<PAGE>
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                              ---------------------

                /x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

     // TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                           COMMISSION FILE NO. 0-23659

                                   VYSIS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                 36-3803405
     (STATE OR OTHER JURISDICTION OF        (I.R.S. EMPLOYER IDENTIFICATION NO.)
     INCORPORATION OR ORGANIZATION)

          3100 WOODCREEK DRIVE                           60515-5400
         DOWNERS GROVE, ILLINOIS                         (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 271-7000
                              ---------------------

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                         COMMON STOCK, $0.001 PAR VALUE
                                (TITLE OF CLASS)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /x/ No //

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

     The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 21, 2001 was approximately $29.6 million.

     Number of shares of Common Stock outstanding as of March 21, 2001:
10,167,492
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                                            DOCUMENTS INCORPORATED BY REFERENCE:
<S>                                                               <C>
    DOCUMENTS: DEFINITIVE PROXY STATEMENT FOR THE 2001            PART OF THE FORM 10-K INTO WHICH INCORPORATED:
              ANNUAL MEETING OF STOCKHOLDERS                                         PART III
</TABLE>

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<PAGE>

                                TABLE OF CONTENTS
                                     PART I

<TABLE>
<CAPTION>
                                                                                                PAGE

<S>                 <C>                                                                                  <C>
ITEM 1:             Business............................................................................  3
                         General........................................................................  3
                         Genomic Disease Management.....................................................  3
                         Technology Platforms...........................................................  3
                         Business Segment Information...................................................  5
                         Products.......................................................................  5
                         Distributed Laboratory Products ............................................... 11
                         Food Testing Products.......................................................... 11
                         Sales and Marketing ........................................................... 11
                         Manufacturing.................................................................. 12
                         Collaborations................................................................. 13
                         Patents, License Rights and Proprietary Information ........................... 14
                         Ability to Practice Technology................................................. 15
                         Competition.................................................................... 17
                         Government Regulation.......................................................... 17
                         Employees...................................................................... 18
                         Executive Officers............................................................. 18
                         Scientific Advisory Board...................................................... 19
ITEM 2:             Properties.......................................................................... 22
ITEM 3:             Legal Proceedings................................................................... 22
ITEM 4:             Submission of Matters to a Vote of Security Holders................................. 23

                                     PART II

ITEM 5:             Market for the Registrant's Common Equity and Related Stockholder Matters........... 23
ITEM 6:             Selected Financial Data............................................................. 23
ITEM 7:             Management's Discussion and Analysis of Financial Condition and Results of
                    Operations..........................................................................
                         Overview....................................................................... 25
                         Results of Operations.......................................................... 25
                         Income Taxes................................................................... 27
                         Liquidity and Capital Resources................................................ 27
                         Recent Accounting Pronouncements............................................... 28
ITEM 7A:            Quantitative and Qualitative Disclosures About Market Risk.......................... 29
ITEM 8:             Financial Statements and Supplementary Data......................................... 29
ITEM 9:             Changes in and Disagreements With Accountants on Accounting and Financial
                    Disclosure.......................................................................... 29

                                                        PART III

ITEM 10:            Directors and Executive Officers of the Registrant.................................. 29
ITEM 11:            Executive Compensation ............................................................. 29
ITEM 12:            Security Ownership of Certain Beneficial Owners and Management...................... 29
ITEM 13:            Certain Relationships and Related Transactions ..................................... 29

                                                        PART IV

ITEM 14:            Exhibits, Financial Statement Schedules and Reports on Form 8-K .................... 30

SIGNATURE............................................................................................... 56
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<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K contains certain statements which describe
the Company's beliefs concerning future business conditions and the outlook for
the Company based on currently available information. Whenever possible, the
Company has identified these "forward-looking" statements (as defined in Section
21E of the Securities Exchange Act of 1934) by words such as "anticipates",
believes", estimates", "expects", and similar expressions. These forward-looking
statements are subject to risks and uncertainties which could cause the
Company's actual results, performance and achievements to differ materially from
those expressed in or implied by these statements. These risks and
uncertainties, which could cause actual results to differ materially from those
expressed or implied by the forward-looking statements, include: the market
acceptance of the Company's clinical products; the extent to which the
clinicians or laboratories performing procedures with the Company's products are
able to obtain third-party reimbursement; the ability of the Company to
successfully market and sell its clinical products, other products and
equipment; competition; compliance by the Company with regulatory requirements
and the timely receipt of necessary governmental approvals; the Company's
ability to manufacture products in sufficient quantities; the Company's ability
to maintain intellectual property protection for its proprietary products, to
defend its existing intellectual property rights from challenges by third
parties, and to avoid infringing intellectual property rights of third parties;
product liability claims; the success of the Company's collaborators and
licensees; and the Company's cost control efforts. In addition, a detailed
discussion of risks and uncertainties may be found in the Company's periodic
filings with the Securities and Exchange Commission. The Company disclaims any
intent or obligation to update these forward-looking statements. Further
information concerning factors that could significantly impact expected results
is included in the following sections of this Form 10-K: Business--Sales and
Marketing; Business--Ability to Practice Technology; Business--Competition;
Business--Government Regulation; Legal Proceedings; and Management's Discussion
and Analysis of Financial Condition and Results of Operations.

                                       2
<PAGE>

                                     PART I

ITEM 1. BUSINESS

GENERAL

     Vysis, Inc. ("Vysis" or the "Company") is a Genomic Disease Management
company that develops, commercializes and markets Deoxyribonucleic Acid
("DNA")-based clinical products that provide information critical to the
evaluation and management of cancer, prenatal disorders and other genetic
diseases. Vysis currently markets six U.S. Food and Drug Administration ("FDA")
or foreign cleared or approved clinical ("Clinical") products in addition to
distributing over 300 Analyte Specific Reagent ("ASR") and research products
("ASR/Research") through its direct sales operations in the United States and
Europe and a worldwide distribution network covering 59 countries. The Company's
wholly owned subsidiary, Gene-Trak Systems Industrial Diagnostics Corporation,
manufactures and markets food testing kits based on DNA probes.

     The Company was incorporated in Delaware on April 18, 1991. The Company's
business represents the consolidation of multiple research units and programs of
the former Amoco Corporation. On December 31, 1998, Amoco Corporation merged
with the former British Petroleum Corporation, and as a result of the merger
became a wholly-owned subsidiary of BP Amoco p.l.c. As used herein, "BP Amoco"
refers to BP Amoco p.l.c., or its wholly owned subsidiaries, Amoco Corporation
and Amoco Technology Company ("ATC").

     On February 10, 1998, the Company completed the initial public offering of
3 million shares of its Common Stock, par value $0.001 per share (the "Common
Stock") at a price of $12.00 per share (the "Offering"). The net proceeds of the
Offering after deducting expenses were approximately $32.1 million. Concurrent
with the consummation of the Offering, the Company issued 675,000 shares of
Common Stock at $12.00 per share to BP Amoco in exchange for a reduction of $8.1
million in the Company's note payable to BP Amoco. As of March 21, 2001, BP
Amoco beneficially owned approximately 66 percent of the Company's outstanding
Common Stock.

     The Company's executive offices are located at 3100 Woodcreek Drive,
Downers Grove, Illinois 60515 and its telephone number is (630) 271-7000.

GENOMIC DISEASE MANAGEMENT

     Genetic abnormalities are a fundamental source of human disease. Genetic
based diseases and disorders include cancer, birth defects, mental retardation,
coronary artery disease, autoimmune diseases and diabetes. Genomic Disease
Management is an emerging field that seeks to develop new genetic tests based on
correlations between genetic abnormalities and disease. Genomic Disease
Management products, by providing new information not currently available
through existing methods, enable physicians to diagnose disease more quickly and
accurately, to determine the most appropriate treatment and to monitor disease
progression and recurrence during therapy. Genomic Disease Management products
also enable the detection of disease at the very early or developing stages when
treatment is likely to be most effective. In addition, Genomic Disease
Management products allow physicians to identify genetic predisposition to
disease well before the disease is manifested, thus enabling early intervention
either through lifestyle changes or preventive therapy.

TECHNOLOGY PLATFORMS

     Genomic Disease Management requires the ability to assess abnormalities of
chromosomes, individual genes within chromosomes and specific DNA sequences
within genes. No single technology is capable of assessing all of these
different types of abnormalities. To address this issue, the Company has three
complementary technology platforms that detect the full range of genetic
abnormalities from large chromosomal aberrations to smaller abnormalities
associated with abnormal numbers of the same gene and the smallest mutations
within specific gene sequences. Vysis' three technology platforms include: the
CELLULAR GENOMICS PLATFORM (also known as the Fluorescence IN SITU Hybridization
("FISH") System), which detects chromosomal copy number and rearrangement (large
genetic structures), the GENOMIC MICROARRAY PLATFORM (also known as the
GenoSensor(TM) System), which detects gene copy number and expression (smaller
genetic structures), and the MOLECULAR LAWN(TM) SYSTEM, which detects specific
gene sequences and their

                                       3
<PAGE>

mutations (smallest genetic structures). The Company is presently focusing its
research and development efforts on the Cellular Genomics and Genomic Microarray
Platforms.

CELLULAR GENOMICS PLATFORM

     The Company's Cellular Genomics assays provide the ability to
simultaneously assess multiple chromosomal and gene abnormalities in a single
intact cell. The FISH technique also provides the ability to perform cell by
cell quantitative assessment of genetic changes in tissue specimens routinely
used by pathologists for diagnosis. FISH is useful primarily to detect gross or
large chromosomal changes, such as extra chromosomes, missing chromosomes,
chromosomal translocations, and gene amplifications and deletions. The Company's
Cellular Genomics Platform consists of automated processing instruments used
with the Company's patented direct label FISH DNA probes.

     Vysis is continuing to refine the automated instruments used in conjunction
with the Company's direct label FISH probes. The Company's HYBrite(TM)
instrument automates the hybridization process in a temperature controlled
environment. The Company began shipping in 1999 its VP 2000(TM) Processor, a
high throughput instrument that automates the specimen preparation steps of FISH
assays, which is estimated to eliminate 70 percent of the labor used for sample
preparation. In July 1999 the Company sold its Quips(TM) cytogenetic imaging
instrumentation ("Imaging") business, which provides integrated solutions to
enhance and automate the visualization, analysis, and storage of FISH images, to
Applied Imaging Corp. ("AI"). See Note 10 of Notes to Consolidated Financial
Statements for further discussion of the Imaging business sale.

GENOMIC MICROARRAY PLATFORM

     The Genomic Microarray Platform comprises the GenoSensor System, which uses
the Company's patented comparative genomic hybridization ("CGH") technology to
survey the entire genome for chromosomal changes in a single test. The
fundamental principle of CGH is to compare an abnormal or test DNA or
Ribonucleic Acid ("RNA") specimen to a reference DNA or RNA in order to detect
genetic aberrations. This method, like FISH, does not require culturing of
"metaphase cells" for a metaphase spread preparation from the sample. For this
reason, CGH enables genetic testing of tissues that are not amenable to culture
such as tumor tissues. In contrast to traditional FISH technology that typically
involves use of a specific probe to a known chromosomal abnormality, CGH can be
used to investigate an entire genome even when a suspected genetic aberration is
unknown.

     Vysis is continuing to develop a ready-to-use array of DNA probes on a
miniaturized chip, the Ampli-Onc(TM) Microarray, which incorporates its patented
CGH technology. Each element of the array will contain DNA from a defined
location on a normal human chromosome and, in total, the collection of elements
may represent the entire genome. This system is intended to enable simultaneous
assessment of a large number of genes in a patient's specimen for abnormalities
in the specific gene count. The GenoSensor System products consist of individual
Ampli-Onc Microarrays, a high speed camera based reader and specimen processing
reagents. The Company began shipping the first Ampli-Onc Microarray, designed
for research use to detect gene amplification of 58 different genes, in December
1999. The Company currently is manufacturing commercial quantities of the
Ampli-Onc Microarrays with a first generation robotic system and is developing a
higher throughput, next generation robotic manufacturing system.

MOLECULAR LAWN SYSTEM

     The Molecular Lawn System uses the Company's patented Q-beta replicase
("QBR") amplification technology to detect specific gene sequences. QBR provides
a quantitative measure of a specific gene sequence in either human, viral or
bacterial DNA. A Molecular Lawn consists of individual or multiple probe
sequences attached to the surface of a miniaturized solid support, similar to
the blades of grass on a lawn. This technology platform enables the detection of
small genetic targets associated with disease predisposition and early detection
of disease. The Company completed a strategic reassessment of its Molecular Lawn
platform in March 1999 and deferred near term research and development of the
Molecular Lawn platform to allow the Company to focus on products for the
Cellular Genomics and Genomic Microarrray platforms. The Company does not
anticipate resuming Molecular Lawn research in 2001.

                                       4
<PAGE>

BUSINESS SEGMENT INFORMATION

     The Company operates in two business segments: genetic testing and food
testing products. See Note 18 of Notes to Consolidated Financial Statements for
financial information regarding each of the Company's segments.

PRODUCTS

CLINICAL DIAGNOSTIC PRODUCTS

     Vysis is developing, commercializing and marketing Clinical products that
provide information critical to the evaluation and management of cancer,
prenatal disorders and other genetic diseases. The Company's lead cancer
product, the PathVysion(TM) HER-2 DNA Probe Kit, was approved by the FDA in
December 1998 to detect amplification of the HER-2/NEU gene via fluorescence IN
SITU hybridization ("FISH") in formalin-fixed, paraffin-embedded human breast
cancer tissue specimens. Results from the PathVysion Kit are intended for use as
an adjunct to existing clinical and pathologic information currently used as
prognostic factors in stage II, node-positive breast cancer patients. The
PathVysion Kit is further indicated as an aid to predict disease-free and
overall survival in patients with stage II, node-positive breast cancer treated
with adjuvant cyclophosphamide, doxorubicin, and 5-fluorouracil (CAF)
chemotherapy. The PathVysion HER-2 DNA Probe Kit was registered in February 2000
by the French regulatory committee, the Agence Francaise de Securite Sanitaire
des Produits de Sante ("AFSSAPS") for marketing in France. The Company's lead
prenatal product, the AneuVysion(R) Assay for the detection of chromosome
abnormalities on the X, Y, 13, 18 and 21 chromosomes, was cleared by the FDA in
October 1997 and by the AFSSAPS in March 1998. The Clinical products represented
approximately $5.9 million, or 27.1 percent, of the Company's $21.9 million of
product revenues in 2000, approximately $4.1 million, or 19.7 percent, of the
Company's $20.9 million of product revenues in 1999, and approximately $2.6
million, or 12.2 percent, of the Company's $21.5 million of product revenues in
1998.

     The Company's Clinical diagnostic product commercialization process
involves four distinct stages prior to marketing which include, in order:
research, development, clinical trials and regulatory review. The Company's
cancer clinical product development is focused in two areas: (1) Early detection
of disease, and (2) Therapeutic response prediction.

                                CLINICAL PRODUCTS
<TABLE>
<CAPTION>

PRODUCT               TECHNOLOGY PLATFORM         APPLICATION           INTENDED UTILITY           STAGE
-------               -------------------         -----------           ----------------           -----

CANCER
------
<S>                   <C>                         <C>                   <C>                        <C>
CEP(R)8               Cellular Genomics           Chronic Myelogenous   Disease monitoring         MARKETING (FDA
                                                  Leukemia, myeloid                                510(k) cleared
                                                  disorders                                        November 1996)

CEP(R)12              Cellular Genomics           Chronic Lymphocytic   Disease progression and    MARKETING (FDA
                                                  Leukemia              disease monitoring         510(k) cleared
                                                                                                   January 1997)

CEP(R)X/Y             Cellular Genomics           Bone marrow           Disease monitoring         MARKETING (FDA
                                                  transplantation                                  510(k) cleared
                                                                                                   January 1997)
</TABLE>

                                       5
<PAGE>


                          CLINICAL PRODUCTS (CONTINUED)
<TABLE>
<CAPTION>

PRODUCT               TECHNOLOGY PLATFORM         APPLICATION           INTENDED UTILITY           STAGE
------                -------------------         -----------           ----------------           ------
<S>                   <C>                         <C>                   <C>                        <C>
PathVysion(TM)        Cellular Genomics           Breast cancer         Selection of therapy and   MARKETING
HER-2                                                                   prognosis                  (FDA PMA
                                                                                                   approved
                                                                                                   December 1998;
                                                                                                   additional
                                                                                                   clinical trial
                                                                                                   underway)

Breast Panel          Cellular Genomics           Breast cancer         Selection of therapy       RESEARCH

Lung Panel            Cellular Genomics           Lung Cancer           Selection of therapy       RESEARCH

Vysis(R)UroVysion     Cellular Genomics           Bladder cancer        Early detection (disease   REGULATORY
                                                                        recurrence monitoring)     REVIEW

Vysis(R)UroVysion     Cellular Genomics           Bladder cancer        Early detection (in        DEVELOPMENT
                                                                        symptomatic patients)

Vysis(R)UroVysion     Cellular Genomics           Bladder cancer        Early detection (in        DEVELOPMENT
                                                                        asymptomatic, high-risk
                                                                        patients)

Lung Panel            Cellular Genomics           Lung cancer           Early detection (in        RESEARCH
                                                                        high-risk patients)

Cervical Panel        Cellular Genomics           Cervical cancer       Early detection (in Pap    RESEARCH
                                                                        smears)

Breast Panel          Cellular Genomics           Breast cancer         Early detection (in        RESEARCH
                                                                        nipple aspirates)

                                                                        Early detection (in rare
Blood Screen Panel    Cellular Genomics           Solid Tumors          cells in blood sample)     RESEARCH

PRENATAL
--------
TriGen(TM)            Cellular Genomics           Trisomy 21 (Down      Detection of chromosomal   MARKETING
                                                  syndrome), sex        abnormalities associated   (AFSSAPS
                                                  chromosome disorders  with mental retardation    registered in
                                                                        and other birth defects    June 1997;
                                                                                                   "Export Only")

AneuVysion            Cellular Genomics           Trisomy 21 (Down      Detection of chromosomal   MARKETING
                                                  syndrome), and other  abnormalities associated   (FDA 510(k)
                                                  chromosomal disorders with mental retardation    cleared October
                                                                        and other birth defects    1997; AFSSAPS
                                                                                                   registered in
                                                                                                   March 1998)

Aneu-Del-Tel(TM)Chip  Genomic Microarrays         Trisomy 21 (Down      Detection of essentially   RESEARCH
                                                  syndrome), and other  all chromosomal
                                                  chromosomal disorders abnormalities causing
                                                                        common mental retardation
                                                                        and other birth defects

Fetal Screen          Cellular Genomics           Trisomy 21 (Down      Detection of mental        RESEARCH
                                                  syndrome), and other  retardation and other
                                                  chromosomal disorders birth defects from fetal
                                                                        cells in maternal blood
                                                                        circulation
</TABLE>

                                       6
<PAGE>

CANCER PRODUCTS

     The Company markets FDA cleared or approved products for leukemia and
breast cancer, and is currently focusing its cancer product development efforts
on breast, bladder, lung and cervical cancers.

     LEUKEMIA. The Company markets three Clinical products, each based on the
FISH System, for use in management of leukemia. The CEP 8 Probe Kit was cleared
by the FDA in November 1996 by a 510(k) premarket notification and is used for
the detection of the abnormal occurrence of three copies of chromosome 8. This
product is used as an adjunct to standard cytogenetic analysis for identifying
and enumerating chromosome 8 via FISH in interphase nuclei and in metaphase
spreads of cells obtained from bone marrow in patients with myeloid disorders
chronic myelogenous leukemia (CML), acute myeloid leukemia (AML),
myeloproliferative disorder (MPD), myelodysplastic syndrome (MDS), and
hematological disorders not otherwise specified (HDNOS). It is not intended to
be used as a stand alone assay for test reporting. Standard cytogenetics, also
called karyotyping, involves the direct microscopic examination of the
chromosomes of cells in a blood or tissue sample. This information provides the
physician with an indication of early blast crisis which is important when
considering bone marrow transplantation therapy.

     The CEP 12 Probe Kit was cleared by the FDA in January 1997 by a 510(k)
premarket notification and is used in conjunction with standard cytogenetics. It
is used as an adjunct to standard cytogenetic analysis for identifying and
enumerating chromosome 12 via FISH in interphase nuclei of cells obtained from
peripheral blood lymphocytes in patients with B-cell chronic lymphocytic
leukemia. It is not intended to be used as a stand alone assay for test
reporting. The CEP 12 assay has not been validated for purposes other than those
described above. The abnormal occurrence of three copies (trisomy) of chromosome
12 is one of the more common genetic abnormalities in chronic lymphocytic
leukemia. These patients have a widely variable clinical course and many do not
require therapy at the time of diagnosis. The detection of trisomy 12 provides
the physician the ability to distinguish patients whose disease will rapidly
progress. These patients may require immediate treatment while others may be
monitored for disease progression without therapeutic intervention.

     The CEP X/Y Probe Kit was cleared by the FDA in January 1997 by a 510(k)
premarket notification and is used in conjunction with standard cytogenetics to
assess how well donor cells are accepted by the recipient in sex-mismatched bone
marrow transplantation and to determine the recurrence of malignant cells. In
the management of many leukemias and other myeloid disorders, bone marrow
transplantation is a critical therapeutic strategy.

     BREAST CANCER. The Company received FDA approval of a PMA application in
December 1998, for its first breast cancer product, the PathVysion(TM) HER-2 DNA
Probe Kit. Results from the PathVysion HER-2 test are intended to rapidly assess
the amplification of the HER-2/NEU gene for use as a predictive marker for
response to adriamycin-based chemotherapy. The Company's marketing partner,
Fujisawa Pharmaceutical Co., is performing clinical trials of the PathVysion
HER-2 kit for Japan regulatory approval.

     The Company's HER-2 product, which uses a Cellular Genomics' FISH assay, is
a locus specific, direct label DNA probe for the HER-2/NEU gene. This assay is
designed for the detection and quantification in tissue cells of the HER-2/NEU
gene and chromosome 17, on which the HER-2/NEU gene resides. The Company's
product includes a second DNA probe specific for chromosome 17, to distinguish
gene amplification from the presence of extra copies of chromosome 17.

     BREAST CANCER PANEL. Because cancer is considered a multi-gene event, the
Company believes that appropriate patient management may require simultaneous
testing for multiple genetic abnormalities. The Company is developing a FISH
probe panel for breast cancer that includes HER-2 and another amplified target
gene.

     LUNG CANCER KIT. The Company is researching a Cellular Genomics' FISH assay
designed to measure gene amplification of the Epidermal Growth Factor Receptor
("EGFR"). The planned kit includes a direct label DNA probe for the EGFR gene
and a second probe specific for chromosome 7, on which EGFR resides. The Company
believes that detection of EGFR gene amplification can be used to predict
therapeutic response for anti-EGFR lung cancer therapy.


                                       7
<PAGE>

     BLADDER CANCER PANELS. The Company is developing the Vysis(R) UroVysion DNA
Probe Kit, based on the Cellular Genomics platform, which is designed to provide
simultaneous analysis of multiple genetic markers in cells from routine urine
specimens for detection of recurrence of bladder cancer. In 1999 the Company
completed a 200 patient preclinical trial of the assay at the Mayo Clinic. In
October 2000, The Company submitted a 510(k) application on this assay for
monitoring recurrence of bladder cancer and the application is in regulatory
review. The Company is currently designing two additional clinical trials to
support first, a claim for the early detection of bladder cancer in symptomatic
patients and second, a claim for screening for the presence of bladder cancer as
part of annual physical exams for patients in high-risk categories for bladder
cancer.

     LUNG CANCER PANEL. The Company is developing a Cellular Genomics-based
panel for use on testing of sputum samples for the early identification of lung
cancer. The Company believes that, similar to the PathVysion Bladder assay of
urine samples, a FISH probe panel can identify cancerous cells present in sputum
samples before conventional test methods can detect the presence of lung cancer.
The Company is currently researching the probes to be included in the panel in
collaboration with the Mayo Clinic.

     CERVICAL CANCER PANEL. The Company is developing a Cellular Genomics-based
panel for use on testing Pap smear samples classified as "ASCUS" (abnormal
squamous cells of unknown significance). The Company believes that a FISH panel
with probes identifying cancer-related genetic abnormalities in the cells
classified as ASCUS will be of significant medical value. The Company is
currently researching several leads for this panel.

     BREAST CANCER PANEL. The Company believes that information regarding the
genetic composition of cells contained in nipple aspirates could distinguish
between women at high risk of breast cancer who should be monitored more
closely. The Company is developing products for testing nipple aspirates that
include a panel of genetic markers designed to provide information indicating
which patients should receive more aggressive management.

     GENERAL CANCER SCREEN. The Company is researching a Cellular Genomics' FISH
probe panel to be applied to rare circulating tumor cells present in a patient's
blood sample. This research is expected to couple the existing and emerging
technologies to identify rare solid tumor cells in blood samples with the
Company's chromosome based analysis for the early detection of cancer.

     PRENATAL PRODUCTS

     The Company's prenatal testing products provide information on genetic
abnormalities involved in mental retardation and other birth defects.

     AMNIOCENTESIS TESTING. Amniocentesis is an invasive procedure required to
obtain the fetal cells for diagnosis of chromosomal abnormalities. In
amniocentesis, amniotic fluid containing fetal cells is removed from the uterus
with an ultrasound-guided needle passed through the abdominal wall. Traditional
testing of the fetal cells is accomplished by direct examination of stained
chromosomes. This analysis, which is known as karyotyping, is a standard
cytogenetic method which requires 7 to 10 days for completion at an estimated
patient cost of $400 to $800 per analysis.

     The Company's first prenatal diagnostic product, based on the Cellular
Genomics Platform, is the TriGen Assay for the direct diagnosis of Down syndrome
(trisomy 21, three copies of chromosome 21) and sex chromosome abnormalities
(aneuploidies of chromosomes X and Y). The product is designed to diagnose these
abnormalities on a single slide within 24 hours from cells obtained by
amniocentesis. Clinical trials conducted by the Company at 18 laboratories
involving 558 patients demonstrated 100 percent correlation of TriGen results to
standard karyotyping results. The French regulatory committee, the AFSSAPS,
registered the product in June 1997 as a stand alone diagnostic test. The
product is only available in the European markets and is for export use only.

     The Company's AneuVysion product is a FISH panel for the detection of the
trisomy 21 abnormality (Down syndrome), sex chromosome abnormalities and two
additional chromosomal abnormalities. The Company's submission on its AneuVysion
prenatal product was cleared by the FDA as a 510(k) in October 1997 and approved
by the French regulatory committee, the AFSSAPS, in March 1998. Clinical trials
conducted by the Company at 31 laboratories involving 1,516 patients
demonstrated 99.9 percent correlation of AneuVysion results to standard
karyotyping for those chromosomal abnormalities that represent approximately 85
percent of the chromosomal abnormalities associated with

                                       8
<PAGE>
mental retardation and other birth defects. In the United States, the
AneuVysion product is cleared as an adjunct to standard cytogenetic testing
of amniocentesis specimens and in France is registered as a stand alone
diagnostic test. A two-year study involving over 3,000 patients tested with
the AneuVysion assay was reported in 1999 as having no false positive results
and one false negative result. In December 2000 the American College of
Medical Genetics ("ACMG") issued revised clinical practice policy for the
clinical use of FISH for pre- and post-natal testing. The revised policy
describes FISH technology as highly accurate and states that FISH prenatal
test results may be routinely reported without waiting on the full karytyping
results. The Company filed a 510(k) supplement with the FDA seeking an
amendment of AneuVysion's product labeling to show the new ACMG reporting
policy. The Company believes the ACMG policy revisions will lead to improved
AneuVysion sales in the U.S.

     The Company is conducting research on a Genomic Microarray-based prenatal
microarray product, the Aneu-Del-Tel(TM) microarray, that is intended to
simultaneously detect multiple chromosome aneusomies, microdeletions and
unbalanced chromosome translocations. These abnormalities may account for
essentially all of the causes of common mental retardation and other birth
defects detectable with conventional amniocentesis and karyotyping.

     MATERNAL BLOOD TESTING. Due to the invasive nature of the amniocentesis
procedure, current prenatal genetic testing is indicated only in high risk
pregnancies. Although the risk of having a child with Down syndrome increases
with maternal age, most pregnancies occur in younger women and, hence, most
births of children with Down syndrome occur to younger women for whom
amniocentesis is not indicated. The ability to detect and analyze fetal cells in
maternal blood would permit women to be routinely screened for genetic
abnormalities associated with mental retardation and birth defects by direct
genetic analysis of fetal cells.

     Maternal blood has been shown to contain cells derived from the fetus,
although these cells are exceedingly rare. Researchers such as the National
Institutes of Health Fetal Cell Study consortium, funded by the U.S. National
Institutes of Health, have demonstrated the feasibility of genetic analysis of
fetal cells isolated from maternal blood. However, obtaining a sufficient number
of fetal blood cells for analysis has been difficult and generally not suitable
to routine clinical application. The Company is continuing research on a system
to identify fetal cells in maternal blood specimens and detect chromosomal
abnormalities in those cells. Such a system is expected to include reagents to
identify fetal cells and the Company's currently developed FISH probe products
(for chromosomes 13, 18, 21, X and Y).

ASR/RESEARCH PRODUCTS

     Vysis currently markets over 300 DNA probes and related reagent products
that were marketed under research use only ("RUO") labeling before November 23,
1998, when new FDA regulations went into effect. The Company has converted the
labeling of most of these products to Analyte Specific Reagents ("ASR's") under
the new regulations. ASR products must be manufactured under the FDA's Quality
System Regulations (formerly the Good Manufacturing Practice rules), and can be
used by high complexity testing laboratories, as certified under the Clinical
Laboratories Improvement Act ("CLIA"), for clinical diagnosis provided that the
laboratory validates the analytical characteristics of the assay and uses an FDA
mandated disclaimer when reporting the results. The Company is not permitted to
make marketing claims on either the analytical or the clinical performance of
any ASR product. See Business - Government Regulation. Sales of ASR products are
categorized in ASR/Research products (see Note 18 of Notes to Consolidated
Financial Statements). The Company introduced 19 new ASR/Research products in
2000. The ASR/Research reagent product line represented approximately $11.2
million, or 51.1 percent, of the Company's $21.9 million of product revenues in
2000, approximately $9.5 million, or 45.4 percent, of the Company's $20.9
million of product revenues in 1999, and approximately $8.5 million or 39.3
percent, of the Company's $21.5 million of product revenues in 1998.

     The Company markets six FISH ASR/Research probe product lines, respectively
marketed as WCP(R), CEP(R), LSI(R) and MultiVysion, TelVysion, ToTelVysion,
ProVysion and SpectraVysion probes and various reagents. These products are used
in a wide range of genetic research and can be used for clinical diagnostics
under the ASR regulations noted above. The Company also markets Comparative
Genomic Hybridization reagents for ASR/Research use.

     WCP WHOLE CHROMOSOME PAINT FISH PROBES. WCP probes fluorescently label or
"paint" the unique sequences of an entire chromosome allowing analysis of the
chromosome number as well as indicating chromosome additions and simple and
complex translocations in human metaphase cells.
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     CEP CHROMOSOME ENUMERATION FISH PROBES. CEP probes hybridize to repeat
sequence targets on specific chromosomes. This allows for rapid counting of
chromosomes to determine if there are too few or too many chromosomes within
interphase or metaphase cells.

     LSI LOCUS SPECIFIC IDENTIFIER FISH PROBES. LSI probes hybridize to specific
locations on individual chromosomes and identify specific sequences of DNA,
which are typically gene or disease specific. By highlighting specific regions
of the chromosome, these probes quickly identify if specific genes are present
as expected or whether certain gross chromosomal changes exist.

     COMPARATIVE GENOMIC HYBRIDIZATION (CGH) REAGENTS. CGH reagents are a line
of products for performing comparative genomic hybridization, a tool for
determining previously unidentified gene amplifications and deletions in genetic
diseases and cancers.

     PREIMPLANTATION GENETIC TESTING ("PGT"). The MultiVysion PGT product, based
on the FISH System, simultaneously detects abnormalities of chromosomes 13, 18,
21, X and Y in a single blastomere cell within 4 hours. In 1998, the MultiVysion
PB product, also on the FISH System, was introduced for detection of
abnormalities of chromosomes 13, 16, 18, 21 and 22 in polar bodies. The Company
is supplying the MultiVysion probes for a marketing trial of their use in PGT
analysis. PGT analysis is performed to increase the probability of a successful
implantation.

     TELVYSION PROBES. Telomeres are unique sequences of DNA at the end of
chromosomes that contain a large number of genes. Telomeres play an integral
role in chromosome biology, structure, and function. Changes in the gene-rich
chromosome regions near telomeres, such as deletions or translocations
frequently missed by traditional karyotyping, have been implicated as causes of
mental retardation and cancer. The Company markets the TelVysion line of
individual locus specific FISH probes targeted at the gene-rich regions near the
telomeres for research in chromosomal causes of mental retardation and cancer.
The Company in 2000 introduced the ASR ToTelVysion multi-color 41 telomere probe
set to simultaneously assess 41 sub-telomere regions.

     SPECTRAVYSION ASSAY. Traditional karyotypes employ black and white images
of chromosomes and interpretation of these karyotypes requires sophisticated
training in recognition of chromosome patterns and changes in the chromosomes.
Frequently subtle translocations are missed utilizing traditional black and
white karyotyping. The Company's SpectraVysion Assay is intended to simplify and
improve the accuracy of karyotyping by providing a unique color to each
chromosome, thus allowing the detection of chromosomal rearrangements not
possible with traditional karyotyping. The Company in 1998 began marketing as an
ASR/research product, its spectral karyotyping system comprised of a 24 color
probe SpectraVysion reagent set and a genetic workstation that incorporates
proprietary software for image analysis of the multi-color karyotype provided by
the reagent. The Quips SpectraVysion genetic imaging workstation software was
sold to AI as part of the Imaging business sale. AI markets imaging software
used with the SpectraVysion probes.

     AMPLI-ONC I AND II MICROARRAYS. In December 1999, the Company initiated
shipments of its Ampli-Onc I Microarray based on its GenoSensor Array System
that detects 58 genes amplified in cancer. This ready-to-use array of DNA probes
on a miniaturized chip is designed for use with the GenoSensor System reader to
enable simultaneous assessment of a large number of genes in patient specimens
for abnormalities in specific gene counts. The Company is also developing the
Ampli-Onc II Microarray, which adds assessment of various tumor suppressor gene
loci to the amplified genes of the Ampli-Onc I. The Company believes that
simultaneous testing for multiple genetic abnormalities is likely to accelerate
research and eventually provide clinical correlations between chromosomal
abnormalities and disease. Both of these products may enable researchers to
discover new correlations that may yield genomic products for improved
diagnosis, prognosis and predictive outcome.

INSTRUMENT PRODUCTS

     Vysis markets instrument products including certain FISH-related processing
instruments and the GenoSensor System reader. The Company began shipments of its
VP 2000 Processor and the GenoSensor Reader in 1999. In July 1999, the Company
sold its Imaging business to Applied Imaging Corp. Under the sale terms, the
Company retained the ownership of and right to use all of the Quips proprietary
software in automated scanning and hybridization instruments.

                                       10
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See Note 10 of Notes to Consolidated Financial Statements for further discussion
of the Imaging business sale. The instrument product line represented
approximately $1.9 million, or 8.7 percent, of the Company's $21.9 million of
product revenues in 2000, approximately $3.3 million, or 15.6 percent, of the
Company's $20.9 million of product revenues in 1999, and approximately $6.6
million, or 30.9 percent, of the Company's $21.5 million of product revenues in
1998.

     VP 2000 PROCESSOR. This processing instrument was designed to reduce up to
70% of the manual steps required in carrying out a FISH assay, particularly for
those assays which involve a tissue pretreatment step. The Company's test
results showed the VP 2000 provided superior test results compared to fully
manual FISH assays for paraffin-embedded breast cancer samples.

     HYBRITE(TM). HYBrite is a semi-automated instrument for denaturation and
hybridization of FISH probes. The HYBrite system eliminates the need for
denaturation reagents and other temperature devices. The HYBrite shortens assay
time, eliminates steps and reduces user variability.

     GENOSENSOR(TM) Reader. The GenoSensor Reader, which the Company began
shipping in 1999, is a proprietary reader designed to quickly capture
fluorescent image data from the Ampli-Onc MicroArray after assay performance.
The Reader incorporates image processing software that permits analysis and
calculation of gene amplification or deletion in the test sample for each gene
in the microarray.

DISTRIBUTED LABORATORY PRODUCTS

     The Company's former wholly-owned subsidiary, Vysis Sarl, marketed a line
of laboratory products on a distributor basis primarily in France. These
products included laboratory ventilation systems, growth media and humidifier
cabinets. Sales of these products were approximately $1.1 million in 1999 and
$1.2 million in 1998. The Company sold Vysis Sarl and the rights to this product
line to Applied Genetics Services, Ltd. in December 1999. See Note 11 of Notes
to Consolidated Financial Statements.

FOOD TESTING PRODUCTS

     The Company develops, manufactures and commercializes products for the
detection and identification of food-borne pathogens to food processors and
quality control laboratories. These products, marketed under the Gene-Trak(R)
name, include both DNA probe products and antibody kits for the detection of
organisms found to contaminate food such as Salmonella, E. coli, Listeria and
Listeria monocytogenes. The Company's food testing product revenues were
approximately $2.8 million in 2000, approximately $3.0 million in 1999, and
approximately $2.6 million in 1998. Sales and marketing of the food testing
products are conducted by sales and marketing employees in the United States
dedicated solely to the food testing business segment and through separate
international distributors. The food testing products are manufactured in a
separate facility from that used for the Company's genetic testing products.
Compliance with government regulatory requirements for the food testing products
is performed by separate employees.

SALES AND MARKETING

MARKETING STRATEGY

     The Company currently markets its products to hospitals, reference
laboratories, academic and commercial research institutions and managed care
organizations. The principal customers for its Clinical diagnostic products
include cytogeneticists, pathologists, oncologists and other physicians. The
AneuVysion assay is used in the U.S. by CLIA certified high complexity testing
cytogenetic laboratories offering karyotyping and prenatal diagnostic services.
The marketing of the PathVysion HER-2 DNA Probe Kit is focused on hospital-based
pathology laboratories and reference laboratories.

     The market adoption rates for its Clinical products improved in 2000,
however there can be no assurances that this improvement trend will continue.
The Company believes the adoption in France of its prenatal Clinical products
has been adversely affected by the French government's 1998 decision to delay
action on a recommendation that it approve reimbursement for FISH prenatal
tests. The French government has still taken no action on this recommendation,
and

                                      11
<PAGE>

the Company does not know when or if the French government will approve
reimbursement. Continued delays in the acceptance and adoption rates for the
Company's Clinical and ASR/Research products could have a material adverse
effect on the Company's business, financial condition and results of operations.

     In order to accelerate clinical market acceptance of its Genomic Disease
Management products, the Company is continuing its marketing programs to (i)
increase the level of awareness of FISH System products among the clinical
laboratories and the physicians who are expected to order these tests, (ii)
educate the medical community regarding the benefits of managing disease with
genomic testing products, (iii) provide data demonstrating clinical correlation
of the disease target to disease outcome, progression and predisposition, and
(iv) establish marketing programs through relevant patient advocacy and support
groups.

     The Company in 2000 continued efforts to obtain approvals from third party
payors, including Medicare and private approvals, for reimbursement for the
Company's products. As part of these efforts, the Company renewed a license
agreement with the American Medical Association ("AMA") permitting the Company
to publish the AMA's "CPT" codes governing reimbursement for the Company's FISH
products. The Company includes the CPT codes in its product catalog and web
site, along with advice for its customer base on how to pursue reimbursement.
The Company believes reimbursement is generally available in all states for the
AneuVysion assay. The Company also has obtained reimbursement approval for its
PathVysion HER-2 DNA Probe Kit in 47 states with reimbursement decisions pending
in 2 states. One state, South Carolina, has denied coverage for the PathVysion
HER-2 assay. The failure of the Company's customers to obtain adequate third
party payor reimbursement for the Company's Genomic Disease Management products
could result in a material adverse impact on the Company's business, financial
condition and results of operations.

SALES STRATEGY

     Sales in the United States are conducted by a direct sales force, currently
consisting of a national sales manager and seven technical sales
representatives. The sales representatives each handle Clinical and ASR/Research
reagent sales as well as instrumentation sales. In 2000 the Company introduced
an electronic commerce, on-line sales order system on its web site,
WWW.VYSIS.COM. European, Middle Eastern and African sales, managed by the
President of the Company's European operations, are supported by a 9-person
direct sales organization with operations in Germany, France and the United
Kingdom.

     Sales and marketing in Japan is conducted through a marketing partnership
with Fujisawa Pharmaceutical Co., Ltd. ("Fujisawa"). The partnership, entered
into in July 1995, provides Fujisawa with a ten-year exclusive distribution
right to market Vysis FISH probes and instruments in Japan. Fujisawa is
responsible for funding all clinical regulatory compliance for the Japanese
market. Vysis will supply all of its United States and European clinical trial
data for its FISH products to assist Fujisawa in its regulatory approval
efforts. The agreement required Fujisawa to pay the Company $600,000 per year
through 1999. Fujisawa and the Company are currently collaborating on the
performance of a Japanese clinical trial plan and submission to the Japanese
regulatory agency for the PathVysion HER-2 assay for breast cancer.

     Sales in the other world markets are conducted through the use of local
distributors. These distributors are supported by a U.S.-based International
Distribution Manager. See Note 18 of Notes to Consolidated Financial Statements
for financial information of the Company organized by geographic area.

MANUFACTURING

     The Company's manufacturing operations encompass the production and
packaging of DNA probes and reagents, the Ampli-Onc I Microarrays and the
GenoSensor Readers. The Company's manufacturing operations utilize a complete
material requirements planning system fully integrated with the Company's
finance department for operational control. The Company believes that its
current genetic testing product manufacturing processes are readily scaleable to
meet expected growth.

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<PAGE>

     The genetic testing product manufacturing processes are performed according
to the FDA's Quality System Regulation ("QSR"), which replaced the FDA's Good
Manufacturing Practices criteria. The Company trains employees for compliance
with current QSR requirements as specified by the FDA. See Business-Government
Regulation. The Company's genetic testing product manufacturing and food testing
product manufacturing are both ISO 9001 certified. ISO 9001 is the most
comprehensive of all the International Organization for Standardization quality
standards and is an important element of the Company's strategy to commercialize
its products globally.

COLLABORATIONS

     The Company is focusing its outside collaborations on development of its
GenoSensor platform and on establishing correlations of chromosome abnormalities
to various cancers. The Company's major collaborations include:

UNIVERSITY OF CALIFORNIA, SAN FRANCISCO

     The Company funds research at the Department of Laboratory Medicine,
University of California, San Francisco ("UCSF") Cancer Center at the UCSF
Medical School on microarray-based CGH and cancer correlations.

THE MAYO CLINIC

     The Company funds or collaborates on research performed at the Mayo Clinic
in the area of correlation of chromosomal abnormalities to aggressive forms of
prostate cancer and genes associated with metastatic potential, in the use of
the Vysis UroVysion Bladder assay and in the development of a FISH panel for the
early detection of lung cancer, and on new FISH probes for classification of
various leukemias and lymphomas.

NATIONAL HUMAN GENOME RESEARCH INSTITUTE/INSTITUTE OF PATHOLOGY AT THE
UNIVERSITY OF BASEL

     In 1999 the Company began a three party cooperative research and
development agreement ("CRADA") collaboration with the National Human Genome
Research Institute and Dr. Guido Sauter of the Institute of Pathology at the
University of Basel in Switzerland, on the use of the Company's FISH and
GenoSensor technologies in combination with "microtumor" arrays. This
collaboration will be testing various microtumor arrays, including bladder,
prostate, breast, ovarian, lung and cervical cancer specimen arrays, with the
Company's FISH probes and Ampli-Onc Microarrays. The Company expects to develop
significant Clinical product leads from this collaboration. Under the CRADA the
Company has an option to obtain an exclusive license to the technology developed
during the collaboration.

EOS BIOTECHNOLOGY

     In 1999 the Company began a research collaboration with Eos Biotechnology,
a privately held developer of therapeutic drug candidates, to identify genes in
breast cancer that are both over-expressed and are amplified at the chromosomal
DNA level. Under this collaboration, the Company is developing FISH probes for
genes identified by Eos as over-expressed in breast cancer. Eos uses a variety
of technologies to identify these genes, including Affymetrix GeneChips and its
own proprietary technologies. Under the collaboration agreement, the Company
will have exclusive rights for diagnostic use of the developed technology and
Eos will have exclusive rights for therapeutic and therapeutic development use.

GENENTECH AND F. HOFFMAN-LA ROCHE

     The Company entered into separate collaborative agreements with Genentech,
Inc. and F. Hoffman-La Roche ("Roche") relating to the use of the PathVysion
HER2 assay to select patients for Herceptin(R) therapy. The Herceptin therapy
was developed by Genentech and targets the HER2 protein with a humanized
monoclonal antibody. It was approved by the FDA for use in treating metastatic
breast cancer in September 1998. Genentech has licensed Roche for the
distribution of Herceptin outside of the U.S. and Roche has begun to receive
Herceptin approvals. Under these collaborations, the Company will supply
Genentech and Roche with PathVysion assays for use in their respective clinical
trials of Herceptin. Genentech published data at the May 2000 American Society
of

                                       13
<PAGE>

Clinical Oncology meeting in New Orleans showing that the PathVysion assay was a
superior predictor of patients likely to respond to Herceptin. Under the
Genentech collaborative agreement, the Company and Genentech will make a joint
submission to the FDA seeking labeling changes of their respective PathVysion
and Herceptin product approvals relating to the use of PathVysion to select
patients for Herceptin therapy.

OTHER COLLABORATIONS

     The Company has also established additional research collaborations aimed
at generating Clinical product opportunities, although there can be no
assurances of successful development of Clinical reagent products based upon any
of these research efforts. The Company's collaboration with the University of
Chicago aimed at producing a set of telomere probes for each human chromosome
and establishing clinical use of these probes for the diagnosis of mental
retardation has resulted in the ToTelVysion telomere probe set product release
in 2000. The Company is supplying its MultiVysion FISH probe panel for a
marketing trial with the Reproductive Genetics Institute directed at
establishing the utility of the Company's FISH probes in pre-implantation
genetic testing. The Company is collaborating with the University of Glasgow,
Glasgow, Scotland, on the use of AmpliOnc microarrays to analyze breast cancer.

PATENTS, LICENSE RIGHTS AND PROPRIETARY INFORMATION

     The Company currently holds or has exclusive licenses to 141 issued United
States patents or allowed United States patent applications, to 62 pending
United States patent applications, and to additional foreign patents and pending
patent applications in various areas of genetic and infectious disease testing.

     The following describes significant patents of the Company:

FISH TECHNOLOGY

     U.S. Patent 5,447,841, "Method for Chromosome-Specific Staining", issued
September 5, 1995, licensed exclusively from the University of California covers
methods of IN SITU hybridization using unique sequence probes and unlabeled
blocking DNA. These methods permit the use as DNA probes of DNA sequences which
are produced by standard cloning procedures without removal of any repeat DNA
sequences which are present. The Company believes that the alternative
manufacturing technologies to produce labeled FISH probes which do not contain
the repeat DNA sequences are difficult to implement and are not proven
commercially. The Company is also licensed exclusively under three pending
United States divisional patent applications stemming from the '841 patent. Each
of these applications claims priority of the '841 patent applications filed on
January 16, 1986 and December 1, 1986. The divisional applications cover other
embodiments of IN SITU hybridization using unique sequence probes, including
detection of abnormalities on chromosome 21 and detection of gene amplification
or gene deletion. U.S. Patent 5,756,696, "Compositions for Chromosome Specific
Staining", issued May 26, 1998, relates to unique sequence FISH probe
compositions containing blocking DNA. In January 2000, the Company acquired a
royalty-bearing exclusive license from Yale University under the chromosomal
suppression IN SITU hybridization patent rights invented by David Ward et al.,
including issued European Patent 0 444 115 and its pending U.S. application
counterparts. This license broadens the Company's FISH patent portfolio,
particularly in Europe, and the Company intends to include these rights in its
sublicensing efforts for FISH.

DIRECT LABELING TECHNOLOGY

     U.S. Patent 5,491,224, "Direct Label Transaminated DNA Probe Compositions
for Chromosome Identification and Methods for their Manufacture", issued
February 13, 1996, and its pending foreign counterpart applications, claim the
Company's direct label FISH DNA probes and their manufacture. U.S. Patent
5,663,319, "Probe Compositions for Chromosome Identification and Methods",
issued September 2, 1997 covers multiple direct label FISH probe compositions.
The Company has received a counterpart European patent on its direct label FISH
DNA probes and on methods of IN SITU hybridization using multiple direct label
FISH DNA probes. U.S. Patent 5,776,688, "Methods for Detection by In Situ
Hybridization of Multiple Chromosomes or Regions Thereof", issued July 7, 1998,
relates to use of multiple direct label FISH probes.

                                       14
<PAGE>

GENOMIC MICROARRAY TECHNOLOGY

     The Company is exclusively licensed by the University of California under
U.S. Patent 5,665,549, "Comparative Genomic Hybridization (CGH)", issued
September 9, 1997, and other pending United States and foreign patent
applications claiming basic CGH methods to detect changes in copy number of DNA
sequences at a particular chromosome location. The Company is also licensed
exclusively by the University of California under U.S. Patent 6,159,685,
covering generic CGH assays to detect copy number changes, both chromosomal and
gene expression changes. The Company also holds an option from the University of
California to obtain an exclusive license to U.S. Patent 5,830,645, "Comparative
Fluorescence Hybridization to Nucleic Acid Arrays", issued November 2, 1998,
relating to microarray-based CGH assays carried out using a nucleic acid array
as the hybridization target, and to pending U.S. and foreign patent applications
claiming microarray-based CGH assays. The Company has pending U.S. patent
applications relating to its Ampli-Onc and Aneu-Del-Tel Microarrays and the
GenoSensor imaging system.

SEQUENCE SPECIFIC TECHNOLOGY

     The Company's Sequence Specific Technology underlies the Molecular Lawn
Platform. U.S. Patent 5,851,767, "Detection of Prokaryotic Organism by DNA
Hybridization", issued December 22, 1998, relates to detection of bacteria using
bacteria specific, synthesized oligonucleotide probes. U.S. Patent 5,750,338,
"Target and Background Capture Methods with Amplification for Affinity Assays",
issued May 12, 1998, the "Collins patent", relates to methods of reducing
background noise in nucleic acid amplification assays. A royalty-bearing,
non-exclusive license under the Collins patent was granted to Gen-Probe
Incorporated ("Gen-Probe") under the August 1999 settlement of the litigation
with Gen-Probe. See Legal Proceedings below. The Company holds non-exclusive
licenses from Columbia University/Salk Institute and from PHRI on United States
and foreign patents and pending patent applications relating to the use of QBR
as an amplification technology to detect nucleic acid targets. These include
U.S. Patent 4,786,600 issued November 22, 1988, claiming "substrate" molecules
having inserted probe sequences which are replicatable by QBR and U.S. Patent
4,957,858, issued September 18, 1990, claiming nucleic acid detection assays
using QBR. The Company also has a number of United States and foreign patents
and pending patent applications covering its sequence specific technology.

CORRELATIONS OF CHROMOSOMAL ABNORMALITIES TO DISEASE

     The Company is pursuing a strategy to acquire rights to methods correlating
particular genetic aberrations to disease. These rights will potentially provide
opportunities for exclusive positions on clinical assays. For example, U.S.
Patent 5,472,842, "Detection of Amplified or Deleted Chromosome Regions", issued
December 5, 1995, and its pending foreign counterpart applications, licensed
exclusively from the University of California, cover methods of detection of a
chromosomal abnormality on chromosome 20 at locus 20q13 which has been
correlated to certain forms of breast cancer. The Company holds an option from
the University of California for an exclusive license for therapeutic and
diagnostic uses to United States and foreign patent applications claiming gene
sequences in the chromosome 20q13 locus. The Company and the Mayo Clinic jointly
own U.S. Patent 6,174,681 covering the Vysis UroVysion Bladder test. The Company
holds an exclusive license to a U.S. patent application filed by the Mayo Clinic
for a FISH assay to identify aggressive prostate cancer. The Company is also
exclusively licensed under United States and foreign patent applications from
the University of California, St. Jude Children's Research Hospital, Canji,
Inc., the U.S. National Institutes of Health and the California Pacific Medical
Center claiming methods to diagnose disease based upon correlations of
particular chromosomal abnormalities for colon cancer, breast cancer, lung
cancer, bladder cancer, ovarian cancer, prostate cancer, gliomas and leukemias.

ABILITY TO PRACTICE TECHNOLOGY

     The Company's success will depend to a substantial degree upon its ability
to operate its business and to develop, manufacture, market and sell its
products without infringing the proprietary rights of third parties. However,
numerous United States and foreign issued patents and pending patent
applications, which are owned by third parties, exist in the general fields of
nucleic acid technology and clinical diagnostic technology. A partial list of
more specific technologies in these general fields includes patents and patent
applications relevant to nucleic acid probe manufacturing, including array
manufacturing, labels for nucleic acid probes, nucleic acid probe compositions,
nucleic acid probe hybridization assays, nucleic acid amplification methods,
full length gene sequences, full length expressed

                                       15
<PAGE>

gene sequences, partial gene and expressed gene sequences, gene expression
assays, correlations of chromosome or gene abnormalities to disease, gene point
mutation detection assays, oligonucleotide and polynucleotide array
hybridization methods, patient sample processing, fetal cell identification and
separation, imaging apparatus and methods, infectious disease detection assays,
miniaturized or microfluidic-based nucleic acid assays, food testing assays and
apparatus related to these technologies. The Company expects that additional
United States and foreign patents owned by third parties will issue and
additional United States and foreign patent applications owned by third parties
will be filed in these fields. The Company further believes that the level of
patent competition in these fields is sufficiently high that patent litigation
in these fields is likely to occur.

     Consequently, the Company believes that its management of the business
risks presented by the intense patent competition in these fields is critical to
its ability to operate its business and to develop, manufacture, market and sell
its products. There can be no assurance that the Company will be able to
successfully manage these patent business risks to avoid infringing the
proprietary rights of others nor can there be any assurance that patent
infringement suits will not be brought against the Company. Any failure in its
management of these patent business risks may have a material adverse impact on
the Company's business, financial condition and results of operations.

     The patent position of a company utilizing biotechnology generally is
highly uncertain and involves complex legal and factual questions. There can be
no assurance that any patents owned by or licensed to the Company will not be
challenged and subsequently invalidated or circumvented, or that such patents
will be sufficiently broad to afford protection against third parties who
develop or use similar technology, or that any of such patents will be
successfully asserted against any infringing activity, or that any of the
Company's patent rights will be successfully cross-licensed to third parties in
exchange for a license under their patent rights. In addition, there can be no
assurance that any pending United States or foreign patent applications owned or
licensed by the Company or those acquired or licensed by the Company in the
future will result in issued patents, or that such applications will not be
subject to foreign opposition seeking the revocation of a Company patent or to
United States patent interference seeking a determination that the Company or
its collaborators were not the first inventor of a particular patent or patent
application, or that the Company or its collaborators will develop additional
technologies that are patentable, or that any patents owned or licensed to the
Company will provide a basis for commercially viable products or services or a
basis for generation of licensing revenue.

     The Company is also aware of issued United States and foreign patents and
pending patent applications owned or controlled by third parties, which are
related to the Company's current or anticipated technologies. Specifically, the
Company is aware of issued United States and foreign patents and pending patent
applications owned or controlled by third parties, which are related to
significant elements of the Company's FISH, CGH, including its microarray-based
CGH applications, and direct labeling technologies, or to significant elements
of the Company's anticipated use of its QBR technologies, or to reagents useful
in the performance of CGH or microarray-based CGH assays. Although the Company
believes that certain of these issued patents are not infringed by the Company's
current and planned operations, there can be no assurance that the Company would
be able to successfully assert such a position in the courts, nor that such a
position could be asserted without the Company incurring substantial or
prohibitive costs. Furthermore, because United States patent applications are
maintained under conditions of confidentiality while the applications are
pending in the United States Patent and Trademark Office, there may be pending
patent applications filed by third parties of which the Company is unaware and
which relate to the Company's current or planned technologies. In addition,
third parties may in the future file patent applications having claims that
relate to the Company's services, processes or products. Persons holding or
licensing patent rights could bring legal actions against the Company claiming
that any of the Company's marketing, services, processes or products, or the
Company's collaborators' or its suppliers' services or products or of the
Company's customers' use of the Company's services or products infringe one or
more of their patents, and seek damages or injunctive relief. Patent litigation
is costly, and there can be no assurance that the Company would prevail in any
patent litigation brought against it. Further, the Company could be subject to
significant liabilities to such persons, may be required to obtain licenses from
such persons, or may be required to cease certain activities, and any of these
could have a material adverse effect upon the Company's business, financial
condition and results of operations. In addition, there can be no assurance that
the Company will be able to obtain such licenses on commercially reasonable
terms, or at all.

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COMPETITION

     Competition in clinical diagnostics and genomics is intense and is expected
to increase as the market for Genomic Disease Management products develops.
Competition is and will continue to be based on quality, reliability, accuracy,
ease of use, price and product line offering. Ventana Medical Systems, Inc.
("Ventana") acquired the FISH oncology-related assets of Oncor, Inc., formerly a
major competitor in the supply of FISH products to the research market. Ventana
has begun marketing of the former Oncor products, including the clinical Inform
HER-2/NEU FISH product. Ventana also markets immunohistochemistry ("IHC")
reagents and has obtained FDA approval to market an IHC test to detect HER-2
gene overexpression that competes with the PathVysion assay. Dako USA also
markets an IHC assay, the Herceptest(TM), that competes with the PathVysion
HER-2 assay. The Company is aware of other entities that currently market
ASR/RUO nucleic acid products, which may have the ability to compete with the
Company in the clinical market. In addition, many reference laboratories and
research institutions produce their own FISH probes for internal use.

     Other companies are developing and marketing genomic assessment products
including "DNA Chip" products for assessment of gene expression or gene sequence
with potential use for clinical diagnostics. Other diagnostic companies may
enter the genetic disease diagnostic market with nucleic acid based
technologies. The Company's FISH products also face significant competition from
polymerase chain reaction ("PCR") based nucleic acid amplification assays. Many
of the Company's existing and potential competitors have substantially greater
financial, marketing, sales, distribution and technological resources than the
Company or may have substantial advantages over the Company in terms of research
and development expertise, experience in conducting clinical trials, experience
in regulatory matters, manufacturing efficiency, name recognition, ability to
obtain necessary intellectual property licenses, sales and marketing expertise
and distribution channels.

     The food testing product segment is also highly competitive and the
Company's nucleic acid probe food testing products face competition from
antibody product suppliers and from PCR assay products.

GOVERNMENT REGULATION

     The preclinical and clinical testing, manufacturing, labeling, distribution
and promotion of the Company's products are subject to extensive and rigorous
government regulation in the United States and other countries. Noncompliance
with applicable requirements can result in enforcement action by the Food and
Drug Administration ("FDA") or comparable foreign regulatory bodies including,
among other things, warning letters, fines, injunctions, civil penalties, recall
or seizure of products, refusal to grant premarket clearances or approvals,
withdrawal of marketing approvals and criminal prosecution.

     The Company generally is prohibited from marketing its diagnostic products
in the United States unless it obtains either 510(k) clearance or premarket
application ("PMA") approval from the FDA. The Company believes that it usually
takes from four to 12 months from submission to obtain 510(k) clearance, but it
can take longer. The process of obtaining PMA approval is generally much more
costly, lengthy and uncertain. In any event, there can be no assurance that
510(k) clearance or PMA approval will be obtained in a timely fashion or at all.
Such clearance or approval may also have limitations on how the device may be
marketed that will limit its sales potential. The Company is also permitted to
market products that have diagnostic utility under the FDA's Analyte Specific
Reagent rules, also termed the "ASR" regulations, that went into effect in
November 1998. Under the ASR regulations, the Company's marketing of products
labeled as ASR's must not contain any claims of analytical or diagnostic
utility.

     The ASR regulations restrict sales of ASR reagents to (1) clinical
laboratories certified under the Clinical Laboratories Improvement Act as
high complexity testing laboratories, (2) clinical device manufacturers and
(3) laboratories and other organizations performing tests for purposes other
than human or animal diagnostic information. The ASR regulations further
permit clinical laboratories to offer diagnostic tests based upon use of ASR
reagents, provided that the laboratory establishes the analytical validity of
the test and that the laboratory includes a disclaimer with the test reports
that the FDA has not reviewed nor approved the test. The Company has
converted the labeling of most of its previous RUO reagents to ASR labeling
in compliance with the ASR regulations. The FDA has not yet taken any
regulatory action under the ASR regulations, nor issued any guidance
documents on the ASR regulations.

                                       17
<PAGE>

     Any devices manufactured or distributed by the Company pursuant to FDA
clearances or approvals will be subject to pervasive and continuing regulation
by the FDA and certain state agencies. The Company will be subject to routine
inspection by the FDA and will have to comply with the host of regulatory
requirements that usually apply to medical devices marketed in the United
States, including labeling regulations, the QSR, the Medical Device Reporting
regulation (which requires a manufacturer to report to the FDA certain types of
adverse events involving its products), and the FDA's prohibitions against
promoting products for unapproved or "off-label" uses. Unanticipated changes in
existing regulatory requirements or adoption of new requirements could have a
material adverse effect on the Company. The Company's failure to comply with
applicable regulatory requirements could result in enforcement action by the FDA
or foreign governments, which could have a material adverse effect on the
Company's business, financial condition and results of operations.

     The Food and Drug Administration Modernization Act of 1997 made changes to
the device provisions of the Food, Drug and Cosmetic Act and other provisions in
the Act affecting the regulation of devices. Among other things, the changes
affect the 510(k) and PMA processes, and also affect device standards and data
requirements, procedures relating to humanitarian and breakthrough devices,
tracking and postmarket surveillance, accredited third party review, and the
dissemination of off-label information. The Company cannot predict how or when
these changes will be implemented or what effect the changes will have on the
regulation of the Company's products. There can be no assurance that the
legislation will not impose additional costs or lengthen review times for the
Company's products.

EMPLOYEES

     As of March 21, 2001, the Company had 133 full-time employees (including
seven open positions), of whom 17 hold Ph.D. degrees, one holds an M.D. degree
and 21 hold other advanced degrees. Of the Company's total work force, 38
positions are in research and development, 31 are in operations and 41 are in
sales, general and administrative positions including sales, marketing, legal,
finance, management information services, human resources and administration.
The Company believes that its future success will depend, in part, on its
continuing ability to attract, retain, and motivate qualified scientific,
technical, and managerial personnel. The Company faces intense competition in
this regard from other companies, research and academic institutions, government
entities and other organizations. None of the Company's employees is represented
by a collective bargaining agreement, nor has the Company experienced work
stoppages. The Company believes that its relations with its employees are good.

EXECUTIVE OFFICERS

     The executive officers of the Company, their ages as of January 1, 2001,
and their present positions with the Company are as follows:
<TABLE>
<CAPTION>

NAME                        AGE   POSITION
----                        ---   --------
<S>                          <C>   <C>
John L. Bishop...........    56    President, Chief Executive Officer and Director
Russel K. Enns...........    52    Vice President, Regulatory Affairs
Robert J. Koska..........    43    Vice President, Sales and Marketing
William E. Murray........    47    Vice President, General Counsel and Secretary
Steven A. Seelig.........    52    Senior Vice President, Research and Development and Chief Medical Officer
John R. Sluis............    55    Senior Vice President, Finance and Chief Financial Officer
Paul J.J.G. Steuperaert..    61    President, European Operations
</TABLE>

     JOHN L. BISHOP has served as President and as a Director since November
1993 and became Chief Executive Officer in February 1996. Mr. Bishop was elected
in March 1999 to the board of directors of the American College of Medical
Genetics Foundation. Mr. Bishop is a member of the Board of Directors of Nyxis,
Chicago, Illinois, a privately held developer of drugs for neurological
disorders. Mr. Bishop has over 25 years experience in developing and operating
diagnostics businesses. From 1991 until November 1993, Mr. Bishop was Chairman
and Chief Executive Officer of MicroProbe Corporation, a manufacturer of DNA
probe diagnostics and therapeutics and, from 1987 until 1991 of Source
Scientific Systems, an original equipment manufacturer of automated diagnostic
systems. From 1984 until 1986, Mr. Bishop was President and Chief Operating
Officer of Gen-Probe, Inc., a developer and manufacturer of

                                       18
<PAGE>

DNA probe diagnostics for infectious diseases. From 1968 until 1984, Mr. Bishop
held various management positions with American Hospital Supply Company and its
affiliates, including a three year assignment in Japan as an Executive Vice
President and Chief Executive Officer of International Reagents Corp., a joint
venture between American Hospital Supply Company and Green Cross Corporation.

     RUSSEL K. ENNS, PH.D., has served as Vice President, Regulatory Affairs
since he joined the Company in December 1995. Prior to joining the Company, Dr.
Enns was Vice President of Technical Affairs of MicroProbe Corporation from
February 1992 to November 1995. From August 1984 to February 1992, Dr. Enns held
several positions with Gen-Probe, Inc., including Director of Product
Development and Clinical Development and Director, Technical Affairs.

     ROBERT J. KOSKA was appointed Vice President, Sales and Marketing in
January 2000. Mr. Koska was previously Director of Marketing since August 1998
and Marketing Manager since joining the Company in June 1996. Prior to joining
the Company, Mr. Koska held a variety of marketing and sales management
positions and was most recently Eastern Area Sales Manager for Difco
Laboratories Inc., a microbiology and infectious disease diagnostic products
manufacturer, from April 1989 to May 1996. From September 1983 to April 1989 Mr.
Koska held sales positions at Genetic Systems Corporation, a supplier of
diagnostic kits and instruments, and Ortho Diagnostic Systems, Inc., a supplier
of diagnostic kits and instruments.

     WILLIAM E. MURRAY, J.D., has served as Vice President, General Counsel and
Secretary of the Company since March 1994 and Assistant Secretary of the Company
from September 1992 to March 1994, while employed by BP Amoco. He became a
full-time employee of the Company in January 1996. Mr. Murray served from 1983
through 1995 in BP Amoco's law department in both attorney and patent attorney
positions.

     STEVEN A. SEELIG, M.D., PH.D., has served as Vice President, Research and
Development and Chief Medical Officer since February 1996. He has held various
research management positions with the Company and its predecessors since May
1989. Dr. Seelig was Associate Professor and Director of pediatric endocrinology
and metabolism at the University of Minnesota from 1985 to 1989.

     JOHN R. SLUIS has served as Senior Vice President, Finance and Chief
Financial Officer since June 2000. Prior to joining the company Mr. Sluis
held a variety of management and financial positions with Sanofi Diagnostics
Pasteur, a developer of medical diagnostic tests, from 1989 to 1999 including
President of its North American operations from 1997 to 1999 and Director
(Executive Vice President) of its holding company located in Paris, France
from 1994-1997. Prior to his Sanofi experience Mr. Sluis was Chief Financial
Officer of Gen-Probe from 1985 to 1989. Mr. Sluis began his career in
healthcare with American Hospital Supply Company where he held a number of
progressive positions in finance from 1974 to 1985.

     PAUL J.J.G. STEUPERAERT has served as President, European Operations since
September 1, 1998. He served from 1988 until joining the Company as President of
Pilling Weck Europe, the surgical products division of Teleflex, Inc., where he
managed all operations in Europe, the Middle East and Africa.

SCIENTIFIC ADVISORY BOARD

     The following individuals comprise Vysis' Scientific Advisory Board, which
plays an active role in guiding Vysis' research and development activities:

     DR. CARLOS CORDON-CARDO, M.D., PH.D., has served as the Director, Division
of Molecular Pathology, Department of Pathology, Memorial Sloan-Kettering Cancer
Center ("MSKCC"), New York City, New York, since 1995. He is also an Attending
Molecular Pathologist, Department of Pathology, MSKCC, and an Associate
Professor of Pathology, Cornell University Medical School, Ithaca, New York. Dr.
Cordon-Cardo also serves as the present Chair of the Solid Tumors Section of the
Association of Molecular Pathology. Dr. Cordon-Cardo holds an M.D. from the
Autonomous University of Barcelona, School of Medicine, Barcelona, Spain and a
Ph.D. from Cornell University Medical College, Graduate School of Medical
Sciences.

                                       19
<PAGE>

     DR. FERDINAND HOFSTADTER, M.D., PH.D., Head of the Department of Pathology,
University of Regensburg, Regensburg, Germany, is also the Chairman of the
Tumorcentre Regensburg, Germany, and the Vice President (Research and
Education), University Clinic, Regensburg. Dr. Hofstadter received his M.D. and
his Ph.D. in Pathology from University Innsbruck, Austria. He leads active
research in tumor pathology, oncology and molecular pathology.

     ROBERT B. JENKINS, M.D., PH.D., is Associate Professor of Laboratory
Medicine, and co-Director of the clinical Cytogenetics and clinical Molecular
Genetic Laboratories at the Mayo Clinic, Rochester, Minnesota. Dr. Jenkins is
the Associate Director of the Mayo Clinic's Cytogenetics Laboratory and has
ongoing research programs into the molecular pathology of prostate, breast and
ovarian cancers and gliomas. Dr. Jenkins has published multiple scientific
articles on the use of FISH to assess cancer pathology.

     DAVID H. LEDBETTER, PH.D., is Professor of Genetics and Director of the
Center for Medical Genetics, University of Chicago, Chicago, Illinois. He served
as Chief, Diagnostic Development Branch of the National Center for Human Genome
Research at the National Institutes of Health from 1993 to May 1996, is a
Founding Fellow of the American College of Medical Genetics, is on the Editorial
Board of HUMAN MOLECULAR GENETICS and is also the Chairman of the Company's
Scientific Advisory Board.

     KENNETH L. MELMON, M.D., is the Chief Medical Officer for Skolar, Inc., a
web-based medical information database and software developer. He is Professor
Emeritus of Medicine and Molecular Pharmacology, Stanford University School of
Medicine, Department of Medicine and Clinical Pharmacology, Stanford,
California. Dr. Melmon was the Arthur L. Bloomfield Professor of Medicine at
Stanford University School of Medicine from 1978-1988; was the Chairman from
1978 to 1984 and Associate Chairman from 1989 to 1993 of the Department of
Medicine at Stanford University School of Medicine.

     DAVID H. PERSING, M.D., PH.D., is Vice President, Diagnostic Development,
Corixa Corporation, and Medical Director, the Infectious Disease Research
Institute, Seattle, Washington. Dr. Persing was previously Associate Professor,
Department of Laboratory Medicine and Pathology and Department of Clinical
Microbiology, Mayo Clinic, Rochester, Minnesota. Dr. Persing leads active
research into infectious disease diagnosis by nucleic acid detection.

     DAN PINKEL, PH.D., is Professor, Department of Laboratory Medicine, UCSF
Cancer Center, University of California, San Francisco. Dr. Pinkel is the author
or co-author of over 50 publications on the uses of FISH; is the co-inventor of
U.S. patents on FISH probes for specific chromosomal locations and CGH; and
leads active research on array CGH assays and array manufacturing methods.

     DR. MICHAEL F. PRESS, M.D., PH.D., is the Harold E. Lee Chair for Cancer
Research Professor at the University of Southern California ("USC"), Los
Angeles, California, the Clinical Laboratory Director and Consultant, Laboratory
for Breast Cancer Analyses, USC, and a Surgical Pathologist, Women's and
Children's Hospital, Los Angeles County and USC Medical Center, and the
Coordinator, Breast Cancer Research Program, USC Norris Comprehensive Cancer
Center.

     DR. GUIDO SAUTER M.D., is a Professor of Pathology, Institute of Pathology,
University Hospital, University of Basel, Basel, Switzerland and leads active
research in molecular cytogenetics of cancer, the use of molecular scanning
technologies, such as microtumor tissue arrays, to develop tumor predictive and
prognostic markers, and urinary bladder cancer. Dr. Sauter holds a Dr. med. from
the University of Zurich, Zurich, Switzerland.

     DR. EDISON TAK-BUN LIU, M.D., is the newly appointed Executive Director of
the Singapore Genomics Program, and previously served from 1996 as the Director,
Division of Clinical Sciences, National Cancer Institute ("NCI"), U.S. National
Institutes of Health, Bethesda, Maryland, and from 1997 as the NCI's Chief,
Molecular Signaling and Oncogenesis Section, Department of Cell and Cancer. Dr.
Liu is a Director of the Board of Directors of the American Association for
Cancer Research ("AACR").

                                       20
<PAGE>

     HANS J. TANKE, PH.D., is Chairman, Department of Cytochemistry and
Cytometry, Sylvius Laboratory, Leiden University, Leiden, The Netherlands. Dr.
Tanke is the author or co-author of multiple publications in the fields of
cytology and molecular biology and leads active research programs on detection
of IN SITU hybridization results.

     STEPHEN T. WARREN, PH.D., is Investigator, Howard Hughes Medical Institute,
the William Patterson Timmie Professor of Human Genetics, and Professor of
Biochemistry and of Pediatrics at Emory University School of Medicine, Atlanta,
Georgia. Dr. Warren is a Founding Fellow of the American College of Medical
Genetics and leads active research into the molecular basis of X
chromosome-linked diseases and trinucleotide repeat expansion disorders.

                                       21
<PAGE>

ITEM 2. PROPERTIES

FACILITIES

     The Company's executive offices, research and development activities,
manufacturing operations and administrative support are located in Downers
Grove, Illinois. This 56,551 square foot facility is leased pursuant to a lease
that expires on November 30, 2004. Capacity exists at such location to expand
production to accommodate future growth.

     The Company has consolidated its European administrative, technical
services, marketing and product warehousing support in a recently constructed
facility of approximately 5,200 square feet near Toulouse, France. The Company
leases 350 square feet of space near Cologne, Germany under a month-to-month
rental agreement. The Company's food testing business leases 10,237 square feet
in Hopkinton, Massachusetts under a lease that expires in January 2003.

ITEM 3. LEGAL PROCEEDINGS

     The Company, BP Amoco and other parties had been named as defendants in a
patent infringement suit brought by Gen-Probe Incorporated ("Gen-Probe") in the
United States District Court in the Southern District of California (San Diego).
During August 1999, the parties to the suit agreed to a settlement which has
been approved by the Court and resulted in dismissal of the action. The
settlement provided for an exchange of certain immunities and patent licenses
among the parties. No material amounts of cash were paid by or received by the
Company upon completion of the settlement. Pursuant to the settlement, Gen-Probe
was granted a royalty-bearing license to the Company's U.S. Patent 5,750,338
("the `338 patent"). Gen-Probe was also granted an option to acquire a license
for its collaboration partners, BioMerieux Corporation, Bayer Corporation and
Chiron Corporation. Gen-Probe exercised this option in December 1999.

     On December 22, 1999, the Company was named as a defendant in a Complaint
For Declaratory Relief filed by Gen-Probe in the United States District Court in
the Southern District of California (San Diego). Gen-Probe filed a First Amended
Complaint For Declaratory Relief And Unfair Competition on January 25, 2000.
Gen-Probe's amended complaint seeks a declaration that the `338 patent is
invalid and not infringed by certain products for detecting the presence of
hepatitis C virus and human immunodeficiency virus in blood specimens and an
injunction restraining the Company from interfering with the manufacture, sale,
license or use of Gen-Probe's products by Gen-Probe, its partners and customers
among others. The complaint also seeks damages and other monetary relief for the
unfair competition.

     The Gen-Probe products identified in the suit use nucleic acid testing
methodology for detecting HCV and HIV in blood specimens. The `338 patent
license applies to Gen-Probe's blood testing products which are marketed by
Chiron Corporation in France and are expected to be marketed in the U.S. and
elsewhere, and other products which the Company understands will be introduced
commercially by Gen-Probe and its partners later in 2000 and thereafter.
Gen-Probe also seeks a declaration from the Court regarding its rights and
obligations under the license.

     The parties are taking discovery. The trial is projected to occur in about
January 2002. The Company believes Gen-Probe's claims are without merit and
intends to defend its rights vigorously.

     As also disclosed previously, the Company has filed an application to
reissue the `338 patent with the United States Patent & Trademark Office seeking
clarification of certain matters concerning the '338 patent. The reissue
application also requests the Patent Office to supplement the claims of the
issued patent with new claims of intermediate scope. The application remains
pending.

     Neither loss of the suit filed by Gen-Probe nor an adverse ruling by the
Patent Office to the reissue application would limit the sales or marketing of
any of the Company's present or planned products, but either result could result
in the loss of revenue resulting from the licenses granted to Gen-Probe and its
partners and other potential licenses granted under the `338 patent. Although
there can be no assurance as to the ultimate outcome of

                                       22
<PAGE>

the suit, based upon the information available at this time it is the opinion of
the Company's management that the outcome of this suit will not have a material
adverse effect on the Company's business, results of operations and financial
condition.

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

     No matters were submitted to a vote of the Company's security holders
during the fourth quarter of 2000.

                                     PART II

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

     The Company's Common Stock is traded on the NASDAQ Stock Market, ticker
symbol VYSI.

     As of March 21, 2001, there were 10,167,492 shares of Common Stock
outstanding held by approximately 89 shareholders of record.

     The following table sets forth the high and low sale prices of the Common
Stock for each fiscal quarter during the years ended December 31, 1999 and 2000,
as quoted on the NASDAQ Stock Market.

 QUARTER ENDED                           ($) HIGH          ($) LOW
 ---------------------------------     -------------    --------------
 1999
 March 31........................           6.813             3.000
 June 30.........................           4.125             2.625
 September 30....................           6.000             2.875
 December 31.....................           3.938             2.438
 2000
 March 31........................          20.000             3.218
 June 30.........................          12.000             4.187
 September 30....................          11.750             5.875
 December 31.....................           9.625             5.218


     The Company has never paid a dividend on its Common Stock. The Company
currently intends to retain its earnings to finance future growth and does not
anticipate paying any cash dividends on its Common Stock in the foreseeable
future. Any determination as to the payment of dividends will depend upon the
future results of operations, capital requirements and financial condition of
the Company and its subsidiaries and such other facts as the Board of Directors
of the Company may consider, including any contractual or statutory restrictions
on the Company's ability to pay dividends.

ITEM 6. SELECTED FINANCIAL DATA

     The statement of operations data presented below for the years ended
December 31, 2000, 1999 and 1998 and the balance sheet data presented below at
December 31, 2000, 1999 and 1998 have been derived from the financial statements
of the Company, which have been audited by Deloitte & Touche LLP, independent
auditors. The statement of operations data for the years ended December 31, 1997
and 1996, and the balance sheet data at December 31, 1997 and 1996, have been
derived from the financial statements of the Company, which have been audited by
other independent accountants. The data presented below should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Report.


                                       23
<PAGE>
<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                          ----------------------------------------------------------------------------
                                             2000            1999           1998             1997            1996
                                          -----------     -----------    ------------    -------------    -------------
<S>                                          <C>             <C>            <C>               <C>             <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
FDA/AFSSAPS approved clinical
     genetic testing products......          $  5,927        $  4,116       $   2,616         $    406        $    ---

ASR/Research products..............            11,176           9,506           8,463            4,611           2,786
Genetic instrument products........             1,906           3,268           6,650            7,232           4,602
Distributed laboratory products....               ---           1,079           1,175            1,246           1,113
Food testing products..............             2,844           2,977           2,622            2,526           2,521
                                          -----------     -----------    ------------    -------------    ------------
         Total product revenue.....            21,853          20,946          21,526           16,021          11,022
License and other revenue..........             2,138             749           1,444            2,212           2,216
Legal settlement...................               ---             ---             384              ---             ---
                                          -----------     -----------    ------------    -------------    ------------
Total revenues.....................            23,991          21,695          23,354           18,233          13,238
Cost of goods sold.................             5,744           8,134           9,896            8,063           6,127
                                          -----------     -----------    ------------    -------------    ------------
Gross profit.......................            18,247          13,561          13,458           10,170           7,111
Research and development...........             7,508           9,062          11,488           10,533           9,456
Selling, general and
       administrative..............            12,958          16,226          19,683           15,877          15,688
Restructuring expense..............               ---             918             ---              ---             ---
                                          -----------     -----------    ------------    -------------    ------------
Loss from operations...............            (2,219)        (12,645)        (17,713)         (16,240)        (18,033)
Gain on sale of Imaging business...               ---           1,700             ---              ---             ---
Gain on sale of French
     distributor...................               ---             166             ---              ---             ---
Gain on sale of marketable
     securities....................             1,190             357             ---              ---             ---
Interest income (expense), net.....               569             580             958             (636)           (148)
                                          -----------     -----------    ------------    -------------    ------------
Net loss...........................          $   (460)       $ (9,842)      $ (16,755)        $(16,876)       $(18,181)
                                          ===========     ===========    ============    =============    ============

Net loss per basic and diluted
     common share..................          $   (.05)       $  (1.00)      $   (1.91)        $ (15.89)       $ (17.18)
                                          ===========     ===========    ============    =============    ============

Shares used in computing net loss
     per basic and diluted share...            10,087           9,859           8,753            1,062           1,058
</TABLE>
<TABLE>
<CAPTION>


                                                                      DECEMBER 31,
                                    ---------------------------------------------------------------------------------
                                        2000             1999             1998             1997             1996
                                    -------------    -------------    -------------    -------------    -------------
<S>                                  <C>              <C>              <C>             <C>             <C>
BALANCE SHEET DATA:
Cash and cash equivalents...         $    715         $  4,818         $  4,517        $     669       $       48
Short-term investments......           10,673            3,597           13,822              ---              ---
Marketable securities.......              ---              622              ---              ---              ---
Working capital (deficit)...           10,442           10,219           17,353           (9,138)          (6,622)
Total assets................           21,490           21,035           35,043           16,940           15,115
Note payable--BP Amoco......              ---              ---              ---            9,202            5,106
Long-term debt..............              ---              ---              523              ---              ---
</TABLE>

                                       24
<PAGE>

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

OVERVIEW

     Vysis is a Genomic Disease Management company that develops, commercializes
and markets clinical products that provide information critical to the
evaluation and management of cancer, prenatal disorders and other genetic
diseases. Vysis currently markets six Clinical products in addition to
distributing over 300 ASR/Research products through its direct sales operations
in the United States and Europe and a worldwide distribution network covering 59
countries. The Company's wholly owned subsidiary, Gene-Trak Systems Industrial
Diagnostics Corporation, manufactures and markets food testing kits based on DNA
probes.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 AND 1999

     For the year ended December 31, 2000, total revenues were $24.0 million, an
increase of $2.3 million, or 11 percent, from the prior year. Product revenue
increased $0.9 million, or four percent, to $21.9 million, and license and other
revenue increased $1.4 million, or 185 percent, to $2.1 million in 2000. The
increase in product revenue was primarily attributable to a $1.8 million, or 44
percent, increase in Clinical products, increased ASR/Research products of $1.7
million, or 18 percent, offset by a $1.4 million, or 42 percent, and $1.1
million, or 100 percent, decrease in Genetic Instrument products ("Instrument")
and Distributed Laboratory products ("Distributed"), respectively. The increase
in Clinical product revenue was primarily due to the growth in the worldwide
adoption of the Company's PathVysionTM breast cancer and AneuVysion(R) prenatal
products. The increase in ASR/Research product revenue was primarily
attributable to the increase in international shipments of previously developed
ASR/Research products as well as the worldwide sales of 19 new ASR/Research
products introduced during 2000. The reduction in Instrument revenue was
primarily attributable to the Company selling its Quips cytogenetic imaging
business ("Imaging") during July 1999, which represented nearly all of its
Instrument business at that time offset partially by the late 1999 introduction
of its GenoSensorTM Reader for the Company's microarrays and its VP2000
Processor. The elimination of Distributed product revenue in 2000 resulted from
the Company's December 1999 sale of its French distribution operation, which
included the entire Distributed product line. The increase in 2000 license and
other revenue of $1.4 million was primarily due to $1.3 million of license
revenue associated with a patent license agreement and an option for a patent
license agreement.

     Cost of goods sold were $5.7 million for the year ended December 31, 2000,
a decrease of $2.4 million, or 29 percent, from the prior year primarily as a
result of the decline in the volume of Instrument products sold following the
divestiture of the Imaging business during July 1999. As a percentage of product
revenue, 2000 product gross profit increased to 73.7 percent as compared to 61.2
percent for 1999, primarily due to the Company's focus on the higher margin
Clinical and ASR/Research products. While 2000 product revenues increased $0.9
million, or four percent, over the prior year, product gross profit for the year
ended December 31, 2000 of $16.1 million represented an increase of $3.3
million, or 26 percent, over the prior year.

     Research and development expense decreased to $7.5 million for the year
ended December 31, 2000 from $9.1 million in the prior year. The $1.6 million
decrease was primarily due to a $2.6 million reduction in general research
and development expense primarily resulting from the Company's 1999
restructuring plans which included the elimination of certain positions and
reduced third party consulting/contract research related to the deferral of
the Company's Molecular Lawn platform and the divestiture of the Imaging
business as well as the Company's 1999 completion of its development for the
VP2000 Processor and GenoSensor Reader, offset by an increase of $1.0 million
in nonrecurring research and development related charges. For the year ended
December 31, 2000, the Company incurred a charge of $1.5 million related to
its collaborative agreement with Genentech, Inc., the developer of the
Herceptin(R) monoclonal antibody treatment for metastatic breast cancer, for
the right to utilize Genentech's clinical trial data for the Company's
regulatory submission to extend the use of its PathVysionTM HER-2 breast
cancer test kit. For the year ended December 31, 1999, the Company incurred a
non-recurring charge of $0.5 million for the acquisition of certain
research-related patents.

                                       25
<PAGE>

     Selling, general and administrative expense decreased to $13.0 million for
the year ended December 31, 2000 from $16.2 million in the prior year. The $3.2
million decrease was due to a $3.5 million reduction in selling expense
primarily due to the full year effect of the reduction in the number of sales
and marketing employees as a result of divesting the Imaging business and
modifying the European organization to use distributors in France and Italy as
well as a decline in bad debt expense and the elimination of certain positions
during the 1999 restructurings. The reduction in selling expenses was partially
offset by an increase of $0.3 million in general and administrative costs
primarily due to higher litigation expenses during 2000.

     During July 2000, the Company sold its marketable securities, which
consisted of AI common stock, for $1.7 million, resulting in a gain on the sale
of $1.2 million.

     Interest income for the year ended December 31, 2000 was $0.6 million which
was relatively consistent with the prior year as a result of the significant
decline in the use of cash for operating activities. For the year ended December
31, 2000, there was no interest expense, which represented a decline of $0.1
million due to the Company's elimination of debt in 1999.

YEAR ENDED DECEMBER 31, 1999 AND 1998

     For the year ended December 31, 1999, total revenues were $21.7 million, a
decrease of $1.7 million, or seven percent, from the prior year. 1999 product
revenue decreased $0.6 million, or three percent, to $20.9 million, from $21.5
million in 1998 while license and other revenue decreased $0.7 million, or 48
percent, as compared to 1998. In addition, the Company received $0.4 million of
nonrecurring revenue during 1998 related to a litigation settlement agreement.
The decrease in 1999 product revenue was attributable to a $3.4 million
reduction in instrument product sales as a result of the Company selling its
Imaging business during July 1999, which represented nearly all of its genetic
instrument business. The $3.4 million decline in instrument revenues was
partially offset by a $1.5 million, or 57 percent, increase in worldwide
shipments of Clinical products, and a $1.0 million, or 12 percent, increase in
worldwide shipments of ASR/Research products. The increase in Clinical sales was
primarily due to sales in the U.S. of the Company's PathVysion(TM) HER-2 DNA
Probe Kit that was approved by the FDA in December 1998 as well as a worldwide
increase in the adoption rate of the Company's Clinical prenatal products. The
Company believes the increase in ASR/Research sales was primarily due to a
general increase in worldwide market demand for the products. The decrease in
license and other revenue was primarily due to the completion of two U.S.
Department of Commerce research grants in February and July 1998.

     Cost of goods sold were $8.1 million for the year ended December 31, 1999,
a decrease of $1.8 million, or 18 percent, from the prior year primarily as a
result of the decline in the volume of the instrument products sold following
the divestiture of the Imaging business during July 1999. As a percentage of
product revenue, 1999 product gross profit increased to 61.2 percent as compared
to 54.0 percent for 1998, primarily due to the Company's shift in focus to the
higher margin Clinical and ASR/Research products. While 1999 product revenue
decreased $0.6 million, the resulting product gross profit increased by $1.2
million, or 10 percent, to $12.8 million as compared to 1998, primarily due to
the revenue growth in the higher margin Clinical and ASR/Research products.

     Research and development expense decreased to $9.1 million for the year
ended December 31, 1999 from $11.5 million in the prior year. The $2.4 million
decrease was due to $2.9 million in reduced expenditures primarily in software
development, contract research and clinical trials as well as savings from the
elimination of certain positions in connection with the Company's 1999
restructuring plans, offset by a nonrecurring charge of $0.5 million for the
acquisition of certain research-related patents.

     Selling, general and administrative expense decreased to $16.2 million for
the year ended December 31, 1999 from $19.7 million in the prior year. The $3.5
million decrease was due to a decrease of $1.6 million in selling expense
primarily due to the reduction in the number of sales and marketing employees
and related costs as a result of divesting the Imaging business and due to the
elimination of certain positions as well as a $1.9 million decrease in general
and administrative expense primarily due to lower litigation expense.

                                       26
<PAGE>

     During the year ended December 31, 1999, the Company completed
restructuring plans that included the elimination of 25 employees at various
levels throughout the Company, which resulted in a $0.9 million restructuring
charge in 1999 for employee severance costs.

     As previously mentioned, the Company sold its Imaging business during July
1999 for a purchase price of $2.3 million plus additional consideration of $0.7
million for the purchase of certain Imaging component inventory, resulting in a
gain of $1.7 million. On December 31, 1999, the Company sold its wholly-owned
French distribution subsidiary for a purchase price of $1.3 million, resulting
in a gain of $0.2 million. The gain on sale of investment for the year ended
December 31, 1999 was $0.4 million that resulted from the $0.5 million sale of
the Company's investment in Incyte Pharmaceuticals, Inc. common stock.

     Interest income decreased to $0.6 million for the year ended December 31,
1999, representing a $0.7 million decrease over the prior year as a result of
the Company utilizing the proceeds from the February 10, 1998 Offering. Interest
expense decreased to $0.1 million for 1999, representing a $0.3 million decrease
from 1998 primarily due to the Company eliminating its outstanding debt during
1999.

INCOME TAXES

     Prior to the completion of the Company's Offering, the Company's results of
operations were included in the consolidated income tax returns of BP Amoco;
accordingly, the Company's domestic net operating losses through February 10,
1998 have been utilized by BP Amoco in its consolidated income tax returns and
are not available to offset the Company's future taxable income. Subsequent to
the Offering, the Company has filed separate federal income tax returns. As the
Company was in a loss position for the period February 11, 1998 through December
31, 1998 and for the years ended December 31, 1999 and 2000, no federal
provision is recorded.

     For state income taxes, the Company's results of operations will continue
to be included with BP Amoco's state returns, due to its 66 percent ownership
interest in the Company, in those states where required by state tax law. Under
state tax laws in a number of states, including Illinois (the state in which
much of the Company's business is taxed), the Company is required by law to be
included in BP Amoco's unitary state tax returns as long as BP Amoco owns or
controls 50 percent or more of the voting equity. For unitary state filings, the
tax sharing agreement with BP Amoco requires BP Amoco to pay the Company the
incremental tax savings, if any, received by BP Amoco as a result of including
the Company's results of operations in such filings. The agreement also requires
the Company to pay BP Amoco the incremental tax liability, if any, incurred by
BP Amoco as a result of including the Company's results of operations in such
filings. As a result of the Company's 1998 losses being included in BP Amoco's
unitary state filings, the Company received during 1999 a $30,000 state tax
benefit payment related to 1998 losses. The Company received no state tax
benefit during 2000 related to 1999 losses. For the year ended December 31,
2000, the Company has not recorded an estimated state tax benefit from BP Amoco.

     A full valuation allowance has been provided for all deferred tax assets
(net of liabilities) at December 31, 2000, as management does not consider
realization of such amounts more likely than not.

LIQUIDITY AND CAPITAL RESOURCES

     Net cash provided by (used in) operating activities was $0.4 million,
($10.8) million and ($14.6) million for the years ended December 31, 2000, 1999
and 1998, respectively. The reduction in cash used in operating activities
primarily relates to the decreases in operating losses.

     Net cash (used in) provided by investing activities was ($4.8) million,
$11.3 million and ($14.9) million for the years ended December 31, 2000, 1999
and 1998, respectively. The 2000 increase in cash used in investing activities
of $16.1 million as compared to 1999 resulted primarily from the purchase of
short-term investments, net of proceeds from maturities offset by the proceeds
from the sale of marketable securities. The 1999 increase in cash provided by
investing activities of $26.2 million resulted primarily from the proceeds from
maturities of short-term investments, net of purchases of short-term
investments, as well as the proceeds from the sale of the Imaging business.

                                       27
<PAGE>

     Net cash flows provided by (used in) financing activities was $0.4 million,
($0.1) million, and $33.3 million for the years ended December 31, 2000, 1999,
and 1998, respectively. The 2000 increase of $0.5 million in cash provided by
financing activities primarily related to the elimination of debt at the end of
1999 and the increase in stock option exercise activity during 2000 as compared
to the prior year. The 1999 decrease of $33.4 million in cash provided by
financing activities primarily resulted from the 1998 receipt of $32.1 million
in net proceeds from the Offering and $1.1 million of long-term debt, net of
repayments, partially offset by the reduced borrowings from BP Amoco.

     The Company has entered into various license agreements pursuant to which
it has been granted use of certain patented technologies. The agreements require
the Company to pay royalties ranging from 2.0 percent to 19.5 percent on net
sales of specified products, with certain minimum royalties due each year. As
additional consideration for certain of the licenses, the Company is obligated
to fund certain research of the licensors. Future minimum amounts due under all
such agreements range from $1.3 million to $0.7 million per year for 2001
through 2005. See Note 15 of Notes to Consolidated Financial Statements.

     At December 31, 2000, the Company had cash, cash equivalents and short-term
investments of $11.4 million and an accumulated deficit of $58.9 million. Since
its inception, the Company has experienced negative cash flows from operations.
For the years ended December 31, 2000 and 1999, operating losses were $2.2
million and $12.6 million, respectively, which represented an improvement of
$10.4 million and $5.1 million as compared to the respective prior year periods.
In order to preserve the Company's cash position and to reduce cash used in
operating activities, the Company implemented during the first quarter of 1999 a
restructuring plan that resulted in the elimination of 20 positions, including
open positions, thereby reducing ongoing expenditures by approximately $1.6
million. In addition, the Company sold its investment in Incyte common stock for
$0.5 million. During the third quarter of 1999 the Company sold its Imaging
business to Applied Imaging Corp. ("AI") for total consideration of $3.0
million. Of the $3.0 million in total consideration, the Company has received
$2.2 million in cash and 497,368 shares of AI common stock that was valued upon
its receipt at $0.5 million. In addition, AI paid $0.3 million plus interest in
January 2001. Upon completion of the Imaging business sale, the Company
refocused on its core technologies and during the fourth quarter of 1999
eliminated 37 positions, including open positions as well as certain positions
previously associated with the Imaging business, thereby reducing ongoing annual
cash expenditures by approximately $2.7 million. At December 31, 2000, the
Company had paid all of the severance costs related to the 1999 restructuring
plans. In addition, the Company sold during December 1999 its French
distribution subsidiary for approximately $1.1 million, which has been adjusted
for the effect of foreign currency translation. At December 31, 2000, the
Company has received substantially all of the $1.1 million adjusted purchase
price.

     The Company believes that its current cash and short-term investment
position, and the interest to be earned thereon, will be sufficient to fund the
Company's operations through the end of year 2002. The Company's estimate of the
time period for which cash funds will be adequate to fund its operations is a
forward looking estimate subject to risks and uncertainty, and actual results
may differ materially. The Company's requirements for additional capital will
depend on many factors, including growth in product revenues, payments received
under potential collaborative agreements; the progress of the Company's
collaborative and independent research and development projects; the costs of
preclinical and clinical trials for the Company's products; the prosecution,
defense and enforcement of patent claims and other intellectual property rights;
costs of product liability claims; and the development of manufacturing, sales
and marketing capabilities. To the extent capital resources together with cash
flow from operations are not sufficient to meet future capital requirements, the
Company will have to raise additional funds to continue the development of its
technologies. There can be no assurance that such funds will be available on
favorable terms, or at all. To the extent that additional capital is raised
through the sale of equity or convertible debt securities, the issuance of such
securities could result in dilution to the Company's shareholders. If adequate
funds are not available, the Company may be required to curtail operations
significantly or to obtain funds through entering into collaborative agreements
on unattractive terms. The Company's inability to raise capital as and when
needed would have a material adverse effect on the Company's business, financial
condition and results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, is effective for all fiscal years
beginning after June 15, 2000. SFAS 133, as amended, establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in

                                       28
<PAGE>

other contracts and for hedging activities. Under SFAS 133, certain contracts
that were not formerly considered derivatives may now meet the definition of a
derivative. The Company has adopted SFAS 133 effective January 1, 2001.
Management has determined that the adoption of SFAS 133 did not have a
significant impact on the financial position, results of operations, or cash
flows of the Company.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is subject to market risk associated with changes in foreign
currency exchange rates and interest rates. The Company's exchange rate risk
is limited to its European operations. The Company's foreign currency
exchange rate risk results primarily from the foreign currency translation of
its foreign operations' financial results and from the foreign operations'
intercompany purchases of inventory. The majority of the intercompany
purchases are to be paid for within standard payment terms of 30 days. Sales
throughout the rest of the world are denoted in U.S. dollars. For the year
ended December 31, 2000, the foreign exchange rates utilized to translate the
Company's international subsidiaries' local currency financial results into
U.S. dollars declined 13 percent as compared to the prior year periods due to
the strengthening of the U.S. dollar against the local currency of these
subsidiaries which resulted in a $0.8 million reduction in results in
comparison to the prior year. The net impact of foreign exchange activities
was immaterial for the years ended December 31, 1999 and 1998. The foreign
currency translation loss included in shareholders' equity resulting from the
translation of the financial statements of the Company's international
subsidiaries into U.S. dollars increased by $0.1 million for the year ended
December 31, 2000. Interest rate exposure is primarily limited to the $10.7
million of short-term investments owned by the Company. Such securities are
debt instruments which generate interest income for the company on excess
cash balances. The Company does not actively manage the risk of interest rate
fluctuations; however, such risk is mitigated by the relatively short term,
less than 12 months, nature of these investments.

     The Company does not consider the present rate of inflation to have a
significant impact on its business.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial statements and supplementary data of the Company on pages 31
to 54 of this Form 10-K are indexed herein under Item 14(a)(1). See also the
financial statement schedules appearing herein, as indexed under Item 14(a)(2).

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

     None.

                                    PART III

     Item 10, "Directors and Executive Officers of the Registrant," Item 11,
"Executive Compensation," Item 12, "Security Ownership of Certain Beneficial
Owners and Management," and Item 13, "Certain Relationships and Related
Transactions," have been omitted from this report inasmuch as the Company will
file with the Securities and Exchange Commission pursuant to Regulation 14A
within 120 days after the end of the fiscal year covered by this report a
definitive Proxy Statement for the 2001 Annual Meeting of Stockholders of the
Company, at which meeting the stockholders will vote upon the election of
directors. The information under the captions "Election of Directors,"
"Ownership of Securities," "Executive Compensation and Related Information" and
"Certain Relationships and Transactions" in such definitive Proxy Statement are
incorporated herein by reference.

                                       29
<PAGE>
                                     PART IV

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

     14(a)(1)     CONSOLIDATED FINANCIAL STATEMENTS

         Set forth below is a listing of the Consolidated Financial Statements
of the Company with reference to the page numbers in this Form 10-K at which
such Statements are disclosed.
<TABLE>
<CAPTION>

                                                                                                 PAGE NUMBERS OF
                                                                                                  THIS FORM 10-K
                                                                                               ---------------------
<S>                                                                                                         <C>
   Report of Management..........................................................................            31
   Independent Auditors' Report..................................................................            32
   Consolidated Balance Sheets--December 31, 2000 and 1999.......................................            33
   Consolidated Statements of Operations for the Years Ended December 31, 2000,
         1999 and 1998...........................................................................            34
   Consolidated  Statements of  Comprehensive  Operations for the Years Ended December 31, 2000,
         1999 and 1998...........................................................................            35
   Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2000, 1999
         and 1998................................................................................            36
   Consolidated Statements of Cash Flows for the Years Ended December 31, 2000,
         1999 and 1998............................................................................            37
   Notes to Consolidated Financial Statements....................................................           38-54
</TABLE>


     14(a)(2) CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

          The documents and schedules listed below are filed as part of this
     report:
<TABLE>
<CAPTION>

                                                                                                  PAGE NUMBER OF
                                                                                                  THIS FORM 10-K
                                                                                               ---------------------
<S>                                                                                                     <C>
Schedule II--Valuation and Qualifying Accounts................................................          55
</TABLE>

          All other schedules have been omitted since they are not required, not
applicable, or the information is included in the Consolidated Financial
Statements or notes thereto.

     14(a)(3) EXHIBITS

          The exhibits filed as part of this annual report are listed in the
Exhibit Index immediately preceding the exhibits. The Company has identified in
the Exhibit Index each management contract and compensation plan filed as an
exhibit to this Form 10-K in response to Item 14(c) of Form 10-K.

     14(b) REPORTS ON FORM 8-K

          The Company did not file any Form 8-K reports during the fourth
quarter of 2000.

                                       30
<PAGE>
                              REPORT OF MANAGEMENT

     The accompanying consolidated financial statements and related information
of Vysis, Inc. and subsidiaries (the "Company") have been prepared by
management, which is responsible for their integrity and objectivity. The
statements have been prepared in conformity with generally accepted accounting
principles and necessarily include some amounts based on management's best
estimates and judgments.

     Management is also responsible for maintaining a system of internal
controls as a fundamental requirement for the operational and financial
integrity of results. The Company has established and maintains a system of
internal controls designed to provide reasonable assurance that the books and
records reflect the transactions of the Company and that its established
policies and procedures are carefully followed. The Company's internal control
system is based upon standard procedures, policies and guidelines and
organizational structures that provide an appropriate division of responsibility
and the careful selection and training of qualified personnel. On an ongoing
basis, the system of internal controls is reviewed, evaluated and revised as
necessary in light of the results of constant management oversight, independent
audits, changes in Vysis' business and other conditions.

     The Company's accompanying 2000 consolidated financial statements have been
audited by Deloitte & Touche LLP, independent auditors, whose audit was made in
accordance with auditing standards generally accepted in the United States of
America. Management has made available to Deloitte & Touche LLP all of the
Company's financial records and related data, as well as the minutes of
stockholders' and directors' meetings. Furthermore, management believes that all
representations made to Deloitte & Touche LLP during its audit were valid and
appropriate. The Independent Auditors' Report appears herein.

     The Board of Directors exercises its oversight responsibility for the
consolidated financial statements through its Audit Committee, comprised of
Directors who are not employees of the Company. To assure independence, Deloitte
& Touche LLP has full and free access to the Audit Committee to discuss internal
accounting control, auditing and financial reporting matters.

   JOHN L. BISHOP                         JOHN R. SLUIS
   President and                          Senior  Vice  President,
   Chief Executive Officer                Finance  and  Chief  Financial Officer




                                       31
<PAGE>


                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Vysis, Inc.:

     We have audited the consolidated balance sheets of Vysis, Inc. (an indirect
subsidiary of BP Amoco p.l.c.) and its subsidiaries (the "Company") as of
December 31, 2000 and 1999, and the related consolidated statements of
operations, comprehensive operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. Our audit also
included the conolidated financial statement schedule listed in the Index at
Item 14(a)(2). These financial statements and the financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and the financial statement
schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Vysis, Inc. (an indirect
subsidiary of BP Amoco p.l.c) and its subsidiaries at December 31, 2000 and
1999, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

DELOITTE & TOUCHE LLP
Chicago, Illinois
February 23, 2001

                                       32
<PAGE>

                                   VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

                           CONSOLIDATED BALANCE SHEETS

               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                                               DECEMBER 31,
                                                                                       -----------------------------
                                                                                          2000              1999
                                                                                       -----------       -----------
<S>                                                                                      <C>               <C>
ASSETS
Current assets:
     Cash and cash equivalents..................................................         $     715         $   4,818
     Short-term investments.....................................................            10,673             3,597
     Marketable securities......................................................               ---               622
     Accounts receivable, net...................................................             3,728             3,093
     Other receivables..........................................................               321             1,963
     Inventories................................................................             1,652             2,012
     Other current assets.......................................................               528               503
                                                                                       -----------       -----------
         Total current assets...................................................            17,617            16,608
Property and equipment, net.....................................................             2,503             2,986
Other assets....................................................................             1,370             1,441
                                                                                       -----------       -----------
         Total assets...........................................................         $  21,490         $  21,035
                                                                                       ===========       ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities...................................         $   6,975         $   6,153
     Deferred revenue...........................................................               200               236
                                                                                       -----------       -----------
         Total current liabilities..............................................             7,175             6,389
                                                                                       -----------       -----------

Long-term liabilities:
     Deferred revenues..........................................................               972             1,155
     Other long-term liabilities................................................               100               ---
                                                                                       -----------       -----------
         Total long-term liabilities............................................             1,072             1,155
                                                                                       -----------       -----------

Commitments and contingencies (Notes 7, 15, 19 and 21)

Stockholders' equity:
    Convertible preferred stock, $0.001 par value; 10,000,000 shares authorized:
         Series A; 6,200,000 shares designated; none issued and outstanding at
         December 31, 2000 and 1999.............................................               ---               ---
         Series B; 553,126 shares designated; none issued and outstanding at
         December 31, 2000 and 1999.............................................               ---               ---
     Common stock, $0.001 par value; 35,000,000 shares authorized; 10,150,992
         issued and outstanding at December 31, 2000; 9,945,346 issued and
         outstanding at December 31, 1999.......................................                10                10
     Additional paid-in capital.................................................            72,625            72,192
     Accumulated other comprehensive income (loss):
         Unrealized gain on marketable securities...............................              ---                93
         Cumulative translation adjustment......................................              (464)             (336)
                                                                                       -----------       -----------
         Total accumulated other comprehensive loss.............................              (464)             (243)
     Accumulated deficit........................................................           (58,928)          (58,468)
                                                                                       -----------       -----------
         Total stockholders' equity.............................................            13,243            13,491
                                                                                       -----------       -----------
         Total liabilities and stockholders' equity.............................         $  21,490         $  21,035
                                                                                       ===========       ===========
</TABLE>


               See notes to the consolidated financial statements.

                                       33
<PAGE>

                                   VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,
                                                                   -------------------------------------------------
                                                                       2000               1999              1998
                                                                   ------------       ------------      ------------
<S>                                                                    <C>                <C>               <C>
Revenues:
     FDA/AFSSAPS approved clinical genetic testing product.....        $  5,927           $  4,116          $  2,616
     ASR/Research products.....................................          11,176              9,506             8,463
     Genetic instrument products...............................           1,906              3,268             6,650
     Distributed laboratory products...........................             ---              1,079             1,175
     Food testing products.....................................           2,844              2,977             2,622
                                                                   ------------       ------------      ------------
         Total product revenue.................................          21,853             20,946            21,526
     License and other revenue.................................           2,138                749             1,444
     Legal settlement..........................................             ---                ---               384
                                                                   ------------       ------------      ------------
         Total revenues........................................          23,991             21,695            23,354
Cost of goods sold.............................................           5,744              8,134             9,896
                                                                   ------------       ------------      ------------
Gross profit...................................................          18,247             13,561            13,458
                                                                   ------------       ------------      ------------
Operating expenses:
     Research and development..................................           7,508              9,062            11,488
     Selling, general and administrative.......................          12,958             16,226            19,683
     Restructuring expense.....................................             ---                918               ---
                                                                   ------------       ------------      ------------
         Total operating expenses..............................          20,466             26,206            31,171
                                                                   ------------       ------------      ------------
Loss from operations...........................................          (2,219)           (12,645)          (17,713)
Gain on sale of Imaging business...............................             ---              1,700               ---
Gain on sale of French distributor.............................             ---                166               ---
Gain on sale of marketable securities..........................           1,190                357               ---
Interest income................................................             569                648             1,337
Interest expense...............................................             ---                (68)             (379)
                                                                   ------------       ------------      ------------
Net loss.......................................................        $   (460)          $ (9,842)         $(16,755)
                                                                   ============       ============      ============
Basic and diluted net loss per share...........................        $   (.05)          $  (1.00)         $  (1.91)
                                                                   ============       ============      ============
Shares used in computing basic and diluted net loss per share..          10,087              9,859             8,753
</TABLE>


               See notes to the consolidated financial statements.

                                       34
<PAGE>

                                  VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                YEAR ENDED DECEMBER 31,

                                                                     -----------------------------------------------
                                                                        2000              1999               1998
                                                                     ----------       ------------       -----------
<S>                                                                  <C>                 <C>               <C>
Net loss..........................................................   $   (460)           $ (9,842)         $(16,755)

Other comprehensive income (loss):
     Cumulative translation adjustment............................       (128)               (235)              140
     Unrealized holding gain (loss) on marketable securities......      1,097                 (12)             (115)
     Reclassification adjustment, realized gain on marketable
     securities...................................................     (1,190)               (357)              ---
                                                                     ----------       ------------       -----------
         Total other comprehensive income (loss)...............          (221)               (604)               25
                                                                     ----------       ------------       -----------
Comprehensive loss................................................   $   (681)           $(10,446)         $(16,730)
                                                                     ==========       ============       ===========
</TABLE>


               See notes to the consolidated financial statements.

                                       35
<PAGE>



                                   VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,

                                                                   -------------------------------------------------
                                                                      2000               1999               1998
                                                                   ------------       ------------       -----------
<S>                                                                <C>                <C>                <C>
Convertible preferred stock:
     Beginning balance..........................................   $        ---       $        ---       $        7
     Conversion of Series A and Series B preferred stock to
         common stock...........................................            ---                ---               (7)
                                                                   ------------       ------------       -----------
     Ending balance.............................................            ---                ---               ---
                                                                   ------------       ------------       -----------
Common stock:
     Beginning balance..........................................             10                 10                1
     Conversion of Series A and Series B preferred stock........            ---                ---                5
     Conversion of note payable--BP Amoco.....................              ---                ---                1
     Issuance of common stock through initial public offering               ---                ---                3
                                                                   ------------       ------------       -----------
     Ending balance.............................................             10                 10               10
                                                                   ------------       ------------       -----------
Additional paid-in capital:
     Beginning balance..........................................         72,192             71,862           30,396
     Expenses funded by stock issuance..........................             13                286              ---
     Expenses funded by BP Amoco................................            115                ---              ---
     Income tax benefit from BP Amoco...........................            ---                ---            1,126
     Deferred compensation......................................            ---                (57)              21
     Conversion of note payable--BP Amoco.....................              ---                ---            8,099
     Exercise of stock options..................................            305                101               81
     Net proceeds from initial public offering..................            ---                ---           32,139
                                                                   ------------       ------------       -----------
     Ending balance.............................................         72,625             72,192           71,862
                                                                   ------------       ------------       -----------
Deferred compensation:
     Beginning balance..........................................            ---                (81)            (206)
     Stock option grants........................................            ---                ---              (21)
     Amortization...............................................            ---                 24              146
     Adjustments................................................            ---                 57              ---
                                                                   ------------       ------------       -----------
     Ending balance.............................................            ---                ---              (81)
                                                                   ------------       ------------       -----------
Unrealized gain (loss) on marketable securities:

     Beginning balance..........................................             93                462              577
     Current year activity......................................            (93)              (369)            (115)
                                                                   ------------       ------------       -----------
     Ending balance.............................................            ---                 93              462
                                                                   ------------       ------------       -----------
Cumulative translation adjustment:
     Beginning balance..........................................           (336)              (101)            (241)
     Current year activity......................................           (128)              (235)             140
                                                                   ------------       ------------       -----------
     Ending balance.............................................           (464)              (336)            (101)
                                                                   ------------       ------------       -----------
Accumulated deficit:
     Beginning balance..........................................        (58,468)           (48,626)         (31,871)
     Net loss...................................................           (460)            (9,842)         (16,755)
                                                                   ------------       ------------       -----------
     Ending balance.............................................        (58,928)           (58,468)         (48,626)
                                                                   ------------       ------------       -----------
Total stockholders' equity......................................   $     13,243       $     13,491       $   23,526
                                                                   ============       ============       ===========
</TABLE>


               See notes to the consolidated financial statements.

                                       36
<PAGE>

                                   VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                               YEAR ENDED DECEMBER 31,

                                                                   -------------------------------------------------
                                                                      2000               1999              1998
                                                                   ------------       -----------       ------------
<S>                                                                    <C>              <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss...................................................       $   (460)        $  (9,842)         $ (16,755)
     Reconciliation of net loss to net cash provided by
         (used in) operating activities:
         Depreciation and amortization..........................          1,493             1,643              2,338
         Effect of changes in foreign currency..................            (29)              136                ---
         Gain on sale of Imaging business.......................            ---            (1,700)               ---
         Gain on sale of French distributor.....................            ---              (166)               ---
         Gain on sale of marketable securities .................         (1,190)             (357)               ---
         Write-off of goodwill..................................            ---               ---                205
         Loss on disposition of assets..........................            ---                10                ---
         Stock compensation.....................................             13                24                146
         Changes in assets and liabilities:
              Accounts receivable...............................           (491)            1,534             (1,310)
              Inventories.......................................            337              (827)               223
              Other current assets..............................            (21)              120                368
              Lease receivables.................................            ---               344             (1,004)
              Other assets......................................             10               137               (208)
              Accounts payable and accrued liabilities..........            938            (2,663)             1,009
              Deferred revenue..................................           (219)              839                428
                                                                   ------------       -----------       ------------
         Net cash provided by (used in) operating activities....            381           (10,768)           (14,560)
                                                                   ------------       -----------       ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Proceeds, net of transaction-related expenditures, from
         sale of Imaging business...............................            449             1,388                ---
     Proceeds, net of cash sold, from sale of French distributor          1,056                28                ---
     Proceeds from sale of marketable securities................          1,718               457                ---
     Proceeds from maturities of short-term investments.........         13,607            30,671             14,310
     Purchases of short-term investments........................        (20,683)          (20,447)           (28,132)
     Purchases of property and equipment........................           (831)             (756)              (675)
     Proceeds from sale of property and equipment...............             21                 4                ---
     Increase in other assets...................................           (150)              (79)              (368)
                                                                   ------------       -----------       ------------
         Net cash (used in) provided by investing activities....         (4,813)           11,266            (14,865)
                                                                   ------------       -----------       ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock.....................            ---               ---             32,142
     Increase in note payable--BP Amoco.........................            ---               ---              1,665
     Expenses funded by stock issuance..........................            ---               286                ---
     Expenses funded by BP Amoco................................            115               ---                294
     Loan repayment to BP Amoco.................................            ---               ---             (2,000)
     Proceeds from long-term borrowings.........................            ---               ---              1,488
     Principal payments on long-term borrowings.................            ---              (496)              (412)
     Proceeds from exercise of stock options....................            305               101                 81
                                                                   ------------       -----------       ------------
         Net cash provided by (used in) financing activities....            420              (109)            33,258

Effect of exchange rate changes on cash.........................            (91)              (88)                15
                                                                   ------------       -----------       ------------
Net (decrease) increase  in cash and cash equivalents...........         (4,103)              301              3,848
Cash and cash equivalents at beginning of year..................          4,818             4,517                669
                                                                   ------------       -----------       ------------
Cash and cash equivalents at end of year........................       $    715         $   4,818          $   4,517
                                                                   ============       ===========       ============

Interest paid...................................................       $    ---         $      68          $     248
                                                                   ============       ===========       ============
</TABLE>

               See notes to the consolidated financial statements.

                                       37
<PAGE>

                                   VYSIS, INC.
                   (AN INDIRECT SUBSIDIARY OF BP AMOCO p.l.c.)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES:

BUSINESS AND ORGANIZATION

     Vysis, Inc. ("Vysis" or the "Company") is a Genomic Disease Management
company that develops, commercializes and markets clinical products that provide
information critical to the evaluation and management of cancer, prenatal
disorders and other genetic diseases. Vysis currently markets six U.S. Food and
Drug Administration ("FDA") or foreign cleared or approved clinical ("Clinical")
products in addition to distributing over 300 Analyte Specific Reagent and
research ("ASR/Research") products through its direct sales operations in the
United States and Europe and a worldwide distribution network covering 59
countries. The Company's wholly owned subsidiary, Gene-Trak Systems Industrial
Diagnostics Corporation, manufactures and markets food testing kits based on
Deoxyribonucleic Acid ("DNA") probes.

     The Company was incorporated in Delaware on April 18, 1991. The Company's
business represents the consolidation of multiple research units and programs of
the former Amoco Corporation. On December 31, 1998, Amoco Corporation merged
with the former British Petroleum Corporation, and as a result of the merger
became a wholly-owned subsidiary of BP Amoco p.l.c. As used herein, "BP Amoco"
refers to BP Amoco p.l.c. and its wholly owned subsidiaries.

     On February 10, 1998, the Company completed the initial public offering of
3 million shares of its Common Stock, par value $0.001 per share, at a price of
$12.00 per share (the "Offering"). The net proceeds of the Offering after
deducting expenses were approximately $32.1 million. Concurrent with the
consummation of the Offering, the Company issued 675,000 shares of Common Stock
at $12.00 per share to BP Amoco in exchange for a reduction of $8.1 million in
the Company's note payable to BP Amoco. As of March 21, 2001, BP Amoco
beneficially owned approximately 66 percent of the Company's outstanding Common
Stock.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.

USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results may differ from those
estimates.

REVENUE RECOGNITION

     Product sales revenue is recognized upon shipment of products to customers.
Revenue attributable to technical support and software enhancements provided
with the sale of certain instrument products is deferred and recognized ratably
over the period of time such services are provided, generally one year. Revenue
on equipment maintenance contracts is deferred and recognized ratably over the
period of the contract, generally one year. License and other revenue is
recognized as earned pursuant to the related agreement. Payments received under
these agreements prior to the completion of the related work are recorded as
deferred revenue.

                                       38
<PAGE>

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"), which provides guidance on the recognition of revenues for various
technology access fees and license agreements. The Company has adopted SAB 101,
which had no impact on the Company's results of operations. In accordance with
SAB 101, the Company recognizes upfront nonrefundable patent license fees upon
the signing of an agreement where there is no future obligation to perform.
Ongoing patent royalty fees are recognized as revenue as earned over the life of
the agreement. Milestone payments are recognized as revenue when earned in
accordance with the terms of the agreement.

WARRANTY

     Estimated future warranty obligations related to certain products are
provided by charges to cost of goods sold in the period in which the related
revenue is recognized.

RESEARCH AND DEVELOPMENT EXPENDITURES

     Research and development costs are expensed as incurred and include certain
amounts relating to other revenues.

CASH AND CASH EQUIVALENTS

     Cash equivalents consist of highly liquid investments, which are readily
convertible into cash and have maturities of three months or less from the date
of acquisition.

SHORT-TERM INVESTMENTS

     Short-term investments have maturities of more than three months and less
than one year. These investments are stated at cost plus accrued interest, as it
is the intent of the Company to hold these securities until maturity.

MARKETABLE SECURITIES

     Marketable securities are classified as available-for-sale securities and
recorded at current market value, with adjustments to stockholders' equity, net
of income taxes.

INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
on the first-in, first-out method. Inventories are reassessed periodically to
determine whether any potential impairment exists. Provision for potentially
obsolete or slow moving inventory is made based on management's analysis of
inventory levels and anticipated future sales.

PROPERTY AND EQUIPMENT

     Property and equipment are recorded at cost. Equipment depreciation is
provided on the straight-line basis over the expected useful lives of three to
seven years. Leasehold improvements are depreciated over the shorter of their
useful life or lease term. Significant improvements are capitalized and repairs
and maintenance charges are expensed as incurred.

CAPITALIZED SOFTWARE COSTS

     Software development costs incurred subsequent to the establishment of
technological feasibility are capitalized in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Cost of
Computer Software to be Sold, Leased, or Otherwise Marketed." Amortization of
capitalized software development costs is the greater of the amount computed
using (a) the ratio of current revenues to the total of current and anticipated
future revenues or (b) the straight-line method over the estimated economic life
of the product.

                                       39
<PAGE>

OTHER ASSETS

     Other assets primarily include capitalized license fees which are carried
at cost less accumulated amortization. Amortization expense is calculated on a
straight-line basis over the estimated economic useful lives of the assets
ranging from 10 to 17 years.

IMPAIRMENT OF LONG-LIVED ASSETS

     The Company has evaluated its long-lived assets for financial impairment,
and will continue to evaluate them as events or changes in circumstances
indicate the carrying amount of such assets may not be fully recoverable.

FINANCIAL INSTRUMENTS

     The carrying value of cash equivalents, investments, accounts receivable,
other receivables and accounts payable approximates their fair value. Cash
equivalents and short-term investments are primarily corporate debt securities
with creditworthy corporations and U.S. government securities. With respect to
accounts receivable and other receivables, credit risk is generally limited due
to the large number of organizations comprising the Company's customer base and
their dispersion across different geographic locations. The Company maintains an
allowance for potentially doubtful accounts based upon specific circumstances,
historical trends and other information.

FOREIGN CURRENCY TRANSLATION

     The functional currency for the Company's foreign subsidiaries is the local
currency. Translation from the applicable foreign currency to U.S. dollars is
performed for assets and liabilities using exchange rates in effect at the
balance sheet date and for the statements of operations using the average
exchange rates in effect during the period. Gains or losses from such
translations are accumulated in a separate component of stockholders' equity.
Gains and losses resulting from foreign currency transactions are included in
the results of operations and have not been significant.

STOCK-BASED COMPENSATION

     The Company recognizes stock-based compensation costs under the intrinsic
value based method of accounting as prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has
adopted the disclosure requirements of SFAS No. 123, "Accounting for Stock-Based
Compensation."

INCOME TAXES

     Deferred income taxes result primarily from temporary differences between
financial and tax reporting. Deferred tax assets and liabilities are determined
based on the difference between the tax bases of assets and liabilities and
their financial reporting amounts using enacted tax rates. Future tax benefits
are recognized to the extent that realization of such benefits is more likely
than not.

RECENT ACCOUNTING PRONOUNCEMENTS

     SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,
is effective for all fiscal years beginning after June 15, 2000. SFAS 133, as
amended, establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts and for hedging activities. Under SFAS 133, certain contracts that
were not formerly considered derivatives may now meet the definition of a
derivative. The Company has adopted SFAS 133 effective January 1, 2001.
Management has determined that the adoption of SFAS 133 did not have a
significant impact on the financial position, results of operations, or cash
flows of the Company.

                                       40
<PAGE>

RECLASSIFICATIONS

     Certain amounts in fiscal 1999 and 1998 have been reclassified to conform
to the fiscal 2000 presentation. These changes had no impact on previously
reported net loss or stockholders' equity.

NOTE 2--RELATED PARTY TRANSACTIONS:

     The Company has received certain research and development support and
administrative support from BP Amoco. The amounts of these costs included in the
consolidated statements of operations were as follows (in thousands):
<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,

                                                        ---------------------------------------------------
                                                             2000              1999              1998
                                                        ---------------    --------------    --------------
         <S>                                                 <C>              <C>                <C>
         Research and development ...............            $---             $ ---              $131
         Selling, general and administrative ....             115               ---               ---
                                                        ---------------    --------------    --------------
                                                             $115             $ ---              $131
                                                        ===============    ==============    ==============
</TABLE>

     Management of the Company believes these costs are reasonable under the
circumstances. These charges may not be indicative of the actual costs that
would have been incurred if the Company had operated independently. During the
year ended December 31, 2000, the Company received certain consulting services
provided and paid by BP Amoco of $115,000 which has been recorded as a capital
contribution with a corresponding charge to selling, general and administrative
expenses. The research and development services provided in 1998 were paid for
by the Company. In addition, during 1998, BP Amoco paid on behalf of the Company
certain expenses aggregating $32,000. Prior to the Offering--see Note 16, the
Company also received cash advances to meet its working capital requirements and
other capital assets from BP Amoco. For 1998 such amounts consisted of advances
of $1,665,000 under a note payable to BP Amoco. The note payable accrued
interest at an annual rate of 7.5 percent that resulted in interest expense of
$131,000 for the year ended December 31, 1998. Concurrent with the consummation
of the Offering, the Company converted $8.1 million of the Note Payable-BP Amoco
into 675,000 shares of Common Stock and repaid the remaining note balance of
$2.0 million.

     The Company entered into a tax sharing agreement with BP Amoco, effective
January 1, 1996, which provides for a capital contribution to the Company in an
amount approximating the tax effect of including the Company's results of
operations prior to the Offering in BP Amoco's consolidated federal tax return.
Under this agreement, $1,126,000 was recorded as contributed capital and a
related reduction of the note payable to BP Amoco during 1998. For state income
taxes, the Company's results of operations will continue to be included with BP
Amoco's state returns, due to its 66 percent ownership interest in the Company,
in those states where required by state tax law. Under state tax laws in a
number of states, including Illinois (the state in which much of the Company's
business is taxed), the Company is required by law to be included in BP Amoco's
unitary state tax returns as long as BP Amoco owns or controls 50 percent or
more of the voting equity. For unitary state filings, the tax sharing agreement
with BP Amoco requires BP Amoco to pay the Company the incremental tax savings,
if any, received by BP Amoco as a result of including the Company's results of
operations in such filings. The agreement also requires the Company to pay BP
Amoco the incremental tax liability, if any, incurred by BP Amoco as a result of
including the Company's results of operations in such filings. As a result of
the Company's 1998 losses being included in BP Amoco's unitary state filings,
the Company received during 1999 a $30,000 state tax benefit payment related to
1998 losses and received no state tax benefit during 2000 related to 1999
losses. For the year ended December 31, 2000, the Company has not recorded an
estimated state tax benefit from BP Amoco. See Note 13 for further discussion of
the income taxes.

                                       41
<PAGE>

NOTE 3--COMPOSITION OF BALANCE SHEET COMPONENTS:

     Accounts receivable consisted of the following (in thousands):
<TABLE>
<CAPTION>

                                                                                DECEMBER 31,
                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                   <C>                    <C>
         Accounts receivable.................................         $ 4,847                $ 4,324
         Less:  allowance for doubtful accounts..............          (1,119)                (1,231)
                                                                  ------------------    -------------------
                                                                      $ 3,728                $ 3,093
                                                                  ==================    ===================

     Inventories consisted of the following (in thousands):
<CAPTION>

                                                                                DECEMBER 31,
                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                   <C>                    <C>
         Raw materials and supplies..........................         $   522                $ 1,136
         Finished goods......................................           1,130                    876
                                                                  ------------------    -------------------
                                                                       $1,652                $ 2,012
                                                                  ==================    ===================

     Property and equipment consisted of the following
     (in thousands):
<CAPTION>

                                                                                DECEMBER 31,
                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                   <C>                    <C>
         Building............................................         $   506                $   ---
         Construction-in-progress............................             ---                    239
         Leasehold improvements..............................           2,413                  2,398
         Equipment, furniture and fixtures...................           9,633                  9,081
                                                                  ------------------    -------------------
                                                                       12,552                 11,718
         Less:  accumulated depreciation.....................         (10,049)                (8,732)
                                                                  ------------------    -------------------
                                                                      $ 2,503                $ 2,986
                                                                  ==================    ===================

     Other assets consisted of the following (in thousands):
<CAPTION>

                                                                                DECEMBER 31,
                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                   <C>                    <C>
         License fees (net of  accumulated  amortization  of
           $611 and $485 in 2000 and 1999, respectively).....         $ 1,289                $ 1,015
         Long-term receivable................................             ---                    258
         Software development costs (net of accumulated
           amortization of $46 and $6 in 2000 and 1999,
           respectively).....................................              34                     74
         Prepaid expenses....................................              47                     94
                                                                  ------------------    -------------------
                                                                      $ 1,370                $ 1,441
                                                                  ==================    ===================



                                       42
<PAGE>

     Accounts payable and accrued liabilities consisted of
     the following (in thousands):
<CAPTION>

                                                                                DECEMBER 31,

                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                    <C>                    <C>
         Trade accounts payable..............................          $1,318                 $1,118
         Employee related costs..............................             831                  1,182
         Other taxes payable.................................           1,198                  1,218
         Accrued rent........................................             848                    934
         Accrued professional fees...........................             891                    783
         Accrued royalties...................................             731                    297
         Accrued clinical trial costs........................             520                     84
         Other...............................................             638                    537
                                                                  ------------------    -------------------
                                                                       $6,975                 $6,153
                                                                  ==================    ===================
</TABLE>

NOTE 4--SHORT-TERM INVESTMENTS CLASSIFIED AS HELD TO MATURITY:

     Short-term investments are classified as held to maturity, are carried at
amortized cost and are summarized as follows (in thousands):
<TABLE>
<CAPTION>

                                                                      DECEMBER 31, 2000
                                                   --------------------------------------------------------
                                                     AMORTIZED           UNREALIZED             FAIR
                                                        COST                GAIN               VALUE
                                                   ----------------    ----------------    ----------------
<S>                                                  <C>                     <C>            <C>
         U.S. government agencies.........           $ 3,307                 $5             $ 3,312
         Corporate debt securities........             7,366                  3               7,369
                                                   ----------------    ----------------    ----------------
                                                     $10,673                 $8             $10,681
                                                   ================    ================    ================
<CAPTION>

                                                                      DECEMBER 31, 1999
                                                   --------------------------------------------------------
                                                     AMORTIZED           UNREALIZED            FAIR
                                                        COST                LOSS               VALUE
                                                   ----------------    ----------------    ----------------
<S>                                                   <C>                   <C>              <C>
         U.S. government agencies.........            $2,727                $11              $2,716
         Corporate debt securities........               870                ---                 870
                                                   ----------------    ----------------    ----------------
                                                      $3,597                $11              $3,586
                                                   ================    ================    ================
</TABLE>

     A summary of securities classified as held to maturity at December 31, 2000
are as follows (in thousands):
<TABLE>
<CAPTION>

                      DUE IN                      AMORTIZED COST           FAIR VALUE
                      ---------------------    -------------------     -------------------
                      <S>                            <C>                     <C>
                      1-90 Days.........             $ 4,624                 $ 4,624
                      91-180 Days.......               5,563                   5,568
                      181-270 Days......                 486                     489
                                               -------------------     -------------------
                                                     $10,673                 $10,681
                                               ===================     ===================
</TABLE>

NOTE 5--LICENSE REVENUES:

     During the second quarter of 2000, the Company entered into a patent
license agreement and an option to a patent license agreement to license certain
patent technology of the Company. Under the terms of these agreements, the
Company recognized $1,250,000 of non-refundable license/option fees as license
revenue.

NOTE 6--LEGAL SETTLEMENT:

     During 1998, the Company recognized a $384,000 nonrecurring gain with
respect to a settlement agreement which ended a patent infringement suit brought
by the Company, as exclusive licensee, and its licensor.

                                       43
<PAGE>

NOTE 7--ACQUIRED CLINICAL TRIAL DATA:

     During May 2000, the Company entered into a collaborative agreement with
Genentech Inc., the developer of the Herceptin(R) monoclonal antibody treatment
for metastatic breast cancer, to extend the use of the Company's PathVysion(TM)
HER-2 breast cancer test kit. In accordance with the agreement, the Company
recorded a $1,500,000 charge to research and development expense for the right
to utilize Genentech clinical trials data for the Company's regulatory
submission to the United States Food and Drug Administration ("FDA") to expand
the use of the Company's PathVysion(TM) HER-2 kit to include the use of the kit
to select patients for treatment with Herceptin. The Company has paid $1,000,000
with the remaining $500,000 due in May 2001. Additionally, if the FDA approves
the product, the Company must make a final additional payment of $500,000 to be
paid the later of FDA approval or May 2001.

NOTE 8--ACQUIRED RESEARCH-RELATED PATENTS:

     During July 1999, the Company acquired Aprogenex, Inc.'s intellectual
property portfolio for $250,000 plus the issuance of 80,291 shares of the
Company's Common Stock for a total value of $536,000, which has been recorded as
a research and development expense. The intellectual property portfolio included
12 United States patents which primarily relate to diagnostic assays using the
identification of fetal cells in maternal blood. The Company has expensed the
entire value of the acquired portfolio as the Company's research has not yet
established that the assays utilizing these patents has sufficient diagnostic
capability and the Company is not currently allocating significant research
expenditures to this area.

NOTE 9--RESTRUCTURING:

     During 1999, the Company completed restructuring plans that included the
elimination of 25 employees at various levels throughout the Company, which
resulted in a $918,000 restructuring charge in 1999 for employee severance
costs. At December 31, 2000, the Company had paid all of these costs.

NOTE 10--GAIN ON SALE OF THE IMAGING BUSINESS:

     During July 1999, the Company sold its Quips cytogenetic imaging
instrumentation ("Imaging") business, which represented nearly all of the
Company's current genetic instrument product line, to Applied Imaging Corp.
("AI") for a purchase price of $2,278,000 plus additional consideration of
$749,000 for the purchase of certain Imaging component inventory, resulting in a
gain of $1,700,000. Of the $3,027,000 in total consideration, the Company has
received $2,248,000 in cash and 497,368 shares of AI common stock that was
valued upon its receipt at $529,000. In addition, in accordance with the sale
agreement, AI paid in cash $250,000 plus interest in January 2001. As of
December 31, 1999, the marketable securities balance of $622,000 represents the
market value of the common stock, and an unrealized gain of $93,000 has been
included as a component of stockholders' equity. See Note 12 for discussion
regarding the July 2000 sale of the AI marketable securities.

NOTE 11--GAIN ON SALE OF FRENCH DISTRIBUTOR:

     On December 31, 1999, the Company sold its wholly-owned French distribution
subsidiary to Applied Genetics Services, Ltd. for a purchase price in French
francs the equivalent of $1,272,000 in U.S. dollars as of December 31, 1999,
resulting in a gain of $166,000. At December 31, 2000, the Company and its
foreign subsidiaries have received the U.S. dollar equivalent of $1,076,000. In
accordance with the sale agreement, the Company and its foreign subsidiaries
should receive by March 2001 the remaining payments in French francs aggregating
the equivalent of $45,000 in U.S. dollars as of December 31, 2000.

                                       44
<PAGE>

NOTE 12--GAIN ON SALES OF MARKETABLE SECURITIES:

     During July 2000, the Company sold all of its marketable securities, which
consisted of AI common stock, for $1,718,000 resulting in a realized gain of
$1,190,000. During the first quarter of 1999, the Company sold its
available-for-sale investment of Incyte Pharmaceuticals, Inc. common stock for
$457,000 resulting in a gain on the sale of $357,000.

NOTE 13--INCOME TAXES:

     Prior to the completion of the Offering (see Note 16), the Company's
results of operations were included in the consolidated income tax returns of BP
Amoco; accordingly, the Company's domestic net operating losses through February
10, 1998 have been utilized by BP Amoco in its consolidated income tax returns
and are not available to offset the Company's future taxable income. Subsequent
to the Offering, the Company has filed separate federal income tax returns. As
the Company was in a loss position for the period February 11, 1998 through
December 31, 1998 and for the years ended December 31, 1999 and 2000, no federal
provision is recorded. See Note 2 for discussion of state taxes and the tax
sharing agreement with BP Amoco.

     The income tax effect of temporary differences comprising the deferred tax
assets and liabilities is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                                DECEMBER 31,
                                                                  -----------------------------------------
                                                                        2000                   1999
                                                                  ------------------    -------------------
<S>                                                                    <C>                    <C>
         Deferred tax assets:
              Net operating loss carryforwards............             $6,860                 $6,326
              Deferred revenue............................                469                    553
              Accrued rent................................                339                    374
              Allowance for doubtful accounts.............                268                    286
              Accrued clinical trial costs................                208                     34
              Inventory reserve...........................                 40                    133
              Accrued professional fees...................                214                    227
              Accrued severance...........................                ---                    185
              Accrued employee benefits...................                120                    141
              Accrued royalties...........................                198                    100
              Miscellaneous accruals......................                532                    487
                                                                  ------------------    -------------------
         Total deferred tax assets........................              9,248                  8,846
         Valuation allowance..............................             (9,201)                (8,513)
                                                                  ------------------    -------------------
         Net deferred tax assets..........................                 47                    333

         Deferred tax liabilities:
              Accumulated depreciation, unrealized gain on
                marketable securities and software
                development costs.........................                (47)                  (333)
                                                                  ------------------    -------------------
         Net deferred tax assets..........................             $  ---                 $  ---
                                                                  ==================    ===================
</TABLE>

     The Company had net operating loss carryforwards of $19,382,000 at December
31, 2000, of which approximately $18,084,000 will expire at varying dates
through 2015 and the remainder of which may be carried forward indefinitely. A
full valuation allowance has been provided for all deferred tax assets net of
liabilities as management does not consider realization of such amounts more
likely than not.

                                       45
<PAGE>

NOTE 14--NON-CASH INVESTING AND FINANCING ACTIVITES:

     During the three years ended December 31, 2000, non-cash investing and
financing activities are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31,
                                                               --------------------------------------------
                                                                   2000           1999             1998
                                                               -----------    ------------     ------------
<S>                                                                <C>            <C>            <C>
         Investing:
               Common stock received in connection with
               the sale of Imaging business ..........                            $529

         Financing:
               Conversion of note payable-BP Amoco....                                           $8,099
               Income tax benefit from BP Amoco.......                                            1,126
               Issuance of common stock for patents...                             286
               Expenses funded by BP Amoco............             $115
</TABLE>

NOTE 15--DEVELOPMENT AND LICENSE AGREEMENTS:

     The Company has entered into various license agreements pursuant to which
it has been granted exclusive and non-exclusive licenses to certain patented
technologies. The agreements require the Company to pay royalties ranging from
2.0 to 19.5 percent on net sales of specified products, with certain agreements
requiring minimum royalties due each year. As additional consideration for
certain of the licenses, the Company is obligated to fund certain research of
the licensors. Future minimum amounts due for such licenses, minimum royalties
and research funding are as follows (in thousands):

<TABLE>
<CAPTION>

                  YEAR ENDING
                  DECEMBER 31,
                  ------------
                  <S>                                             <C>
                  2001 ....................................       $1,281
                  2002 ....................................        1,253
                  2003 ....................................          907
                  2004 ....................................          728
                  2005 ....................................          728
                                                           ---------------
                                                                  $4,897
                                                           ===============
</TABLE>

NOTE 16--CAPITALIZATION:

     During October 1997, the Board of Directors authorized the Company to
proceed with an initial public offering of the Company's Common Stock. The
Company completed the Offering on February 10, 1998 and issued 3 million shares
of Common Stock, resulting in net cash proceeds of approximately $32.1 million.
In connection with the Offering, 6,200,000 and 553,126 shares of Series A and
Series B Convertible Preferred Stock, respectively, held by BP Amoco,
automatically converted into 4,525,547 and 403,741 shares of Common Stock,
respectively. In addition, concurrent with the consummation of the Offering, the
Company converted $8.1 million of the Note Payable-BP Amoco into 675,000 shares
of Common Stock and repaid the remaining note balance of $2.0 million. Upon
completion of the Offering, the Company had approximately 9.7 million shares of
Common Stock issued and outstanding.

                                       46
<PAGE>

     Transactions related to Convertible Preferred and Common Stock for the
three years ended December 31, 2000 are as follows (in thousands, except share
data):
<TABLE>
<CAPTION>

                                                                       SHARES                 AMOUNT
                                                                  ------------------    -------------------
<S>                                                                 <C>                       <C>
         Convertible Preferred Stock:
               Beginning balance, January 1, 1998............        6,753,126                $ 7
               Conversion of Series A and Series B preferred
               stock to common stock ........................       (6,753,126)                (7)
                                                                  ------------------    -------------------
               Balance, December 31, 1998....................              ---                $--
                                                                  ==================    ===================
</TABLE>

     For the years ended December 31, 1999 and 2000, there was no Convertible
Preferred Stock activity.
<TABLE>
<CAPTION>

                                                                       SHARES                 AMOUNT
                                                                  ------------------    -------------------
<S>                                                                 <C>                       <C>
         Common Stock:
               Beginning balance, January 1, 1998.............       1,071,970                $ 1
               Conversion of Series A and Series B
               preferred  stock...............................       4,929,288                  5
               Conversion of note payable-BP Amoco............         675,000                  1
               Issuance of common stock through initial
               public offering................................       3,000,000                  3
               Shares issued under stock option plans.........         112,143                ---
                                                                  ------------------    -------------------
               Balance, December 31, 1998.....................       9,788,401                 10
               Shares issued under stock option plans.........          76,654                ---
               Shares issued for patents......................          80,291                ---
                                                                  ------------------    -------------------
               Balance, December 31, 1999.....................       9,945,346                 10
               Shares issued under stock option plans.........         205,646                ---
                                                                  ------------------    -------------------
               Balance, December 31, 2000                           10,150,992                $10
                                                                  ==================    ===================
</TABLE>

NOTE 17--EMPLOYEE BENEFIT PLANS:

     In February 1996, the Company adopted the 1996 Stock Incentive Plan (the
"1996 Plan"). A total of 985,402 shares of Common Stock have been authorized for
issuance under the 1996 Plan, subject to anti-dilution and other adjustments. In
general, under the 1996 Plan, incentive or nonqualified stock options may be
granted at a price not less than 100 percent of the estimated fair value of the
Common Stock on the date of grant, as determined by the Compensation Committee
of the Board of Directors. Options generally vest over 4 years and expire within
10 years from the date of grant. The grants made during 2000 do not vest until
the Company has achieved two consecutive quarters of positive net earnings.

                                       47
<PAGE>

     Option activity under the 1996 Plan is summarized below:
<TABLE>
<CAPTION>

                                                                      NUMBER OF              WEIGHTED
                                                                       SHARES             AVERAGE PRICE
                                                                  ------------------    -------------------
<S>                                                                  <C>                      <C>
         Options outstanding at December 31, 1997............         951,719                 $1.08
         Granted.............................................          53,440                 $5.81
         Exercised...........................................        (112,143)                $0.73
         Surrendered or terminated...........................         (46,696)                $1.40
                                                                  ------------------
         Options outstanding at December 31, 1998............         846,320                 $1.40
         Granted.............................................          50,158                 $4.03
         Exercised...........................................         (76,654)                $1.32
         Surrendered or terminated...........................         (80,212)                $3.19
                                                                  ------------------
         Options outstanding at December 31, 1999............         739,612                 $1.40
         Granted ............................................          20,000                 $6.25
         Exercised ..........................................        (185,646)                $1.14
         Surrendered or terminated ..........................          (9,563)                $3.17
                                                                  ------------------
         Options outstanding at December 31, 2000 ...........         564,403                 $1.62
                                                                  ==================

         Options exercisable at December 31, 2000   .........         512,138                 $1.24
         Options  available  for future grant at December 31,
              2000...........................................          32,980
         Weighted-average fair value of options granted
              during the year ended December 31, 1998  ......           $2.92
         Weighted-average fair value of options granted
              during the year ended December 31, 1999  ......           $3.47
         Weighted-average fair value of options granted
              during the year ended December 31, 2000  ......           $6.01
</TABLE>

     During 1997, the Company issued options under the 1996 Plan to employees to
purchase 78,249 shares of Common Stock at an exercise price of $2.74 per share,
exercisable through 2007. The Company recorded deferred compensation of $277,000
in connection with these options based upon differences between the estimated
fair value of the underlying stock and the exercise price of the related
options. During 1999 the employees originally granted these options left the
Company and, as a result, deferred compensation was reduced by $57,000. During
1996, the Company issued options under the 1996 Plan to consultants to purchase
44,162 shares of Common Stock at an exercise price of $0.53 per share,
exercisable through 2006. The Company recorded deferred compensation of $213,000
in connection with these options, based upon the difference between the
estimated fair value of the services received and the exercise price of the
options granted. The Company recognized $24,000 and $146,000 as stock
compensation expense during the years ended December 31, 1999 and 1998.

     During July 1998, the shareholders approved the adoption of the 1998 Long
Term Incentive Plan ("the 1998 Plan"). A total of 1,500,000 shares of Common
Stock have been authorized for issuance under the 1998 Plan, subject to
anti-dilution and other adjustments. In general, under the 1998 Plan, incentive
or non-qualified stock options may be granted at a price not less than 100
percent of the fair market value of the Common Stock on the date of grant. As
implemented by the Company, options granted under the 1998 Plan vest either in
accordance with the completion of certain performance milestones for which
specific percentages of vesting are associated, or over four years with 50
percent vesting in the first year and the remaining 50 percent vesting ratably
over the following three years, or over four years with 25 percent vesting in
each of the years; however, no vesting occurs until the Company has achieved two
consecutive quarters of positive net earnings. During 2000, the Company's Board
of Directors approved the replacement of certain performance milestones
previously issued that were no longer aligned with the strategic direction of
the Company with future performance milestones that are aligned with the
Company's current strategic direction. Regardless of whether milestones or the
profitability criteria are achieved for those options granted with milestones or
the profitability criteria, the options fully vest upon the ninth anniversary of
the grant date and expire within 10 years from the grant date.

                                       48
<PAGE>

     Option activity under the 1998 Plan is summarized below:
<TABLE>
<CAPTION>

                                                                      NUMBER OF              WEIGHTED
                                                                       SHARES             AVERAGE PRICE
                                                                  ------------------    -------------------
<S>                                                                 <C>                       <C>
         Granted.............................................       1,039,000                 $5.62
         Exercised...........................................             ---                   ---
         Surrendered or terminated ..........................             ---                   ---
                                                                  ------------------
         Options outstanding at December 31, 1998............       1,039,000                 $5.62
         Granted.............................................         674,900                 $3.91
         Exercised...........................................             ---                   ---
         Surrendered or terminated...........................        (341,000)                $5.59
                                                                  ------------------
         Options outstanding at December 31, 1999............       1,372,900                 $4.78
         Granted.............................................         310,134                 $9.49
         Exercised...........................................             ---                   ---
         Surrendered or terminated...........................        (190,350)                $5.33
                                                                  ------------------
         Options outstanding at December 31, 2000............       1,492,684                 $5.69
                                                                  ==================

         Options exercisable at December 31, 2000............           1,500                 $3.75
         Options  available  for future grant at December 31,
              2000...........................................           7,316
         Weighted-average fair value of options granted
              during the year ended December 31, 1998........           $3.42
         Weighted-average fair value of options  granted
              during the year ended December 31, 1999........           $2.77
         Weighted-average fair value of options granted
              during the year ended December 31, 2000........           $8.99
</TABLE>

     During January 2000, the Board of Directors approved the immediate vesting
of 242 and 1,500 unvested options as of December 31, 1999 under the 1996 and
1998 Plans, respectively, for former employees of the French distribution
subsidiary that was sold on December 31, 1999 (see Note 11). The Company
recognized $13,000 of stock compensation expense for the year ended December 31,
2000.

     On October 1, 1998, a subcommittee of the Compensation Committee of the
Company's Board of Directors approved a repricing of certain stock options
granted under the 1996 Plan, and all stock options granted under the 1998 Plan,
for options granted during 1998 through October 1, 1998. All repriced options
have an exercise price of $5.60 which exceeded the fair market value of the
Common Stock as of October 1, 1998.

     During October 1998, the Company's Board of Directors approved, with Mr.
Bartlett, Dr. Melmon and Mr. Williams abstaining from the vote, a grant of
non-qualified stock options to each of Mr. Bartlett, Dr. Melmon and Mr.
Williams, to purchase 5,000 shares of Common Stock at a price of $5.60 per share
which was not less than 100 percent of the fair market value of the Common Stock
on the date of grant. The options vest immediately upon grant and expire the
earlier of one year after a Director ceases to be a Director of the Company, or
10 years after the grant date.

     During June 1999, the shareholders approved the adoption of the 1999
Outside Directors Stock Option Plan ("Directors Plan"). A total of 100,000
shares of Common Stock has been authorized for issuance under the Directors
Plan, subject to anti-dilution and other adjustments. The Directors Plan
provides that, on the date of an Outside Director's initial election to the
Board of Directors, the Outside Director will receive an option to purchase
10,000 shares of Common Stock. In addition, the Directors Plan provides that
each person who is an Outside Director at the close of the regular annual
meeting of the Company's stockholders will receive an option to purchase 5,000
shares of Common Stock. Under the Directors Plan, options will be granted at a
price equal to the fair market value of the Common Stock on the date of the
grant. The options vest immediately upon grant and expire the earlier of one
year after a Director ceases to be a Director of the Company, or 10 years after
the grant date.

     Option activity for the above grants and the Directors Plan is summarized
below:

                                       49
<PAGE>
<TABLE>
<CAPTION>

                                                                      NUMBER OF              WEIGHTED
                                                                       SHARES             AVERAGE PRICE
                                                                  ------------------    -------------------
<S>                                                                   <C>                     <C>
         Granted.............................................          15,000                 $5.60
         Exercised...........................................             ---                   ---
                                                                  ------------------
         Options outstanding at December 31, 1998............          15,000                 $5.60
         Granted ............................................          15,000                 $3.75
         Exercised...........................................             ---                  ---
                                                                  ------------------
         Options outstanding at December 31, 1999............          30,000                 $4.68
         Granted.............................................          20,000                 $8.97
         Exercised...........................................         (20,000)                $4.68
                                                                  ------------------
         Options outstanding at December 31, 2000............          30,000                 $7.54
                                                                  ==================
         Options exercisable at December 31, 2000............          30,000                 $7.54
         Options  available  for future grant at December 31,
              2000...........................................          65,000
         Weighted-average fair value of options granted
              during the year ended December 31, 1998........           $2.93
         Weighted-average fair value of options granted
              during the year ended December 31, 1999........           $3.54
         Weighted-average fair value of options granted
              during the year ended December 31, 2000........           $6.00

</TABLE>

     The following summarizes information about stock options outstanding at
December 31, 2000:
<TABLE>
<CAPTION>

                                       OPTIONS OUTSTANDING                     OPTIONS EXERCISABLE
                               ------------------------------------    ------------------------------------
                                                      WEIGHTED
                                                       AVERAGE            WEIGHTED
            RANGE OF                                 REMAINING            AVERAGE
            EXERCISE               NUMBER            CONTRACTUAL          EXERCISE             NUMBER
            PRICES               OUTSTANDING            LIFE                PRICE            EXERCISABLE
         ------------------    ----------------    ----------------    ----------------    ----------------
          <S>                       <C>                 <C>                <C>                 <C>
          $0.53-$1.34                434,388            6.01               $0.56               426,418
          $2.74-$3.75                440,507            8.46               $2.97                42,468
          $5.38-$5.60                856,179            7.66               $5.55                33,763
          $6.13-$10.56               356,013            9.13               $8.01                40,989
                               ----------------                                         ----------------
                                   2,087,087                                                   543,638
                               ================                                         ================
</TABLE>

     The fair value of each option was estimated on the date of grant using the
Black-Scholes option pricing model. The principal determinants of option pricing
are: the estimated fair value of the Company's Common Stock at the date of
grant, expected volatility, risk-free interest rate, expected option lives and
dividend yields. Weighted average assumptions employed by the Company were as
follows:
<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,
                                                        ---------------------------------------------------
                                                             2000              1999              1998
                                                        ---------------    --------------    --------------
<S>                                                         <C>                <C>               <C>
         Expected volatility........................        124.4%             94.2%             82.0%
         Risk free interest rate....................          6.2%              6.0%              4.4%
         Expected option life (years)...............          7.0               6.7               6.9
         Dividend yield.............................            0                 0                 0
</TABLE>

                                       50
<PAGE>

     The Company applies Accounting Principles Board Opinion No. 25 in
accounting for its fixed stock option plan and, accordingly, has not recognized
compensation cost in the accompanying consolidated statement of operations. Had
compensation cost been recognized using the fair value-based method of
accounting, as prescribed by SFAS No. 123, the Company's pro forma net loss and
net loss per share would have been as follows (in thousands, except per share
amounts):
<TABLE>
<CAPTION>

                                                                     YEAR ENDED DECEMBER 31,
                                                        ---------------------------------------------------
                                                             2000              1999              1998
                                                        ---------------    --------------    --------------
<S>                                                       <C>              <C>               <C>
         Net loss:
              As reported..............................   $  (460)         $ (9,842)         $(16,755)
              Pro forma................................   $(1,935)         $(10,792)         $(17,151)
         Basic and diluted net loss per share:
                 As reported...........................     $(.05)           $(1.00)           $(1.91)
                 Pro forma.............................     $(.19)           $(1.09)           $(1.96)
</TABLE>

     The Company also maintains the Vysis, Inc. Savings and Investment Plan (the
"Savings Plan"), as amended, which allows for participant contributions pursuant
to Section 401(k) of the Internal Revenue Code. Substantially all the Company's
U.S. employees are eligible to participate in the Savings Plan and may
contribute up to 17 percent of their eligible compensation to the Savings Plan.
The Company provides for a 50% match of the employees' contribution up to 3
percent of the employees' salary, subject to legal limitations. The Company made
matching contributions to the Savings Plan of $172,000, $203,000 and $204,000 in
2000, 1999, and 1998, respectively.

NOTE 18--SEGMENT AND GEOGRAPHIC INFORMATION:

     The Company operates in two reportable business segments: genetic and food
testing products. The genetics business develops, commercializes, manufactures
and markets products that use nucleic acid probes for the evaluation and
management of cancer, prenatal disorders and other genetic diseases. The food
business manufactures and markets food testing kits based on DNA probes.

     The tables below present information (in thousands) about reported segments
for the three years ended December 31, 2000:
<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31, 2000
                                                   --------------------------------------------------------
                                                      GENETICS              FOOD                TOTAL
                                                   ----------------    ----------------    ----------------
<S>                                                    <C>                  <C>                  <C>
         Revenues from external
           customers...........................        $21,147              $ 2,844              $23,991
         Interest income.....................              569                  ---                  569
         Unusual expense items, net*......                 310                  ---                  310
         Depreciation and amortization...                1,467                   26                1,493
         Other non-cash items...............            (1,091)                 ---               (1,091)
         Segment income (loss)............                (462)                   2                 (460)
         Segment assets.....................            20,907                  583               21,490
         Additions to long-lived assets ......             960                   21                  981
</TABLE>

     *    Includes acquired clinical trial data expense, net of gain on sale of
          marketable securities.

                                       51
<PAGE>

<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31, 1999
                                                   --------------------------------------------------------
                                                      GENETICS              FOOD                TOTAL
                                                   ----------------    ----------------    ----------------
<S>                                                    <C>                   <C>                 <C>
         Revenues from external
           customers........................           $18,718               $2,977              $21,695
         Interest income....................               648                  ---                  648
         Interest expense...................                68                  ---                   68
         Unusual income items, net*.........               769                  ---                  769
         Depreciation and amortization......             1,622                   21                1,643
         Other non-cash items...............            (1,767)                 ---               (1,767)
         Segment loss.......................             9,702                  140                9,842
         Segment assets.....................            20,374                  661               21,035
         Additions to long-lived assets.....               778                   57                  835
</TABLE>

     *    Includes gain on sales of Imaging business, French distributor and
          marketable securities, net of acquired research-related patents and
          restructuring expense.
<TABLE>
<CAPTION>

                                                                YEAR ENDED DECEMBER 31, 1998
                                                   --------------------------------------------------------
                                                      GENETICS              FOOD                TOTAL
                                                   ----------------    ----------------    ----------------
<S>                                                    <C>                   <C>                 <C>
         Revenues from external
           customers........................           $20,348               $2,622              $22,970
         Legal settlement...................               384                  ---                  384
         Interest income....................             1,337                  ---                1,337
         Interest expense...................               379                  ---                  379
         Depreciation and amortization......             2,320                   18                2,338
         Other non-cash items...............               351                  ---                  351
         Segment loss.......................            16,329                  426               16,755
         Segment assets.....................            34,380                  663               35,043
         Additions to long-lived assets.....             1,032                   11                1,043
</TABLE>

     The Company's revenues by product line are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,

                                                   --------------------------------------------------------
                                                        2000                1999                1998
                                                   ----------------    ----------------    ----------------
<S>                                                        <C>             <C>                 <C>
         FDA/AFSSAPS approved clinical
           genetic testing products........                $ 5,927         $ 4,116             $ 2,616
         ASR/Research products.............                 11,176           9,506               8,463
         Genetic instrument products.......                  1,906           3,268               6,650
         License and other revenue.........                  2,138             749               1,444
         Distributed laboratory products...                    ---           1,079               1,175
         Food testing products.............                  2,844           2,977               2,622
         Legal settlement..................                    ---             ---                 384
                                                   ----------------    ----------------    ----------------
         Consolidated total revenues.......                $23,991         $21,695             $23,354
                                                   ================    ================    ================
</TABLE>

     The Company's revenues from external customers by geographic area based on
the customer's location are as follows (in thousands):
<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                                   --------------------------------------------------------
                                                        2000                1999                1998
                                                   ----------------    ----------------    ----------------
<S>                                                     <C>                 <C>                 <C>
         United States......................            $13,087             $10,423             $ 9,884
         Europe, Middle East and Africa  ...              8,058               8,766              11,212
         Other..............................              2,846               2,506               2,258
                                                   ----------------    ----------------    ----------------
         Consolidated total revenues........            $23,991             $21,695             $23,354
                                                   ================    ================    ================
</TABLE>

                                       52
<PAGE>

     All long-lived assets as of December 31, 2000 and 1999 are located within
the United States, except for $591,000 and $284,000 of European long-lived
assets, respectively.

     For the years ended December 31, 2000, 1999 and 1998, there were no
revenues to individual customers that exceeded 10 percent of total revenues.

NOTE 19--LEASE OBLIGATIONS:

     The Company operates primarily in leased facilities and also leases
certain manufacturing and other equipment. These leases generally require the
Company to pay taxes, maintenance, insurance and certain other operating
costs of the leased property. Most of the Company's leases contain renewal
clauses.

     Future minimum lease payments under non-cancelable operating leases are as
follows (in thousands):

                             YEAR ENDING DECEMBER 31,

                             2001 ..............................  $   837
                             2002 ..............................      953
                             2003 ..............................      745
                             2004 ..............................      644
                             2005 ..............................       15
                                                                ---------------
                                                                   $3,194
                                                                ===============

     Rental expense totaled $852,000, $1,055,000 and $932,000 in 2000, 1999, and
1998, respectively.

NOTE 20--GOODWILL WRITE-OFF:

     On April 3, 1996, the Company acquired all of the outstanding common stock
of TechGen International Sarl ("TechGen") for $295,000. TechGen is a French
distributor of chemical, biological, health and hygiene products and equipment,
which was subsequently sold in December 1999 (see Note 11). The acquisition was
accounted for under the purchase method of accounting. Accordingly, the cash
paid of $295,000 and liabilities assumed of $711,000 were allocated to the
tangible assets acquired. The excess of the purchase price over the estimated
fair value of net assets acquired of $457,000 was assigned to goodwill and
amortized using the straight-line method over a five year period. During 1998,
the Company analyzed the undiscounted future cash flows from this product line
and determined the cash flows would be less than the carrying value of the
goodwill. As a result of the impairment, the Company wrote off during the year
ended December 31, 1998 the remaining goodwill of $205,000 in selling, general
and administrative expense.

NOTE 21--COMMITMENTS AND CONTINGENCIES:

     In August 1999 the Company settled a patent infringement claim brought by
Gen-Probe Incorporated ("Gen-Probe") against the Company and Amoco Corporation
alleging infringement of certain patents owned by Gen-Probe and a claim of
malicious prosecution brought by Gen-Probe against the Company and Amoco
Corporation. The litigation settlement included an exchange of various patent
licenses and immunities from suit between the parties. No material amounts of
cash were paid or received by the Company upon completion of the settlement. At
December 31, 1998, the Company had accrued estimated future legal costs related
to that matter of $1.0 million. During 1999, the Company incurred legal costs of
$744,000 related to that matter and, as a result, credited the remaining
$256,000 to selling, general and administrative expenses.

     The Company is named as the defendant in a declaratory judgment suit filed
in the United States District Court in the Southern District of California (San
Diego) by Gen-Probe. The suit seeks a declaration that the Company's U.S. Patent
No. 5,750,338 ("the `338 patent") is invalid and not infringed by certain
products for detecting the presence of hepatitis C virus and human
immunodeficiency virus in blood specimens. The Company understands that Chiron
is currently marketing the products in various countries outside the U.S.
pursuant to licenses

                                       53
<PAGE>

granted by the Company to Gen-Probe and Chiron. The suit also seeks an
injunction restraining the Company from interfering with activities by Gen-Probe
and its partners regarding these and other products in development; damages and
other relief for unfair competition; and a declaration of Gen-Probe's rights and
obligations under its license to the `338 patent. The parties are taking
discovery. The trial is projected to occur in about January 2002. The Company
believes Gen-Probe's claims are without merit and intends to defend its rights
vigorously.

     The Company has filed an application to reissue the `338 patent with the
United States Patent & Trademark Office seeking clarification of certain matters
concerning the '338 patent. The reissue application also requests the Patent
Office to supplement the claims of the issued patent with new claims of
intermediate scope. The application remains pending.

     Neither loss of the suit filed by Gen-Probe nor an adverse ruling by the
Patent Office to the reissue application would limit the sales or marketing of
any of the Company's present or planned products, but either result could result
in the loss of revenue resulting from the licenses granted to Gen-Probe and its
partners and other potential licenses granted under the `338 patent. Although
there can be no assurance as to the ultimate outcome of the suit, based upon the
information available at this time it is the opinion of the Company's management
that the outcome of this suit will not have a material adverse effect on the
Company's business, results of operations and financial condition.

     The Company has an unused $2.0 million line of credit secured by eligible
accounts receivable.

NOTE 22--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>

                                                             (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                              MARCH 31             JUNE 30          SEPTEMBER 30         DECEMBER 31
                                           ----------------    ----------------    ----------------    ----------------
<S>                                            <C>                 <C>                   <C>                 <C>
2000
Total revenues........................         $ 5,131             $ 6,825               $ 5,486             $ 6,549
Gross profit..........................           3,892               5,335                 4,257               4,763
Net income (loss).....................          (1,319)               (995)                  950                 904
Basic income (loss) per share.........            (.13)               (.10)                  .09                 .09
Diluted income (loss) per share.......            (.13)               (.10)                  .09                 .08
1999
Total revenues........................         $ 5,444             $ 6,472               $ 4,039             $ 5,740
Gross profit..........................           3,397               3,833                 2,742               3,589
Net loss..............................          (3,498)             (2,798)               (1,989)             (1,557)
Basic and diluted loss per share......           (0.36)              (0.29)                (0.20)              (0.16)
</TABLE>


                                       54
<PAGE>

                                                                     SCHEDULE II

                                   VYSIS, INC.

                        VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                                     DEDUCTIONS
                                        BALANCE AT                     DEDUCTIONS     DEDUCTIONS     DUE TO SALE     BALANCE AT
           DESCRIPTION OF               BEGINNING                        DUE TO         DUE TO        OF FRENCH        END OF
       ALLOWANCE AND RESERVES           OF PERIOD       ADDITIONS      WRITE-OFFS     RECOVERIES     SUBSIDIARY        PERIOD
-------------------------------------  -------------   ------------  --------------- -------------- --------------  --------------
<S>                                       <C>           <C>              <C>           <C>            <C>              <C>
2000
Allowance for doubtful accounts           $1,231        $   167          $  68         $   211        $    ---         $1,119
1999
Allowance for doubtful accounts            1,290            653            244             ---             468          1,231
1998
Allowance for doubtful accounts              197          1,124             31             ---             ---          1,290
</TABLE>





                                       55
<PAGE>



                                   SIGNATURES

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

                             VYSIS, INC.


Date:  March 29, 2001        By:                /s/JOHN L. BISHOP
                                ----------------------------------------------
                                Name: John L. Bishop
                                TITLE: PRESIDENT AND CHIEF EXECUTIVE OFFICER

     PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>

                       SIGNATURES                                     TITLE (CAPACITY)                    DATE
                      -----------                                    -----------------                   ------
<S>                                                           <C>                                   <C>
                                                               President, Chief Executive
                    /s/JOHN L. BISHOP                             Officer and Director              March 29, 2001
----------------------------------------------------------        (Principal Executive Officer
                     John L. Bishop                               and Director)

                                                              Senior Vice President of Finance
                    /s/ JOHN R. SLUIS                              (Principal Financial Officer     March 29, 2001
----------------------------------------------------------         and Principal Accounting
                      John R. Sluis                                Officer)

                    /s/W. MURRAY AIR                          Director                              March 29, 2001
----------------------------------------------------------
                      W. Murray Air

                  /s/KENNETH L. MELMON                        Director                              March 29, 2001
----------------------------------------------------------
                    Kenneth L. Melmon

                  /s/RICHARD A. LERNER                        Director                              March 29, 2001
----------------------------------------------------------
                    Richard A. Lerner

                 /s/ANTHONY J. NOCCHIERO                      Director                              March 29, 2001
----------------------------------------------------------
                  Anthony J. Nocchiero

                 /s/WALTER R. QUANSTROM                       Director                              March 29, 2001
----------------------------------------------------------
                   Walter R. Quanstrom

                    /s/FRANK J. SROKA                         Director                              March 29, 2001
----------------------------------------------------------
                     Frank J. Sroka
</TABLE>



                                       56
<PAGE>

                                  EXHIBIT INDEX

     EXHIBIT
     NUMBER                               DESCRIPTION OF DOCUMENT
------------------  ---------------------------------------------------------

 **       2.1(5)    Asset Purchase, License, and Distribution Agreement
                    Between Vysis, Inc. and Applied Imaging Corp. dated July
                    16, 1999.

          3.1.1(1)  Certificate of Incorporation of Vysis, Inc. (formerly
                    Framingham Development Company) filed April 18, 1991.

          3.1.2(1)  Certificate of Amendment of Certificate of Incorporation
                    filed March 30, 1994.

          3.1.3(1)  Certificate of Merger filed February 1, 1996.

          3.1.4(1)  Certificate of Amendment of Certificate of Incorporation
                    filed February 29, 1996.

          3.1.5(1)  Certificate of Correction of Certificate of Amendment
                    filed July 22, 1996.

          3.1.6(1)  Certificate of Amendment of Certificate of Incorporation
                    filed September 16, 1997.

          3.1.7(1)  Certificate of Designations of Series B Preferred Stock,
                    filed September 17, 1997.

          3.1.8(1)  Certificate of Amendment of Certificate of Incorporation
                    filed November 21, 1997.

          3.2(3)    Amended and Restated Bylaws of Vysis, Inc.

          4.1(1)    Form of Common Stock Certificate.

*         10.1(1)   Vysis, Inc. 1996 Stock Incentive Plan.

          10.2(1)   Industrial Building Lease between American National Bank and
                    Trust Company of Chicago and Vysis, Inc. dated November 29,
                    1994.

          10.3(1)   License Agreement for Chromosome Analysis Technology with
                    Chromosome-Specific Probes between ATC and The Regents of
                    The University of California dated August 15, 1989, as
                    amended October 6, 1989; July 1, 1991; April 15, 1992; June
                    1, 1994; June 6, 1994; June 28, 1994; July 1, 1994;
                    September 1, 1994.

          10.4(1)   Exclusive License Agreement between The Regents of The
                    University of California and Imagenetics for Inventions made
                    in the field of Molecular Cytogenetics dated July 1, 1994.

          10.5(1)   Option Agreement between The Regents of The University of
                    California and Imagenetics for Inventions made in the field
                    of Molecular Cytogenetics dated July 1, 1994.

          10.6(1)   Exclusive Option Agreement between Vysis and the University
                    of California for the Glass Chromosome.

          10.7(1)   Exclusive License Agreement between the Regents of the
                    University of California and Vysis, Inc. for Molecular
                    Cytogenetics Software dated June 1, 1995.

                                       57
<PAGE>

                          EXHIBIT INDEX -- (CONTINUED)


   EXHIBIT
    NUMBER                    DESCRIPTION OF DOCUMENT
-------------------    --------------------------------------------------------

          10.8(1)   Exclusive License Agreement between the Regents of The
                    University of California and ATC dated July 30, 1992, as
                    amended, December 7, 1994.

          10.9(1)   License Agreement between The Trustees of Columbia
                    University, The Salk Institute for Biological Studies and
                    Gene-Trak Systems dated October 7, 1988, as amended June 15,
                    1996.

          10.10(1)  Research and License Agreement between Gene-Trak Inc. and
                    Public Health Research Institute dated July 14, 1994 and
                    Letter re: Research and License Agreement dated July 18,
                    1994.

          10.11(1)  Exclusive Distributor Agreement between Vysis, Inc. and
                    Fujisawa Pharmaceutical Co., Ltd. dated July 31, 1995.

**        10.12(1)  Sublicense Agreement between Ciba Corning Diagnostics Corp.
                    and Vysis, Inc. dated May 24, 1996.

**        10.13     License agreement between the Company and Yale University.

          10.14(1)  Cooperation Agreement between the Company and Amoco
                    Technology Company.

          10.15(2)  Registration Rights Agreement between the Company and Amoco
                    Technology Company.

          10.16(1)  Amended and Restated Tax Allocation Agreement between the
                    Company and Amoco Technology Company.

*         10.17(6)  Amended and Restated Vysis, Inc. 1998 Long Term Incentive
                    Plan.

*         10.18(4)  1999 Outside Directors Stock Option Plan.

*         10.19(7)  1998 Stock Option Agreement with Dr. Kenneth Melmon.

*         10.20     Director's Agreement with Dr. Richard A. Lerner

          21.1(1)   Subsidiaries of Vysis, Inc.

          23.1      Independent Auditors' Consent.

-----------

(1)  Previously filed under the corresponding exhibit number in the Company's
     S-1 Registration Statement No. 333-38109 and incorporated herein by
     reference.

(2)  Previously filed as Exhibit 10.15 to the Company's Annual Report on Form
     10-K for the year ended December 31, 1997 and incorporated herein by
     reference.

                                       58
<PAGE>

                          EXHIBIT INDEX -- (CONTINUED)

(3)  Previously filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K
     for the year ended December 31, 1998 and incorporated herein by reference.

(4)  Previously filed as Exhibit A to the Company's Definitive Proxy Statement
     for the 1999 Annual Meeting of Stockholders and incorporated herein by
     reference.

(5)  Previously filed as Exhibit 2.1 to the Company's Quarterly Report on Form
     10-Q for the quarter ended June 30, 1999 and incorporated herein by
     reference.

(6)  Previously filed as Exhibit 10.17 to the Company's Annual Report on Form
     10-K for the year ended December 31, 1999 and incorporated herein by
     reference.

(7)  Previously filed as Exhibit 10.19 to the Company's Annual Report on Form
     10-K for the year ended December 31, 1999 and incorporated herein by
     reference.

*    Management contract or compensatory plan or arrangement.

**   Confidential information contained in this Agreement has been omitted.

                                       59