##### Table of Contents



UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2005oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          
    to          .   Commission File Number 0-27316
  MOLECULAR DEVICES
    CORPORATION
 (Exact name of Registrant as
    Specified in Its Charter)
  DELAWARE

94-2914362(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification No.)1311 ORLEANS DRIVE,
    SUNNYVALE, CALIFORNIA(Address of Principal
    Executive Offices)

94089(Zip code)   (408) 747-1700
 (Registrants Telephone Number, Including Area Code)
  Securities registered pursuant to Section 12(b) of the
    Act:
 NONE
  Securities registered pursuant to Section 12(g) of the
    Act:
 COMMON STOCK, $.001 PAR VALUE
 (Title of Class)
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.
  *
    Excludes approximately 7,854,221 shares of common stock
    held by directors, officers and holders of 5% or more of the
    registrants outstanding common stock at June 30,
    2005. Exclusion of shares held by any person should not be
    construed to indicate that such person possesses the power,
    direct or indirect, to direct or cause the direction of the
    management or policies of the registrant, or that such person is
    controlled by or under common control with the registrant.




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TABLE OF
    CONTENTS
   
 PART IItem 1.

Business


1The Company


1Industry
    Background


1Our Products


3Customer Service


8Research and
    Development


9Marketing and
    Customers


9Manufacturing


10Patents and
    Proprietary Technologies


10Competition


10Government
    Regulation


11Employees


11Available
    Information


11Item 1A.

Risk Factors


11Item 1B.

Unresolved Staff
    Comments


22Item 2.

Properties


22Item 3.

Legal
    Proceedings


22Item 4.

Submission of
    Matters to a Vote of Security Holders


23PART IIItem 5.

Market for
    Registrants Common Equity, Related Stockholder Matters and
    Issuer Purchases of Equity Securities


23Item 6.

Selected
    Consolidated Financial Data


24Item 7.

Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations


25Item 7A.

Quantitative and
    Qualitative Disclosures About Market Risk


35Item 8.

Financial
    Statements and Supplementary Data


35Item 9.

Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure


36Item 9A.

Controls and
    Procedures


36Item 9B.

Other
    Information


38PART IIIItem 10.

Directors and
    Executive Officers of the Registrant


38Item 11.

Executive
    Compensation


39Item 12.

Security Ownership
    of Certain Beneficial Owners and Management and Related
    Stockholder Matters


39Item 13.

Certain
    Relationships and Related Transactions


39Item 14.

Principal
    Accountant Fees and Services


39PART IVItem 15.

Exhibits and
    Financial Statement Schedules


39SIGNATURES


42EXHIBIT 10.55EXHIBIT 10.56EXHIBIT 21.1EXHIBIT 23.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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Except for the historical information contained herein, this
    Annual Report on
    Form 10-K
    contains forward-looking statements within the
    meaning of Section 21E of the Securities Exchange Act of
    1934, as amended, and Section 27A of the Securities Act of
    1933, as amended. For this purpose, any statements that are not
    statements of historical fact may be deemed to be
    forward-looking statements. Words such as believes,
    anticipates, plans,
    predicts, expects,
    estimates, intends, will,
    continue, may, potential,
    should and similar expressions are intended to
    identify forward-looking statements. There are a number of
    important factors that could cause our results to differ
    materially from those indicated by these forward-looking
    statements, including, among others, those discussed in
    Item 1A  Risk Factors,
    Item 7  Managements Discussion
    and Analysis of Financial Condition and Results of
    Operations,
    Item 7A  Quantitative and Qualitative
    Disclosures About Market Risk, and the risks detailed from
    time to time in the Companys future Securities and
    Exchange Commission (SEC) reports. Neither we nor
    any other person assumes responsibility for the accuracy and
    completeness of these statements. We assume no duty to update
    any of the forward-looking statements after the date of this
    report or to conform these statements to actual results.
    Accordingly, we caution readers not to place undue reliance on
    these statements.
 PART I  Item 1.
    Business. The
    Company   Industry
    Background       1




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High-Throughput
    Imaging
  ® tm ,
  Industrialization
    Safety
    Profiling
   2




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Our
    Products    Life
    Sciences Research Products
  ® ® ® ®
  Microplate
    Detection
  ® ®
    SpectraMax
  first-of-a-kind first-of-a-kind
  
    EMax®.  This
    product is aimed at the market for traditional microplate
    readers that do not require kinetic capability. We introduced it
    to provide a reader for customers in academia and other
    customers with restricted capital budgets. 3




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
    VMax®.  This
    was the first microplate reader to offer kinetic read capability
    and is designed to address the needs of biochemists.
    VersaMaxtm.  The
    VersaMax is our low cost variable wavelength offering that
    provides kinetic capability and temperature control.
    SpectraMax 340PC384.  This product is a visible
    range microplate spectrophotometer, offering tunability and the
    additional capability of our patented
    PathCheck®
    Sensor technology, which corrects common variability problems
    across wells of microplates.
    SpectraMax 190.  The predecessor to this
    product was the worlds first microplate reader that
    incorporated a monochromator for continuous wavelength
    selection. Wavelength selection provides for enhanced
    convenience and flexibility in assay design. In addition, the
    SpectraMax 190 also includes our patented PathCheck Sensor
    technology.
    SpectraMax Plus384.  The SpectraMax Plus384
    combines the high-throughput of a microplate reader with the
    performance of a cuvette-based spectrophotometer as a result of
    our patented PathCheck Sensor technology. It is capable of
    reading wavelengths as short as 190 nanometers and as long as
    1,000 nanometers, the equivalent range to a spectrophotometer,
    and is compatible with both
    96-well and
    384-well
    microplates.
    Gemini XPS.  Gemini was the worlds first
    dual-scanning microplate spectrofluorometer, a configuration
    that allows the user to automatically optimize the instrument
    for particular assays. The Gemini XPS, introduced in 2004, is
    the most sensitive version of Gemini yet and is capable of
    fluorescence, luminescence and time-resolved fluorescence
    measurements.
    Gemini EM.  The Gemini EM features the ability
    to read microplates from either the top or the bottom, a
    capability that enables it to perform complex cell-based assays.
    LMax II384.  LMax was our first reader to
    offer customers sensitive luminescence detection in a bench-top
    instrument. The second generation of LMax adds improved
    sensitivity,
    384-well
    detection and the capability to integrate with laboratory robots.
    SpectraMax
    M2/M2e.  These
    instruments incorporate the dual-scanning monochromator
    technology of the Gemini family into a multimode reader with
    both absorbance and fluorescence detection. SpectraMax
    M2/M2e
    can read 96 and 384 well microplates using any of four
    different scanning techniques. This combination of features
    makes the SpectraMax
    M2/M2e
    highly versatile instruments capable of a wide range of
    applications.
    SpectraMax M5.  Introduced in 2004, this
    instrument expands our multimode reader family by offering the
    performance features of the SpectraMax M2 with the flexibility
    of five different detection modes. Our most versatile benchtop
    reader, the SpectraMax M5 is capable of absorbance, fluorescence
    intensity, fluorescence polarization, time-resolved fluorescence
    and luminescence measurements.  FlexStation
  plate-to-plate 384
  tm
 4




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GenePix
    Microarray Systems
  ®
  
    GenePix 4000B.  The GenePix 4000B is the
    fastest and most compact microarray scanner on the market today.
    Unlike most commercially available scanners, this instrument
    acquires data simultaneously at two wavelengths, resulting in
    superior speed and a low error rate. Like all of our microarray
    scanners, the GenePix 4000B comes with our popular and
    user-friendly GenePix Pro software for data acquisition and
    analysis.
    GenePix Professional 4200A.  This instrument
    offers the performance of the GenePix 4000B with additional
    features such as four-color scanning and enhanced flexibility.
    An optional accessory, the Autoloader 4200AL, automates the
    process of introducing microarrays to the instrument, an
    important feature for high-volume laboratory environments.
    GenePix Personal 4100A.  This instrument offers
    the superior performance of the GenePix family in a lower-cost,
    more compact version that addresses the needs of the individual
    researcher.
    Acuity®4.0.  This software package provides
    applications for advanced users, including data warehousing,
    sophisticated data analysis and visualization applications. It
    is compatible with the GenePix family of scanners as well as
    other commercially available microarray platforms.  MetaMorph
    Imaging Software
    
    MetaMorph®.  MetaMorph
    software is a
    state-of-the-art
    software package for capturing and analyzing cellular images.
    MetaMorphs functions include control of a wide variety of
    imaging devices as well as a large menu of tools for image
    processing and analysis.
    MetaFluor®.  MetaFluor
    software allows researchers to image and analyze ratiometric
    indicators of intracellular events.
    MetaVuetm.  A
    lower-cost version of MetaMorph, MetaVue is an entry-level
    product tailored to common imaging applications.
    MetaPlayertm.  MetaPlayer
    is a standalone visualization software program designed for
    viewing already-collected imaging experiments. The program plays
    multi-dimensional movies in 2D, 3D or 4D.    Cellular
    Neurosciences
   5




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
    Digidata 1322A.  The Digidata 1322A is a
    high-speed, low-noise data acquisition system.
    pCLAMP 9.0.  pCLAMP 9.0 is a software package
    for acquisition and analysis of electrophysiological data.
    MultiClamp 700B.  MultiClamp 700B is used for
    high-speed current clamp, patch clamp, voltammetry/amperometry,
    ion-selective measurement, and bilayer recordings.
    Axopatch 200B.  Axopatch 200B patch clamp is
    the latest version of the patch-clamp amplifier incorporating
    Capacitor-Feedback technology for single-channel recording, and
    resistive-feedback for whole-cell recording.  Liquid
    Handling
  state-of-the-art
  Threshold
    System
    Drug
    Discovery Products
    FLIPR
    System and Reagent Kits
    
    FLIPR TETRA.  This product is the fourth
    generation FLIPR instrument. It combines all of the benefits of
    preceding versions of FLIPR with new capabilities in a
    completely redesigned, compact platform. FLIPR TETRA features
    simultaneous liquid transfer of samples in 96, 384 and
    1,536 well microplates, allowing 6




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
    FLIPR Assay Kits.  This product family includes
    the FLIPR Calcium Assay Kit, the FLIPR Calcium 3 Kit and two
    formulations of the FLIPR Membrane Potential Kit. By eliminating
    a step in the assay protocol, these kits can significantly
    increase throughput, reduce costs and increase screening
    efficiency. The FLIPR Calcium Assay Kit addresses the most
    popular assay performed on the FLIPR system for detecting the
    activation of GPCRs. The FLIPR Calcium 3 Kit extends the
    applicability of this assay by allowing researchers to test
    problematic but important targets such as chemokines and other
    small peptides. In addition, this kit offers a significant
    improvement in data quality compared to traditional methods. The
    FLIPR Membrane Potential Kits allow researchers to measure
    changes in the electrical potential across live cell membranes,
    a key indicator of ion channel activity.  Automated
    Electrophysiology
    
    IonWorks Quattro.  This is a turnkey system for
    drug discovery screening and safety profiling that enables
    customers to obtain up to 400,000 data points per year, the
    highest throughput currently available. The system consists of
    an instrument and a family of proprietary consumables.
    PatchXpress 7000A.  This system offers
    automated patch clamping with a high degree of flexibility. It
    is capable of performing tests on the two major types of ion
    channels, voltage-gated and ligand-gated, and generating an
    entire response curve for each cell tested. Like the IonWorks
    Quattro, this system operates using its own proprietary
    consumable plate.
    OpusXpress 6000A.  OpusXpress 6000A is an
    automated solution for the early-stage process of ion channel
    target identification, and enables efficient pharmacological
    testing in the later stages of drug discovery research.  High-Throughput
    Imaging Systems
    
    ImageXpress®
    Micro.  This fully-integrated hardware and
    software system for high-throughput imaging features custom
    optics for the most efficient light path and highest resolution
    possible. It is our most compact, cost-effective and modular
    imaging system to date. The system design is optimized for
    speed, utilizing an all-new high-speed laser auto-focus option
    that allows for the acquisition of more than 50,000 wells
    per day. Its small footprint requires minimal lab space, and it
    features an automated door for robotic plate-loading access.
    ImageXpress
    ULTRAtm.  The
    ImageXpress ULTRA imaging system is a fully-integrated true
    point-scanning confocal system for automated acquisition and
    analysis of images for high-throughput cell-based screening. The
    bench-top system utilizes up to four configurable solid-state
    lasers. The throughput and 7




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resolution of the ImageXpress ULTRA is comparable to larger,
    more expensive confocal commercial systems.  
    ImageXpress®
    5000A.  ImageXpress 5000A is an integrated
    hardware and software system capable of very rapid image
    acquisition and sophisticated image analysis. The system can be
    easily upgraded to allow environmental control and liquid
    handling, both of which enable live cell imaging applications.
    Discovery-1tm.  Discovery-1
    offers flexibility and simplicity in a complete high-throughput
    imaging system. It features a patented optical system that fully
    automates the complex process of obtaining high-quality cellular
    images.
    MetaXpress and AcuityXpress.  Our imaging
    systems incorporate MetaXpress software, which is built on our
    industry-leading
    MetaMorph®
    software for cellular imaging. In addition, an option available
    with all of our imaging systems is AcuityXpress cellular
    informatics software, designed for enterprise-level data mining
    of high-throughput screening experiments.
    Transfluor®.  Transfluor
    is a patented, cell-based fluorescence technology that is used
    in conjunction with high-throughput imaging systems. It is the
    most versatile technology available for screening GPCRs. It has
    been successfully validated on over 90 GPCRs and is unique in
    its ability to test all of the different categories of GPCRs.
    Transfluor has been established as a gold-standard
    high-throughput imaging assay by many pharmaceutical and
    biotechnology companies and is considered an integral part of
    their drug discovery processes.  Analyst
    System and Reagent Kits
    
    Analyst GT.  This multi-mode system features
    seven detection options and the ability to read 96, 384 and
    1,536 well microplates. With the capacity to test over
    400,000 wells per day, Analyst GT is designed to address
    the industrialized screening needs of the drug discovery market.
    IMAP Assay Kits.  A proprietary bead-based
    platform, IMAP allows researchers to determine the activity of
    kinases, phosphatases and phosphodiesterases in a simple,
    non-radioactive format. We currently offer five kits that
    feature the most popular kinases for screening, as well as kits
    that enable our customers to apply this extremely flexible
    technology to their own protein kinase targets. Customer
    Service   8




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Research
    and Development      
    broadening our technology solution, including development of new
    proprietary reagent kits and additional solutions for automated
    ion channel testing and high-throughput imaging;
    providing more sensitive quantitative evaluation of biological
    events;
    providing greater throughput capability, especially with smaller
    sample volumes; and
    developing increasingly sophisticated data management and
    analysis capability. Marketing
    and Customers        
    political, social and economic instability;
    trade restrictions and changes in tariffs;
    the impact of business cycles and downturns in economies outside
    of the United States;
    unexpected changes in regulatory requirements that may limit our
    ability to export our products or sell into particular
    jurisdictions;
    import and export license requirements and restrictions;
    difficulties and costs of staffing, managing and monitoring
    geographically disparate operations;
    difficulties in maintaining effective communications with
    employees and customers due to distance, language and cultural
    barriers; 9




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
    disruptions in international transport or delivery;
    difficulties in protecting our intellectual property rights,
    particularly in countries where the laws and practices do not
    protect proprietary rights to as great an extent as do the laws
    and practices of the United States;
    difficulties in enforcing agreements through
    non-U.S. legal
    systems;
    longer payment cycles and difficulties in collecting receivables;
    potentially adverse tax consequences; and
    foreign currency exchange fluctuations. Manufacturing   Patents
    and Proprietary Technologies       Competition     10




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ease-of-use,
   Government
    Regulation   Employees   Available
    Information  Form 10-K, Form 10-Q, Form 8-K, 1-800-SEC-0330.
  Item 1A.
    Risk
    Factors.    Variations
    in the amount of time it takes for us to sell our products and
    collect accounts receivable and the timing of customer orders
    may cause fluctuations in our operating results, which could
    cause our stock price to decline.
   11




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We
    depend on orders that are received and shipped in the same
    quarter and therefore have limited visibility of future product
    shipments.
    Many
    of our current and potential competitors have significantly
    greater resources than we do, and increased competition could
    impair sales of our products.
     12




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If we
    are not successful in developing new and enhanced products, we
    may lose market share to our competitors.
  first-to-market
  We
    must expend a significant amount of time and resources to
    develop new products, and if these products do not achieve
    commercial acceptance, our operating results may
    suffer.
    We
    obtain some of the consumables, components and subassemblies
    used with or included in our systems from a single source or
    limited group of suppliers, and the partial or complete loss of
    one of these suppliers could cause customer supply or production
    delays and a substantial loss of revenues.
   13




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
    our suppliers may cease or interrupt production of required
    consumables, components or subassemblies or otherwise fail to
    supply us with an adequate supply of required consumables,
    components or subassemblies for a number of reasons, including
    contractual disputes with our suppliers or adverse financial
    developments at or affecting the supplier;
    we have reduced control over the pricing of third party-supplied
    consumables, components and subassemblies, and our suppliers may
    be unable or unwilling to supply us with required consumables,
    components and subassemblies on commercially acceptable terms,
    or at all;
    we have reduced control over the timely delivery of third
    party-supplied consumables, components and
    subassemblies; and
    our suppliers may be unable to develop technologically advanced
    products to support our growth and development of new systems.    We may
    encounter manufacturing and assembly problems or delays, which
    could result in lost revenues.
      scale-up scale-up
 14




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If we
    deliver products with defects, our credibility will be harmed
    and the sales and market acceptance of our products will
    decrease.
    We
    have significantly expanded our international operations, which
    exposes us to risks inherent in international business
    activities.
      
    political, social and economic instability;
    trade restrictions and changes in tariffs;
    the impact of business cycles and downturns in economies outside
    of the United States;
    unexpected changes in regulatory requirements that may limit our
    ability to export our products or sell into particular
    jurisdictions;
    import and export license requirements and restrictions;
    difficulties and costs of staffing, managing and monitoring
    geographically disparate operations;
    difficulties in maintaining effective communications with
    employees and customers due to distance, language and cultural
    barriers;
    disruptions in international transport or delivery;
    difficulties in protecting our intellectual property rights,
    particularly in countries where the laws and practices do not
    protect proprietary rights to as great an extent as do the laws
    and practices of the United States;
    difficulties in enforcing agreements through
    non-U.S. legal
    systems;
    longer payment cycles and difficulties in collecting
    receivables; and
    potentially adverse tax consequences.     15




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Most
    of our current and potential customers are from the
    pharmaceutical and biotechnology industries and are subject to
    risks faced by those industries.
      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.
    
    assert claims of infringement;
    enforce our patents;
    protect our trade secrets or know-how; or
    determine the enforceability, scope and validity of the
    proprietary rights of others.   16




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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.
      
    the pending patent applications we have filed or to which we
    have exclusive rights may not result in issued patents or may
    take longer than we expect to result in issued patents;
    the claims of any patents which are issued may not provide
    meaningful protection;
    we may not be able to develop additional proprietary
    technologies that are patentable;
    the patents licensed or issued to us or our customers may not
    provide a competitive advantage;
    other companies may challenge patents licensed or issued to us
    or our customers;
    patents issued to other companies may harm our ability to do
    business;
    other companies may independently develop similar or alternative
    technologies or duplicate our technologies; and
    other companies may design around the technologies we have
    licensed or developed.    We may
    have difficulty managing our growth.
   17




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We
    rely upon distributors for product sales and support outside of
    North America.
    If we
    choose to acquire new and complementary businesses, products or
    technologies instead of developing them ourselves, we may be
    unable to complete these acquisitions or may not be able to
    successfully integrate an acquired business or technology in a
    cost-effective and non-disruptive manner.
  ®
  
    the potential disruption of our ongoing business and distraction
    of our management;
    the potential strain on our financial and managerial controls
    and reporting systems and procedures;
    unanticipated expenses and potential delays related to
    integration of the operations, technology and other resources of
    acquired businesses;
    the impairment of relationships with employees, suppliers and
    customers as a result of any integration of new management
    personnel;
    greater than anticipated costs and expenses related to
    restructuring, including employee severance or relocation costs
    and costs related to vacating leased facilities; and
    potential unknown liabilities associated with any acquisition,
    including higher than expected integration costs, which may
    cause our quarterly and annual operating results to fluctuate.     18




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We
    depend on our key personnel, the loss of whom would impair our
    ability to compete.
    Changes
    to financial accounting standards may affect our results of
    operations and cause us to change our business
    practices.
    Changes
    in our effective income tax rate could reduce our
    earnings.
  Share-Based Payment
  Our
    operating results fluctuate and any failure to meet financial
    expectations may disappoint securities analysts or investors and
    result in a decline in our stock price.
    
    customer confidence in the economy, evidenced, in part, by stock
    market levels;
    changes in the domestic and international economic, business and
    political conditions; 19




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
    economic conditions within the pharmaceutical and biotechnology
    industries;
    levels of product and price competition;
    the length of our sales cycle and customer buying patterns;
    the size and timing of individual transactions;
    the timing of new product introductions and product enhancements;
    the mix of products sold;
    levels of international transactions;
    activities of and acquisitions by competitors;
    the timing of new hires and the allocation of our resources;
    changes in foreign currency exchange rates;
    our ability to develop and market new products and control
    costs; and
    changes in U.S. generally accepted accounting principles.      period-to-period
  Failure
    to maintain effective internal controls in accordance with
    Section 404 of the Sarbanes-Oxley Act of 2002 could have a
    material adverse effect on our stock price.
   20




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Our
    stock price is volatile, which could cause stockholders to lose
    a substantial part of their investment in our
    stock.
      
    domestic and international economic, business and political
    conditions;
    economic conditions within the pharmaceutical and biotechnology
    industries;
    our failure to meet our performance estimates or the performance
    estimates of securities analysts;
    changes in financial estimates of our revenues and operating
    results by us or securities analysts;
    changes in buy/sell recommendations by securities
    analysts; and
    the timing of announcements by us or our competitors of
    significant products, contracts or acquisitions or publicity
    regarding actual or potential results or performance thereof.  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.
    Our
    actual results could differ materially from those anticipated in
    our forward-looking statements.
   21




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Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Location(1)

Ownership

Facilities

Lease Expiration1311 Orleans Drive
    Sunnyvale, CA 94089

Leased

Approximately 60,000 square feet
    of office and laboratory space

February 28, 20133280 Whipple Road
    Union City, CA  94587

Leased

Approximately 76,214 square feet
    of office, laboratory and manufacturing space

February 16, 20111312 Crossman Avenue
    Sunnyvale, CA 94089

Leased

Approximately 54,500 square feet
    of office, laboratory and manufacturing space

February 28, 2013402 Boot Road 
    Downingtown, PA 19335

Leased

Approximately 27,900 square feet
    of office, laboratory and manufacturing space

November 15, 2010Oslo, Norway

Leased

Approximately 17,500 square feet
    of office and manufacturing space

January 1, 2007Wokingham, England

Leased

Approximately 14,048 square feet
    of office space

September 2, 2015Tokyo, Japan

Leased

Approximately 4,300 square feet of
    office space

June 30, 2007Osaka, Japan

Leased

Approximately 3,700 square feet of
    office space

March 31, 2007Shanghai, China

Leased

Approximately 3,500 square feet of
    office space

April 9, 2007Munich, Germany

Leased

Approximately 3,500 square feet of
    office space

October 31, 2006Melbourne, Australia

Leased

Approximately 2,200 square feet of
    office space

May 31, 2007Seoul, South Korea

Leased

Approximately 2,100 square feet of
    office space

November 14, 20061411 Marsh Street, Ste 202 
    San Luis Obispo, CA 94301

Leased

Approximately 900 square feet of
    office space

November 30, 2006     (1)
    
    In addition to the properties described above, we lease
    approximately 20,000 square feet of property in Union City,
    California, which we sublease to a third party. We do not use
    this property in our current operations and have not included it
    in the table above.  Item 3.
    Legal
    Proceedings.   22




---



##### Table of Contents



Item 4.
    Submission
    of Matters to a Vote of Security Holders.   PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities.  Market
    Information
      2005


2004High


Low


High


LowFirst Quarter

$
21.32


$
18.27


$
22.32


$
17.64Second Quarter


22.01



18.16



19.70



17.05Third Quarter


21.80



19.95



24.82



17.85Fourth Quarter


28.93



19.45



25.30



18.82   Holders
    Dividends
   23




---



##### Table of Contents



Item 6.
    Selected
    Consolidated Financial Data.    Consolidated
    Statements of Operations Data (in thousands):
  Years Ended
    December 31,2005


2004


2003


2002


2001Revenues

$
181,215


$
148,529


$
115,581


$
102,157


$
92,231Cost of revenues


69,531



56,274



43,256



40,561



35,538Gross profit


111,684



92,255



72,325



61,596



56,693Operating expenses:Research and development


25,281



22,038



18,679



18,002



15,105Selling, general and administrative


59,885



52,469



43,457



35,435



33,381Acquired in-process research and
    development(1)






5,000











12,625Restructuring and other charges(1)


1,427



1,157











Total operating expenses


86,593



80,664



62,136



53,437



61,111Income (loss) from operations(1)


25,091



11,591



10,189



8,159



(4,418
)Gain on sale of equity securities






18,288











Interest expense


(85
)


(187
)










Interest and other income
    (expense), net


(530
)


319



872



1,562



3,806Income (loss) before income taxes


24,476



30,011



11,061



9,721



(612
)Income tax provision


8,580



12,778



3,319



2,916



4,625Net income (loss)

$
15,896


$
17,233


$
7,742


$
6,805


$
(5,237
)Basic net income (loss) per share

$
0.95


$
1.08


$
0.51


$
0.44


$
(0.32
)Diluted net income (loss) per share

$
0.93


$
1.04


$
0.51


$
0.44


$
(0.32
)Shares used in computing basic net
    income (loss) per share


16,783



16,028



15,067



15,348



16,192Shares used in computing diluted
    net income (loss) per share


17,147



16,532



15,179



15,457



16,192   Consolidated
    Balance Sheets Data (in thousands):
  As of
    December 31,2005


2004


2003


2002


2001Cash, cash equivalents and short
    and long-term investments

$
28,908


$
30,175


$
60,110


$
53,783


$
67,257Working capital


62,664



67,556



87,305



84,851



99,422Total assets


257,416



255,229



166,913



162,901



152,361Long-term liabilities


5,479



6,776











Retained earnings (accumulated
    deficit)


7,023



(8,873
)


(26,106
)


(33,848
)


(40,653
)Total stockholders equity


213,073



210,620



145,538



142,804



137,485     (1)
    
    Our 2005 income from operations included a $1.4 million
    charge related to restructuring, associated with the termination
    of employees and the restructuring of an agreement. Our 2004
    income from operations included a 24




---



##### Table of Contents



$5.0 million write-off for the acquisition of in-process
    research and development costs and a $1.2 million charge
    related to restructuring, associated with the acquisition of
    Axon. Our 2001 loss from operations included a
    $12.6 million write-off for the acquisition of in-process
    research and development costs related to our acquisition of
    Cytion S.A.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Overview
            
    political, social and economic instability;
    trade restrictions and changes in tariffs; 25




---



##### Table of Contents




    the impact of business cycles and downturns in economies outside
    of the United States;
    unexpected changes in regulatory requirements that may limit our
    ability to export our products or sell into particular
    jurisdictions;
    import and export license requirements and restrictions;
    difficulties and costs of staffing, managing and monitoring
    geographically disparate operations;
    difficulties in maintaining effective communications with
    employees and customers due to distance, language and cultural
    barriers;
    disruptions in international transport or delivery;
    difficulties in protecting our intellectual property rights,
    particularly in countries where the laws and practices do not
    protect proprietary rights to as great an extent as do the laws
    and practices of the United States;
    difficulties in enforcing agreements through
    non-U.S. legal
    systems;
    longer payment cycles and difficulties in collecting receivables;
    potentially adverse tax consequences; and
    foreign currency exchange fluctuations.  ®
    Critical
    Accounting Policies
   26




---



##### Table of Contents



Revenue
    Recognition
    
    Emerging Issues Task Force, Issue
    No. 00-21,
    Revenue Arrangements with Multiple Deliverables.Revenue arrangements with multiple elements are divided into
    separate units of accounting if the deliverables in the
    arrangement have value to the customer on a stand alone basis,
    there is objective and reliable evidence of the fair value of
    the undelivered elements and there are no rights of return or
    additional performance guarantees by us.
    Statement of Position 97-2, Software Revenue
    Recognition.Revenue earned on software arrangements
    involving multiple elements is allocated to each element based
    on the relative fair values of the elements as determined by
    means of our quoting process and published price lists.
    Staff Accounting Bulletin (SAB) No. 104,
    Revenue Recognition. Revenue is recognized
    when the following four criteria are met: (1) persuasive
    evidence of an arrangement exists; (2) delivery has
    occurred or services have been rendered; (3) the
    sellers price is fixed or determinable; and
    (4) collectibility is reasonably assured.          
    Instruments, software and consumables  We
    recognize revenue with respect to sales of instruments, software
    and consumables at the time that an instrument, software or
    consumable is shipped, in accordance with the shipping terms of
    the invoice. Under FOB Destination terms, we do not recognize
    revenue until the product arrives at the customer site. We
    determine that the SAB 104 criteria have been met through
    receipt of a valid purchase order and issuance by us of either a
    sales order confirmation or an invoice, confirmation of product
    shipment (or receipt, when FOB Destination terms apply),
    issuance of an invoice indicating the price and determination of
    credit-worthiness or, in certain circumstances, receipt of prior
    payment.
    Service, installation and training  Revenue from
    service events not covered by warranty or a service contract is
    recognized upon completion of the service. Service can be
    provided in the field or at our service depot. For a small
    number of products, we offer the option to purchase installation
    services. Installation is billed separately at the time of
    performance and is not part of a package price for instruments.
    We have established a fair value for installation services, as
    installation can be purchased with or without an instrument.
    Further, a third party or the customer can perform the
    installation. Training is billed separately at the time of
    performance and is not part of a package price for instruments.
    Training revenue is recognized upon completion of the training.
    We determine that the SAB 104 criteria have been met
    through receipt of a 27




---



##### Table of Contents



valid purchase order and issuance by us of either a sales order
    confirmation or an invoice, receipt of a customer acknowledgment
    that the service, installation or training has been completed,
    issuance of an invoice indicating the price and determination of
    credit-worthiness or, in certain circumstances, receipt of prior
    payment.  
    Service contracts  Revenue from service
    contracts for our instruments, generally with a one-year term,
    is recognized ratably over the period of coverage. We determine
    that the SAB 104 criteria have been met through receipt of
    a valid purchase order and issuance by us of either a sales
    order confirmation or an invoice, issuance of an invoice
    indicating the price and determination of credit-worthiness or,
    in certain circumstances, receipt of prior payment.
    Technology license agreements  Revenue from
    technology license agreements is recognized upon completion of
    our obligations to the licensee. We determine that the
    SAB 104 criteria have been met through receipt of an
    executed license agreement and determination of
    credit-worthiness or, in certain circumstances, receipt of prior
    payment. We have no ongoing obligations under our current
    technology license agreements.  Warranty
    Accounts
    Receivable
    Inventories
  first-in,
  Goodwill
    and Other Intangible Assets
   28




---



##### Table of Contents



Equity
    Investments
    Income
    Taxes
       29




---



##### Table of Contents



Results
    of Operations
    Years Ended
    December 31,2005


2004


2003Revenues


100.0
%


100.0
%


100.0
%Cost of revenues


38.4



37.9



37.4Gross profit


61.6



62.1



62.6Operating expenses:Research and development


14.0



14.8



16.2Selling, general and administrative


33.0



35.3



37.6Acquired in-process research and
    development






3.4



Restructuring and other charges


0.8



0.8



Income from operations


13.8



7.8



8.8Gain on sale of equity securities






12.3



Interest expense






(0.1
)


Interest and other income
    (expense), net


(0.3
)


0.2



0.8Income before income taxes


13.5



20.2



9.6Income tax provision


4.7



8.6



2.9Net income


8.8
%


11.6
%


6.7
%   Years
    Ended December 31, 2005 and 2004
  Revenues
    Gross
    margin
    Research
    and development expenses
    Selling,
    general and administrative expenses
   30




---



##### Table of Contents



Acquired
    in-process research and development
    Restructuring
    and other charges
      Gain
    on sale of equity securities
    Interest
    expense
    Interest
    and other income (expense), net
    Income
    tax provision
    Years
    Ended December 31, 2004 and 2003
  Revenues
   31




---



##### Table of Contents



Gross
    margin
    Research
    and development expenses
    Selling,
    general and administrative expenses
    Acquired
    in-process research and development
    Restructuring
    and other charges
    Gain
    on sale of equity securities
    Interest
    expense
    Interest
    and other income (expense), net
   32




---



##### Table of Contents



Income
    tax provision
    Liquidity
    and Capital Resources
             33




---



##### Table of Contents




    the progress of our research and development;
    the number and scope of our research and development programs;
    market acceptance and demand for our products;
    the costs that may be involved in enforcing our patent claims
    and other intellectual property rights;
    potential acquisition and technology licensing opportunities;
    the costs associated with repurchasing shares of our common
    stock;
    manufacturing capacity requirements; and
    the costs of expanding our sales, marketing and distribution
    capabilities both in the United States and abroad.      Contractual
    Obligations
    Payments Due by Period2011 andTotal


2006


2007 to 2008


2009 to 2010


ThereafterOperating leases

$
36.9


$
6.7


$
11.2


$
11.2


$
7.8Unconditional purchase obligations


13.4



13.4











Total contractual cash obligations

$
50.3


$
20.1


$
11.2


$
11.2


$
7.8     Recent
    Accounting Pronouncements
   34




---



##### Table of Contents



Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk.    Foreign
    Currency Exchange
    Interest
    and Investment Income
    Debt and
    Interest Expense
    Item 8.
    Financial
    Statements and Supplementary Data.    Financial
    Statements:
  
    Report of Independent Registered Public Accounting Firm;
    Consolidated Balance Sheets as of December 31, 2005 and
    2004;
    Consolidated Statements of Income for each of the three years in
    the period ended December 31, 2005; 35




---



##### Table of Contents




    Consolidated Statements of Stockholders Equity for each of
    the three years in the period ended December 31, 2005;
    Consolidated Statements of Cash Flows for each of the three
    years in the period ended December 31, 2005; and
    Notes to Consolidated Financial Statements.  Financial
    Statement Schedules:
  Schedule II  Valuation
    and Qualifying Accounts
    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures.  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e))
  Managements
    Annual Report on Internal Control over Financial
    Reporting
  15d-15(f). Internal Control  Integrated Framework
   36




---



##### Table of Contents



The Board
    of Directors and Stockholders of Molecular Devices
    Corporation
                  37




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    Item 9B.
    Other
    Information.  successor-in-interest
     PART III  Item 10.
    Directors
    and Executive Officers of the Registrant.  Identification
    of Directors and Executive Officers
    Compliance
    with Section 16(a) of the Exchange Act
    Code of
    Conduct
  Form 8-K
 38




---



##### Table of Contents



Item 11.
    Executive
    Compensation.    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions.    Item 14.
    Principal
    Accountant Fees and Services.   PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules.          ExhibitNumber

Description of
    Document3
.1(1)

Amended and Restated Certificate
    of Incorporation of Registrant3
.2(1)

Bylaws of the Registrant3
.3(5)

Certificate of Amendment to
    Certificate of Incorporation4
.1(1)

Specimen Certificate of Common
    Stock of Registrant10
.1(1)*

1988 Stock Option Plan10
.2(1)*

Form of Incentive Stock Option
    under the 1988 Stock Option Plan10
.3(1)*

Form of Supplemental Stock Option
    under the 1988 Stock Option Plan10
.4(5)*

1995 Employee Stock Purchase Plan10
.6(1)*

Form of Nonstatutory Stock Option
    under the 1995 Non-Employee Directors Stock Option Plan10
.8(1)*

Form of Incentive Stock Option
    under the 1995 Stock Option Plan10
.9(1)*

Form of Nonstatutory Stock Option
    under the 1995 Stock Option Plan10
.10(1)*

Form of Early Exercise Stock
    Purchase Agreement under the 1995 Stock Option Plan10
.11(1)*

Form of Indemnity Agreement
    between the Registrant and its Directors and Executive Officers10
.19(10)*

Amended Key Employee Agreement for
    Joseph D. Keegan, Ph.D., dated July 29, 200410
.20(2)

Exclusive License and Technical
    Support Agreement, dated August 28, 1998, by and between
    the Registrant and Affymax 39




---



##### Table of Contents



ExhibitNumber

Description of
    Document10
.21(2)*

Employee Offer Letter for Timothy
    A. Harkness10
.24(10)*

1995 Non-Employee Directors
    Stock Option Plan, as amended10
.25(10)*

1995 Stock Option Plan, as amended10
.26(3)*

Employee Offer Letter for Patricia
    Sharp10
.27(4)*

LJL BioSystems 1994 Equity
    Incentive Plan and Forms of Agreements10
.28(4)*

LJL BioSystems 1997 Stock Plan and
    Forms of Agreements10
.29(4)*

LJL BioSystems
    1998 Directors Stock Option Plan and Forms of
    Agreements10
.33(6)

Lease Agreement, dated
    May 26, 2000, by and between Aetna Life Insurance Company
    and the Registrant10
.34(7)*

Change in Control Severance
    Benefit Plan10
.35(8)

Rights Agreement, dated
    October 25, 2001, among the Registrant and EquiServe Trust
    Company, N.A.10
.37(5)*

Key Employee Agreement for Tom
    OLenic10
.38(10)*

2001 Stock Option Plan, as amended10
.39(9)

Lease dated May 28, 2002 by
    and between The Irvine Company and the Registrant10
.40(9)*

Letter Agreement, dated
    April 11, 2002, by and between the Registrant and Joseph D.
    Keegan, Ph.D.10
.43 (11)*

Amended Key Employment Agreement
    for Timothy A. Harkness10
.44(11)*

Employee Offer Letter for Alan
    Finkel10
.45(11)*

Employee Offer Letter for Steven
    Davenport10
.46(11)*

Employee Offer Letter for Jan
    Hughes10
.47(11)*

Amended Employee Offer Letter for
    Jan Hughes10
.48(12)*

Non-Employee Director Compensation
    Arrangements10
.49(13)*

Executive Officer Compensation
    Arrangements10
.50(14)*

Form of Stock Option Agreement for
    Non-Employee Director under the 1995 Equity Incentive Plan10
.51(15)

Asset Purchase Agreement, dated as
    of March 9, 2005, by and between Molecular Devices
    Corporation and Xsira Pharmaceuticals, Inc.10
.52(16)*

2005 Equity Incentive Plan10
.53(16)*

Form of Stock Option Agreement
    under the 2005 Equity Incentive Plan10
.54(16)*

Form of Stock Option Agreement for
    Non-Employee Director under the 2005 Equity Incentive Plan10
.55

First Amendment to Lease, dated
    January 27, 2006, by and between the Registrant and Moffett
    Office Park Investors LLC
    (successor-in-interest
    to Aetna Life Insurance Company)10
.56

First Amendment to Lease, dated
    January 30, 2006, by and between the Registrant and The
    Irvine Company LLC21
.1

Subsidiaries of the Registrant23
.1

Consent of Independent Registered
    Public Accounting Firm24
.1

Power of Attorney (contained on
    the signature pages hereto)31
.1

Certification required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)31
.2

Certification required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)32
.1**

Certifications required by
    Rule 13a-14(b)
    or
    Rule 15d-14(b)
    and Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C 1350)     (1)
    
    Incorporated by reference to the similarly described exhibit in
    our Registration Statement on
    Form S-1
    (File
    No. 33-98926),
    as amended.(2)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 1998, and filed
    November 13, 1998. 40




---



##### Table of Contents



(3)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 2000 and filed on
    November 13, 2000.(4)
    
    Incorporated by reference to the similarly described exhibit
    filed with LJL BioSystems Registration Statement on
    Form S-1
    (File
    No. 333-43529)
    declared effective on March 12, 1998.(5)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2001 and filed on
    April 1, 2002.(6)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2000 and filed on
    March 30, 2001.(7)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated March 31, 2001 and filed on
    May 11, 2001.(8)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed October 30, 2001.(9)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2003 and filed on
    March 27, 2003.  (10)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 2004, and filed on
    November 9, 2004.(11)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2004, and filed on
    March 16, 2005.(12)
    
    Incorporated by reference to the information in our definitive
    Proxy Statement pursuant to Regulation 14A filed on
    April 22, 2005, under the heading Executive
    Compensation  Compensation of Directors.(13)
    
    Incorporated by reference to the information in our Current
    Reports on
    Form 8-K
    filed on February 23, 2005 and February 15, 2006.(14)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed on April 18, 2005.(15)
    
    Incorporated by reference to the similarly described exhibit in
    our Quarterly Report on
    Form 10-Q
    dated March 31, 2005 and filed on May 4, 2005.(16)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed on June 1, 2005.*
    
    Management contract or compensatory plan or arrangement.
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the Securities and Exchange Commission.**
    
    The certification attached as Exhibit 32.1 accompanies the
    Annual Report on
    Form 10-K
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    and shall not be deemed filed by the Company for
    purposes of Section 18 of the Securities Exchange Act of
    1934, as amended. 41




---



##### Table of Contents



SIGNATURES  Form 10-K
    By:
    /s/  Joseph D. Keegan, Ph.D.      attorneys-in-fact Form 10-K, attorneys-in-fact attorneys-in-fact
    Signature

Title

Date/s/  Joseph D.
    Keegan, Ph.DJoseph
    D. Keegan, Ph.D.

President, Chief Executive Officer
    and Director (Principal Executive Officer)

March 15, 2006/s/  Timothy A.
    HarknessTimothy
    A. Harkness

Chief Financial Officer and Senior
    Vice President Finance and Operations (Principal Financial and
    Accounting Officer)

March 15, 2006/s/  Moshe H. AlafiMoshe
    H. Alafi

Director

March 15, 2006/s/  David L.
    AndersonDavid
    L. Anderson

Director

March 15, 2006/s/  A. Blaine BowmanA.
    Blaine Bowman

Director

March 15, 2006/s/  Paul
    Goddard, Ph.D.Paul
    Goddard, Ph.D.

Director

March 15, 2006/s/  Andre F. MarionAndre
    F. Marion

Director

March 15, 2006 42




---



##### Table of Contents



Signature

Title

Date/s/  Harden M.
    McConnell, Ph.D.Harden
    M. McConnell, Ph.D.

Director

March 15, 2006/s/  J. Allan
    Waitz, Ph.D.J.
    Allan Waitz, Ph.D.

Director

March 15, 2006/s/  Alan
    Finkel, Ph.D.Alan
    Finkel, Ph.D.

Director

March 15, 2006  43




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                44




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2005


2004(In thousands, except share and
    per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
28,908


$
30,175Accounts receivable, net of
    allowance for doubtful accounts of $442 and $339


41,197



36,995Inventories, net


23,197



25,785Deferred tax assets


5,873



9,654Prepaid and other current assets


2,353



2,780Total current assets


101,528



105,389Equipment and leasehold
    improvements, net


9,902



11,762Goodwill


102,835



104,228Developed technology


25,152



16,339Intangible and other assets


17,999



17,511$
257,416


$
255,229LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
7,676


$
7,085Accrued compensation


9,759



8,447Other accrued liabilities


13,623



14,995Deferred revenue


7,806



7,306Total current liabilities


38,864



37,833Other long-term liabilities


993



1,452Deferred tax liabilities


4,486



5,324Total liabilities


44,343



44,609Commitments and contingencies
    (Note 3)Stockholders equity:Preferred stock, $.001 par
    value; 3,000,000 shares authorized, no shares issued or
    outstanding






Common stock, $.001 par value;
    60,000,000 shares authorized; 20,076,495 and
    19,363,579 shares issued and 16,681,727 and 17,152,610
    outstanding at December 31, 2005 and 2004, respectively


20



19Additional paid-in capital


271,300



262,676Retained earnings (accumulated
    deficit)


7,023



(8,873
)Treasury stock, at cost; 3,394,768
    and 2,429,446 shares at December 31, 2005 and 2004,
    respectively


(66,519
)


(46,595
)Deferred stock compensation






(113
)Accumulated other comprehensive
    income


1,249



3,506Total stockholders equity


213,073



210,620$
257,416


$
255,229    45




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF INCOME
  Years Ended
    December 31,2005


2004


2003(In thousands, except per share
    amounts)Revenues

$
181,215


$
148,529


$
115,581Cost of revenues


69,531



56,274



43,256Gross profit


111,684



92,255



72,325Operating expenses:Research and development


25,281



22,038



18,679Selling, general and administrative


59,885



52,469



43,457Acquired in-process research and
    development






5,000



Restructuring and other charges


1,427



1,157



Total operating expenses


86,593



80,664



62,136Income from operations


25,091



11,591



10,189Gain on sale of equity securities






18,288



Interest expense


(85
)


(187
)


Interest and other income
    (expense), net


(530
)


319



872Income before income taxes


24,476



30,011



11,061Income tax provision


8,580



12,778



3,319Net income

$
15,896


$
17,233


$
7,742Basic net income per share

$
0.95


$
1.08


$
0.51Diluted net income per share

$
0.93


$
1.04


$
0.51    46




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
  Retained








AccumulatedEarnings








Other


TotalCommon Stock


Additional


(Accumulated


Treasury Stock


Deferred Stock


Comprehensive


StockholdersShares


Amount


Paid-In Capital


Deficit)


(at cost)


Compensation


Income (Loss)


Equity(In thousands, except share
    amounts)Balance at December 31, 2002


15,312,892


$
15


$
181,773


$
(33,848
)

$
(4,632
)

$



$
(504
)

$
142,804Comprehensive income:Net income














7,742















7,742Currency translation, net of tax


























2,144



2,144Total comprehensive income






























9,886Issuance of shares of common stock
    for options exercised


28,792







305



















305Issuance of shares of common stock
    under Employee Stock Purchase Plan


69,301



1



992



















993Income tax benefit associated with
    the exercise of stock options










1,886



















1,886Repurchase of shares of common stock


(632,148
)














(10,336
)










(10,336
)Balance at December 31, 2003


14,778,837



16



184,956



(26,106
)


(14,968
)






1,640



145,538Comprehensive income:Net income














17,233















17,233Currency translation, net of tax


























1,866



1,866Total comprehensive income






























19,099Issuance of common stock to acquire
    Axon Instruments, Inc., net of issuance costs of $784


3,582,655



3



69,648



















69,651Issuance of shares of common stock
    for options exercised


290,619







3,266



















3,266Issuance of shares of common stock
    under Employee Stock Purchase Plan


55,499







872



















872Income tax benefit associated with
    the exercise of stock options










3,934



















3,934Repurchase of shares of common stock


(1,555,000
)














(31,627
)










(31,627
)Deferred stock compensation






















(226
)






(226
)Amortization of deferred stock
    compensation






















113







113Balance at December 31, 2004


17,152,610



19



262,676



(8,873
)


(46,595
)


(113
)


3,506



210,620Comprehensive income:Net income














15,896















15,896Currency translation


























(2,257
)


(2,257
)Total comprehensive income






























13,639Issuance of shares of common stock
    for options exercised


426,567



1



6,216



















6,217Issuance of shares of common stock
    under Employee Stock Purchase Plan


67,872







1,098



















1,098Income tax benefit associated with
    the exercise of stock options










1,310



















1,310Repurchase of shares of common stock


(965,322
)














(19,924
)










(19,924
)Amortization of deferred stock
    compensation






















113







113Balance at December 31, 2005


16,681,727


$
20


$
271,300


$
7,023


$
(66,519
)

$



$
1,249


$
213,073    47




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
   CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended
    December 31,2005


2004


2003(In thousands, exceptshare amounts)Cash flows from operating
    activities:Net income:

$
15,896


$
17,233


$
7,742Adjustments to reconcile net income
    to net cash provided by operating actives:Depreciation and amortization


6,494



5,818



5,304Amortization of intangible assets


3,032



1,247



425Amortization of deferred stock
    compensation


113



113



Charge for acquired in-process
    research and development






5,000



Non-cash portion of restructuring
    and other expenses


823







Gain on sale of equity securities






(18,288
)


Decrease in deferred tax assets


1,783



4,297



1,140Loss on disposal of fixed assets


5



23



Equity investment exchanged for
    services


524



653



Income tax benefit realized as a
    result of employee exercises of stock options


1,310



3,934



1,886(Increase) decrease in assets:Accounts receivable


(5,953
)


(2,715
)


1,740Inventories


(67
)


1,188



(412
)Other current assets


375



(233
)


(41
)Increase (decrease) in liabilities:Accounts payable


626



(576
)


1,147Accrued compensation


1,414



3,454



1,662Other accrued liabilities


(2,534
)


1,614



(2,560
)Deferred revenue


776



377



714Net cash provided by operating
    activities


24,617



23,139



18,747Cash flows from investing
    activities:Purchases of investments










(15,275
)Proceeds from sales and maturities
    of
    available-for-sale
    investments






9,850



15,475Proceeds from sale of equity
    securities






28,288



Capital expenditures


(2,850
)


(4,773
)


(2,399
)Acquisitions, net of cash on hand






(48,533
)


Purchase of intangible assets


(10,084
)






Increase in intangible and other
    assets


(137
)


(1,600
)


(1,294
)Net cash used in investing
    activities


(13,071
)


(16,768
)


(3,493
)Cash flows from financing
    activities:Proceeds from borrowings on credit
    facility






15,000



Repayment of borrowings






(15,000
)


Issuance of common stock


7,314



4,138



1,299Purchase of treasury stock


(19,924
)


(31,627
)


(10,336
)Net cash used in financing
    activities


(12,610
)


(27,489
)


(9,037
)Effect of exchange rate changes on
    cash and cash equivalents


(203
)


1,033



310Net (decrease) increase in cash and
    cash equivalents


(1,267
)


(20,085
)


6,527Cash and cash equivalents at
    beginning of year


30,175



50,260



43,733Cash and cash equivalents at end of
    year

$
28,908


$
30,175


$
50,260Supplemental cash flow information:Cash paid during the year for:Interest

$
85


$
186


$
Income taxes

$
5,257


$
2,972


$
2,143Issuance of 3,582,655 shares
    of common stock in conjunction with the acquisition of Axon
    Instruments, Inc. in July 2004

$



$
69,648


$
    48




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
    Principles
    of Consolidation
    Use of
    Estimates
    Cash
    Equivalents
    Concentration
    of Credit Risk
    Accounts
    Receivable
    Inventories
  first-in,
  Equipment
    and Leasehold Improvements
   49




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Goodwill
  Goodwill and Other Intangible Assets
  Developed
    Technology, Intangible and Other Assets
    Impairment
    of Long-Lived Assets
    Equity
    Investments
      Income
    Taxes
   50




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Foreign
    Currency Translation
    Revenue
    Recognition and Warranty
    
    Emerging Issues Task Force, Issue
    No. 00-21,
    Revenue Arrangements with Multiple Deliverables.Revenue arrangements with multiple elements are divided into
    separate units of accounting if the deliverables in the
    arrangement have value to the customer on a stand alone basis,
    there is objective and reliable evidence of the fair value of
    the undelivered elements and there are no rights of return or
    additional performance guarantees by the Company.
    Statement of Position 97-2, Software Revenue
    Recognition.Revenue earned on software arrangements
    involving multiple elements is allocated to each element based
    on the relative fair values of the elements as determined by
    means of our quoting process and published price lists.
    Staff Accounting Bulletin (SAB) No. 104,
    Revenue Recognition. Revenue is recognized
    when the following four criteria are met: (1) persuasive
    evidence of an arrangement exists; (2) delivery has
    occurred or services have been rendered; (3) the
    sellers price is fixed or determinable; and
    (4) collectibility is reasonably assured.     51




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       
    Instruments, software and consumables  We
    recognize revenue with respect to sales of instruments, software
    and consumables at the time that an instrument, software or
    consumable is shipped, in accordance with the shipping terms of
    the invoice. Under FOB Destination terms, we do not recognize
    revenue until the product arrives at the customer site. We
    determine that the SAB 104 criteria have been met through
    receipt of a valid purchase order and issuance by us of either a
    sales order confirmation or an invoice, confirmation of product
    shipment (or receipt, when FOB Destination terms apply),
    issuance of an invoice indicating the price and determination of
    credit-worthiness or, in certain circumstances, receipt of prior
    payment.
    Service, installation and training  Revenue from
    service events not covered by warranty or a service contract is
    recognized upon completion of the service. Service can be
    provided in the field or at our service depot. For a small
    number of products, we offer the option to purchase installation
    services. Installation is billed separately at the time of
    performance and is not part of a package price for instruments.
    We have established a fair value for installation services, as
    installation can be purchased with or without an instrument.
    Further, a third party or the customer can perform the
    installation. Training is billed separately at the time of
    performance and is not part of a package price for instruments.
    Training revenue is recognized upon completion of the training.
    We determine that the SAB 104 criteria have been met
    through receipt of a valid purchase order and issuance by us of
    either a sales order confirmation or an invoice, receipt of a
    customer acknowledgment that the service, installation or
    training has been completed, issuance of an invoice indicating
    the price and determination of credit-worthiness or, in certain
    circumstances, receipt of prior payment.
    Service contracts  Revenue from service
    contracts for our instruments, generally with a one-year term,
    is recognized ratably over the period of coverage. We determine
    that the SAB 104 criteria have been met through receipt of
    a valid purchase order and issuance by us of either a sales
    order confirmation or an invoice, issuance of an invoice
    indicating the price and determination of credit-worthiness or,
    in certain circumstances, receipt of prior payment.
    Technology license agreements  Revenue from
    technology license agreements is recognized upon completion of
    our obligations to the licensee. We determine that the
    SAB 104 criteria have been met through receipt of an
    executed license agreement and determination of
    credit-worthiness or, in certain circumstances, receipt of prior
    payment. We have no ongoing obligations under our current
    technology license agreements.    Advertising
    Costs
    Recent
    Accounting Pronouncements
  Share-Based Payment Accounting for Stock-Based
    Compensation Accounting for
    Stock Issued to Employees
 52




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Accounting Changes and Error Corrections Accounting Changes, Reporting Accounting Changes in
    Interim Financial Statements.
  Earnings
    Per Share
      Years Ended
    December 31,2005


2004


2003Weighted average common shares
    outstanding for the period


16,783



16,028



15,067Common equivalent shares assuming
    the exercise of stock options under the treasury stock method


364



504



112Shared used in computing diluted
    net income per share


17,147



16,532



15,179Net income

$
15,896


$
17,233


$
7,742Basic net income per share

$
0.95


$
1.08


$
0.51Diluted net income per share

$
0.93


$
1.04


$
0.51    53




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Based Compensation
    Years Ended
    December 31,2005


2004


2003Net income  as
    reported

$
15,896


$
17,233


$
7,742Plus: Stock based employee
    compensation expense included in reported net income, net of tax


65



65



Less: Stock based compensation
    expense determined using the fair value method, net of tax


(5,759
)


(6,301
)


(7,520
)Net income  pro
    forma

$
10,202


$
10,997


$
222Net income per share:Basic  as reported


0.95



1.08



0.51Basic  pro forma


0.61



0.69



0.01Diluted  as
    reported


0.93



1.04



0.51Diluted  pro forma


0.59



0.67



0.01       2005


2004


2003Expected dividend yield


0
%


0
%


0
%Expected stock price volatility


77
%


86
%


81
%Risk-free interest rate


4.0
%


4.1
%


2.9
%Expected life of options


6.0 years



5.2 years



6.2 years     Comprehensive
    Income
  available-for-sale
 54




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 2.  
    Balance Sheet Amounts
  December 31,2005


2004(in thousands)Inventories, net:Raw materials

$
11,350


$
12,521Work-in-process


2,127



2,202Finished goods and demonstration
    equipment, net


9,720



11,062$
23,197


$
25,785Equipment and leasehold
    improvements:Machinery and equipment

$
21,862


$
21,474Software


4,617



4,299Furniture and fixtures


4,604



4,331Leasehold improvements


8,898



8,20639,981



38,310Less accumulated depreciation and
    amortization


(30,079
)


(26,548
)$
9,902


$
11,762Intangible and other assets:Equity investments

$
1,177


$
2,200Intangible assets


13,481



13,904Other assets


3,341



1,407$
17,999


$
17,511Other accrued liabilities:Accrued income taxes

$
3,051


$
3,128Warranty accrual


2,663



2,276Other


7,909



9,591$
13,623


$
14,995   Note 3.
    Commitments
    and Contingencies  Operating
    Leases
   55




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Minimum LeaseFor the Year Ending
    December 31,

Payments


Sublease Income


Net2006

$
6,673


$
241


$
6,4322007


5,866



289



5,5772008


5,366



312



5,0542009


5,538



323



5,2152010


5,682



334



5,348Thereafter


7,752



43



7,709$
36,877


$
1,542


$
35,335       Purchase
    Obligations
    Warranty
    Balance December 31, 2003

$
1,502New warranties issued during the
    period


1,976Cost of warranties incurred during
    the period


(1,721
)Warranties assumed from Axon
    Instruments, Inc.


519Balance December 31, 2004


2,276New warranties issued during the
    period


2,738Cost of warranties incurred during
    the period


(2,351
)Balance December 31, 2005

$
2,663   Guarantees
   56




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Guarantors Accounting and Disclosure Requirements
    for Guarantees, Including Indirect Guarantees of Indebtedness of
    Others,
      Note 4.
    Acquisitions
    and Restructuring  Acquisition
    of Axon Instruments, Inc.
    Common stock issued

$
67,207Cash paid


66,845Common stock options assumed


3,225Direct transaction costs


2,337Total purchase price

$
139,614      57




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Expected dividend yield


0
%Expected stock price volatility


53
%Risk-free interest rate


1.5
%Expected life of options


0.57  2 years        58




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Acquired goodwill

$
76,822Net book value of acquired assets
    and liabilities which approximates fair value


33,192Acquired developed technology
    (amortized over ten years)


15,900Acquired tradename


8,600Acquired in-process research and
    development


5,000Acquired backlog (amortized over
    one year)


100$
139,614     As ofJune 30, 2004Assets:Cash and cash equivalents

$
22,064Accounts receivable


7,286Inventories, net


11,253Other current assets


6,256Fixed assets


1,577Intangible and other assets


3,080Total assets

$
51,516Liabilities:Accounts payable and other current
    liabilities

$
11,824Long term liabilities


6,500Total liabilities

$
18,324Net book value of acquired assets
    and liabilities

$
33,192   Restructuring
    and Other Charges
    Non-CashCharges


Balance atand Cash


December 31,Initial Cost


Payments


2005Molecular Devices employee
    severance

$
604


$
(201
)

$
403Restructuring of agreement


823



(823
)


Total

$
1,427


$
(1,024
)

$
403  59




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Non-Cash


AdjustmentsBalance at


Charges and


Included in


Balance atDecember 31,


Cash


Pre-Tax


December 31,Initial Cost


Payments


2004


Payments


Income


2005Axon employee severance and
    relocation

$
500


$
(365
)

$
135


$
(35
)

$
(100
)

$
Closure of duplicate facilities


2,200







2,200



(857
)


(54
)


1,289Molecular Devices employee
    severance


1,157



(124
)


1,033



(972
)


(61
)


Total

$
3,857


$
(489
)

$
3,368


$
(1,864
)

$
(215
)

$
1,289   Note 5.
    Goodwill,
    Developed Technology and Intangible and Other Assets  ®
   60




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     December 31, 2005


December 31, 2004Gross Carrying


Accumulated


Net Carrying


Gross Carrying


Accumulated


Net CarryingValue


Amortization


Value


Value


Amortization


ValueDeveloped technology

$
28,743


$
3,591


$
25,152


$
17,368


$
1,029


$
16,339License fees


2,688



772



1,916



2,688



513



2,175Patents


1,372



610



762



1,372



472



900Tradename


200



15



185











Order backlog


100



100







100



42



58Total

$
33,103


$
5,088


$
28,015


$
21,528


$
2,056


$
19,472     For the Year Ending
    December 31,

Amortization Expense2006

$
3,3062007


3,3132008


3,3132009


3,3132010


3,313Thereafter


11,457$
28,015   Note 6.
    Stockholders
    Equity  Treasury
    Stock
    Note 7.
    Stock
    Option and Employee Incentive Plans     61




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Shares Available


Options


Weighted Averagefor Future Grant


Outstanding


Exercise PriceBalance at December 31, 2002


980,386



2,565,332


$
27.87Authorized


500,000







Granted


(562,855
)


562,855



16.08Exercised






(28,792
)


10.62Cancelled


146,824



(146,824
)


32.93Balance at December 31, 2003


1,064,355



2,952,571



25.55Authorized


300,000







Granted


(522,500
)


522,500



19.54Assumed through acquisition of Axon






572,570



18.55Exercised






(270,258
)


12.18Cancelled


289,768



(289,768
)


24.74Balance at December 31, 2004


1,131,623



3,487,615



24.59Granted


(411,500
)


411,500



20.82Exercised






(458,190
)


14.29Cancelled


356,595



(356,595
)


27.69Balance at December 31, 2005


1,076,718



3,084,330


$
25.15  62




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Options OutstandingWeighted AverageRemaining





Options ExercisableNumber


Contractual Life


Weighted Average


Number


Weighted AverageRange of Exercise
    Prices

Outstanding


(Yr.)


Exercise Price


Exercisable


Exercise Price$0.00 to $12.58


206,791



4.4


$
7.27



191,419


$
7.22$12.59 to $25.16


2,142,879



6.6



19.53



1,371,022



19.47$25.17 to $37.74


232,600



3.2



27.93



232,600



27.93$37.75 to $50.33


308,331



4.1



46.79



308,331



46.79$50.34 to $62.91


71,630



4.6



53.07



71,630



53.07$62.92 to $75.49


47,750



5.1



75.27



47,750



75.27$75.50 to $88.08


74,349



4.8



77.74



74,349



77.743,084,330






$
25.15



2,297,101


$
27.12     Deferred
    Compensation
    401(k)
    Plan
      Stock
    Reserved for Issuance
   63




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 8.
    Income
    Taxes    Years Ended
    December 31,2005


2004


2003Current:Federal

$
3,015


$
3,374


$
150State


469



1,755



215Foreign


914



650



1,8154,398



5,779



2,180Deferred:Federal


3,389



6,089



1,938State


368



730



437Foreign


425



180



(1,236
)4,182



6,999



1,139$
8,580


$
12,778


$
3,319     Years Ended
    December 31,2005


2004


2003Income before provision for income
    taxes

$
24,476


$
30,011


$
11,061Income tax at statutory rate (35%)


8,567



10,504



3,871Non-deductible acquired in-process
    research and development






1,750



State income tax, net of federal
    benefit


555



1,615



424Extraterritorial income exclusion
    benefit


(414
)


(410
)


(147
)Qualified production activities
    income deduction


(201
)






Research and development credits


(301
)


(688
)


(197
)Foreign losses currently not
    benefited










(708
)Other


374



7



76Income tax provision

$
8,580


$
12,778


$
3,319      64




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2005


2004Deferred tax assets:Deferred revenue and
    non-deductible reserves

$
1,127


$
743Warranty and accrued expenses


3,730



4,185Depreciation and amortization


1,562



Net operating loss carryforwards


215



3,007Foreign loss carryforwards


288



447Tax credit carryforwards


491



1,376Intercompany inventory transactions


512



512Other


22



383Total deferred tax assets


7,947



10,653Deferred tax liabilities:Acquired intangible assets


(4,486
)


(5,125
)Depreciation and amortization






(886
)Other






(198
)Total deferred tax liabilities


(4,486
)


(6,209
)Net deferred tax assets

$
3,461


$
4,444            65




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 9.
    Revolving
    Credit Facility    Note 10.
    Industry
    Segment, Geographic and Customer Information      Adjustments andUnited States


International


Eliminations


TotalYear ended December 31, 2003Revenues

$
98,885


$
37,193


$
(20,497
)

$
115,581Income from operations


5,768



4,545



(124
)


10,189Identifiable assets


157,950



25,754



(16,791
)


166,913Year ended December 31, 2004Revenues


133,662



44,577



(29,710
)


148,529Income from operations


10,118



1,624



(151
)


11,591Identifiable assets


248,996



31,577



(25,344
)


255,229Year ended December 31, 2005Revenues


161,609



59,970



(40,364
)


181,215Income from operations


21,846



3,150



95



25,091Identifiable assets


255,146



33,652



(31,382
)


257,416     Years Ended
    December 31,2005


2004


2003Drug discovery

$
72,778


$
61,457


$
51,864Life sciences research


108,437



87,072



63,717Total revenues

$
181,215


$
148,529


$
115,581  66




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##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Years Ended
    December 31,2005


2004


2003North America

$
105,562


$
90,454


$
72,403Europe


46,231



38,515



28,090Rest of World


29,422



19,560



15,088Total revenues

$
181,215


$
148,529


$
115,581   Note 11.
    Related
    Party Transactions          Note 12.
    Subsequent
    Event   67




---



##### Table of Contents



MOLECULAR
    DEVICES CORPORATION AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 13.
    Quarterly
    Financial Data (Unaudited)    First


Second


Third


Fourth(In thousands, except per share
    amounts)Year ended December 31, 2004Revenues

$
27,337


$
32,205


$
41,502


$
47,485Gross profit


17,095



20,130



25,700



29,331Net income (loss)


1,430



2,505



(1,268
)


14,567Basic net income (loss) per share


0.10



0.18



(0.07
)


0.84Diluted net income (loss) per share


0.10



0.17



(0.07
)


0.81Year ended December 31, 2005Revenues

$
39,064


$
44,537


$
45,156


$
52,458Gross profit


24,018



26,937



27,763



32,966Net income


1,844



3,665



4,631



5,756Basic net income per share


0.11



0.22



0.28



0.35Diluted net income per share


0.11



0.21



0.27



0.34    68




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##### Table of Contents



SCHEDULE II    VALUATION
    AND QUALIFYING ACCOUNTS
  Balance at


Charged to Costs





Balance at End ofDescription

Beginning of Year


and Expenses


Deductions


Year(In thousands)Allowance for doubtful accounts
    receivableYear ended December 31, 2003

$
434


$
77


$
(103
)

$
408Year ended December 31, 2004

$
408


$
436
(A)

$
(505
)

$
339Year ended December 31, 2005

$
339


$
255


$
(152
)

$
442     (A)
    
    Of this amount, $0.2 million in reserves was associated
    with receivables acquired from Axon (see Note 4). 69




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Description of
    Document3
.1(1)

Amended and Restated Certificate
    of Incorporation of Registrant3
.2(1)

Bylaws of the Registrant3
.3(5)

Certificate of Amendment to
    Certificate of Incorporation4
.1(1)

Specimen Certificate of Common
    Stock of Registrant10
.1(1)*

1988 Stock Option Plan10
.2(1)*

Form of Incentive Stock Option
    under the 1988 Stock Option Plan10
.3(1)*

Form of Supplemental Stock Option
    under the 1988 Stock Option Plan10
.4(5)*

1995 Employee Stock Purchase Plan10
.6(1)*

Form of Nonstatutory Stock Option
    under the 1995 Non-Employee Directors Stock Option Plan10
.8(1)*

Form of Incentive Stock Option
    under the 1995 Stock Option Plan10
.9(1)*

Form of Nonstatutory Stock Option
    under the 1995 Stock Option Plan10
.10(1)*

Form of Early Exercise Stock
    Purchase Agreement under the 1995 Stock Option Plan10
.11(1)*

Form of Indemnity Agreement
    between the Registrant and its Directors and Executive Officers10
.19(10)*

Amended Key Employee Agreement for
    Joseph D. Keegan, Ph.D., dated July 29, 200410
.20(2)

Exclusive License and Technical
    Support Agreement, dated August 28, 1998, by and between
    the Registrant and Affymax10
.21(2)*

Employee Offer Letter for Timothy
    A. Harkness10
.24(10)*

1995 Non-Employee Directors
    Stock Option Plan, as amended10
.25(10)*

1995 Stock Option Plan, as amended10
.26(3)*

Employee Offer Letter for Patricia
    Sharp10
.27(4)*

LJL BioSystems 1994 Equity
    Incentive Plan and Forms of Agreements10
.28(4)*

LJL BioSystems 1997 Stock Plan and
    Forms of Agreements10
.29(4)*

LJL BioSystems
    1998 Directors Stock Option Plan and Forms of
    Agreements10
.33(6)

Lease Agreement, dated
    May 26, 2000, by and between Aetna Life Insurance Company
    and the Registrant10
.34(7)*

Change in Control Severance
    Benefit Plan10
.35(8)

Rights Agreement, dated
    October 25, 2001, among the Registrant and EquiServe Trust
    Company, N.A.10
.37(5)*

Key Employee Agreement for Tom
    OLenic10
.38(10)*

2001 Stock Option Plan, as amended10
.39(9)

Lease dated May 28, 2002 by
    and between The Irvine Company and the Registrant10
.40(9)*

Letter Agreement, dated
    April 11, 2002, by and between the Registrant and Joseph D.
    Keegan, Ph.D.10
.43(11)*

Amended Key Employment Agreement
    for Timothy A. Harkness10
.44(11)*

Employee Offer Letter for Alan
    Finkel10
.45(11)*

Employee Offer Letter for Steven
    Davenport10
.46(11)*

Employee Offer Letter for Jan
    Hughes10
.47(11)*

Amended Employee Offer Letter for
    Jan Hughes10
.48(12)*

Non-Employee Director Compensation
    Arrangements 70




---



##### Table of Contents



ExhibitNumber

Description of
    Document10
.49(13)*

Executive Officer Compensation
    Arrangements10
.50(14)*

Form of Stock Option Agreement for
    Non-Employee Director under the 1995 Equity Incentive Plan10
.51(15)

Asset Purchase Agreement, dated as
    of March 9, 2005, by and between Molecular Devices
    Corporation and Xsira Pharmaceuticals, Inc.10
.52(16)*

2005 Equity Incentive Plan10
.53(16)*

Form of Stock Option Agreement
    under the 2005 Equity Incentive Plan10
.54(16)*

Form of Stock Option Agreement for
    Non-Employee Director under the 2005 Equity Incentive Plan10
.55

First Amendment to Lease, dated
    January 27, 2006, by and between the Registrant and Moffett
    Office Park Investors LLC
    (successor-in-interest
    to Aetna Life Insurance Company)10
.56

First Amendment to Lease, dated
    January 30, 2006, by and between the Registrant and The
    Irvine Company LLC21
.1

Subsidiaries of the Registrant23
.1

Consent of Independent Registered
    Public Accounting Firm24
.1

Power of Attorney (contained on
    the signature pages hereto)31
.1

Certification required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)31
.2

Certification required by
    Rule 13a-14(a)
    or
    Rule 15d-14(a)32
.1**

Certifications required by
    Rule 13a-14(b)
    or
    Rule 15d-14(b)
    and Section 1350 of Chapter 63 of Title 18 of the
    United States Code (18 U.S.C 1350)     (1)
    
    Incorporated by reference to the similarly described exhibit in
    our Registration Statement on
    Form S-1
    (File
    No. 33-98926),
    as amended.(2)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 1998, and filed
    November 13, 1998.(3)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 2000 and filed on
    November 13, 2000.(4)
    
    Incorporated by reference to the similarly described exhibit
    filed with LJL BioSystems Registration Statement on
    Form S-1
    (File
    No. 333-43529)
    declared effective on March 12, 1998.(5)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2001 and filed on
    April 1, 2002.(6)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2000 and filed on
    March 30, 2001.(7)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated March 31, 2001 and filed on
    May 11, 2001.(8)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed October 30, 2001.(9)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2003 and filed on
    March 27, 2003.  (10)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-Q
    Quarterly Report dated September 30, 2004, and filed on
    November 9, 2004.(11)
    
    Incorporated by reference to the similarly described exhibit in
    our
    Form 10-K
    Annual Report dated December 31, 2004, and filed on
    March 16, 2005.(12)
    
    Incorporated by reference to the information in our definitive
    Proxy Statement pursuant to Regulation 14A filed on
    April 22, 2005, under the heading Executive
    Compensation  Compensation of Directors. 71




---



##### Table of Contents



(13)
    
    Incorporated by reference to the information in our Current
    Reports on
    Form 8-K
    filed on February 23, 2005 and February 15, 2006.(14)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed on April 18, 2005.(15)
    
    Incorporated by reference to the similarly described exhibit in
    our Quarterly Report on
    Form 10-Q
    dated March 31, 2005 and filed on May 4, 2005.(16)
    
    Incorporated by reference to the similarly described exhibit in
    our Current Report on
    Form 8-K
    filed on June 1, 2005.  *
    
    Management contract or compensatory plan or arrangement.
    
    Confidential treatment has been requested with respect to
    certain portions of this exhibit. Omitted portions have been
    filed separately with the Securities and Exchange Commission.**
    
    The certification attached as Exhibit 32.1 accompanies the
    Annual Report on
    Form 10-K
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    and shall not be deemed filed by the Company for
    purposes of Section 18 of the Securities Exchange Act of
    1934, as amended. 72