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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

               [X] Annual Report Pursuant To Section 13 Or 15(d)
                     Of The Securities Exchange Act Of 1934
                     For the Fiscal Year Ended June 30, 2001

                                       OR
              [ ] Transition Report Pursuant To Section 13 Or 15(d)
                     Of The Securities Exchange Act Of 1934

              For the transition period from ________ to _________

                          Commission File Number 1-4389

                               -------------------

                               Applera Corporation
             (Exact name of registrant as specified in its charter)

               DELAWARE                                   06-1534213
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

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

Registrant's telephone number, including area code: 203-840-2000

                               -------------------

Securities registered pursuant to Section 12(b) of the Act:

                                                         Name of Each Exchange
               Title of Class                             on Which Registered


Applera Corporation - Applied Biosystems Group         New York Stock Exchange
  Common Stock (par value $0.01 per share)                 Pacific Exchange


Applera Corporation - Celera Genomics Group            New York Stock Exchange
   Common Stock (par value $0.01 per share)                Pacific Exchange

Securities registered pursuant to Section 12 (g) of the Act:

                                 Title of Class
                          ----------------------------
                                Class G Warrants

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                  [X] Yes                            [ ] No

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         As of September 4, 2001, 211,623,977 shares of Applera Corporation -
Applied Biosystems Group Common Stock were outstanding, and the aggregate market
value of such shares (based upon the average of the high and low price) held by
non-affiliates was $5,315,931,298. As of September 4, 2001, 61,950,655 shares of
Applera Corporation - Celera Genomics Group Common Stock were outstanding, and
the aggregate market value of such shares (based upon the average of the high
and low price) held by non-affiliates was $1,652,314,834.

--------------------------------------------------------------------------------

                       DOCUMENTS INCORPORATED BY REFERENCE

                  Annual Report to Stockholders for Fiscal Year
                   ended June 30, 2001 - Parts I, II, and IV.

               Proxy Statement for Annual Meeting of Stockholders
                      dated September 18, 2001 - Part III.

================================================================================

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                                     PART I

Item 1.                             BUSINESS

General Development of Business

         Applera Corporation (hereinafter referred to as the "Company") was
incorporated in 1998 under the laws of the State of Delaware. The Company
conducts its business through two groups: the Applied Biosystems Group ("Applied
Biosystems") and the Celera Genomics Group ("Celera Genomics"). The Company
maintains a corporate staff to provide accounting, tax, treasury, legal,
information technology, human resources, and other internal services.

         The Company is the successor to PE Corporation (NY), formerly "The
Perkin-Elmer Corporation," which became a wholly owned subsidiary of the Company
as a result of a recapitalization of PE Corporation (NY) completed in May 1999.
As part of the recapitalization, the Company established two classes of common
stock that were intended to reflect separately the performance of the businesses
of each of Applied Biosystems and Celera Genomics (i.e., Applera Corporation -
Applied Biosystems Group Common Stock and Applera Corporation - Celera Genomics
Group Common Stock). Effective November 30, 2000, the Company, which was named
"PE Corporation" at the time of the recapitalization, was renamed "Applera
Corporation," and Applied Biosystems, which was named the "PE Biosystems Group"
at the time of the recapizalization, was renamed the "Applied Biosystems Group."

         Applied Biosystems is engaged principally in the development,
manufacture, sale, and service of instrument systems and associated consumable
products for life science and related applications. Its products are used in
various applications including synthesis, amplification, purification,
isolation, analysis, and sequencing of nucleic acids, proteins, and other
biological molecules. The markets for Applied Biosystems' products span the
spectrum of the life sciences industry and research community, including: basic
human disease research; genetic analysis; pharmaceutical drug discovery,
development, and manufacturing; human identification; agriculture; and food and
environmental testing. Universities, government agencies, and other non-profit
organizations engaged in research activities also use Applied Biosystems'
products. During the 2001 fiscal year, Applied Biosystems implemented an
organizational realignment away from a business unit structure organized around
specific technologies to a more integrated marketing and product development
structure.

         Celera Genomics is engaged principally in integrating high throughput
technologies to create therapeutic discovery and development capabilities for
internal use and for its customers and collaborators. Celera Genomics'
businesses are its online information business and its therapeutic discovery
business. The online information business is a leading provider of genomic and
related biological and medical information. Pharmaceutical, biotechnology, and
academic customers use this information, along with customized information
technology solutions provided by Celera Genomics, to enhance their capabilities
in the fields of life science research and pharmaceutical and diagnostic
discovery and development. Celera Genomics recently expanded its focus to
include therapeutic discovery and development. Celera Genomics intends to
leverage its capabilities in genomics, proteomics, and bioinformatics, both in
internal programs and through collaborations, to identify drug targets and
diagnostic markers, and to discover and develop novel therapeutic candidates.
Initially, Celera Genomics intends to focus its therapeutic discovery efforts in
the field of oncology. In June 2001, Celera Genomics announced


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the signing of a definitive merger agreement with Axys Pharmaceuticals, Inc.
("Axys"), a small molecule drug discovery and development company. Celera
Genomics believes that Axys' medicinal and structural chemistry and biology
capabilities will accelerate the development of its therapeutic discovery
business. This acquisition is expected to close during the fourth quarter of
calendar 2001.

         In April 2001, the Company formed a joint venture between Applied
Biosystems and Celera Genomics in the field of diagnostics ("Celera
Diagnostics"). The Company expects that this joint venture will be focused on
the discovery, development, and commercialization of novel diagnostic tests.

Financial Information About Industry Segments

         A summary of net revenues from external customers, operating income
(loss), and total assets attributable to each of the Company's industry segments
for the fiscal years ended June 30, 1999, 2000, and 2001 is incorporated herein
by reference to Note 6 on pages 44-45, Note 6 on page 82, and Note 6 on pages
102-103 of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 2001.

Narrative Description of Business

         Applied Biosystems Group

         Overview. Applied Biosystems is engaged principally in the development,
manufacture, sale, and service of instrument systems and associated consumable
products for life science research and related applications. Its products are
used in various applications including the synthesis, amplification,
purification, isolation, analysis, and sequencing of nucleic acids, proteins,
and other biological molecules. The markets for Applied Biosystems' products
span the spectrum of the life sciences industry and research community,
including: basic human disease research; genetic analysis; pharmaceutical drug
discovery, development, and manufacturing; human identification; agriculture;
and food and environmental testing. Universities, government agencies, and other
non-profit organizations engaged in research activities also use Applied
Biosystems' products.

         During the 2001 fiscal year, Applied Biosystems implemented an
organizational realignment away from a business unit structure organized around
specific technologies to a more integrated marketing and product development
structure. Within this structure, Applied Biosystems' business organization is
comprised of the following operating groups:

         o        Applications and Products Group. Applied Biosystems'
                  Applications and Products group has overall responsibility for
                  all Applied Biosystems product lines. The Applications and
                  Products group's marketing activities have been assigned
                  within the group to an applications marketing unit, a platform
                  marketing unit, a global service unit, and a brand marketing
                  unit. The applications marketing unit has been established to
                  focus on the following key product application areas which
                  have been identified for product development: genomics,
                  proteomics, high throughput screening, drug metabolism and
                  pharmacokinetics, and applied genetic analysis in the areas of
                  human identification, and environmental and food testing. The
                  platform marketing unit has been established to focus on
                  development of instrument platform

                                      -2-
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                  products. The global service and solutions marketing group has
                  been established to focus on Applied Biosystems' service
                  business. And the brand marketing group is responsible for
                  communication of the overall Applied Biosystems strategy.

                  The Applications and Products group also has responsibility
                  for applications research and development. In addition to the
                  four marketing units described above, a research and
                  development unit formed within the Applications and Products
                  group has responsibility for the development of
                  application-specific products that are to be used on Applied
                  Biosystems' instrument and reagent platforms. Examples of this
                  type of product would include the commercialization of the
                  content of the human genome into specific assays for
                  genotyping, gene expression, DNA sequencing, protein
                  expression, and biochemical screening of biological pathways.

         o        Platform Products R&D Group. Applied Biosystems' Platform
                  Products Research and Development group has overall
                  responsibility for all platform research and development
                  programs, including all instrument and software development
                  projects. Platform instruments and software are developed by
                  this group in collaboration with the Applications and Products
                  group.

         o        Global Operations Group. The Global Operations group is
                  responsible for manufacturing, distribution, and quality
                  control of all Applied Biosystems products. Applied
                  Biosystems has sought to optimize manufacturing operations by
                  establishing discreet units for instruments, consumables, and
                  its specialized oligonucleotide factory.

         The operating activities of these groups are supported by a shared
service organization responsible for the human resources, finance, sales,
communications, legal, intellectual property, and advanced research functions.
As a result of its new integrated marketing and product development structure,
Applied Biosystems expects to be able to bring new products to market in a
timely manner while maintaining the innovation and product quality that have
helped to establish Applied Biosystems as a leading supplier of tools for life
science research. In addition, Applied Biosystems believes this new structure
enables enhanced operating efficiencies in its marketing and development
activities and reduced administrative costs through cross-selling of products to
the same customer base.

         In July 2001, the Company announced a collaboration among Celera
Genomics, Applied Biosystems, and Celera Diagnostics for commercializing
products derived from information obtained through analysis of variations in the
human genome. The Company expects that these products will be based on the
identification of variations in the sequence and expression of genes, and their
association with disease and therapy. As part of this program, Celera Genomics
plans to prioritize and resequence selected genes from 40 to 50 individuals,
which the Company believes will reveal a larger number of single nucleotide
polymorphisms ("SNPs") with health related implications than are currently
available. SNPs are naturally occurring genetic variations within a genome that
scientists believe can be correlated with susceptibility to disease, disease
prognosis, drug efficiency, and drug toxicity. Celera Genomics intends to use
this SNP data in its internal discovery efforts to improve the predictive
efficacy and toxicity of drug candidates, and as the basis for additional
collaborations. Celera Genomics may also incorporate the data from this program
into its database offerings. It is expected that Applied Biosystems will use
this information to develop new assays for the study of SNPs and other
polymorphisms, and that


                                      -3-
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Celera Diagnostics will use this information in genotyping and gene expression
studies ultimately aimed at identifying new diagnostic markers.

         Scientific Background. All living organisms contain four basic
biomolecules: nucleic acids, which include DNA and RNA; proteins; carbohydrates;
and lipids. Biomolecules are typically much larger and more complex than common
molecules. These structural differences make the analysis of biomolecules
significantly more complex than the analysis of smaller compounds. Although all
of these biomolecules are critical for a cell to function normally,
historically, key advances in therapeutics have come from an understanding of
proteins or DNA. DNA molecules provide instructions that ultimately control the
synthesis of proteins within a cell, a process referred to as gene expression.
DNA molecules consist of long chains of chemical subunits, called nucleotides.
There are four nucleotides - adenine, cytosine, guanine, and thymine - often
abbreviated with their first letters A, C, G, and T. DNA molecules consist of
two long chains of nucleotides bound together to form a double helix. Genes are
individual segments of these DNA molecules that carry the specific information
necessary to construct particular proteins. Genes may contain from several dozen
to tens of thousands of nucleotides. The entire collection of DNA in an
organism, called the genome, may contain a wide range of nucleotides, including
as few as 4 million nucleotides in the case of simple bacteria and 3.1 billion
base pairs of nucleotides in the case of human beings.

         Principally driven by the "biotechnology revolution," and the
increasing focus on DNA, researchers are developing a better understanding of
DNA's role in human disease. An increased appreciation of how DNA ultimately
determines the functions of living organisms has generated a worldwide effort to
identify and sequence genes of many organisms, including the genes that make up
the human genome. The Company believes the best scientific evidence to date
indicates that the number of genes in the human genome is between 20,000 and
30,000, which is significantly less than had been previously thought.

         Individual research efforts in genetics generally fall into three broad
categories: sequencing, genotyping, and gene expression. In sequencing
procedures, the goal is to determine the exact order of the individual
nucleotides in a DNA strand so that this information can be related to the
genetic activity influenced by that piece of DNA. In genotyping, the goal is to
determine a particular sequence variant of a gene and its particular association
with an individual's DNA. This testing is not performed to determine the
complete structure of the gene, but rather is performed to determine if the
particular variant can be associated with a particular disease susceptibility or
drug response. In gene expression studies, the goal is to determine whether a
particular gene is expressed in a relevant biological tissue.

         As researchers learn more about DNA and genes, they are also developing
a better understanding of the role of proteins in human disease through efforts
in the field of proteomics, the study of proteins expressed, or encoded, by
genes. Proteins are the products of genes and, after gene expression and
modification, are believed to be the key drivers and mediators of cellular
function and biological system activity. The understanding and treatment of
disease today involves the study of genes and frequently involves the
measurement of a drug's binding to specific proteins in the body.

         The Company believes that gene and protein research will increase as
companies in the pharmaceutical and biotechnology industries seek to accelerate
their drug discovery and development efforts. These efforts are expected to
create a demand for increased automation and efficiency in pharmaceutical and
biotechnology laboratories. Applied Biosystems' products


                                      -4-
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are designed to address this demand by combining the detection capabilities of
bioanalytical instruments with advances in automation.

         Products for the Genomics Market. Customers in the genomics market need
biosystems for the analysis of nucleic acids for basic research, pharmaceutical
discovery, diagnostic development, and food and environmental testing. Applied
Biosystems has developed technologies and products to support key applications
in sequencing, genotyping, and gene expression studies. following is a
description of Applied Biosystems' products for the genomics market:

         o        PCR Products. Polymerase chain reaction ("PCR") is a process
                  in which a short strand of DNA is copied multiple times, or
                  "amplified," so that it can be more readily detected and
                  analyzed. Applied Biosystems' PCR amplification instruments,
                  known as thermal cyclers, include 24, 48, and 96 sample
                  amplification systems, several combination thermal cyclers and
                  PCR detection systems, reagents, and software. Applied
                  Biosystems' dual 384-well sample thermal cycler supports all
                  key applications in genetic analysis and fills a significant
                  market need for laboratories conducting high volume genomic
                  research.

                  The Sequence Detection Systems product line, introduced in
                  1996, uses TaqMan(R) chemistry, a unique PCR technology
                  designed by the Roche Group and developed by Applied
                  Biosystems. TaqMan(R) chemistry detects the product of PCR
                  amplification and quantifies the initial sample during the
                  thermal cycling process. This product line has been widely
                  accepted in the pharmaceutical discovery research market. The
                  6700 Automated Nucleic Acid Workstation automates nucleic acid
                  preparation, including sample filtration and purification,
                  assay plate set-up, and plate scaling. This instrument is
                  designed to substantially decrease the labor and cost involved
                  in preparing DNA for analysis. The newly introduced ABI
                  PRISM(R) 7900HT Sequence Detection System provides high
                  throughput analysis of DNA for gene expression and genotyping
                  studies. This is an automated analyzer that can process more
                  than 300,000 samples in 24 hours for genotyping.

         o        Genetic Analysis Products. Genetic analysis uses
                  electrophoresis to separate DNA molecules based on their
                  differing lengths and the resulting differences in the speeds
                  at which they will pass through a separation medium. Applied
                  Biosystems' genetic analysis products generally support both
                  DNA sequencing and genotyping.

                  DNA sequencing is used to determine the exact order of
                  nucleotides in a strand of DNA. Typically, fluorescent tags
                  are used to generate labeled products, with each of the four
                  different nucleotides labeled with a different color. The
                  labeled fragments are run through an electrophoresis
                  separation medium and detected.

                  DNA fragment analyzers are used to determine the size,
                  quantity, or pattern of DNA fragments. Fragment analysis
                  applications include: gene mapping; forensic typing using
                  microsatellite markers; SNP analysis; gene expression
                  analysis; and oligonucleotide ligation assays to detect known
                  mutations.

                  Applied Biosystems' DNA sequencing products include a
                  sequencer with 96 capillaries (Model 3700), a sequencer with
                  16 capillaries (Model 3100), a one capillary sequencer (Model
                  310), a slab-gel instrument expandable to 96 lanes


                                      -5-
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                  (Model 377), sequencing reagents, and analysis software. These
                  products are used to sequence DNA to provide an understanding
                  of human and other genomes and to analyze DNA fragments for
                  various applications, including human disease research, food
                  contamination, forensic analysis, genotyping, and gene
                  expression studies.

                  The high throughput Model 3700 DNA Analyzer, which was
                  introduced in the Company's 1999 fiscal year, is designed to
                  enable applications requiring analysis of tens of thousands of
                  samples produced weekly by combining proven capillary
                  electrophoresis hardware and separation polymer chemistry with
                  new detection technology and automation. This is an automated
                  instrument which allows 24 hour unattended operation. The
                  Model 3700 DNA Analyzer is the principal instrument used by
                  Celera Genomics for sequencing. The Company believes the Model
                  3700 DNA Analyzer is also the principal instrument used by the
                  Human Genome Project for its sequencing projects. The Model
                  3100, which was introduced in the Company's 2000 fiscal year
                  and was designed for use by academic programs and commercial
                  laboratories worldwide, incorporates the automated technology
                  developed for these large-scale programs. Applied Biosystems'
                  Model 3700 DNA Analyzer accounted for 10.5%, 14.5%, and 9.1%
                  of the Company's consolidated revenues in fiscal years 1999,
                  2000, and 2001, respectively.

         o        DNA Synthesis. DNA synthesizers produce synthetic polymers of
                  DNA, called oligonucleotides, for genetic analysis. The
                  synthetic DNA is an essential reagent for PCR and DNA
                  sequencing and is also used in drug discovery applications.
                  The needs of multiple markets are met with several models of
                  synthesizers and supporting reagents marketed by Applied
                  Biosystems. Applied Biosystems also provides custom synthesis,
                  in which oligonucleotides are made to order and shipped to
                  customers.

         o        PNA. Applied Biosystems has a license, which is exclusive for
                  certain applications, to manufacture and sell peptide nucleic
                  acid ("PNA") for molecular biology research and various other
                  applications. PNA resembles DNA in its chemical structure
                  except that it has a neutral peptide-like "backbone," whereas
                  DNA has a negatively charged sugar phosphate backbone. The
                  unique chemical structure of PNA enhances its affinity and
                  specificity as a DNA or RNA probe, which is used to search for
                  DNA and RNA sequences that are complementary to the probe.
                  PNA may be used in many areas, including basic research,
                  pharmaceutical discovery, diagnostic development, and food and
                  environmental testing.

         Products for the Proteomics Market. Customers in the proteomics market
need biosystems for the analysis of proteins for discovery of drug targets,
protein therapeutics, biomarkers, and diagnostics. Applied Biosystems has
developed products for applications including purification, separation, and
identification of proteins and characterization of protein structure and
function. The following is a description of Applied Biosystems' products for the
proteomics market:

         o        Mass Spectrometry. Recently, mass spectrometry has become very
                  useful for the analysis of large molecules of biological
                  importance such as proteins. Analysis of proteins by mass
                  spectrometry involves the creation of charged particles, or
                  ions, from a protein sample followed by analysis of their mass
                  to assist in characterizing the protein. In the past, mass
                  spectrometry was not useful for this analysis because


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                  the classical methods for creating ions caused these complex
                  molecules to disintegrate into many small pieces. This process
                  resulted in the destruction of the information about the
                  original large molecule. The mass separation component was
                  also problematic because it was not possible to distinguish
                  between large molecules of nearly the same mass. Applied
                  Biosystems believes that its delayed extraction technology
                  used in its Matrix-Assisted, Laser Desorption Ionization
                  Time-of-flight ("MALDI-TOF") mass spectrometer overcomes those
                  deficiencies for the analysis of proteins and many other large
                  molecules of biological importance. This technology, along
                  with planned future enhancements, is expected to satisfy
                  market needs in the emerging field of proteomics, the study of
                  proteins expressed by genes, by providing high throughput
                  systems for the identification and characterization of
                  proteins.

                  Since MALDI-TOF instruments are not directly coupled to
                  separation devices, mixtures are often separated, purified,
                  and collected before analysis. This process can be
                  accomplished with Applied Biosystems' purification products
                  such as the VISION(TM) Workstation, an integrated separation
                  device which provides rapid separation of proteins or other
                  large molecules.

         o        Purification. Due to the emerging growth in the field of
                  proteomics, Applied Biosystems believes that tens of thousands
                  of proteins will be analyzed to determine if they may be used
                  as drug targets or as therapeutics. Effective analysis of
                  protein samples requires that they be purified. Applied
                  Biosystems believes that its purification products in general
                  can be incorporated readily into the development process of
                  pharmaceutical products and offer productivity advantages,
                  enabled by high throughput separation, over competitive
                  product offerings.

                  Applied Biosystems' patented Perfusion Chromatography(R)
                  technology uses proprietary flow-through particles and
                  BioCad(R) Chromatography workstations to reduce the time
                  necessary for the purification and analysis of biomolecules.
                  This technology separates biomolecules 10 to 100 times faster
                  than conventional liquid chromatography or high pressure
                  liquid chromatography ("HPLC") without compromising resolution
                  or capacity. Applied Biosystems' Vision(TM) Workstation is
                  believed to be the first robotic-equipped HPLC platform
                  introduced to the life science markets that allows for the
                  separation of proteins followed by analysis of the fractions
                  collected in an unattended operation. Together, the automated
                  platform and flow-through particles are designed to increase
                  throughput and efficiency for the purification of
                  biomolecules.

         o        Protein Sequencing and Synthesis. Protein sequencers provide
                  information about the sequence of amino acids that make up a
                  given protein by chemically disassembling the protein and
                  analyzing the amino acids. The Procise(R) Protein Sequencing
                  system uses Edman protein sequencing chemistry to sequence a
                  peptide (a short sequence of amino acids, the building blocks
                  of proteins), one amino acid at a time, and in turn to
                  identify or characterize the protein that contains the
                  peptide.

                  Synthetically produced peptides are used in understanding
                  antibody reactions and as potential drugs or drug analogs.
                  Applied Biosystems' Pioneer(TM) and 433A Peptide Synthesis
                  systems are designed for the high throughput and quality
                  synthesis of peptides, peptide analogs, and small proteins.
                  Applied Biosystems also


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                  manufactures and sells proprietary synthesis reagents and fine
                  chemicals for use with these and other products.

         High Throughput Screening Products. High throughput screening systems
are important in pharmaceutical development and life sciences research in
applications where large volumes of clinical samples need to be analyzed. The
following is a description of Applied Biosystems' high throughput screening
products:

         o        Cell Based Detection Systems. Through its strategic alliance
                  with Becton, Dickinson and Company, Applied Biosystems has
                  co-developed a fluorometric microvolume assay technology
                  system ("FMAT"). This instrument system uses proprietary
                  scanning technology to rapidly detect and measure fluorescence
                  associated with objects as small as a single cell. This system
                  was designed to satisfy market needs in pharmaceutical
                  development for a cell-based, high throughput screening
                  system.

         o        Chemiluminescence Products. Applied Biosystems' high
                  throughput screening products include reagents and
                  chemiluminescent plate readers that measure light emitted by a
                  sample. Chemiluminescence is the conversion of chemical energy
                  stored within a molecule into light. Chemiluminescent
                  substrates are substances that emit light in the presence of
                  another target substance that is tagged, or chemically linked,
                  with an enzyme. Chemiluminescent technology is used in life
                  science research and commercial applications including drug
                  discovery and development, clinical diagnostics, gene function
                  study, molecular biology, and immunology research. Applied
                  Biosystems also licenses its technology to companies selling
                  bioanalytical and clinical diagnostic tests.

         o        Drug Discovery Services. Applied Biosystems also operates a
                  facility devoted to drug discovery services for the
                  pharmaceutical, biotechnology, and agricultural markets. The
                  services offered by this facility include custom assay
                  development using proprietary technologies and high throughput
                  drug screening with a capacity of approximately 100,000 to
                  400,000 tests per day.

         Products for the Drug Metabolism and Pharmacokinetics Market. Applied
Biosystems' mass spectrometry products can be used for the analysis of not only
large molecules such as proteins but also small molecules, including those that
might be used as drugs. Mass spectrometry instruments are especially important
for pharmacokinetics, the measurement of drugs and their metabolites, which are
compounds resulting from the body's acting upon the drug, in bodily fluids such
as blood or urine. This information is required by the U.S. Food and Drug
Administration and other regulatory agencies for the approval of drugs. This
application is very demanding because the amounts of the drugs and their
metabolites are very low and the mixtures are very complex. In order to analyze
this mixture, scientists use LC/MS/MS systems, which consist of HPLC devices
which separate the components of the mixture, usually an extract of blood or
urine, and which are coupled directly to tandem mass spectrometry systems. For
this application, it is important to achieve as much sensitivity and specificity
as possible. This can be done with components which have been developed and
refined by Applied Biosystems/MDS SCIEX Instruments (formerly Perkin-Elmer/SCIEX
Instruments and PE SCIEX Instruments), a joint venture between the Company and
MDS Inc. of Canada (formerly MDS Health Group Limited of Canada) through which
the Company manufactures and sells certain of its mass spectrometry instrument
systems. Applied Biosystems/MDS SCIEX Instruments has developed the MS/MS
(tandem mass spectrometry) technologies which create the sensitivity and
specificity


                                      -8-
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required for this demanding application. Under the terms of the joint venture
agreement with MDS Inc., Applied Biosystems has the exclusive worldwide
distribution rights to the LC/MS systems (liquid chromatography devices coupled
with mass spectrometry devices) manufactured for the joint venture by the MDS
SCIEX Division of MDS Inc. for the analytical instruments market.

         Applied Genetic Analysis Products. Applied Biosystems has developed,
and expects to continue to develop, products and services specially designed for
specific markets, with a focus in the areas of human identification (mainly
forensics), environmental, and food testing.

         For example, Applied Biosystems is developing technologies for
bacterial and fungal detection, characterization, and identification. It has
developed the MicroSeq 16S rDNA Bacterial Sequencing Kit to accurately identify
microorganisms. TaqMan(R) Pathogen Detection Kits relying on Sequence Detection
Systems instrument platforms are under development. These kits are being
developed to rapidly detect bacterial contamination and to detect and analyze
genetically modified organisms in foods.

         Also, Applied Biosystems develops systems that are used by crime
laboratories and other agencies to identify individuals based on their DNA.
Applied Biosystems believes these systems are most often used in cases of
violent crime where DNA found at the crime scene is matched with DNA from
suspects. The use of DNA in some criminal investigations may help solve the
crimes and may reduce the cost of the investigation, and the Company believes
there is a growing recognition of the validity of the use of DNA testing and DNA
databases for this purpose. The systems are also used in the identification of
human remains at disaster sites.

         Marketing and Distribution. The markets for Applied Biosystems'
products and services span the spectrum of the life sciences industry,
including: basic human disease research; genetic analysis; pharmaceutical drug
discovery, development, and manufacturing; human identification; agriculture;
and food and environmental testing. Universities, government agencies, and other
non-profit organizations engaged in research activities also use Applied
Biosystems' products. Each of these markets has unique requirements and
expectations that Applied Biosystems seeks to address in its product offerings.
Applied Biosystems' customers are continually searching for processes and
systems that can perform tests faster, more efficiently, and at lower costs.
Applied Biosystems believes that its focus on automated and high throughput
systems enables it to respond to this need.

         The size and growth of Applied Biosystems' markets are influenced by a
number of factors, including:

         o        technological innovation in bioanalytical practice;

         o        government funding for basic and disease-related research,
                  such as in heart disease, AIDS, and cancer;

         o        application of biotechnology to basic agricultural processes;

         o        increased awareness of biological contamination in food and
                  the environment; and


                                      -9-
<PAGE>

         o        research and development spending by biotechnology and
                  pharmaceutical companies.

         In the United States, Applied Biosystems markets the largest portion of
its products directly through its own sales and distribution organizations,
although certain products are marketed through independent distributors and
sales representatives. Sales to major markets outside of the United States are
generally made by Applied Biosystems' foreign-based sales and service staff, but
are also made directly from the United States to foreign customers in some
cases. In some foreign countries, sales are made through various representative
and distributorship arrangements. Applied Biosystems owns or leases sales and
service offices in the United States and in foreign countries through its
foreign sales subsidiaries and distribution operations. None of Applied
Biosystems' products are distributed through retail outlets.

         Raw Materials. There are no specialized raw materials that are
particularly essential to the operation of Applied Biosystems' business. Applied
Biosystems' manufacturing operations require a wide variety of raw materials,
electronic and mechanical components, chemical and biochemical materials, and
other supplies, some of which are occasionally found to be in short supply.
Applied Biosystems has multiple commercial sources for most components and
supplies, but it is dependent on single sources for a limited number of such
items, in which case Applied Biosystems normally secures long-term supply
contracts. In some cases, if a supplier discontinues a product, it could
temporarily interrupt the business of Applied Biosystems.

         Patents, Licenses, and Franchises. Applied Biosystems' products are
based on complex, rapidly developing technologies. Some of these technologies
are covered by patents owned by Applied Biosystems, and others are owned by
third parties and used by Applied Biosystems under license. Applied Biosystems
has pursued a policy of seeking patent protection in the United States and other
countries for developments, improvements, and inventions originating within its
organization that are incorporated into Applied Biosystems' products or that
fall within its fields of interest. Applied Biosystems' business depends on its
ability to continue developing new technologies which can be patented, or
licensing new technologies from third parties that own patents in such
technologies. The rights that Applied Biosystems considers important to its
current business include the following:

         o        Applied Biosystems has rights to PCR technology under a series
                  of agreements with the Roche Group, which owns the patents
                  covering the PCR process. The first of these patents expires
                  in 2004. In July 2000, Applied Biosystems and the Roche Group
                  agreed to expand the markets each company serves with products
                  incorporating PCR. This new arrangement will allow both
                  companies to develop and market products for all potential
                  uses of PCR. Additionally, Applied Biosystems will continue to
                  distribute products the Roche Group manufactures for research
                  and non-diagnostic applications.

         o        Applied Biosystems also licenses rights under certain patents
                  assigned to the California Institute of Technology relating to
                  DNA sequencing. These patents expire between 2006 and 2015.

         o        Applied Biosystems also licenses rights under certain patents
                  assigned to the University of Colorado relating to
                  oligonucleotide synthesis. These patents will expire through
                  2007.


                                      -10-
<PAGE>

         From time to time, Applied Biosystems has asserted that various
competitors and others are infringing its patents; and similarly, from time to
time, others have asserted that Applied Biosystems was or is infringing patents
owned by them. (See Item 3, Legal Proceedings, on pages 25 and 26 of this
Annual Report on Form 10-K). These claims are sometimes settled by mutual
agreement on a satisfactory basis and result in the granting of licenses by or
to Applied Biosystems. However, the Company cannot make any assurances as to the
outcome of any pending or future claims.

         Applied Biosystems has established a licensing program that provides
industry access to certain of its intellectual property.

         Backlog. Applied Biosystems' total recorded backlog at June 30, 2000
was $220.9 million, which included $25.8 million of orders from Celera Genomics.
Applied Biosystems' total recorded backlog at June 30, 2001 was $202.3 million,
which included $5.0 million of orders from Celera Genomics. It is Applied
Biosystems' general policy to include in backlog only purchase orders or
production releases that have firm delivery dates within one year. Recorded
backlog may not result in sales because of cancellation or other factors. It is
anticipated that all orders included in the current backlog will be delivered
before the close of fiscal year 2002.

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

         Applied Biosystems' principal competition comes from specialized
manufacturers that have strengths in narrow segments of the life science
markets. Applied Biosystems competes principally in terms of the breadth and
quality of its product offerings, and its service and distribution capabilities.
While the absence of reliable statistics makes it difficult to determine Applied
Biosystems' relative market position in its industry segment, Applied Biosystems
believes it is one of the principal suppliers in its fields, marketing a broad
line of instruments and life science systems.

         Research, Development, and Engineering. Applied Biosystems is actively
engaged in basic and applied research, development, and engineering programs
designed to develop new products and to improve existing products. Research,
development, and engineering expenditures for Applied Biosystems totaled $143.6
million in fiscal 1999, $150.6 million in fiscal 2000, and $196.8 million in
fiscal 2001. The Company spent $184.6 million in fiscal 1999, $265.0 million in
fiscal 2000, and $324.5 million in fiscal 2001 on Company-sponsored research,
development, and engineering activities.

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

         Research and development projects at Applied Biosystems include: the
development of improved electrophoresis techniques for DNA analysis; real-time
PCR for nucleic acid


                                      -11-
<PAGE>

quantification; innovative approaches to cellular analysis; sample preparation;
information technologies; and mass spectrometry.

         Environmental Matters. Applied Biosystems is subject to federal, state,
and local laws and regulations regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, in
those jurisdictions where Applied Biosystems operates or maintains facilities.
Applied Biosystems does not believe that any liability arising under, or
compliance with, environmental laws or regulations will have a material effect
on its business, and no material capital expenditures are expected for
environmental control.

         Celera Genomics Group

         Overview. Celera Genomics is engaged principally in integrating high
throughput technologies to create therapeutic discovery and development
capabilities for internal use and for its customers and collaborators. Celera
Genomics' businesses are its online information business and its therapeutics
discovery business. The online information business is a leading provider of
genomic and related biological and medical information. Pharmaceutical,
biotechnology, and academic customers use this information, along with
customized information technology solutions provided by Celera Genomics, to
enhance their capabilities in the fields of life science research and
pharmaceutical and diagnostic discovery and development. Celera Genomics
recently expanded its focus to include therapeutic discovery and development.
Celera Genomics intends to leverage its capabilities in genomics, proteomics,
and bioinformatics, both in internal programs and through collaborations, to
identify drug targets and diagnostic markers, and to discover and develop novel
therapeutic candidates. Initially, Celera Genomics intends to focus its
therapeutic discovery efforts in the field of oncology. In June 2001, Celera
Genomics announced the signing of a definitive merger agreement with Axys, a
small molecule drug discovery and development company. Celera Genomics believes
that Axys' medicinal and structural chemistry and biology capabilities will
accelerate the development of its therapeutic discovery business.

         The Company and Dr. J. Craig Venter, a leading genomic scientist and
founder of The Institute for Genomic Research ("TIGR"), formed the Celera
Genomics business for the purpose of generating and commercializing genomic,
proteomic, and related biological and medical information to accelerate the
understanding of biological processes and to assist pharmaceutical,
biotechnology, and life science research entities in areas of research
including:

         o        new drugs and improved drug development processes;

         o        novel genes and factors that regulate and control gene
                  expression;

         o        understanding basic biological processes;

         o        interrelationships between genetic variability, disease, and
                  drug response; and

         o        personalized health/medicine.

         A key component of Celera Genomics' business strategy is the
development and sale of its Celera Discovery System(TM). The Celera Discovery
System is an online information and discovery system through which users can
access Celera Genomics' genomic and related biological and medical information.
Celera Genomics continues to expand the content and functionality of this
integrated information and discovery system, which Celera Genomics


                                      -12-
<PAGE>

believes includes the most comprehensive and integrated databases of genomic and
related biological and medical information currently available. The Celera
Discovery System contains proprietary information from both Celera Genomics and
external sources, as well as publicly available data. Also, Celera Genomics has
developed, and expects to continue developing, software tools that enable users
to view, browse, and analyze data available through the Celera Discovery System
in an integrated way to facilitate the drug discovery process.

         Celera Genomics supplements human genome sequence data with other
information to increase the value of its Celera Discovery System. This
additional information includes annotation, comparative genomic information, and
associated tissue-specific gene and protein expression profiles from human and
other model organisms. Comparative genomic information from model organisms,
such as Drosophila (fruit fly) and mouse, are often used as a mechanism to
better analyze specific areas of the genome and develop an understanding of the
interrelationships of the genetic code to disease and drug response. This
information, which facilitates a better understanding of how genes are
controlled by regulatory elements, is expected to have significant implications
for therapeutic discovery and development.

         Celera Genomics anticipates that its Celera Discovery System will
continue to be a resource for a wide range of customers, including companies in
the pharmaceutical and biotechnology industries, academic and research
institutions, and ultimately physicians and individuals. In addition, Celera
Genomics expects that the Celera Discovery System will be used internally for,
and will have a significant role in, Celera Genomics' therapeutic discovery
programs.

         Scientific progress to date/publication of data. In June 2000, Celera
Genomics and the Human Genome Project each announced the "first assembly" of the
human genome, and in April 2001, Celera Genomics announced the assembly of the
mouse genome. Assembly is the process by which individual fragments of DNA, the
molecule that forms the basis of the genetic material in virtually all living
organisms, are pieced together into their appropriate order and placed or
positioned on each chromosome within the genome. Celera Genomics' first assembly
of the human genome covered approximately 95% of that genome, and its assembly
of the mouse genome covered approximately 99% of that genome. Celera Genomics
will continue to update its assembly of the human and mouse genomes as it
continues to annotate these genomes. Annotation is the process whereby genes,
sequences of DNA that encode proteins, and their structures, features, protein
expression, and predicted function, are identified and recorded.

         In sequencing and assembling the human and mouse genomes, Celera
Genomics used an advanced strategy known as "shotgun sequencing." This technique
uses a combination of Applied Biosystems' high throughput sequencing equipment
to sequence DNA fragments and powerful computers and proprietary software
algorithms to assemble them. This is the same technique Celera Genomics used to
sequence and assemble the Drosophila genome in cooperation with the Berkeley
Drosophila Genome Project, Celera Genomics' first sequencing project. Celera
Genomics has used a combination of public and proprietary data to build the
assembled human genome. To build the assembled mouse genome, Celera Genomics
used its own proprietary data. Celera Genomics' customers continue to receive
updated versions of these assembled genomes.

         Celera Genomics believes that its shotgun sequencing strategy has
accelerated the generation of genomic information and the discovery of new
genes. This information includes


                                      -13-
<PAGE>

rarely expressed genes, predicted proteins, and other factors, such as
regulatory regions, that control gene expression. This data forms the basis of
Celera Genomics' human genome database. Information from this database is
available to Celera Genomics' customers through the Celera Discovery System.

         Celera Genomics released a detailed ordered consensus human genome
assembly in the journal Science in February 2001. Celera Genomics makes this
information available to non-commercial entities in a searchable format via its
web site. Celera Genomics believes that this disclosure policy will establish
Celera Genomics' data as the genome reference standard and will encourage
researchers to use its data and ultimately become customers of Celera Genomics.
However, Celera Genomics' disclosure policies are and will continue to be
affected by, among other things, the evolution of intellectual property law and
Celera Genomics' assessment of the likelihood that other commercial
organizations may seek to obtain Celera Genomics' data and resell it to their
own customers in competition with Celera Genomics. Celera Genomics believes that
current efforts by some companies to obtain data made publicly available for the
purpose of private resale may continue, and that the need to protect the value
of its information while carrying out its intention to share this data with the
research community will affect its data disclosure strategy.

         Commercial Applications. Celera Genomics expects that the use of the
information it develops and the discoveries it makes will help transform life
sciences research by increasing the understanding of biological processes, thus
enabling scientists to accelerate the discovery and development process. Celera
Genomics also believes that the information it develops will ultimately
facilitate the development of individual genetic profiles that will be used for
personal health planning by the medical market. The commercial markets that
Celera Genomics believes will benefit from its information include
pharmaceutical drug discovery and development, medical, and consumer markets.

         Celera Genomics expects that its revenue sources for the foreseeable
future will come from selling access to its information through subscriptions,
genomic services, and research and development collaborations. The structure of
customer subscriptions, including the databases to be offered, functionality of
the system, the access fees to be charged, the intellectual property terms, and
the nature of any services provided to customers, will vary according to
customer requirements and are expected to change over time.

         Online Information Business and Related Products and Services. The
Celera Discovery System is the primary platform for Celera Genomics' online
information business. The Celera Discovery System is an online information and
discovery system through which users can access Celera Genomics' genomic and
related biological and medical information. Through the Celera Discovery System,
customers have access, on a subscription basis, to extensive integrated genomic
information systems, including proprietary, public, and third party annotations;
polymorphism information; comparative genomics information; protein information;
and search tools and algorithms. Customers can subscribe to all of the Celera
Discovery System's databases and tools on a bundled basis, or can purchase
access to a selection of features. In addition, subscribers to Celera Genomics'
database offerings may choose forms of data access and delivery other than
through the Celera Discovery System.

         The Celera Discovery System provides a bioinformatics infrastructure
designed to enable and support discovery research. Bioinformatics refers to
information technology designed for the management, processing, analysis,
storage, and visualization of large quantities of genomic


                                      -14-
<PAGE>

and related information. Celera Genomics' bioinformatics infrastructure includes
software tools that enable users to view, browse, and analyze data available
through the Celera Discovery System. In addition, users can integrate the Celera
Discovery System into their existing software infrastructure. Also, subscribers
to the Celera Discovery System can purchase bioinformatics and related
information technology services, such as data hosting, custom analysis
applications services, and data integration.

         All of the information contained in the Celera Discovery System is
integrated through Celera Genomics' bioinformatics infrastructure to enable
analysis across data sets and facilitate users' discovery efforts. Users access
the data using a bioinformatics system that includes a graphical user interface
which enables viewing of data. The Celera Discovery System currently includes
the following databases:

         o        Genome Reference Database. Celera Genomics' Genome Reference
                  Database includes Celera Genomics' assembled and annotated
                  human, mouse, and Drosophila genomes, as well as genomic and
                  related data from a variety of sources available to the
                  public. In addition, the Celera Discovery System enables users
                  to integrate their own data with these data sets. The Celera
                  Discovery System provides pre-computed relationships among the
                  data sets integrated into the Genome Reference Database, and
                  contains computational tools designed to facilitate the
                  viewing and analysis of gene structure, function, and role,
                  and protein classifications.

         o        SNP Reference Database. Celera Genomics' SNP Reference
                  Database identifies over 3.5 million single nucleotide
                  polymorphism, or SNP, sites within the human genome. SNPs are
                  naturally occurring genetic variations within a genome that
                  scientists believe can be correlated with susceptibility to
                  disease, disease prognosis, drug efficiency, and drug
                  toxicity. In addition to the basic SNP data, this database
                  includes related content such as the identification of
                  haplotypes, which are sets of SNPs which relate to specific
                  diseases or other conditions, and is integrated with Celera
                  Genomics' annotation of the human genome.

         Celera Genomics expects to expand the Celera Discovery System to
include comparative genomics tools. Comparative genomics involves the study of
genes of model organisms such as Drosophila (fruit fly) and mouse that
correspond to human genes in order to better analyze specific areas of the
genome and develop an understanding of interrelationships of the genetic code to
disease and drug response. The comparative genomics tools that Celera Genomics
is developing are expected to enable users to identify corresponding genes in
available genomes, facilitate validation of targets in model organisms, and
extend gene function predictions across species. Celera Genomic believes that
this type of information will facilitate a better understanding of how genes are
controlled by regulatory elements and will have significant implications for
therapeutic discovery and development.

         Celera Genomics also expects to expand the Celera Discovery System to
include gene expression data and tools. Gene expression is the process by which
proteins are made from the instructions encoded in DNA. Celera Genomics plans to
enhance the Celera Discovery System to include tools to map customer and public
gene expression data, to integrate the Celera Discovery System with third party
gene expression tools, and to integrate gene expression data with Celera
Genomics classification systems. Celera Genomics may also add other product
offerings to the Celera Discovery System in the future, such as literature
annotation, protein function, and protein structure products.


                                      -15-
<PAGE>

         In addition to the products and services incorporated into the Celera
Discovery System, Celera Genomics provides collaborative products and services
customized to the individual needs of customers. Celera Genomics believes that
the infrastructure it has built in developing its online information business,
including its staff, technology, integrated information systems, and strategic
relationships, can be applied to the individual needs of its customers. These
additional products and services may include: licensing of proprietary
intellectual property rights from its own discovery efforts; collaborative
research and development endeavors; genome services such as sequencing and
assembly of genomes and genotyping services, (i.e., the detection and analysis
of individual genome profiles); and the provision of customized bioinformatics
tools and computer processing capacity.

         In July 2001, the Company announced a collaboration among Celera
Genomics, Applied Biosystems, and Celera Diagnostics for commercializing
products derived from information obtained through analysis of variations in the
human genome. The Company expects that these products will be based on the
identification of variations in the sequence and expression of genes, and their
association with disease and therapy. As part of this program, Celera Genomics
plans to prioritize and resequence selected genes from 40 to 50 individuals,
which the Company believes will reveal a larger number of SNPs with health
related implications than are currently available. Celera Genomics intends to
use this SNP data in its internal discovery efforts to improve the predictive
efficacy and toxicity of drug candidates, and as the basis for additional
collaborations. Celera Genomics may also incorporate the data from this program
into its database offerings. It is expected that Applied Biosystems will use
this information to develop new assays for the study of SNPs and other
polymorphisms, and that Celera Diagnostics will use this information in
genotyping and gene expression studies ultimately aimed at identifying new
diagnostic markers.

         Celera Therapeutics. Celera Genomics has recently expanded its focus to
include therapeutic discovery and development. Celera Genomics intends to
leverage its capabilities in genomics, proteomics, and bioinformatics to
identify therapeutic targets and diagnostic markers, and to discover and develop
novel therapeutic candidates. Initially, Celera Genomics intends to focus its
efforts in the field of oncology and has launched programs in pancreatic and
lung cancer, and expects to expand into other areas as its business and
discovery infrastructure develops. Celera Genomics intends to pursue both small
molecule and biologic therapeutics. Small molecule therapeutics are low
molecular weight synthetic pharmaceuticals, whereas biologic therapeutics are
generally large molecular weight protein-based biological compounds, typically
antibodies, vaccines, and replacement proteins. Celera Genomics plans to
commercialize discoveries, either at the target or therapeutic level, through
internal product development, collaboration, or licensing of intellectual
property.

         Celera Genomics expects its scientific approach in therapeutic
discovery to be as follows:

         o        Target and Marker Identification. Celera Genomics expects that
                  its discovery program will use high throughput proteomics to
                  identify proteins which are associated with the onset or
                  progression of disease, and which may therefore represent
                  potential diagnostic markers or points of therapeutic
                  intervention. In fiscal 2001, Celera Genomics commenced
                  construction of a proteomics facility to house the high
                  throughput proteomics technology that Celera Genomics will
                  need for these studies. Celera Genomics is currently scaling
                  up the operations of the proteomics


                                      -16-
<PAGE>

                  facility, which is expected to become fully operational during
                  the Company's 2002 fiscal year.

                  Celera Genomics plans to evaluate differential protein
                  patterns in biological samples from both healthy and diseased
                  individuals. Celera Genomics expects to evaluate sera samples,
                  which are readily available, as well as tissue samples. Celera
                  Genomics has designed advanced methods to fractionate cellular
                  and subcellular components of biological samples and to
                  capture from these components proteins belonging to druggable
                  target classes. Druggable target classes are related proteins
                  which in the past have been successfully used as points of
                  therapeutic intervention. Celera Genomics intends to use
                  advanced chromatography and mass spectrometer systems that
                  are amenable to high throughput quantitation and
                  identification of proteins. Celera Genomics expects that
                  information derived from these protein studies can then be
                  matched with values calculated from protein sequence
                  translations of Celera Genomics' assembled human and mouse
                  genomes using Celera Genomics' proprietary software and
                  algorithms designed for that purpose.

                  As a complementary approach to the methods described above,
                  Celera Genomics intends to also use a gene based approach to
                  target and marker identification. This approach uses genomics
                  and bioinformatics capabilities to identify novel genes. As
                  these novel genes are identified, Celera Genomics intends to
                  establish the priorities of these genes or their gene products
                  as targets based on the families of proteins they encode, the
                  association of the expression of these genes with specific
                  diseases, and the functional importance of the genes' products
                  to cells.

         o        Target and Marker Validation. Celera Genomics expects to use a
                  variety of methodologies to validate targets. Celera Genomics
                  intends to use immunohistochemistry (tissue and cellular
                  localization of proteins using antibody reagents) to refine
                  its understanding of therapeutic targets of interest and, for
                  example, to identify expression profiles that would support or
                  preclude meaningful progression of the drug targets. For
                  targets of interest, Celera Genomics intends to carry out
                  assays to determine the relevance of those targets across a
                  broad range of tissues and diseases. In the same manner,
                  Celera Genomics intends to use antibody assays to identify
                  proteins in fluids to refine its understanding of markers
                  through examination of expression profiles in a range of
                  patient samples, primarily bodily fluids, to support or
                  preclude meaningful progression of the markers. Celera
                  Genomics has obtained and expects to continue accessing
                  further validation capabilities through collaborations. For
                  example, in calendar 2001, Celera Genomics entered into
                  collaborations with Isis Pharmaceuticals, Inc. to access its
                  antisense technology and SomaLogic, Inc. to access its aptamer
                  technology.

         In June 2001, Celera Genomics announced the signing of a definitive
agreement for the acquisition of Axys, a small molecule drug discovery and
development company. The closing of this transaction is expected to occur in the
fourth quarter of calendar 2001. Celera Genomics believes that if this
acquisition is completed, Axys' medicinal and structural chemistry and biology
capabilities will accelerate the development of its therapeutic discovery
business for the following reasons:

         o        Axys' medicinal chemistry and biology capabilities are
                  expected to provide additional capabilities for in-vivo and
                  in-vitro target validation, as well as chemistry


                                      -17-
<PAGE>

                  based validation through hit-based functionation, the
                  identification of function through interaction with molecules
                  of known biological activity.

         o        Also, Celera Genomics expects to benefit from Axys' expertise
                  in the fields of small molecule structure based drug design,
                  medicinal and combinatorial chemistry, and pharmacokinetic and
                  safety evaluation. Axys has developed a general expertise in
                  proteases, a known druggable class of proteins.

         o        Axys has existing preclinical programs, including a program
                  directed at the treatment of osteoporosis in collaboration
                  with Merck & Co., a program directed at the treatment of
                  rheumatoid arthritis and atherosclerosis in collaboration with
                  Aventis Pharmaceuticals Products, Inc., and a program directed
                  at the treatment of asthma in collaboration with Bayer A.G.

         Celera Genomics believes that it is uniquely positioned to build a
therapeutics discovery and development business by combining its existing
genomics capabilities with its developing proteomics capabilities and, if the
Axys acquisition is completed, with Axys' medicinal and structural chemistry and
biology capabilities. In addition, Celera Genomics believes that its
bioinformatics infrastructure will contribute to the development of this
business by accelerating the therapeutic discovery process through, for example,
computer-based experimentation and improved decision support. Celera Genomics
expects that the combination of its large scale computing infrastructure with
the development of proprietary algorithms will facilitate the extraction of data
from proteomics experiments and the integration of this data with genome, gene
expression, and protein characterization information, scientific literature, and
the patent status of possible targets.

         Raw Materials. Celera Genomics' operations require a variety of raw
materials, such as chemical and biochemical materials and other supplies, some
of which are occasionally found to be in short supply. Celera Genomics depends
on Applied Biosystems for several critical materials, including reagents and
capillary arrays, required for sequencing. For certain of these materials,
Applied Biosystems is the sole supplier, and for other materials Celera Genomics
believes that Applied Biosystems provides the highest quality materials
available. Any interruption in the availability of these materials could
adversely affect and, in some cases, shut down sequencing operations.

         Patents, Licenses, Franchises and other Intellectual Property. Through
its internal research programs and collaborative programs, Celera Genomics
anticipates that it will develop an increasing portfolio of intellectual
property. Celera Genomics may use this intellectual property in its internal
development programs or may license such intellectual property to third party
collaborators or customers for some combination of license fees, milestone
payments, and royalty payments.

         Celera Genomics' business and competitive position are dependent, in
part, on its ability to protect its database information, its proprietary gene
sequence methods, its software technology, the novel genes and proteins it
identifies, and any therapeutic or diagnostic discoveries it makes using a
variety of intellectual property mechanisms. Celera Genomics' commercial success
will be affected by, but is not directly dependent on, the ability to obtain
patent protection on genes, polymorphisms, proteins, disease associations,
therapeutic agents, and diagnostic agents discovered by it and/or by Celera
Genomics' customers on their own behalf and by collaborators. Celera Genomics
has sought and plans to continue seeking


                                      -18-
<PAGE>

intellectual property protection, including copyright protection, for the Celera
Discovery System, including its content, and the software and methods it creates
to manage, store, analyze, and search novel information.

         Celera Genomics has also sought and expects to continue seeking patent
protection for inventions relating to gene, protein, therapeutic, and diagnostic
discoveries. Celera Genomics' current plan is to apply for patent protection
upon the identification of novel genes, proteins, and their biological function
or utility, as well as therapeutic and diagnostic agents it discovers or
develops. Although obtaining patent protection based on genes and proteins might
enhance Celera Genomics' business, Celera Genomics does not believe that its
commercial success will be materially dependent on its ability to do so.
However, if Celera Genomics does not receive patents for therapeutic and
diagnostic discoveries it makes in the future, if any, the failure to obtain
such patents could adversely affect the commercial value of such discoveries.
Currently, Celera Genomics has patent applications directed to gene, protein,
therapeutic, and diagnostic discoveries that are pending in the United States
and in foreign jurisdictions and has received one issued United States patent.

         Celera Genomics has in the past used and expects to continue using a
combination of strategies to protect its intellectual property assets involving
gene discoveries, proteomics discoveries, SNP discoveries, the underlying
validation, and functional characteristics of these genes, proteins, and SNPs,
as well as any therapeutic or diagnostic agents it discovers. In addition to
seeking patent protection, Celera Genomics may rely on trade secret laws or
confidentiality protections for these discoveries. Celera Genomics recognizes
that many of the intellectual property laws are directly suitable for
application to such discoveries while other protections may not be available or
extend to cover genomic and/or proteomic-based discoveries.

         During the sequencing and early assembly phases of the human genome,
Celera Genomics maintained proprietary protection of its genome assembly and SNP
discoveries using a combination of confidential treatment of, and control of
access to, the information, as well as by seeking patent protection where
appropriate. During later stages of assembly and gene annotation, Celera
Genomics has sought and expects to continue seeking broader patent protections
of its discoveries. Such an approach will be utilized to establish commercial
applications and patentable utility for such SNP discoveries.

         The granting of patents on genomic and proteomic based discoveries as
well as patents to therapeutic and diagnostic agents is uncertain worldwide and
is currently under review and revision in many countries. Moreover, publication
of information concerning partial gene sequences prior to the time that Celera
Genomics applies for patent protection based on the full-length gene sequences
or different partial gene sequences in the same gene may affect Celera Genomics'
ability to obtain patent protection. Certain court decisions suggest that
disclosure to the applicable agency of a partial sequence may not be sufficient
to support the patentability of a full-length sequence and that patent claims to
a partial sequence may not cover a full-length sequence inclusive of that
partial sequence. Currently, the United States Patent and Trademark Office
requires an adequate disclosure of a specific and substantial utility, such as
gene function, in order to support the patentability of a gene sequence.

         In January 1997, TIGR, in collaboration with the National Center for
Biological Information, disclosed full-length DNA sequences assembled from
expressed sequence tags available in publicly accessible databases or sequenced
at TIGR. The National Human Genome Research Institute also plans to release
sequence information to the public. These disclosures

                                      -19-
<PAGE>

might limit the scope of Celera Genomics' claims or make subsequent discoveries
related to full-length genes unpatentable. While Celera Genomics believes that
the publication of sequence data will not preclude it or others from being
granted patent protection on genes, there can be no assurances that this
publication has not affected and will not affect the ability to obtain patent
protection.

         In February 2001, Celera Genomics disclosed an assembly of the human
genome and gene/protein annotations in a publicly accessible database at Celera
Genomics. The Federally funded Human Genome Project also released a human genome
sequence assembly to the public on this date. These disclosures might limit the
scope of Celera Genomics' claims or make subsequent discoveries related to
full-length genes and proteins unpatentable. While Celera Genomics believes that
the publication of sequence data will not preclude it or others from being
granted patent protection on genes and proteins, there can be no assurances that
this publication has not affected and will not affect the ability to obtain
patent protection.

         Celera Genomics also cannot ensure that any changes to, or
interpretations of, the patent laws will not adversely affect its patent
position. Celera Genomics anticipates that there may be significant litigation
regarding genomic patent and other intellectual property rights. If Celera
Genomics becomes involved in such litigation, it could consume a substantial
portion of Celera Genomics' resources, and Celera Genomics may not ultimately
prevail. If Celera Genomics does not prevail in a patent litigation dispute, it
may be required to pay damages or royalties or to take measures to avoid any
future infringement, or Celera Genomics may not be able to stop a competitor
from making, using, or selling similar products or technology.

         Celera Genomics also intends to rely on trade secret protection for its
confidential and proprietary information. Celera Genomics believes it has
developed proprietary procedures for sequencing and analyzing genes and for
assembling the genes in their naturally occurring order. In addition, Celera
Genomics believes it has developed novel methods for searching and identifying
particularly important regions of genetic information or whole genes of
interest. Celera Genomics currently protects these methods and procedures as
trade secrets and has sought patent protection for some of the proprietary
methods although no such patents have yet been issued.

         Celera Genomics has taken security measures to protect its databases,
including entering into confidentiality agreements with employees and academic
collaborators who are provided or have access to confidential or proprietary
information. Celera Genomics continues to explore ways to further enhance the
security for its data, including copyright protection for its databases.

         Backlog. Celera Genomics' total recorded backlog at June 30, 2000 was
$24.3 million. Celera Genomics' total recorded backlog at June 30, 2001 was
$66.1 million. It is Celera Genomics' general policy to include in backlog only
purchase orders that have firm delivery dates within one year. Recorded backlog
may not result in sales because of cancellation or other factors. It is
anticipated that all orders included in the current backlog will be delivered
before the close of fiscal year 2002.

         Competition. There is intense competition among entities attempting to
interpret segments of the human genome and identify genes associated with
specific diseases and develop products, services and intellectual property based
on these discoveries. Celera Genomics faces competition in these areas from
genomic, pharmaceutical, biotechnology and diagnostic companies, academic and
research institutions, and government or other publicly-funded

                                      -20-
<PAGE>

agencies, both in the United States and abroad. A number of companies, other
institutions, and government-financed entities are engaged in gene and protein
analysis, and some of them are developing databases containing gene, protein,
and related biological information and are marketing or plan to market their
data to pharmaceutical and biotechnology companies and academic and research
institutions.

         Additional competitors may attempt to establish databases containing
genomic and related information in the future which are similar to or
competitive with Celera Genomics' databases. In addition, some pharmaceutical
and biotechnology companies may choose to develop or acquire competing
technologies to meet their needs rather than purchase products or services from
Celera Genomics. Celera Genomics has licensed some of its key technology on a
non-exclusive basis from third parties and therefore this technology may be
available for license by competitors of Celera Genomics or pharmaceutical or
biotechnology companies seeking to develop their own databases for their own
use. Also, a customer may use Celera Genomics' services to develop products that
compete with products separately developed by Celera Genomics or its other
customers. Finally, new technologies that improve the gene and protein analysis
and discovery process may emerge over time and could compete with those being
developed by Celera Genomics or otherwise affect its business strategy.

         Celera Genomics believes that the competitive position of its online
database business is dependent on the features and ease of use of the Celera
Discovery System and the scope, quality, and pricing (and perceived quality and
value) of the databases and services available through the Celera Discovery
System. Celera Genomics believes that the competitive position of the
therapeutics discovery business will depend upon the discoveries it makes, if
any, and the development of effective therapeutic agents based on those
discoveries.

         Research and Development. Celera Genomics is actively engaged in basic
and applied research and development programs designed to develop new products.
Research and development expenditures for Celera Genomics totaled $43.7 million
in fiscal 1999, $148.6 million in fiscal 2000, and $164.7 million in fiscal
2001. The Company spent $184.6 million in fiscal 1999, $265.0 million in fiscal
2000, and $324.5 million in fiscal 2001 on Company-sponsored research,
development, and engineering activities.

         Celera Genomics' new products are expected to originate from three
sources: internal research and development programs, external collaborative
efforts or alliances, and business and technology acquisitions.

         Environmental Matters. Celera Genomics is subject to federal, state,
and local laws and regulations regulating the discharge of materials into the
environment, or otherwise relating to the protection of the environment, in
those jurisdictions where Celera Genomics operates or maintains facilities.
Celera Genomics does not believe that any liability arising under, or compliance
with, environmental laws or regulations will have a material effect on its
business, and no material capital expenditures are expected for environmental
control.

         Celera Diagnostics Joint Venture

         In November 2000, the Company announced a major initiative in the field
of diagnostics and the appointment of Kathy Ordonez, formerly president of Roche
Molecular Systems, to lead this initiative. In April 2001, the Company formed
Celera Diagnostics, a joint venture between Applied Biosystems and Celera
Genomics to be headed by Ms. Ordonez as its President, to

                                      -21-
<PAGE>

pursue this initiative. Celera Diagnostics is in the early stages of developing
its strategy and building its resources, but the Company expects that it will be
focused on the discovery, development, and commercialization of novel diagnostic
tests. The Company believes that Celera Diagnostics will be uniquely positioned
to contribute to the future of diagnostic medicine by leveraging the instrument
and technology expertise of Applied Biosystems with the discovery and
informatics capabilities of Celera Genomics.

         In addition, in July 2001, the Company announced a collaboration among
Celera Genomics, Applied Biosystems, and Celera Diagnostics for commercializing
products derived from information obtained through analysis of variations in the
human genome. The Company expects that these products will be based on the
identification of variations in the sequence and expression of genes, and their
association with disease and therapy. As part of this program, Celera Genomics
plans to prioritize and resequence selected genes from 40 to 50 individuals,
which the Company believes will reveal a larger number of SNPs with health
related implications than are currently available. Celera Genomics intends to
use this SNP data in its internal discovery efforts to improve the predictive
efficacy and toxicity of drug candidates, and as the basis for additional
collaborations. Celera Genomics may also incorporate the data from this program
into its database offerings. It is expected that Applied Biosystems will use
this information to develop new assays for the study of SNPs and other
polymorphisms, and that Celera Diagnostics will use this information in
genotyping and gene expression studies ultimately aimed at identifying new
diagnostic markers.

         Employees

         As of June 30, 2001, the Company had approximately 5,544 employees
allocated as follows:

                   Business/Function                               Number
                   -----------------                               ------

               Applied Biosystems Group                             4,524

               Celera Genomics Group                                  817

               Celera Diagnostics                                      49

               Corporate Staff                                        154

         The Company's corporate staff provides accounting, tax, treasury,
legal, information technology, human resources, and other internal services for
Applied Biosystems, Celera Genomics, and Celera Diagnostics. None of Applied
Biosystems' United States employees, and none of Celera Genomics' or Celera
Diagnostics' employees or the Company's corporate staff employees, are subject
to collective bargaining agreements. The Company generally considers its
relations with its employees to be good.

Financial Information About Geographic Areas

         A summary of net revenues from external customers and long-lived assets
attributed to each of the Company's geographic areas for the fiscal years 1999,
2000, and 2001 is incorporated herein by reference to Note 6 on pages 44 and 45,
Note 6 on page 82, and Note 6 on pages 102


                                      -22-
<PAGE>
and 103 of the Company's Annual Report to Stockholders for the fiscal year ended
June 30, 2001.

         The Company's consolidated net revenues from external customers in
countries other than the United States for fiscal years 1999, 2000, and 2001
were $607.9 million, $690.0 million,
and $824.8 million, or 50.0%, 50.3%, and 50.2%, respectively, of the Company's
consolidated net revenues.

         The Company's manufacturing facilities outside the continental United
States are located in the United Kingdom, Japan, and Singapore.


Item 2.                         PROPERTIES

Applied Biosystems Group Facilities

         Applied Biosystems' headquarters are located in leased facilities in
Foster City, California. Applied Biosystems owns or leases various other
facilities for manufacturing, distribution, warehousing, research and
development, sales and demonstration, service, and administration. The following
is a list of Applied Biosystems' principal and other material facilities,
substantially all of which are utilized by Applied Biosystems and all of which
are maintained in good working order:


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

Foster City, CA (761,000)                                  Leased (2001-2015)
Hayward, CA (66,000)                                       Leased (2004)
San Jose, CA (81,000)                                      Owned
Bedford, MA (43,000)                                       Leased (2007)
Framingham, MA (140,000)                                   Leased (2009)
Cambridge, MA (10,700)                                     Leased (2006)
Santa Fe, NM (14,000)                                      Leased (2010)
Houston, TX (50,000)                                       Leased (2004)
Warrington, United Kingdom (69,000)                        Owned
Rotterdam, Netherlands (46,000)                            Leased (2010)
Singapore (30,000)                                         Leased (2002)
Narita, Japan (24,000)                                     Owned


         Applied Biosystems acquired ownership of an 80 acre property in
Pleasanton, California, in September 2000, on which the company intends to
construct a new facility with approximately 600,000 square feet for research and
development, manufacturing, and administrative purposes. Demolition of the
existing facilities on this property and construction of the new facility are
underway and the new facility is currently expected to be completed in 2003.
Also, the Company is currently constructing a new owned facility in Warrington,
United Kingdom with approximately 38,000 square feet, which is expected to be
completed in November 2001. The Company expects to transfer some of its existing
operations in Warrington to this new facility upon its completion and intends to
sell the vacated property. Applied Biosystems also owns undeveloped land in
Vacaville, California, and is evaluating whether to develop this property.



                                      -23-
<PAGE>
Celera Genomics Group Facilities

         Celera Genomics' headquarters are located in two owned adjacent
buildings in Rockville, Maryland. Celera Genomics' administrative facilities,
sequencing facility, research and development laboratories, bioinformatics data
center, and proteomics factory are located at its headquarters. Celera Genomics
also leases various other facilities for research and development, sales, and
service, as well as a facility in Pasadena, California which is the headquarters
for Paracel, Inc., which was acquired by Celera in June 2000. The following is a
list of Celera Genomics' principal and other material facilities, substantially
all of which are utilized by Celera Genomics and all of which are maintained in
good working order:

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

Rockville, MD (220,000)                                       Owned
Pasadena, CA (85,000)                                         Leased (2011)
Davis, CA (16,000)                                            Leased (2002)

         The facility in Rockville, Maryland includes approximately 13 acres of
undeveloped land that the Company believes could be used for the construction of
additional facilities, if necessary.

Celera Diagnostics Facilities

         The Company has leased the following two facilities to serve as the
principal facilities for Celera Diagnostics, which Celera Diagnostics is using
as its headquarters as well as for research and development and administrative
purposes, and which it expects to use for manufacturing purposes in the future:

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

Alameda, CA (48,000)                                           Leased (2003)
Alameda, CA (19,000)                                           Leased (2006)


         Currently, Celera Diagnostics is using approximately 50% of the
combined capacity in these facilities, although it expects to be using
substantially all of the capacity by the end of the 2002 fiscal year due to the
expected growth in its operations. These facilities are in good working order,
although they are currently undergoing renovations that are expected to be
completed during the fourth quarter of calendar 2001.

Corporate Facilities

         In May 2001, the Company consolidated most of its corporate staff into
a new leased headquarters facility located in Norwalk, Connecticut. The Company
leases approximately 51,000 square feet at this facility, substantially all of
which the Company uses for corporate staff and related support functions. This
facility is maintained in good working order.

         The Company also owns another facility in Norwalk and Wilton,
Connecticut, with an area of approximately 402,000 square feet. This facility
was previously the Company's corporate headquarters, but is no longer used by
the Company. This facility is being held for sale

                                      -24-
<PAGE>

or long term lease. The facility is currently vacant and is expected to remain
vacant pending completion of such a sale or lease.


Item 3.                       LEGAL PROCEEDINGS

         The Company is a party to various legal proceedings, including among
others patent, commercial, and environmental matters, arising from the conduct
of the Company's normal business activities, including those described below.

Amersham

          On November 18, 1997, Amersham Pharmacia Biotech, Inc. ("Amersham")
filed a patent infringement action against the Company in the United States
District Court for the Northern District of California. The complaint alleges
that the Company is directly, contributorily, or by inducement infringing U.S.
Patent No. 5,688,648 ("the '648 patent"). Amersham asserts that the Company's
use and sale of DNA analysis reagents and systems that incorporate "BigDye"
fluorescence detection technology infringe the '648 patent, and seeks injunctive
and monetary relief. The Company answered the complaint, alleging that the '648
patent is invalid and unenforceable, and that the Company has not infringed the
'648 patent. In December 2000, the court granted Amersham's motion for summary
judgment in part, finding that certain of the Company's activities infringe the
claims of the '648 patent, but denied Amersham's motion for summary judgment
that the Company induced its customers to infringe the claims of the '648
patent. On April 6, 2001, the court granted the Company's motion for summary
judgment finding that the Company's recently introduced BigDye Version 3.0 dye
technology does not infringe the '648 patent.

         On March 13, 1998, the Company filed a patent infringement action
against Amersham and Molecular Dynamics, Inc. in the United States District
Court for the Northern District of California. The Company asserts that one of
its patents (U.S. Patent No. 4,811,218) is infringed by reason of Molecular
Dynamics' and Amersham's sale of certain DNA analysis systems (e.g., the
MegaBACE 1000 System). In response, Amersham has asserted various affirmative
defenses and several counterclaims, including that the Company is infringing two
patents, U.S. Patent No. 5,091,652 ("the '652 patent") and U.S. Patent No.
5,459,325, each owned by or licensed to Molecular Dynamics, by selling certain
ABI PRISM(TM) DNA sequencing systems. In December 2000, the court granted the
Company's motion for summary judgment of non-infringement of the '652 patent.
The trial date previously scheduled for August 6, 2001 was vacated in July 2001.

On May 21, 1998, Amersham filed a patent infringement action against the Company
in the United States District Court for the Southern District of New York. The
complaint alleges that the Company is infringing, contributing to the
infringement of, and inducing the infringement of U.S. Patent No. 4,707,235
("the '235 patent") by reason of the Company's sale of certain ABI PRISM(TM) DNA
sequencing systems. The complaint seeks injunctive and monetary relief. The
Company answered the complaint, alleging that the '235 patent is invalid and
that the Company does not infringe the '235 patent. The matters described in
this paragraph and the immediately preceding paragraph have been consolidated
into a single case to be heard in the United States District Court for the
Northern District of California. In December 2000, the court granted the
Company's motion for summary judgment of non-infringement of the '235 patent.
However, on December 18, 2000, Amersham filed a new complaint alleging that the
Company is infringing the '235 patent by reason of the Company's sale of certain
DNA

                                      -25-
<PAGE>

sequencing systems, which allegations were not in the previous suit under the
'235 patent. This action is in the early stages of discovery.

         On May 30, 2000, the Company filed a patent infringement action against
Amersham in the United States District Court for the Northern District of
California. The Company asserts that one of its patents (U.S. Patent No.
5,945,526) is infringed by reason of Amersham's sale of DNA analysis reagents
and systems that incorporate ET Terminator fluorescence detection technology.
The claims construction hearing previously scheduled for June 7, 2001 has been
postponed.

         On July 10, 2001, United States Judge Charles R. Breyer stayed all
cases in the litigation described above for the purpose of facilitating court
ordered settlement mediation. The stay is scheduled to expire on March 11, 2002.

Securities Litigation

         The Company and some of its officers have been served in five lawsuits
between April and May, 2000, purportedly on behalf of purchasers of Applera
Corporation - Celera Genomics Group Common Stock in the Company's follow-on
public offering of Applera Corporation - Celera Genomics Group Common Stock
completed on March 6, 2000. In the offering, the Company sold an aggregate of
approximately 4.4 million shares of Applera Corporation - Celera Genomics Group
Common Stock at a public offering price of $225 per share. All of these lawsuits
have been consolidated into a single case and are pending in the United States
District Court for the District of Connecticut, and an amended consolidated
complaint was filed on August 21, 2001. The consolidated complaint generally
alleges that the prospectus used in connection with the offering was inaccurate
or misleading because it failed to adequately disclose the alleged opposition of
the Human Genome Project and two of its supporters, the governments of the
United States and the United Kingdom, to providing patent protection to the
Company's genomic-based products. The consolidated complaint seeks unspecified
money damages, rescission, costs and expenses, and such other relief as the
court deems proper.

United States v. Davis

         The Company is a party to the action United States v. Davis, pending in
the United States District Court for the District of Rhode Island. The Company
was brought into the case along with numerous other companies as a result of a
third party complaint filed by United Technologies Corporation ("UTC") seeking
contribution for environmental cleanup costs imposed by the United States
government. In December 1998, the District Court found the Company liable to UTC
along with certain, but not all, of the defendants in the case. The Company
believes the amount of such liability to be less than $200,000, which will be
determined when all appeals have been concluded. Both UTC and the Company
appealed the District Court's decision. In August 2001, the United States Court
of Appeals for the First Circuit affirmed the District Court's decision and
remanded the case to the District Court for further proceedings. The Company and
the other defendants are considering the decision of the Court of Appeals and
their legal alternatives.


Item 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         Not applicable.


                                      -26-
<PAGE>

                                   PART II

Item 5.             MARKET FOR REGISTRANT'S COMMON EQUITY
                       AND RELATED STOCKHOLDER MATTERS

Market Information

         The principal United States market where the Company's Applera
Corporation - Applied Biosystems Group Common Stock and Applera Corporation -
Celera Genomics Group Common Stock are traded is the New York Stock Exchange,
although such stock is also traded on the Pacific Exchange.

         The high and low sales prices of Applera Corporation - Applied
Biosystems Group Common Stock and Applera Corporation - Celera Genomics Group
Common Stock for each quarterly period during fiscal years 2000 and 2001 is
incorporated herein by reference to Note 12, page 54, of the Company's Annual
Report to Stockholders for the fiscal year ended June 30, 2001.

Holders

         On September 4, 2001, the approximate number of holders of Applera
Corporation - Applied Biosystems Group Common Stock was 6,326, and the
approximate number of holders of Applera Corporation - Celera Genomics Group
Common Stock was 6,065. The approximate number of holders is based upon the
actual number of holders registered in the Company's books at such date and does
not include holders of shares in "street name" or persons, partnerships,
associations, corporations, or other entities identified in security position
listings maintained by depository trust companies. The calculation of the
market value of shares held by non-affiliates shown on the cover of this Annual
Report on Form 10-K was made on the assumption that there were no affiliates
other than executive officers and directors as of the date of calculation.

Dividends

         Information regarding the amount of quarterly dividends during fiscal
years 2000 and 2001 is incorporated herein by reference to Note 12, page 54, of
the Company's Annual Report to Stockholders for the fiscal year ended June 30,
2001.

Sale of Unregistered Securities

         The Company has not sold any securities during the fiscal year ended
June 30, 2001, that were not registered under the Securities Act of 1933.

Forward Looking Statements and Risk Factors

         Certain statements contained in, or incorporated by reference in, this
Annual Report on Form 10-K are forward-looking and are subject to a variety of
risks and uncertainties. These statements may be identified by the use of
forward-looking words or phrases such as "believe," "expect," "anticipate,"
"should," "plan," "estimate," and "potential," among others. These
forward-looking statements are based on the Company's current expectations. The
Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for
such forward-looking


                                      -27-
<PAGE>

statements. In order to comply with the terms of the safe harbor, the Company
notes that a variety of factors could cause actual results and experience to
differ materially from the anticipated results or other expectations expressed
in such forward-looking statements. Also, the Company notes that owners of
Applera Corporation - Applied Biosystems Group Common Stock and Applera
Corporation - Celera Ceramics Group Common Stock are subject to risks arising
from their ownership of common stock of a corporation with two separate classes
of common stock. The risks and uncertainties that may affect the operations,
performance, development, and results of the Company's business, and the risks
arising from a capital structure with two separate classes of common stock,
include, but are not limited to:

         Risks Relating to the Applied Biosystems Group

         Rapidly changing technology in life sciences could make Applied
         Biosystems' product line obsolete unless it continues to improve
         existing products, develop new products, and pursue new market
         opportunities.

         A significant portion of the net revenues for Applied Biosystems each
year is derived from products that did not exist in the prior year. Applied
Biosystems' future success depends on its ability to continually improve its
current products, develop and introduce, on a timely and cost-effective basis,
new products that address the evolving needs of its customers, and pursue new
market opportunities that develop as a result of technological and scientific
advances in life sciences. Applied Biosystems' products are based on complex
technology which is subject to rapid change as new technologies are developed
and introduced in the marketplace. Unanticipated difficulties or delays in
replacing existing products with new products could adversely affect Applied
Biosystems' future operating results. The pursuit of new market opportunities
will add further complexity and require additional management attention and
resources as these markets are addressed.

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

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

         A substantial portion of Applied Biosystems' sales is to customers at
         universities or research laboratories whose funding is dependent on
         both the level and timing of funding from government sources.

         As a result, the timing and amount of revenues from these sources may
vary significantly due to factors that can be difficult to forecast. Although
research funding has increased during the past several years, grants have, in
the past, been frozen for extended periods or otherwise become unavailable to
various institutions, sometimes without advance notice. Budgetary pressures may
result in reduced allocations to government agencies that fund research and


                                      -28-
<PAGE>

development activities. If government funding necessary to purchase Applied
Biosystems' products were to become unavailable to researchers for any extended
period of time, or if overall research funding were to decrease, the business of
Applied Biosystems could be adversely affected.

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

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

         The Company is currently subject to patent litigation with Amersham
Pharmacia Biotech, Inc. and Molecular Dynamics, Inc. In the litigation, Amersham
and Molecular Dynamics allege that Applied Biosystems has infringed four
Amersham patents as a result of Applied Biosystems' sale of DNA sequencing
instrumentations and reagents. Also in the litigation, the Company has brought
suit against Amersham and Molecular Dynamics alleging that they have infringed
two of the Company's patents as a result of their sale of their DNA sequencing
instrumentations and reagents. At present, these lawsuits are not scheduled for
trial. The sale of DNA sequencing instrumentation and reagents is an important
part of Applied Biosystems' business. If these lawsuits proceed to trial, the
cost of the litigation, and the amount of management time that will be devoted
to the litigation, will be significant. There can be no assurance that this
litigation will be resolved favorably to the Company or either Celera Genomics
or Applied Biosystems, that the Company and both of its groups will not be
enjoined from selling the products in question or other products as a result, or
that any monetary or other damages assessed against the Company will not have a
material adverse effect on the financial condition of the Company, Celera
Genomics, or Applied Biosystems.

         Since Applied Biosystems' business is dependent on foreign sales,
         fluctuating currencies will make revenues and operating results more
         volatile.

         Approximately 50% of Applied Biosystems' net revenues during fiscal
2001 were derived from sales to customers outside of the United States. The
majority of these sales were based on the relevant customer's local currency. A
significant portion of the related costs for


                                      -29-
<PAGE>

Applied Biosystems are based on the U.S. dollar. As a result, Applied
Biosystems' reported and anticipated operating results and cash flows are
subject to fluctuations due to material changes in foreign currency exchange
rates that are beyond Applied Biosystems' control.

         Integrating acquired technologies may be costly and may not result in
         technological advances.

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

         Electricity shortages and earthquakes could disrupt operations in
         California.

         The headquarters and principal operations of Applied Biosystems are
located in Foster City, California. The State of California and its principal
electrical utility companies have recently indicated that there is a statewide
electricity shortage and that these utility companies are in poor financial
condition. As a result, California has experienced temporary localized
electricity outages, or rolling blackouts, which may continue or worsen into
blackouts of longer duration in the future. Blackouts in Foster City, even of
modest duration, could impair or cause a temporary suspension of the group's
operations, including the manufacturing and shipment of new products. Power
disruptions of an extended duration or high frequency could have a material
adverse effect on operating results. In addition, Foster City is located near
major California earthquake faults. The ultimate impact of earthquakes on
Applied Biosystems, its significant suppliers, and the general infrastructure is
unknown, but operating results could be materially affected in the event of a
major earthquake.

         The Celera Genomics/Applied Biosystems Joint Venture's ability to
         develop proprietary diagnostic products is unproven.

         The Company has announced the formation of Celera Diagnostics, a joint
venture between Applied Biosystems and Celera Genomics in the field of
diagnostics. Celera Diagnostics faces the difficulties inherent in developing
and commercializing diagnostic tests and in building and operating a commercial
research and development program. Celera Diagnostics' ability to develop
proprietary diagnostic products is unproven, and it is possible that Celera
Diagnostics' discovery process will not result in any commercial products or
services. Even if Celera Diagnostics is able to develop products and services,
it is possible that these products and services may not be commercially viable
or successful due to a variety of reasons, including difficulty obtaining
regulatory approvals, competitive conditions, the inability to obtain necessary
intellectual property protection, the need to build distribution channels,
failure to get adequate reimbursement for these products from insurance or
government payors, or the inability of Celera Diagnostics to recover its
development costs in a reasonable period.


                                      -30-
<PAGE>

         Risks Relating to the Celera Genomics Group

         Celera Genomics has incurred net losses to date and may not achieve
         profitability.

         Celera Genomics has accumulated net losses of $365.0 million as of June
30, 2001, and expects that it will continue to incur additional net losses for
the foreseeable future. These losses are expected to increase as Celera Genomics
increases its investments in new technology and product development, including
investments for the development of its therapeutics discovery and development
business and investments in Celera Diagnostics, its joint venture with Applied
Biosystems, for the development of Celera Diagnostics' diagnostics business. As
an early stage business, Celera Genomics faces significant challenges in
simultaneously expanding its operations, pursuing key scientific goals and
attracting customers for its information products and services. As a result,
there is a high degree of uncertainty that Celera Genomics will be able to
achieve profitable operations.

         Celera Genomics' business plan depends heavily on continued assembly
         and annotation of the human and mouse genomes.

         In June 2000, Celera Genomics and the Human Genome Project each
announced the "first assembly" of the human genome, and in April 2001, Celera
Genomics announced the assembly of the mouse genome. Assembly is the process by
which individual fragments of DNA, the molecule that forms the basis of the
genetic material in virtually all living organisms, are pieced together into
their appropriate order and place on each chromosome within the genome. Celera
Genomics' first assembly of the human genome covered approximately 95% of that
genome, and its assembly of the mouse genome covered approximately 99% of that
genome. Celera Genomics intends to continue updating its assembly of the human
and mouse genomes as it continues to annotate these genomes. Annotation is the
process of assigning features or characteristics to each chromosome. Each gene
on each chromosome is given a name, its structural features are described, and
proteins encoded by genes are classified into possible or known function.

         Celera Genomics' ability to retain its existing customers and attract
new customers for its genome database business is heavily dependent upon the
continued assembly and annotation of these genomes. This information is also
essential to the therapeutics discovery and development components of Celera
Genomics' business strategy in which Celera Genomics intends to make substantial
investments in the near future. As a result, failure to update the assembly and
annotation efforts in a timely manner may have a material adverse effect on
Celera Genomics' business.

         Celera Genomics' revenue growth depends on retaining existing customers
         and adding new customers.

         The revenues that Celera Genomics expects to receive from its existing
customers will offset only a portion of its expenses. In order to generate
significant additional revenues, Celera Genomics must obtain additional
customers and retain its existing customers. Celera Genomics' ability to retain
existing customers and add new customers depends upon customers' continued
belief that Celera Genomics' products can help accelerate their drug discovery
and development efforts and fundamental discoveries in biology. Although
customer agreements typically have multiple year terms, there can be no
assurance that any will be renewed upon expiration. Celera Genomics' future
revenues are also affected by the extent to which existing customers expand


                                      -31-
<PAGE>

their agreements to include new services and database products. In some cases,
Celera Genomics may accept milestone payments or future royalties on products
developed by its customers as consideration for access to Celera Genomics'
databases and products in lieu of a portion of subscription fees. These
arrangements are unlikely to produce revenue for Celera Genomics for a number of
years, if ever, and depend heavily on the research and product development,
sales and marketing and intellectual property protection abilities of the
customer.

         Use of genomics information to develop or commercialize products is
         unproven.

         The development of new drugs and the diagnosis of disease based on
information derived from the study of the genetic material of organisms, or
genomics, is unproven. Few therapeutic or diagnostic products based on genomic
discoveries have been developed and commercialized and to date no one has
developed or commercialized any therapeutic or diagnostic products based on
Celera Genomics' technologies. If Celera Genomics or its customers are
unsuccessful in developing and commercializing products based on the group's
databases or other products or services, customers and Celera Genomics may be
unable to generate sufficient revenues and Celera Genomics' business may suffer
as a result. Development of these products will be subject to risks of failure,
including that these products will be found to be toxic, be found to be
ineffective, fail to receive regulatory approvals, fail to be developed prior to
the successful marketing of similar products by competitors or infringe on
proprietary rights of third parties.

         The industry in which Celera Genomics operates is intensely competitive
         and evolving.

         There is intense competition among entities attempting to interpret
segments of the human genome and identify genes associated with specific
diseases and develop products, services and intellectual property based on these
discoveries. Celera Genomics faces competition in these areas from genomic,
pharmaceutical, biotechnology and diagnostic companies, academic and research
institutions and government or other publicly-funded agencies, both in the
United States and abroad. A number of companies, other institutions and
government-financed entities are engaged in gene and protein analysis, and some
of them are developing databases containing gene, protein, and related
biological information and are marketing or plan to market their data to
pharmaceutical and biotechnology companies and academic and research
institutions. Additional competitors may attempt to establish databases
containing this information in the future. In addition, some pharmaceutical and
biotechnology companies may choose to develop or acquire competing technologies
to meet their needs rather than purchase products or services from Celera
Genomics. Celera Genomics has licensed some of its key technology on a
non-exclusive basis from third parties and therefore this technology may be
available for license by competitors of Celera Genomics or pharmaceutical or
biotechnology companies seeking to develop their own databases for their own
use. Also, a customer of Celera Genomics may use the products or services of
Celera Genomics to develop products or services that compete with products or
services separately developed by Celera Genomics or its customers.

         Competitors may also discover and characterize genes or proteins
involved in disease processes, potential candidates for new therapeutics, drug
discovery and development technologies, or drugs in advance of Celera Genomics
or its customers, or which are more effective than those developed by Celera
Genomics or its customers, or may obtain regulatory approvals of their drugs
more rapidly than Celera Genomics or its customers do, any of which

                                      -32-
<PAGE>

could have a material adverse effect on any of the similar programs of Celera
Genomics or its customers. Moreover, these competitors may obtain patent
protection or other intellectual property rights that would limit Celera
Genomics' rights or its customers' ability to use Celera Genomics' products to
commercialize therapeutic, diagnostic or agricultural products. In addition, a
customer may use Celera Genomics' services to develop products that compete with
products separately developed by the group or its other customers.

         Celera Genomics also faces competition from software providers. A
number of companies have announced their intent to develop and market software
to assist pharmaceutical and biotechnology companies and academic researchers in
managing and analyzing their own genomic data and publicly available data.

         Celera Genomics' current and potential customers are primarily from,
         and are subject to risks faced by, the pharmaceutical and biotechnology
         industries.

         Celera Genomics derives a substantial portion of its revenues from fees
for its information products and services paid by pharmaceutical companies and
biotechnology companies engaged in drug discovery and development. These fees
accounted for approximately 70% of Celera Genomics' revenue in fiscal year 2001.
Celera Genomics expects that these companies will continue to be Celera
Genomics' primary source of revenues for the foreseeable future. As a result,
Celera Genomics is subject to risks and uncertainties that affect the
pharmaceutical and biotechnology industries and to reduction and delays in
research and development expenditures by companies in these industries.

         In addition, Celera Genomics' future revenues may be adversely affected
by mergers and consolidation in the pharmaceutical and biotechnology industries,
which may reduce the number of the group's existing and potential customers.
Large pharmaceutical and biotechnology customers could also decide to conduct
their own genomics programs or seek other providers instead of using Celera
Genomics' products and services.

         Celera Genomics relies on its strategic relationship with Applied
         Biosystems.

         Celera Genomics believes that its strategic relationship with Applied
Biosystems has provided it with a significant competitive advantage in its
efforts to date to sequence the human and other genomes. Applied Biosystems
leases instruments, sells consumables and project materials and provides
research and development services to Celera Genomics. Celera Genomics paid
Applied Biosystems $17.3 million in fiscal year 1999, $54.4 million in fiscal
year 2000 and $60.1 million in fiscal year 2001 for these products and services.
Celera Genomics' continued development of its database business and successful
extension of its business into therapeutics discovery and development will
depend on Applied Biosystems' ability to continue to provide leading edge,
proprietary technology and products, including advanced technologies for gene
and protein analysis. If Applied Biosystems is unable to supply these
technologies, Celera Genomics will need to obtain access to alternative
technologies, which may not be available, or may only be available on
unfavorable terms. Any change in the relationship with Applied Biosystems that
adversely affects Celera Genomics' access to Applied Biosystems' technology or
failure by Applied Biosystems to continue to develop new technologies or protect
its proprietary technology could adversely affect Celera Genomics' business.


                                      -33-
<PAGE>

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

         New products developed by Celera Genomics could expose Celera Genomics
to potential product liability risks that are inherent in the testing,
manufacturing and marketing of human therapeutic and diagnostic products.
Product liability claims or product recalls, regardless of the ultimate outcome,
could require Celera Genomics to spend significant time and money in litigation
and to pay significant damages.

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

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

         Celera Genomics' sales cycle is lengthy and it may spend considerable
         resources on unsuccessful sales efforts or may not be able to complete
         deals on the schedule anticipated.

         Celera Genomics' sales cycle is typically lengthy because the group
needs to educate potential customers and sell the benefits of its products and
services to a variety of constituencies within those companies. In addition,
each agreement involves the negotiation of unique terms. Celera Genomics'
ability to obtain new customers for genomic information products, collaborative
services, and licenses to intellectual property depends on its customers' belief
that Celera Genomics can help accelerate their drug discovery efforts. Celera
Genomics may expend substantial funds and management effort with no assurance
that an agreement will be reached with a potential customer. Actual and proposed
consolidations of pharmaceutical and biotechnology companies have affected and
may in the future affect the timing and progress of Celera Genomics' sales
efforts.

         Scientific and management staff has unique expertise which is key to
         Celera Genomics' commercial viability and which would be difficult to
         replace.

         Celera Genomics is highly dependent on the principal members of its
scientific and management staff, particularly J. Craig Venter, its President and
Chief Scientific Officer. Additional members of Celera Genomics' medical,
scientific and information technology staff are important to the implementation
of its business plan. The loss of any of these persons' expertise would be
difficult to replace and could have a material adverse effect on Celera
Genomics' ability to achieve its goals.

         Celera Genomics' competitive position may depend on patent and
         copyright protection and licenses to the important intellectual
         property patented by others, which may not be sufficiently available.

         Celera Genomics' ability to compete and to achieve profitability may be
affected by its ability to protect its proprietary technology and other
intellectual property. While Celera Genomics' business is currently primarily
dependent on revenues from access fees to its on-line information system, Celera
Genomics expects that obtaining patent protection may become

                                      -34-
<PAGE>

increasingly important to its business as it moves beyond the on-line database
business. Celera Genomics would be able to prevent competitors from making,
using or selling any of its technology for which it obtains a patent. However,
patent law affecting Celera Genomics' business, particularly gene sequences,
gene function and genetic variations, or polymorphisms, is uncertain. As a
result, Celera Genomics is uncertain as to its ability to obtain intellectual
property protection covering its information discoveries sufficient to prevent
competitors from developing similar subject matter. The United States Patent and
Trademark Office has recently adopted new guidelines for use in the review of
the utility of inventions, particularly biotechnology inventions. These
guidelines increased the amount of evidence required to illustrate utility in
order to obtain a patent in the biotechnology field, making patent protection
more difficult to obtain. Although others have been successful in obtaining
patents to biotechnology inventions, since the adoption of these guidelines
these patents have been issued with increasingly less frequency. As a result,
patents may not issue from patent applications that Celera Genomics may own or
license if the applicant is unable to satisfy the new guidelines. In addition,
because patent applications in the United States are maintained in secrecy until
patents issue, third parties may have filed patent applications for technology
used by Celera Genomics or covered by Celera Genomics' pending patent
applications without Celera Genomics being aware of those applications.

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

         Moreover, Celera Genomics may be dependent on protecting, through
copyright law or otherwise, its databases to prevent other organizations from
taking information from those databases and copying and reselling it. Copyright
law currently provides uncertain protection regarding the copying and resale of
factual data. As such, Celera Genomics is uncertain whether it could prevent
that copying or resale. Changes in copyright and patent law could either expand
or reduce the extent to which Celera Genomics and its customers are able to
protect their intellectual property.

         Celera Genomics' position may depend on its ability to protect trade
         secrets.

         Celera Genomics relies on trade secret protection for its confidential
and proprietary information and procedures, including procedures related to
sequencing genes and to searching and identifying important regions of genetic
information. Celera Genomics currently protects its information and procedures
as trade secrets. Celera Genomics protects its trade secrets through recognized
practices, including access control, confidentiality and nonuse agreements with
employees, consultants, collaborators, and customers, and other security
measures. These confidentiality and nonuse agreements may be breached, however,
and Celera Genomics may not have adequate remedies for a breach. In addition,
Celera Genomics' trade secrets may otherwise become known or be independently
developed by competitors.


                                      -35-
<PAGE>

         Public disclosure of genomics sequence data could jeopardize Celera
         Genomics' intellectual property protection and have an adverse effect
         on the value of its products and services.

         Celera Genomics, the federally funded Human Genome Project and others
engaged in similar research have made and are expected to continue making
available to the public basic human sequence data. These disclosures might limit
the scope of Celera Genomics' claims or make subsequent discoveries related to
full-length genes and proteins unpatentable. While Celera Genomics believes that
the publication of sequence data will not preclude it or others from being
granted patent protection on genes and proteins, there can be no assurance that
the publication has not affected and will not affect the ability to obtain
patent protection. Customers may conclude that uncertainties of that protection
and the fact that the basic human sequence data is available for free decrease
the value of Celera Genomics' information products and services and as a result,
it may be required to reduce the fees it charges for its products and services.

         Celera Genomics may infringe the intellectual property rights of third
         parties and may become involved in expensive intellectual property
         litigation.

         The intellectual property rights of biotechnology companies, including
Celera Genomics, are generally uncertain and involve complex legal, scientific
and factual questions. Celera Genomics' success in the therapeutics discovery
and development fields may depend, in part, on its ability to operate without
infringing on the intellectual property rights of others and to prevent others
from infringing on its intellectual property rights.

         There has been substantial litigation regarding patents and other
intellectual property rights in the genomics industry. Celera Genomics may
become a party to patent litigation or proceedings at the United States Patent
and Trademark Office to determine its patent rights with respect to third
parties, which may include subscribers to Celera Genomics' database information
services. Interference proceedings may be necessary to establish which party was
the first to discover the intellectual property. Celera Genomics may become
involved in patent litigation against third parties to enforce Celera Genomics'
patent rights, to invalidate patents held by the third parties, or to defend
against these claims. The cost to Celera Genomics of any patent litigation or
similar proceeding could be substantial, and it may absorb significant
management time. If an infringement litigation against Celera Genomics is
resolved unfavorably to Celera Genomics, Celera Genomics may be enjoined from
manufacturing or selling its products or services without a license from a third
party. Celera Genomics may not be able to obtain a license on commercially
acceptable terms, or at all.

         Celera Genomics' business is dependent on the continuous, effective,
         reliable and secure operation of its computer hardware, software and
         Internet applications and related tools and functions.

         Because Celera Genomics' business requires manipulating and analyzing
large amounts of data, and communicating the results of the analysis to its
internal research personnel and to its customers via the Internet, Celera
Genomics depends on the continuous, effective, reliable and secure operation of
its computer hardware, software, networks, Internet servers and related
infrastructure. To the extent that Celera Genomics' hardware or software
malfunctions or access to Celera Genomics' data by Celera Genomics' internal
research personnel or customers through the Internet is interrupted, its
business could suffer.


                                      -36-
<PAGE>

         Celera Genomics' computer and communications hardware is protected
through physical and software safeguards. However, it is still vulnerable to
fire, storm, flood, power loss, earthquakes, telecommunications failures,
physical or software break-ins, and similar events. In addition, Celera
Genomics' database products are complex and sophisticated, and as such, could
contain data, design or software errors that could be difficult to detect and
correct. Software defects could be found in current or future products. If
Celera Genomics fails to maintain and further develop the necessary computer
capacity and data to support its computational needs and its customers' drug
discovery efforts, it could result in loss of or delay in revenues and market
acceptance. In addition, any sustained disruption in Internet access provided by
third parties could adversely impact Celera Genomics' business.

         Celera Genomics' research and product development depends on access to
         tissue samples and other biological materials.

         Celera Genomics will need access to normal and diseased human and other
tissue samples, other biological materials and related clinical and other
information, which may be in limited supply. Celera Genomics may not be able to
obtain or maintain access to these materials and information on acceptable
terms. In addition, government regulation in the United States and foreign
countries could result in restricted access to, or use of, human and other
tissue samples. If Celera Genomics loses access to sufficient numbers or sources
of tissue samples, or if tighter restrictions are imposed on its use of the
information generated from tissue samples, its business may be harmed.

         Ethical, legal and social issues related to the use of genetic
         information and genetic testing may cause less demand for Celera
         Genomics' products.

         Genetic testing has raised issues regarding confidentiality and the
appropriate uses of the resulting information. For example, concerns have been
expressed towards insurance carriers and employers using these tests to
discriminate on the basis of this information, resulting in barriers to the
acceptance of these tests by consumers. This could lead to governmental
authorities calling for limits on or regulation of the use of genetic testing or
prohibiting testing for genetic predisposition to certain diseases, particularly
those that have no known cure. Any of these scenarios could reduce the potential
markets for products of Celera Genomics.

         Expected rapid growth in the number of its employees could absorb
         valuable management resources and be disruptive to the development of
         Celera Genomics' business.

         Celera Genomics expects to increase its employee base significantly,
including the addition of Axys' employees. This growth will require substantial
effort to hire new employees and train and integrate them in Celera Genomics'
business and to develop and implement management information systems, financial
controls and facility plans. Celera Genomics' inability to manage growth
effectively would have a material adverse effect on its future operating
results.


                                      -37-
<PAGE>

         Products and services developed using Celera Genomics group's
         databases, and the therapeutic discovery and development business of
         Celera Genomics, may be subject to government regulation.

         Celera Genomics and its pharmaceutical and biotechnology customers use
Celera Genomics' databases for drug discovery and development, which is subject
to regulation by the United States Food and Drug Administration. Any new drug
developed must undergo an extensive regulatory review and approval process. This
process can take many years and require substantial expense. Celera Genomics and
its customers may also use its databases to develop products or services in the
field of personalized health/medicine. However, current and future patient
privacy and health care laws and regulations issued by the United States Food
and Drug Administration may limit the use of data concerning an individual's
genetic information. To the extent that such regulations restrict or discourage
Celera Genomics or its customers from developing these products and services,
Celera Genomics' business may be adversely affected.

         Future acquisitions may absorb significant resources and may be
         unsuccessful.

         As part of Celera Genomics' strategy, it expects to pursue acquisitions
(in addition to the Axys acquisition), investments and other strategic
relationships and alliances. Acquisitions, investments and other strategic
relationships and alliances may involve significant cash expenditures, debt
incurrence, additional operating losses, dilutive issuances of equity
securities, and expenses that could have a material effect on Celera Genomics'
financial condition and results of operations. For example, to the extent that
it elects to pay the purchase price for acquisitions in shares of Celera
Genomics common stock, the issuance of additional shares of Celera Genomics
common stock will be dilutive to holders of Celera Genomics common stock.
Acquisitions involve numerous other risks, including:

         o        difficulties integrating acquired technologies and personnel
                  into the business of Celera Genomics;

         o        diversion of management from daily operations;

         o        inability to obtain required financing on favorable terms;

         o        entry into new markets in which Celera Genomics has little
                  previous experience;

         o        potential loss of key employees or customers of acquired
                  companies or of Celera Genomics; and

         o        assumption of the liabilities and exposure to unforeseen
                  liabilities of acquired companies.

         It may be difficult for Celera Genomics to complete these transactions
quickly and to integrate these businesses efficiently into its current business.
Any acquisitions, investments or other strategic relationships and alliances by
Celera Genomics may ultimately have a negative impact on its business and
financial condition.

                                      -38-
<PAGE>

         Applera Corporation - Celera Genomics Group Common Stock price is
         highly volatile.

         The market price of Applera Corporation - Celera Genomics Group Common
Stock has been and may continue to be highly volatile due to the risks and
uncertainties described in this section of this Annual Report on Form 10-K, as
well as other factors, including:

         o        conditions and publicity regarding the genomics,
                  biotechnology, pharmaceutical, or life sciences industries
                  generally;

         o        price and volume fluctuations in the stock market at large
                  which do not relate to Celera Genomics' operating performance;
                  and

         o        comments by securities analysts or government officials,
                  including with regard to the viability or profitability of the
                  biotechnology sector generally or with regard to intellectual
                  property rights of biotechnology companies, or Celera
                  Genomics' failure to meet market expectations.

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

         The Company is subject to a purported class action lawsuit relating to
         its 2000 offering of shares of Applera Corporation - Celera Genomics
         Group Common Stock that may be expensive and time consuming.

         The Company and some of its officers have been served in five lawsuits
purportedly on behalf of purchasers of Applera Corporation - Celera Genomics
Group Common Stock in the Company's follow-on public offering of Applera
Corporation - Celera Genomics Group Common Stock completed on March 6, 2000. In
the offering, the Company sold an aggregate of approximately 4.4 million shares
of Applera Corporation - Celera Genomics Group Common Stock at a public offering
price of $225 per share. All of these lawsuits have been consolidated into a
single case and an amended consolidated complaint was filed on August 21, 2001.
The consolidated complaint generally alleges that the prospectus used in
connection with the offering was inaccurate or misleading because it failed to
adequately disclose the alleged opposition of the Human Genome Project and two
of its supporters, the governments of the United States and the United Kingdom,
to providing patent protection to the Company's genomic-based products. The
consolidated complaint seeks unspecified money damages, rescission, costs and
expenses, and other relief as the court deems proper. Although the Company
believes the asserted claims are without merit and intends to defend the case
vigorously, the outcome of this or any other litigation is inherently uncertain.
The defense of this case will require management attention and resources.


                                      -39-
<PAGE>

         Celera Genomics' ability to develop proprietary therapeutics and the
         Celera Genomics/Applied Biosystems Joint Venture's ability to develop
         proprietary diagnostic products is unproven.

         The development and commercialization of new drugs by determining the
causes of diseases through the study of genes, variations in genes, and the
proteins expressed by genes is unproven. As Celera Genomics expands its efforts
into this new business area, it faces the difficulties inherent in developing
and commercializing therapeutic products, and it has limited experience in
operating a commercial research and development program. In addition, the
Company has announced the formation of Celera Diagnostics, a joint venture
between Applied Biosystems and Celera Genomics in the field of diagnostics.
Celera Diagnostics faces the difficulties inherent in developing and
commercializing diagnostic tests and in building and operating a commercial
research and development program. Given Celera Genomics' unproven ability to
develop proprietary therapeutics and Celera Diagnostics' unproven ability to
develop proprietary diagnostic products, it is possible that Celera Genomics'
and Celera Diagnostics' discovery processes will not result in any commercial
products or services. Even if Celera Genomics or Celera Diagnostics is able to
develop products and services, it is possible that these products and services
may not be commercially viable or successful due to a variety of reasons,
including difficulty obtaining regulatory approvals, competitive conditions, the
inability to obtain necessary intellectual property protection, the need to
build distribution channels, failure to get adequate reimbursement for these
products from insurance or government payors, or the inability of Celera
Genomics or Celera Diagnostics to recover its development costs in a reasonable
period.

         Risks Relating to a Capital Structure with Two Separate Classes of
         Common Stock

         Stockholders of the Company are stockholders of one company and,
         therefore, financial effects on one group could adversely affect the
         other.

         Applied Biosystems and Celera Genomics are not separate legal entities.
As a result, stockholders will continue to be subject to all of the risks of an
investment in the Company, including Applied Biosystems and Celera Genomics. The
risks and uncertainties that may affect the operations, performance,
development, and results of the businesses of Applied Biosystems and Celera
Genomics are described above. The assets attributed to one group could be
subject to the liabilities of the other group, even if these liabilities arise
from lawsuits, contracts, or indebtedness that the Company attributes to the
other group. If the Company is unable to satisfy one group's liabilities out of
the assets attributed to it, the Company may be required to satisfy those
liabilities with assets attributed to the other group.

         Financial effects from one group that affect the Company's consolidated
results of operations or financial condition could, if significant, affect the
results of operations or financial condition of the other group and the market
price of the common stock relating to the other group. In addition, net losses
of either group and dividends or distributions on, or repurchases of, either
class of common stock or repurchases of preferred stock will reduce the funds
the Company can pay as dividends on each class of common stock under Delaware
law. For these reasons, stockholders should read the consolidated financial
information with the financial information the Company provides for each group.


                                      -40-
<PAGE>

         The market price of either class of the Company's common stock may not
         reflect the separate performance of the group related to that common
         stock.

         The market price of Applera Corporation - Applied Biosystems Group
Common Stock and Applera Corporation - Celera Genomics Group Common Stock may
not reflect the separate performance of the business of the group relating to
that class of common stock. The market price of either class of common stock
could simply reflect the performance of the Company as a whole, or the market
price of either class of common stock could move independently of the
performance of the business of either group. Investors may discount the value of
either class of common stock because it is part of a common enterprise rather
than a stand-alone company.

         The market price of either class of the Company's common stock may be
         affected by factors that do not affect traditional common stock.

         o        The complex nature of the terms of Applera Corporation -
                  Applied Biosystems Group Common Stock and Applera Corporation
                  - Celera Genomics Group Common Stock may adversely affect the
                  market price of either class of common stock. The complex
                  nature of the terms of the two classes of common stock, such
                  as the convertibility of Applera Corporation - Applied
                  Biosystems Group Common Stock into Applera Corporation -
                  Celera Genomics Group Common Stock, or vice versa, and the
                  potential difficulties investors may have understanding these
                  terms, may adversely affect the market price of either class
                  of common stock.

         o        The market price of Applera Corporation - Applied Biosystems
                  Group Common Stock or Applera Corporation - Celera Genomics
                  Group Common Stock may be adversely affected by the fact that
                  holders have limited legal interests in the group relating to
                  the class of common stock held as a separate legal entity. For
                  example, as described in greater detail in the subsequent risk
                  factors, holders of either class of common stock generally do
                  not have separate class voting rights with respect to
                  significant matters affecting either group. In addition, upon
                  a liquidation or dissolution of the Company, holders of either
                  class of common stock will not have specific rights to the
                  assets of the group relating to the class of common stock held
                  and will not be entitled to receive proceeds that are
                  proportional to the relative performance of that group.

         o        The market price of Applera Corporation - Applied Biosystems
                  Group Common Stock or Applera Corporation - Celera Genomics
                  Group Common Stock may be adversely affected by events
                  involving the group relating to the other class of common
                  stock or the performance of the class of common stock relating
                  to that group. Events, such as earnings announcements or other
                  developments concerning one group that the market does not
                  view favorably and which thus adversely affect the market
                  price of the class of common stock relating to that group, may
                  adversely affect the market price of the class of common stock
                  relating to the other group. Because both classes of common
                  stock are common stock of the Company, an adverse market
                  reaction to one class of common stock may, by association,
                  cause an adverse reaction to the other class of common stock.
                  This reaction may occur even if the triggering event was not
                  material to the Company as a whole.


                                      -41-
<PAGE>

         Limits exist on the voting power of group common stock.

         o        Applera Corporation - Celera Genomics Group Common Stock May
                  Not Have Any Influence on the Outcome of Stockholder Voting.
                  Applera Corporation - Applied Biosystems Group Common Stock
                  currently has a substantial majority of the voting power of
                  the Company's common stock and had approximately 74.7% of the
                  voting power as of August 24, 2001, the record date for the
                  Company's 2001 annual meeting of stockholders. Except in
                  limited circumstances where there is separate class voting,
                  the relative voting power of the two classes of common stock
                  fluctuates based on their relative market values. Therefore,
                  except in cases of separate class voting, either class of
                  common stock that is entitled to more than the number of votes
                  required to approve any stockholder action could control the
                  outcome of the vote even if the matter involves a divergence
                  or conflict of the interests of the holders of Applera
                  Corporation - Applied Group Biosystems Common Stock and
                  Applera Corporation - Celera Genomics Group Common Stock.
                  These matters may include mergers and other extraordinary
                  transactions.

         o        A class of group common stock with less than majority voting
                  power can block action if a class vote is required. If
                  Delaware law, stock exchange rules, or the Company's Board of
                  Directors requires a separate vote on a matter by the holders
                  of either Applera Corporation - Applied Biosystems Group
                  Common Stock or Applera Corporation - Celera Genomics Group
                  Common Stock, those holders could prevent approval of the
                  matter even if the holders of a majority of the total number
                  of votes cast or entitled to be cast, voting together as a
                  class, were to vote in favor of it. As a result, in cases
                  where holders of Applera Corporation - Applied Biosystems
                  Group Common Stock or Applera Corporation - Celera Genomics
                  Group Common Stock vote as separate classes on a proposal, the
                  affirmative vote of shares representing a majority of one
                  class of common stock will not prevent the holders of the
                  other class of common stock from defeating the proposal.

         o        Holders of only one class of common stock cannot ensure that
                  their voting power will be sufficient to protect their
                  interests. Since the relative voting power per share of
                  Applera Corporation - Applied Biosystems Group Common Stock
                  and Applera Corporation - Celera Genomics Group Common Stock
                  will fluctuate based on the market values of the two classes
                  of common stock, the relative voting power of a class of
                  common stock could decrease. As a result, holders of shares of
                  only one of the two classes of common stock cannot ensure that
                  their voting power will be sufficient to protect their
                  interests.

         o        Stockholders of either class of common stock will not have
                  some of the stockholder rights traditionally associated with
                  common stock. Neither Applied Biosystems nor Celera Genomics
                  will have a separate board of directors to represent solely
                  the interests of either class of common stock as holders of
                  that class. Consequently, there will be no board of directors
                  that owes any separate duties to holders of one class of
                  common stock as holders of that class. The Company's Board of
                  Directors will act in accordance with its good faith business
                  judgment of the best interests of the Company, taking into
                  consideration the interests of all common stockholders
                  regardless of class or series, which may be detrimental to
                  holders of one class of common stock has holders of that
                  class.


                                      -42-
<PAGE>

         Stockholders may not have any remedies for breach of fiduciary duties
         if any action by directors or officers has a disadvantageous effect on
         either class of common stock.

         Stockholders may not have any remedies if any action or decision of the
Company's Board of Directors or officers has a disadvantageous effect on Applera
Corporation - Applied Biosystems Group Common Stock or Applera Corporation -
Celera Genomics Group Common Stock compared to the other class of common stock.
Cases in Delaware involving tracking stocks have established that decisions by
directors or officers involving differing treatment of tracking stocks are
judged under the principle known as the "business judgment rule" unless
self-interest is shown.

         In addition, principles of Delaware law established in cases involving
differing treatment of two classes of common stock or two groups of holders of
the same class of common stock provide that a board of directors owes an equal
duty to all stockholders regardless of class or series. Absent abuse of
discretion, a good faith business decision made by a disinterested and
adequately informed Board of Directors, Board of Directors' committee, or
officer of the Company with respect to any matter having different effects on
holders of Applera Corporation - Applied Biosystems Group Common Stock and
holders of Applera Corporation - Celera Genomics Group Common Stock would be a
defense to any challenge to the determination made by or on behalf of the
holders of either class of common stock.

         Stock ownership could cause directors and officers to favor one group
         over the other.

         As a policy, the Company's Board of Directors periodically monitors the
ownership of shares of Applera Corporation - Applied Biosystems Group Common
Stock and Applera Corporation - Celera Genomics Group Common Stock by the
Company's directors and senior officers as well as their option holdings and
other benefits so that their interests are not misaligned with the two classes
of common stock and with their duty to act in the best interests of the Company
and its stockholders as a whole. However, because the actual stock market value
of their interests in Applera Corporation - Applied Biosystems Group Common
Stock and Applera Corporation - Celera Genomics Group Common Stock could vary
significantly, it is possible that they could favor one group over the other as
a result of their common stock holdings, options and other benefits. As of
August 31, 2001, the Company's directors and senior officers held shares of
Applera Corporation - Applied Biosystems Group Common Stock and Applera
Corporation - Celera Genomics Group Common Stock representing approximately
equal percentages of the total shares outstanding of Applera Corporation -
Applied Biosystems Group Common Stock and Applera Corporation - Celera Genomics
Group Common Stock. The stock market value of these shares will vary with
fluctuations in the market price of Applera Corporation - Applied Biosystems
Group Common Stock and Applera Corporation - Celera Genomics Group Common Stock.
However, the market capitalization of Applied Biosystems is substantially
greater than that of Celera Genomics and, therefore, the market value of Applera
Corporation - Applied Biosystems Group Common Stock held by the Company's
directors and senior officers was significantly higher than the market value of
Applera Corporation - Celera Genomics Group Common Stock held by them on that
date.


                                      -43-
<PAGE>

         Numerous potential conflicts of interest exist between the classes of
         common stock that may be difficult to resolve by the Company's Board of
         Directors or that may be resolved adversely to one of the classes.

         o        Allocation of corporate opportunities could favor one group
                  over the other. The Company's Board of Directors may be
                  required to allocate corporate opportunities between Applied
                  Biosystems and Celera Genomics. In some cases, the Company's
                  directors could determine that a corporate opportunity, such
                  as a business that the Company is acquiring or a new business,
                  should be shared by the groups or be allocated to one group
                  over the other. Any decisions could favor one group to the
                  detriment of the other.

         o        Applied Biosystems and Celera Genomics may compete with each
                  other to the detriment of their businesses. The existence of
                  two separate classes of common stock will not prevent Applied
                  Biosystems and Celera Genomics from competing with each other.
                  Any competition between Applied Biosystems and Celera Genomics
                  could be detrimental to the businesses of either or both of
                  the groups. Under a Board of Directors' policy, the groups
                  will generally not engage in the principal businesses of the
                  other, except for joint transactions with each other. However,
                  the Company's Chief Executive Officer or Board of Directors
                  will permit indirect competition between the groups, such as
                  one group doing business with a competitor of the other group,
                  based on his or its good faith business judgment that the
                  competition is in the best interests of the Company and all of
                  the Company's stockholders as a whole. In addition, the groups
                  may compete in a business that is not a principal business of
                  the other group.

         o        The Company's Board of Directors may pay more or less
                  dividends on group common stock than if that group were a
                  separate company. Subject to the limitations referred to
                  below, the Company's Board of Directors has the authority to
                  declare and pay dividends on Applera Corporation - Applied
                  Biosystems Group Common Stock and Applera Corporation - Celera
                  Genomics Group Common Stock in any amount and could, in its
                  sole discretion, declare and pay dividends exclusively on
                  Applera Corporation - Applied Biosystems Group Common Stock,
                  exclusively on Applera Corporation - Celera Genomics Group
                  Common Stock, or on both, in equal or unequal amounts. The
                  Company's Board of Directors is not required to consider the
                  amount of dividends previously declared on each class, the
                  respective voting or liquidation rights of each class, or any
                  other factor. The performance of one group may cause the
                  Company's Board of Directors to pay more or less dividends on
                  the common stock relating to the other group than if that
                  other group were a stand-alone company. In addition, Delaware
                  law and the Company's certificate of incorporation impose
                  limitations on the amount of dividends that may be paid on
                  each class of common stock.

         o        Proceeds of mergers or consolidations may be allocated
                  unfavorably. The Company's Board of Directors will determine
                  how consideration to be received by holders of common stock in
                  connection with a merger or consolidation involving the
                  Company is to be allocated among holders of each class of
                  common stock. This percentage may be materially more or less
                  than that which might have been allocated to the holders had
                  the Company's Board of Directors chosen a different method of
                  allocation.


                                      -44-
<PAGE>

         o        Holders of either class of common stock may be adversely
                  affected by a conversion of group common stock. The Company's
                  Board of Directors could, in its sole discretion and without
                  stockholder approval, determine to convert shares of Applera
                  Corporation - Applied Biosystems Group Common Stock into
                  shares of Applera Corporation - Celera Genomics Group Common
                  Stock, or vice versa, at any time, including when either or
                  both classes of common stock may be considered to be
                  overvalued or undervalued. If the Company's Board of Directors
                  chose to issue Applera Corporation - Celera Genomics Group
                  Common Stock in exchange for Applera Corporation - Applied
                  Biosystems Group Common Stock, or vice versa, the conversion
                  would dilute the interests in the Company of the holders of
                  the class of common stock being issued in the conversion. If
                  the Company's Board of Directors were to choose to issue
                  Applera Corporation - Celera Genomics Group Common Stock in
                  exchange for Applera Corporation - Applied Biosystems Group
                  Common Stock, or vice versa, the conversion could give holders
                  of shares of the class of common stock being converted a
                  greater or lesser premium than any premium that was paid or
                  might be paid by a third-party buyer of all or substantially
                  all of the assets of the group whose stock is converted.

         o        Cash proceeds of newly issued Applera Corporation - Celera
                  Genomics Group Common Stock in the future could be allocated
                  to Applied Biosystems. If and to the extent Applied Biosystems
                  holds "Celera Genomics Designated Shares" at the time of any
                  future sale of Applera Corporation - Celera Genomics Group
                  Common Stock, the Company's Board of Directors could allocate
                  some or all of the proceeds of that sale to Applied Biosystems
                  in consideration of a reduction in the number of these shares.
                  Celera Genomics Designated Shares are a type of authorized
                  shares of Applera Corporation - Celera Genomics Group Common
                  Stock. Any decision could favor one group over the other
                  group. For example, the decision to allocate the proceeds of
                  that sale to Applied Biosystems could adversely affect Celera
                  Genomics' ability to obtain funds to finance its growth
                  strategies. Applied Biosystems does not hold any Celera
                  Genomics Designated Shares as of the date of this Annual
                  Report on Form 10-K. Celera Genomics Designated Shares could
                  be issued in the future if the Company's Board of Directors
                  determines that Celera Genomics requires additional capital to
                  finance its business and that Applied Biosystems should supply
                  that capital.

         The Company's Board of Directors may change its management and
         allocation policies without stockholder approval to the detriment of
         either group.

         The Company's Board of Directors may modify or rescind the Company's
policies with respect to the allocation of corporate overhead, taxes, debt,
interest, and other matters, or may adopt additional policies, in its sole
discretion without stockholder approval. A decision to modify or rescind these
policies, or adopt additional policies, could have different effects on holders
of Applera Corporation - Applied Biosystems Group Common Stock and holders of
Applera Corporation - Celera Genomics Group Common Stock or could result in a
benefit or detriment to one class of stockholders compared to the other class.
The Company's Board of Directors will make any decision in accordance with its
good faith business judgment that the decision is in the best interests of the
Company and all of its stockholders as a whole.


                                      -45-
<PAGE>

         Either Applied Biosystems or Celera Genomics may finance the other
         group on terms unfavorable to either group.

         From time to time, the Company anticipates that it will transfer cash
and other property between groups to finance their business activities. When
this occurs, the group providing the financing will be subject to the risks
relating to the group receiving the financing. The Company will account for
those transfers in one of the following ways:

         o        as a reallocation of pooled debt or preferred stock;

         o        as a short-term or long-term loan between groups or as a
                  repayment of a previous borrowing;

         o        as an increase or decrease in Celera Genomics Designated
                  Shares; or

         o        as a sale of assets between groups.

         The Company's Board of Directors has not adopted specific criteria for
determining when it will account for transfer of cash or other property as a
reallocation of pooled debt or preferred stock, a loan or repayment, an increase
or decrease in Celera Genomics Designated Shares, or a sale of assets. These
determinations, including the terms of any transactions accounted for as debt,
may be unfavorable to either the group transferring or receiving the cash or
other property. The Company's Board of Directors expects to make these
determinations, either in specific instances or by setting generally applicable
policies, after considering the financing requirements and objectives of the
receiving group, the investment objectives of the transferring group, and the
availability, cost, and time associated with alternative financing sources,
prevailing interest rates, and general economic conditions.

         The Company cannot assure stockholders that any terms that it fixes for
debt will approximate those that could have been obtained by the borrowing group
if it were a stand-alone company.

         Celera Genomics could incur a higher tax liability than if it were a
         stand-alone taxpayer.

         The Company's tax allocation policy provides that some tax benefits
that cannot be used by the group generating those benefits but can be used on a
consolidated basis are to be transferred, without reimbursement, to the group
that can use the benefits. Any tax benefits that are transferred from Celera
Genomics to Applied Biosystems will not be carried forward to reduce Celera
Genomics' future tax liability. Accordingly, future use by Applied Biosystems,
without reimbursement, of tax benefits generated by Celera Genomics will result
in Celera Genomics paying a greater portion of the total corporate tax liability
than would have been the case if Celera Genomics were a stand-alone taxpayer.

         Holders of group common stock may receive less consideration upon a
         sale of assets than if the group were a separate company.

         The Company's certificate of incorporation provides that if a
disposition of all or substantially all of the assets of either group occurs,
the Company must, subject to certain exceptions:


                                      -46-
<PAGE>

         o        distribute to holders of the class of common stock relating to
                  that group an amount equal to the net proceeds of such
                  disposition; or

         o        convert at a 10% premium the common stock relating to that
                  group into shares of the class of common stock relating to the
                  other group.

         If the group subject to the disposition were a separate, independent
company and its shares were acquired by another person, some of the costs of
that disposition, including corporate level taxes, might not be payable in
connection with that acquisition. As a result, if the group subject to the
disposition were a stand-alone company, stockholders of that group might receive
a greater amount than the net proceeds that would be received by those
stockholders if the assets of that group were sold and the proceeds distributed
to those stockholders. In addition, the Company cannot assure stockholders that
the net proceeds per share of the common stock relating to that group will be
equal to or more than the market value per share of that common stock prior to
or after announcement of a disposition.

         The Company's capital structure and variable vote per share may
         discourage acquisitions of a group or a class of common stock.

         A potential acquiror could acquire control of the Company by acquiring
shares of common stock having a majority of the voting power of all shares of
common stock outstanding. This majority could be obtained by acquiring a
sufficient number of shares of both classes of common stock or, if one class of
common stock has a majority of the voting power, only shares of that class since
the relative aggregate voting power of the two classes of common stock
fluctuates based on their relative aggregate market values. Currently, Applera
Corporation - Applied Biosystems Group Common Stock has a substantial majority
of the voting power. As a result, it might be possible for an acquiror to obtain
control by purchasing only shares of Applera Corporation - Applied Biosystems
Group Common Stock.

         Decisions by the Company's Board of Directors and officers that affect
         market values could adversely affect voting and conversion rights.

         The relative voting power per share of each class of common stock and
the number of shares of one class of common stock issuable upon the conversion
of the other class of common stock will vary depending upon the relative market
values of Applera Corporation - Applied Biosystems Group Common Stock and
Applera Corporation - Celera Genomics Group Common Stock. The market value of
either or both classes of common stock could be adversely affected by market
reaction to decisions by the Company's Board of Directors or management that
investors perceive as affecting differently one class of common stock compared
to the other. These decisions could involve changes to the Company's management
and allocation policies, transfers of assets between groups, allocations of
corporate opportunities and financing resources between groups, and changes in
dividend policies.

         Provisions governing common stock could discourage a change of control
         and the payment of a premium for stockholders' shares.

         The Company's stockholder rights plan could prevent stockholders from
profiting from an increase in the market value of their shares as a result of a
change in control of the Company by delaying or preventing a change in control.
The existence of two classes of common stock


                                      -47-
<PAGE>

could also present complexities and may pose obstacles, financial and otherwise,
to an acquiring person. In addition, provisions of Delaware law and the
Company's certificate of incorporation and bylaws may also deter hostile
takeover attempts.

         Legislative proposals could have adverse tax consequences for the
         Company and holders of Applera Corporation - Celera Genomics Group
         Common Stock and Applera Corporation - Applied Biosystems Group Common
         Stock.

         The Clinton Administration Budget Proposals in 1999 and 2000 proposed
legislation that would have adversely affected holders of tracking stock such as
Applera Corporation - Celera Genomics Group Common Stock and Applera Corporation
- Applied Biosystems Group Common Stock. The 1999 proposal would have required
corporate-level gain recognition on the issuance of tracking stock, while the
2000 proposal would have required that the stockholders of the issuing
corporation be taxed upon the receipt of tracking stock in specified
circumstances. Although Congress did not act on either proposal and the recent
Bush Administration Budget Proposal does not contain a similar provision, it is
impossible to predict whether any proposals relating to tracking stock will be
made in the future, and to what extent Congress would act upon any proposals.

         The Company may convert Applera Corporation - Celera Genomics Group
Common Stock or Applera Corporation - Applied Biosystems Group Common Stock into
shares of the other class without any premium if, based on the legal opinion of
its tax counsel, it is more likely than not as a result of the enactment of
legislative changes or administrative proposals or changes that the Company or
its stockholders will be subject to tax upon issuance of Applera Corporation -
Celera Genomics Group Common Stock or Applera Corporation - Applied Biosystems
Group Common Stock or that the stock will not be treated as stock of the
Company.


Item 6.                     SELECTED FINANCIAL DATA

         The Company incorporates herein by reference pages 11 and 12 of the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001.


Item 7.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The Company incorporates herein by reference pages 13-25, of the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001.


Item 7A.            QUANTITATIVE AND QUALITATIVE DISCLOSURES
                              ABOUT MARKET RISK

         The Company incorporates herein by reference pages 21 and 22 of the
Company's Annual Report to Stockholders for the fiscal year ended June 30, 2001.


                                      -48-
<PAGE>


Item 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The following financial statements and the supplementary financial
information included in the Company's Annual Report to Stockholders for the
fiscal year ended June 30, 2001, are incorporated herein by reference: the
Consolidated Financial Statements and the report thereon of
PricewaterhouseCoopers LLP dated July 26, 2001, on pages 33-67 of said Annual
Report, and the combined Financial Statements and the reports thereon of
PricewaterhouseCoopers LLP dated July 26, 2001, on pages 69-90 and 91-108 of
said Annual Report, including Note 12, page 54, Note 12, page 87, and Note 12,
page 107, which contain unaudited quarterly financial information.


Item 9.         CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUNTING AND FINANCIAL DISCLOSURE

         Not applicable.



                                      -49-
<PAGE>


                                    PART III

Item 10.                DIRECTORS AND EXECUTIVE OFFICERS
                               OF THE REGISTRANT

Identification and Background of Directors

         The Company incorporates herein by reference pages 3 and 4 of the
Company's Proxy Statement dated September 18, 2001, in connection with its
Annual Meeting of Stockholders to be held on October 18, 2001.

Identification of Executive Officers

         The following is a list of the Company's executive officers, their
ages, and their positions and offices with the Company, as of September 4, 2001.

<TABLE>
<CAPTION>
Name                               Age   Present Positions and Year First Elected
<S>                                <C>   <C>
Peter Barrett.................      48   Vice President (1998)
Peter Chambre.................      45   Vice President (2000)
Ugo D. DeBlasi................      39   Assistant Controller (1999)
Michael W. Hunkapiller........      52   Senior Vice President (1998);  President,  Applied Biosystems Group
                                         (1994)
Vikram Jog....................      45   Controller (1999)
Robert C. Jones...............      46   Vice President (2001)
Barbara J. Kerr...............      55   Vice President, Human Resources (2000)
Stephen J. Lombardi...........      46   Vice President (2001)
Kenneth D. Noonan.............      53   Senior Vice President, Corporate Development  (2000)
Kathy Ordonez.................      50   Vice President (2000)
Robert P. Ragusa..............      41   Vice President (2001)
William B. Sawch..............      46   Senior Vice President and General Counsel (1993)
Deborah A. Smeltzer...........      47   Assistant Controller (1999)
J. Craig Venter...............      54   Senior Vice President and President, Celera Genomics Group (1998)
Tony L. White.................      55   Chairman, President, and Chief Executive Officer (1995)
Dennis L. Winger..............      53   Senior Vice President and Chief Financial Officer (1997)
</TABLE>

         Each of the foregoing named officers was either elected at the last
organizational meeting of the Company's Board of Directors, or elected by the
Board since that date. The term of each officer will expire on October 18, 2001,
the date of the next scheduled organizational meeting of the Board of Directors,
unless renewed for another year.

Identification of Certain Significant Employees

         Not applicable.

Family Relationships

         To the best of the Company's knowledge and belief, there is no family
relationship between any of the Company's directors, executive officers, or
persons nominated or chosen by the Company to become a director or an executive
officer.

Business Experience

         With respect to the business experience of the Company's directors and
persons nominated to become directors, the Company incorporates herein by
reference pages 3 and 4 of the Company's Proxy Statement dated September 18,
2001, in connection with its Annual


                                      -50-
<PAGE>

Meeting of Stockholders to be held on October 18, 2001. With respect to the
executive officers of the Company, each such officer has been employed by the
Company or a subsidiary in one or more executive or managerial capacities for at
least the past five years, with the exception of Mr. Chambre, Mr. Jog, Ms. Kerr,
Dr. Noonan, Ms. Ordonez, Ms. Smeltzer, Dr. Venter, and Mr. Winger.

         Mr. Chambre was elected Vice President of the Company on August 17,
2000. Prior to his employment by the Company in July 2000, Mr. Chambre served as
Chief Executive Officer of Bespak plc, a United Kingdom drug delivery company,
for six years.

         Mr. Jog was elected Controller of the Company on August 19, 1999. Prior
to his employment by the Company in July 1999, Mr. Jog served as Vice President
and Controller of Hercules Incorporated, a manufacturer of chemicals, for seven
years.

         Ms. Kerr was elected Vice President, Human Resources of the Company on
September 5, 2000. Prior to her employment by the Company in September 2000, Ms.
Kerr served as a principal of Quantic, Inc., a human resources and compensation
consulting firm. Prior to that, Ms. Kerr was employed by Chiron Corporation,
which conducts research and development in the fields of biological proteins,
gene therapy, and combinatorial chemistry, where she was Vice President, Human
Resources from 1990 to 1997.

         Dr. Noonan was elected Senior Vice President of the Company on January
4, 2000. Prior to his employment by the Company in January 2000, Dr. Noonan was
a partner in the global life sciences practice of Booz, Allen & Hamilton, Inc.,
an international consulting firm, for three years, and from 1990 to 1996 he was
a partner in The Wilkerson Group, a specialty medical products consulting group.

         Ms. Ordonez was elected Vice President of the Company on December 1,
2000. Prior to her employment by the Company in December 2000, Ms. Ordonez was
employed by Hoffmann La-Roche, Inc. a leading international healthcare company,
where she was President and Chief Executive Officer of Roche Molecular Systems
from 1991 to 2000.

         Ms. Smeltzer was elected Assistant Controller of the Company on
November 18, 1999. Prior to her employment by the Company in November 1999, Ms.
Smeltzer served as Chief Financial Officer and Vice President of Genset, SA, a
global genomics company from May 1996 to November 1999, and she was a general
partner of Grotech Capital Group, Inc. from 1988 to 1996.

         Dr. Venter was elected Senior Vice President of the Company and
President, Celera Genomics Group, on November 19, 1998. Prior to his employment
by the Company in August 1998, Dr. Venter was employed by The Institute for
Genomic Research (TIGR), a non-profit entity which conducts research and
development in genes, where he was founder, Chairman, and President for six
years, and where he remains as Chairman.

         Mr. Winger was elected Senior Vice President and Chief Financial
Officer of the Company on October 16, 1997. Prior to his employment by the
Company in September 1997, Mr. Winger was employed by Chiron Corporation, which
conducts research and development in the fields of biological proteins, gene
therapy, and combinatorial chemistry, where he was Senior Vice President,
Finance and Administration, and Chief Financial Officer since 1989.


                                      -51-
<PAGE>

Involvement in Certain Legal Proceedings

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

Compliance with Section 16(a) of the Securities Exchange Act of 1934

         Information concerning compliance with Section 16(a) of the Securities
Exchange Act of 1934 is incorporated herein by reference to page 10 of the
Company's Proxy Statement dated September 18, 2001, in connection with its
Annual Meeting of Stockholders to be held on October 18, 2001.


Item 11.                  EXECUTIVE COMPENSATION

         The Company incorporates herein by reference pages 11-21 of the
Company's Proxy Statement dated September 18, 2001, in connection with its
Annual Meeting of Stockholders to be held on October 18, 2001.


Item 12.            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                              OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

         Information concerning the security ownership of certain beneficial
owners is incorporated herein by reference to pages 8-10 of the Company's Proxy
Statement dated September 18, 2001, in connection with its Annual Meeting of
Stockholders to be held on October 18, 2001.

Security Ownership of Management

         Information concerning the security ownership of management is
incorporated herein by reference to pages 8-10 of the Company's Proxy Statement
dated September 18, 2001, in connection with its Annual Meeting of Stockholders
to be held on October 18, 2001.

Changes in Control

         The Company knows of no arrangements, including any pledge by any
person of securities of the Company, the operation of which may at a subsequent
date result in a change in control of the Company.


                                      -52-
<PAGE>

Item 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information concerning certain relationships and related transactions
is incorporated herein by reference to pages 20 and 21 of the Company's Proxy
Statement dated September 18, 2001, in connection with its Annual Meeting of
Stockholders to be held on October 18, 2001.


                                      -53-


<PAGE>

                                     PART IV

Item 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
                               REPORTS ON FORM 8-K

(a) 1.  Financial Statements

         The following financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated July 26, 2001, appearing in the Company's
Annual Report to Stockholders for the fiscal year ended June 30, 2001, are
incorporated by reference in this Annual Report on Form 10-K. With the exception
of the aforementioned information and that which is specifically incorporated in
Parts I and II, the Annual Report to Stockholders for the fiscal year ended June
30, 2001, is not to be deemed filed as part of this Annual Report on Form 10-K.

           Applera  Corporation
                                                                 Annual Report
                                                                   Page No.
                                                               -----------------

Consolidated Statements of Operations
         Fiscal years 1999, 2000, and 2001 .........................   33

Consolidated Statements of Financial Position
         At June 30, 2000 and 2001 .................................   34

Consolidated Statements of Cash Flows
         Fiscal years 1999, 2000, and 2001 .........................   35

Consolidated Statements of Stockholders' Equity
         Fiscal years 1999, 2000, and 2001 .........................   36

Notes to Consolidated Financial Statements .........................  37-66

Report of Management ...............................................   67

Report of Independent Accountants ..................................   67


                                      -54-
<PAGE>



           Applied Biosystems Group
                                                                 Annual Report
                                                                   Page No.
                                                               -----------------

Combined Statements of Operations
         Fiscal years 1999, 2000, and 2001 .........................  69

Combined Statements of Financial Position
         At June 30, 2000 and 2001 .................................  70

Combined Statements of Cash Flows
         Fiscal years 1999, 2000, and 2001 .........................  71

Combined Statements of Allocated Net Worth
         Fiscal years 1999, 2000, and 2001 .........................  72

Notes to Combined Financial Statements ............................. 73-89

Report of Management ...............................................  90

Report of Independent Accountants ..................................  90


           Celera Genomics Group
                                                                 Annual Report
                                                                   Page No.
                                                               -----------------

Combined Statements of Operations
         Fiscal years 1999, 2000, and 2001 .........................   91

Combined Statements of Financial Position
         At June 30, 2000 and 2001 .................................   92

Combined Statements of Cash Flows
         Fiscal years 1999, 2000, and 2001 .........................   93

Combined Statements of Allocated Net Worth
         Fiscal years 1999, 2000, and 2001 .........................   94

Notes to Combined Financial Statements ............................. 95-107

Report of Management ...............................................   108

Report of Independent Accountants ..................................   108


                                      -55-
<PAGE>



(a) 2. Financial Statement Schedule

The following additional financial data should be read in conjunction with the
consolidated financial statements in said Annual Report to Stockholders for the
fiscal year ended June 30, 2001. Schedules not included with this additional
financial data have been omitted because they are not applicable or the required
information is shown in the consolidated financial statements or notes thereto.


                                                                   10-K Page No.
                                                                   -------------

     Report of Independent Accountants on Financial Statement
     Schedule .....................................................    61

     Schedule II - Valuation and Qualifying Accounts and
     Reserves .....................................................    62


(a) 3. Exhibits

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

2.2        Agreement and Plan of Merger dated as of June 12, 2001, among Applera
           Corporation, a Delaware corporation, Angel Acquisition Sub, Inc., a
           Delaware corporation, and Axys Pharmaceuticals, Inc., a Delaware
           corporation (incorporated by reference to Exhibit 2.1 to the
           Company's Current Report on Form 8-K dated June 12, 2001 (Commission
           file number 1-4389)).

3.1.1      Certificate of Incorporation of the Company (incorporated by
           reference to Exhibit 3(i) to the Company's Quarterly Report on Form
           10-Q for the fiscal quarter ended December 31, 2000 (Commission file
           number 1-4389)).

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

3.2        By-laws of the Company (incorporated by reference to Exhibit 3.2 to
           the Company's Registration Statement on Form S-4 (No. 333-67797)).

4.1        Stockholder Protection Rights Agreement between the Company and
           BankBoston, N.A. (incorporated by reference to Exhibit 4.1 to the
           Company's Registration Statement on Form S-4 (No. 333-67797)).

4.2        Credit Agreement dated as of April 20, 2000, among The Perkin-Elmer
           Corporation, the Company, the lenders party thereto, Salomon Smith
           Barney Inc., Wachovia Bank, N.A., The Chase Manhattan Bank, and
           Citibank, N.A. (incorporated by reference to Exhibit 4(2) to Annual
           Report on Form 10-K of the Company for the fiscal year ended June 30,
           2000 (Commission file number 1-4389)).

10.1       The Perkin-Elmer Corporation 1988 Stock Incentive Plan for Key
           Employees (incorporated by reference to Exhibit 10(4) to Annual
           Report on Form 10-K of the Company for the fiscal year ended July 31,
           1988 (Commission file number 1-4389)).*

10.2       The Perkin-Elmer Corporation 1993 Stock Incentive Plan for Key
           Employees (incorporated by reference to Exhibit 99 to the Company's
           Registration Statement on Form S-8 (No. 33-50847)).*

10.3       The Perkin-Elmer Corporation 1996 Stock Incentive Plan (incorporated
           by reference to Exhibit 99 to the Company's Registration Statement on
           Form S-8 (No. 333-15189)).*



                                      -56-
<PAGE>

10.4       The Perkin-Elmer Corporation 1996 Employee Stock Purchase Plan, as
           amended October 15, 1998 (incorporated by reference to Exhibit A to
           the Company's Proxy Statement for its 1998 Annual Meeting of
           Stockholders (Commission file number 1-4389)).*

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

10.6       PerSeptive Biosystems, Inc. 1989 Stock Plan, as amended August 1,
           1991 (incorporated by reference to Exhibit 10(1) of the Company's
           Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
           1998 (Commission file number 1-4389)).*

10.7       PerSeptive Biosystems, Inc. 1992 Stock Plan, as amended January 20,
           1997 (incorporated by reference to Exhibit 4.1 to the Quarterly
           Report on Form 10-Q of PerSeptive Biosystems, Inc. for the fiscal
           quarter ended March 29, 1997 (Commission file No. 0-20032)).*

10.8       Molecular Informatics, Inc. 1997 Equity Ownership Plan (incorporated
           by reference to Exhibit 99 to the Company's Registration Statement on
           Form S-8 (No. 333-42683)).*

10.9       The Perkin-Elmer Corporation 1998 Stock Incentive Plan (incorporated
           by reference to Exhibit B to the Company's Proxy Statement for its
           1998 Annual Meeting of Stockholders (Commission file number
           1-4389)).*

10.10      PE Corporation 1999 Employee Stock Purchase Plan (incorporated by
           reference to Exhibit A to the Company's Proxy Statement for its 1999
           Annual Meeting of Stockholders (Commission file number 1-4389)).*

10.11      Applera Corporation/Applied Biosystems Group 1999 Stock Incentive
           Plan, as amended October 19, 2000 (incorporated by reference to
           Appendix A to Schedule 14A, filed September 11, 2000, containing the
           Company's definitive Proxy Statement for its 2000 Annual Meeting of
           Stockholders (Commission file number 1-4389)).*

10.12      Applera Corporation/Celera Genomics Group 1999 Stock Incentive Plan,
           as amended October 19, 2000 (incorporated by reference to Appendix B
           to Schedule 14A, filed September 11, 2000, containing the Company's
           definitive Proxy Statement for its 2000 Annual Meeting of
           Stockholders (Commission file number 1-4389)).*

10.13      Agreement dated September 12, 1995, between the Company and Tony L.
           White (incorporated by reference to Exhibit 10(21) to Annual Report
           on Form 10-K of the Company for the fiscal year ended June 30, 1995
           (Commission file number 1-4389)).*

10.14      Amendment dated August 17, 2001, to Agreement dated September 12,
           1995, between the Company and Tony L. White. *

10.15      Deferred Compensation Contract dated September 15, 1994, between the
           Company and Michael W. Hunkapiller (incorporated by reference to
           Exhibit 10(7) to Annual Report on Form 10-K of the Company for the
           fiscal year ended June 30, 1995 (Commission file number 1-4389)).*

10.16      Change of Control Agreement dated September 12, 1995, between the
           Company and Tony L. White (incorporated by reference to Exhibit
           10(16) to Annual Report on Form 10-K of the Company for the fiscal
           year ended June 30, 1995 (Commission file number 1-4389)).*

10.17      Employment Agreement dated November 16, 1995, between the Company and
           Michael W. Hunkapiller (incorporated by reference to Exhibit 10(11)
           to Annual Report on Form 10-K of the Company for fiscal year ended
           June 30, 1996 (Commission file number 1-4389)).*

10.18      Employment Agreement dated November 16, 1995, between the Company and
           William B. Sawch (incorporated by reference to Exhibit 10(16) to
           Annual Report on Form 10-K of the Company for fiscal year ended June
           30, 1998 (Commission file number 1-4389)).*

10.19      Employment Agreement dated September 25, 1997, between the Company
           and Dennis L. Winger (incorporated by reference to Exhibit 10(17) to
           Annual Report on Form 10-K of the Company for the fiscal year ended
           June 30, 1998 (Commission file number 1-4389)).*

10.20      Letter Agreement dated June 24, 1997, between the Company and Dennis
           L. Winger (incorporated by reference to Exhibit 10(18) to Annual
           Report on Form 10-K of the Company for the fiscal year ended June 30,
           1998 (Commission file number 1-4389)).*

10.21      Deferred Compensation Contract dated July 15, 1993, between the
           Company and William B. Sawch (incorporated by reference to Exhibit
           10(19) to Annual Report on Form 10-K of the Company for the fiscal
           year ended June 30, 1998 (Commission file number 1-4389)).*


                                      -57-
<PAGE>

10.22      Agreement dated April 28, 1999, between the Company and J. Craig
           Venter (incorporated by reference to Exhibit 10(20) to Annual Report
           on Form 10-K of the Company for the fiscal year ended June 30, 1999
           (Commission file number 1-4389)).*

10.23      The Perkin-Elmer Corporation Supplemental Retirement Plan effective
           as of August 1, 1979, as amended through October 1, 1996
           (incorporated by reference to Exhibit 10(22) to Annual Report on Form
           10-K of the Company for the fiscal year ended June 30, 2000
           (Commission file number 1-4389)).*

10.24      The Excess Benefit Plan of The Perkin-Elmer Corporation dated August
           1, 1984, as amended through August 17, 2000 (incorporated by
           reference to Exhibit 10(23) to Annual Report on Form 10-K of the
           Company for the fiscal year ended June 30, 2000 (Commission file
           number 1-4389)).*

10.25      Third Amendment to The Excess Benefit Plan of The Perkin-Elmer
           Corporation effective January 1, 2001. *

10.26      1993 Director Stock Purchase and Deferred Compensation Plan as
           amended through March 17, 2000 (incorporated by reference to Exhibit
           10.1 to Quarterly Report on Form 10-Q of the Company for the quarter
           ended March 31, 2000 (Commission file number 1-4389)).*

10.27      PE Corporation Performance Unit Bonus Plan as amended through
           November 18, 1999 (incorporated by reference to Exhibit 10.1 to
           Quarterly Report on Form 10-Q of the Company for the quarter ended
           December 31, 1999 (Commission file number 1-4389)).*

10.28      The Estate Enhancement Plan of The Perkin-Elmer Corporation
           (incorporated by reference to Exhibit 10(22) to Annual Report on Form
           10-K of the Company for the fiscal year ended June 30, 1997
           (Commission file number 1-4389)).

10.29      The Perkin-Elmer Corporation Deferred Compensation Plan, as amended
           and restated effective as of January 1, 1998 (incorporated by
           reference to Exhibit 4 to the Company's Registration Statement on
           Form S-8 (No. 333-45187)).*

11         Computation of Net Income (Loss) per Share for the three years ended
           June 30, 2001 (incorporated by reference to Note 1 to Consolidated
           Financial Statements of Annual Report to Stockholders for the fiscal
           year ended June 30, 2001).

13         Annual Report to Stockholders for the fiscal year ended June 30, 2001
           (to the extent incorporated herein by reference).

21         List of Subsidiaries.

23         Consent of PricewaterhouseCoopers LLP.


*          Management plan or compensatory plan or arrangement


(b) Reports on Form 8-K

         During the quarter ended June 30, 2001, the Company filed a Current
Report on Form 8-K dated June 12, 2001, and filed June 29, 2001, to report under
Item 5 thereof the signing of a definitive agreement for the acquisition of Axys
Pharmaceuticals, Inc.


                                      -58-
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                   APPLERA CORPORATION


                                   By  /s/  William B. Sawch
                                       ----------------------------------------
                                       William B. Sawch
                                       Senior Vice President and General Counsel


Date:  September 26, 2001


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.





/s/ Tony L. White                                           September 26, 2001
-------------------------------------------------
Tony L. White
Chairman of the Board of Directors, President
and Chief Executive Officer
(Principal Executive Officer)


/s/ Dennis L. Winger                                        September 26, 2001
-------------------------------------------------
Dennis L. Winger
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)


/s/ Vikram Jog                                              September 26, 2001
-------------------------------------------------
Vikram Jog
Controller
(Principal Accounting Officer)


                                      -59-
<PAGE>


/s/ Richard H. Ayers                                       September 26, 2001
-------------------------------------------------
Richard H. Ayers
Director


/s/ Jean-Luc Belingard                                     September 26, 2001
-------------------------------------------------
Jean-Luc Belingard
Director


/s/ Robert H. Hayes                                        September 26, 2001
-------------------------------------------------
Robert H. Hayes
Director


/s/ Arnold J. Levine                                       September 26, 2001
-------------------------------------------------
Arnold J. Levine
Director


/s/ Theodore E. Martin                                     September 26, 2001
-------------------------------------------------
Theodore E. Martin
Director


/s/ Georges C. St. Laurent, Jr.                            September 26, 2001
-------------------------------------------------
Georges C. St. Laurent, Jr.
Director


/s/ Carolyn W. Slayman                                     September 26, 2001
-------------------------------------------------
Carolyn W. Slayman
Director


/s/ Orin R. Smith                                          September 18, 2001
-------------------------------------------------
Orin R. Smith
Director


/s/ James R. Tobin                                         September 26, 2001
-------------------------------------------------
James R. Tobin
Director


                                      -60-
<PAGE>


                        REPORT OF INDEPENDENT ACCOUNTANTS
                         ON FINANCIAL STATEMENT SCHEDULE


To the Board of Directors
of Applera Corporation


         Our audits of the consolidated financial statements of Applera
Corporation referred to in our report dated July 26, 2001, appearing in the 2001
Annual Report to Stockholders of Applera Corporation (which report and
consolidated financial statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the financial statement schedule
listed in Item 14(a)2 of this Form 10-K. In our opinion, this financial
statement schedule presents fairly, in all material respects, the information
set forth therein when read in conjunction with the related consolidated
financial statements.


/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Stamford, Connecticut
July 26, 2001


                                      -61-
<PAGE>

                               APPLERA CORPORATION
                 VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
            FOR THE FISCAL YEARS ENDED JUNE 30, 1999, 2000, AND 2001

(Amounts in thousands)

                                                                 ALLOWANCE FOR
                                                               DOUBTFUL ACCOUNTS



Balance at June 30, 1998 ......................................      $ 4,783

Charged to income in fiscal year 1999 .........................        2,101

Deductions from reserve in fiscal year 1999 ...................       (2,601)

Divested Business (2) .........................................         (449)
                                                                     -------

Balance at June 30, 1999 ......................................        3,834

Charged to income in fiscal year 2000 .........................        3,146

Deductions from reserve in fiscal year 2000 ...................       (3,015)
                                                                     -------

Balance at June 30, 2000 (1) ..................................        3,965

Charged to income in fiscal year 2001 .........................        3,326

Deductions from reserve in fiscal year 2001 ...................       (2,221)
                                                                     -------

Balance at June 30, 2001 (1) ..................................      $ 5,070
                                                                     =======

(1) Deducted in the Consolidated Statements of Financial Position from accounts
receivable.

(2) See Note 2 to the Consolidated Financial Statements.



                                   SCHEDULE II


                                      -62-
<PAGE>


                                  EXHIBIT INDEX

Exhibit Number

10.14      Amendment dated August 17, 2001, to Employment Agreement dated
           September 12, 1995, between the Company and Tony L. White

10.25      Third Amendment to the Excess Benefit Plan of the Perkin-Elmer
           Corporation

13         Annual Report to Stockholders for the fiscal year ended June 30, 2001
           (to the extent incorporated herein by reference)

21         List of Subsidiaries

23         Consent of Pricewaterhouse Coopers LLP