##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal year ended December 31, 2005                                                 
|or        
|          
|o          |  | 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: 000-28229


Caliper Life Sciences, Inc.


(Exact name of registrant as specified in its charter)


|                                                                        |  |                                         
|----------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                                |  | 33-0675808                              
|(State or other jurisdiction of
    incorporation or organization)      |  | (I.R.S. Employer
    Identification No.)
|                                                                       
|68 Elm Street
    Hopkinton, MA(Address of principal executive offices) |  | 01748(Zip Code)                         

Registrants telephone number, including area code
(508) 435-9500


Securities registered pursuant to Section 12(b) of the
Exchange Act: None


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


Common Stock, $0.001 Par Value Per Share


Common Stock Purchase Rights


(Title of class)


o þ


o þ


þ o


S-K 10-K 10-K. þ


12b-2


o þ o


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE


10-K: 10-K 10-K, 10-K.










---



##### 










CALIPER LIFE SCIENCES, INC.


FORM 10-K


For the Fiscal Year Ended December 31, 2005


TABLE OF CONTENTS


|                                                            |  |                                                                                                        |    |      |    |  |  | 
|----------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------ | -- | ---- | -- |  |  | 
|                                                            |  |                                                                                                        |    | Page |   
|                                                            |  |                                                                                                        |    |      |   
|PART I                                                     
|Item 1.                                                     |  | Business                                                                                               |    |      | 2  | 
|Item 1A.                                                    |  | Risk Factors                                                                                           |    |      | 20 | 
|Item 1B.                                                    |  | Unresolved Staff Comments                                                                              |    |      | 29 | 
|Item 2.                                                     |  | Properties                                                                                             |    |      | 29 | 
|Item 3.                                                     |  | Legal Proceedings                                                                                      |    |      | 30 | 
|Item 4.                                                     |  | Submission of Matters to a Vote of Security
    Holders                                                |    |      | 30 | 
|                                                           
|PART II                                                    
|Item 5.                                                     |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer of Equity Securities |    |      | 32 | 
|Item 6.                                                     |  | Selected Financial Data                                                                                |    |      | 33 | 
|Item 7.                                                     |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations              |    |      | 35 | 
|Item 7A.                                                    |  | Quantitative and Qualitative Disclosures
    About Market Risk                                         |    |      | 47 | 
|Item 8.                                                     |  | Financial Statements and Supplementary
    Data                                                        |    |      | 49 | 
|Item 9.                                                     |  | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure               |    |      | 49 | 
|Item 9A.                                                    |  | Controls and Procedures                                                                                |    |      | 49 | 
|Item 9B.                                                    |  | Other Information                                                                                      |    |      | 52 | 
|                                                           
|PART III                                                   
|Item 10.                                                    |  | Directors and Executive Officers of the
    Registrant                                                 |    |      | 52 | 
|Item 11.                                                    |  | Executive Compensation                                                                                 |    |      | 52 | 
|Item 12.                                                    |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters     |    |      | 52 | 
|Item 13.                                                    |  | Certain Relationships and Related
    Transactions                                                     |    |      | 52 | 
|Item 14.                                                    |  | Principal Accountant Fees and Services                                                                 |    |      | 52 | 
|                                                           
|PART IV                                                    
|Item 15.                                                    |  | Exhibits and Financial Statement
    Schedules                                                         |    |      | 53 | 
|Signatures                                                  |  |                                                                                                        | 56 |     
|EX-2.5 - Merger Agreement with Xenogen Corp dated 2/10/2006
|EX-10.67 - Offer Letter dated 9/7/2005                     
|EX-21.1 - Subsidiaries of the Registrant                   
|EX-23.1 - Consent of Ernst & Young LLP                     
|EX-31.1 - Sec 302 Certification of CEO                     
|EX-31.2 - Sec 302 Certification of CFO                     
|EX-32.1 - Sec 906 Certification of CEO                     
|EX-32.2 - Sec 906 Certification of CFO                     



1



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##### Table of Contents



INFORMATION REGARDING FORWARD-LOOKING STATEMENTS


10-K


10-K, 10-K







PART I







|        |         
|------- | --------
|Item 1. | Business

Overview


lab-on in vitro






2



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10-K, 10-Q, 8-K,


Recent and Pending Acquisitions


30-month


in vitro in vitro




3



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| |   |                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continue to expand the breadth of NovaScreens drug
    discovery and development services to perform fully integrated,
    high-value discovery and early development programs for its
    clients.                                                                                                                          
|
| |  | Strengthen and expand NovaScreens market position by
    providing innovative, cost-effective, high-quality,
    customer-driven services.                                                                                                                                                                                   
|
| |  | Leverage NovaScreens in vitroscreening assay
    and chemistry capabilities to grow its pharmacoinformatics
    database and its in silico screening tools to enable
    NovaScreen to provide substantial productivity enhancements and
    higher value-added services to its pharmaceutical and
    biotechnology clients.

in vitro




Technologies, Products and Services




| |                                  
| | ---------------------------------
| | LabChip Microfluidic Technologies



4



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| |                            
| | ---------------------------
| | Features of LabChip Systems



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Miniaturization. A conventional laboratory typically uses
    at least a drop of fluid, or 1 to 100 microliters, to perform
    each experiment. In many LabChip applications, the sample volume
    needed from external sources is reduced to below 1 nanoliter, a
    reduction of up to 100,000-fold over conventional systems. In
    some processes within the chip, reagents are dispensed in the
    microchannels in volumes down to tens of picoliters, another 10-
    to 100-fold reduction, which speeds analysis times and increases
    sample throughput. A microliter is one millionth of a liter, a
    nanoliter is one billionth of a liter, and a picoliter is one
    trillionth of a liter.
|
| |  | Integration. Integration is the combining of multiple
    processes into a single process, or the inclusion of multiple
    functions into one device. Today many laboratory systems perform
    only one or two steps of an experimental protocol. Our LabChip
    systems can integrate complete experiments involving half a
    dozen or more steps into one continuous process performed on a
    single chip.                                                                                                                                                                                                                                                                                               
|
| |  | Automation. Many laboratory experiments are performed in
    multiple manual steps. With our LabChip systems, entire
    experiments can be automated and performed inside a chip using
    one instrument, freeing up valuable research time and laboratory
    space and reducing labor requirements.                                                                                                                                                                                                                                                                                                                                                                                                           



| |                                
| | -------------------------------
| | Key Benefits of LabChip Systems



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Improved Data Quality and Accuracy. Our LabChip systems
    are designed to produce more accurate, consistent and
    reproducible data by reducing human error, reducing the
    variability caused by the use of multiple instruments, and
    enabling more analytical approaches to experimentation that are
    impractical in traditional systems. For example, biochemical
    screening assays typically call for fast, bulk
    measurements of an experimental mixture. Reducing the size of
    the experiment allows for rapid separation and measurement of
    individual molecular species in the test mixture, which in turn
    enhances the accuracy of the overall result. With higher quality
    data, our customers can make better decisions earlier in the
    drug discovery and development process. This enables our
    customers to avoid the time and expense of performing additional
    analyses and experiments on false positive results
    from their primary screening experiments.
|
| |  | Improved Sensitivity. When screening against drug
    targets, such as kinases, the higher quality data from our
    LabChip systems allows customers to detect more subtle drug
    compound activities than can be detected with traditional
    microplate well-based assays. This has two advantages:
    (1) an increase in the pool of potential lead compounds,
    and (2) the possibility that a hit found at
    lower levels of inhibition will be more selective for the target
    of interest than a hit found at higher levels of inhibition
    because compounds that hit at higher levels of inhibition may
    also produce unacceptable levels of inhibition on other,
    non-target kinases.                                                                                                                                                                                                                                                                                                         
|
| |  | Reduced Reagent and Labor Cost. Our LabChip systems
    utilize only a small fraction of the usual amount of expensive
    reagents used in experiments performed in test tubes,
    96-well plates, or
    384-well plates, and
    also reduce the labor involved in each experiment. We believe
    that saving on reagent cost and labor can enable pharmaceutical
    companies to expand the scale of experimentation in ways that
    would otherwise not be commercially feasible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | High Speed. We believe our LabChip systems can, depending
    on the application, accelerate some experiments as much as
    100-fold or more. For example, molecular separations such as
    electrophoresis may take two hours or more using conventional
    equipment. On a chip, however, we can perform these separations
    in less than one minute.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Faster Assay Development. Traditional assays,
    particularly those used for enzymatic screening, can require
    complex and time-consuming assay development. For example, some
    popular assays rely on developing specific antibodies for the
    assay  a process that can take up to six weeks or
    more. Because they eliminate the requirement for assay
    development steps such as antibody preparation, LabChip assays
    are much faster to develop. In addition, we have exploited the
    predictable nature of fluid and reagent movement inside
    microfluidic channels and have developed software tools to
    facilitate the                                                                                                                                                                                                                                                                                                                                                                   

5



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | process of optimizing the experimental conditions necessary for
    a successful enzymatic assay on a LabChip device, such as
    separating a substrate peptide from its product. Typically, our
    customers have found that these combined benefits shorten a two-
    to three-month assay development process for a traditional assay
    to just a week or two for a LabChip assay.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Expanded Individual Researcher Capability. Because our
    LabChip systems can combine a multi-step, complex experiment
    into one step, we believe that individual researchers can
    perform experiments previously outside their areas of expertise.
    By comparison, with conventional, non-integrated equipment,
    researchers need to master the complexities of performing each
    individual step.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Improved Enterprise-Wide Productivity. We believe our
    LabChip systems can improve data quality and reproducibility to
    the point where researchers can utilize data generated outside
    their laboratory or organization. This has the potential to
    greatly improve enterprise-wide productivity by supporting data
    sharing and reducing the need to repeat experiments. For
    example, a typical primary screen produces approximate,
    yes/no answers about the activity of library
    compounds against a particular kinase target, and therefore the
    information from such primary screens is only useful for one
    primary screening experiment. With LabChip assays, the primary
    screening data is more specific, in terms of the degree of
    inhibition, and more reproducible. This could enable an
    organization to build a database of primary screening data that
    could ultimately be mined by other scientists within the
    organization interested in a particular compound/target
    interaction.





| |             
| | ------------
| | Our Products





| |                        
| | -----------------------
| | Drug Discovery Products



| |                                                                   
| | ------------------------------------------------------------------
| | High-Throughput Screening Systems and Integrated
    Workstations:

LabChip 3000 Drug Discovery System. 384-well


6



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Staccato Automated Workstations.




| |                          
| | -------------------------
| | Advanced Liquid Handling:

1536-well






8-channel ease-of


7



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| |                              
| | -----------------------------
| | Plate Management and Storage:



Twister I and II.




| |                          
| | -------------------------
| | Separations and Analysis:

LabChip 90 Automated Electrophoresis System. 96-well 384-well




| |                          
| | -------------------------
| | Drug Development Products

technician-to ,


MultiDose G3.


Tablet Processing Workstation II (TPW II).


8



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Prelude Workstation.




| |         
| | --------
| | Services

in vitro


Screening and Profiling Services.


Assay Development Services.


Drug Discovery and Development Services. in vitro


Product Support.


Validation Services. on-site


Key Corporate Partnerships




9



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| |           
| | ----------
| | Affymetrix

® start-up






| |                     
| | --------------------
| | Agilent Technologies

Lab-on




Agilent 2100 Bioanalyzer.


Agilent 5100 ALP Instrument.






| |                        
| | -----------------------
| | Amphora Discovery Corp.



10



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| |                     
| | --------------------
| | Bio-Rad Laboratories









| |                              
| | -----------------------------
| | Wako Pure Chemical Industries



Customers






Backlog




11



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Research and Development


lab-on lab-on






| |                    
| | -------------------
| | Technology Research



Chip Design.


Chip Manufacturing.


12



---



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Instrument Manufacturing and Software Design.




| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the miniaturization of fluidics,                                                                                                                                                               
|
| |  | robotics for target preparation and handling of microarray chips,                                                                                                                              
|
| |  | the development of modular microfluidic instrument components
    that can be combined with other types of instruments and liquid
    handling equipment, depending on the desired application,
|
| |  | high-efficiency liquid handling workstations,                                                                                                                                                  
|
| |  | the development of software to promote integration
    capability, and                                                                                                                         
|
| |  | continued development of productivity workstations for genomics
    and biotech.                                                                                                               

Systems and Assay Integration.




| |                                     
| | ------------------------------------
| | Applications and Product Development





13



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Manufacturing










14



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| |          
| | ---------
| | Suppliers





Competition








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Companies providing competitive liquid handling products,
    automation products and integration services for applications
    similar to ours. We believe the primary competitive factors in
    these markets are productivity enhancement, breadth of
    applications, accuracy,
    ease-of-use, price,
    performance, product reliability and service support.
    Competition for these types of products and services comes from
    many companies, including Tecan, Beckman Coulter,
    Velocity 11, Applied Biosystems division of Applera, and
    PerkinElmer.
|
| |  | Companies supplying conventional technologies for gel
    electrophoresis separations for proteins, DNA and RNA. We
    believe the primary competitive factors in these markets are
    cost per sample analyzed, throughput and productivity
    enhancement, data quality, ease of use, and service support.
    Competition for these types of products and services comes from
    many companies, including Agilent, Bio-Rad Laboratories, and
    Beckman Coulter.                                                                                                      
|
| |  | Companies supplying products for high throughput screening for
    the discovery of new drug compounds. We believe the primary
    competitive factors in these markets are cost per compound
    analyzed, throughput, data quality, ease of use, reliability,
    and service support. Competition for these types of products and
    services comes from many companies, including G.E. Healthcare,
    Molecular Devices, PerkinElmer, and Tecan.                                                                                                                         
|
| |  | Companies supplying assay development, screening and profiling
    services to drug discovery and development laboratories. We
    believe the primary competitive factors in these markets are
    cost per compound tested, data quality, and turn around time.
    Competition for these types of products and                                                                                                                                                                                                                                                              

15



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| |  |                                                                                                                      
| |  | ---------------------------------------------------------------------------------------------------------------------
| |  | services comes from many companies, including Cerep, MDS Pharma,
    Serologicals, Invitrogen, and Carna Biosciences.



lab-on






Intellectual Property


lab-on




| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | control of movement of fluid and other material through
    interconnected microchannels;
|
| |  | continuous flow, high-throughput screening assay methods and
    systems;                
|
| |  | analytical and control instrumentation;                                                  
|
| |  | analytical system architecture;                                                          
|
| |  | automated liquid handling systems;                                                       

16



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| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | chip-based assay chemistries and methods;                                    
|
| |  | chip-compatible sample access;                                               
|
| |  | software for control of microfluidic based systems and data
    analysis; and
|
| |  | chip manufacturing processes.                                                

lab-on




Environmental Matters




Other Business Risks




Employees




Executive Officers of the Registrant




E. Kevin Hrusovsky,


17



---



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Bruce J. Bal,


Enrique Bernal,


Paula J. Cassidy,


Andrea W. Chow, Ph.D.,


Stephen E. Creager,


18



---



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Thomas T. Higgins,


William C. Kruka,


David Manyak, Ph.D.,


Peter F. McAree,


Auro Nair, Ph.D.,


19



---



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Mark T. Roskey, Ph.D.,


Jean-Louis Rufener,





Item 1A.     Risk
Factors




| |                              
| | -----------------------------
| | Risks Related To Our Business



| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our LabChip products may not achieve widespread market
    acceptance, which could cause our revenue to grow slowly or
    decline and make it more difficult for us to achieve or maintain
    profitability.

ease-of




easy-to




20



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| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to demonstrate the advantages and potential economic
    value of our LabChip drug discovery systems over alternative,
    well-established technologies;                                                         
|
| |  | our ability to develop a broader range of standard assays and
    applications that enable customers and potential customers to
    perform many different types of experiments on a single LabChip
    instrument system; and
|
| |  | our ability to market and sell our drug discovery systems and
    related consumable products through our marketing and sales
    organization without the involvement of our senior management.                              



| |                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are not successful in developing new and enhanced
    liquid handling, LabChip and other life sciences products, we
    may lose market share to our competitors.

first-to




| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are not successful in improving the cost of our LabChip
    products relative to the performance delivered, we may not be
    successful in displacing alternative or more established
    products and technologies that are competitive with our LabChip
    products.



21



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| |                                                                                                                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to the capital spending patterns of the
    pharmaceutical industry, which recently have been adversely
    impacted by general economic conditions, industry consolidation
    and increased competition, and which have resulted in severe
    price competition among suppliers of products to that
    industry.





| |                                                                                                                                                                                                                                                                                                                                                            
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our future revenue growth depends to a significant extent on
    sales by Affymetrix of the GCAS automated target preparation
    system, which is based on the Caliper Sciclone liquid handling
    instrument. If end-user demand for this product is not as strong
    as anticipated by Affymetrix, our future revenue targets may not
    be achieved.

®




| |                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our future revenue growth depends to a significant extent on
    the revenue growth of NovaScreen, which we recently acquired. If
    NovaScreens revenue does not grow as we anticipate, our
    future revenue targets may not be achieved.





| |                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A significant portion of our business depends upon
    collaborations with business partners, and our financial success
    depends upon our ability to develop new product concepts with
    compelling value propositions to generate new Caliper Driven
    collaboration relationships, as well as our ability to manage
    our existing relationships.



22



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| |                                                                                    
| | -----------------------------------------------------------------------------------
| | Acquisitions may have unexpected consequences or impose
    additional costs on us.







| |   |                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | difficulties in integration of the operations, technologies and
    products and services of the acquired companies;                                                                                                                                                                                                                                                                                          
|
| |  | the risk of diverting managements attention from normal
    daily operations of the business;                                                                                                                                                                                                                                                                                                                
|
| |  | potential cost and disruptions caused by the integration of
    financial reporting systems and development of uniform
    standards, controls, procedures and policies;                                                                                                                                                                                                                                      
|
| |  | accounting consequences, including amortization of acquired
    intangible assets or other required purchase accounting
    adjustments, resulting in variability or reductions of our
    reported earnings;                                                                                                                                                                                                 
|
| |  | potential difficulties in completing projects associated with
    purchased in-process research and development;                                                                                                                                                                                                                                                                                              
|
| |  | risks of entering markets in which we have no or limited direct
    prior experience and where competitors in these markets have
    stronger market positions;                                                                                                                                                                                                                                               
|
| |  | the potential loss of our key employees or those of the acquired
    company due to the employment uncertainties inherent in the
    acquisition process;                                                                                                                                                                                                                                                     
|
| |  | the assumption of known and potentially unknown liabilities of
    the acquired company;                                                                                                                                                                                                                                                                                                                      
|
| |  | the risk that we may find that the acquired company or business
    does not further our business strategy or that we paid more than
    what the company or business was worth;                                                                                                                                                                                                                              
|
| |  | we may disagree with the former management of businesses that we
    acquire with respect to the interpretation of provisions in the
    acquisition agreement relating to earn out provisions or other
    provisions that have ongoing effect after the completion of the
    acquisition, which could result in disputes or litigation with
    current employees who joined us as part of the acquisition;
|
| |  | our relationship with current and new employees and customers
    could be impaired;                                                                                                                                                                                                                                                                                                                          

23



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| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the acquisition may result in litigation from terminated
    employees or third parties who believe a claim against us would
    be valuable to pursue;               
|
| |  | our due diligence process may fail to identify significant
    issues with product quality, product architecture and legal
    contingencies, among other matters; and
|
| |  | there may be insufficient revenues to offset increased expenses
    associated with acquisitions.                                                                     







| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Our business and stock price may be adversely affected if the
    acquisition of Xenogen is not completed.





| |   |                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the diversion of our managements attention from our
    day-to-day business as
    a result of efforts relating to the acquisition;                                        
|
| |  | the market price of shares of our stock may decline to the
    extent that the current market price reflects a market
    assumption that the acquisition will be completed;
|
| |  | under certain circumstances, we could be required to pay Xenogen
    a $2 million termination fee;                                                                          
|
| |  | we must pay costs related to the merger, such as legal and
    accounting fees and a portion of the investment banking
    fees; and                                        
|
| |  | we would not realize the benefits we expect from acquiring
    Xenogen.                                                                                                     



| |                                                                                   
| | ----------------------------------------------------------------------------------
| | We may not realize all of the anticipated benefits of the
    Xenogen acquisition.





| |   |                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------
| |  | consolidating research and development and manufacturing
    operations;                                                             
|
| |  | retaining key employees;                                                                                                             
|
| |  | consolidating corporate and administrative infrastructures;                                                                          
|
| |  | coordinating sales and marketing functions;                                                                                          
|
| |  | preserving our and Xenogens research and development,
    distribution, marketing, promotion, and other important
    relationships;
|
| |  | minimizing the diversion of managements attention from
    ongoing business concerns; and                                           
|
| |  | coordinating geographically separate organizations.                                                                                  



24



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| |                                                                                  
| | ---------------------------------------------------------------------------------
| | We expect to incur future operating losses and may not
    achieve profitability.





| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our operating results fluctuate significantly and any failure
    to meet financial expectations may disappoint securities
    analysts or investors and result in a decline in our stock
    price.

period-to






| |                                                                                                                                                                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our revenue from Agilent could decline due to a number of
    different factors, including a reduction in planar LabChip
    purchases by Agilent and reduced sales of the Agilent 2100
    Bioanalyzer and LabChip products sold by Agilent, or reduced
    sales of such products by Agilent due to competition from us or
    our other commercial partners.





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| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | We depend on our key personnel, the loss of whom would impair
    our ability to compete.





| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our products could infringe on the intellectual property
    rights of others, which may cause us to engage in costly
    litigation and, if we are not successful, could also cause us to
    pay substantial damages and prohibit us from selling our
    products.





| |                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may need to initiate lawsuits to protect or enforce our
    patents, which would be expensive and, if we lose, may cause us
    to lose some of our intellectual property rights, which would
    reduce our ability to compete in the market.



26



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| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The rights we rely upon to protect our intellectual property
    underlying our products may not be adequate, which could enable
    third parties to use our technology and would reduce our ability
    to compete in the market.





| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are dependent on a single-source supplier for the glass
    used in our LabChip products and if we are unable to buy this
    glass on a timely basis, we will not be able to deliver our
    LabChip products to customers.





| |                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We obtain some of the components and subassemblies included
    in our systems from a single source or a limited group of
    suppliers, and the partial or complete loss of one of these
    suppliers could cause production delays and a substantial loss
    of revenue.







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| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If a natural disaster strikes our manufacturing facilities,
    we would be unable to manufacture our products for a substantial
    amount of time and we would lose revenue.





| |                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Failure to raise additional capital or generate the
    significant capital necessary to expand our operations and
    invest in new products could reduce our ability to compete and
    result in lower revenue.







| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | Our tax net operating losses and credit carryforwards may
    expire if we do not achieve or maintain profitability.





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Risks Related to Owning Our Common Stock




| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Our stock price is extremely volatile, and you could lose a
    substantial portion of your investment.





| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | announcements by analysts regarding their assessment of us and
    our prospects;                        
|
| |  | announcements by our competitors of complementary or competing
    products and technologies;            
|
| |  | announcements of our financial results, particularly if they
    differ from investors expectations; and
|
| |  | general market volatility for technology stocks.                                                         





| |                                                                                     
| | ------------------------------------------------------------------------------------
| | We have been sued, and are at risk of future securities class
    action litigation.





| |                                                                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provisions of our charter documents and Delaware law may
    inhibit a takeover, which could limit the price investors might
    be willing to pay in the future for our common stock.








|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties

5-year


29



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

In re Caliper
Technologies Corp. Initial Public Offering Securities
Litigation, In re Initial Public Offering Securities Litigation, 10b-5







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



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| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) Two persons were elected to serve as Directors of the
    Company to hold office until the next annual meeting of
    shareholders and until their successors is chosen and qualified.
    The following is a table setting forth the number of votes cast
    for and withheld for each nominee for Director:

|                        |  |          |            |  |          |  |        | 
|----------------------- |  | -------- | ---------- |  | -------- |  | ------ | 
|                        |  | No. of   |            |  | No. of   | 
|                        |  | Common   |            |  | Common   | 
|                        |  | Votes in |            |  | Votes    | 
|Name of Nominee         |  | Favor    |            |  | Withheld | 
|                        |  |          |            |  |          | 
|Daniel L. Kisner, Ph.D. |  |          | 26,134,417 |  |          |  | 74,662 | 
|Allan L. Comstock       |  |          | 26,122,200 |  |          |  | 86,879 | 



| |                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The term of the following directors continued subsequent to the
    annual meeting: Van Billet, Robert C. Bishop, E. Kevin
    Hrusovsky, David Milligan and Kathryn A. Tunstall.                                                                                                                                                                                     
|
| | (b) The appointment of Ernst & Young LLP as our
    independent registered public accounting firm for the fiscal
    year ending December 31, 2005 was ratified. There were
    26,012,596 shares of Common Stock voting in favor,
    166,931 shares of Common Stock voting against, and
    29,552 shares of Common Stock abstaining with zero Broker
    non-votes.

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PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities

Market Information




|             |                |      |   |      |     |  |   |      | 
|------------ | -------------- | ---- | - | ---- | --- |  | - | ---- | 
|             |                | High |   |      | Low | 
|             |                |      |   |      |     | 
|Fiscal 2005: |                |      |   |      |     |  |   |     
|             | First Quarter  |      | $ | 8.03 |     |  | $ | 6.42 | 
|             | Second Quarter |      | $ | 6.45 |     |  | $ | 5.44 | 
|             | Third Quarter  |      | $ | 7.17 |     |  | $ | 5.56 | 
|             | Fourth Quarter |      | $ | 7.36 |     |  | $ | 5.88 | 
|Fiscal 2004: |                |      |   |      |     |  |   |     
|             | First Quarter  |      | $ | 9.75 |     |  | $ | 5.75 | 
|             | Second Quarter |      | $ | 7.78 |     |  | $ | 4.64 | 
|             | Third Quarter  |      | $ | 7.13 |     |  | $ | 4.67 | 
|             | Fourth Quarter |      | $ | 8.15 |     |  | $ | 6.54 | 

Stockholders




Dividends




Issuer Purchases of Equity Securities




|                            |  |              |        |  |               |                  |      |           |                        |  |                     |  |  |  |   | 
|--------------------------- |  | ------------ | ------ |  | ------------- | ---------------- | ---- | --------- | ---------------------- |  | ------------------- |  |  |  | - | 
|                            |  |              |        |  |               | Total Number of  |      |           |                       
|                            |  |              |        |  |               | Shares Purchased |      |           | Maximum Approximate    | 
|                            |  |              |        |  |               | as Part of       |      |           | Dollar Value of Shares | 
|                            |  | Total Number |        |  | Average Price |                  |      | Publicly  |                        |  | that may yet be     | 
|                            |  | of Shares    |        |  | Paid Per      |                  |      | Announced |                        |  | Purchased Under the | 
|Period                      |  | Purchased    |        |  | Share         |                  |      | Programs  |                        |  | Programs            | 
|                            |  |              |        |  |               |                  |      |           |                        |  |                     | 
|October 1 through 31, 2005  |  |              | 10,000 |  |               | $                | .001 |           |                        |  |                    |  |  |  |  | 
|November 1 through 30, 2005 |  |              |       |  |               | $                |     |           |                        |  |                    |  |  |  |  | 
|December 1 through 31, 2005 |  |              | 5,000  |  |               | $                | .001 |           |                        |  |                    |  |  |  |  | 
|                            |  |              |        |  |               |                  |      |           |                        |  |                     | 
|Total                       |  |              | 15,000 |  |               | $                | .001 |           |                        |  |                    |  |  |  |  | 

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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

10-K.


|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |         |        |        |   |         |        |        | 
|------------------------------------------------------------------------ | ----------------------------------- | ------------------------------------- | ------- | ------ | ------- | - | ------- | ------ | ------- | - | ------- | ------ | ------- | ---- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                                                                         |                                     | Years Ended December 31,              |        
|                                                                         |                                     |                                       |        
|                                                                         |                                     | 2005                                  |         |        | 2004    |   |         | 2003   |         |   | 2002    |        |         | 2001 |        
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|                                                                         |                                     | (In thousands, except per share data) |        
|Statements of Operations Data(1):                                        |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |         |        |        |   |         |       
|Revenue:                                                                 |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |         |        |        |   |         |       
|                                                                         | Product revenue                     |                                       | $       | 59,565 |         |   | $       | 57,808 |         |   | $       | 31,916 |         |      | $       | 15,644 |        |   | $       | 12,468 |       
|                                                                         | Service revenue                     |                                       |         | 16,430 |         |   |         | 13,448 |         |   |         | 5,879  |         |      |         | 37     |        |   |         |       |       
|                                                                         | License fees and contract revenue   |                                       |         | 11,014 |         |   |         | 8,871  |         |   |         | 11,616 |         |      |         | 10,152 |        |   |         | 17,120 |       
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|                                                                         |                                     | Total revenues                        |         |        | 87,009  |   |         |        | 80,127  |   |         |        | 49,411  |      |         |        | 25,833 |   |         |        | 29,588 | 
|Costs and expenses:                                                      |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |         |        |        |   |         |       
|                                                                         | Cost of product revenue             |                                       |         | 39,960 |         |   |         | 38,350 |         |   |         | 23,494 |         |      |         | 10,927 |        |   |         | 6,887  |       
|                                                                         | Cost of service revenue             |                                       |         | 8,291  |         |   |         | 6,673  |         |   |         | 2,486  |         |      |         |       |        |   |         |       |       
|                                                                         | Research and development            |                                       |         | 17,448 |         |   |         | 22,728 |         |   |         | 33,691 |         |      |         | 43,317 |        |   |         | 38,263 |       
|                                                                         | Selling, general and administrative |                                       |         | 31,210 |         |   |         | 32,325 |         |   |         | 27,292 |         |      |         | 17,534 |        |   |         | 15,545 |       
|                                                                         | Employee stock compensation, net    |                                       |         | 1,585  |         |   |         | 2,770  |         |   |         | 1,000  |         |      |         | 378    |        |   |         | 2,540  |       
|                                                                         | Amortization of intangible assets   |                                       |         | 4,069  |         |   |         | 3,805  |         |   |         | 2,756  |         |      |         |       |        |   |         |       |       
|                                                                         | Restructuring charges (credits)     |                                       |         | (1,005 | )       |   |         | 6,018  |         |   |         | 11,535 |         |      |         | 314    |        |   |         |       |       
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|                                                                         |                                     | Total costs and expenses              |         |        | 101,558 |   |         |        | 112,669 |   |         |        | 102,254 |      |         |        | 72,470 |   |         |        | 63,235 | 
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|Operating loss                                                           |                                     |                                       | (14,549 | )      |         |   | (32,542 | )      |         |   | (52,843 | )      |         |      | (46,637 | )      |        |   | (33,647 | )     
|Interest income, net                                                     |                                     |                                       | 895     |        |         |   | 846     |        |         |   | 2,227   |        |         |      | 4,353   |        |        |   | 9,970   |       
|Other income (expense), net                                              |                                     |                                       | (689    | )      |         |   | 517     |        |         |   | 1,279   |        |         |      | 1,320   |        |        |   |        |       
|Litigation settlement and reimbursement                                  |                                     |                                       |        |        |         |   |        |        |         |   |        |        |         |      |        |        |        |   | 27,500  |       
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|Income (loss) before taxes                                               |                                     |                                       | (14,343 | )      |         |   | (31,179 | )      |         |   | (49,337 | )      |         |      | (40,964 | )      |        |   | 3,823   |       
|Provisions for income taxes                                              |                                     |                                       | (114    | )      |         |   | (377    | )      |         |   | (190    | )      |         |      |        |        |        |   |        |       
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|Net income (loss)                                                        |                                     | $                                     | (14,457 | )      |         | $ | (31,556 | )      |         | $ | (49,527 | )      |         | $    | (40,964 | )      |        | $ | 3,823   |       
|                                                                         |                                     |                                       |         |        |         |   |         |        |         |   |         |        |         |      |        
|Net income (loss) per common share, basic                                |                                     | $                                     | (0.46   | )      |         | $ | (1.08   | )      |         | $ | (1.88   | )      |         | $    | (1.68   | )      |        | $ | 0.16    |       
|Shares used in computing net income (loss) per common share,
    basic   |                                     |                                       | 31,313  |        |         |   | 29,273  |        |         |   | 26,396  |        |         |      | 24,403  |        |        |   | 23,997  |       
|Net income (loss) per common share, diluted                              |                                     | $                                     | (0.46   | )      |         | $ | (1.08   | )      |         | $ | (1.88   | )      |         | $    | (1.68   | )      |        | $ | 0.15    |       
|Shares used in computing net income (loss) per common share,
    diluted |                                     |                                       | 31,313  |        |         |   | 29,273  |        |         |   | 26,396  |        |         |      | 24,403  |        |        |   | 25,634  |       

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|                                                                                 |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------------------------------------------------------------------- |  | ------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                                                                 |  | As of December 31, |        
|                                                                                 |  |                    |        
|                                                                                 |  | 2005               |         |  | 2004 |   |         | 2003 |  |   | 2002    |  |  | 2001 |        
|                                                                                 |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |        
|                                                                                 |  | (In thousands)     |        
|Balance Sheet Data(1):                                                           |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Cash, cash equivalents, marketable securities and short-term
    restricted cash |  | $                  | 31,704  |  |      | $ | 50,237  |      |  | $ | 66,996  |  |  | $    | 154,602 |  |  | $ | 166,176 | 
|Working capital                                                                  |  |                    | 33,750  |  |      |   | 52,234  |      |  |   | 66,577  |  |  |      | 155,583 |  |  |   | 195,310 | 
|Total assets                                                                     |  |                    | 158,209 |  |      |   | 147,947 |      |  |   | 168,230 |  |  |      | 179,878 |  |  |   | 222,543 | 
|Long-term obligations, less current portion                                      |  |                    | 320     |  |      |   |        |      |  |   | 646     |  |  |      | 1,986   |  |  |   | 3,749   | 
|Total stockholders equity                                                       |  |                    | 118,438 |  |      |   | 111,579 |      |  |   | 134,797 |  |  |      | 167,558 |  |  |   | 206,564 | 






|    |                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The statement of operations data includes the results of Zymark
    beginning July 14, 2003 and the results of NovaScreen
    beginning October 3, 2005, the respective dates of these
    acquisitions. The balance sheet data incorporates the effects of
    these acquisitions as of December 31 of the year in which
    each respective acquisition was completed.

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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following discussion and analysis should be read with
Selected Financial Data and our financial statements
and notes included elsewhere in this Annual Report on
Form 10-K. The
discussion in this Annual Report on
Form 10-K contains
forward-looking statements that involve risks and uncertainties,
such as statements of our plans, objectives, expectations and
intentions. The cautionary statements made in this Annual Report
on Form 10-K
should be read as applying to all related forward-looking
statements wherever they appear in this Annual Report on
Form 10-K. Our
actual results could differ materially from those discussed
here. Factors that could cause or contribute to these
differences include those discussed in Factors Affecting
Operating Results below, as well as those discussed
elsewhere.




Overview


lab-on








35



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| |                 
| | ----------------
| | Overview of 2005



| |                      
| | ---------------------
| | Financial Performance



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our $87.0 million of revenue in 2005 was consistent with
    our previous estimates. Revenue growth principally came from our
    drug discovery product family including from OEM instrument
    sales, LabChip systems, services, including drug discovery
    screening and profiling services of newly acquired NovaScreen,
    and license fees under our Caliper Driven program. These growth
    areas were partially offset by lower revenues from our drug
    development product family and other instruments.
|
| |  | Our 2005 Selling, general and administrative and research and
    development expenses of $48.7 million were
    $6.4 million lower than 2004, reflecting our continued
    efforts to control costs and manage toward profitability.                                                                                                                                                                                                                                                                                    
|
| |  | We ended 2005 with $31.7 million in cash, cash equivalents
    and marketable securities and believe our current cash balances
    are adequate to meet our cash needs, at least through the end of
    2007.                                                                                                                                                                                                                                                                                                            
|
| |  | We achieved our long-standing objective of attaining positive
    cash flows from operations during the fourth quarter of 2005.                                                                                                                                                                                                                                                                                                                                                                                          



| |                 
| | ----------------
| | Key Developments



Microfluidic Adoption Continues.


Industry Partnerships Strengthen. ®


Lab-on


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Acquisition of NovaScreen. in vitro in vitro in vitro


Pending Acquisition of Xenogen. in vitro in vivo






| |   |                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Xenogens stockholders may not approve the transaction, the
    necessary regulatory approval may not be obtained or the
    companies may be required to modify aspects of the transaction
    to achieve regulatory approval, or the transaction otherwise may
    not close; prior to the closing of the proposed acquisition, the
    businesses of the companies may suffer due to uncertainty;
|
| |  | the expected benefits, including revenue growth, from combining
    the two companies may not be realized;                                                                                                                                                                                                                                                                                          
|
| |  | integration of the companies and their product portfolios
    following closing could prove more difficult and costly than
    expected, and planned synergies may not transpire;                                                                                                                                                                                                                   
|
| |  | Xenogen employees who are key to maintaining the revenue growth
    of Xenogens products may leave Xenogen due to the
    uncertainties created by the merger;                                                                                                                                                                                                                                     

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| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the historic growth rate of Xenogens products may not
    continue as expected due to market saturation or to the failure
    to convince large pharmaceutical companies as to the value of
    Xenogens imaging technology;
|
| |  | unanticipated difficulties may be encountered in connection with
    consolidating the operations of the two companies; and                                                                                                   
|
| |  | other factors that involve known and unknown risks and
    uncertainties may cause actual financial results, performance or
    achievements to differ materially from anticipated results.                                   



| |                                           
| | ------------------------------------------
| | Keys Factors Affecting Ongoing Performance





Results of Operations




| |        
| | -------
| | Revenue

|                                  |  |                |        |  |          |   |       |          |              |  |      |   |  |          |        |              |          |   |        |      |  |  |     |    |  |   |        | 
|--------------------------------- |  | -------------- | ------ |  | -------- | - | ----- | -------- | ------------ |  | ---- | - |  | -------- | ------ | ------------ | -------- | - | ------ | ---- |  |  | --- | -- |  | - | ------ | 
|                                  |  | Year Ended     |        |  |          |   |       |          | Year Ended   |  |      |   |  |          |        | Year Ended   |         
|                                  |  | December 31,   |        |  |          |   |       |          | December 31, |  |      |   |  |          |        | December 31, |         
|                                  |  | 2005           |        |  | $ Change |   |       | % Change |              |  | 2004 |   |  | $ Change |        |              | % Change |   |        | 2003 | 
|                                  |  |                |        |  |          |   |       |          |              |  |      |   |  |          |        |              |          |   |        |      | 
|                                  |  | (In thousands) |       
|Product revenue                   |  | $              | 59,565 |  |          | $ | 1,757 |          |              |  | 3    | % |  | $        | 57,808 |              |          | $ | 25,892 |      |  |  | 81  | %  |  | $ | 31,916 | 
|Service revenue                   |  |                | 16,430 |  |          |   | 2,982 |          |              |  | 22   | % |  |          | 13,448 |              |          |   | 7,569  |      |  |  | 129 | %  |  |   | 5,879  | 
|License fees and contract revenue |  |                | 11,014 |  |          |   | 2,143 |          |              |  | 24   | % |  |          | 8,871  |              |          |   | (2,745 | )    |  |  | (24 | )% |  |   | 11,616 | 
|                                  |  |                |        |  |          |   |       |          |              |  |      |   |  |          |        |              |          |   |        |      | 
|Total Revenue                     |  | $              | 87,009 |  |          | $ | 6,882 |          |              |  | 9    | % |  | $        | 80,127 |              |          | $ | 30,716 |      |  |  | 62  | %  |  | $ | 49,411 | 
|                                  |  |                |        |  |          |   |       |          |              |  |      |   |  |          |        |              |          |   |        |      | 

Total Revenue.


38



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Product Revenue.




Service Revenue.


License Fees and Contract Revenue.




| |                
| | ---------------
| | Cost of Revenue

|                      |                 |                |        |        |          |   |       |          |              |  |      |    |   |          |        |              |          |   |        |        |  |  |    |     |   |   |        |        | 
|--------------------- | --------------- | -------------- | ------ | ------ | -------- | - | ----- | -------- | ------------ |  | ---- | -- | - | -------- | ------ | ------------ | -------- | - | ------ | ------ |  |  | -- | --- | - | - | ------ | ------ | 
|                      |                 | Year Ended     |        |        |          |   |       |          | Year Ended   |  |      |    |   |          |        | Year Ended   |         
|                      |                 | December 31,   |        |        |          |   |       |          | December 31, |  |      |    |   |          |        | December 31, |         
|                      |                 | 2005           |        |        | $ Change |   |       | % Change |              |  | 2004 |    |   | $ Change |        |              | % Change |   |        | 2003   | 
|                      |                 |                |        |        |          |   |       |          |              |  |      |    |   |          |        |              |          |   |        |        | 
|                      |                 | (In thousands) |       
|Cost of               |                 |                |        |        |          |   |       |          |              |  |      |    |   |          |        |              |          |   |        |        |  |  |    |     |   |   |        |       
|                      | Product revenue |                | $      | 39,960 |          |   | $     | 1,610    |              |  |      | 4  | % |          | $      | 38,350       |          |   | $      | 14,856 |  |  |    | 63  | % |   | $      | 23,494 | 
|                      | Service revenue |                |        | 8,291  |          |   |       | 1,618    |              |  |      | 24 | % |          |        | 6,673        |          |   |        | 4,187  |  |  |    | 168 | % |   |        | 2,486  | 
|                      |                 |                |        |        |          |   |       |          |              |  |      |    |   |          |        |              |          |   |        |        | 
|Total Cost of Revenue |                 | $              | 48,251 |        |          | $ | 3,228 |          |              |  | 7    | %  |   | $        | 45,023 |              |          | $ | 19,043 |        |  |  | 73 | %   |   | $ | 25,980 |       
|                      |                 |                |        |        |          |   |       |          |              |  |      |    |   |          |        |              |          |   |        |        | 

Cost of Product Revenue.


39



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Cost of Service Revenue.


Gross Margins.




| |                   
| | ------------------
| | Operating Expenses

|                                    |  |                |        |   |          |   |         |          |              |  |      |    |  |          |        |              |          |   |         |      |  |  |     |    |  |   |        | 
|----------------------------------- |  | -------------- | ------ | - | -------- | - | ------- | -------- | ------------ |  | ---- | -- |  | -------- | ------ | ------------ | -------- | - | ------- | ---- |  |  | --- | -- |  | - | ------ | 
|                                    |  | Year Ended     |        |   |          |   |         |          | Year Ended   |  |      |    |  |          |        | Year Ended   |         
|                                    |  | December 31,   |        |   |          |   |         |          | December 31, |  |      |    |  |          |        | December 31, |         
|                                    |  | 2005           |        |   | $ Change |   |         | % Change |              |  | 2004 |    |  | $ Change |        |              | % Change |   |         | 2003 | 
|                                    |  |                |        |   |          |   |         |          |              |  |      |    |  |          |        |              |          |   |         |      | 
|                                    |  | (In thousands) |       
|Research and development            |  | $              | 17,448 |   |          | $ | (5,280  | )        |              |  | (23  | )% |  | $        | 22,728 |              |          | $ | (10,963 | )    |  |  | (33 | )% |  | $ | 33,691 | 
|Selling, general and administrative |  |                | 31,210 |   |          |   | (1,115  | )        |              |  | (3   | )% |  |          | 32,325 |              |          |   | 5,033   |      |  |  | 18  | %  |  |   | 27,292 | 
|Employee stock compensation, net    |  |                | 1,585  |   |          |   | (1,185  | )        |              |  | (43  | )% |  |          | 2,770  |              |          |   | 1,770   |      |  |  | 177 | %  |  |   | 1,000  | 
|Amortization of intangible assets   |  |                | 4,069  |   |          |   | 264     |          |              |  | 7    | %  |  |          | 3,805  |              |          |   | 1,049   |      |  |  | 38  | %  |  |   | 2,756  | 
|Restructuring charges (credits)     |  |                | (1,005 | ) |          |   | (7,023  | )        |              |  | (117 | )% |  |          | 6,018  |              |          |   | (5,517  | )    |  |  | (48 | )% |  |   | 11,535 | 
|                                    |  |                |        |   |          |   |         |          |              |  |      |    |  |          |        |              |          |   |         |      | 
|                                    |  | $              | 53,307 |   |          | $ | (14,339 | )        |              |  | (21  | )% |  | $        | 67,646 |              |          | $ | (8,628  | )    |  |  | (11 | )% |  | $ | 76,274 | 
|                                    |  |                |        |   |          |   |         |          |              |  |      |    |  |          |        |              |          |   |         |      | 

Research and Development Expenses.


40



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yet-to


Selling, General and Administrative Expenses.


Employee Stock Compensation.


Restructuring Charges. 10-K.




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We recorded a restructuring credit of $1.4 million in
    connection with new subleases entered into during 2005. In
    determining the amount of restructuring credit to record,
    Caliper considered all future sublease income for which we have
    reasonable assurance of collection and discounted the future
    cash flows using the same 5% discount rate that was used
    originally to calculate the restructuring liability. The
    restructuring credit includes sublease payments in 2005 of
    $233,000, net of broker fees of $68,000.

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| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Caliper excluded $0.5 million of future sublease income
    from this estimate due to the uncertain financial status of one
    sublease tenant.
|
| |  | We recorded accretion expense and a corresponding increase in
    the short-term restructuring liability of $0.4 million.                       



| |                                       
| | --------------------------------------
| | Interest and Other Income and Expenses

|                            |  |                |      |   |          |  |        |          |              |  |      |    |  |          |       |              |          |   |        |      |  |  |     |    |  |   |       |  
|--------------------------- |  | -------------- | ---- | - | -------- |  | ------ | -------- | ------------ |  | ---- | -- |  | -------- | ----- | ------------ | -------- | - | ------ | ---- |  |  | --- | -- |  | - | ----- | -
|                            |  | Year Ended     |      |   |          |  |        |          | Year Ended   |  |      |    |  |          |       | Year Ended   |         
|                            |  | December 31,   |      |   |          |  |        |          | December 31, |  |      |    |  |          |       | December 31, |         
|                            |  | 2005           |      |   | $ Change |  |        | % Change |              |  | 2004 |    |  | $ Change |       |              | % Change |   |        | 2003 | 
|                            |  |                |      |   |          |  |        |          |              |  |      |    |  |          |       |              |          |   |        |      | 
|                            |  | (In thousands) |     
|Interest income             |  | $              | 932  |   |          |  | (80    | )        |              |  | (8   | )% |  | $        | 1,012 |              |          | $ | (1,627 | )    |  |  | (62 | )% |  | $ | 2,639 |  
|Interest expense            |  |                | (37  | ) |          |  | 129    |          |              |  | 78   | %  |  |          | (166  | )            |          |   | 246    |      |  |  | 60  | %  |  |   | (412  | )
|Other income (expense), net |  |                | (689 | ) |          |  | (1,206 | )        |              |  | (233 | )% |  |          | 517   |              |          |   | (762   | )    |  |  | (60 | )% |  |   | 1,279 |  
|                            |  |                |      |   |          |  |        |          |              |  |      |    |  |          |       |              |          |   |        |      | 
|                            |  | $              | 206  |   |          |  | (1,157 | )        |              |  | (85  | )% |  | $        | 1,363 |              |          | $ | (2,143 | )    |  |  | (61 | )% |  | $ | 3,506 |  
|                            |  |                |      |   |          |  |        |          |              |  |      |    |  |          |       |              |          |   |        |      | 

Interest Income (Expense), Net.


Other Income, Net. marking-to non-U.S.


Liquidity and Capital Resources






| |           
| | ----------
| | Cash Flows

|                           |  |                |        |   |          |   |              |      |  |   |          |              |  |      |         |   |  |   |         |  
|-------------------------- |  | -------------- | ------ | - | -------- | - | ------------ | ---- |  | - | -------- | ------------ |  | ---- | ------- | - |  | - | ------- | -
|                           |  | Year Ended     |        |   |          |   | Year Ended   |      |  |   |          | Year Ended   | 
|                           |  | December 31,   |        |   |          |   | December 31, |      |  |   |          | December 31, | 
|                           |  | 2005           |        |   | $ Change |   |              | 2004 |  |   | $ Change |              |  | 2003 |        
|                           |  |                |        |   |          |   |              |      |  |   |          |              |  |      |        
|                           |  | (In thousands) |       
|Cash provided by (used in) |  |                |        |   |          |   |              |      |  |   |          |              |  |      |         |   |  |   |         |  
|Operating Activities       |  | $              | (7,635 | ) |          | $ | 10,356       |      |  | $ | (17,991  | )            |  | $    | 13,648  |   |  | $ | (31,639 | )
|Investing Activities       |  | $              | 4,659  |   |          | $ | (9,315       | )    |  | $ | 13,974   |              |  | $    | (10,907 | ) |  | $ | 24,881  |  
|Financing Activities       |  | $              | 1,619  |   |          | $ | (2,968       | )    |  | $ | 4,587    |              |  | $    | 6,052   |   |  | $ | (1,465  | )

Operating Activities.


42



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Investing Activities.


Financing Activities.


Contractual Obligations




|                                     |            |                                                          |   |       |                 |                 |       |             |       |   |     |     |     | 
|------------------------------------ | ---------- | -------------------------------------------------------- | - | ----- | --------------- | --------------- | ----- | ----------- | ----- | - | --- | --- | --- | 
|                                     |            |                                                          |   |       |                 | Other Long-term |      
|                                     |            | Operating Leases                                         |   |       | Idle Facilities |                 |       | Obligations |      
|                                     |            |                                                          |   |       |                 |                 |       |             |      
|Years ending December 31:            |            |                                                          |   |       |                 |                 |       |             |       |   |     |    
|                                     | 2006       |                                                          | $ | 4,678 |                 |                 | $     | 3,167       |       |   | $   | 133 |    
|                                     | 2007       |                                                          |   | 4,454 |                 |                 |       | 3,200       |       |   |     | 116 |    
|                                     | 2008       |                                                          |   | 4,140 |                 |                 |       | 1,604       |       |   |     | 124 |    
|                                     | 2009       |                                                          |   | 1,867 |                 |                 |       |            |       |   |     | 80  |    
|                                     | 2010       |                                                          |   | 1,722 |                 |                 |       |            |       |   |     |    |    
|                                     | Thereafter |                                                          |   | 8,106 |                 |                 |       |            |       |   |     |    |    
|                                     |            |                                                          |   |       |                 |                 |       |             |      
|                                     |            | Total minimum lease and principal and principal payments |   | $     | 24,967          |                 |       |             | 7,971 |   |     |     | 453 | 
|                                     |            |                                                          |   |       |                 |                 |       |             |      
|Less: Amount representing interest   |            |                                                          |   |       |                 |                 | 741   |             |       |   |    |    
|                                     |            |                                                          |   |       |                 |                 |       |             |      
|Present value of future payments     |            |                                                          |   |       |                 |                 | 7,230 |             |       |   | 453 |    
|Less: Current portion of obligations |            |                                                          |   |       |                 |                 | 2,872 |             |       |   | 133 |    
|                                     |            |                                                          |   |       |                 |                 |       |             |      
|Noncurrent portion of obligations    |            |                                                          |   |       |                 | $               | 4,358 |             |       | $ | 320 |    
|                                     |            |                                                          |   |       |                 |                 |       |             |      







| |   |                                                                                 
| | - | --------------------------------------------------------------------------------
| |  | continued market acceptance of our microfluidic and lab
    automation products;
|
| |  | the magnitude and scope of our research and product development
    programs;   

43



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| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | our ability to maintain existing, and establish additional,
    corporate partnerships and licensing arrangements;
|
| |  | the time and costs involved in expanding and maintaining our
    manufacturing facilities;                        
|
| |  | the potential need to develop, acquire or license new
    technologies and products; and                          
|
| |  | other factors not within our control.                                                                             



Financial Outlook.




| |   |                                                                                                                                                                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | We project first quarter revenues in the range of $21 to
    $23 million.                                                                                                                                                                                                                                                                            
|
| |  | Assuming the successful closing of our planned acquisition of
    Xenogen by the end of the second quarter of 2006, we project our
    full year revenues will be approximately $120 to
    $128 million, subject to revision for the potential effects
    of purchase accounting on Xenogens deferred revenue as of
    the closing of the merger.

10-K.


Impact of Inflation




Off-Balance Sheet Arrangements




Critical Accounting Estimates




44



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Restructuring Charges.


Revenue Recognition.


Accounts Receivable Reserves.


Inventory Reserves.


45



---



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Warranty Provision. 90-day




Goodwill.


Impairment.


Valuation of Intangibles.


46



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##### Table of Contents



Recent Accounting Pronouncements


Stock-Based
Compensation











|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk

Foreign Currency




47



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Interest Rate Sensitivity












|                                          |                                         |                       |        |        |      |   |       |       |      |              |       |     |      |      |        |        |      |   |        |        |  | 
|----------------------------------------- | --------------------------------------- | --------------------- | ------ | ------ | ---- | - | ----- | ----- | ---- | ------------ | ----- | --- | ---- | ---- | ------ | ------ | ---- | - | ------ | ------ |  | 
|                                          |                                         |                       |        |        |      |   |       |       |      | Fair Value   |      
|                                          |                                         |                       |        |        |      |   |       |       |      | December 31, |      
|                                          |                                         | 2006                  |        |        | 2007 |   |       | 2008  |      |              | Total |     |      | 2005 |       
|                                          |                                         |                       |        |        |      |   |       |       |      |              |       |     |      |      |       
|Cash and money market funds:              |                                         |                       |        |        |      |   |       |       |      |              |       |     |      |      |        |        |      |   |        |       
|                                          | Fixed rate securities (in thousands)    |                       | $      | 8,575  |      |   |       |      |      |              |       |    |      |      | $      | 8,575  |      |   | $      | 8,575  | 
|                                          |                                         | Average interest rate |        |        | 0.25 | % |       |       |     |              |       |     |     |      |        |        | 0.25 | % |        |        |  | 
|Available for sale marketable securities: |                                         |                       |        |        |      |   |       |       |      |              |       |     |      |      |        |        |      |   |        |       
|                                          | Fixed rate securities (in thousands)    |                       | $      | 19,908 |      |   | $     | 2,985 |      |              | $     | 285 |      |      | $      | 23,178 |      |   | $      | 23,129 | 
|                                          |                                         | Average interest rate |        |        | 3.60 | % |       |       | 5.15 | %            |       |     | 3.32 | %    |        |        | 3.79 | % |        |        |  | 
|                                          | Variable rate securities (in thousands) |                       |        |        |      |   |       |       |      |              |       |     |      |      |        |        |      |   |        |        | 
|                                          |                                         | Average interest rate |        |        |      |   |       |       |      |              |       |     |      |      |        |        |      |   |        |        |  | 
|Total securities (in thousands)           |                                         | $                     | 28,483 |        |      | $ | 2,985 |       |      | $            | 285   |     |      | $    | 31,753 |        |      | $ | 31,704 |       
|                                          |                                         | Average interest rate |        |        | 2.58 | % |       |       | 5.15 | %            |       |     | 3.32 | %    |        |        | 2.82 | % |        |        |  | 

48



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|                                          |                                         |                       |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |   |        |        |      |   |        |        |  | 
|----------------------------------------- | --------------------------------------- | --------------------- | ------ | ------ | ---- | - | ------ | ------ | ---- | - | ---- | ------------ | - | ----- | ----- | ----- | ---- | - | ------ | ------ | ---- | - | ------ | ------ |  | 
|                                          |                                         |                       |        |        |      |   |        |        |      |   |      | Fair Value   |  
|                                          |                                         |                       |        |        |      |   |        |        |      |   |      | December 31, |  
|                                          |                                         | 2005                  |        |        | 2006 |   |        | 2007   |      |   | 2008 |              |   | Total |       |       | 2004 |  
|                                          |                                         |                       |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |  
|Cash and money market funds:              |                                         |                       |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |   |        |        |      |   |        |       
|                                          | Fixed rate securities (in thousands)    |                       | $      | 10,403 |      |   |        |       |      |   |      |             |   |       |       |      |      |   | $      | 10,403 |      |   | $      | 10,403 | 
|                                          |                                         | Average interest rate |        |        | 0.03 | % |        |        |     |   |      |              |  |       |       |       |     |   |        |        | 0.03 | % |        |        |  | 
|Available for sale marketable securities: |                                         |                       |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |   |        |        |      |   |        |       
|                                          | Fixed rate securities (in thousands)    |                       | $      | 17,006 |      |   | $      | 21,742 |      |   |      |             |   |       | $     | 1,261 |      |   | $      | 40,009 |      |   | $      | 39,834 | 
|                                          |                                         | Average interest rate |        |        | 3.70 | % |        |        | 3.37 | % |      |              |  |       |       |       | 4.16 | % |        |        | 3.53 | % |        |        |  | 
|                                          | Variable rate securities (in thousands) |                       |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |   |        |        |      |   |        |        | 
|                                          |                                         | Average interest rate |        |        |      |   |        |        |      |   |      |              |   |       |       |       |      |   |        |        |      |   |        |        |  | 
|Total securities (in thousands)           |                                         | $                     | 27,409 |        |      | $ | 21,742 |        |      |   |     |              |   | $     | 1,261 |       |      | $ | 50,412 |        |      | $ | 50,237 |       
|                                          |                                         | Average interest rate |        |        | 2.31 | % |        |        | 3.37 | % |      |              |  |       |       |       | 4.16 | % |        |        | 2.81 | % |        |        |  | 






|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data





| |                          
| | -------------------------
| | (1) Financial Statements:

|                                                                                                          |  |      |     | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                          |  | Page |    
|                                                                                                          |  |      |    
|Report of Ernst & Young LLP, Independent Registered
    Public Accounting Firm                            |  |      | F-2 | 
|Consolidated Balance Sheets at December 31, 2005 and 2004                                                 |  |      | F-3 | 
|Consolidated Statements of Operations  For the Years
    ended December 31, 2005, 2004 and 2003          |  |      | F-4 | 
|Consolidated Statement of Stockholders Equity 
    For the Years ended December 31, 2005, 2004 and 2003 |  |      | F-5 | 
|Consolidated Statements of Cash Flows  For the Years
    ended December 31, 2005, 2004 and 2003          |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                                |  |      | F-7 | 



| |                                   
| | ----------------------------------
| | (2) Financial Statement Schedules:








|        |                                                                                     
|------- | ------------------------------------------------------------------------------------
|Item 9. | Changes in Disagreements with Accountants on Accounting
    and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of disclosure controls and procedures. 13a-15 15d-15(e)) 10-K,


49



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##### Table of Contents





Limitations on the Effectiveness of Disclosure Controls and
Procedures.


Changes in internal controls.


Managements report on internal control over financial
reporting. 13a-15(f), 15d-15(f) 10-K,


50



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





51



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|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant

10-K, 10-K 10-K


8-K.







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

10-K







|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters

10-K


10-K







|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

10-K







|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

10-K


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##### Table of Contents






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

10-K.






| |                          
| | -------------------------
| | (1) Financial Statements:

|                                                                                                          |  |      |     | 
|--------------------------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                                          |  | Page |    
|                                                                                                          |  |      |    
|Report of Ernst & Young LLP, Independent Registered
    Public Accounting Firm                            |  |      | F-2 | 
|Consolidated Balance Sheets at December 31, 2005 and 2004                                                 |  |      | F-3 | 
|Consolidated Statements of Operations  For the Years
    ended December 31, 2005, 2004 and 2003          |  |      | F-4 | 
|Consolidated Statement of Stockholders Equity 
    For the Years ended December 31, 2005, 2004 and 2003 |  |      | F-5 | 
|Consolidated Statements of Cash Flows  For the Years
    ended December 31, 2005, 2004 and 2003          |  |      | F-6 | 
|Notes to Consolidated Financial Statements                                                                |  |      | F-7 | 



| |                                   
| | ----------------------------------
| | (2) Financial Statement Schedules:





| |              
| | -------------
| | (3) Exhibits:



|        |    |                         |  |                                                                                                                                                                       
|------- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 2  | .1(15)                  |  | Stock Purchase Agreement, by and among Caliper, Berwind
    Corporation and The Berwind Company LLC, dated June 9, 2003.                                              
|        | 2  | .2(15)                  |  | Amendment No. 1 to the Stock Purchase Agreement, by and
    among Caliper, Berwind Corporation and The Berwind Company LLC,
    dated July 10, 2003.                  
|        | 2  | .3(18)                  |  | Amendment No. 2 to the Stock Purchase Agreement, by and
    among Caliper, Berwind Corporation and The Berwind Company LLC,
    dated April 1, 2004.                  
|        | 2  | .4(19)                  |  | Agreement and Plan of Merger, among Caliper Life Sciences, Inc.,
    Caliper Services, Inc. and NovaScreen Biosciences Corporation,
    dated as of September 7, 2005.
|        | 2  | .5                      |  | Agreement and Plan of Merger, among Caliper Life Sciences, Inc.,
    Caliper Holdings, Inc. and Xenogen Corporation, dated as of
    February 10, 2006.               
|        | 3  | .1(18)                  |  | Amended and Restated Certificate of Incorporation of Caliper.                                                                                                         
|        | 3  | .2(8)                   |  | Certificate of Designation Of Series A Junior Participating
    Preferred Stock.                                                                                      
|        | 3  | .3(1)                   |  | Restated Bylaws of Caliper.                                                                                                                                           
|        | 3  | .4(18)                  |  | Amendment No. 1 to Bylaws of Caliper.                                                                                                                                 
|        | 4  | .1                      |  | Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.                                                                                                                  
|        | 4  | .2(20)                  |  | Specimen Stock Certificate.                                                                                                                                           
|        | 4  | .3(9)                   |  | Rights Agreement, dated as of December 18, 2001, between
    Caliper and Wells Fargo Bank Minnesota, N.A., as Rights Agent.                                           
|        | 10 | .1(2)                   |  | Lease Agreement, dated December 1, 1998, between Caliper
    and 605 East Fairchild Associates, L.P.                                                                  
|        | 10 | .2(2)(3)                |  | 1996 Equity Incentive Plan.                                                                                                                                           
|        | 10 | .3(2)(3)                |  | 1999 Equity Incentive Plan.                                                                                                                                           
|        | 10 | .4(2)(3)                |  | 1999 Employee Stock Purchase Plan.                                                                                                                                    

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|        |    |                         |  |                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .5(2)(3)                |  | 1999 Non-Employee Directors Stock Option Plan.                                                                                                                                                                        
|        | 10 | .6(3)(20)               |  | Form of Grant Agreement for 1999 Equity Incentive
    Plan  Option Awards.                                                                                                                                            
|        | 10 | .7(3)(20)               |  | Form of Grant Agreement for 1999 Equity Incentive
    Plan  Restricted Stock Unit Awards.                                                                                                                             
|        | 10 | .8(3)(20)               |  | Form of Grant Agreement for 1999 Non-Employee Directors
    Stock Option Plan.                                                                                                                                        
|        | 10 | .9(2)(3)                |  | Form of Indemnification Agreement entered into between Caliper
    and its directors and executive officers.                                                                                                           
|        | 10 | .10(2)(4)               |  | Collaboration Agreement, dated May 2, 1998, between Caliper
    and Hewlett-Packard Company (now Agilent Technologies, Inc.).                                                                                          
|        | 10 | .11(3)(20)              |  | Form of Stock Option Grant Agreement for Acquisition Equity
    Incentive Plan.                                                                                                                                        
|        | 10 | .12(3)(20)              |  | Form of Stock Award Agreement for Acquisition Equity Incentive
    Plan (pro rata vesting).                                                                                                                            
|        | 10 | .13(3)(20)              |  | Form of Stock Award Agreement for Acquisition Equity Incentive
    Plan (5 year cliff vesting).                                                                                                                        
|        | 10 | .17(3)(20)              |  | Non-Employee Directors Cash Compensation Plan.                                                                                                                                                                        
|        | 10 | .18(3)(11)              |  | Caliper Performance Bonus Plan.                                                                                                                                                                                        
|        | 10 | .19(3)(20)              |  | Employment Offer Letter dated November 30, 2004 between
    Caliper and Mr. Thomas T. Higgins.                                                                                                                         
|        | 10 | .20(3)(11)              |  | Summary Cash Compensation Sheet.                                                                                                                                                                                       
|        | 10 | .23(2)(3)               |  | The Corporate Plan for Retirement Select Plan Adoption Agreement
    and related Basic Plan Document.                                                                                                                  
|        | 10 | .27(6)                  |  | Lease Agreement, dated June 23, 2000 and effective
    July 5, 2000, between Caliper and Martin CBP Associates,
    L.P.                                                                                               
|        | 10 | .29(3)(20)              |  | Key Employee Change of Control and Severance Benefit Plan.                                                                                                                                                             
|        | 10 | .30(5)(8)               |  | Cross-License Agreement, dated March 12, 2001 between
    Aclara Biosciences, Inc. and Caliper.                                                                                                                        
|        | 10 | .32(4)(7)               |  | Settlement Agreement and Mutual General Release dated
    March 12, 2001 between Aclara Biosciences, Inc. and Caliper.                                                                                                 
|        | 10 | .39(3)(9)               |  | 2001 Non-Statutory Stock Option Plan.                                                                                                                                                                                  
|        | 10 | .46(3)(20)              |  | Form of Grant Agreement for 2001 Non-Statutory Stock Option Plan.                                                                                                                                                      
|        | 10 | .48(3)(10)              |  | Key Employee Agreement, dated July 1, 2002, between Caliper
    and Dr. Daniel Kisner.                                                                                                                                 
|        | 10 | .52(4)(16)              |  | Sole Commercial Patent License Agreement, effective
    September 1, 1995, between UT-Battelle, LLC, the successor
    to Lockheed Martin Energy Research Corporation, and Caliper, as
    amended on November 1, 2002.
|        | 10 | .55(4)(12)              |  | Collaboration Agreement, dated June 4, 2003, between
    Caliper and Bio-Rad Laboratories, Inc.                                                                                                                        
|        | 10 | .56(3)(13)              |  | Key Employee Agreement, dated July 14, 2003, between
    Caliper and E. Kevin Hrusovsky.                                                                                                                               
|        | 10 | .62(3)(14)              |  | Acquisition Equity Incentive Plan.                                                                                                                                                                                     
|        | 10 | .63(3)(17)              |  | Key Employee Agreement Amendment, dated December 24, 2003,
    between Caliper and Dr. Daniel L. Kisner.                                                                                                               
|        | 10 | .64(3)(17)              |  | Consulting Agreement, dated January 1, 2004, between
    Caliper and Dr. David V. Milligan.                                                                                                                            
|        | 10 | .66(4)(17)              |  | Collaboration and Supply Agreement, dated January 9, 2004,
    among Caliper, Zymark Corporation and Affymetrix, Inc.                                                                                                  
|        | 10 | .67(3)                  |  | Offer Letter dated September 7, 2005 between Caliper Life
    Sciences, Inc. and David M. Manyak, Ph.D.                                                                                                                
|        | 21 | .1                      |  | Subsidiaries of the Registrant.                                                                                                                                                                                        
|        | 23 | .1                      |  | Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm.                                                                                                                                       
|        | 24 | .1                      |  | Power of Attorney (reference is made to the signature page of
    this report).                                                                                                                                        
|        | 31 | .1                      |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                
|        | 31 | .2                      |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                

54



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##### Table of Contents



|        |    |                         |  |                                                                                                                                
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 32 | .1                      |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.
|        | 32 | .2                      |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.






| |     |                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Previously filed as Exhibit 3.4 to our Registration
    Statement on
    Form S-1, as
    amended, File
    No. 333-88827,
    filed on October 12, 1999 and incorporated by reference
    herein.                 
|
| | (2) | Previously filed as the like-numbered Exhibit to our
    Registration Statement on
    Form S-1, as
    amended, File
    No. 333-88827,
    filed on October 12, 1999 and incorporated by reference
    herein.   
|
| | (3) | Management contract or compensatory plan or arrangement.                                                                                                                                                           
|
| | (4) | Confidential treatment has been granted for a portion of this
    exhibit.                                                                                                                                         
|
| | (5) | Previously filed as the like-numbered exhibit to Annual Report
    of Form 10-K for
    the year ended December 31, 1999 and incorporated by
    reference herein.                                                 
|
| | (6) | Previously filed as the like-numbered Exhibit to our
    Registration Statement on
    Form S-1, as
    amended, File
    No. 333-45942,
    filed on September 15, 2000, and incorporated by reference
    herein.
|
| | (7) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended March 31, 2001 and incorporated by
    reference herein.                                                         
|
| | (8) | Previously filed as Exhibit 99.1 to Current Report on
    Form 8-K filed
    December 19, 2001 and incorporated by reference herein.                                                                               
|
| | (9) | Previously filed as Exhibit 99.1 to our Registration
    Statement on
    Form S-8, File
    No. 333-76636,
    filed January 11, 2002 and incorporated by reference herein.                                       



|     |                                                                                                                                                                             
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended September 30, 2002 and incorporated
    by reference herein.              
|    
|(11) | Previously filed as the like-numbered Exhibit to Current Report
    on Form 8-K filed
    March 16, 2005 and incorporated by reference herein.                              
|    
|(12) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended June 30, 2003 and incorporated by
    reference herein.                   
|    
|(13) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended September 30, 2003 and incorporated
    by reference herein.              
|    
|(14) | Previously filed as Exhibit 99.1 to our Registration
    Statement on
    Form S-8, File
    No. 333-106946,
    filed June 10, 2003 and incorporated by reference herein.  
|    
|(15) | Previously filed as the like-numbered Exhibit to
    Form 8-K filed
    July 25, 2003 and incorporated by reference herein.                                                 
|    
|(16) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2002 and incorporated by reference
    herein.                           
|    
|(17) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2003 and incorporated by reference
    herein.                           
|    
|(18) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended March 31, 2004 and incorporated by
    reference herein.                  
|    
|(19) | Previously filed as Exhibit 2.1 to our Registration
    Statement on
    Form S-3, File
    No. 333-129192,
    filed October 21, 2005 and incorporated by reference herein.
|    
|(20) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2004 and incorporated by reference
    herein.                           

55



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##### Table of Contents






SIGNATURES






| |                            
| | ---------------------------
| | Caliper Life Sciences, Inc.



| |     |                       
| | --- | ----------------------
| | By: | /s/ E. Kevin Hrusovsky

| |                        
| | -----------------------
| |                        
| | E. Kevin Hrusovsky     
| | Chief Executive Officer



POWER OF ATTORNEY


attorney-in attorneys-in attorneys-in




|                                                         |  |                                                                                   |  |                |  | 
|-------------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                                |  | Title                                                                             |  | Date          
|                                                         |  |                                                                                   |  |               
|                                                        
|/s/ E. Kevin HrusovskyE. Kevin Hrusovsky                 |  | President and Chief Executive Officer and Director(Principal Executive Officer)   |  | March 14, 2006
|                                                        
|/s/ Thomas T. HigginsThomas T. Higgins                   |  | Executive Vice President and Chief Financial Officer(Principal Financial Officer) |  | March 14, 2006
|                                                        
|/s/ Peter F. McAreePeter F. McAree                       |  | Vice President, Finance(Principal Accounting Officer)                             |  | March 14, 2006
|                                                        
|/s/ Daniel L.
    Kisner, M.D.Daniel L. Kisner, M.D.     |  | Chairman of the Board of Directors                                                |  | March 14, 2006
|                                                        
|/s/ David V. Milligan,
    Ph.D.David V. Milligan, Ph.D. |  | Vice Chairman of the Board of Directors                                           |  | March 14, 2006
|                                                        
|/s/ Van BilletVan Billet                                 |  | Director                                                                          |  | March 14, 2006

56



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|                                                       |  |          |  |                |  | 
|------------------------------------------------------ |  | -------- |  | -------------- |  | 
|Signature                                              |  | Title    |  | Date          
|                                                       |  |          |  |               
|                                                      
|/s/ Robert C.
    Bishop, Ph.D.Robert C. Bishop, Ph.D. |  | Director |  | March 14, 2006
|                                                      
|/s/ Allan L. ComstockAllan L. Comstock                 |  | Director |  | March 14, 2006
|                                                      
|/s/ Kathryn TunstallKathryn Tunstall                   |  | Director |  | March 14, 2006

57



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


INDEX TO FINANCIAL STATEMENTS


|                                                                                                              |  |    
|------------------------------------------------------------------------------------------------------------- |  | ---
|Report of Ernst & Young LLP,
    Independent Registered Public Accounting Firm                                |  | F-2
|Consolidated Balance Sheets at
    December 31, 2005 and 2004                                                 |  | F-3
|Consolidated Statements of
    Operations  For the Years ended December 31,
    2005, 2004 and 2003          |  | F-4
|Consolidated Statement of
    Stockholders Equity  For the Years ended
    December 31, 2005, 2004 and 2003 |  | F-5
|Consolidated Statements of Cash
    Flows  For the Years ended December 31, 2005,
    2004 and 2003          |  | F-6
|Notes to Consolidated Financial
    Statements                                                                |  | F-7

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP





F-2



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.





CONSOLIDATED BALANCE SHEETS


|                                            |                                                                                                                                                              |                            |                                            |          |         |         |        |          |         |         | 
|------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------- | ------------------------------------------ | -------- | ------- | ------- | ------ | -------- | ------- | ------- | 
|                                            |                                                                                                                                                              | December 31,               |                                           
|                                            |                                                                                                                                                              |                            |                                           
|                                            |                                                                                                                                                              | 2005                       |                                            |          | 2004    |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              | (In thousands, except      |                                           
|                                            |                                                                                                                                                              | share and per share data)  |                                           
|ASSETS                                     
|Current assets:                             |                                                                                                                                                              |                            |                                            |          |         |         |        |         
|                                            | Cash and cash equivalents, including restricted cash of $479 and
    $962 in 2005 and 2004, respectively                                                     |                            | $                                          | 8,575    |         |         | $      | 10,403   |        
|                                            | Marketable securities                                                                                                                                        |                            |                                            | 23,129   |         |         |        | 39,834   |        
|                                            | Accounts receivable, net of allowance for doubtful accounts of
    $482 and $475 in 2005 and 2004, respectively                                              |                            |                                            | 19,532   |         |         |        | 17,040   |        
|                                            | Inventories                                                                                                                                                  |                            |                                            | 11,061   |         |         |        | 9,828    |        
|                                            | Note receivable from director                                                                                                                                |                            |                                            |         |         |         |        | 146      |        
|                                            | Prepaid expenses and other current assets                                                                                                                    |                            |                                            | 2,657    |         |         |        | 1,992    |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              | Total current assets       |                                            |          | 64,954  |         |        |          | 79,243  |        
|Restricted cash                             |                                                                                                                                                              |                            | 3,145                                      |          |         |         | 2,151  |         
|Property and equipment, net                 |                                                                                                                                                              |                            | 12,019                                     |          |         |         | 6,186  |         
|Intangibles, net                            |                                                                                                                                                              |                            | 16,822                                     |          |         |         | 12,745 |         
|Goodwill                                    |                                                                                                                                                              |                            | 60,866                                     |          |         |         | 47,215 |         
|Other assets                                |                                                                                                                                                              |                            | 403                                        |          |         |         | 407    |         
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              | Total assets               |                                            | $        | 158,209 |         |        | $        | 147,947 |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                           
|LIABILITIES AND STOCKHOLDERS EQUITY       
|Current liabilities:                        |                                                                                                                                                              |                            |                                            |          |         |         |        |         
|                                            | Accounts payable                                                                                                                                             |                            | $                                          | 5,318    |         |         | $      | 3,164    |        
|                                            | Accrued compensation                                                                                                                                         |                            |                                            | 6,774    |         |         |        | 6,348    |        
|                                            | Other accrued liabilities                                                                                                                                    |                            |                                            | 8,117    |         |         |        | 5,841    |        
|                                            | Deferred revenue and customer deposits                                                                                                                       |                            |                                            | 7,990    |         |         |        | 7,769    |        
|                                            | Current portion of accrued restructuring                                                                                                                     |                            |                                            | 2,872    |         |         |        | 3,177    |        
|                                            | Current portion of long-term obligations                                                                                                                     |                            |                                            | 133      |         |         |        | 409      |        
|                                            | Current portion of sale-leaseback arrangements                                                                                                               |                            |                                            |         |         |         |        | 301      |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              | Total current liabilities  |                                            |          | 31,204  |         |        |          | 27,009  |        
|Noncurrent portion of long-term obligations |                                                                                                                                                              |                            | 320                                        |          |         |         |       |         
|Noncurrent portion of accrued restructuring |                                                                                                                                                              |                            | 4,358                                      |          |         |         | 8,428  |         
|Other noncurrent liabilities                |                                                                                                                                                              |                            | 3,503                                      |          |         |         | 931    |         
|Deferred tax liability                      |                                                                                                                                                              |                            | 386                                        |          |         |         |       |         
|Commitments and contingencies (Note 12)     |                                                                                                                                                              |                            |                                            |          |         |         |        |         
|Stockholders equity:                       |                                                                                                                                                              |                            |                                            |          |         |         |        |         
|                                            | Preferred stock, $0.001 par value; 5,000,000 shares
    authorized; no shares issued and outstanding                                                         |                            |                                            |         |         |         |        |         |        
|                                            | Common stock, $0.001 par value; 70,000,000 shares
    authorized; 33,785,792 and 30,360,288 shares issued and
    outstanding in 2005 and 2004, respectively |                            |                                            | 34       |         |         |        | 30       |        
|                                            | Additional paid-in capital                                                                                                                                   |                            |                                            | 302,412  |         |         |        | 280,709  |        
|                                            | Deferred stock compensation                                                                                                                                  |                            |                                            | (3,003   | )       |         |        | (2,666   | )      
|                                            | Accumulated deficit                                                                                                                                          |                            |                                            | (181,106 | )       |         |        | (166,649 | )      
|                                            | Accumulated other comprehensive income                                                                                                                       |                            |                                            | 101      |         |         |        | 155      |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              | Total stockholders equity |                                            |          | 118,438 |         |        |          | 111,579 |        
|                                            |                                                                                                                                                              |                            |                                            |          |         |        
|                                            |                                                                                                                                                              |                            | Total liabilities and stockholders equity |          | $       | 158,209 |        |          | $       | 147,947 | 
|                                            |                                                                                                                                                              |                            |                                            |          |         |        



F-3



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


|                                                                          |                                           |                                       |                          |        |                      |         |         |        |       |         |         |        |       |         | 
|------------------------------------------------------------------------- | ----------------------------------------- | ------------------------------------- | ------------------------ | ------ | -------------------- | ------- | ------- | ------ | ----- | ------- | ------- | ------ | ----- | ------- | 
|                                                                          |                                           | Year                                  |                          |        | s Ended December 31, |        
|                                                                          |                                           |                                       |                          |        |                      |        
|                                                                          |                                           |                                       |                          |        |                     
|                                                                          |                                           | 2005                                  |                          |        | 2004                 |         |         | 2003   |      
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|                                                                          |                                           | (In thousands, except per share data) |                         
|Revenue:                                                                  |                                           |                                       |                          |        |                      |         |         |        |       |         |         |       
|                                                                          | Product revenue                           |                                       | $                        | 59,565 |                      |         | $       | 57,808 |       |         | $       | 31,916 |      
|                                                                          | Service revenue                           |                                       |                          | 16,430 |                      |         |         | 13,448 |       |         |         | 5,879  |      
|                                                                          | License fees and contract revenue         |                                       |                          | 11,014 |                      |         |         | 8,871  |       |         |         | 11,616 |      
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|                                                                          |                                           |                                       | Total revenue            |        |                      | 87,009  |         |        |       | 80,127  |         |        |       | 49,411  | 
|Costs and expenses:                                                       |                                           |                                       |                          |        |                      |         |         |        |       |         |         |       
|                                                                          | Cost of product revenue                   |                                       |                          | 39,960 |                      |         |         | 38,350 |       |         |         | 23,494 |      
|                                                                          | Cost of service revenue                   |                                       |                          | 8,291  |                      |         |         | 6,673  |       |         |         | 2,486  |      
|                                                                          | Research and development                  |                                       |                          | 17,448 |                      |         |         | 22,728 |       |         |         | 33,691 |      
|                                                                          | Selling, general and administrative       |                                       |                          | 31,210 |                      |         |         | 32,325 |       |         |         | 27,292 |      
|                                                                          | Employee stock-based compensation, net(1) |                                       |                          | 1,585  |                      |         |         | 2,770  |       |         |         | 1,000  |      
|                                                                          | Amortization of intangible assets         |                                       |                          | 4,069  |                      |         |         | 3,805  |       |         |         | 2,756  |      
|                                                                          | Restructuring charges (credits)           |                                       |                          | (1,005 | )                    |         |         | 6,018  |       |         |         | 11,535 |      
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|                                                                          |                                           |                                       | Total costs and expenses |        |                      | 101,558 |         |        |       | 112,669 |         |        |       | 102,254 | 
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|Operating loss                                                            |                                           |                                       | (14,549                  | )      |                      |         | (32,542 | )      |       |         | (52,843 | )     
|                                                                          |                                           | Interest income                       |                          |        | 932                  |         |         |        | 1,012 |         |         |        | 2,639 |        
|                                                                          |                                           | Interest expense                      |                          |        | (37                  | )       |         |        | (166  | )       |         |        | (412  | )      
|                                                                          |                                           | Other income (expense), net           |                          |        | (689                 | )       |         |        | 517   |         |         |        | 1,279 |        
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|Loss before income taxes                                                  |                                           |                                       | (14,343                  | )      |                      |         | (31,179 | )      |       |         | (49,337 | )     
|Provision for income taxes                                                |                                           |                                       | (114                     | )      |                      |         | (377    | )      |       |         | (190    | )     
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|Net loss                                                                  |                                           | $                                     | (14,457                  | )      |                      | $       | (31,556 | )      |       | $       | (49,527 | )     
|                                                                          |                                           |                                       |                          |        |                      |         |         |        |      
|Net loss per common share, basic and diluted                              |                                           | $                                     | (0.46                    | )      |                      | $       | (1.08   | )      |       | $       | (1.88   | )     
|Shares used in computing net loss per common share, basic and
    diluted |                                           |                                       | 31,313                   |        |                      |         | 29,273  |        |       |         | 26,396  |       






|    |                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------
|(1) | Includes employee stock-based compensation, net, related to
    employees classified within expenses as follows:

|                                    |       |   |       |       |  |   |       |       |  |   |     |       | 
|----------------------------------- | ----- | - | ----- | ----- |  | - | ----- | ----- |  | - | --- | ----- | 
|Cost of revenue                     |       | $ | 187   |       |  | $ | 208   |       |  | $ | 56  |      
|Research and development            |       |   | 280   |       |  |   | 515   |       |  |   | 384 |      
|Selling, general and administrative |       |   | 1,118 |       |  |   | 2,047 |       |  |   | 560 |      
|                                    |       |   |       |       |  |   |       |       | 
|                                    | Total |   | $     | 1,585 |  |   | $     | 2,770 |  |   | $   | 1,000 | 
|                                    |       |   |       |       |  |   |       |       | 



F-4



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.





CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY


|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |   |   |       |        |   |   |         |         |  
|----------------------------- | ------------------------------------------------------------------------------- | ----------------------------- | ---------- | --------- | ---------- | - | -- | -------- |  | - | ------------ | ------ | ----------------- | ------------- | ------ | ------ | ------------- | - | -------- | ------- | - | - | ----- | ------ | - | - | ------- | ------- | -
|                              |                                                                                 | Stockholders Equity          |           
|                              |                                                                                 |                               |           
|                              |                                                                                 | Common Stock                  |            |           | Additional |   |    | Deferred |  |   |              |        | Accumulated Other |               |        | Total  |              
|                              |                                                                                 |                               |            |           | Paid-In    |   |    | Stock    |  |   | Accumulated  |        |                   | Comprehensive |        |        | Stockholders |  
|                              |                                                                                 | Shares                        |            |           | Amount     |   |    | Capital  |  |   | Compensation |        |                   | Deficit       |        |        | Income/(Loss) |   |          | Equity  |  
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              |                                                                                 | (In thousands, except shares) |           
|Balances at December 31, 2002 |                                                                                 |                               | 24,694,451 |           |            | $ | 25 |          |  | $ | 252,219      |        |                   | $             | (637   | )      |               | $ | (85,566  | )       |   | $ | 1,517 |        |   | $ | 167,558 |        
|                              | Net loss                                                                        |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          | (49,527 | ) |   |       |       |   |   |         | (49,527 | )
|                              | Foreign currency translation gain                                               |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | 98     |   |   |         | 98      |  
|                              | Change in unrealized gain on available-for-sale securities                      |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | (1,177 | ) |   |         | (1,177  | )
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              | Comprehensive loss                                                              |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |   |   |       |        |   |   |         | (50,606 | )
|                              | Issuance of common stock pursuant to stock plans                                |                               |            | 537,592   |            |   |    |         |  |   |              | 1,419  |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 1,419   |  
|                              | Issuance of common stock for the purchase of Zymark Corporation                 |                               |            | 3,150,000 |            |   |    | 3        |  |   |              | 14,588 |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 14,591  |  
|                              | Deferred compensation from issuance of restricted common stock                  |                               |            |          |            |   |    |         |  |   |              | 2,188  |                   |               |        | (2,188 | )             |   |          |        |   |   |       |       |   |   |         |        |  
|                              | Amortization and reversals of deferred stock compensation                       |                               |            |          |            |   |    |         |  |   |              | (17    | )                 |               |        | 1,017  |               |   |          |        |   |   |       |       |   |   |         | 1,000   |  
|                              | Compensation expense associated with modifications to certain
    stock options |                               |            |          |            |   |    |         |  |   |              | 401    |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 401     |  
|                              | Stock options issued to non-employees                                           |                               |            |          |            |   |    |         |  |   |              | 434    |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 434     |  
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|Balances at December 31, 2003 |                                                                                 |                               | 28,382,043 |           |            |   | 28 |          |  |   | 271,232      |        |                   |               | (1,808 | )      |               |   | (135,093 | )       |   |   | 438   |        |   |   | 134,797 |        
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              | Net loss                                                                        |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          | (31,556 | ) |   |       |       |   |   |         | (31,556 | )
|                              | Foreign currency translation gain                                               |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | 232    |   |   |         | 232     |  
|                              | Change in unrealized gain on available-for-sale securities                      |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | (515   | ) |   |         | (515    | )
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              | Comprehensive loss                                                              |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |   |   |       |        |   |   |         | (31,839 | )
|                              | Issuance of common stock pursuant to stock plans                                |                               |            | 1,939,785 |            |   |    | 2        |  |   |              | 6,343  |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 6,345   |  
|                              | Issuance of common stock upon exercise of warrants                              |                               |            | 38,460    |            |   |    |         |  |   |              | 47     |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 47      |  
|                              | Deferred compensation from issuance of restricted common stock                  |                               |            |          |            |   |    |         |  |   |              | 2,585  |                   |               |        | (2,585 | )             |   |          |        |   |   |       |       |   |   |         |        |  
|                              | Amortization and reversals of deferred stock compensation                       |                               |            |          |            |   |    |         |  |   |              | (96    | )                 |               |        | 1,743  |               |   |          |        |   |   |       |       |   |   |         | 1,647   |  
|                              | Compensation expense associated with modifications to certain
    stock options |                               |            |          |            |   |    |         |  |   |              | 540    |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 540     |  
|                              | Compensation expense related to stock options issued to
    non-employees       |                               |            |          |            |   |    |         |  |   |              | 58     |                   |               |        | (16    | )             |   |          |        |   |   |       |       |   |   |         | 42      |  
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|Balances at December 31, 2004 |                                                                                 |                               | 30,360,288 |           |            |   | 30 |          |  |   | 280,709      |        |                   |               | (2,666 | )      |               |   | (166,649 | )       |   |   | 155   |        |   |   | 111,579 |        
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              | Net loss                                                                        |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          | (14,457 | ) |   |       |       |   |   |         | (14,457 | )
|                              | Foreign currency translation loss                                               |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | (180   | ) |   |         | (180    | )
|                              | Change in unrealized gain on available-for-sale securities                      |                               |            |          |            |   |    |         |  |   |              |       |                   |               |        |       |               |   |          |        |   |   |       | 126    |   |   |         | 126     |  
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|                              | Comprehensive loss                                                              |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |   |   |       |        |   |   |         | (14,511 | )
|                              | Issuance of common stock upon acquisition of NovaScreen                         |                               |            | 2,576,933 |            |   |    | 3        |  |   |              | 17,572 |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 17,575  |  
|                              | Issuance of common stock pursuant to stock plans                                |                               |            | 848,571   |            |   |    | 1        |  |   |              | 2,181  |                   |               |        |       |               |   |          |        |   |   |       |       |   |   |         | 2,182   |  
|                              | Deferred compensation from issuance of restricted common stock                  |                               |            |          |            |   |    |         |  |   |              | 2,100  |                   |               |        | (2,100 | )             |   |          |        |   |   |       |       |   |   |         |        |  
|                              | Amortization and reversals of deferred stock compensation                       |                               |            |          |            |   |    |         |  |   |              | (175   | )                 |               |        | 1,760  |               |   |          |        |   |   |       |       |   |   |         | 1,585   |  
|                              | Compensation expense related to stock options issued to
    non-employees       |                               |            |          |            |   |    |         |  |   |              | 25     |                   |               |        | 3      |               |   |          |        |   |   |       |       |   |   |         | 28      |  
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  
|Balances at December 31, 2005 |                                                                                 |                               | 33,785,792 |           |            | $ | 34 |          |  | $ | 302,412      |        |                   | $             | (3,003 | )      |               | $ | (181,106 | )       |   | $ | 101   |        |   | $ | 118,438 |        
|                              |                                                                                 |                               |            |           |            |   |    |          |  |   |              |        |                   |               |        |        |               |   |          |         |  



F-5



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |        |        |         |  
|---------------------------------------------------------------------------- | ----------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------- | ------ | ------ | ------ | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | -
|                                                                             |                                                                   | Years Ended December 31,                           |                                   
|                                                                             |                                                                   |                                                    |                                   
|                                                                             |                                                                   | 2005                                               |                                    |        | 2004   |        |         | 2003   |       
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|                                                                             |                                                                   | (In thousands)                                     |                                   
|Operating activities                                                         |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|Net loss                                                                     |                                                                   | $                                                  | (14,457                            | )      |        | $      | (31,556 | )      |        | $       | (49,527 | )     
|Adjustments to reconcile net loss to net cash from operating
    activities: |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|                                                                             | Depreciation and amortization                                     |                                                    |                                    | 7,138  |        |        |         | 10,020 |        |         |         | 10,169 |       
|                                                                             | Employee stock-based compensation expense, net                    |                                                    |                                    | 1,585  |        |        |         | 2,770  |        |         |         | 1,000  |       
|                                                                             | Stock options issued to non-employees                             |                                                    |                                    | 28     |        |        |         | 42     |        |         |         | 434    |       
|                                                                             | Non-cash restructuring charge (credit)                            |                                                    |                                    | (1,170 | )      |        |         | 6,018  |        |         |         | 10,623 |       
|                                                                             | Foreign currency exchange losses (gains)                          |                                                    |                                    | 661    |        |        |         | (337   | )      |         |         | (783   | )     
|                                                                             | Loss from disposal of fixed assets                                |                                                    |                                    | 27     |        |        |         | 4      |        |         |         | 313    |       
|                                                                             | Changes in operating assets and liabilities, net of acquisitions: |                                                    |                                    |        |        |        |         |        |        |         |         |        |       
|                                                                             |                                                                   | Accounts receivable                                |                                    |        | (2,233 | )      |         |        | (7,150 | )       |         |        | (1,296 | )      
|                                                                             |                                                                   | Inventories                                        |                                    |        | (1,654 | )      |         |        | 1,410  |         |         |        | 4,343  |        
|                                                                             |                                                                   | Prepaid expenses and other current assets          |                                    |        | (142   | )      |         |        | 2,184  |         |         |        | (577   | )      
|                                                                             |                                                                   | Notes receivable from director                     |                                    |        | 151    |        |         |        | 32     |         |         |        | 37     |        
|                                                                             |                                                                   | Accounts payable and other accrued liabilities     |                                    |        | 2,653  |        |         |        | 1,125  |         |         |        | (463   | )      
|                                                                             |                                                                   | Accrued compensation                               |                                    |        | (58    | )      |         |        | 1,617  |         |         |        | (2,874 | )      
|                                                                             |                                                                   | Deferred revenue and customer deposits             |                                    |        | 488    |        |         |        | 566    |         |         |        | (1,299 | )      
|                                                                             |                                                                   | Other noncurrent liabilities                       |                                    |        | 2,572  |        |         |        | (298   | )       |         |        | (401   | )      
|                                                                             |                                                                   | Payments of accrued restructuring obligations, net |                                    |        | (3,224 | )      |         |        | (4,438 | )       |         |        | (1,338 | )      
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|                                                                             |                                                                   |                                                    | Net cash from operating activities |        |        | (7,635 | )       |        |        | (17,991 | )       |        |        | (31,639 | )
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|Investing activities                                                         |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|Purchases of marketable securities                                           |                                                                   |                                                    | (6,025                             | )      |        |        | (51,410 | )      |        |         | (44,257 | )     
|Proceeds from sales of marketable securities                                 |                                                                   |                                                    | 11,321                             |        |        |        | 61,058  |        |        |         | 115,164 |       
|Proceeds from maturities of marketable securities                            |                                                                   |                                                    | 11,506                             |        |        |        | 7,831   |        |        |         | 8,232   |       
|Other assets                                                                 |                                                                   |                                                    |                                   |        |        |        | 40      |        |        |         | (568    | )     
|Restricted cash, net                                                         |                                                                   |                                                    | (994                               | )      |        |        | 48      |        |        |         | 279     |       
|Purchases of property and equipment                                          |                                                                   |                                                    | (6,515                             | )      |        |        | (3,593  | )      |        |         | (1,533  | )     
|Acquisition of NovaScreen, net of cash acquired                              |                                                                   |                                                    | (4,634                             | )      |        |        |        |        |        |         |        |       
|Acquisition of Zymark, net of cash acquired                                  |                                                                   |                                                    |                                   |        |        |        |        |        |        |         | (52,436 | )     
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|                                                                             |                                                                   |                                                    | Net cash from investing activities |        |        | 4,659  |         |        |        | 13,974  |         |        |        | 24,881  |  
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|Financing activities                                                         |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|Payments of obligations under sale-leaseback arrangements                    |                                                                   |                                                    | (301                               | )      |        |        | (1,443  | )      |        |         | (2,884  | )     
|Payments of long-term obligations                                            |                                                                   |                                                    | (403                               | )      |        |        | (362    | )      |        |         |        |       
|Proceeds from issuance of common stock                                       |                                                                   |                                                    | 2,323                              |        |        |        | 6,392   |        |        |         | 1,419   |       
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|                                                                             |                                                                   |                                                    | Net cash from financing activities |        |        | 1,619  |         |        |        | 4,587   |         |        |        | (1,465  | )
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|Effect of exchange rates on changes in cash and cash equivalents             |                                                                   |                                                    | (471                               | )      |        |        | 665     |        |        |         | 928     |       
|Net increase (decrease) in cash and cash equivalents                         |                                                                   |                                                    | (1,828                             | )      |        |        | 1,235   |        |        |         | (7,295  | )     
|Cash and cash equivalents at beginning of year                               |                                                                   |                                                    | 10,403                             |        |        |        | 9,168   |        |        |         | 16,463  |       
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|Cash and cash equivalents at end of year                                     |                                                                   | $                                                  | 8,575                              |        |        | $      | 10,403  |        |        | $       | 9,168   |       
|                                                                             |                                                                   |                                                    |                                    |        |        |        |         |        |       
|Supplemental disclosure of cash flow information                             |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|Interest paid                                                                |                                                                   | $                                                  | 37                                 |        |        | $      | 409     |        |        | $       | 412     |       
|Income taxes paid                                                            |                                                                   | $                                                  | 243                                |        |        | $      | 103     |        |        | $       | 171     |       
|Supplemental disclosure of significant non-cash investing
    activities     |                                                                   |                                                    |                                    |        |        |        |         |        |        |         |         |       
|Non-cash consideration exchanged for acquired research and
    development   |                                                                   | $                                                  |                                   |        |        | $      | 810     |        |        | $       |        |       
|Stock issued for acquisition of NovaScreen                                   |                                                                   | $                                                  | 17,575                             |        |        | $      |        |        |        | $       |        |       
|Stock issued for acquisition of Zymark                                       |                                                                   | $                                                  |                                   |        |        | $      |        |        |        | $       | 14,591  |       
|Purchase price adjustment for Zymark acquisition                             |                                                                   | $                                                  |                                   |        |        | $      | (47     | )      |        | $       |        |       



F-6



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|   |                                       
|-- | --------------------------------------
|1. | Organization and Basis of Presentation





| |                                                                     
| | --------------------------------------------------------------------
| | Financial Statement Presentation and Principles of
    Consolidation





|   |                                           
|-- | ------------------------------------------
|2. | Summary of Significant Accounting Policies



| |                 
| | ----------------
| | Use of Estimates





| |                                           
| | ------------------------------------------
| | Cash Equivalents and Marketable Securities







| |                             
| | ----------------------------
| | Customer Accounts Receivable





| |            
| | -----------
| | Inventories



F-7



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                
| | ---------------
| | Restricted Cash





| |                       
| | ----------------------
| | Property and Equipment





| |                                
| | -------------------------------
| | Impairment of Long-lived Assets





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





F-8



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                    
| | -------------------
| | Revenue Recognition



| |               
| | --------------
| | General Policy



00-21,




| |                
| | ---------------
| | Product Revenue

00-21,






| |                                          
| | -----------------------------------------
| | Service and Annual Maintenance Agreements



F-9



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                      
| | ---------------------
| | Licensing and Royalty





| |                 
| | ----------------
| | Contract Revenue





| |         
| | --------
| | Software





| |                  
| | -----------------
| | Segment Reporting





| |         
| | --------
| | Goodwill



F-10



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                             
| | ----------------------------
| | Foreign Currency Translation







| |                         
| | ------------------------
| | Research and Development







| |                     
| | --------------------
| | Warranty Obligations

90-day


F-11



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                       
| | ----------------------
| | Other Income (Expense)



|                                                   |  |                          |      |   |      |   |     |      |  |   |       |  
|-------------------------------------------------- |  | ------------------------ | ---- | - | ---- | - | --- | ---- |  | - | ----- | -
|                                                   |  | Years Ended December 31, |     
|                                                   |  |                          |     
|                                                   |  | 2005                     |      |   | 2004 |   |     | 2003 | 
|                                                   |  |                          |      |   |      |   |     |      | 
|Realized gain (loss) on marketable securities, net |  | $                        | (59  | ) |      | $ | 124 |      |  | $ | 924   |  
|Foreign exchange transaction gains (losses)        |  |                          | (661 | ) |      |   | 338 |      |  |   | 783   |  
|Loss on sale of equipment                          |  |                          | (27  | ) |      |   | (4  | )    |  |   | (313  | )
|Other income (expense), net                        |  |                          | 58   |   |      |   | 59  |      |  |   | (115  | )
|                                                   |  |                          |      |   |      |   |     |      | 
|                                                   |  | $                        | (689 | ) |      | $ | 517 |      |  | $ | 1,279 |  
|                                                   |  |                          |      |   |      |   |     |      | 



| |                                
| | -------------------------------
| | Guarantees and Indemnifications







| |                                     
| | ------------------------------------
| | Shipping and Handling Fees and Costs





| |                    
| | -------------------
| | Advertising Expense





| |                
| | ---------------
| | Risk Management



F-12



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                   
| | --------------------------------------------------
| | Significant Concentrations, Credit and Other Risks





start-up




| |                            
| | ---------------------------
| | Comprehensive Income (Loss)





| |                         
| | ------------------------
| | Stock-Based Compensation



F-13



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                    |                                                                                                      |                          |   |         |       |   |   |         |       |   |   |         |       |  
|------------------- | ---------------------------------------------------------------------------------------------------- | ------------------------ | - | ------- | ----- | - | - | ------- | ----- | - | - | ------- | ----- | -
|                    |                                                                                                      | Years Ended December 31, |  
|                    |                                                                                                      |                          |  
|                    |                                                                                                      | 2005                     |   |         | 2004  |   |   | 2003    |      
|                    |                                                                                                      |                          |   |         |       |   |   |         |      
|Net loss:           |                                                                                                      |                          |   |         |       |   |   |         |       |   |   |        
|                    | As reported                                                                                          |                          | $ | (14,457 | )     |   | $ | (31,556 | )     |   | $ | (49,527 | )    
|                    | Add: Stock-based employee compensation expense included in
    reported net loss                     |                          |   | 1,585   |       |   |   | 2,770   |       |   |   | 1,841   |      
|                    | Deduct: Total stock-based employee compensation expense
    determined under fair value based method |                          |   | (6,094  | )     |   |   | (12,827 | )     |   |   | (20,142 | )    
|                    |                                                                                                      |                          |   |         |       |   |   |         |      
|                    | Pro forma net loss                                                                                   |                          | $ | (18,966 | )     |   | $ | (41,613 | )     |   | $ | (67,828 | )    
|                    |                                                                                                      |                          |   |         |       |   |   |         |      
|Net loss per share: |                                                                                                      |                          |   |         |       |   |   |         |       |   |   |        
|                    | As reported:                                                                                         |                          |   |         |       |   |   |         |       |   |   |         |      
|                    |                                                                                                      | Basic and diluted        |   | $       | (0.46 | ) |   | $       | (1.08 | ) |   | $       | (1.88 | )
|                    | Pro forma:                                                                                           |                          |   |         |       |   |   |         |       |   |   |         |      
|                    |                                                                                                      | Basic and diluted        |   | $       | (0.61 | ) |   | $       | (1.42 | ) |   | $       | (2.57 | )





|                           |  |      |      |  |      |  |      |      |  |  |      | 
|-------------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- | 
|                           |  | 2005 |      |  | 2004 |  |      | 2003 | 
|                           |  |      |      |  |      |  |      |      | 
|Expected Volatility(%)     |  |      | 63   |  |      |  | 78   |      |  |  | 81   | 
|Risk-free interest rate(%) |  |      | 3.96 |  |      |  | 3.11 |      |  |  | 2.26 | 
|Expected life (years)      |  |      | 4.1  |  |      |  | 4.0  |      |  |  | 4.0  | 
|Expected dividend yield(%) |  |      | 0    |  |      |  | 0    |      |  |  | 0    | 



| |                   
| | ------------------
| | Net Loss Per Share





F-14



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                  
| | -----------------
| | Reclassifications





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A modified prospective method in which compensation
    cost is recognized beginning with the effective date
    (a) based on the requirements of Statement 123(R) for
    all share-based payments granted after the effective date and
    (b) based on the requirements of Statement 123 for all
    awards granted to employees prior to the effective date of
    Statement 123(R) that remain unvested on the effective date.
|
| |  | A modified retrospective method which includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under Statement 123 for purposes of
    pro forma disclosures for either (a) all prior periods
    presented or (b) prior interim periods of the year of
    adoption.                                             

Stock-Based
Compensation




F-15



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                                                  
|-- | -------------------------------------------------
|3. | Acquisition of NovaScreen Biosciences Corporation

30-month


in vitro in silico in vitro in vitro




F-16



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                               |  |   |        |  
|------------------------------ |  | - | ------ | -
|Cash and cash equivalents      |  | $ | 1,015  |  
|Other current assets           |  |   | 1,574  |  
|Other assets                   |  |   | 919    |  
|Liabilities assumed            |  |   | (2,057 | )
|Identifiable intangible assets |  |   | 8,148  |  
|Goodwill                       |  |   | 13,651 |  
|                               |  |   |       
|                               |  | $ | 23,250 |  
|                               |  |   |       



|                                |  |             |            |      |       |   |       | 
|------------------------------- |  | ----------- | ---------- | ---- | ----- | - | ----- | 
|                                |  |             |            | Fair |      
|                                |  | Useful Life |            |      | Value |  
|                                |  |             |            |      |       |  
|Developed technology            |  |             | 8 years    |      |       | $ | 4,550 | 
|Customer relationships          |  |             | 5 years    |      |       |   | 1,480 | 
|Government contracts and grants |  |             | 4 years    |      |       |   | 980   | 
|Favorable lease                 |  |             | 3.1 years  |      |       |   | 148   | 
|Trade name                      |  |             | Indefinite |      |       |   | 990   | 
|                                |  |             |            |      |       |  
|                                |  |             |            |      |       | $ | 8,148 | 
|                                |  |             |            |      |       |  





|           |  |   |       | 
|---------- |  | - | ----- | 
|2006       |  | $ | 1,423 | 
|2007       |  |   | 1,357 | 
|2008       |  |   | 1,283 | 
|2009       |  |   | 1,170 | 
|2010       |  |   | 660   | 
|Thereafter |  |   | 787   | 
|           |  |   |      
|           |  | $ | 6,680 | 
|           |  |   |      

F-17



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                          |  |             |         |   |      |   |         |  
|----------------------------------------- |  | ----------- | ------- | - | ---- | - | ------- | -
|                                          |  | 2005        |         |   | 2004 |  
|                                          |  |             |         |   |      |  
|                                          |  | (Unaudited) |        
|Revenue                                   |  | $           | 92,780  |   |      | $ | 88,548  |  
|Operating loss                            |  |             | (14,565 | ) |      |   | (32,107 | )
|Net loss                                  |  |             | (14,722 | ) |      |   | (30,561 | )
|Basic and diluted loss per share          |  |             | (0.44   | ) |      |   | (0.96   | )
|Pro forma weighted average shares assumed |  |             | 33,254  |   |      |   | 31,850  |  





|   |                                  
|-- | ---------------------------------
|4. | Acquired Research and Development





|   |                                                 
|-- | ------------------------------------------------
|5. | Cash, Cash Equivalents and Marketable Securities



F-18



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                              |              |                           |        |       |            |   |       |            |      |   |            |   |    |   |        |   |        | 
|--------------------------------------------- | ------------ | ------------------------- | ------ | ----- | ---------- | - | ----- | ---------- | ---- | - | ---------- | - | -- | - | ------ | - | ------ | 
|                                              |              |                           |        | Gross |            |   | Gross |            |      |  
|                                              |              | Amortized                 |        |       | Unrealized |   |       | Unrealized |      |   | Estimated  |  
|                                              |              | Cost                      |        |       | Losses     |   |       | Gains      |      |   | Fair Value |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|Cash and money market funds                   |              | $                         | 8,575  |       |            | $ |      |            |      | $ |           |   |    | $ | 8,575  |  
|Bonds of the U.S. Government and its agencies |              |                           | 15,171 |       |            |   | (79   | )          |      |   |           |   |    |   | 15,092 |  
|Corporate debt securities                     |              |                           | 8,007  |       |            |   | (49   | )          |      |   | 79         |   |    |   | 8,037  |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              |              | $                         | 31,753 |       |            | $ | (128  | )          |      | $ | 79         |   |    | $ | 31,704 |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              | Reported as: |                           |        |       |            |   |       |            |      |   |            |   |    |   |        |   |       
|                                              |              | Cash and cash equivalents |        | $     | 8,575      |   |       | $          |     |   |            | $ |   |   |        | $ | 8,575  | 
|                                              |              | Marketable securities     |        |       | 23,178     |   |       |            | (128 | ) |            |   | 79 |   |        |   | 23,129 | 
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              |              | $                         | 31,753 |       |            | $ | (128  | )          |      | $ | 79         |   |    | $ | 31,704 |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  



|                                          |       |           |        |        |            |   |        |        | 
|----------------------------------------- | ----- | --------- | ------ | ------ | ---------- | - | ------ | ------ | 
|                                          |       | Amortized |        |        | Estimated  |  
|                                          |       | Cost      |        |        | Fair Value |  
|                                          |       |           |        |        |            |  
|Mature within one year                    |       | $         | 28,485 |        |            | $ | 28,413 |       
|Mature after one year through three years |       |           | 3,268  |        |            |   | 3,291  |       
|                                          |       |           |        |        |            |  
|                                          | Total |           | $      | 31,753 |            |   | $      | 31,704 | 
|                                          |       |           |        |        |            |  



|                                              |              |                           |        |       |            |   |       |            |      |   |            |   |    |   |        |   |        | 
|--------------------------------------------- | ------------ | ------------------------- | ------ | ----- | ---------- | - | ----- | ---------- | ---- | - | ---------- | - | -- | - | ------ | - | ------ | 
|                                              |              |                           |        | Gross |            |   | Gross |            |      |  
|                                              |              | Amortized                 |        |       | Unrealized |   |       | Unrealized |      |   | Estimated  |  
|                                              |              | Cost                      |        |       | Losses     |   |       | Gains      |      |   | Fair Value |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|Cash and money market funds                   |              | $                         | 10,403 |       |            | $ |      |            |      | $ |           |   |    | $ | 10,403 |  
|Bonds of the U.S. Government and its agencies |              |                           | 24,575 |       |            |   | (161  | )          |      |   |           |   |    |   | 24,414 |  
|Corporate debt securities                     |              |                           | 15,434 |       |            |   | (84   | )          |      |   | 70         |   |    |   | 15,420 |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              |              | $                         | 50,412 |       |            | $ | (245  | )          |      | $ | 70         |   |    | $ | 50,237 |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              | Reported as: |                           |        |       |            |   |       |            |      |   |            |   |    |   |        |   |       
|                                              |              | Cash and cash equivalents |        | $     | 10,403     |   |       | $          |     |   |            | $ |   |   |        | $ | 10,403 | 
|                                              |              | Marketable securities     |        |       | 40,009     |   |       |            | (245 | ) |            |   | 70 |   |        |   | 39,834 | 
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  
|                                              |              | $                         | 50,412 |       |            | $ | (245  | )          |      | $ | 70         |   |    | $ | 50,237 |  
|                                              |              |                           |        |       |            |   |       |            |      |   |            |  



|                                          |       |           |        |        |            |   |        |        | 
|----------------------------------------- | ----- | --------- | ------ | ------ | ---------- | - | ------ | ------ | 
|                                          |       | Amortized |        |        | Estimated  |  
|                                          |       | Cost      |        |        | Fair Value |  
|                                          |       |           |        |        |            |  
|Mature within one year                    |       | $         | 27,409 |        |            | $ | 27,285 |       
|Mature after one year through three years |       |           | 23,003 |        |            |   | 22,952 |       
|                                          |       |           |        |        |            |  
|                                          | Total |           | $      | 50,412 |            |   | $      | 50,237 | 
|                                          |       |           |        |        |            |  

F-19



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                 
|-- | ----------------
|6. | Notes Receivable





|   |            
|-- | -----------
|7. | Inventories

first-in,


|                |             |              |       |        |      |   |       |       | 
|--------------- | ----------- | ------------ | ----- | ------ | ---- | - | ----- | ----- | 
|                |             | December 31, |      
|                |             |              |      
|                |             | 2005         |       |        | 2004 |  
|                |             |              |       |        |      |  
|Raw material    |             | $            | 5,075 |        |      | $ | 4,780 |      
|Work-in-process |             |              | 762   |        |      |   | 852   |      
|Finished goods  |             |              | 5,224 |        |      |   | 4,196 |      
|                |             |              |       |        |      |  
|                | Inventories |              | $     | 11,061 |      |   | $     | 9,828 | 
|                |             |              |       |        |      |  



F-20



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                       
|-- | ----------------------
|8. | Property and Equipment



|                                          |  |                                                   |           |              |       |   |         |      |       |   |         |  
|----------------------------------------- |  | ------------------------------------------------- | --------- | ------------ | ----- | - | ------- | ---- | ----- | - | ------- | -
|                                          |  |                                                   |           | December 31, |      
|                                          |  |                                                   |           |              |      
|Asset Classification                      |  | Estimated Useful Life                             |           |              | 2005  |   |         | 2004 |      
|                                          |  |                                                   |           |              |       |   |         |      |      
|Machinery and equipment                   |  |                                                   | 2-5 years |              |       | $ | 15,496  |      |       | $ | 15,122  |  
|Computers and information systems         |  |                                                   | 3-5 years |              |       |   | 6,949   |      |       |   | 5,782   |  
|Office equipment, furniture and fixtures  |  |                                                   | 5 years   |              |       |   | 2,131   |      |       |   | 2,019   |  
|Leasehold improvements                    |  | Shorter of estimated useful life or life of lease |           |              | 9,908 |   |         |      | 4,715 |  
|                                          |  |                                                   |           |              |       |   |         |      |      
|                                          |  |                                                   |           |              |       |   | 34,484  |      |       |   | 27,638  |  
|Accumulated depreciation and amortization |  |                                                   |           |              |       |   | (22,465 | )    |       |   | (21,452 | )
|                                          |  |                                                   |           |              |       |   |         |      |      
|Property and equipment, net               |  |                                                   |           |              |       | $ | 12,019  |      |       | $ | 6,186   |  
|                                          |  |                                                   |           |              |       |   |         |      |      



|                                          |  |   |        |  
|----------------------------------------- |  | - | ------ | -
|Machinery and equipment                   |  | $ | 1,218  |  
|Computers and information systems         |  |   | 135    |  
|Office equipment, furniture and fixtures  |  |   | 54     |  
|Leasehold improvements                    |  |   | 17     |  
|                                          |  |   |       
|                                          |  |   | 1,424  |  
|Accumulated depreciation and amortization |  |   | (1,303 | )
|                                          |  |   |       
|Leased property and equipment, net        |  | $ | 121    |  
|                                          |  |   |       



|   |                         
|-- | ------------------------
|9. | Goodwill and Intangibles



|                 |                                |              |        |        |      |   |        |        | 
|---------------- | ------------------------------ | ------------ | ------ | ------ | ---- | - | ------ | ------ | 
|                 |                                | December 31, |       
|                 |                                |              |       
|                 |                                | 2005         |        |        | 2004 |  
|                 |                                |              |        |        |      |  
|Intangibles, net |                                | $            | 16,822 |        |      | $ | 12,745 |       
|Goodwill         |                                |              | 60,866 |        |      |   | 47,215 |       
|                 |                                |              |        |        |      |  
|                 | Total goodwill and intangibles |              | $      | 77,688 |      |   | $      | 59,960 | 
|                 |                                |              |        |        |      |  



| |         
| | --------
| | Goodwill



F-21



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Intangibles



|                                  |  |                  |           |  |      |   |             |              |  |   |         |   |  |   |        | 
|--------------------------------- |  | ---------------- | --------- |  | ---- | - | ----------- | ------------ |  | - | ------- | - |  | - | ------ | 
|                                  |  | Weighted Average |           |  |      |   |             |              | 
|                                  |  | Amortization     |           |  |      |   | Accumulated |              |  |  
|Asset Classification              |  | Period           |           |  | Cost |   |             | Amortization |  |   | Net     |  
|                                  |  |                  |           |  |      |   |             |              |  |   |         |  
|Amortized intangible assets:      |  |                  |           |  |      |   |             |              |  |   |         |   |  |   |        | 
|Developed technology              |  |                  | 5.7 years |  |      | $ | 18,864      |              |  | $ | (7,299  | ) |  | $ | 11,565 | 
|Customer relationships            |  |                  | 5 years   |  |      |   | 5,120       |              |  |   | (1,852  | ) |  |   | 3,268  | 
|Government contracts and grants   |  |                  | 4 years   |  |      |   | 980         |              |  |   | (144    | ) |  |   | 836    | 
|Favorable lease                   |  |                  | 3 years   |  |      |   | 148         |              |  |   | (11     | ) |  |   | 137    | 
|Other intangibles                 |  |                  | 5 years   |  |      |   | 937         |              |  |   | (911    | ) |  |   | 26     | 
|                                  |  |                  |           |  |      |   |             |              |  |   |         |  
|                                  |  |                  | 5.4 years |  |      | $ | 26,049      |              |  | $ | (10,217 | ) |  | $ | 15,832 | 
|                                  |  |                  |           |  |      |   |             |              |  |   |         |  
|Unamortized trade name intangible |  |                  |           |  |      | $ | 990         |              |  |   |         |   |  |   |        | 
|                                  |  |                  |           |  |      |   |             |              |  |   |         |  





|           |  |   |        | 
|---------- |  | - | ------ | 
|2006       |  | $ | 5,018  | 
|2007       |  |   | 4,952  | 
|2008       |  |   | 3,231  | 
|2009       |  |   | 1,174  | 
|2010       |  |   | 664    | 
|Thereafter |  |   | 793    | 
|           |  |   |       
|           |  | $ | 15,832 | 
|           |  |   |       

F-22



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                          
|--- | -----------------------------------------
|10. | Other Current and Non-current Liabilities



|                                |                                    |              |       |       |      |   |       |       | 
|------------------------------- | ---------------------------------- | ------------ | ----- | ----- | ---- | - | ----- | ----- | 
|                                |                                    | December 31, |      
|                                |                                    |              |      
|                                |                                    | 2005         |       |       | 2004 |  
|                                |                                    |              |       |       |      |  
|Accrued bonus                   |                                    | $            | 4,081 |       |      | $ | 4,364 |      
|Accrued other                   |                                    |              | 2,693 |       |      |   | 1,984 |      
|                                |                                    |              |       |       |      |  
|                                | Total accrued compensation         |              | $     | 6,774 |      |   | $     | 6,348 | 
|                                |                                    |              |       |       |      |  
|Accrued construction-in-process |                                    | $            | 1,644 |       |      | $ |      |      
|Accrued warranty                |                                    |              | 1,555 |       |      |   | 1,436 |      
|Accrued VAT and other taxes     |                                    |              | 1,320 |       |      |   | 1,571 |      
|Accrued accounting and legal    |                                    |              | 705   |       |      |   | 1,031 |      
|Accrued other                   |                                    |              | 2,893 |       |      |   | 1,803 |      
|                                |                                    |              |       |       |      |  
|                                | Total other accrued liabilities    |              | $     | 8,117 |      |   | $     | 5,841 | 
|                                |                                    |              |       |       |      |  
|Deferred rent liability         |                                    | $            | 3,086 |       |      | $ | 611   |      
|Deferred revenue                |                                    |              | 245   |       |      |   | 117   |      
|Other                           |                                    |              | 172   |       |      |   | 203   |      
|                                |                                    |              |       |       |      |  
|                                | Total other noncurrent liabilities |              | $     | 3,503 |      |   | $     | 931   | 
|                                |                                    |              |       |       |      |  



|                                                   |  |   |        |  
|-------------------------------------------------- |  | - | ------ | -
|Balance, December 31, 2003                         |  | $ | 1,108  |  
|Warranties issued during the period                |  |   | 1,751  |  
|Settlements and adjustments made during the period |  |   | (1,423 | )
|                                                   |  |   |       
|Balance, December 31, 2004                         |  |   | 1,436  |  
|Warranties issued during the period                |  |   | 1,671  |  
|Settlements and adjustments made during the period |  |   | (1,552 | )
|                                                   |  |   |       
|Balance, December 31, 2005                         |  | $ | 1,555  |  
|                                                   |  |   |       

F-23



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                  
|--- | -----------------
|11. | Other Obligations



|                                                                                                                                                                                                                                                                       |                       |              |     |     |      |   |     |     | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ------------ | --- | --- | ---- | - | --- | --- | 
|                                                                                                                                                                                                                                                                       |                       | December 31, |    
|                                                                                                                                                                                                                                                                       |                       |              |    
|                                                                                                                                                                                                                                                                       |                       | 2005         |     |     | 2004 |  
|                                                                                                                                                                                                                                                                       |                       |              |     |     |      |  
|Note payable to bank dated July 18, 2001, due July 20,
    2006 and bearing interest at 7.75% per annum. The note is
    payable in monthly installments of principal and interest of $3
    and is secured by certain equipment                                       |                       | $            | 22  |     |      | $ |    |    
|Note payable to bank dated February 26, 2004, due
    February 26, 2009 and bearing interest at 5.90% per
    annum. The note is payable in monthly installments of principal
    and interest of $2 and is secured by certain equipment                               |                       |              | 81  |     |      |   |    |    
|Note payable to bank dated June 8, 2004, due
    September 9, 2009 and bearing interest at 6.29% per
    annum. The note is payable in monthly installments, beginning
    September 30, 2004, of principal and interest of $9 and is
    secured by certain equipment |                       |              | 350 |     |      |   |    |    
|Labotec deferred acquisition payments                                                                                                                                                                                                                                  |                       |              |    |     |      |   | 409 |    
|                                                                                                                                                                                                                                                                       |                       |              |     |     |      |  
|                                                                                                                                                                                                                                                                       | Total                 |              |     | 453 |      |   |     | 409 | 
|                                                                                                                                                                                                                                                                       | Less: current portion |              |     | 133 |      |   |     | 409 | 
|                                                                                                                                                                                                                                                                       |                       |              |     |     |      |  
|                                                                                                                                                                                                                                                                       |                       | $            | 320 |     |      | $ |    |    
|                                                                                                                                                                                                                                                                       |                       |              |     |     |      |  



|                          |                |  |   |     | 
|------------------------- | -------------- |  | - | --- | 
|Years ending December 31: |                |  |   |    
|                          | 2006           |  | $ | 133 | 
|                          | 2007           |  |   | 116 | 
|                          | 2008           |  |   | 124 | 
|                          | 2009           |  |   | 80  | 
|                          |                |  |  
|                          | Total payments |  | $ | 453 | 
|                          |                |  |  





|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies



| |       
| | ------
| | Leases



|                          |            |                              |   |       |        | 
|------------------------- | ---------- | ---------------------------- | - | ----- | ------ | 
|Years ending December 31: |            |                              |   |      
|                          | 2006       |                              | $ | 4,678 |       
|                          | 2007       |                              |   | 4,454 |       
|                          | 2008       |                              |   | 4,140 |       
|                          | 2009       |                              |   | 1,867 |       
|                          | 2010       |                              |   | 1,722 |       
|                          | Thereafter |                              |   | 8,106 |       
|                          |            |                              |  
|                          |            | Total minimum lease payments |   | $     | 24,967 | 
|                          |            |                              |  

F-24



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














| |                  
| | -----------------
| | Letters-of-Credit

letters-of letters-of letters-of


F-25



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                    
| | -------------------
| | Inventory Purchases





| |                    
| | -------------------
| | Royalty Commitments





|    |                         
|--- | ------------------------
|13. | Restructuring Activities





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In November 2003, Caliper closed one of its three facilities in
    Mountain View, California that was used primarily for instrument
    manufacturing and research and development activities, and
    recognized a $7.7 million charge related to costs estimated
    over the remainder of the lease (June 2008), including leasehold
    improvements having a carrying value of $319,000 that had no
    further use.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In June 2004, as a result of efficiencies achieved following
    Calipers strategic prioritization of research and
    development programs, Caliper vacated and shut down
    approximately one half of a second Mountain View facility that
    was primarily used for research and development activities, and
    recognized an additional $2.2 million charge related to
    costs estimated over the remainder of the lease (June 2008),
    including leasehold improvements having a carrying value of
    $67,000 that had no further use.                                                                                                                                                                                                                                                                                                                          
|
| |  | In December 2004, Caliper was successful in achieving additional
    efficiencies that enabled it to complete the full closure of the
    second facility above. In connection with this action, Caliper
    also reassessed its previous estimates supporting the earlier
    charges taken and determined, on the basis of recent market
    information indicating at the time a low probability of
    obtaining sublease income from these idled facilities, that a
    $3.6 million charge was necessary to both account for the
    latest closure and reflect the fair value of its remaining lease
    payments for both idled facilities as of December 31, 2004.
    Of the total charge, $1.7 million was related to Caliper
    revised estimate of the sublease income potential and $246,000
    was related to leasehold improvements that had no further use.

F-26



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |   |                                                                                                                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In December 2005, Caliper recognized a $1.4 million
    restructuring credit to reflect the net present value of future
    sublease rental income based upon subleases entered into during
    2005. The restructuring credit includes payments in 2005 of
    $233,000, net of broker fees of $68,000.





|                                            |  |            |        |           |       |   |        |              |  |   |       |   |  |   |        |  
|------------------------------------------- |  | ---------- | ------ | --------- | ----- | - | ------ | ------------ |  | - | ----- | - |  | - | ------ | -
|                                            |  |            |        | Operating |       |   |        |              | 
|                                            |  | Workforce  |        |           | Lease |   |        | Leaseholds   |  |   |      
|                                            |  | Reductions |        |           | Costs |   |        | Abandonments |  |   | Total |  
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Balance, December 31, 2002                  |  | $          |       |           |       | $ |       |              |  | $ |      |   |  | $ |       |  
|Restructuring charges                       |  |            | 3,822  |           |       |   | 7,394  |              |  |   | 319   |   |  |   | 11,535 |  
|Non-cash restructuring charges              |  |            | (401   | )         |       |   |       |              |  |   | (319  | ) |  |   | (720   | )
|Reclassification of deferred rent liability |  |            |       |           |       |   | 425    |              |  |   |      |   |  |   | 425    |  
|Payments                                    |  |            | (1,338 | )         |       |   |       |              |  |   |      |   |  |   | (1,338 | )
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Balance, December 31, 2003                  |  |            | 2,083  |           |       |   | 7,819  |              |  |   |      |   |  |   | 9,902  |  
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Restructuring charges                       |  |            | 180    |           |       |   | 5,415  |              |  |   | 313   |   |  |   | 5,908  |  
|Non-cash restructuring charges              |  |            |       |           |       |   |       |              |  |   | (313  | ) |  |   | (313   | )
|Restructuring credits                       |  |            | (134   | )         |       |   |       |              |  |   |      |   |  |   | (134   | )
|Reclassification of deferred rent liability |  |            |       |           |       |   | 436    |              |  |   |      |   |  |   | 436    |  
|Accretion of facility lease accrual         |  |            |       |           |       |   | 244    |              |  |   |      |   |  |   | 244    |  
|Payments                                    |  |            | (2,129 | )         |       |   | (2,309 | )            |  |   |      |   |  |   | (4,438 | )
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Balance, December 31, 2004                  |  |            |       |           |       |   | 11,605 |              |  |   |      |   |  |   | 11,605 |  
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Restructuring credits                       |  |            |       |           |       |   | (1,366 | )            |  |   |      |   |  |   | (1,366 | )
|Accretion of facility lease accrual         |  |            |       |           |       |   | 361    |              |  |   |      |   |  |   | 361    |  
|Payments                                    |  |            |       |           |       |   | (3,370 | )            |  |   |      |   |  |   | (3,370 | )
|                                            |  |            |        |           |       |   |        |              |  |   |       |  
|Balance, December 31, 2005                  |  | $          |       |           |       | $ | 7,230  |              |  | $ |      |   |  | $ | 7,230  |  
|                                            |  |            |        |           |       |   |        |              |  |   |       |  



F-27



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                     |      |   |       |       | 
|------------------------------------ | ---- | - | ----- | ----- | 
|Years ending December 31:            |      |   |       |      
|                                     | 2006 |   | $     | 3,167 | 
|                                     | 2007 |   |       | 3,200 | 
|                                     | 2008 |   |       | 1,604 | 
|                                     |      |   |      
|Total Payments                       |      |   | 7,971 |      
|Less: Unamortized discount           |      |   | 741   |      
|                                     |      |   |      
|Present value of future payments     |      |   | 7,230 |      
|Less: Current portion of obligations |      |   | 2,872 |      
|                                     |      |   |      
|Noncurrent portion of obligations    |      | $ | 4,358 |      
|                                     |      |   |      



|    |                     
|--- | --------------------
|14. | Stockholders Equity



| |                                     
| | ------------------------------------
| | Preferred Share Purchase Rights Plan



F-28



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Stock Plans



|                                     |  |             |            |  |             |  |           |              |  |  |           |  |  |  |            | 
|------------------------------------ |  | ----------- | ---------- |  | ----------- |  | --------- | ------------ |  |  | --------- |  |  |  | ---------- | 
|                                     |  |             |            |  |             |  |           | Common Stock | 
|                                     |  |             |            |  |             |  |           | Reserved for | 
|                                     |  | Plan Shares |            |  | Plan Shares |  |           | Awards       |  |  | Future    | 
|Plan                                 |  | Authorized  |            |  | Available   |  |           | Outstanding  |  |  | Issuance  | 
|                                     |  |             |            |  |             |  |           |              |  |  |           | 
|Option Plans:                        |  |             |            |  |             |  |           |              |  |  |           |  |  |  |            | 
|1999 Equity Plan                     |  |             | 12,820,000 |  |             |  | 3,396,025 |              |  |  | 5,889,633 |  |  |  | 9,285,658  | 
|1999 Directors Plan                 |  |             | 556,023    |  |             |  | 396,223   |              |  |  | 152,800   |  |  |  | 549,023    | 
|2001 Non-Statutory Stock Option Plan |  |             | 500,000    |  |             |  | 149,012   |              |  |  | 350,988   |  |  |  | 500,000    | 
|Acquisition Plan                     |  |             | 900,000    |  |             |  | 50,000    |              |  |  | 600,000   |  |  |  | 650,000    | 
|                                     |  |             |            |  |             |  |           |              |  |  |           | 
|                                     |  |             | 14,776,023 |  |             |  | 3,991,260 |              |  |  | 6,993,421 |  |  |  | 10,984,681 | 
|                                     |  |             |            |  |             |  |           |              |  |  |           | 
|1999 Purchase Plan                   |  |             | 1,777,053  |  |             |  | 326,391   |              |  |  |          |  |  |  | 326,391    | 
|                                     |  |             |            |  |             |  |           |              |  |  |           | 

12-month 10-year 10-year 4-year


12-month






12-month 10-year


F-29



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                 |                       |           |           |             |        |  |           |                |          |   |              |              |  |   |       |       | 
|-------------------------------- | --------------------- | --------- | --------- | ----------- | ------ |  | --------- | -------------- | -------- | - | ------------ | ------------ |  | - | ----- | ----- | 
|                                 |                       |           |           | Outstanding |        |  | Weighted  |               
|                                 |                       |           |           |             |        |  | Average   |               
|                                 |                       |           |           | Number of   |        |  |           |                | Exercise |  
|                                 |                       | Available |           |             | Shares |  |           | Exercise Price |          |   | Price        |             
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Balance at December 31, 2002     |                       |           | 4,404,858 |             |        |  | 4,382,307 |                |          | $ | 0.06$162.00 |              |  | $ | 10.15 |      
|                                 | Authorized            |           |           | 4,543,275   |        |  |           |               |          |   |              |             |  |   |       |      | 
|                                 | Granted               |           |           | (5,670,660  | )      |  |           | 5,670,660      |          |   | $            | 0.00$6.45   |  |   | $     | 4.12  | 
|                                 | Exercised             |           |           |            |        |  |           | (177,666       | )        |   | $            | 0.06$3.63   |  |   | $     | 1.89  | 
|                                 | Vested                |           |           |            |        |  |           | (15,152        | )        |   | $            | 0.00         |  |   | $     | 0.00  | 
|                                 | Canceled              |           |           | 923,799     |        |  |           | (923,799       | )        |   | $            | 0.97$77.00  |  |   | $     | 9.89  | 
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Balance at December 31, 2003     |                       |           | 4,201,272 |             |        |  | 8,936,350 |                |          | $ | 0.06$162.00 |              |  | $ | 6.54  |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|                                 | Authorized            |           |           | 103,980     |        |  |           |               |          |   |              |             |  |   |       |      | 
|                                 | Granted               |           |           | (1,055,470  | )      |  |           | 1,055,470      |          |   | $            | 0.00$9.32   |  |   | $     | 3.71  | 
|                                 | Exercised             |           |           |            |        |  |           | (1,374,938     | )        |   | $            | 0.06$6.37   |  |   | $     | 3.69  | 
|                                 | Vested                |           |           |            |        |  |           | (188,746       | )        |   | $            | 0.00         |  |   | $     | 0.00  | 
|                                 | Un-vested repurchases |           |           |            |        |  |           | (21,145        | )        |   | $            | 0.00         |  |   | $     | 0.00  | 
|                                 | Canceled              |           |           | 994,197     |        |  |           | (994,197       | )        |   | $            | 0.97$162.00 |  |   | $     | 11.15 | 
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Balance at December 31, 2004     |                       |           | 4,243,979 |             |        |  | 7,412,794 |                |          | $ | 0.00$162.00 |              |  | $ | 6.24  |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|                                 | Authorized            |           |           |            |        |  |           |               |          |   |              |             |  |   |       |      | 
|                                 | Granted               |           |           | (849,580    | )      |  |           | 849,580        |          |   | $            | 0.00$7.90   |  |   | $     | 4.17  | 
|                                 | Exercised             |           |           |            |        |  |           | (339,500       | )        |   | $            | 0.06$6.69   |  |   | $     | 3.84  | 
|                                 | Vested                |           |           |            |        |  |           | (316,575       | )        |   | $            | 0.00         |  |   | $     | 0.00  | 
|                                 | Un-vested repurchases |           |           | 20,000      |        |  |           | (36,017        | )        |   | $            | 0.00         |  |   | $     | 0.00  | 
|                                 | Canceled              |           |           | 576,861     |        |  |           | (576,861       | )        |   | $            | 0.47$77.00  |  |   | $     | 10.97 | 
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Balance at December 31, 2005     |                       |           | 3,991,260 |             |        |  | 6,993,421 |                |          | $ | 0.00$162.00 |              |  | $ | 5.98  |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Exercisable at December 31, 2005 |                       |           |           |             |        |  | 4,576,505 |                |          |   |              |              |  |   |       |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Exercisable at December 31, 2004 |                       |           |           |             |        |  | 4,047,952 |                |          |   |              |              |  |   |       |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             
|Exercisable at December 31, 2003 |                       |           |           |             |        |  | 3,695,624 |                |          |   |              |              |  |   |       |      
|                                 |                       |           |           |             |        |  |           |                |          |   |              |             



F-30



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                        |  |             |           |          |                  |  |          |                |  |   |           |          |  |                  |           |  |  |   |        | 
|----------------------- |  | ----------- | --------- | -------- | ---------------- |  | -------- | -------------- |  | - | --------- | -------- |  | ---------------- | --------- |  |  | - | ------ | 
|                        |  | Outstanding |           |          | Exercisable      | 
|                        |  |             |           |          |                  | 
|                        |  |             |           | Weighted |                  |  |          |                | 
|                        |  |             |           | Average  |                  |  | Weighted |                |  |   |           | Weighted | 
|                        |  | Number of   |           |          | Remaining        |  |          | Average        |  |   | Number of |          |  | Average Exercise |          
|Range of Exercise Price |  | Shares      |           |          | Contractual Life |  |          | Exercise Price |  |   | Shares    |          |  | Price            |          
|                        |  |             |           |          |                  |  |          |                |  |   |           |          |  |                  |          
|$  0.00                 |  |             | 612,038   |          |                  |  | 3.1      |                |  | $ | 0.00      |          |  |                  |          |  |  |   |       | 
|$  0.47$  0.63         |  |             | 17,935    |          |                  |  | 1.4      |                |  | $ | 0.54      |          |  |                  | 17,935    |  |  | $ | 0.54   | 
|$  0.97                 |  |             | 547,367   |          |                  |  | 3.1      |                |  | $ | 0.97      |          |  |                  | 547,367   |  |  | $ | 0.97   | 
|$  3.12$  4.64         |  |             | 1,572,040 |          |                  |  | 5.4      |                |  | $ | 3.59      |          |  |                  | 1,355,479 |  |  | $ | 3.58   | 
|$  4.71$  7.06         |  |             | 3,234,972 |          |                  |  | 7.3      |                |  | $ | 5.70      |          |  |                  | 1,810,249 |  |  | $ | 5.63   | 
|$  7.28$  9.96         |  |             | 381,050   |          |                  |  | 6.5      |                |  | $ | 8.29      |          |  |                  | 225,930   |  |  | $ | 8.50   | 
|$ 11.80$ 17.34         |  |             | 451,669   |          |                  |  | 4.4      |                |  | $ | 14.14     |          |  |                  | 443,195   |  |  | $ | 14.17  | 
|$ 22.40$ 31.13         |  |             | 55,100    |          |                  |  | 0.9      |                |  | $ | 30.89     |          |  |                  | 55,100    |  |  | $ | 30.89  | 
|$ 33.63                 |  |             | 89,300    |          |                  |  | 2.8      |                |  | $ | 33.63     |          |  |                  | 89,300    |  |  | $ | 33.63  | 
|$ 58.44$ 77.00         |  |             | 23,400    |          |                  |  | 3.3      |                |  | $ | 70.75     |          |  |                  | 23,400    |  |  | $ | 70.75  | 
|$130.00$162.00         |  |             | 8,550     |          |                  |  | 4.1      |                |  | $ | 150.21    |          |  |                  | 8,550     |  |  | $ | 150.21 | 
|                        |  |             |           |          |                  |  |          |                |  |   |           |          |  |                  |          
|                        |  |             | 6,993,421 |          |                  |  | 5.8      |                |  | $ | 5.98      |          |  |                  | 4,576,505 |  |  | $ | 6.87   | 
|                        |  |             |           |          |                  |  |          |                |  |   |           |          |  |                  |          



| |                         
| | ------------------------
| | Stock Based Compensation



|                                                                                                                        |  |                          |       |   |      |   |       |      |  |   |       |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                                                        |  | Years Ended December 31, |      
|                                                                                                                        |  |                          |      
|                                                                                                                        |  | 2005                     |       |   | 2004 |   |       | 2003 | 
|                                                                                                                        |  |                          |       |   |      |   |       |      | 
|Grants related to Calipers initial public offering in 1999                                                             |  | $                        |      |   |      | $ | 95    |      |  | $ | 542   |  
|Restricted stock issuances                                                                                              |  |                          | 1,760 |   |      |   | 1,599 |      |  |   | 475   |  
|Option accelerating and other stock-based expenses incurred in
    connection with employment and separation agreements |  |                          |      |   |      |   | 1,123 |      |  |   |      |  
|Reversal of stock compensation due to forfeited options and
    restricted stock                                        |  |                          | (175  | ) |      |   | (47   | )    |  |   | (17   | )
|                                                                                                                        |  |                          |       |   |      |   |       |      | 
|                                                                                                                        |  | $                        | 1,585 |   |      | $ | 2,770 |      |  | $ | 1,000 |  
|                                                                                                                        |  |                          |       |   |      |   |       |      | 





F-31



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|     |  |   |       | 
|---- |  | - | ----- | 
|2006 |  | $ | 1,619 | 
|2007 |  |   | 894   | 
|2008 |  |   | 409   | 
|2009 |  |   | 81    | 
|     |  |   |      
|     |  | $ | 3,003 | 
|     |  |   |      



|    |             
|--- | ------------
|15. | Income Taxes



|        |  |                          |     |  |      |   |     |      |  |   |     | 
|------- |  | ------------------------ | --- |  | ---- | - | --- | ---- |  | - | --- | 
|        |  | Years Ended December 31, |    
|        |  |                          |    
|        |  | 2005                     |     |  | 2004 |   |     | 2003 | 
|        |  |                          |     |  |      |   |     |      | 
|Federal |  | $                        |    |  |      | $ |    |      |  | $ |    | 
|State   |  |                          | 42  |  |      |   |    |      |  |   |    | 
|Foreign |  |                          | 72  |  |      |   | 377 |      |  |   | 190 | 
|        |  |                          |     |  |      |   |     |      | 
|Total   |  | $                        | 114 |  |      | $ | 377 |      |  | $ | 190 | 
|        |  |                          |     |  |      |   |     |      | 



F-32



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |                    |                          |        |     |      |   |         |      |   |   |         |     | 
|------------------------------- | ------------------ | ------------------------ | ------ | --- | ---- | - | ------- | ---- | - | - | ------- | --- | 
|                                |                    | Years Ended December 31, |       
|                                |                    |                          |       
|                                |                    | 2005                     |        |     | 2004 |   |         | 2003 |  
|                                |                    |                          |        |     |      |   |         |      |  
|U.S. federal taxes (benefit):   |                    |                          |        |     |      |   |         |      |   |   |         |    
|At statutory rate               |                    | $                        | (4,876 | )   |      | $ | (10,601 | )    |   | $ | (16,775 | )  
|State                           |                    |                          | 42     |     |      |   |        |      |   |   |        |    
|Foreign                         |                    |                          | 72     |     |      |   | 377     |      |   |   | 190     |    
|Permanent differences:          |                    |                          |        |     |      |   |         |      |   |   |         |    
|                                | Stock Compensation |                          |        | (94 | )    |   |         | (685 | ) |   |         | 340 | 
|                                | Other              |                          |        | 121 |      |   |         | 95   |   |   |         | 151 | 
|Unutilized net operating losses |                    |                          | 4,849  |     |      |   | 11,191  |      |   |   | 16,284  |    
|                                |                    |                          |        |     |      |   |         |      |  
|Total                           |                    | $                        | 114    |     |      | $ | 377     |      |   | $ | 190     |    
|                                |                    |                          |        |     |      |   |         |      |  



|                                     |       |              |         |      |      |   |         |      |  |   |         |   | 
|------------------------------------ | ----- | ------------ | ------- | ---- | ---- | - | ------- | ---- |  | - | ------- | - | 
|                                     |       | December 31, |        
|                                     |       |              |        
|                                     |       | 2005         |         |      | 2004 |   |         | 2003 | 
|                                     |       |              |         |      |      |   |         |      | 
|Net operating loss carryforwards     |       | $            | 52,991  |      |      | $ | 47,859  |      |  | $ | 36,099  |  
|Research credit carryforwards        |       |              | 7,738   |      |      |   | 7,093   |      |  |   | 6,230   |  
|Capitalized research and development |       |              | 2,567   |      |      |   | 2,567   |      |  |   | 3,026   |  
|Restructuring accrual                |       |              | 2,892   |      |      |   | 4,473   |      |  |   | 3,917   |  
|Intangible assets                    |       |              | (6,330  | )    |      |   | (5,041  | )    |  |   | (6,564  | )
|Non-amortized intangibles            |       |              | (386    | )    |      |   |        |      |  |   |        |  
|Other, net                           |       |              | 4,290   |      |      |   | 5,736   |      |  |   | 4,349   |  
|                                     |       |              |         |      |      |   |         |      | 
|Net deferred tax assets              |       |              | 63,762  |      |      |   | 62,687  |      |  |   | 47,057  |  
|Valuation allowance                  |       |              | (64,148 | )    |      |   | (62,687 | )    |  |   | (47,057 | )
|                                     |       |              |         |      |      |   |         |      | 
|                                     | Total |              | $       | (386 | )    |   | $       |     |  |   | $       |  | 
|                                     |       |              |         |      |      |   |         |      | 







F-33



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |             
|--- | ------------
|16. | 401(k) Plans







|    |           
|--- | ----------
|17. | Litigation

In re Caliper Technologies
Corp. Initial Public Offering Securities Litigation, In re Initial
Public Offering Securities Litigation, 10b-5


F-34



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##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                
|--- | ---------------
|18. | Geographic Data



|         |                              |               |         |   |         |   |         |      |         |   |         |   |         |  
|-------- | ---------------------------- | ------------- | ------- | - | ------- | - | ------- | ---- | ------- | - | ------- | - | ------- | -
|         |                              | 2005          |         |   | 2004    |   |         | 2003 |        
|         |                              |               |         |   |         |   |         |      |        
|Revenue: |                              |               |         |   |         |   |         |      |         |   |         |  
|         |                              | United States |         | $ | 58,587  |   |         | $    | 50,154  |   |         | $ | 34,668  |  
|         |                              | Europe        |         |   | 20,224  |   |         |      | 20,029  |   |         |   | 10,291  |  
|         |                              | Asia          |         |   | 5,963   |   |         |      | 8,233   |   |         |   | 3,986   |  
|         |                              | Other         |         |   | 2,235   |   |         |      | 1,711   |   |         |   | 466     |  
|         |                              |               |         |   |         |   |         |      |        
|         |                              | $             | 87,009  |   |         | $ | 80,127  |      |         | $ | 49,411  |  
|         |                              |               |         |   |         |   |         |      |        
|         | Net loss:                    |               |         |   |         |   |         |      |         |   |         |   |        
|         |                              | United States |         | $ | (14,738 | ) |         | $    | (34,199 | ) |         |   | (49,105 | )
|         |                              | Europe        |         |   | 273     |   |         |      | 1,211   |   |         |   | (516    | )
|         |                              | Asia          |         |   | 61      |   |         |      | 1,095   |   |         |   | 132     |  
|         |                              | Other         |         |   | (53     | ) |         |      | 337     |   |         |   | (38     | )
|         |                              |               |         |   |         |   |         |      |        
|         |                              | $             | (14,457 | ) |         | $ | (31,556 | )    |         |   | (49,527 | )
|         |                              |               |         |   |         |   |         |      |        
|         | Property and equipment, net: |               |         |   |         |   |         |      |         |   |         |   |        
|         |                              | United States |         | $ | 11,844  |   |         | $    | 5,946   |   |         |   | 8,843   |  
|         |                              | Europe        |         |   | 167     |   |         |      | 227     |   |         |   | 244     |  
|         |                              | Asia          |         |   | 8       |   |         |      | 13      |   |         |   | 19      |  
|         |                              |               |         |   |         |   |         |      |        
|         |                              | $             | 12,019  |   |         | $ | 6,186   |      |         |   | 9,106   |  
|         |                              |               |         |   |         |   |         |      |        
|         | Net Assets:                  |               |         |   |         |   |         |      |         |   |         |   |        
|         |                              | United States |         | $ | 116,730 |   |         | $    | 107,292 |   |         |   | 136,089 |  
|         |                              | Europe        |         |   | 2,465   |   |         |      | 4,392   |   |         |   | (1,221  | )
|         |                              | Asia          |         |   | (1,173  | ) |         |      | (631    | ) |         |   | (259    | )
|         |                              | Other         |         |   | 416     |   |         |      | 526     |   |         |   | 188     |  
|         |                              |               |         |   |         |   |         |      |        
|         |                              | $             | 118,438 |   |         | $ | 111,579 |      |         |   | 134,797 |  
|         |                              |               |         |   |         |   |         |      |        



F-35



---



##### Table of Contents



CALIPER LIFE SCIENCES, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                     
|--- | ------------------------------------
|19. | Quarterly Financial Data (Unaudited)



|                                 |  |         |         |   |         |   |        |         |  |   |         |   |  |   |        |  
|-------------------------------- |  | ------- | ------- | - | ------- | - | ------ | ------- |  | - | ------- | - |  | - | ------ | -
|                                 |  | First   |         |   | Second  |   |        | Third   |  |   | Fourth  |  
|                                 |  | Quarter |         |   | Quarter |   |        | Quarter |  |   | Quarter |  
|                                 |  |         |         |   |         |   |        |         |  |   |         |  
|Year ended December 31, 2005     |  |         |         |   |         |   |        |         |  |   |         |   |  |   |        |  
|Total revenue                    |  | $       | 18,402  |   |         | $ | 20,333 |         |  | $ | 21,332  |   |  | $ | 26,942 |  
|Gross profit(1)                  |  |         | 7,956   |   |         |   | 9,578  |         |  |   | 9,192   |   |  |   | 12,032 |  
|Operating loss                   |  |         | (4,866  | ) |         |   | (4,133 | )       |  |   | (4,130  | ) |  |   | (1,420 | )
|Net loss                         |  |         | (4,930  | ) |         |   | (4,186 | )       |  |   | (3,852  | ) |  |   | (1,489 | )
|Basic and diluted loss per share |  | $       | (0.16   | ) |         | $ | (0.14  | )       |  | $ | (0.13   | ) |  | $ | (0.03  | )
|Year ended December 31, 2004     |  |         |         |   |         |   |        |         |  |   |         |   |  |   |        |  
|Total revenue                    |  | $       | 16,933  |   |         | $ | 18,922 |         |  | $ | 20,181  |   |  | $ | 24,091 |  
|Gross profit(1)                  |  |         | 4,808   |   |         |   | 6,432  |         |  |   | 7,196   |   |  |   | 7,797  |  
|Operating loss                   |  |         | (10,155 | ) |         |   | (9,659 | )       |  |   | (5,326  | ) |  |   | (7,402 | )
|Net loss                         |  |         | (10,036 | ) |         |   | (9,473 | )       |  |   | (5,129  | ) |  |   | (6,918 | )
|Basic and diluted loss per share |  | $       | (0.35   | ) |         | $ | (0.33  | )       |  | $ | (0.17   | ) |  | $ | (0.23  | )






|    |                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Gross profit refers to total product and service revenue, less
    costs associated with those revenues. Costs related to contract
    revenues are included within research and development expenses
    in the accompanying statements of operations.





|    |                 
|--- | ----------------
|20. | Subsequent Event



F-36



---



##### Table of Contents



Caliper Life Sciences, Inc.


Schedule II  VALUATION AND QUALIFYING
ACCOUNTS


|                                            |  |                |        |  |            |   |        |            |  |            |        |  |  |   |        | 
|------------------------------------------- |  | -------------- | ------ |  | ---------- | - | ------ | ---------- |  | ---------- | ------ |  |  | - | ------ | 
|                                            |  | Balance        |        |  | Additions  |   |        |            |  |           
|                                            |  | at             |        |  | Charged to |   |        |            |  | Balance at |       
|                                            |  | Beginning      |        |  | Costs and  |   |        |            |  | End of     |       
|                                            |  | Period         |        |  | Expenses   |   |        | Deductions |  |            | Period | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|                                            |  | (In thousands) |       
|Year ended December 31, 2005:               |  |                |        |  |            |   |        |            |  |            |        |  |  |   |        | 
|Allowance for doubtful accounts             |  | $              | 475    |  |            | $ | 121    |            |  | $          | 114    |  |  | $ | 482    | 
|Valuation allowance for deferred tax assets |  |                | 62,687 |  |            |   | 1,461  | (1)        |  |            |       |  |  |   | 64,148 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|                                            |  | $              | 63,162 |  |            | $ | 1,582  |            |  | $          | 114    |  |  | $ | 64,630 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|Year ended December 31, 2004:               |  |                |        |  |            |   |        |            |  |            |        |  |  |   |        | 
|Allowance for doubtful accounts             |  | $              | 252    |  |            | $ | 244    |            |  | $          | 21     |  |  | $ | 475    | 
|Valuation allowance for deferred tax assets |  |                | 47,057 |  |            |   | 15,630 | (1)        |  |            |       |  |  |   | 62,687 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|                                            |  | $              | 47,309 |  |            | $ | 15,874 |            |  | $          | 21     |  |  | $ | 63,162 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|Year ended December 31, 2003:               |  |                |        |  |            |   |        |            |  |            |        |  |  |   |        | 
|Allowance for doubtful accounts             |  | $              | 119    |  |            | $ | 263    |            |  | $          | 130    |  |  | $ | 252    | 
|Valuation allowance for deferred tax assets |  |                | 33,220 |  |            |   | 13,837 | (1)        |  |            |       |  |  |   | 47,057 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 
|                                            |  | $              | 33,339 |  |            | $ | 14,100 |            |  | $          | 130    |  |  | $ | 47,309 | 
|                                            |  |                |        |  |            |   |        |            |  |            |        | 






|    |                                
|--- | -------------------------------
|(1) | Charged to deferred tax expense

F-37



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##### Table of Contents



EXHIBIT INDEX


|        |    |                         |  |                                                                                                                                                                       
|------- | -- | ----------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 2  | .1(15)                  |  | Stock Purchase Agreement, by and among Caliper, Berwind
    Corporation and The Berwind Company LLC, dated June 9, 2003.                                              
|        | 2  | .2(15)                  |  | Amendment No. 1 to the Stock Purchase Agreement, by and
    among Caliper, Berwind Corporation and The Berwind Company LLC,
    dated July 10, 2003.                  
|        | 2  | .3(18)                  |  | Amendment No. 2 to the Stock Purchase Agreement, by and
    among Caliper, Berwind Corporation and The Berwind Company LLC,
    dated April 1, 2004.                  
|        | 2  | .4(19)                  |  | Agreement and Plan of Merger, among Caliper Life Sciences, Inc.,
    Caliper Services, Inc. and NovaScreen Biosciences Corporation,
    dated as of September 7, 2005.
|        | 2  | .5                      |  | Agreement and Plan of Merger, among Caliper Life Sciences, Inc.,
    Caliper Holdings, Inc. and Xenogen Corporation, dated as of
    February 10, 2006.               
|        | 3  | .1(18)                  |  | Amended and Restated Certificate of Incorporation of Caliper.                                                                                                         
|        | 3  | .2(8)                   |  | Certificate of Designation Of Series A Junior Participating
    Preferred Stock.                                                                                      
|        | 3  | .3(1)                   |  | Restated Bylaws of Caliper.                                                                                                                                           
|        | 3  | .4(18)                  |  | Amendment No. 1 to Bylaws of Caliper.                                                                                                                                 
|        | 4  | .1                      |  | Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.                                                                                                                  
|        | 4  | .2(20)                  |  | Specimen Stock Certificate.                                                                                                                                           
|        | 4  | .3(9)                   |  | Rights Agreement, dated as of December 18, 2001, between
    Caliper and Wells Fargo Bank Minnesota, N.A., as Rights Agent.                                           
|        | 10 | .1(2)                   |  | Lease Agreement, dated December 1, 1998, between Caliper
    and 605 East Fairchild Associates, L.P.                                                                  
|        | 10 | .2(2)(3)                |  | 1996 Equity Incentive Plan.                                                                                                                                           
|        | 10 | .3(2)(3)                |  | 1999 Equity Incentive Plan.                                                                                                                                           
|        | 10 | .4(2)(3)                |  | 1999 Employee Stock Purchase Plan.                                                                                                                                    
|        | 10 | .5(2)(3)                |  | 1999 Non-Employee Directors Stock Option Plan.                                                                                                                       
|        | 10 | .6(3)(20)               |  | Form of Grant Agreement for 1999 Equity Incentive
    Plan  Option Awards.                                                                                           
|        | 10 | .7(3)(20)               |  | Form of Grant Agreement for 1999 Equity Incentive
    Plan  Restricted Stock Unit Awards.                                                                            
|        | 10 | .8(3)(20)               |  | Form of Grant Agreement for 1999 Non-Employee Directors
    Stock Option Plan.                                                                                       
|        | 10 | .9(2)(3)                |  | Form of Indemnification Agreement entered into between Caliper
    and its directors and executive officers.                                                          
|        | 10 | .10(2)(4)               |  | Collaboration Agreement, dated May 2, 1998, between Caliper
    and Hewlett-Packard Company (now Agilent Technologies, Inc.).                                         
|        | 10 | .11(3)(20)              |  | Form of Stock Option Grant Agreement for Acquisition Equity
    Incentive Plan.                                                                                       
|        | 10 | .12(3)(20)              |  | Form of Stock Award Agreement for Acquisition Equity Incentive
    Plan (pro rata vesting).                                                                           
|        | 10 | .13(3)(20)              |  | Form of Stock Award Agreement for Acquisition Equity Incentive
    Plan (5 year cliff vesting).                                                                       
|        | 10 | .17(3)(20)              |  | Non-Employee Directors Cash Compensation Plan.                                                                                                                       
|        | 10 | .18(3)(11)              |  | Caliper Performance Bonus Plan.                                                                                                                                       
|        | 10 | .19(3)(20)              |  | Employment Offer Letter dated November 30, 2004 between
    Caliper and Mr. Thomas T. Higgins.                                                                        
|        | 10 | .20(3)(11)              |  | Summary Cash Compensation Sheet.                                                                                                                                      
|        | 10 | .23(2)(3)               |  | The Corporate Plan for Retirement Select Plan Adoption Agreement
    and related Basic Plan Document.                                                                 
|        | 10 | .27(6)                  |  | Lease Agreement, dated June 23, 2000 and effective
    July 5, 2000, between Caliper and Martin CBP Associates,
    L.P.                                              
|        | 10 | .29(3)(20)              |  | Key Employee Change of Control and Severance Benefit Plan.                                                                                                            
|        | 10 | .30(5)(8)               |  | Cross-License Agreement, dated March 12, 2001 between
    Aclara Biosciences, Inc. and Caliper.                                                                       



---



##### Table of Contents



|        |    |                         |  |                                                                                                                                                                                                                        
|------- | -- | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .32(4)(7)               |  | Settlement Agreement and Mutual General Release, dated
    March 12, 2001 between Aclara Biosciences, Inc. and Caliper.                                                                                                
|        | 10 | .39(3)(9)               |  | 2001 Non-Statutory Stock Option Plan.                                                                                                                                                                                  
|        | 10 | .46(3)(20)              |  | Form of Grant Agreement for 2001 Non-Statutory Stock Option Plan.                                                                                                                                                      
|        | 10 | .48(3)(10)              |  | Key Employee Agreement, dated July 1, 2002, between Caliper
    and Dr. Daniel Kisner.                                                                                                                                 
|        | 10 | .52(4)(16)              |  | Sole Commercial Patent License Agreement, effective
    September 1, 1995, between UT-Battelle, LLC, the successor
    to Lockheed Martin Energy Research Corporation, and Caliper, as
    amended on November 1, 2002.
|        | 10 | .55(4)(12)              |  | Collaboration Agreement, dated June 4, 2003, between
    Caliper and Bio-Rad Laboratories, Inc.                                                                                                                        
|        | 10 | .56(3)(13)              |  | Key Employee Agreement, dated July 14, 2003, between
    Caliper and E. Kevin Hrusovsky.                                                                                                                               
|        | 10 | .62(3)(14)              |  | Acquisition Equity Incentive Plan.                                                                                                                                                                                     
|        | 10 | .63(3)(17)              |  | Key Employee Agreement Amendment, dated December 24, 2003,
    between Caliper and Dr. Daniel L. Kisner.                                                                                                               
|        | 10 | .64(3)(17)              |  | Consulting Agreement, dated January 1, 2004, between
    Caliper and Dr. David V. Milligan.                                                                                                                            
|        | 10 | .66(4)(17)              |  | Collaboration and Supply Agreement, dated January 9, 2004,
    among Caliper, Zymark Corporation and Affymetrix, Inc.                                                                                                  
|        | 10 | .67(3)                  |  | Offer Letter dated September 7, 2005 between Caliper Life
    Sciences, Inc. and David M. Manyak, Ph.D.                                                                                                                
|        | 21 | .1                      |  | Subsidiaries of the Registrant.                                                                                                                                                                                        
|        | 23 | .1                      |  | Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm.                                                                                                                                       
|        | 24 | .1                      |  | Power of Attorney (reference is made to the signature page of
    this report).                                                                                                                                        
|        | 31 | .1                      |  | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                
|        | 31 | .2                      |  | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                
|        | 32 | .1                      |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                        
|        | 32 | .2                      |  | Certification Pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002.                                                                                        






| |     |                                                                                                                                                                                                                    
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Previously filed as Exhibit 3.4 to our Registration
    Statement on
    Form S-1, as
    amended, File
    No. 333-88827,
    filed on October 12, 1999 and incorporated by reference
    herein.                 
|
| | (2) | Previously filed as the like-numbered Exhibit to our
    Registration Statement on
    Form S-1, as
    amended, File
    No. 333-88827,
    filed on October 12, 1999 and incorporated by reference
    herein.   
|
| | (3) | Management contract or compensatory plan or arrangement.                                                                                                                                                           
|
| | (4) | Confidential treatment has been granted for a portion of this
    exhibit.                                                                                                                                         
|
| | (5) | Previously filed as the like-numbered exhibit to Annual Report
    of Form 10-K for
    the year ended December 31, 1999 and incorporated by
    reference herein.                                                 
|
| | (6) | Previously filed as the like-numbered Exhibit to our
    Registration Statement on
    Form S-1, as
    amended, File
    No. 333-45942,
    filed on September 15, 2000, and incorporated by reference
    herein.
|
| | (7) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended March 31, 2001 and incorporated by
    reference herein.                                                         
|
| | (8) | Previously filed as Exhibit 99.1 to Current Report on
    Form 8-K filed
    December 19, 2001 and incorporated by reference herein.                                                                               
|
| | (9) | Previously filed as Exhibit 99.1 to our Registration
    Statement on
    Form S-8, File
    No. 333-76636,
    filed January 11, 2002 and incorporated by reference herein.                                       



|     |                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended September 30, 2002 and incorporated
    by reference herein.



---



##### Table of Contents





|     |                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Previously filed as the like-numbered Exhibit to Current Report
    on Form 8-K filed
    March 16, 2005 and incorporated by reference herein.                               
|    
|(12) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended June 30, 2003 and incorporated by
    reference herein.                    
|    
|(13) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended September 30, 2003 and incorporated
    by reference herein.               
|    
|(14) | Previously filed as Exhibit 99.1 to our Registration
    Statement on
    Form S-8, File
    No. 333-106946,
    filed June 10, 2003 and incorporated by reference herein.   
|    
|(15) | Previously filed as the like-numbered Exhibit to
    Form 8-K filed
    July 25, 2003 and incorporated by reference herein.                                                  
|    
|(16) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2002 and incorporated by reference
    herein.                            
|    
|(17) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2003 and incorporated by reference
    herein.                            
|    
|(18) | Previously filed as the like-numbered Exhibit to
    Form 10-Q for the
    quarterly period ended March 31, 2004 and incorporated by
    reference herein.                   
|    
|(19) | Previously filed as Exhibit 2.1 to our Registration
    Statement on
    Form S-3, File
    No. 333-129-192,
    filed October 21, 2005 and incorporated by reference herein.
|    
|(20) | Previously filed as the like-numbered Exhibit to
    Form 10-K for the
    year ended December 31, 2004 and incorporated by reference
    herein.