).
10.11 Assignment of Settlement Agreement between Millipore
Corporation, University Patents, Inc. and Applied
Biosystems, Inc. ("ABI") involving cross license of certain
patents, granting ABI a license under U.S. Patent No.
4,725,677, "Process for the Preparation of Oligonucleotides"
and Millipore a license under U.S. Patent Nos. 4,458,066 and
4,415,732 (filed as Exhibit 10.26 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1994 and incorporated herein by reference).
10.12 License Agreement dated January 23, 1991 between the
University of Minnesota and Millipore Corporation granting
Millipore an exclusive worldwide license to make, use and
sell products under U.S. Patent Nos. 5,235,028, 5,196,566
and 5,117,009 and related pending applications covering
support structures for peptide synthesis operations (filed
as Exhibit 10.27 to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 and
incorporated herein by reference).
10.13 License Agreement dated January 1, 1988 between Hoffman-La
Roche Inc. and Millipore Corporation granting Millipore a
non-exclusive license to make, use and sell so-called FMOC
chemistries on laboratory instruments (filed as Exhibit
10.28 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein
by reference).
10.14 License Agreement dated March 9, 1992 between Novabiochem AG
and Millipore Corporation granting Millipore a non-exclusive
license to make, use and sell instruments for the monitoring
of certain peptide reactions related to the synthesis of
peptides (filed as Exhibit 10.29 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30,
1994 and incorporated herein by reference).
<PAGE>
10.15 License Agreement dated December 17, 1991 between Ole
Burkhardt, Peter E. Nielsen, Rolf H. Berg, Michael Egholm
and Millipore Corporation granting an exclusive, worldwide
license Danish Patent Application No. 0986/91
"Oligonucleotide Analogs Termed PNA" and corresponding
international counterparts (filed as Exhibit 10.30 to the
Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994 and incorporated herein by
reference).
10.16 Lease Agreement between the Company and the Massachusetts
Institute of Technology dated March 19, 1993 for space
located at 12 Emily Street, Cambridge, Massachusetts (filed
as Exhibit 10.31 to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 and
incorporated herein by reference).
10.17 Lease Agreement between the Company and 500 Old Connecticut
Path Limited Partnership for space located at 500 Old
Connecticut Path, Framingham, Massachusetts (filed as
Exhibit 10.32 to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994 and
incorporated herein by reference).
10.18 Master Lease Agreement between the Company and Hambrecht &
Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1995 and incorporated herein
by reference).
10.19 Security Agreement between the Company and Hambrecht & Quist
Guaranty Finance, L.P. dated March 31, 1995 (filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the period ended March 31, 1995 and incorporated herein
by reference).
10.20 Stipulation and Compromise of Settlement dated as of June
14, 1995 relating to the action entitled In re: PerSeptive
Biosystems, Inc. Securities Litigation, Civ. Action No. 94-
12575(PBS), brought in the U.S. District Court for the
District of Massachusetts (filed as Exhibit 10.1 to the
Company's Current Report on Form 8-K dated as of September
11, 1995 and incorporated herein by reference).
10.21 Credit Agreements between the Company's subsidiary
PerSeptive Biosystems GmbH - Hamburg (formerly, "BioSearch
GmbH") IKB Deutsche Industriebank and Dresdner Bank (filed
as Exhibit 10.27 to Form 10K/A Amendment No. 1 to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1995 and incorporated herein by reference).
10.22 Master Agreement, dated as of May 7, 1996, between the
Company and ChemGenics Pharmaceuticals a d/b/a of Myco
Pharmaceuticals Inc. (filed as Exhibit 2 to the Company's
Current Report on Form 8-K dated as of June 28, 1996 and
incorporated herein by reference).
<PAGE>
10.23 Omnibus Amendment Agreement dated December 18, 1996 between
the Company and ChemGenics Pharmaceuticals, Inc.
10.24 1997 Non-Qualified Stock Option Plan, as amended (filed as
Exhibit 4.1 to the Company's Registration Statement No. 333-
38989, on Form S-8 and incorporated herein by reference).
10.25+ Employment Agreement dated as of January 17, 1997 between
PerSeptive Biosystems, Inc. and John F. Smith (filed as
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
for the period ended June 28, 1997 and incorporated by
reference herein).
10.26+ Employment Agreement dated as of January 17, 1997 between
PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
for the period ended June 28, 1997 and incorporated by
reference herein).
21 Subsidiaries of the Company. (filed as Exhibit 21 to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1997 and incorporated herein by reference)
23.1* Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included in the signature page to the
Company's Annual Report on Form 10-K for the year ended
September 30, 1997).
________________________________
*Indicates exhibits filed herewith. All other exhibits have been
previously filed unless otherwise indicated.
+Indicates a management contract or compensatory plan or arrangement.
(B) REPORTS ON FORM 8-K.
Current Report on Form 8-K dated April 16, 1997, reporting under Item 5,
the Company's announcement that the Company had filed a motion to permit an
immediate appeal of an April 3, 1997 decision of the United States District
Court for the District of Massachusetts (C.A. No. 93-12237-PBS) denying the
Company's motion to correct inventorship of three U.S. patents issued to
the Company, Nos. 5,019,270, 5,228,989 and 5,384,042, covering the
Perfusion Chromatography (R) process and particles and matrix structures
used in that process.
Current Report on Form 8-K dated August 22, 1997, reporting the Company's
announcement that the Company issued 1,019,108 shares of its common stock,
$.01 par value per share, to Millipore Corporation in payment of the third
$10 million installment due upon the redemption by Millipore Corporation of
1,000 shares of the Company's non-voting Series A Redeemable Convertible
Preferred Stock, $.01 par value per share.
Current Report on Form 8-K dated August 26, 1997, reporting that the
Company, The Perkin-Elmer Corporation, and Seven Acquisition Corp., a
wholly owned subsidiary of Perkin-Elmer had entered into an Agreement and
Plan of Merger.
(C) EXHIBITS.
The Company hereby files as exhibits to this Annual Report on Form 10-K
those exhibits listed in Item 14(a)(3), above and denoted with an asterisk.
(d) FINANCIAL STATEMENT SCHEDULES.
The Company hereby files as financial statement schedules to this Annual
Report on Form 10-K those financial statement schedules listed in Item
14(a)(2), above, which are attached hereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment to the Annual
Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly
authorized, in the Town of Framingham, Commonwealth of Massachusetts, on the 6th
day of January, 1998.
PERSEPTIVE BIOSYSTEMS, INC.
By: /s/ Noubar B. Afeyan
-------------------------------
Noubar B. Afeyan
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Noubar B. Afeyan Chief Executive Officer January 6, 1998
- ------------------------ (Principal Executive
Noubar B. Afeyan Officer), Director and
Chairman of the Board of
Directors
* President and Director January 6, 1998
- ------------------------
John F. Smith
* Senior Vice President January 6, 1998
- ------------------------ and Chief Financial
Thomas G. Ruane Officer (Principal Financial
and Accounting Officer)
* Director January 6, 1998
- ------------------------
Daniel I.C. Wang
<PAGE>
* Director January 6, 1998
- ------------------------
Edwin M. Kania, Jr.
* Director January 6, 1998
- ------------------------
William F. Pounds
* Director January 6, 1998
- ------------------------
Bruce J. Ryan
* By: /s/ Noubar B. Afeyan
------------------------
Noubar B. Afeyan
Attorney-in-fact
<PAGE>
PERSEPTIVE BIOSYSTEMS, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants................................................ F-2
Consolidated Balance Sheets at September 30, 1997 and 1996....................... F-3
Consolidated Statements of Operations for the years ended
September 30, 1997, 1996 and 1995............................................... F-4
Consolidated Statements of Changes in Stockholders' Equity for the years ended
September 30, 1997, 1996 and 1995............................................... F-5
Consolidated Statements of Cash Flows for the years ended
September 30, 1997, 1996 and 1995............................................... F-8
Notes to the Consolidated Financial Statements................................... F-9
Financial Statement Schedules:
Report of Independent Accountants................................................ S-1
II - Valuation and Qualifying Accounts......................................... S-2
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
of PerSeptive Biosystems, Inc.:
We have audited the accompanying consolidated balance sheets of PerSeptive
Biosystems, Inc., as of September 30, 1997 and 1996 and the related consolidated
statements of operations, cash flows and stockholders' equity for each of the
three years in the period ended September 30, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of PerSeptive
Biosystems, Inc. as of September 30, 1997 and 1996 and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended September 30, 1997, in conformity with generally accepted
accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 1, 1997
F-2
<PAGE>
<TABLE>
<CAPTION>
PerSeptive Biosystems, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
September 30, September 30,
1997 1996
-------------- --------------
<S> <C> <C>
Assets:
Current Assets:
Cash and cash equivalents 18,283 5,384
Short-term investments, available for sale 16,646 19,273
Trade accounts receivable, net of allowance for doubtful accounts
of $1,963 and $2,386 at September 30, 1997 and 1996, respective 20,814 16,052
Inventories, net 22,602 21,074
Other current assets 3,600 2,107
----------- ------------
Total current assets 81,945 63,890
Fixed assets, net 27,626 32,017
Patent and license costs, net 5,458 5,913
Goodwill, net 17,478 18,518
Other long-term assets 1,444 1,317
----------- ------------
Total assets 133,951 121,655
=========== ============
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable 13,484 9,292
Accrued expenses 10,583 18,699
Current portion of deferred revenue 2,271 1,158
Short-term borrowing 5,055 5,032
Current portion of obligations and other current liabilities 8,004 3,137
----------- ------------
Total current liabilities 39,397 37,318
Long-term liabilities:
Convertible subordinated notes 20,423 27,230
Long-term debt 5,130 5,574
Capital lease obligations, less current portion 281 361
Deferred revenue and other liabilities 1,322 887
----------- ------------
Total long-term liabilities 27,156 34,052
Commitments & contingencies (Note 12)
Stockholders' equity:
Redeemable convertible preferred stock, $10 par value; 4000 shares
authorized; 1,000 and 2,000 issued and outstanding at
September 30, 1997 and 1996, respectively; redemption value
$10,000 and $20,000 at September 30, 1997 and 1996, respective 9,480 18,053
Common stock, $.01 par value; 100,000,000 shares authorized;
22,649,980 and 21,315,456 shares issued and outstanding
at September 30, 1997 and 1996, respectively 226 213
Additional paid-in-capital 170,669 158,556
Accumulated deficit (111,278) (125,094)
----------- ------------
69,097 51,728
Cumulative translation adjustment (4,785) (1,373)
Unrealized gain (loss) on investments 3,086 (70)
----------- ------------
Total stockholders' equity 67,398 50,285
----------- ------------
Total liabilities and stockholders' equity 133,951 121,655
=========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
PerSeptive Biosystems, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
Year ended September 30,
-----------------------------------
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Revenue:
Product revenue $96,516 $75,916 $69,430
Contract revenue 10,102 19,999
------- ------- -------
96,516 86,018 89,429
------- ------- -------
Cost of goods sold:
Cost of product revenue 49,815 37,813 33,169
Cost of contract revenue 8,571 16,968
Other charges 9,906 -
------- ------- -------
49,815 56,290 50,137
------- ------- -------
Gross profit 46,701 29,728 39,292
Operating expenses:
Research and development 15,215 11,342 6,999
Selling, general and administrative 40,425 39,518 32,771
Other charges 24,239 15,459
Amortization 1,041 2,158 3,080
------- ------- -------
56,681 77,257 58,309
------- ------- -------
Loss from operations (9,980) (47,529) (19,017)
------- ------- -------
Other income (expense):
Interest income $ 648 $ 482 $ 1,209
Interest expense (3,534) (3,473) (2,958)
Other income, net 28,109 53 196
------- ------- -------
Net Income (Loss) $15,243 ($50,467) ($20,570)
======= ======= =======
Net income (loss) per common share, primary $ 0.63 ($3.22) ($1.88)
======= ======= =======
Net income per common share, fully diluted $ 0.60
=======
Weighted average common and common equivalent
shares outstanding, primary 21,905 16,296 12,340
======= ======= =======
Weighted average common and common equivalent
shares outstanding, fully diluted 25,552
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PerSeptive Biosystems, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the Three Years in the Period Ended September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Redeemable
Convertible
Preferred Stock Common Stock
Shares Par Value Shares Par Value
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Balance at September 30, 1994 - - 12,097 $120
Modification of warrants in connection with the
acquisition of PerIsis II
Issuance of warrants pursuant to shareholder
litigation settlement
Issuance of common stock pursuant to shareholder
litigation settlement 494 5
Reclassification of redeemable preferred stock pursuant
to the acquisition of the synthesis products business 3,000 $25,709
Conversion of preferred stock into common stock 912 9
Sale of common stock pursuant to stock
purchase agreement 158 2
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 249 4
Accretion on redeemable convertible preferred stock 283
Cumulative translation adjustment
Amortization of deferred compensation
Net loss
---------- ---------- ---------- ----------
Balance at September 30, 1995 3,000 25,992 13,910 140
Issuance of contengent consideration relating to the
acquisition of AMI 373 4
Issuance of common stock pursuant to the
acquisition of PTC II 2,640 26
Issuance of common stock, through a private placement,
net of issuance costs 2,579 26
Conversion of warrants into common stock 331 3
Conversion of preferred stock into common stock (1,000) (10,000) 1,248 12
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 235 2
Accretion on redeemable convertible preferred stock 2,061
Cumulative translation adjustment
Unrealized gain (loss) on investments
Amortization of deferred compensation
Net loss
---------- ---------- ---------- ----------
Balance at September 30, 1996 2,000 18,053 21,316 213
Conversion of preferred stock into common stock (1,000) (10,000) 1,019 10
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 315 3
Accretion on redeemable convertible preferred stock 1,427
Cumulative translation adjustment
Unrealized gain on investments
Net Income
========== ========== ========== ==========
Balance at September 30, 1997 1,000 $9,480 22,650 $226
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
Perspective Biosystems, Inc.
Consolidated Statement of Changes in Stockholders'
For the Three Years in the Period Ended September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Additional Cumulative
Paid-in Accumulated Translation
Capital Deficit Adjustment
---------- ----------- -----------
<S> <C> <C> <C>
Balance at September 30, 1994 $ 89,743 $ (49,346)
Modification of warrants in connection with the
acquisition of PerIsis II 1,870
Issuance of warrants pursuant to shareholder
litigation settlement 2,000
Issuance of common stock pursuant to shareholder
litigation settlement 5,071
Reclassification of redeemable preferred stock pursuant
to the acquisition of the synthesis products business 3,000
Conversion of preferred stock into common stock 9,991
Sale of common stock pursuant to stock
purchase agreement 1,998
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 699
Accretion on redeemable convertible preferred stock (2,650)
Cumulative translation adjustment 225
Amortization of deferred compensation
Net loss (20,570)
-------- ---------- --------
Balance at September 30, 1995 111,372 (72,566) 225
Issuance of contengent consideration relating to the
acquisition of AMI 3,461
Issuance of common stock pursuant to the
acquisition of PTC II 15,534
Issuance of common stock, through a private placement,
net of issuance costs 16,822
Conversion of warrants into common stock
Conversion of preferred stock into common stock 9,988
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 1,379
Accretion on redeemable convertible preferred stock (2,061)
Cumulative translation adjustment (1,598)
Unrealized loss on investments
Amortization of deferred compensation
Net loss (50,467)
-------- ---------- --------
Balance at September 30, 1996 158,556 (125,094) (1,373)
Conversion of preferred stock into common stock 9,990
Sale of common stock pursuant to employee stock
purchase plan and exercise of stock options and warrants 2,123
Accretion on redeemable convertible preferred stock (1,427)
Cumulative translation adjustment (3,412)
Unrealized gain on investments
Net Income 15,243
-------- --------- --------
Balance at September 30, 1997 $170,669 $(111,278) $ (4,785)
======== ========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PerSeptive Biosystems, Inc.
Consolidated Statement of Changes in Stockholders'
For the Three Years in the Period Ended September 30, 1997
(in thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (Loss) on Deferred Total
Investments Compensation Equity
----------- ------------ ------------
<S> <C> <C> <C>
Balance at September 30, 1994 ($168) $40,349
Modification of warrants in connection with the acquisition of
PerIsis II 1,870
Issuance of warrants pursuant to shareholder litigation settlement 2,000
Issuance of common stock pursuant to shareholder litigation
settlement 5,076
Reclassification of redeemable preferred stock pursuant to the
acquisition of the synthesis products business 25,709
Conversion of preferred stock into common stock 10,000
Sale of common stock pursuant to stock purchase agreement 2,000
Sale of common stock pursuant to employee stock purchase plan
and exercise of stock options and warrants 703
Accretion on redeemable convertible preferred stock (2,367)
Cumulative translation adjustment 225
Amortization of deferred compensation 112 112
Net loss (20,570)
----------- ------------ ------------
Balance at September 30, 1995 (56) 65,107
Issuance of contengent consideration relating to the acquisition of
AMI 3,465
Issuance of common stock pursuant to the acquisition of PTC II 15,560
Issuance of common stock, through a private placement, net of
issuance costs 16,848
Conversion of warrants into common stock 3
Conversion of preferred stock into common stock -
Sale of common stock pursuant to employee stock purchase plan
and exercise of stock options and warrants 1,381
Accretion on redeemable convertible preferred stock -
Cumulative translation adjustment (1,598)
Unrealized loss on investments (70) (70)
Amortization of deferred compensation 56 56
Net loss (50,467)
----------- ------------ ------------
Balance at September 30, 1996 (70) - 50,285
Conversion of preferred stock into common stock
Sale of common stock pursuant to employee stock purchase plan
and exercise of stock options and warrants 2,126
Accretion on redeemable convertible preferred stock -
Cumulative translation adjustment (3,412)
Unrealized gain on investments 3,156 3,156
Net Income 15,243
--------------------------------------
Balance at September 30, 1997 $3,086 $67,398
======================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-7
<PAGE>
<TABLE>
<CAPTION>
PerSeptive Biosystems, Inc.
Consolidated Statements of Cash Flows
(in thousands)
Year ended September 30,
-------------------------------------------------------
1997 1996 1995
----------- -------------- ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 15,243 ($ 50,467) ($ 20,570)
Adjustments to reconcile net loss to net cash
used in operating activities, net of acquired amounts:
Depreciation and amortization 7,862 10,530 11,009
Gain on ChemGenics exchange (27,481)
Bad debt expense - 1,275 438
Non-cash portion of other charges - 33,073 8,946
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (5,788) 220 (6,589)
(Increase) decrease in inventories (2,690) (5,263) 3,059
(Increase) decrease in other assets (1,621) 388 (651)
Increase (decrease) in accounts payable 4,192 (59) (2,979)
(Decrease) increase in accrued expenses (8,116) (6,935) 2,592
Increase (decrease) in other liabilities 1,548 (2,488) 571
----------- ------------- -----------
Net cash (used in) operating activities (16,851) (19,726) (4,174)
----------- ------------- -----------
Cash flows from investing activities:
Purchase of fixed assets, net (3,483) (10,725) (21,328)
Cash and securities available-for-sale acquired from PTC II - 11,851
Proceeds from ChemGenics notes and warrants 4,000
Purchase of securities available-for-sale - (88,498) (53,156)
Proceeds from sale and maturities of securities available-for-sale 29,263 80,756 71,615
Increase in patents and licenses - (27) (1,442)
----------- ------------- -----------
Net cash provided by (used in) investing activities 29,780 (6,643) (4,311)
----------- ------------- -----------
Cash flows from financing activities:
Proceeds from capital lease financing - 373 5,000
Principal payments under capital lease obligations (2,019) (2,173) (687)
Net proceeds from facility financing - 2,404 3,170
Payment of finance costs - (225) (254)
Net proceeds from short-term borrowing 320 1,089 3,943
Proceeds from issuance of common stock 2,126 18,298 2,706
----------- ------------- -----------
Net cash provided by financing activities 427 19,766 13,878
----------- ------------- -----------
Effect of exchange rate changes on cash and cash equivalents (457) (228) 222
----------- ------------- -----------
Increase (decrease) in cash and cash equivalents 12,899 (6,831) 5,615
Cash and cash equivalents at beginning of year 5,384 12,215 6,600
----------- ------------- -----------
Cash and cash equivalents at end of year $ 18,283 $ 5,384 $ 12,215
=========== ============= ===========
Supplemental disclosure of cash flow information:
Interest paid $ 3,284 $ 3,259 $ 1,203
Supplemental disclosure of non-cash activities:
Accretion of Series A Preferred Stock $ 1,427 $ 2,061 $ 2,650
Issuance of stock in exchange for redemption of
Series A Preferred Stock 10,000 10,000 10,000
Stock and warrants issued in connection with acquisition of PTC II,
net of warrants exchanged - 15,592 -
Issuance of stock and warrants pursuant to shareholder
litigation settle - 7,076
Stock issued in connection with acquisition of Perlsis II - 1,870
Stock issued to AMI in exchange for remaining acquisition costs - 3,423 -
Value of Millennium stock received, net of stock sold 10,575
Value of Millennium stock unrealized Gain 3,108
</TABLE>
The accompanying notes are an integral part of these financial statements
F-8
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Organization
PerSeptive Biosystems, Inc. (the "Company") develops, manufactures, and markets
proprietary products and systems for the purification, analysis and synthesis of
biomolecules.
Pending Merger with Perkin-Elmer Corporation.
On August 27, 1997, The Perkin-Elmer Corporation ("Perkin-Elmer"), Seven
Acquisition Corp., a wholly-owned subsidiary of Perkin-Elmer, and PerSeptive
entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant
to the Merger Agreement, all outstanding shares of PerSeptive common stock, $.01
par value per share (the "PerSeptive Common Stock"), will be converted into
shares of Perkin-Elmer common stock, $1.00 par value per share (the "Perkin-
Elmer Common Stock"), at the exchange rate equal to $13.00 divided by the
average of the closing sales prices of Perkin-Elmer Common Stock on the New York
Stock Exchange composite tape on each of the 20 consecutive trading days
preceding the second trading day prior to the effective date of the merger. In
no event, however, will the exchange rate be more than 0.1926, or less than
0.1486, of a share of Perkin-Elmer Common Stock for each share of PerSeptive
Common Stock. At the effective time of the merger, PerSeptive will become a
wholly-owned subsidiary of Perkin-Elmer. On December 4, 1997, the proposed
merger was approved by PerSeptive's stockholders. The completion of the merger
is subject to regulatory approvals and other closing conditions. There can be no
assurance that the proposed merger will be completed. None of the financial
statements reflect the effects of the proposed transaction. Either party has the
right to terminate the merger agreement if the merger is not consummated on or
before January 31, 1998, unless the parties agree to extend that date on or
before January 31, 1998. The Company has incurred costs of $878,000 through
September 30, 1997 in connection with the merger, which costs have been deferred
until the closing of the merger.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All intercompany balances and transactions have
been eliminated.
Revenue Recognition
The Company recognizes revenue upon shipment of its products to the customer.
Significant future obligations, such as satisfaction of subjective or more than
perfunctory customer-mandated performance criteria, and sales-related
contingencies, such as unilateral rights to return product, delay revenue
recognition until the obligation is satisfied or the contingency is resolved.
Cost of insignificant obligations are accrued when revenue is recognized.
The Company recognizes revenue from research contracts as the related costs are
incurred on a cost-plus basis and from development contracts using the
percentage of completion method.
Foreign Currency
Effective July 1, 1995, the Company changed the functional currency designation
of its foreign subsidiaries from the U.S. dollar to the local currency of its
subsidiaries. The change was based on significant changes in the nature of the
Company's foreign operations. Accordingly, the Company's foreign subsidiaries
translate assets and liabilities at year-end exchange rates and capital accounts
at historical exchanges rates. Income and expense accounts are translated at
the average exchange rates in effect during the year. The resulting translation
gains and losses are
F-9
<PAGE>
reported as a separate component of stockholders' equity.
The functional currency designation in the first three quarters of 1995 and in
previous years' financial statements was the U.S. dollar. Monetary assets and
liabilities were translated at year-end exchange rates, while nonmonetary items
were translated at historical exchange rates. Income and expense accounts were
translated at the average exchange rates in effect during the year, except for
depreciation, amortization, and cost of revenue which were translated at
historical rates. Gains and losses from changes in exchange rates were
recognized in the statement of operations. Translation gains and losses prior
to the change in functional currency designation were not material. Transaction
gains and losses which are immaterial, are included in other income.
Cash and Cash Equivalents
Cash equivalents consist of investments in money market funds, short term
government securities and highly liquid commercial paper of companies in varied
industries. Accordingly, these investments are subject to minimal credit and
market risk. The Company considers investments with an original maturity of
three months or less, at date of acquisition, to be cash equivalents.
Investments
The Company invests in high credit quality, interest-bearing instruments,
primarily government and corporate debt securities and Millennium
Pharmaceuticals Inc. common stock. (See Concentrations of Credit and Market
Risk, below)
Investments that mature within one year or that are expected to be sold within
the year to meet cash-flow requirements are classified as current assets. All
other investments are classified as long-term assets and are recorded at market
value, while securities classified as held-to-maturity are recorded at amortized
cost. Unrealized gains and losses on available-for-sale securities are reported
as a separate component of stockholders' equity. At September 30, 1997 and
1996, all of the Company's investments are classified as available-for-sale.
Investment income consists primarily of interest income, net realized gains and
losses from the sale of securities, and the amortization of premiums and
discounts. The cost of securities sold is based on the specific identification
method.
Inventories
Inventories are stated at the lower of cost or market with cost being determined
on the first-in, first-out basis (FIFO).
Fixed Assets
Fixed assets are recorded at cost and are depreciated over their estimated
useful lives on a straight-line basis. Leasehold improvements are depreciated
over their estimated useful lives or the terms of the lease, if shorter. Upon
retirement or other disposition of fixed assets the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or loss is
reflected in income. Additions, renewals and betterments are capitalized.
Expenditures for maintenance and repairs are charged to expense as incurred.
Intangible Assets
Organization costs are amortized on a straight-line basis over a five year
period. Costs associated with patents and the licensing of patents are
capitalized as incurred and amortized on a straight-line basis over the shorter
of the legal term or the estimated economic life of the
F-10
<PAGE>
patent. Purchase options, consisting of the value ascribed to the options to
acquire the callable stock of certain research and development corporations,
were amortized over the term of the option. All purchase options outstanding at
September 30, 1995 were exercised during fiscal year 1996 in connection with the
acquisition of PTC-II. Goodwill is amortized on a straight-line basis over 20
years. Intangible assets are shown net of accumulated amortization of $5,744,000
and $5,174,000 at September 30, 1997 and 1996, respectively. Amortization
expense for intangible assets amounted to $1,752,000, $3,022,000 and $3,993,000
in fiscal year 1997, 1996 and 1995, respectively.
Deferred Financing Costs
Deferred financing costs, which consist of the costs associated with the
issuance of convertible subordinated notes, and obtaining other sources of
financing, are deferred and amortized on a straight-line basis, which
approximates the effective interest method, over the term of the debt.
Income Taxes
The Company accounts for income taxes on the liability method, which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of temporary differences between the carrying amounts and the
tax bases of assets and liabilities, measured using the enacted tax rates to be
in effect when those differences reverse net of any required valuation
allowance.
Product Warranty
The Company provides customers with up to a one year warranty from the date of
installation. Estimated warranty obligations, which are included in the results
of operations, are evaluated and provided for at the time of sale. Product
warranty costs were not significant.
Long-Lived Assets
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. An impairment loss is
recognized if the sum of the estimated future cash flows expected to result from
use of the asset is less than the carrying amount of the asset. In 1996, the
Company compared the estimated future cash flows expected to result from
previous acquisitions and noted that the cash flows were greater than the
respective net goodwill amounts associated with those acquisitions, except for
the goodwill associated with the fiscal 1994 acquisition of the In Vitro
Division of Advanced Magnetics, Inc. which was written off during the fourth
quarter of fiscal 1996 (Note 13).
Concentrations of Credit and Market Risk
Financial instruments which subject the Company to concentrations of credit risk
consist primarily of accounts receivable, cash equivalents and investments. The
Company is subject to significant market risk through its investment in
Millennium stock (see Note 3).
In the normal course of business, the Company extends credit, on open accounts,
to its customers after credit and business analysis. The Company performs on-
going credit evaluation of its customers, does not require collateral and
maintains a reserve for potential credit losses. Historically, the Company has
not experienced significant losses related to its accounts receivables.
In addition, the Company has certain receivables, payables, borrowings and other
assets and liabilities denominated in foreign currencies, which are not hedged
and therefore are subject to
F-11
<PAGE>
exchange rate fluctuations. To date, the Company has not incurred significant
losses as a result of currency fluctuations.
Net Income (Loss) Per Share
Net income per share applicable to common shareholders is determined by dividing
net income, including accretion on preferred stock, by the weighted average
number of common and common equivalent shares outstanding during the period.
Net loss per share applicable to common shareholders is determined by dividing
net loss, including accretion on preferred stock, by the weighted average common
shares outstanding during the period. Common stock equivalents, consisting of
options, warrants, contingently issuable shares and shares held in escrow, are
included in the per share calculations, where the effect of their inclusion
would have been dilutive. Fully diluted earnings per share is calculated under
the if converted method which includes preferred stock as if it had been
converted to common stock at the beginning of the period. Under the if
converted method, accretion is not considered in the calculation of fully
diluted earnings per share." Net income (loss) (in thousands) and net income
(loss) per common share after preferred stock accretion for the year ended
September 30, 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Year ended September 30,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) before preferred stock $15,243 ($50,467) ($20,570)
accretion
Accretion of redeemable preferred stock (1,427) (2,061) (2,650)
------- -------- --------
Net income (loss) after preferred stock
accretion 13,816 ($52,528) ($23,220)
======= ======== ========
Net income (loss) per common share after
preferred stock accretion, primary $0.63 ($3.22) ($1.88)
======= ======== ========
Net income per common share, fully diluted $0.60
=======
Weighted average common and common equivalent
shares outstanding, primary 21,905 16,296 12,340
======= ======== ========
Weighted average common and common equivalent
shares outstanding, fully diluted 25,552
=======
</TABLE>
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years
ended after December 15, 1997, including interim periods. SFAS 128 requires the
presentation of basic and diluted earnings per share ("EPS"). Basic EPS, which
replaces primary EPS, excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Diluted EPS is computed
similarly to fully diluted EPS under the existing rules. SFAS 128 requires
restatement of all prior-period earnings per share data presented after the
effective date. The Company will adopt SFAS 128 in its fiscal year ended
September 30, 1998 and does not
F-12
<PAGE>
anticipate adoption to have a material effect on the financial statements.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income", which is effective for fiscal years ended after December 15, 1997,
including interim periods. SFAS 130 requires the presentation of comprehensive
income and its components. Comprehensive income presents a measure of all
changes in equity that result from recognized transactions and other economic
events of the period other than transactions with owners. SFAS 130 requires
restatement of all prior-period statements presented after the effective date.
The Company will adopt SFAS 130 in its fiscal year ended September 30, 1998 and
has not yet determined the impact of such adoption.
In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments
of an Enterprise and Related Information" which is effective for fiscal years
ended after December 15, 1997. The interim reporting disclosures are not
required in the first year of adoption. SFAS 131 specifies revised guidelines
for determining an entity's operating segments and the type and level of
financial information to be disclosed. SFAS 131 changes current practice under
SFAS 14 by establishing a new framework on which to base segment reporting. The
"management" approach expands the required disclosures for each segment. The
Company will adopt SFAS 131 in its fiscal year ended September 30, 1998 and has
not yet determined the impact of such adoption.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. INVESTMENTS
As of September 30, 1997 all securities available-for-sale are stated at market
value. These securities consist of U.S. Government and U.S. Government Agency
debt securities and Millennium Pharmaceuticals Inc. Common Stock and are
included in current assets based on the securities' maturity dates and the
Company's expected utilization of the securities.
The estimated fair value of investments available for sale, by contractual
maturity, at September 30, 1997 is as follows (in thousands):
Common Stock $13,678
Due in one year or less 2,968
-------
$16,646
=======
The Common Stock value shown above includes unrealized gain (in thousands) of
$3,108.
Securities and cash equivalents with an estimated fair market value of
approximately $5,500,000 at September 30, 1997 and 1996 are pledged as
collateral to secure short-term borrowings.
4. INVENTORIES
Inventories consist of the following (in thousands):
F-13
<PAGE>
<TABLE>
<CAPTION>
September 30,
1997 1996
-------- --------
<S> <C> <C>
Raw materials $ 9,450 $ 7,368
Work in progress 2,338 2,751
Finished goods 10,814 10,955
------- -------
$22,602 $21,074
======= =======
</TABLE>
5. FIXED ASSETS
Fixed assets consist of the following (in thousands):
<TABLE>
<CAPTION>
Estimated September 30,
useful life (years) 1997 1996
------------------ ------- --------
<S> <C> <C> <C>
Land $ 1,296 $ 1,496
Building 20 8,096 9,084
Construction in progress 488 917
Demonstration equipment 3 4,520 4,317
Laboratory equipment 3-10 7,681 10,762
Computer and office equipment 3-7 5,969 4,814
Production equipment 3-10 6,051 4,970
Leasehold improvements 5 9,992 9,789
-------- --------
44,093 46,149
Accumulated depreciation and
amortization (16,467) (14,132)
-------- --------
$ 27,626 $ 32,017
======== ========
</TABLE>
Depreciation and amortization expense amounted to $6,366,000, $7,508,000, and
$6,851,000 in fiscal years 1997, 1996, and 1995, respectively.
At September 30, 1997 and 1996, laboratory, computer and office equipment under
capital leases included in fixed assets amounted to approximately $1,553,000 and
$5,891,000 respectively. Accumulated amortization related to assets under
capital leases was approximately $670,000 and $2,731,000 at September 30, 1997
and 1996, respectively, and is included in accumulated depreciation and
amortization. Fixed assets under capital leases are depreciated over the
shorter of the term of the lease or the useful life of the asset.
6. ACCRUED EXPENSES
Accrued expenses consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30,
1997 1996
-------- ---------
<S> <C> <C>
Accrued professional fees $ 1,976 $ 5,041
Accrued transaction fees and purchase
accounting costs 378 1,732
Accrued warranty costs 1,088 1,297
Accrued wages and commissions 3,402 2,807
Other accrued expenses 3,739 7,822
------- -------
$10,583 $18,699
======= =======
</TABLE>
F-14
<PAGE>
7. INCOME TAXES
Pre-tax loss incurred under the following jurisdictions (in thousands):
<TABLE>
<CAPTION>
Year ended September 30,
1997 1996 1995
------- --------- --------
<S> <C> <C> <C>
Income (Loss) before income taxes:
Domestic $22,361 $(44,777) $(21,781)
Foreign (7,118) (5,690) 1,211
------- -------- --------
$15,243 $(50,467) $(20,570)
======= ======== ========
</TABLE>
The provision for income taxes was as follows (in thousands):
<TABLE>
<CAPTION>
Year ended September 30,
1997 1996 1995
------- --------- --------
<S> <C> <C> <C>
Current tax expense:
State and local $ - $ - $ -
Foreign - - 527
------- -------- -------
Total current $ _ $ - $ 527
------- -------- -------
Deferred tax expense (benefit)
Federal 7,855 $(17,521) $ (898)
State 822 (1,947) (148)
Foreign (6,966) (974) (527)
------- -------- -------
Total deferred 1,711 (20,442) (1,573)
------- -------- -------
Deferred tax asset valuation allowance (1,711) 20,442 1,046
------- -------- -------
Total provision $ - $ - $ -
======= ======== =======
</TABLE>
Deferred tax assets (liabilities) are comprised of the following (in thousands):
<TABLE>
<CAPTION>
Year ended September 30,
1997 1996
------- --------
<S> <C> <C>
Net operating loss carryforwards $ 39,013 $ 32,869
Research and development credit 1,169 863
Expense accruals 1,285 2,607
Depreciation (605) 44
Inventory reserves 2,214 3,553
Millennium stock transaction (4,285) -
Patent amortization (344) (355)
Accounts receivable 697 888
Warranty reserve 407 536
Other reserves and temporary differences 3,630 3,887
-------- --------
Gross deferred tax assets 43,181 44,892
Deferred tax assets valuation allowance (41,908) (43,619)
-------- --------
$ 1,273 $ 1,273
======== ========
</TABLE>
F-15
<PAGE>
A reconciliation between the amount of reported income tax expense and the
amount computed using the U.S. Federal Statutory rate of 35% is as follows (in
thousands):
<TABLE>
<CAPTION>
Year ended September 30,
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Income/(Loss) at statutory rate $ 5,335 $(20,757) $(7,200)
Foreign losses not benefited 2,195 - -
Utilization of US NOL's (7,656)
Shareholder settlement (2,020) 3,546
Nondeductible amortization 65 - 194
ChemGenics Transaction - 1,250 -
PDI book goodwill write-off - 1,446 -
Charge for purchased research and development
acquired from PTC-II, net of anticipated tax benefit - 2,375 -
State tax benefit, net of federal tax liability - (2,613) -
R & D Credit - (149)
Other 61 26 2
------- -------- -------
- (20,442) (3,458)
Benefit of loss not recognized - 20,442 3,458
------- -------- -------
Provision for income taxes $ - $ - $ -
======= ======== =======
</TABLE>
The Company has provided a valuation allowance for certain deferred tax assets,
since it is not more likely than not that future benefits will be realized. If
the Company achieves profitability, these deferred assets would be available to
offset future income tax liabilities and expense, subject to the limitations
described below.
At September 30, 1997, the Company has net operating loss carryforwards and
research and development tax credits for federal income tax reporting purposes
of approximately $64 million and $1,169,000, respectively, which will expire
between 2003 and 2012. The net operating loss carryforward is offset by
$4,700,450 relating to deductions for non-qualified stock option exercises which
will be credited to additional paid-in-capital upon realization. The Company has
a net operating loss carryforward for foreign income tax reporting of $12
million some of which will expire between 1998 and 2002 and the rest with an
unlimited carryforward period.
Ownership changes, as defined in the Internal Revenue Code, resulting from the
issuance of Series A, Series B and Series C convertible preferred stock and from
the issuance of common stock may have limited the amount of net operating loss
and tax credit carryforwards that can be utilized annually to offset future
taxable income or tax liability.
8. CREDIT FACILITIES AND BORROWINGS
Convertible Subordinated Notes
In August 1994, the Company issued $27,230,000 aggregate principal amount of 8-
1/4% Convertible Subordinated Notes Due 2001 (the "Notes"). As of September 30,
1997, $6.8 million, representing the payment that is due on August 15, 1998, is
classified as a current liability. The Notes are convertible into the
F-16
<PAGE>
Company's common stock at any time after the expiration of 60 days following the
last date of original issuance through maturity, unless previously redeemed or
repurchased, at a conversion price of $13.80 per share, subject to adjustment in
certain circumstances. Beginning on August 15, 1998 and on each anniversary date
through the year 2000, the Company is required to deposit in a sinking fund,
cash sufficient to redeem, on each August 15, 25% of the outstanding principal
and accrued interest.
Interest on the Notes is payable semi-annually on each February 15 and August
15, commencing on February 15, 1995, and the Notes will mature on August 15,
2001, unless previously redeemed or repurchased. Interest expense in fiscal
year 1997, 1996 and 1995 was $2,246,000. The Notes are not redeemable by the
Company prior to August 25, 1997. Thereafter, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time, at specified
redemption prices plus accrued and unpaid interest to the date of redemption.
The Notes are unsecured general obligations of the Company and are subordinated
to all existing and future senior indebtedness (as defined in the agreement) of
the Company.
Long-term Debt
The Company secured financing totaling 8.5 million DM (approximately $6 million
at September 30, 1995) in bank loans from two German banks during fiscal year
1995 to contribute to the construction of the Company's new manufacturing
facility in Hamburg, Germany. During fiscal year 1996 additional proceeds were
received to complete the construction. At September 30, 1996, total proceeds of
8.5 million DM (approximately $6 million at September 30, 1996) were received
from the Facility Financing.
The bank loans are payable in semi-annual installments of 363,640 DM
(approximately $206,657 at September 30, 1997) beginning March 31, 1997 through
September 30, 2007. Interest is calculated at 7.5% per annum and is payable at
the end of each year. The bank loans are collateralized by all real estate and
buildings owned by the Company in Hamburg, Germany.
Short-term Borrowing
The Company has secured short-term financing from an investment bank which is
collateralized by the Company's short-term investments. The short-term
borrowing is classified as a current liability and approximates $5 million at
September 30, 1997 and 1996, respectively. Interest is payable monthly and is
calculated daily, based on the broker call rate plus a percentage of the amount
borrowed. The rate paid in fiscal year 1997, 1996 and 1995 ranged from 6.10% to
8.25%.
9. STOCKHOLDERS' EQUITY
Redeemable Convertible Preferred Stock
In connection with its acquisition of the synthesis products business acquired
from Millipore Corporation ("Millipore"), the Company's Board of Directors
authorized the designation and issuance to Millipore of 4,000 shares of a newly
designated series of non-voting redeemable convertible preferred stock (the
"Series A Preferred Shares"), valued at approximately $33,121,000 as of the
acquisition date using an imputed interest rate of 8% (Note 16). The Series A
Preferred Shares are redeemable in four equal installments on each of the first
four anniversaries of the closing of the acquisition in $10 million
installments, payable at the Company's option in cash or the Company's common
stock. The Company will have the right to redeem all or any part of the Series A
Preferred Shares prior to their stated redemption date by paying cash or by
delivering shares of its common stock with a market value equal to the
redemption price. The holders of the Series A Preferred Shares will have
certain rights to
F-17
<PAGE>
convert, at the election of holders of 66-2/3% of the Series A Preferred Shares,
all, but not less than all, of the outstanding Series A Preferred Shares into
shares of common stock in the first year if the market price of the stock
exceeds $32.00 per share, and in the second year, if the market price exceeds
$38.00 per share. The conversion rate will be determined by dividing the
redemption value of the Series A Preferred Shares to be converted by the then
fair market value of the common stock at the time of conversion.
In August 1995, the Company issued 912,199 shares of common stock at $10.96 per
share to satisfy its first redemption payment due August 22, 1995. In August
1996, the Company issued 1,248,050 shares of common stock at $8.01 per share to
satisfy its second redemption payment due August 22, 1996. In August 1997, the
Company issued 1,019,108 shares of common stock at $9.81 per share to satisfy
its third redemption payment due August 22, 1997. Management's intent is to
satisfy the remaining installment under this preferred stock arrangement as it
becomes due through the issuance of common stock. As a result of the action
taken during fiscal year 1995 to convert the first installment of the preferred
stock to common stock and management's intent to satisfy future installments
with common stock, the remaining fair value of this outstanding security has
been reflected as a component of the Company's equity beginning in September 30,
1995.
The difference between the fair value of the Series A Preferred Shares recorded
at the date of issuance and the redemption value is accreted as a charge to
accumulated deficit using the effective interest method.
Capital Stock
The authorized capital stock of the Company consists of (i) 100,000,000 shares
of common stock and (ii) 1,000,000 shares of preferred stock, par value $.01 per
share, of which 4,000 shares have been designated Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock") and 400,000 shares have
been designated Series B Junior Participating Preferred Stock ("Series B
Preferred Stock").
As of September 30, 1997 the Company had reserved 4,951,672 shares of common
stock for use in the Company's 1989, 1992 and 1997 Stock Plans and the Company's
1992 Non-Employee Director Plan (Note 10) and 59,039 shares of common stock for
use in the Company's 1992 Employee Stock Purchase Plan (Note 10).
Warrants
In addition, the Company also has outstanding the following warrants to purchase
common stock:
<TABLE>
<CAPTION>
Note Number of Exercise Date Expiration
Reference Shares Price Exercisable Date
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Warrants 15 401,100 $20.00 December 1992 December 1997
Class C Warrants 15 40,000 7.31 September 1993 March 1999
Class E Warrants 15 41,875 33.00 January 1996 December 1998
Class F Warrants 12 100,000 7.62 March 1996 October 2002
Class G Warrants 13 279,330 12.66 March 1996 September 2003
</TABLE>
The exercise prices and the number of shares of the Company's common stock
issuable upon exercise of the Class C, E, and G warrants will be appropriately
adjusted in the event of stock
F-18
<PAGE>
splits, combinations, rights offering, stock dividends or certain other special
dividends with respect to the Company's common stock. The Class A warrants
expired unexercised on December 23, 1997.
10. STOCK OPTION PLANS AND OTHER BENEFITS
1989 and 1992 Stock Plans
In June 1989 and March 1992, the Company adopted the 1989 and 1992 Stock Plans,
respectively (the "1989 Plan" and the "1992 Plan"), which provide for the
granting of incentive stock options, non-qualified stock options, stock purchase
rights and awards of stock. The Board of Directors determines the term of each
option, option price, number of shares for which each option is granted, whether
restrictions will be imposed on the shares subject to options, and the rate at
which each option is exercisable. The exercise price for incentive stock
options granted generally may not be less than the fair market value per share
of the underlying common stock on the date granted. The exercise price per
share for non-qualified options will be as determined by the Board of Directors.
Additionally, the term of the options cannot exceed ten years (five years for
options granted to holders of more than 10% of the voting stock of the Company).
The options vest on an annual or quarterly basis from the date of grant over
periods determined by the Board of Directors.
As a result of the decline in the market price of the Company's common stock,
during fiscal year 1995, the Company allowed holders of 1,230,000 options to
surrender their existing options having exercise prices ranging from $7.63 to
$26.75 in exchange for new options totaling 615,000 at an exercise price of
$5.38.
Under the 1989 Plan, 984,000 options were authorized for issuance and options
covering 130,625 shares are currently outstanding, of which all were exercisable
as of September 30, 1997. No further options will be granted under this plan.
On June 16, 1993, the Company amended the 1992 Plan to increase the number of
shares of common stock authorized for issuance under the 1992 Plan from 800,000
to 1,700,000. On March 10, 1994, May 1, 1995, May 6, 1996 and March 5, 1997 the
Company amended the 1992 Plan to increase the number of shares of common stock
authorized for issuance to 2,300,000; 2,900,500; 3,585,500; and 4,585,500;
respectively. In addition, the 1992 Plan was amended on March 10, 1994 and
March 5, 1997 to limit the number of shares of common stock that any participant
may purchase under the Plan to 600,000 and 1,400,000, respectively. Under the
1992 Plan, options covering 4,087,017 shares are currently outstanding, of which
1,760,402 options were exercisable and 35,530 were available for grant as of
September 30, 1997.
1992 Non-Employee Director Plan
During March 1992, the Company adopted the 1992 Non-Employee Director Stock
Option Plan. This plan provides for grants of non-qualified options to non-
employee members of the Board of Directors. The exercise prices of options
granted under this plan will equal the fair market value of the underlying
common stock on the date granted. The term of options under this plan is ten
years. The original plan provided that Directors receive 1,500 non-qualified
options per year, except that persons who were directors on June 1, 1992
received an initial grant of 6,000 options, and persons first elected as
directors subsequent to June 1, 1992 receive an initial grant of 10,000 options.
On March 11, 1996, the plan was amended to increase the annual automatic grant
under the Director Plan from 1,500 to 7,500 shares of the Company' s Common
Stock. Initial and annual grants of options will vest in four and three equal
annual amounts, respectively, commencing on the grant date. In the event that a
director ceases to be a member of the Board of
F-19
<PAGE>
Directors, any unexercised portion of options granted will terminate. Under this
plan, 200,000 shares of common stock have been authorized for issuance, and
options covering 107,000 shares are currently outstanding, of which 70,163
options were exercisable and 91,500 were available for grant as of September 30,
1997.
1997 Employee Non-Qualified Stock Option Plan
During 1997, the Company adopted the 1997 Non-Qualified Stock Option Plan. This
plan provides for grants of non-qualified options to employees, consultants and
certain new officers. The number of shares for which each option is granted,
whether restrictions will be imposed on the shares subject to options, and the
rate at which each is exercisable shall be determined at the discretion of the
Board of Directors. The maximum term of options under this plan is ten years.
The original plan authorized 200,000 shares of common stock for issuance. On
August 21, 1997, the number of shares of common stock authorized for issuance
was increased to 550,000. As of September 30, 1997, options covering 474,114
shares are currently outstanding, of which 15,000 options were exercisable, and
25,886 options were available for grant.
Stock-based Compensation Plans
The Company has adopted the disclosure requirements of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."
The Company continues to recognize compensation costs using the intrinsic value
based method described in Accounting Principles Board Opinion No. 25,
"Accounting for Stock issued to Employees."
Net income (loss) and net income (loss) per share as reported in these
consolidated financial statements and on a pro forma basis, as if the fair value
based method described in SFAS No. 123 had been adopted, are as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
Year Ended September 30
-----------------------
1997 1996
------ ------
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income As reported $15,243 $(50,467)
Pro forma 12,625 (51,368)
Primary net income As reported $ .63 $ (3.22)
per share Pro forma .51 (3.28)
Fully diluted net As reported $ .60 -
income per share Pro forma .44 -
</TABLE>
The effects of applying SFAS No. 123 in fiscal year 1997 and 1996 are not
necessary indicative of the effects on reported net income in future years.
The following table summarizes the Company's stock option activity at September
30, 1997, 1996, and 1995, and changes during the years then ended:
F-20
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
------------------------ ------------------------ ------------------------
- -------------------------------------------------------------------------------------------------------
WEIGHTED- WEIGHTED WEIGHTED
SHARES AVERAGE SHARES AVERAGE SHARES AVERAGE
UNDER EXERCISE UNDER EXERCISE UNDER EXERCISE
OPTION PRICE OPTION PRICE OPTION PRICE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 3,560 $7.83 2,491 $7.37 2,332 $15.79
Granted at fair
market value 1,646 7.04 1,604 7.98 1,908 6.39
Exercised (260) 6.22 (180) 5.30 (190) 1.85
Canceled (147) 7.40 (355) 6.83 (1,559) 19.28
- -------------------------------------------------------------------------------------------------------
Outstanding at
end of year 4,799 $7.70 3,560 $7.83 2,491 $7.37
- -------------------------------------------------------------------------------------------------------
</TABLE>
Options exercisable at September 30, 1997, 1996 and 1995 were 1,976,190,
1,227,458 and 1,208,184, respectively. The weighted-average grant-date fair
value of options granted during 1997 and 1996 were $4.19 and $3.99,
respectively.
The following table summarizes information about stock options outstanding at
September 30, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
Weighted
Average
Remaining Weighted Weighted
Number Contractual Average Number Average
Range of Outstanding Life Exercise Outstanding Exercise
Exercise prices At 9/30/97 (In Years) Price At 9/30/97 Price
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$0.39 - $6.10 1,048,762 6.25 $5.11 765,872 $4.98
$6.38 - $6.81 311,525 9.34 $6.61 17,990 $6.57
$7.13 - $7.13 1,117,879 9.32 $7.13 53,632 $7.13
$7.63 - $7.63 1,107,507 8.75 $7.63 364,673 $7.63
$7.81 - $31.50 1,213,084 7.47 $10.81 774,023 $11.68
--------- ---- ------ ---------- ------
$0.39 - $31.50 4,798,756 8.05 $7.70 1,976,190 $8.17
</TABLE>
For the purpose of providing pro forma disclosures, the fair values of options
granted were estimated using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997 and 1996,
respectively: a risk-free interest rate of 6.02 % and 6.13 %, an expected life
of 4 years, expected volatility of 57.27 %, and no expected dividends.
Employee Stock Purchase Plan
On May 29, 1992, the Company adopted the 1992 Employee Stock Purchase Plan. This
plan provides eligible employees the opportunity to purchase shares of common
stock annually at 85% of the fair market value at the lower of the beginning or
ending stock price of the shares during two six-month periods of each year. A
maximum of 250,000 shares of common stock have been authorized for issuance
under this plan. The term of this plan is ten years. Purchases under this plan
were 51,000 shares in fiscal year 1997 at prices ranging between $5.53 and $5.75
per share and 54,000 shares in fiscal year 1996 at prices ranging between $7.50
and $8.25 per share and 188,000 shares since inception through September 30,
1997. The plan was terminated by the Board of Directors effective November 30,
1997.
F-21
<PAGE>
Savings Plan
Effective May 1, 1993 the Company established the PerSeptive Biosystems, Inc.
401(k) Savings Plan (the "Plan") to provide employees the opportunity to defer
taxes on their savings. The Plan is a defined contribution plan covering all
full-time employees of the Company who have completed six months of service and
are age twenty-one or older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974. The Company is not required to
contribute to, and has made no contributions, to the Plan.
11. STOCKHOLDER RIGHTS PLAN
Effective March 2, 1995, the Company's Board of Directors implemented a
Stockholder Rights Plan by declaring a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of the Company's common stock.
Each Right entitles the registered holder to purchase from the Company one one-
hundredth of a share (a "Unit") of Series B Junior Participating Preferred
Stock, $.01 par value per share at a purchase price of $47.00 per Unit (the
"Purchase Price"), subject to adjustment. Such rights are transferred with any
change in ownership of the Company's common stock.
The Rights will be exercisable only upon the occurrence of certain triggering
events. Such events would include the acquisition of or a tender offer that, in
the aggregate, equals or exceeds 15% of the outstanding shares of common stock
of the Company. Until a Right is exercised, the holder thereof will have no
rights as a stockholder of the Company. Until a triggering event occurs, the
Rights will not trade separately from the Company's common stock. The Rights
are not exercisable until the occurrence of a triggering event and will expire
at the close of business on March 2, 2005, unless earlier redeemed by the
Company.
On August 23, 1997, the Stockholder Rights Plan was amended in anticipation of
approving a merger pursuant to an Agreement and Plan of Merger with Perkin-Elmer
Corporation ("Merger"). This amendment stated that no triggering event has
occurred as a result of the approval of the Merger and consequently, no rights
have become exercisable.
12. COMMITMENTS AND CONTINGENCIES
Commitments
The Company has entered into license agreements pursuant to which it pays
royalties generally ranging from 1% to 6% on sales of certain consumable
products contained in the Company's finished goods. Royalty rates are higher on
bulk sales of consumable products to other resellers. Royalty expense incurred
in connection with these agreements for the years ended September 30, 1997, 1996
and 1995 totaled $535,000, $398,000 and $367,000, respectively.
The Company leases manufacturing facilities, office space and equipment under
noncancelable operating and capital leases expiring at various dates through
2009. The approximate minimum rental commitments under all noncancelable leases
as of September 30, 1997 are as follows (in thousands):
Operating Capital
leases leases
--------- -------
1998 $ 3,102 $ 512
1999 2,646 447
2000 2,559 239
2001 1,550 44
F-22
<PAGE>
2002 1,352 2
Thereafter 9,536 0
------- ------
Total minimum lease payments $20,745 1,244
=======
Less-amount representing interest (175)
------
Present value of obligations under $1,069
capital leases ======
Total rent expense was approximately $2,331,000, $2,651,000 and $4,415,000 for
the years ended September 30, 1997, 1996, and 1995, respectively.
On March 31, 1995, the Company entered into an agreement for the subsequent sale
and leaseback of equipment totaling $4,790,000 for $5 million. Under the terms
of the lease agreement, the Company has the option to repurchase the equipment
and is required to remit 30 equal monthly lease payments of approximately
$186,000 commencing March 31, 1995. Interest on the lease is calculated at 9%
per annum. For financial accounting purposes this lease had been recorded as a
capital lease. At September 30, 1997, the obligation under this lease was
fulfilled. The Company currently is negotiating an operating lease for this
equipment.
In conjunction with the sale and leaseback transaction: (1) Class F warrants to
purchase 100,000 shares of the Company's common stock were issued at an initial
per share exercise price of $7.25 and were exercised by the lessor during fiscal
1996; (2) the Company did not elect to exercise its right to repurchase the
equipment during fiscal 1996 and as a result additional Class F warrants to
purchase 100,000 shares of the Company's common stock were issued at an initial
per share exercise price of $7.62 and are exercisable any time on or after March
31, 1996 and on or before October 1, 2002. The value of the warrants issued has
been determined to be de minimus, and, therefore, no value has been ascribed.
Contingencies
During 1997 and 1996, the Company sold certain receivables for approximately
$17,518,000 and $11,936,000, respectively, to a financial institution with
recourse. At September 30, 1997 and 1996, approximately $4,572,018 and
$2,636,000, respectively, of the receivables sold had not been collected by the
financial institution. The Company paid interest on receivables sold of
approximately $78,855 and $55,000 during fiscal year 1997 and 1996,
respectively.
13. OTHER CHARGES
Other charges consist of costs of the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
-----------------------
<S> <C> <C>
In-process research and
development (Notes 15,16) $ 6,785 $ 1,879
Other charges 27,360 13,580
------- -------
$34,145 $15,459
Total other charges ======= =======
</TABLE>
1996 Charges
Other charges of $9,900,000 reported as part of costs of goods sold relate to
various charges recorded in connection with activities undertaken to realign the
Company's product offerings
F-23
<PAGE>
and to record impairment charges associated with certain underutilized
production assets.
Other charges of $17,460,000 were recognized during fiscal 1996 and related
to charges recorded in connection with the PTC-II acquisition, a provision for
the impairment of certain intangible assets, accruals for estimated legal costs
related primarily to the enforcement of the ongoing patent enforcement action
and other miscellaneous matters. The charge recorded in connection with the PTC-
II acquisition related to costs associated with organizational realignment
following the acquisition of approximately $3,300,000. The charge also included
provisions recorded in connection with ongoing litigation matters totaling
$5,200,000. The impairment charge recorded in connection with the write-off of
the goodwill associated with the purchase of the In Vitro Division of Advanced
Magnetics, Inc. ("AMI") totaled $5,300,000. Charges related to other
miscellaneous matters totaled $3,660,000.
1995 Charges
On December 26, 1994, the Company announced a restatement of its financial
results for its fiscal year ended September 30, 1993 and for the first three
quarters of its 1994 fiscal year. Shortly thereafter, a number of class action
lawsuits were filed in the U.S. District Court for the District of Massachusetts
against the Company and certain of its officers. These lawsuits were
consolidated in an amended complaint filed on March 8, 1995. The complaint
asserted, on behalf of the class of all purchasers of the Company's common stock
from February 2, 1993 through December 26, 1994, violations of federal
securities laws and common law consisting of the issuing of allegedly materially
false and misleading financial results with respect to the Company's quarterly
and year-end fiscal 1993 financial statements and the Company's quarterly
financial statements for the first, second and third quarters of fiscal 1994.
The complaint sought unspecified damages, interest, costs and fees. On May 8,
1995, the Company filed its answer which denied all of plaintiffs' material
allegations and raised several affirmative defenses.
On June 14, 1995, the Court entered a preliminary order of approval of a
stipulation of compromise and settlement (the "Stipulation") between the
defendants in this action and the plaintiff class. On August 11, 1995, the
court approved the Stipulation. Pursuant to the terms of the Stipulation, the
purchasers of (a) the Company's Class E Warrants, which were originally issued
as part of units with the common stock of PerSeptive Technologies II
Corporation, and (b) its 8 1/4% Convertible Subordinated Notes due 2001, are
included in the plaintiff class in addition to the purchasers of the Company's
common stock. In exchange for releases of the defendants, the plaintiff class
is entitled to receive: $5,000,000 in cash, a portion of which is paid by third
parties; $5,000,000 in shares of the Company's common stock; and $2,000,000 in
warrants to purchase shares of the Company's common stock. In August of 1995,
the Company issued 493,827 shares of common stock with an aggregate market value
of $5,000,000. The final cash payment of $1.5 million due under a promissory
note issued pursuant to the Stipulation, together with interest thereon, was
made on April 1, 1996. The Company issued the Class G Warrants to purchase up
to 279,330 shares of the Company's common stock for $12.66 per share. The
warrants became exercisable at any time on or after March 11, 1996 and will
expire September 11, 2003. The costs of the settlement, including professional
fees associated with the settlement were recorded as a charge during the quarter
ended June 30, 1995.
14. LITIGATION
The Company has sued Pharmacia Biotech, Inc. and certain of its affiliates, and
their parent Pharmacia AB (collectively, "Pharmacia"), now part of Pharmacia &
Upjohn Co., Sepracor Inc.
F-24
<PAGE>
("Sepracor") and BioSepra Inc. ("BioSepra"), a company partially owned by
Sepracor, for willful infringement of three PerSeptive patents (U.S. Nos.
5,019,270, 5,228,989 and 5,384,042), covering the process of Perfusion
Chromatography/(R)/ and the manufacture, sale and use of chromatography
particles and matrices that enable Perfusion Chromatography (collectively, the
"Original Perfusion Patents"). The Company commenced its action against
Pharmacia and Sepracor on October 14, 1993, and the consolidated action has been
pending in the United States District Court for the District of Massachusetts.
BioSepra was added as a party on May 19, 1994. The lawsuit also claims that
Sepracor and BioSepra made false and misleading representations of fact with
respect to the Company's products, and that BioSepra engaged in false and
misleading advertising. The lawsuit, in an amended complaint filed by Purdue
University and the Company, also claims that Sepracor and BioSepra infringe a
fourth patent ("the Coatings Patent"), licensed exclusively by PerSeptive,
covering novel coatings for chromatography media. The lawsuit seeks to enjoin
the defendants from infringing the four patents and asks for treble damages, as
well as other relief and damages. Pharmacia, Sepracor and BioSepra each have
asserted that their products do not infringe the Original Perfusion Patents and
that the Original Perfusion Patents are invalid and unenforceable, and have
asserted counterclaims against the Company alleging that the Company's
assertions that they have infringed the patents, and that statements allegedly
made by the Company to customers concerning the litigation, constitute unfair
competition, commercial disparagement, unfair trade practices, tortious
interference with customer relationships and violation of the Lanham Act, and
seeking an unspecified amount of damages, and, under certain asserted claims,
double or treble damages, as well as attorneys' fees and expenses. The Company
has denied any liability on these counterclaims.
On January 9, 1996, the Court entered an order denying the Company's motion for
partial summary judgment relating to the inventorship of the Original Perfusion
Patents, granting the Defendants' motions for partial summary judgment that
inventorship of the Original Perfusion Patents is improper for failure to name
one or more persons as additional joint inventors, and requiring the Company to
move to correct inventorship or have the patents declared invalid. On March 12,
1996, the Court entered a ruling directing the Company to correct inventorship
and placed on the Company the burden of proving the absence of deceptive intent
in the designation of inventors at a hearing. The Company moved to correct
inventorship. The Company has preserved its right to appeal a number of issues,
including the Court's January 9, 1996 order that the Original Perfusion Patents
failed to name additional persons as joint inventors and the Court's March 12,
1996 order imposing the burden of proof on PerSeptive. The hearing was held in
May and June 1996. On April 3, 1997, the Court issued a ruling denying the
Company's motion to correct inventorship, ruling that the Company had not met
its burden of proving that two British scientists, who worked for a company that
is not a party to the litigation, were not named on the Original Perfusion
Patents without deceptive intent within the meaning of Section 256 of Title 35
United States Code, and granted judgment in favor of Sepracor, BioSepra and
Pharmacia on the Company's claims relating to the Original Perfusion Patents.
On April 16, 1997, the Company filed a motion to permit an immediate appeal of
the April 3, 1997 decision, and the related January 9, 1996 and March 12, 1996
decisions, to the United States Court of Appeals for the Federal Circuit, which
has exclusive jurisdiction in the United States to hear appeals in patent cases.
On April 30, 1997, the defendants filed a motion requesting that the District
Court render a decision on the defendants' defense of inequitable conduct prior
to permitting the Company's appeal. On July 30, 1997, the Company filed a
motion seeking to (i) vacate the Court's April 3, 1997 decision and (ii) enter a
final judgment that will permit the
F-25
<PAGE>
Company to appeal the Court's earlier January 9, 1996 and March 12, 1996 orders
that the patents do not name all of the inventors and imposing the burden of
proof on PerSeptive. The Company's motion is based on a decision by the Court of
Appeals for the Federal Circuit in an unrelated case, Stark v. Advanced
-----------------
Magnetics, Inc., issued on July 11, 1997, which the Company contends rendered
- --------------
the Court's April 3, 1997 decision erroneous. The defendants filed motions again
requesting that the District Court render a decision on their defense of
inequitable conduct prior to permitting an appeal. The Court has not rendered a
decision on the Company's or the defendants' motions. The Court has not yet
considered the issue of infringement of the Original Perfusion Patents or the
Coatings Patent.
On December 12, 1997, the Company announced that it had settled the litigation
with Sepracor and BioSepra. Under the terms of the settlement, the Company
received an unspecified amount (which is not material to the financial
statements) and BioSepra obtained a non-exclusive license under PerSeptive's
Perfusion Chromatography patents. Sepracor and BioSepra were removed as
defendants in the litigation. The Company intends to continue to vigorously
pursue the litigation against Pharmacia, which remains a defendant.
The Company may incur substantial expenses relating to these lawsuits. There
can be no assurance that the outcome of the litigation will not have a material
adverse effect on the Company.
In September 1996 and February 1997, two new United States patents relating to
Perfusion Chromatography systems were issued to the Company. Neither of these
patents, which cover instruments and systems that perform the high-speed, high
resolution chromatography which is the subject of the Original Perfusion
Patents, are the subject of the current litigation. Prior to the issuance of
these patents, the Company had submitted to the patent examiner the District
Court's January 9, 1996 order, and non-confidential portions of related briefs
filed by the parties, and the patents were issued naming only PerSeptive's
scientific founders as the inventors nonetheless.
Since November 1994, the Company has been responding to informal requests for
information from the Securities and Exchange Commission relating to certain of
the Company's financial matters. In May 1995, the Company was advised by the
Commission that it had obtained a formal order of investigation so that, among
other matters, it may utilize subpoena powers to obtain information relevant to
its inquiry. The Commission has and may in the future utilize its subpoena
powers to obtain information from various officers, directors and employees of
the Company and from persons not presently associated with the Company. If,
after completion of its investigation, the Commission finds that violations of
the federal securities laws have occurred, the Commission has the authority to
order persons to cease and desist from committing or causing such violations and
any future violations. The Commission may also seek administrative, civil and
criminal fines and penalties and injunctive relief. The Department of Justice
has the authority in respect of criminal matters. There can be no assurance as
to the timeliness of the completion of the investigation or as to the final
result thereof, and no assurance can be given that the final result of the
investigation will not have a material adverse effect on the Company. The
Company is cooperating fully with the investigation, and has responded and will
continue to respond to requests for information in connection with the
investigation.
15. CONTRACT RESEARCH AND CONTRACT DEVELOPMENT
PerSeptive Technologies II Corporation
F-26
<PAGE>
In December 1993, the Company and PerSeptive Technologies II Corporation ("PTC-
II") completed an initial public offering of 2,645,000 units for net proceeds of
approximately $53.2 million (including the underwriters overallotment). Each
unit consisted of one share of callable common stock of PTC-II and one Class E
warrant to purchase one share of the Company's common stock. The Company had an
option exercisable at any time through December 31, 1997 to purchase all (but
not less than all) of the shares of PTC-II common stock that form a part of the
units at a premium over the public offering price per unit; the option price per
share ranged from $33.83 to $57.23 depending on the date of exercise. The
Company also had options to acquire PTC-II's rights under certain development
programs at option prices per share ranging from $5.58 to $15.74 depending both
on the program acquired and the date of exercise. The option prices may be paid
in cash, shares of the company's common stock, or any combination thereof, at
the Company's discretion. The Company had no obligation to exercise the stock
purchase option or any of the program purchase options. Any warrants not
exchanged in the exchange offer discussed below are exercisable at any time from
January 1, 1996 through December 31, 1998. The exercise price of the warrants
is $33.00 per share.
In connection with the unit offering, the Company and PTC-II entered into
various agreements, including a technology license agreement and a research and
development agreement. Pursuant to the technology license agreement, the
Company licensed technology to PTC-II for the development of products for
certain life sciences applications. In this respect, the Company received a
non-refundable license fee of $4.0 million, recorded as deferred revenue, which
was being amortized into income over a 36 month period at a rate of $333,333 per
quarter. In accordance with the research and development agreement, PTC-II
agreed to use the Company's services exclusively to develop the licensed
technology. During the years ended September 30, 1996, 1995, and 1994 the
Company recognized $10.1 million, $19.8 million, and $12.8 million respectively,
in research and development revenue in connection with these agreements,
including the amortization of the license fee. The Company considers the
warrants issued to the investors to have been in exchange for the call option on
PTC-II's stock. Accordingly, such option has been recorded at the $5.3 million
valuation of the warrants in other intangible assets in the accompanying balance
sheet and was being amortized over the 36-month life of the option. The value
of the warrant remaining as of the acquisition date was included in the extra
space in-process research and development charge described below.
Effective March 8, 1996, the Company completed an exchange offer in which PTC-II
unit holders exchanged 2,603,125 of their units for 2,603,125 shares of the
Company's common stock and 2,603,125 new Class I warrants to purchase the
Company's common stock exercisable until August 8, 1997 at an exercise price per
share of $13.50. The total value of common stock and warrants issued in the
exchange offer was approximately $16 million based on the market value of the
common stock on March 8, 1996. The Company recorded an in-process research and
development charge of approximately $6.8 million, which represents the
approximated value of acquired technologies which have not reached
commercialization (Note 16).
PerIsis II Development Corporation
In March 1993, the Company completed a transaction related to the formation of
two research and development corporations. In connection with this transaction,
the Company and Isis Pharmaceuticals, Inc. ("Isis") licensed certain
applications of their technologies to two newly formed research and development
corporations. One of these corporations ("PerIsis I") was pursuing the
development of products for the purification, analysis and synthesis of
oligonucleotides manufactured by Isis and the second corporation ("PerIsis II")
was pursuing the development of such products for commercialization and sale to
all other entities. Under the
F-27
<PAGE>
agreements, the Company was paid for performing contract research and
development services over a period of approximately two years. During the years
ended September 30, 1995 and 1994, the Company recognized research and
development revenue totaling $0.2 million and $0.5 million respectively, in
connection with these agreements.
In exchange for an option to purchase all of the stock of PerIsis II at a price
ranging from approximately $2.7 million to $3.6 million, the Company issued
Class C warrants to purchase 40,000 shares of the Company's common stock at an
exercise price of $25.00 per share, exercisable from the period beginning
September 15, 1993 and ending March 15, 1999, and Class D warrants that, if they
become exercisable, will be exercisable from the period beginning March 15, 1996
and ending September 15, 2000 for a number of shares ranging from 172,914 to
345,829, determined as defined by the agreement.
In April 1995, the Company exercised its option to purchase all of the common
stock of PerIsis II. In consideration for all of the stock of PerIsis II, the
exercise price of the Class C Warrants was amended to $7.31 per share and the
Class D Warrants were amended to be exercisable for 300,573 shares of common
stock at an exercise price of $0.01 per share. The Class D Warrants were
exercised during fiscal 1996. There were no tangible assets of PerIsis II
acquired, therefore, the value of the consideration paid of $1.8 million was
recorded an in-process research and development charge during the quarter ended
June 30, 1995.
16. ACQUISITIONS
Advanced Magnetics, Inc. - In Vitro Diagnostics Division
At September 30, 1995, the Company had a liability of approximately $3.4 million
for the final settlement of the Company's acquisition of the In Vitro
Diagnostics Division of AMI. In December 1995, the Company issued 373,080
shares of common stock with a value of $3.4 million, to satisfy this obligation.
Perceptive Technologies II Corporation
On November 1, 1995, the Company, PerSeptive Acquisition Corporation ("PAC"), a
wholly owned subsidiary of the Company, and PTC-II entered into a definitive
agreement pursuant to which the Company agreed to an exchange offer for all of
the 2,645,000 outstanding units of PTC-II followed by a merger of PTC-II with
PAC. Each PTC-II unit consisted of one share of callable common stock of PTC-II
and one Class E Warrant of the Company, exercisable at $33.00 until December
1998. Effective March 8, 1996, the Company acquired 2,603,125 units of PTC-II
that were validly tendered and not withdrawn in the exchange offer. The PTC-II
shareholders, who participated in the exchange offer, exchanged their units for
2,603,125 shares of the Company's common stock and 2,603,125 new Class I
Warrants to purchase the Company's common stock, exercisable until August 8,
1997 at an exercise price per share of $13.50. On March 13, 1996, PTC-II merged
with PAC and became a wholly owned subsidiary of the Company. Each of the
remaining 41,875 shares of callable common stock of PTC-II not exchanged in the
exchange offer were automatically converted into a right to receive one share of
the Company's common stock upon the merger of PTC-II with PAC. During the
quarter ended June 30, 1996, 36,475 rights were exchanged for an equivalent
number of shares of the Company's common stock. The total value of the common
stock issued in the exchange offer was approximately $16 million based on the
market value of the Company's common stock on March 8, 1996. The transaction
has been accounted for as a purchase and the Company has recorded an in-process
research and development charge of approximately $6.8 million which represents
the value of acquired technologies which have not reached commercialization.
F-28
<PAGE>
During the six month period ended March 31, 1996, the Company recognized
research and development revenue from PTC-II totaling approximately $10.1
million.
The following is a summary of the purchase price and the allocation of the
purchase price to the net assets acquired, calculated using the closing price of
PerSeptive's common stock of $5.875 on March 8, 1996:
<TABLE>
<CAPTION>
Purchase Price: (000's)
- -------------- ----------
<S> <C> <C>
Shares of Common Stock Issued 2,639,600 at $5.875 $15,508
Shares of Common Stock to be Issued 5,400 at $5.875 32
Warrants Issued 2,603,125 at $0.90 2,343
Warrants Returned 2,603,125 at $0.88 (2,291)
Provision For Purchase Obligations 1,000
Write off of Purchase Option Cost 1,082
Transaction costs (i) 1,620
-------
Total purchase price $19,294
=======
</TABLE>
(i) Amount represents acquisition costs associated with the Transaction which
include professional fees, printing costs and regulatory filing fees.
<TABLE>
<CAPTION>
Allocation of the Purchase Price: March 8,
- -------------------------------- 1996
(000's)
----------
<S> <C>
Net asset values:
Cash and investments $11,851
Other current assets 693
Accrued expenses (35)
In-process research and development 6,785
-------
Allocation of consideration $19,294
=======
</TABLE>
The unaudited pro forma results of operations for the years ended September 30,
1996 and 1995 reflecting the acquisition of PTC-II as if the companies had been
combined as of September 30, 1995 and 1994, respectively, are as follows (in
thousands except for per share data):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Revenue $75,916 $69,613
Net loss ($57,263) ($37,108)
Net loss per share ($3.41) ($2.48)
</TABLE>
ChemGenics Pharmaceuticals Inc.
In June 1996, the Company entered into a transaction with ChemGenics
Pharmaceuticals Inc. ("ChemGenics") (formerly, Myco Pharmaceuticals Inc.), in
which the Company transferred certain assets and employees of the Company's drug
discovery program to ChemGenics and granted a non-exclusive license to GemGenics
to use the Company's technology (including technology developed through PTC-II)
in the field of drug discovery in exchange for shares of
F-29
<PAGE>
ChemGenics' common stock, $.001 par value per share ("ChemGenics Common Stock")
and warrants to purchase additional shares of ChemGenics Common Stock
exercisable until June 28, 2000. The warrants were exercisable at $5.00 per
share ($13.25 per share after a proposed 2.65-for-1 reverse stock split). The
Company was subject to certain contractual restrictions on the sale or
distribution of its holdings of ChemGenics Common Stock. In December 1996, the
Company and ChemGenics executed amendments to their agreements pursuant to which
the Company exchanged a portion of its ChemGenics Common Stock for a promissory
note for $3 million payable on the earlier of the closing of ChemGenics' initial
public offering or December 31, 2002. The Company held at September 30, 1996
approximately 34% of the outstanding capital stock of ChemGenics, and warrants
which, if exercised, would increase the Company's holdings to approximately 47%
(of which, warrants sufficient to increase the Company's holdings to
approximately 40% were currently exercisable prior to the merger with
Millennium).
In January, 1997 ChemGenics and Millennium Pharmaceuticals, Inc. ("Millennium")
entered into an Agreement and Plan of Merger ("Agreement"). Under the terms of
the Agreement, the stockholders of ChemGenics received common stock of
Millennium in exchange for their common stock of ChemGenics. At the closing on
February 10, 1997, the Company received 1,612,582 shares of Millennium common
stock, $.001 par value per share ("Millennium common stock"), in exchange for
its shares of ChemGenics common stock. In addition, the Company received $4
million cash in exchange for the warrants for ChemGenics common stock and in
satisfaction of the above referenced promissory note. The transaction qualified
as a tax-free merger. The Company's shares of Millennium common stock are
subject to restrictions on sale which expired in increments between June and
September 1997. In connection with this event, the Company recorded a gain of
$25.8 million, reflecting the fair market value of the cash received and the
Company's investment in Millennium common stock as of March 29, 1997. During
the quarter ended June 28, 1997, the Company sold approximately 50% of its
investment in Millennium for $12.9 million and realized a gain on the sale of
approximately $800,000. During the fourth quarter of fiscal 1997, the Company
recognized an additional gain for book purposes of $800,000 in connection with
the release of a previously existing contingency on approximately 52,000 shares
of Millennium stock. The taxable gain arising from this transaction will be
offset by available net operating loss carryforwards with the exception of a
portion of the gain potentially subject to the Federal Alternative Minimum Tax.
The total gain included in other income was for the year ended September 30,
1997 $27.4 million.
17. SALES TO SIGNIFICANT CUSTOMERS
The Company recorded sales to one significant customer, PTC-II, of $10.1
million and $19.8 million for the years ended September 30, 1997 and 1996,
respectively. No customer accounted for greater than 10% of revenue for the year
ended September 30, 1997.
18. GEOGRAPHICAL INFORMATION
The Company's areas of operation outside of the North America include Europe and
Asia. Information about the Company's operations in different geographic
locations for the fiscal years 1997 and 1996 is shown below (in thousands). The
Company's operations in geographic locations other than North America for prior
years are not significant.
F-30
<PAGE>
<TABLE>
<CAPTION>
North
America Europe Asia Eliminations Consolidated
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 Net sales to unaffiliated
customers $ 54,322 $18,052 $24,142 - $ 96,516
Transfer between areas 26,830 9,094 - (35,924) -
-------- ------- ------- ------- --------
Total sales 81,152 27,146 24,142 (35,924) 96,516
Net income (loss) 22,361 (2,820) (4,298) - 15,243
Identifiable assets 122,999 12,004 (1,052)(1) - 133,951
</TABLE>
(1) Identifiable assets information does not exclude intercompany balances.
<TABLE>
<CAPTION>
North
America Europe Asia Eliminations Consolidated
------- ------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
1996 Net sales to unaffiliated customers $56,480 $13,447 $16,091 $ - $86,018
Transfer between areas 17,004 8,942 - (25,946) -
------- ------- ------- ------------ ------------
Total sales 73,484 22,389 16,091 (25,946) 86,018
Net income (loss) (48,176) (552) (1,739) - (50,467)
Identifiable assets 100,906 15,693 5,056 - 121,655
</TABLE>
F-31
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Board of Directors and Stockholders of PerSeptive Biosystems, Inc.:
Our report on other consolidated financial statements of PerSeptive Biosystems,
Inc., is included on page F-2 of this Annual Report on Form 10-K. In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule for each of the three years in the period ending
September 30, 1997, listed in the index of this Annual Report on Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 1, 1997
S-1
<PAGE>
PERSEPTIVE BIOSYSTEMS, INC.
FINANCIAL STATEMENT SCHEDULES
SCHEDULE II - VALUATIONS AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Balance Additions Balance at
beginning charges to costs end of
Classifications of period and expenses Other Deductions period
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts
for the year ended
September 30,
1997 $2,386,000 $ 138,000 ($250,000) ($311,000) $1,963,000
1996 $1,699,000 $1,275,000 $ 0 ($588,000) $2,386,000
1995 $1,778,000 $ 438,000 $ 0 ($517,000) $1,699,000
Inventory reserves
for the year ended
September 30,
1997 $8,877,000 $3,580,000 $ 0 ($6,627,000) $5,829,682
1996 $4,448,000 $6,682,000 $ 0 ($2,253,000) $8,877,000
1995 $4,594,000 $2,327,000 $ 0 ($2,473,000) $4,448,000
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Agreement and Plan of Reorganization dated as of October 8, 1993
by and among the Company, PV Merger Corporation and Vestec
Corporation, as amended (filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K dated October 8, 1993, as amended and
incorporated herein by reference).
2.2 Agreement and Plan of Merger by and among the Company, PV Merger
Corporation and Vestec Corporation (filed as Exhibit 2.2 to the
Company's Current Report on Form 8-K dated October 8, 1993, as
amended and incorporated herein by reference).
2.3 Escrow and Exchange Agreement by and among the Company, Vestec
Corporation, Marvin L. Vestal as the representative of the
stockholders of Vestec, American Stock Transfer & Trust Company
and the stockholders of Vestec Corporation whose names appear on
the signature pages thereto (filed as Exhibit 2.3 to the
Company's Current Report on Form 8-K dated October 8, 1993, as
amended and incorporated herein by reference).
2.4 Registration Rights Agreement by and among the Company, PV Merger
Corporation and Vestec Corporation (filed as Exhibit 2.4 to the
Company's Current Report on Form 8-K dated October 8, 1993, as
amended and incorporated herein by reference).
2.5 Asset Purchase Agreement dated as of October 15, 1993 by and
between the Company and Advanced Magnetics, Inc. (filed as
Exhibit 2.1 to the Company's Current Report on Form 8-K dated
October 15, 1993, as amended and incorporated herein by
reference).
2.6 Asset Purchase and Sale Agreement dated as of July 14, 1994 by
and among the Company, Millipore Corporation and Millipore
Investment Holdings Limited (filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K dated August 22, 1994, as
amended and incorporated herein by reference).
2.7 Registration Rights Agreement by and among the Company, Millipore
Corporation and Millipore Investment Holdings Limited dated
August 22, 1994 (filed as Exhibit 2.3 to the Company's Current
Report on Form 8-K dated August 22, 1994, as amended and
incorporated herein by reference).
<PAGE>
2.8 Registration Rights Agreement by and among the Company, Alex.
Brown & Sons Incorporated and Lehman Brothers Inc. dated August
26, 1994 (filed as Exhibit 4.2 to the Company's Registration
Statement No. 33-74600 on Form S-3 and incorporated herein by
reference).
2.9 Agreement and Plan of Merger, dated as of November 1, 1995 among
the Company, PerSeptive Acquisition Corporation and PerSeptive
Technologies II Corporation (filed as Exhibit 10.26 to the
Company's Annual Report on Form 10-K for the year ended September
30, 1995 and incorporated herein by reference).
2.10 Amendment No. 1 to Agreement and Plan of Merger, dated January
29, 1996 among the Company, PerSeptive Acquisition Corporation
and PerSeptive Technologies II Corporation (filed as Exhibit 2.1
to the Company's Registration Statement No. 333-1016 on Form S-4
and incorporated herein by reference).
2.11 Agreement and Plan of Merger dated as of August 23, 1997 among
The Perkin-Elmer Corporation, Seven Acquisition Corp. And
PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the
Company's Current Annual Report on Form 8-K dated August 26, 1997
and incorporated herein by reference).
3.1 Amended and Restated Certificate of Incorporation of the Company
(filed as Exhibit 3.2, 4.2 to the Company's Registration
Statement No. 33-46871 on Form S-1 and incorporated herein by
reference).
3.2 Certificate of Amendment of Restated Certificate of Incorporation
of the Company (filed as Exhibit 4.1 to the Company's
Registration Statement No. 33-80856 on Form S-8 and incorporated
herein by reference).
3.3 Amended and Restated By-Laws of the Company (filed as Exhibit
3.4, 4.4 to the Company's Registration Statement No. 33-46871 on
Form S-1 and incorporated herein by reference).
3.4 Certificate of Designations for the Series A Redeemable
Convertible Preferred Stock filed with the Secretary of State of
the State of Delaware on August 19, 1994 (filed as Exhibit 2.2 to
the Company's Current Report on Form 8-K dated August 22, 1994,
as amended, and incorporated herein by reference).
3.5 Certificate of Amendment of the Amended and Restated Certificate
of Incorporation of the Company filed with the Secretary of State
of the State of Delaware on May 8, 1995 (filed as Exhibit 3.1 to
the Company's Quarterly Report on Form 10-Q for the period ended
June 30, 1995 and incorporated herein by reference).
<PAGE>
3.6 Certificate of Designations for the Series B Junior Participating
Preferred Stock filed with the Secretary of State of the State of
Delaware on March 2, 1995 (exhibit to Exhibit 4.9) (filed as
Exhibit 3.6 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1995 and incorporated herein by
reference).
3.7 Amended Certificate of Designation for the Series B Junior
Participating Preferred Stock filed with the Secretary of State
of the State of Delaware on October 24, 1995 (filed as Exhibit
3.7 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1995 and incorporated herein by reference).
4.1 Description of Capital Stock contained in the Company's Amended
and Restated Certificate of Incorporation, as amended, filed as
Exhibits 3.1 through 3.7 hereto.
4.2 Form of Class A Warrants for the purchase of the Company's Common
Stock dated as of December 23, 1992 issued to the stockholders of
PTC-I (filed as Exhibit 4.1 to the Company's Quarterly Report on
Form 10-Q for the three-month period ended March 31, 1993 and
incorporated herein by reference).
4.3 Form of Class C Warrants for the purchase of the Company's Common
Stock dated as of March 15, 1993 issued to the stockholders of
PerIsis II (filed as Exhibit 4.3 to the Company's Report on Form
10-Q for the three-month period ended March 31, 1993 and
incorporated herein by reference).
4.4 Warrant Agreement relating to the issuance of Class E Warrants of
the Company dated as of December 29, 1993, as executed
(supersedes Exhibit 4.7 to Amendment No. 1 to the Company's
Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3)
(filed as Exhibit 4.2 to the Company's Quarterly Report on Form
10-Q for the Quarterly Period ended March 31, 1994 and
incorporated herein by reference).
4.5 Specimen Class E Warrant Certificate (filed as Exhibit 4.3 to
Amendment No. 1 to the Company's Registration Statement Nos. 33-
71812, 33-71814 on Form S-1/S-3 and incorporated herein by
reference).
4.6 Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment No.
1 to the Company's Registration Statement Nos. 33-71812, 33-71814
on Form S-1/S-3 and incorporated herein by reference).
<PAGE>
4.7 Indenture dated as of August 26, 1994 between the Company and
State Street Bank and Trust Company, as Trustee (filed as Exhibit
4.9 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1994 and incorporated herein by reference).
4.8 Rights Agreement, dated as of March 1, 1995, between the Company
and American Stock Transfer & Trust Company, as amended on August
23, 1997. (filed as Exhibit 4.8 to the Company's Annual Report on
Form 10-K for the year ended September 30, 1997 and incorporated
herein by reference)
4.9 Warrant Purchase Agreement relating to the issuance of Class F
Warrants (filed as Exhibit 4.1 to the Company's Quarterly Report
on Form 10-Q for the period ended March 31, 1995 and incorporated
herein by reference).
4.10 Form of Class F Warrant (filed as Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the period ended March 31, 1995
and incorporated herein by reference).
4.11 Warrant Agreement dated as of September 11, 1995 between the
Company and American Stock Transfer & Trust Company relating to
the Class G Warrants (filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K dated as of September 11, 1995 and
incorporated herein by reference).
4.12 Specimen of Class G Warrant Certificate (filed as Exhibit 4.2 to
the Company's Current Report on Form 8-K dated as of September
11, 1995 and incorporated herein by reference).
4.13 Form of Amendment to Class C Warrants (filed as Exhibit 4.15 to
the Company's Annual Report on Form 10-K for the year ended
September 30, 1995 and incorporated herein by reference).
4.14 Class H Warrant dated as of September 1, 1995 (filed as Exhibit
4.19 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1995 and incorporated herein by reference).
4.15 Amendment No. 1, dated as of September 27, 1995, to the Rights
Agreement, dated as of March 1, 1995, between the Company and
American Stock Transfer & Trust Company (filed as Exhibit 4.20 to
the Company's Annual Report on Form 10-K for the year ended
September 30, 1995 and incorporated herein by reference).
<PAGE>
4.16 Form of Warrant Agreement between the Company and American Stock
Transfer & Trust Company relating to the Company's Class I
Warrants (filed as Exhibit 4.7 to the Company's Registration
Statement No. 333-1016 on Form S-4 and incorporated herein by
reference).
4.17 Specimen of Class I Warrant Certificate (filed as Exhibit 4.8 to
the Company's Registration Statement No. 333-1016 on Form S-4 and
incorporated herein by reference).
4.18 Stock Option Agreement dated August 23, 1997 between PerSeptive
BioSystems, Inc. and the Perkin-Elmer Corporation (filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K dated as
of August 26, 1997).
10.1+ 1989 Stock Plan (filed as Exhibit 10.1 to the Company's
Registration Statement No. 33-46871 on Form S-1 and incorporated
herein by reference).
10.2+ 1992 Stock Plan of the Company, as amended on January 20, 1997
(filed as Exhibit 4.1 to the Company's Quarterly Report on Form
10-Q for the Quarterly Period ended March 29, 1997 and
incorporated herein by reference).
10.3+ 1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to the
Company's Registration Statement No. 33-46871 on Form S-1 and
incorporated herein by reference).
10.4+ 1992 Non-Employee Director Stock Option Plan, as amended on March
11, 1996 (filed as Exhibit 4.2 to the Company's Quarterly Report
on Form 10-Q for the Quarterly Period ended March 31, 1996 and
incorporated herein by reference).
10.5 Consulting Agreement with Dr. Fred E. Regnier dated June 1, 1988
(filed as Exhibit 10.7 to the Company's Registration Statement
No. 33-46871 on Form S-1 and incorporated herein by reference).
10.6 License Agreement with Purdue Research Foundation dated as of
June 16, 1990 (filed as Exhibit 10.8 to the Company's
Registration Statement No. 33-46871 on Form S-1 and incorporated
herein by reference).
10.7 Sublease Agreement with the Massachusetts Institute of Technology
dated October 1, 1990 (filed as Exhibit 10.10 to the Company's
Registration Statement No. 33-46871 on Form S-1 and incorporated
herein by reference).
<PAGE>
10.8 Form of Indemnity Agreement with directors and officers (filed as
Exhibit 10.15 to the Company's Registration Statement No. 33-
46871 on Form S-1 and incorporated herein by reference).
10.9 Product License and Supply Agreement between Millipore
Corporation and the Company granting the Company an exclusive
worldwide royalty free license within the Life Science market to
use certain patented technology to process membrane products and
to carry out certain processes useful to DNA synthesis operations
and providing for the supply of membrane products (filed as
Exhibit 10.24 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein by
reference).
10.10 OEM Purchase and Supply Agreement between BioSearch, Inc. and the
Waters Chromatography Division of Millipore Corporation with
respect to the supply of certain high performance liquid
chromatography components, machined parts and other materials to
BioSearch, Inc. (filed as Exhibit 10.25 to the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1994
and incorporated herein by reference).
10.11 Assignment of Settlement Agreement between Millipore Corporation,
University Patents, Inc. and Applied Biosystems, Inc. ("ABI")
involving cross license of certain patents, granting ABI a
license under U.S. Patent No. 4,725,677, "Process for the
Preparation of Oligonucleotides" and Millipore a license under
U.S. Patent Nos. 4,458,066 and 4,415,732 (filed as Exhibit 10.26
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994 and incorporated herein by reference).
10.12 License Agreement dated January 23, 1991 between the University
of Minnesota and Millipore Corporation granting Millipore an
exclusive worldwide license to make, use and sell products under
U.S. Patent Nos. 5,235,028, 5,196,566 and 5,117,009 and related
pending applications covering support structures for peptide
synthesis operations (filed as Exhibit 10.27 to the Company's
Annual Report on Form 10-K for the fiscal year ended September
30, 1994 and incorporated herein by reference).
10.13 License Agreement dated January 1, 1988 between Hoffman-La Roche
Inc. and Millipore Corporation granting Millipore a non-exclusive
license to make, use and sell so-called FMOC chemistries on
laboratory instruments (filed as Exhibit 10.28 to the Company's
Annual Report on Form 10-K for the fiscal year ended September
30, 1994 and incorporated herein by reference).
<PAGE>
10.14 License Agreement dated March 9, 1992 between Novabiochem AG and
Millipore Corporation granting Millipore a non-exclusive license
to make, use and sell instruments for the monitoring of certain
peptide reactions related to the synthesis of peptides (filed as
Exhibit 10.29 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein by
reference).
10.15 License Agreement dated December 17, 1991 between Ole Burkhardt,
Peter E. Nielsen, Rolf H. Berg, Michael Egholm and Millipore
Corporation granting an exclusive, worldwide license Danish
Patent Application No. 0986/91 "Oligonucleotide Analogs Termed
PNA" and corresponding international counterparts (filed as
Exhibit 10.30 to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994 and incorporated herein by
reference).
10.16 Lease Agreement between the Company and the Massachusetts
Institute of Technology dated March 19, 1993 for space located at
12 Emily Street, Cambridge, Massachusetts (filed as Exhibit 10.31
to the Company's Annual Report on Form 10-K for the fiscal year
ended September 30, 1994 and incorporated herein by reference).
10.17 Lease Agreement between the Company and 500 Old Connecticut Path
Limited Partnership for space located at 500 Old Connecticut
Path, Framingham, Massachusetts (filed as Exhibit 10.32 to the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1994 and incorporated herein by reference).
10.18 Master Lease Agreement between the Company and Hambrecht & Quist
Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1995 and incorporated herein by
reference).
10.19 Security Agreement between the Company and Hambrecht & Quist
Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1995 and incorporated herein by
reference).
10.20 Stipulation and Compromise of Settlement dated as of June 14,
1995 relating to the action entitled In re: PerSeptive
Biosystems, Inc. Securities Litigation, Civ. Action No. 94-
12575(PBS), brought in the U.S. District Court for the District
of Massachusetts (filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K dated as of September 11, 1995 and
incorporated herein by reference).
<PAGE>
10.21 Credit Agreements between the Company's subsidiary PerSeptive
Biosystems GmbH - Hamburg (formerly, "BioSearch GmbH") IKB
Deutsche Industriebank and Dresdner Bank (filed as Exhibit 10.27
to Form 10K/A Amendment No. 1 to the Company's Annual Report on
Form 10-K for the year ended September 30, 1995 and incorporated
herein by reference).
10.22 Master Agreement, dated as of May 7, 1996, between the Company
and ChemGenics Pharmaceuticals a d/b/a of Myco Pharmaceuticals
Inc. (filed as Exhibit 2 to the Company's Current Report on Form
8-K dated as of June 28, 1996 and incorporated herein by
reference).
10.23 Omnibus Amendment Agreement dated December 18, 1996 between the
Company and ChemGenics Pharmaceuticals, Inc. (filed as exhibit
10.23 to the Company's Annual Report on Form 10-K for the year
ended September 30, 1996 and incorporated herein by reference).
10.24 1997 Non-Qualified Stock Option Plan, as amended (filed as
Exhibit 4.1 to the Company's Registration Statement No. 333-
38989, on Form S-8 and incorporated herein by reference).
10.25+ Employment Agreement dated as of January 17, 1997 between
PerSeptive Biosystems, Inc. and John F. Smith (filed as Exhibit
10.1 to the Company's Quarterly Report on Form 10-Q for the
period ended June 28, 1997 and incorporated by reference herein.
10.26+ Employment Agreement dated as of January 17, 1997 between
PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as
Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
the period ended June 28, 1997 and incorporated by reference
herein.
21 Subsidiaries of the Company (filed as Exhibit 21 to the Company's
Annual Report on Form 10-K for the year ended September 30, 1997
and incorporated herein by reference).
23.1* Consent of Coopers & Lybrand L.L.P.
24 Power of Attorney (included in the signature page to the
Company's Annual Report on Form 10-K for the year ended September
30, 1997).
________________________________
*Indicates exhibits filed herewith. All other exhibits have been
previously filed unless
otherwise indicated.
+Indicates a management contract or compensatory plan or arrangement.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
PerSeptive Biosystems, Inc. on Form S-8 (File Nos. 333-23773, 333-23775, 333-
8151, 33-94606, 33-80856, 33-49642), Form S-4 (File Nos. 333-1016, 333-38881)
and on Form S-3 (File Nos. 33-71814, 33-72760, 33-72924, 33-94598, 33-94600, 33-
94602, 33-94604, 33-94608, 33-80421, 333-8149, 333-11229) of our reports dated
December 1, 1997, on our audit of the consolidated financial statements and
financial statement schedule of PerSeptive Biosystems, Inc. as of September 30,
1997 and 1996 and for the years ended September 30, 1997, 1996 and 1995 which
reports are included in this Annual Report on Form 10-K/A.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 6, 1998
