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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

FOR THE QUARTERLY PERIOD ENDED MARCH 26, 2011



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

FOR THE TRANSITION PERIOD FROM              TO

COMMISSION FILE NUMBER: 001-34116





Celera Corporation

(Exact name of registrant as specified in its charter)







|                                              |  |                                    
|--------------------------------------------- |  | -----------------------------------
|Delaware                                      |  | 26-2028576                         
|(State or other jurisdictionof incorporation) |  | (I.R.S. EmployerIdentification No.)

1401 Harbor Bay Parkway

Alameda, CA 94502

(Address of principal executive offices, with zip code)

(510) 749-4200

(Registrants telephone number, including area code)





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 the filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or
for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  | x
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

Number of
shares of common stock outstanding as of April 22, 2011: 82,181,869.









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TABLE OF CONTENTS



|                               |  |                                                                                                               |    |      |    | 
|------------------------------ |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|                               |  |                                                                                                               |    | Page |   
|PART I  Financial Information |  |                                                                                                               |    |     
|Item 1.                        |  | Financial Statements (Unaudited)                                                                              |    |      | 4  | 
|                               |  |                                                                                                              
|                               |  | 2010 Restatement                                                                                              |    |      | 4  | 
|                               |  |                                                                                                              
|                               |  | Condensed Consolidated Statements of Operations for the Three Months Ended March 26, 2011 and March 
27, 2010 |    |      | 5  | 
|                               |  |                                                                                                              
|                               |  | Condensed Consolidated Statements of Financial Position at March 26, 2011 and December 25,
2010               |    |      | 6  | 
|                               |  |                                                                                                              
|                               |  | Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 26, 2011 and March 
27, 2010 |    |      | 7  | 
|                               |  |                                                                                                              
|                               |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                |    |      | 8  | 
|                               |  |                                                                                                              
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |    |      | 24 | 
|                               |  |                                                                                                              
|Item 3.                        |  | Quantitative and Qualitative Disclosures about Market Risk                                                    |    |      | 30 | 
|                               |  |                                                                                                              
|Item 4.                        |  | Controls and Procedures                                                                                       |    |      | 31 | 
|                               | 
|PART II  Other Information    |  |                                                                                                               |    |     
|                               |  |                                                                                                              
|Item 1.                        |  | Legal Proceedings                                                                                             |    |      | 33 | 
|                               |  |                                                                                                              
|Item 1A.                       |  | Risk Factors                                                                                                  |    |      | 37 | 
|                               |  |                                                                                                              
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                   |    |      | 63 | 
|                               |  |                                                                                                              
|Item 6.                        |  | Exhibits                                                                                                      |    |      | 64 | 
|                               | 
|SIGNATURES                     |  |                                                                                                               | 65 |     



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CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains certain forward-looking statements, including, without
limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy and development efforts. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for certain forward-looking statements so long as such information is identified as forward-looking and is accompanied by meaningful cautionary statements
identifying important factors that could cause actual results to differ materially from those projected in the information. When used in this Quarterly Report on Form 10-Q, the words may, might, should,
estimate, project, plan, anticipate, expect, intend, outlook, believe and other similar expressions are intended to identify forward-looking statements
and information. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we
believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified in Part II, Item 1A Risk Factors in this Quarterly
Report. Reference is also made to such risks and uncertainties detailed from time to time in our other filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement as a
result of new information, future events or otherwise, except as otherwise required by law.



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PART I  Financial Information



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

2010 Restatement

As described in the Annual Report on Form 10-K of Celera Corporation (Celera or the Company) for the year ended
December 25, 2010 filed with the Securities and Exchange Commission (SEC) on March 18, 2011, Celera has restated certain financial statements and other information.

For further discussion of the effects of the 2010 restatement, see Part I, Item 1, Financial Statements, Note 2, Restatement of Previously Issued Financial Statements, of the
Notes to Unaudited Condensed Consolidated Financial Statements, Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operationsand Item 4, Controls and Procedures.



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Celera Corporation

Condensed Consolidated Statements of Operations

(Unaudited)



|                                                       |  |                    |        |   |                            |   |         |  
|------------------------------------------------------ |  | ------------------ | ------ | - | -------------------------- | - | ------- | -
|                                                       |  | Three Months Ended |       
|(Dollar amounts in thousands except per share amounts) |  | March 26,2011      |        |   | March 27,2010(As Restated) |  
|Net Revenues                                           |  |                    |        |   |                            |   |         |  
|Services                                               |  | $                  | 19,628 |   |                            | $ | 16,609  |  
|Products                                               |  |                    | 10,708 |   |                            |   | 8,174   |  
|Royalties, licenses and milestones                     |  |                    | 4,452  |   |                            |   | 5,671   |  
|                                                       |  |                    |        |   |                            |   |         |  
|Total Net Revenues                                     |  |                    | 34,788 |   |                            |   | 30,454  |  
|                                                       |  |                    |        |   |                            |   |         |  
|Cost of Sales                                          |  |                    |        |   |                            |   |         |  
|Services                                               |  |                    | 7,359  |   |                            |   | 7,296   |  
|Products                                               |  |                    | 5,633  |   |                            |   | 4,577   |  
|                                                       |  |                    |        |   |                            |   |         |  
|Total Cost of Sales                                    |  |                    | 12,992 |   |                            |   | 11,873  |  
|                                                       |  |                    |        |   |                            |   |         |  
|Gross Margin                                           |  |                    | 21,796 |   |                            |   | 18,581  |  
|Selling, general and administrative                    |  |                    | 20,276 |   |                            |   | 22,748  |  
|Research and development                               |  |                    | 6,521  |   |                            |   | 6,560   |  
|Amortization of purchased intangible assets            |  |                    | 2,560  |   |                            |   | 2,567   |  
|Employee-related charges, asset impairments and other  |  |                    | 57     |   |                            |   | 220     |  
|Legal settlement                                       |  |                    | (3,228 | ) |                            |   |        |  
|Merger-related costs                                   |  |                    | 1,998  |   |                            |   |        |  
|                                                       |  |                    |        |   |                            |   |         |  
|Operating Loss                                         |  |                    | (6,388 | ) |                            |   | (13,514 | )
|Interest income, net                                   |  |                    | 1,012  |   |                            |   | 1,223   |  
|                                                       |  |                    |        |   |                            |   |         |  
|Loss Before Income Taxes                               |  |                    | (5,376 | ) |                            |   | (12,291 | )
|Benefit (provision) for income taxes                   |  |                    | 80     |   |                            |   | (161    | )
|                                                       |  |                    |        |   |                            |   |         |  
|Net Loss                                               |  | $                  | (5,296 | ) |                            | $ | (12,452 | )
|                                                       |  |                    |        |   |                            |   |         |  
|Net Loss per Share                                     |  |                    |        |   |                            |   |         |  
|Basic and diluted                                      |  | $                  | (0.06  | ) |                            | $ | (0.15   | )
|                                                       |  |                    |        |   |                            |   |         |  
|Weighted Average Shares Outstanding(in thousands)      |  |                    |        |   |                            |   |         |  
|Basic and diluted                                      |  |                    | 82,115 |   |                            |   | 81,975  |  
|                                                       |  |                    |        |   |                            |   |         |  

See accompanying notes to unaudited condensed consolidated financial statements.



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Celera Corporation

Condensed Consolidated Statements of Financial Position

(Unaudited)



|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ---------- | - | ------------------- | - | ---------- | -
|(Dollar amounts in thousands)                                                                                                                                                                                          |  | At March 26,2011 |            |   | At December 25,2010 |  
|Assets                                                                                                                                                                                                                 |  |                  |            |   |                     |   |            |  
|Current assets                                                                                                                                                                                                         |  |                  |            |   |                     |   |            |  
|Cash and cash equivalents                                                                                                                                                                                              |  | $                | 55,794     |   |                     | $ | 34,971     |  
|Short-term investments                                                                                                                                                                                                 |  |                  | 270,659    |   |                     |   | 291,913    |  
|Accounts receivable (net of allowances for doubtful accounts of$7,960 and $8,194, respectively)                                                                                                                        |  |                  | 18,982     |   |                     |   | 19,223     |  
|Inventories                                                                                                                                                                                                            |  |                  | 7,951      |   |                     |   | 8,910      |  
|Prepaid expenses and other current assets                                                                                                                                                                              |  |                  | 11,003     |   |                     |   | 10,650     |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total current assets                                                                                                                                                                                                   |  |                  | 364,389    |   |                     |   | 365,667    |  
|Property, plant and equipment, net                                                                                                                                                                                     |  |                  | 11,389     |   |                     |   | 12,190     |  
|Goodwill                                                                                                                                                                                                               |  |                  | 116,350    |   |                     |   | 116,350    |  
|Intangible assets, net                                                                                                                                                                                                 |  |                  | 87,960     |   |                     |   | 90,753     |  
|Other long-term assets                                                                                                                                                                                                 |  |                  | 27,576     |   |                     |   | 27,318     |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total Assets                                                                                                                                                                                                           |  | $                | 607,664    |   |                     | $ | 612,278    |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Liabilities and Stockholders Equity                                                                                                                                                                                   |  |                  |            |   |                     |   |            |  
|Current liabilities                                                                                                                                                                                                    |  |                  |            |   |                     |   |            |  
|Accounts payable                                                                                                                                                                                                       |  | $                | 8,678      |   |                     | $ | 10,027     |  
|Income taxes payable                                                                                                                                                                                                   |  |                  | 4,082      |   |                     |   | 4,132      |  
|Accrued salaries and wages                                                                                                                                                                                             |  |                  | 6,240      |   |                     |   | 7,918      |  
|Other accrued expenses                                                                                                                                                                                                 |  |                  | 9,885      |   |                     |   | 7,364      |  
|Deferred revenue                                                                                                                                                                                                       |  |                  | 745        |   |                     |   | 1,073      |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total current liabilities                                                                                                                                                                                              |  |                  | 29,630     |   |                     |   | 30,514     |  
|Other long-term liabilities                                                                                                                                                                                            |  |                  | 14,479     |   |                     |   | 14,291     |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total Liabilities                                                                                                                                                                                                      |  |                  | 44,109     |   |                     |   | 44,805     |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Commitments and contingencies (refer to Note 13)                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|                                                                                                                                                                                                                       |  |                 
|Stockholders Equity                                                                                                                                                                                                   |  |                  |            |   |                     |   |            |  
|Common stock: par value $0.01 per share; 300,000,000 shares authorized; 82,529,016 and 82,395,082 shares issued and 82,173,465
and 82,083,871 shares outstanding at March 26, 2011 and December 25, 2010, respectively |  |                  | 825        |   |                     |   | 824        |  
|Preferred stock: par value $0.01 per share; 10,000,000 shares authorized; zero shares issued and outstanding                                                                                                           |  |                  |           |   |                     |   |           |  
|Additional paid-in capital                                                                                                                                                                                             |  |                  | 1,595,874  |   |                     |   | 1,594,138  |  
|Accumulated other comprehensive loss                                                                                                                                                                                   |  |                  | (1,992     | ) |                     |   | (1,909     | )
|Treasury stock, at cost: 355,551 and 311,211 shares at March 26, 2011and December 25, 2010,
respectively                                                                                                               |  |                  | (2,834     | ) |                     |   | (2,558     | )
|Accumulated net loss                                                                                                                                                                                                   |  |                  | (1,028,318 | ) |                     |   | (1,023,022 | )
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total Stockholders Equity                                                                                                                                                                                             |  |                  | 563,555    |   |                     |   | 567,473    |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  
|Total Liabilities and Stockholders Equity                                                                                                                                                                             |  | $                | 607,664    |   |                     | $ | 612,278    |  
|                                                                                                                                                                                                                       |  |                  |            |   |                     |   |            |  

See accompanying notes to unaudited condensed consolidated financial statements.



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Celera Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                                      |  |                    |         |   |                            |   |         |  
|----------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | -------------------------- | - | ------- | -
|                                                                                                      |  | Three Months Ended |        
|(Dollar amounts in thousands)                                                                         |  | March 26,2011      |         |   | March 27,2010(As Restated) |  
|Operating Activities                                                                                  |  |                    |         |   |                            |   |         |  
|Net loss                                                                                              |  | $                  | (5,296  | ) |                            | $ | (12,452 | )
|Adjustments to reconcile net loss from operations to net cash provided (used) byoperating activities: |  |                    |         |   |                            |   |         |  
|Depreciation and amortization                                                                         |  |                    | 3,898   |   |                            |   | 3,994   |  
|Allowance for doubtful accounts                                                                       |  |                    | 627     |   |                            |   | 816     |  
|Employee-related charges, asset impairments and other                                                 |  |                    | 278     |   |                            |   | 220     |  
|Share-based compensation                                                                              |  |                    | 1,562   |   |                            |   | 1,169   |  
|Deferred income taxes                                                                                 |  |                    | 189     |   |                            |   | 150     |  
|Non-cash interest income                                                                              |  |                    | (242    | ) |                            |   | (233    | )
|Amortization of premium on purchase of investments                                                    |  |                    | 998     |   |                            |   | 638     |  
|Changes in operating assets and liabilities:                                                          |  |                    |         |   |                            |   |         |  
|Accounts receivable                                                                                   |  |                    | (386    | ) |                            |   | 6,049   |  
|Inventories                                                                                           |  |                    | 959     |   |                            |   | (961    | )
|Prepaid expenses and other assets                                                                     |  |                    | (408    | ) |                            |   | 524     |  
|Accounts payable and other liabilities                                                                |  |                    | (1,116  | ) |                            |   | (4,926  | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Net Cash Provided (Used) by Operating Activities                                                      |  |                    | 1,063   |   |                            |   | (5,012  | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Investing Activities                                                                                  |  |                    |         |   |                            |   |         |  
|Additions to property, plant and equipment and intangible assets, net                                 |  |                    | (351    | ) |                            |   | (1,664  | )
|Proceeds from maturities of available-for-sale investments                                            |  |                    | 50,490  |   |                            |   | 45,563  |  
|Proceeds from sales of available-for-sale investments                                                 |  |                    | 4,728   |   |                            |   | 6,940   |  
|Purchases of available-for-sale investments                                                           |  |                    | (35,006 | ) |                            |   | (46,238 | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Net Cash Provided by Investing Activities                                                             |  |                    | 19,861  |   |                            |   | 4,601   |  
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Financing Activities                                                                                  |  |                    |         |   |                            |   |         |  
|Proceeds from the exercise of stock options                                                           |  |                    | 175     |   |                            |   |        |  
|Taxes withheld and paid on the vesting of restricted stock                                            |  |                    | (276    | ) |                            |   | (222    | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Net Cash Used by Financing Activities                                                                 |  |                    | (101    | ) |                            |   | (222    | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Net Change in Cash and Cash Equivalents                                                               |  |                    | 20,823  |   |                            |   | (633    | )
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Cash and Cash Equivalents at Beginning of Period                                                      |  |                    | 34,971  |   |                            |   | 56,233  |  
|                                                                                                      |  |                    |         |   |                            |   |         |  
|Cash and Cash Equivalents at End of Period                                                            |  | $                  | 55,794  |   |                            | $ | 55,600  |  
|                                                                                                      |  |                    |         |   |                            |   |         |  

See accompanying notes to unaudited condensed consolidated financial statements.





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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements

1. The Company and Nature of Operations

Organization

Celera Corporation is a healthcare business focusing on the integration of genetic testing into routine clinical care through a combination of products
and services incorporating proprietary discoveries.

Celera operates through three reporting segments: a clinical laboratory testing service
business (Lab Services); a products business (Products); and a segment that includes other activities under corporate management (Corporate). The Lab Services business, conducted through Berkeley HeartLab, Inc. (BHL), offers a broad portfolio of
clinical laboratory tests and disease management services designed to help physicians improve cardiovascular disease treatment regimens for their patients. The Products business develops, manufactures and oversees the commercialization of molecular
diagnostic products. Most of this business is conducted through the Companys distribution and royalty agreements with Abbott Molecular (Abbott), a subsidiary of Abbott Laboratories. The Corporate segment includes revenues from royalties,
licenses, collaborations and milestones related to the licensing of certain intellectual property and from Celeras former small molecule and proteomic programs.

Basis of Presentation

The accompanying unaudited condensed consolidated financial
statements include the financial statements of Celera Corporation and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant to such rules. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements
and notes thereto for the year ended December 25, 2010 included in the Companys Annual Report on Form 10-K filed with the SEC on March 18, 2011.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) considered necessary for the fair
statement of the results for the interim periods.

Merger

On March 18, 2011, Celera announced that it had entered into an Agreement and Plan of Merger, dated March 17, 2011 (as amended effective April 18, 2011, the Merger Agreement), with Quest
Diagnostics Incorporated (Quest), a Delaware corporation, and Spark Acquisition Corporation (Purchaser), a Delaware corporation and a wholly owned subsidiary of Quest. Pursuant to the Merger Agreement and upon the terms and subject to the conditions
thereof, on March 28, 2011, Purchaser commenced a tender offer (the Tender Offer) to acquire all of the issued and outstanding shares of the common stock of Celera for $8.00 per share, net to the holder thereof in cash (the Offer Price),
without interest and subject to applicable withholding taxes. The Merger Agreement provides that, among other things, upon its terms and subject to the satisfaction or written waiver of certain conditions, following completion of the Tender Offer,
and in accordance with the applicable provisions of the Delaware General Corporation Law, Purchaser will be merged with and into Celera (the Merger), with Celera continuing as the surviving corporation in the Merger.

On May 4, 2011, Quest announced that it had successfully completed the Tender Offer and accepted for payment 52.38% of the Companys outstanding
shares of common stock on a fully diluted basis.

Pursuant to an engagement letter dated March 23, 2010, the Company retained Credit Suisse as
its financial advisor in connection with, among other things, the proposed merger with Quest. Under the terms of the engagement letter, the Company became obligated to pay Credit Suisse a fee upon the closing of the Tender Offer of approximately
$8.8 million, of which $250,000 was paid following execution of the engagement letter and $1.0 million became payable upon the delivery of its written fairness opinion, which is included as Annex II to Schedule 14D-9, filed with the SEC on March 28,
2011.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



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 the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Significant items subject to such
estimates and assumptions include: Lab Services revenues; share-based compensation; the carrying amount of property, plant and equipment; intangible assets and goodwill; and valuation allowances for accounts receivable, inventories and deferred
income tax assets. Actual results could differ from those estimates.

2. Restatement of Previously Issued Financial Statements

As described in the Companys Annual Report on Form 10-K for the year ended December 25, 2010, Celera has restated certain financial
statements and other information. For additional details of the effects of the restatements on certain line items within the previously reported Condensed Consolidated Statement of Operations for the three months ended March 27, 2010, please refer
to the following sections in the Companys Annual Report on Form 10-K: Overview of Restatement; Part II, Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations; and Part II, Item 8,
Financial Statements and Supplementary Data, Note 3, Restatement of Previously Issued Financial Statements and Note 24, Unaudited Quarterly Financial Information.

The restatements reflect adjustments to correct errors in the Companys classification of bad debt expense. As a result of applying Financial Accounting Standards Board (FASB) Accounting Standards
Codification Topic 954, Health Care Entities (ASC 954), certain amounts that were previously included in bad debt expenses as a component of selling, general and administrative expenses, have now been correctly reflected as a reduction in
revenue. The errors in classification resulted in an overstatement of consolidated revenues and of selling, general and administrative expenses.



The effect of correcting the errors on the restated Condensed Consolidated Statement of Operations for the three months ended March 27, 2010 is
presented below. The restatements do not have a material impact on previously reported Condensed Consolidated Statements of Cash Flows.

Celera Corporation

Condensed Consolidated Statement of Operations

(Unaudited)

Three Months Ended March 27, 2010



|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|------------------------------------------------------ |  | --------------------------------- | ------- | - | --------------------------------- | - | ---- | ----------- |  | - | ------- | -
|(Dollar amounts in thousands except per share amounts) |  | As PreviouslyReported
onForm 10-Q |         |   | Classificationof Bad
DebtExpenses |   |      | As Restated | 
|Net Revenues                                           |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Services                                               |  | $                                 | 17,581  |   |                                   | $ | (972 | )           |  | $ | 16,609  |  
|Products                                               |  |                                   | 8,174   |   |                                   |   |     |             |  |   | 8,174   |  
|Royalties, licenses and milestones                     |  |                                   | 5,671   |   |                                   |   |     |             |  |   | 5,671   |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Total Net Revenues                                     |  |                                   | 31,426  |   |                                   |   | (972 | )           |  |   | 30,454  |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Cost of Sales                                          |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Services                                               |  |                                   | 7,296   |   |                                   |   |     |             |  |   | 7,296   |  
|Products                                               |  |                                   | 4,577   |   |                                   |   |     |             |  |   | 4,577   |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Total Cost of Sales                                    |  |                                   | 11,873  |   |                                   |   |     |             |  |   | 11,873  |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Gross Margin                                           |  |                                   | 19,553  |   |                                   |   | (972 | )           |  |   | 18,581  |  
|Selling, general and administrative                    |  |                                   | 23,720  |   |                                   |   | (972 | )           |  |   | 22,748  |  
|Research and development                               |  |                                   | 6,560   |   |                                   |   |     |             |  |   | 6,560   |  
|Amortization of purchased intangible assets            |  |                                   | 2,567   |   |                                   |   |     |             |  |   | 2,567   |  
|Employee-related charges, asset impairments and other  |  |                                   | 220     |   |                                   |   |     |             |  |   | 220     |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Operating Loss                                         |  |                                   | (13,514 | ) |                                   |   |     |             |  |   | (13,514 | )
|Interest income, net                                   |  |                                   | 1,223   |   |                                   |   |     |             |  |   | 1,223   |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Loss Before Income Taxes                               |  |                                   | (12,291 | ) |                                   |   |     |             |  |   | (12,291 | )
|Provision for income taxes                             |  |                                   | (161    | ) |                                   |   |     |             |  |   | (161    | )
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Net Loss                                               |  | $                                 | (12,452 | ) |                                   | $ |     |             |  | $ | (12,452 | )
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Net Loss per Share                                     |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Basic and diluted                                      |  | $                                 | (0.15   | ) |                                   |   |      |             |  | $ | (0.15   | )
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Weighted Average Shares Outstanding(in thousands)      |  |                                   |         |   |                                   |   |      |             |  |   |         |  
|Basic and diluted                                      |  |                                   | 81,975  |   |                                   |   |      |             |  |   | 81,975  |  
|                                                       |  |                                   |         |   |                                   |   |      |             |  |   |         |  

3. Accounting Policies

There have been no changes to the Companys accounting policies during the three months ended March 26, 2011, except as noted below. Refer to Note 2 to the consolidated financial statements
contained in the Companys Annual Report on Form 10-K for the year ended December 25, 2010.

In October 2009, the FASB issued
two updates to the Accounting Standards Codification (Codification) relating to revenue recognition. The first update eliminates the requirement that all undelivered elements in an arrangement with multiple deliverables have objective and reliable
evidence of fair value before revenue can be recognized for items that have been delivered. The update also no longer allows use of the residual method when allocating consideration to deliverables. Instead, arrangement consideration is to be
allocated to deliverables using the relative selling price method, applying a selling price hierarchy. Vendor specific objective evidence (VSOE) of selling price should be used if it exists. Otherwise, third party evidence (TPE) of selling
price should be used. If neither VSOE nor TPE is available, the companys best estimate of selling price should be used. The second update eliminates tangible products from the scope of software revenue recognition guidance when the tangible
products contain software components and non-software components that function together to deliver the tangible products essential functionality. Both updates require expanded qualitative and quantitative disclosures. The Company adopted the
provisions of the updates on December 26, 2010. Adoption of the updates did not have a material effect on the Companys condensed consolidated financial statements.

In April 2010, the FASB issued an update to the Codification related to the milestone method of revenue recognition. The update clarifies the guidance on defining a milestone and determining when it may
be appropriate to apply the milestone method of revenue recognition for research or development transactions. The Company adopted the provisions of the update on December 26, 2010. Adoption of the update did not have a material effect on the
Companys condensed consolidated financial statements.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



4. Employee-Related Charges, Asset Impairments and Other

Restructurings

For the three months
ended March 26, 2011, Celera recorded a net charge of $0.1 million in employee-related charges, asset impairments and other in the Condensed Consolidated Statements of Operations. This included a charge of $0.5 million for severance and related
costs associated with a restructuring program that was announced in November 2010. Costs of $0.3 million and $0.2 million were recorded in the Companys Lab Services and Corporate segments, respectively. The remaining cash expenditures
associated with this program of $0.5 million are expected to be paid through March 2012. The Company expects to complete the program by the end of the second quarter of 2011.

The Company also recorded the receipt of sublease income of $0.4 million in employee-related charges, asset impairments and other in the Condensed Consolidated Statements of Operations for the three
months ended March 26, 2011. The sublease income, recorded in the Companys Corporate segment, related to excess space in a facility previously used by Paracel, Inc. (Paracel), a business Celera acquired in 2000 and closed in 2005, the
cost of which had previously been expensed. The remaining net cash expenditures related to this charge are approximately $0.1 million and are expected to be paid through June 2011.

For the three months ended March 27, 2010, Celera recorded a net charge of $0.2 million in employee-related charges, asset impairments and other in the Condensed Consolidated Statements of
Operations. This included a charge of $0.4 million for additional lease expenses related to a facility previously used by Paracel. The charge was recorded in Celeras Corporate segment. Also for the three months ended March 27, 2010,
Celera recorded the reversal of a previously established accrual of $0.2 million in employee-related charges, asset impairments and other in the Condensed Consolidated Statements of Operations. The reversal related to severance and related costs
associated with the Companys 2009 restructuring programs.

5. Net Loss per Share

Basic and diluted net loss per share has been computed for the three months ended March 26, 2011 and March 27, 2010 using the weighted average
number of common shares outstanding for each period.

Restricted stock unit awards and stock options to acquire 5.6 million and
6.2 million shares of common stock at March 26, 2011 and March 27, 2010, respectively, have been excluded from the computations of diluted net loss per share because their effect would have been anti-dilutive.

6. Investments

All short-term
investments are classified as available-for-sale and are carried at fair value with unrealized gains and losses reported as a component of stockholders equity in the Condensed Consolidated Statements of Financial Position.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The fair value of short-term investments and unrealized gains and losses at March 26, 2011 and
December 25, 2010 were as follows:



|                                      |  |                      |       |  |                 |   |     |                  |  |   |           |   |  |   |       | 
|------------------------------------- |  | -------------------- | ----- |  | --------------- | - | --- | ---------------- |  | - | --------- | - |  | - | ----- | 
|                                      |  | At March 26, 2011    |      
|(Dollar amounts in millions)          |  | AmortizedCost        |       |  | UnrealizedGains |   |     | UnrealizedLosses |  |   | FairValue |  
|U.S. Treasury securities              |  | $                    | 58.9  |  |                 | $ | 0.6 |                  |  | $ | (0.1      | ) |  | $ | 59.4  | 
|U.S. government agency securities(a)  |  |                      | 57.2  |  |                 |   | 0.2 |                  |  |   |          |   |  |   | 57.4  | 
|Non-U.S. government agency securities |  |                      | 25.1  |  |                 |   | 0.1 |                  |  |   |          |   |  |   | 25.2  | 
|Corporate bonds                       |  |                      | 110.0 |  |                 |   | 0.7 |                  |  |   | (0.1      | ) |  |   | 110.6 | 
|Asset-backed securities               |  |                      | 13.1  |  |                 |   |    |                  |  |   |          |   |  |   | 13.1  | 
|Commercial paper                      |  |                      | 5.0   |  |                 |   |    |                  |  |   |          |   |  |   | 5.0   | 
|                                      |  |                      |       |  |                 |   |     |                  |  |   |           |   |  |   |       | 
|Total short-term investments          |  | $                    | 269.3 |  |                 | $ | 1.6 |                  |  | $ | (0.2      | ) |  | $ | 270.7 | 
|                                      |  |                      |       |  |                 |   |     |                  |  |   |           |   |  |   |       | 
|                                      | 
|                                      |  | At December 25, 2010 |      
|(Dollar amounts in millions)          |  | AmortizedCost        |       |  | UnrealizedGains |   |     | UnrealizedLosses |  |   | FairValue |  
|U.S. Treasury securities              |  | $                    | 60.9  |  |                 | $ | 0.7 |                  |  | $ | (0.1      | ) |  | $ | 61.5  | 
|U.S. government agency securities(a)  |  |                      | 74.4  |  |                 |   | 0.3 |                  |  |   |          |   |  |   | 74.7  | 
|Non-U.S. government agency securities |  |                      | 29.4  |  |                 |   | 0.1 |                  |  |   |          |   |  |   | 29.5  | 
|Corporate bonds                       |  |                      | 117.5 |  |                 |   | 0.7 |                  |  |   | (0.2      | ) |  |   | 118.0 | 
|Asset-backed securities               |  |                      | 8.3   |  |                 |   |    |                  |  |   | (0.1      | ) |  |   | 8.2   | 
|                                      |  |                      |       |  |                 |   |     |                  |  |   |           |   |  |   |       | 
|Total short-term investments          |  | $                    | 290.5 |  |                 | $ | 1.8 |                  |  | $ | (0.4      | ) |  | $ | 291.9 | 
|                                      |  |                      |       |  |                 |   |     |                  |  |   |           |   |  |   |       | 



|(a) | U.S. government agency securities include corporate bonds that are guaranteed by the Federal Deposit Insurance Corporation (FDIC).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

There were no realized gains and losses associated with short-term investments for the three months ended March 26, 2011 and March 27, 2010.

The following tables show the fair value and the gross unrealized losses for investments that were in an unrealized loss position at
March 26, 2011 and December 25, 2010 aggregated by asset class and by the length of time that the individual securities have been in a continuous loss position.



|                             |  |                      |      |  |                      |   |      |            |  |   |                |  |  |            |   |  |                |   |      |  |  |   |      |  
|---------------------------- |  | -------------------- | ---- |  | -------------------- | - | ---- | ---------- |  | - | -------------- |  |  | ---------- | - |  | -------------- | - | ---- |  |  | - | ---- | -
|                             |  | At March 26, 2011    |     
|                             |  | Less Than 12 Months  |      |  | 12 Months or Greater |   |      | Total      | 
|(Dollar amounts in millions) |  | Fair Value           |      |  | UnrealizedLoss       |   |      | Fair Value |  |   | UnrealizedLoss |  |  | Fair Value |   |  | UnrealizedLoss |  
|U.S. Treasury securities     |  | $                    | 4.4  |  |                      | $ | (0.1 | )          |  | $ |               |  |  | $          |  |  |                | $ | 4.4  |  |  | $ | (0.1 | )
|Corporate bonds              |  |                      | 50.0 |  |                      |   | (0.1 | )          |  |   |               |  |  |            |  |  |                |   | 50.0 |  |  |   | (0.1 | )
|                             |  |                      |      |  |                      |   |      |            |  |   |                |  |  |            |   |  |                |   |      |  |  |   |      |  
|Total                        |  | $                    | 54.4 |  |                      | $ | (0.2 | )          |  | $ |               |  |  | $          |  |  |                | $ | 54.4 |  |  | $ | (0.2 | )
|                             |  |                      |      |  |                      |   |      |            |  |   |                |  |  |            |   |  |                |   |      |  |  |   |      |  
|                             | 
|                             |  | At December 25, 2010 |     
|                             |  | Less Than 12 Months  |      |  | 12 Months or Greater |   |      | Total      | 
|(Dollar amounts in millions) |  | Fair Value           |      |  | UnrealizedLoss       |   |      | Fair Value |  |   | UnrealizedLoss |  |  | Fair Value |   |  | UnrealizedLoss |  
|U.S. Treasury securities     |  | $                    | 9.9  |  |                      | $ | (0.1 | )          |  | $ |               |  |  | $          |  |  |                | $ | 9.9  |  |  | $ | (0.1 | )
|Corporate bonds              |  |                      | 58.1 |  |                      |   | (0.2 | )          |  |   |               |  |  |            |  |  |                |   | 58.1 |  |  |   | (0.2 | )
|Asset-backed securities      |  |                      | 6.7  |  |                      |   | (0.1 | )          |  |   |               |  |  |            |  |  |                |   | 6.7  |  |  |   | (0.1 | )
|                             |  |                      |      |  |                      |   |      |            |  |   |                |  |  |            |   |  |                |   |      |  |  |   |      |  
|Total                        |  | $                    | 74.7 |  |                      | $ | (0.4 | )          |  | $ |               |  |  | $          |  |  |                | $ | 74.7 |  |  | $ | (0.4 | )
|                             |  |                      |      |  |                      |   |      |            |  |   |                |  |  |            |   |  |                |   |      |  |  |   |      |  

The Company periodically reviews its investments for other-than-temporary declines in fair value and writes down investments
to their fair value when an other-than-temporary decline has occurred. When investments are evaluated for other-than-temporary impairment, factors considered include the length of time and extent to which fair value has been below cost basis, the
financial condition of the issuer, the Companys intent to sell the investment, and whether it is more-likely-than-not that the Company will be required to sell the investment before recovery of its amortized cost basis.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The Company evaluated its short-term investment portfolio and concluded that there had been no decline
in market value at March 26, 2011 that was considered to be other-than-temporary.

Total unrealized losses of $0.2 million in the
investment portfolio at March 26, 2011 were due to market movements and fluctuations in interest rates and have been recorded in accumulated other comprehensive loss in the Condensed Consolidated Statements of Financial Position. Management
does not believe the unrealized losses represent an other-than-temporary impairment based on its evaluation of available evidence as of March 26, 2011. At that date, the Company had no intention to sell these investments and believes it is
more-likely-than-not that it will not be required to sell these investments before recovery of their amortized cost basis.

The following
table summarizes the contractual maturities of available-for-sale securities at March 26, 2011:



|                             |  |                 |       | 
|---------------------------- |  | --------------- | ----- | 
|(Dollar amounts in millions) |  | AtMarch 26,2011 |      
|Less than one year           |  | $               | 108.2 | 
|Due in one-to-two years      |  |                 | 99.6  | 
|Due in two-to-five years     |  |                 | 62.9  | 
|                             |  |                 |       | 
|Total                        |  | $               | 270.7 | 
|                             |  |                 |       | 

Securities classified as trading totaling $8.5 million at March 26, 2011 and $8.2 million at December 25, 2010
have been recorded at fair value with realized and unrealized gains and losses included in net loss in the Condensed Consolidated Statements of Operations. These securities, representing the deferred compensation and excess savings plan assets, are
recorded in prepaid expenses and other current assets in the Condensed Consolidated Statements of Financial Position. The related deferred compensation and excess savings plan liabilities are recorded at fair value in other long-term liabilities in
the Condensed Consolidated Statements of Financial Position. Included in net loss are unrealized net holding gains of $0.2 million and $0.1 million for the three months ended March 26, 2011 and March 27, 2010, respectively. These gains are
offset by changes in fair value of the related liability.

Minority equity investments classified as available-for-sale totaling $0.4 million
at March 26, 2011 and at December 25, 2010, are included in other long-term assets in the Condensed Consolidated Statements of Financial Position. These investments are carried at fair value with unrealized gains and losses reported as a
component of stockholders equity in the Condensed Consolidated Statements of Financial Position. Included in comprehensive loss is a net unrealized holding loss of less than $0.1 million for the three months ended March 26, 2011 and net
unrealized holding gains of $2.9 million for the three months ended March 27, 2010.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



7. Fair Value Measurements

Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair
value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB established a three-tier value hierarchy,
which prioritizes the inputs used in the valuation methodologies in measuring fair value:



|         |  |                                                                                                                                                                                                                                                                                                                  
|-------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level 1: |  | observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets;
markets;                                                                                                                                                                                          
|         | 
|Level 2: |  | observable inputs that reflect unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or
liabilities in markets that are not active, or inputs other than quoted prices that are observable for the assets or liabilities; and
|         | 
|Level 3: |  | unobservable inputs which are supported by little or no market activity.                                                                                                                                                                                                                                         

Active markets are those in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Inactive markets are those in which there are few transactions
for the asset, prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly. With regard to the Companys financial assets subject to fair value
measurements, the Company believes that all of the assets it holds are actively traded because there is sufficient frequency and volume to obtain pricing information on an ongoing basis. The Company uses the market approach to value its securities,
utilizing market inputs such as reported trades, benchmark yields, issuer spreads, and broker/dealer quotes.

The following table sets forth
the Companys financial assets that were accounted for at fair value at March 26, 2011 and at December 25, 2010:



|                                                     |  |                                    |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|---------------------------------------------------- |  | ---------------------------------- | ----- |  | ------- | - | ----- | ------- |  | - | ------- |  |  | - | - | 
|                                                     |  | Fair Value at March 26, 2011 Using |      
|(Dollar amounts in millions)                         |  | Total                              |       |  | Level 1 |   |       | Level 2 |  |   | Level 3 | 
|U.S. Treasury securities                             |  | $                                  | 59.4  |  |         | $ | 59.4  |         |  | $ |        |  |  | $ |  | 
|U.S. government agency securities(a)                 |  |                                    | 57.4  |  |         |   |      |         |  |   | 57.4    |  |  |   |  | 
|Non-U.S. government agency securities                |  |                                    | 25.2  |  |         |   |      |         |  |   | 25.2    |  |  |   |  | 
|Corporate bonds                                      |  |                                    | 110.6 |  |         |   |      |         |  |   | 110.6   |  |  |   |  | 
|Asset-backed securities                              |  |                                    | 13.1  |  |         |   |      |         |  |   | 13.1    |  |  |   |  | 
|Commercial paper                                     |  |                                    | 5.0   |  |         |   |      |         |  |   | 5.0     |  |  |   |  | 
|                                                     |  |                                    |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Short-term investments                               |  |                                    | 270.7 |  |         |   | 59.4  |         |  |   | 211.3   |  |  |   |  | 
|Cash equivalents                                     |  |                                    | 45.7  |  |         |   | 45.7  |         |  |   |        |  |  |   |  | 
|Publicly traded common stock                         |  |                                    | 0.4   |  |         |   | 0.4   |         |  |   |        |  |  |   |  | 
|Deferred compensation and excess savings plan assets |  |                                    | 8.5   |  |         |   | 8.5   |         |  |   |        |  |  |   |  | 
|                                                     |  |                                    |       |  |         |   |       |         |  |   |         |  |  |   |   | 
|Total assets measured at fair value                  |  | $                                  | 325.3 |  |         | $ | 114.0 |         |  | $ | 211.3   |  |  | $ |  | 
|                                                     |  |                                    |       |  |         |   |       |         |  |   |         |  |  |   |   | 



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



|                                                     |  |                                       |       |  |         |   |      |         |  |   |         |  |  |   |   | 
|---------------------------------------------------- |  | ------------------------------------- | ----- |  | ------- | - | ---- | ------- |  | - | ------- |  |  | - | - | 
|                                                     |  | Fair Value at December 25, 2010 Using |      
|(Dollar amounts in millions)                         |  | Total                                 |       |  | Level 1 |   |      | Level 2 |  |   | Level 3 | 
|U.S. Treasury securities                             |  | $                                     | 61.5  |  |         | $ | 61.5 |         |  | $ |        |  |  | $ |  | 
|U.S. government agency securities(a)                 |  |                                       | 74.7  |  |         |   |     |         |  |   | 74.7    |  |  |   |  | 
|Non-U.S. government agency securities                |  |                                       | 29.5  |  |         |   |     |         |  |   | 29.5    |  |  |   |  | 
|Corporate bonds                                      |  |                                       | 118.0 |  |         |   |     |         |  |   | 118.0   |  |  |   |  | 
|Asset-backed securities                              |  |                                       | 8.2   |  |         |   |     |         |  |   | 8.2     |  |  |   |  | 
|                                                     |  |                                       |       |  |         |   |      |         |  |   |         |  |  |   |   | 
|Short-term investments                               |  |                                       | 291.9 |  |         |   | 61.5 |         |  |   | 230.4   |  |  |   |  | 
|Cash equivalents                                     |  |                                       | 18.7  |  |         |   | 18.7 |         |  |   |        |  |  |   |  | 
|Publicly traded common stock                         |  |                                       | 0.4   |  |         |   | 0.4  |         |  |   |        |  |  |   |  | 
|Deferred compensation and excess savings plan assets |  |                                       | 8.2   |  |         |   | 8.2  |         |  |   |        |  |  |   |  | 
|                                                     |  |                                       |       |  |         |   |      |         |  |   |         |  |  |   |   | 
|Total assets measured at fair value                  |  | $                                     | 319.2 |  |         | $ | 88.8 |         |  | $ | 230.4   |  |  | $ |  | 
|                                                     |  |                                       |       |  |         |   |      |         |  |   |         |  |  |   |   | 



|(a) | U.S. government agency securities include corporate bonds that are guaranteed by the Federal Deposit Insurance Corporation (FDIC).
|--- | ----------------------------------------------------------------------------------------------------------------------------------

Cash equivalents typically consist of money market funds and instruments with remaining maturities of three months or less at the date of purchase.
Publicly traded common stock represents minority equity investments which are included in other long-term assets in the Condensed Consolidated Statements of Financial Position. Deferred compensation and excess savings plan assets, totaling $8.5
million at March 26, 2011, have been classified as trading and have been recorded at fair value with realized gains and losses included in net loss. These assets are included in prepaid expenses and other current assets in the Condensed
Consolidated Statements of Financial Position. The related deferred compensation and excess savings plan liabilities are recorded at fair value in other long-term liabilities in the Condensed Consolidated Statements of Financial Position. Changes in
fair value are recorded in net loss where they offset the gains and losses recorded for the related assets.

8. Inventories

Inventories included the following components at March 26, 2011 and December 25, 2010:



|                             |  |                 |     |  |                    |   |     | 
|---------------------------- |  | --------------- | --- |  | ------------------ | - | --- | 
|(Dollar amounts in millions) |  | AtMarch 26,2011 |     |  | AtDecember 25,2010 |  
|Raw materials and supplies   |  | $               | 3.6 |  |                    | $ | 4.4 | 
|Work-in-process              |  |                 | 1.1 |  |                    |   | 1.3 | 
|Finished products            |  |                 | 3.3 |  |                    |   | 3.2 | 
|                             |  |                 |     |  |                    |   |     | 
|Total inventories            |  | $               | 8.0 |  |                    | $ | 8.9 | 
|                             |  |                 |     |  |                    |   |     | 



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



9. Goodwill and Intangible Assets

The gross carrying amount of goodwill in each of the Companys reporting units at March 26, 2011 was as follows:



|                             |  |                 |       | 
|---------------------------- |  | --------------- | ----- | 
|(Dollar amounts in millions) |  | AtMarch 26,2011 |      
|Reportable Segment           |  |                 |       | 
|Lab Services                 |  | $               | 103.0 | 
|Products                     |  |                 | 11.0  | 
|Corporate                    |  |                 | 2.3   | 
|                             |  |                 |       | 
|Total                        |  | $               | 116.3 | 
|                             |  |                 |       | 

There has been no change to the goodwill balance since December 25, 2010.

The gross carrying amount and changes in accumulated amortization of intangible assets other than goodwill at March 26, 2011 were as follows:



|                                  |  |                       |       | 
|--------------------------------- |  | --------------------- | ----- | 
|                                  |  | Gross Carrying Amount |      
|(Dollar amounts in millions)      |  | at March 26, 2011     |      
|Amortized intangible assets:      |  |                       |       | 
|Customer relationships            |  | $                     | 85.2  | 
|Acquired technology               |  |                       | 17.6  | 
|Patents and licenses              |  |                       | 13.7  | 
|Other                             |  |                       | 1.8   | 
|                                  |  |                       |       | 
|Total amortized intangible assets |  |                       | 118.3 | 
|Unamortized intangible assets:    |  |                       |       | 
|Trade names                       |  |                       | 6.9   | 
|Total                             |  | $                     | 125.2 | 
|                                  |  |                       |       | 

There has been no change to the gross carrying amount of intangible assets since December 25, 2010.



|                             |  |                     |    |  |                          |   |      |           |  |   |                    |  |  |   |      | 
|---------------------------- |  | ------------------- | -- |  | ------------------------ | - | ---- | --------- |  | - | ------------------ |  |  | - | ---- | 
|                             |  |                     |    |  | Accumulated Amortization |  
|(Dollar amounts in millions) |  | WeightedAverageLife |    |  | AtMarch 26,2011          |   |      | Additions |  |   | AtDecember 25,2010 | 
|Amortized intangible assets: |  |                     |    |  |                          |   |      |           |  |   |                    |  |  |   |      | 
|Customer relationships       |  |                     | 13 |  |                          | $ | 26.9 |           |  | $ | 1.9                |  |  | $ | 25.0 | 
|Acquired technology          |  |                     | 8  |  |                          |   | 7.6  |           |  |   | 0.6                |  |  |   | 7.0  | 
|Patents and licenses         |  |                     | 15 |  |                          |   | 2.1  |           |  |   | 0.2                |  |  |   | 1.9  | 
|Other                        |  |                     | 5  |  |                          |   | 0.6  |           |  |   |                   |  |  |   | 0.6  | 
|                             |  |                     |    |  |                          |   |      |           |  |   |                    |  |  |   |      | 
|Total                        |  |                     |    |  |                          | $ | 37.2 |           |  | $ | 2.7                |  |  | $ | 34.5 | 
|                             |  |                     |    |  |                          |   |      |           |  |   |                    |  |  |   |      | 

In connection with the acquisition of BHL in October 2007, trade names were acquired that were determined to be indefinitely
lived. The Company conducts its annual impairment analysis for indefinite lived intangible assets during the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that an asset may be impaired.

Aggregate intangible asset amortization expense was $2.7 million for the three months ended March 26, 2011, of which $2.5 million related to
acquisition-related intangible assets and is recorded in amortization of purchased intangible assets in the Condensed Consolidated Statements of Operations. The amortization of patents and licenses is recorded in cost of sales in the Condensed
Consolidated Statements of Operations.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



10. Other Balance Sheet Accounts

The following table summarizes the major components of selected accounts in the Condensed Consolidated Statements of Financial Position:



|                             |  |                 |      |  |                    |   |      | 
|---------------------------- |  | --------------- | ---- |  | ------------------ | - | ---- | 
|(Dollar amounts in millions) |  | AtMarch 26,2011 |      |  | AtDecember 25,2010 |  
|Other long-term assets:      |  |                 |      |  |                    |   |      | 
|Receivable from Abbott(a)    |  | $               | 26.9 |  |                    | $ | 26.7 | 
|Minority equity investments  |  |                 | 0.4  |  |                    |   | 0.4  | 
|Other                        |  |                 | 0.3  |  |                    |   | 0.2  | 
|                             |  |                 |      |  |                    |   |      | 
|Other long-term assets       |  | $               | 27.6 |  |                    | $ | 27.3 | 
|                             |  |                 |      |  |                    |   |      | 
|Other long-term liabilities: |  |                 |      |  |                    |   |      | 
|Deferred compensation        |  | $               | 8.5  |  |                    | $ | 8.2  | 
|Deferred tax liability       |  |                 | 4.1  |  |                    |   | 3.9  | 
|Other                        |  |                 | 1.9  |  |                    |   | 2.2  | 
|                             |  |                 |      |  |                    |   |      | 
|Other long-term liabilities  |  | $               | 14.5 |  |                    | $ | 14.3 | 
|                             |  |                 |      |  |                    |   |      | 



|(a) | Following the termination of the Abbott strategic alliance effective October 1, 2008, the Companys total net investment in the alliance was converted to a
long-term receivable from Abbott with a then present value of $24.8 million. The receivable from Abbott at March 26, 2011 includes $2.1 million accretion of discount.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11. Share-Based Compensation

The Company estimates the fair value of stock-based payment
awards on the date of grant using the Black-Scholes pricing model, which is affected by the Companys stock price as well as other assumptions. Forfeitures are estimated such that the Company only recognizes expense for those shares expected to
vest, and adjustments are made if actual forfeitures differ from those estimates.

For the three months ended March 26, 2011, 30,756
restricted stock units and 50,000 options were granted to employees under the Celera Corporation 2008 Stock Incentive Plan. The fair value of the options granted was estimated at the date of grant using the following weighted average assumptions:



|                                               |  |                                 |      |  
|---------------------------------------------- |  | ------------------------------- | ---- | -
|                                               |  | Three MonthsEndedMarch 26, 2011 |     
|Expected option term in years                  |  |                                 | 5.0  |  
|Volatility                                     |  |                                 | 51.5 | %
|Risk-free interest rate                        |  |                                 | 2.1  | %
|Expected dividends                             |  |                                 | 0.0  | %
|Weighted average fair value per option granted |  | $                               | 2.95 |  

Share-based compensation expense for
the three months ended March 26, 2011 and March 27, 2010 was $1.6 million and $1.2 million, respectively.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



12. Income Taxes

Benefit for income taxes of $0.1 million was recorded for the three months ended March 26, 2011. The benefit was primarily due to the release of a reserve, partially offset by an increase in the
deferred tax liability associated with the acquisition of Atria in October 2007. Provision for income taxes of $0.2 million was recorded for the three months ended March 27, 2010. The provision was primarily the result of an increase in the
deferred tax liability associated with the acquisition of Atria in October 2007.

The Company maintains a full valuation allowance on its
federal and state net deferred tax assets since the Company believes it is more likely than not it may not generate sufficient income, of the appropriate character, and in the particular jurisdictions, to realize the benefits.

13. Commitments and Contingencies

Indemnifications

In the normal
course of business, Celera enters into agreements under which it indemnifies third parties for intellectual property infringement claims or claims arising from breaches of representations or warranties. In addition, from time to time, Celera
provides indemnity protection to third parties for claims relating to past performance arising from undisclosed liabilities, product liabilities, environmental obligations, representations and warranties, and other claims. In these agreements, the
scope and amount of remedy, or the period in which claims can be made, may be limited. It is not possible to determine the maximum potential amount of future payments, if any, due under these indemnities due to the conditional nature of the
obligations and the unique facts and circumstances involved in each agreement. Historically, payments made related to these indemnifications have not been material to the Companys consolidated financial position.

Legal Proceedings

2011
Securities Litigation

Delaware Court of Chancery Cases (New Orleans, Ariel and Henderson)

During March 2011, the following putative class action lawsuits were filed in the Delaware Court of Chancery: New Orleans Employees Retirement System
v. Ayers, et al. (filed on March 22, 2011), Ariel Holdings LLC v. Ayers, et al. (filed on March 24, 2011) and Henderson, et al. v. Ayers, et al.(filed on March 29, 2011) (together, the Delaware Complaints). The
Delaware Complaints named as defendants the members of the Companys Board of Directors (the Company Board), as well as the Company, Quest and Purchaser. The plaintiffs in the Delaware Complaints alleged that members of the Company Board
breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and further claimed that Quest aided and abetted those alleged breaches of fiduciary duty. The Delaware Complaints alleged that
the Tender Offer and the Merger involve an unfair price, an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves personally. The Delaware Complaints sought
compensatory damages and injunctive relief, including to enjoin the Tender Offer and the Merger, and an award of attorneys and other fees and costs, in addition to other relief. On April 1, 2011, the Delaware Complaints were consolidated
into one asIn re Celera Corporation Shareholder Litigation, Consolidated C.A. No. 6304-VCP (the Amended Delaware Complaint).



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



On April 1, 2011, a verified consolidated amended class action complaint was filed in the Amended
Delaware Complaint, which superseded the existing complaints pending in the Delaware Court of Chancery, and named as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The Amended Delaware Complaint alleged
that the members of the Company Board breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and further claimed that the Company, Quest and Purchaser aided and abetted those alleged
breaches of fiduciary duty. The Amended Delaware Complaint alleged that the Tender Offer and Merger between the Company and Quest involves an unfair price, an inadequate sales process and unreasonable deal protection devices and that defendants
agreed to the transactions to benefit themselves personally. The Amended Delaware Complaint further alleged that the Companys Schedule 14D-9 filed with the SEC on March 28, 2011 (the Schedule 14D-9) failed to fully and fairly disclose all
material information relating to the background of the Tender Offer, the Companys financial projections, and the fairness opinion of Credit Suisse directed to the Company Board. The Amended Delaware Complaint sought compensatory damages and
injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief.

Alameda County Superior Court Cases (Lauver, Hobby and Wolf)

During March 2011, the
following putative class action lawsuits were filed in the Alameda County Superior Court: Lauver v. Celera Corp., et al. (filed on March 23, 2011), Hobby v. Celera Corp., et al. (filed on March 23, 2011) and Eric Wolf v.
Celera Corporation, et al., (filed on March 29, 2011) (together, the Alameda County Complaints). The Lauver and Wolfcomplaints named as defendants the members of the Company Board, the Company, Quest and Purchaser. The
Hobby complaint named as defendants the members of the Company Board, the Company and Quest. The Alameda County Complaints alleged that the Company and its directors breached their fiduciary duties to the Companys stockholders in
connection with the Tender Offer and the Merger, and further claimed that Quest aided and abetted those alleged breaches of fiduciary duty. The Alameda County Complaints alleged that the Tender Offer and the Merger involve an unfair price, an
inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves personally. The Lauver complaint further alleged that the Companys Schedule 14D-9 failed to disclose
material information relating to the Companys financial forecasts, the fairness opinion of Credit Suisse directed to the Company Board, and the background of the Tender Offer and the Merger. The Wolfcomplaint further alleged that the
fairness opinion of Credit Suisse directed to the Company Board was materially false and misleading. The Alameda County Complaints sought injunctive relief, including to enjoin the Tender Offer and the Merger, and an award of attorneys and
other fees and costs, in addition to other relief. On April 5, 2011, the Alameda Superior Court consolidated the Alameda County Complaints as Lauver v. Ordoñez, et al.

Settlement of Delaware Court of Chancery and Alameda County Superior Court Cases

On April 18, 2011, the Company and other defendants entered into a memorandum of understanding (the MOU) with the parties to the actions pending in
the Delaware Court of Chancery and the three cases pending in the Alameda County Superior Court consolidated as Lauver v. Ordoñez, et al., pursuant to which the Company and such parties agreed in principle, and subject to certain
conditions, to settle those stockholder lawsuits. Subject to approval of the Delaware Court of Chancery and further definitive documentation, the MOU establishes a framework to resolve the allegations by the settling plaintiffs against the Company
and other defendants in connection with the Tender Offer and the Merger Agreement and contemplates a release and settlement by the Companys stockholders of all claims against the Company and other defendants and their affiliates and agents in
connection with the Tender Offer and the Merger Agreement (including release of those claims brought in the non-settling actions). In exchange for the release and settlement, pursuant to the terms of the MOU, the parties agreed, after arms
length discussions, that (i) the Company would provide certain additional disclosures in an amendment to the Schedule 14D-9, (ii) the Company, Quest and Purchaser would amend the Merger Agreement, (iii) the Company would release third
parties currently subject to confidentiality agreements with the Company from any standstill restrictions contained in such agreements and (iv) the Company would file a Current Report on Form 8-K and related press release disclosing
the amendment of the Merger Agreement and the terms of the MOU. The Company filed the foregoing Current Report on Form 8-K on April 18, 2011. The settlement is also contingent upon, among other things, consummation of the Tender Offer and the
Merger. As part of the settlement, the Company agreed that counsel to the plaintiffs in the settling actions established a right to an award of attorneys fees and expenses based upon the benefits that the settlement provided to the class,
which award would be paid by the Company or its successors. It is not possible to estimate at this time what amount of fees and expenses may be awarded by the court. In the event that the settlement is not approved or otherwise does not become
final, the Company will resume its vigorous defense of the actions.

On May 2, 2011, BVF Partners L.P. filed a Notice of Intention to Object
to Proposed Settlement with the Delaware Court of Chancery indicating its intent to object to approval of the proposed settlement, to seek appraisal for their shares, and to seek to opt-out of the proposed settlement, if approved by the court.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



McCreary, Andal and Korngold Cases

On April 1, 2011, a putative class action lawsuit captioned McCreary v. Celera Corp., et al. was filed in the United States District Court for
the Northern District of California. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the Company and its directors violated sections 14(d)(4) and 14(e)
of the Securities Exchange Act of 1934, as amended (the Exchange Act) by filing a materially misleading Schedule 14D-9, that the Companys directors breached their fiduciary duties to the Companys stockholders in connection with the
Tender Offer and the Merger, and further claims that the Company and Quest aided and abetted those alleged breaches of fiduciary duty. The complaint alleges that the Tender Offer and Merger involves an unfair price, an inadequate sales process and
unreasonable deal protection devices, that the Companys directors agreed to the transactions to benefit themselves personally, and that the Schedule 14D-9 fails to adequately disclose information relating to the opinion provided by Credit
Suisse to the Company Board. The complaint seeks injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief. On April 13, 2011, the United
States District Court for the Northern District of California entered an order staying the McCreary case pending the resolution of the consolidated class action pending in the Delaware Court of Chancery.

On April 11, 2011, a putative class action lawsuit captioned Andal v. Celera Corp., et al., was filed in the United States District Court for
the Northern District of California. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the Company and its directors violated section 14(e) of the
Exchange Act by filing a materially misleading Schedule 14D-9, that the Companys directors breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, that Quest, the Company and its
directors aided and abetted those alleged breaches of fiduciary duty, and further claims that the Company and its directors violated section 20(a) of the Exchange Act by aiding and abetting those alleged breaches of fiduciary duty. The complaint
alleges that the Tender Offer and Merger between the Company and Quest involves an unfair price, an inadequate sales process and unreasonable deal protection devices, that defendants agreed to the transactions to benefit themselves personally, and
that the Schedule 14D-9 fails to adequately disclose information relating to the opinion provided by Credit Suisse to the Company Board. The complaint seeks injunctive relief, including to enjoin the Tender Offer and Merger, and an award of
attorneys and other fees and costs, in addition to other relief.

On April 7, 2011, a putative class action lawsuit captioned
Korngold v. Ayers, et al., was filed in the Alameda County Superior Court. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the Companys
directors breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and that Quest and Purchaser aided and abetted those alleged breaches of fiduciary duty. The complaint alleges that the
Tender Offer and Merger between the Company and Quest involves an unfair price, an inadequate sales process and unreasonable deal protection devices, and that defendants agreed to the transactions to benefit themselves personally. The complaint
seeks compensatory damages and injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The Company will continue to vigorously defend the McCreary, Andal andKorngold
cases, including by asserting that the release contained in the MOU encompasses all claims asserted in those actions.

2010 Securities
Litigation

On June 14, 2010, a purported class action captioned Washtenaw County Employees Retirement System v. Celera
Corporation was filed in the United States District Court for the Northern District of California against Celera and certain of its directors and current and former officers. On September 23, 2010, the court appointed a lead plaintiff and
renamed the action In re Celera Corp. Securities Litigation. An amended complaint was filed on October 15, 2010. The amended complaint alleged that, from April 24, 2008, through July 22, 2009, the defendants set inadequate
allowances for doubtful accounts, concealed the extent to which Celeras accounts receivable were impaired, and made other false and misleading statements regarding the Companys business and financial results with an intent to defraud
investors. The amended complaint sought unspecified damages on behalf of an alleged class of purchasers of the Companys stock during the period in which the alleged misrepresentations were made, as well as an award to the lead plaintiff of its
costs and attorneys fees. On March 24, 2011, pursuant to the parties stipulation, the Court ordered the lead plaintiff to file a second amended complaint on or before May 6, 2011. Celera believes that plaintiffs claims
are without merit and intends to vigorously defend the action.

On July 2, 2010, and July 9, 2010, two stockholder derivative
actions, captioned Kahn v. Ordoñez and Greenberg v. Ordoñez, respectively, were filed in the United States District Court for the Northern District of California. The two actions were consolidated into a single action on
September 23, 2010, captioned In re Celera Corp. Derivative Litigation. On April 22, 2011, plaintiffs in the consolidated action filed an amended complaint. The amended complaint alleges that certain current and former Celera
officers and directors breached their fiduciary duties by allowing the Company to set inadequate allowances for doubtful accounts, conceal the extent to which the Companys accounts receivable were impaired, and make other allegedly false and
misleading statements regarding the Companys business and financial results. The action seeks to recover damages on behalf of Celera against the director and officer defendants, an award to plaintiffs of their costs and attorneys fees,
and other appropriate relief. Celera believes that plaintiffs lack standing to pursue litigation on behalf of Celera.

Health Diagnostic
Laboratory, Inc.

On January 14, 2010, BHL filed a lawsuit in the United States District Court for the Eastern District of Virginia
against Health Diagnostic Laboratory, Inc. (HDL), Blue Wave Healthcare Consultants, Inc. (Blue Wave) and seven former employees of BHL. In the litigation, BHL sought injunctive relief and damages for contractual, tort and statutory claims
against the defendants, including claims for misappropriation of trade secrets and tortious interference with BHLs client relationships. On April 22, 2010, the Company announced that BHL had settled the litigation. The
settlement agreement provides for the payment by HDL to BHL of an aggregate amount of approximately $7.1 million to be made in a series of payments in 2010 and 2011. BHL received approximately $3.9 million in 2010, with the balance of $3.2
million owed in 2011, of which $2.4 million has been received. The settlement agreement also provides for HDL to pay BHL an additional amount in 2011 based on samples HDL received during 2010 from an agreed upon set of healthcare providers. BHL
received $0.8 million in March 2011 and $0.6 million in April 2011 relating to the additional payment.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The settlement agreement contains prohibitions, which have now expired, on HDL, Blue Wave and the
individuals named in the litigation from performing lab testing services for healthcare providers that were BHL customers during the latter half of 2009. HDL, Blue Wave and the individuals named in the litigation were also prohibited from
soliciting or hiring BHL employees for a defined period, which has now expired.

Tax Matters Agreement

The tax matters agreement with Life Technologies governs Life Technologies and Celeras respective rights, responsibilities and obligations
after the split-off with respect to taxes, including ordinary course of business taxes and taxes, if any, incurred as a result of any failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S.
federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code (including as a result of Section 355(e) of the Internal Revenue Code). Under the tax matters agreement, it is expected that Life
Technologies generally will be responsible for the payment of all income and non-income taxes attributable to Celeras operations pre-split-off, with the exception of BHL, and Celera generally will be responsible for the payment of all income
and non-income taxes attributable to its operations post-split-off. In addition, Life Technologies will pay Celera for certain available tax benefits resulting from U.S. federal and state tax credits and losses attributable to Celeras business
that arose prior to the split-off from Life Technologies, to the extent these credits are not first utilized by Life Technologies.

Notwithstanding the foregoing, it is expected that, under the tax matters agreement, Celera also generally will be responsible for any taxes imposed on
Life Technologies that arise from the failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax purposes within the meaning of Sections 355 and 368(a)(1)(D) of the
Internal Revenue Code, if such failure to qualify is attributable to actions, events or transactions relating to Celeras stock, assets or business, or a breach of the relevant representations or covenants made by Celera in the tax matters
agreement. In addition, Celera generally will be responsible for a percentage of any taxes that arise from the failure of the split-off, together with certain related transactions, to qualify as a tax-free exchange for U.S. federal income tax
purposes within the meaning of Sections 355 and 368(a)(1)(D) of the Internal Revenue Code, if such failure is for any reason for which neither Celera nor Life Technologies is responsible. Under the tax matters agreement Celera will also be
required to indemnify Life Technologies for a portion of Life Technologies tax cost resulting from Life Technologies and Celera entering into an intellectual property supply agreement and other intellectual property license agreements in
connection with the split-off. The tax matters agreement also imposes restrictions on Celeras and Life Technologies ability to engage in certain actions following Celeras separation from Life Technologies and sets forth the
respective obligations among Celera and Life Technologies with respect to the filing of tax returns, the administration of tax contests, assistance and cooperation and other matters.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The Company believes that Life Technologies has materially breached the tax matters agreement in
connection with the filing of its consolidated federal tax return for the period ended June 27, 2008.

Other
Matters

Lab Services revenue for the three months ended June 26, 2010 did not include approximately $1.9 million for additional
testing performed on samples previously received and processed by BHL because the Company was reviewing these orders, and similar orders associated with approximately $2.2 million of revenue from earlier periods. The Company has subsequently
determined that a significant number of these orders may not have supported payor requirements for amounts billed to, and reimbursements received from, federal healthcare programs and certain other payors. The Company expects to refund approximately
$2.3 million to the affected third-party payors and a liability for this amount is included in accounts payable in the Condensed Consolidated Statement of Financial Position at March 26, 2011. There can be no assurance that the affected payors will
not make additional claims for monies, including penalties, or will not seek other remedies, any of which could harm the Companys operating results and financial condition. The Company is unable at this time to determine the likelihood that
affected payors may pursue such claims or remedies and, accordingly, it cannot determine what effect, if any, these contingencies will have on its results of operations.

14. Comprehensive Loss

The components of comprehensive loss for the three months ended
March 26, 2011 and March 27, 2010, net of any related tax effects, are as follows:



|                                                      |  |                    |      |   |               |   |       |  
|----------------------------------------------------- |  | ------------------ | ---- | - | ------------- | - | ----- | -
|                                                      |  | Three Months Ended |     
|(Dollar amounts in millions)                          |  | March 26,2011      |      |   | March 27,2010 |  
|Net loss                                              |  | $                  | (5.3 | ) |               | $ | (12.5 | )
|Other comprehensive (loss) income:                    |  |                    |      |   |               |   |       |  
|Unrealized (loss) gain on minority equity investments |  |                    | (0.1 | ) |               |   | 2.9   |  
|                                                      |  |                    |      |   |               |   |       |  
|Comprehensive loss                                    |  | $                  | (5.4 | ) |               | $ | (9.6  | )
|                                                      |  |                    |      |   |               |   |       |  

15. Segment Information

Business Segments

Celera operates primarily in the U.S. through three reporting segments,
a clinical laboratory testing service business (Lab Services), a products business (Products), and a segment that includes other activities under corporate management (Corporate). The Lab Services business, conducted through BHL, offers a broad
portfolio of clinical laboratory tests and disease management services designed to help physicians improve cardiovascular disease treatment regimens for their patients. The Products business develops, manufactures and oversees the commercialization
of molecular diagnostic products. The Corporate segment includes revenues from royalties, licenses, collaborations and milestones related to the licensing of certain intellectual property and from Celeras former small molecule and proteomic
programs. The Corporate segment also includes corporate and shared general and administrative functions, and centrally managed research and business development activities. Also included in the Corporate segment is the benefit and provision for
income taxes and the amortization and impairment of purchased intangible assets.

Costs and expenses for the Lab Services and Products
segments reflect direct costs attributable to those segments and an allocation of certain shared services related to information technology, human resources, facilities and other services. These costs have been allocated primarily based on head
count. All other centralized corporate and shared administrative costs are reflected in the Corporate segment.

Assets, including purchased
intangible assets, are allocated to their respective segments, except for cash, cash equivalents and short-term investments which are allocated to the Corporate segment. All amortization of purchased intangible assets, $2.5 million and $2.6 million
for the three months ended March 26, 2011 and March 27, 2010, respectively, is allocated to the Corporate segment.



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Celera Corporation

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)



The above items included in the respective reporting segments are consistent with the financial
information provided to the Companys chief operating decision maker.

The following table provides information concerning the segments
for the three months ended March 26, 2011 and March 27, 2010:



|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|--------------------------------- |  | ------------ | ----- | - | -------- | - | ---- | --------- |  | - | ------------------------------- | - |  | ----- | ---- | - |  | - | ----- | -
|(Dollar amounts in millions)      |  | Lab Services |       |   | Products |   |      | Corporate |  |   | Elimination ofIntersegmentSales |   |  | Total |     
|Three months ended March 26, 2011 |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Revenues from external customers  |  | $            | 19.3  |   |          | $ | 13.2 |           |  | $ | 2.3                             |   |  | $     |     |   |  | $ | 34.8  |  
|Intersegment revenues(a)          |  |              |      |   |          |   | 0.6  |           |  |   |                                |   |  |       | (0.6 | ) |  |   |      |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Total net revenues                |  |              | 19.3  |   |          |   | 13.8 |           |  |   | 2.3                             |   |  |       | (0.6 | ) |  |   | 34.8  |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Operating income (loss)           |  |              | 2.3   |   |          |   | 4.0  |           |  |   | (12.7                           | ) |  |       |     |   |  |   | (6.4  | )
|Interest income, net              |  |              |      |   |          |   |     |           |  |   | 1.0                             |   |  |       |     |   |  |   | 1.0   |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Income (loss) before income taxes |  | $            | 2.3   |   |          | $ | 4.0  |           |  | $ | (11.7                           | ) |  | $     |     |   |  | $ | (5.4  | )
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Total assets                      |  | $            | 180.4 |   |          | $ | 82.0 |           |  | $ | 345.3                           |   |  | $     |     |   |  | $ | 607.7 |  
|Depreciation and amortization     |  |              | 0.4   |   |          |   | 0.3  |           |  |   | 3.2                             |   |  |       |     |   |  |   | 3.9   |  
|                                  |  |              |       |   |         
|Three months ended March 27, 2010 |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Revenues from external customers  |  | $            | 16.6  |   |          | $ | 9.9  |           |  | $ | 4.0                             |   |  | $     |     |   |  | $ | 30.5  |  
|Intersegment revenues(a)          |  |              |      |   |          |   | 0.6  |           |  |   |                                |   |  |       | (0.6 | ) |  |   |      |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Total net revenues                |  |              | 16.6  |   |          |   | 10.5 |           |  |   | 4.0                             |   |  |       | (0.6 | ) |  |   | 30.5  |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Operating (loss) income           |  |              | (4.6  | ) |          |   | 1.5  |           |  |   | (10.4                           | ) |  |       |     |   |  |   | (13.5 | )
|Interest income, net              |  |              |      |   |          |   |     |           |  |   | 1.2                             |   |  |       |     |   |  |   | 1.2   |  
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|(Loss) income before income taxes |  | $            | (4.6  | ) |          | $ | 1.5  |           |  | $ | (9.2                            | ) |  | $     |     |   |  | $ | (12.3 | )
|                                  |  |              |       |   |          |   |      |           |  |   |                                 |   |  |       |      |   |  |   |       |  
|Total assets                      |  | $            | 191.7 |   |          | $ | 82.5 |           |  | $ | 350.8                           |   |  | $     |     |   |  | $ | 625.0 |  
|Depreciation and amortization     |  |              | 0.6   |   |          |   | 0.1  |           |  |   | 3.3                             |   |  |       |     |   |  |   | 4.0   |  



|(a) | Sales from Products to Lab Services.
|--- | ------------------------------------



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##### Table of Contents

|ITEM 2 | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------ | -------------------------------------------------------------------------------------

The purpose of the following managements discussion and analysis is to provide an overview of the business of Celera to help facilitate an understanding of significant factors influencing our
historical operating results, financial condition, and liquidity and also to convey our expectations of the potential impact of known trends, events, or uncertainties that may impact our future results. The following should be read in conjunction
with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC) on March 18, 2011. Historical results and percentage relationships are
not necessarily indicative of operating results for future periods. In this Quarterly Report on Form 10-Q, references to Celera, the Company, we, us and our mean Celera Corporation and its
consolidated subsidiaries, except where the context otherwise requires that the term means only Celera Corporation.

2010 Restatement

As discussed in Part I, Item 1, Financial Statements, 2010 Restatement on page 4 and further described in Part I,
Item 1, Financial Statements, Note 1, The Company and Nature of Operations, of the Notes to Unaudited Condensed Consolidated Financial Statements, we have restated certain financial statements and other information.

In this Quarterly Report on Form 10-Q, we are reporting net revenues of $30.5 million and selling, general and administrative expenses of $22.7 million
for the three months ended March 27, 2010, compared to $31.4 million and $23.7 million, respectively, included in our Quarterly Report on Form 10-Q filed with the SEC on May 5, 2010. These changes are as a result of the restatement.

As a result of the restatement, readers should no longer rely on our previously filed financial statements and other financial information
for the year ended June 30, 2008, the six months ended December 27, 2008, the year ended December 26, 2009, each quarter in the year ended December 26, 2009 and the first three quarters in the year ended December 25, 2010.

Merger

On March 18,
2011, we announced that we had entered into an Agreement and Plan of Merger, dated March 17, 2011 (as amended effective April 18, 2011, the Merger Agreement), with Quest Diagnostics Incorporated (Quest), a Delaware corporation, and Spark
Acquisition Corporation (Purchaser), a Delaware corporation and a wholly owned subsidiary of Quest. Pursuant to the Merger Agreement and upon the terms and subject to the conditions thereof, on March 28, 2011, Purchaser commenced a tender offer
(the Tender Offer) to acquire all of the issued and outstanding shares of the common stock of Celera for $8.00 per share, net to the holder thereof in cash (the Offer Price), without interest and subject to applicable withholding taxes. The Merger
Agreement provides that, among other things, upon its terms and subject to the satisfaction or written waiver of certain conditions, following completion of the Tender Offer, and in accordance with the applicable provisions of the Delaware General
Corporation Law, Purchaser will be merged with and into Celera (the Merger), with Celera continuing as the surviving corporation in the Merger.

On May 4, 2011, Quest announced that it had successfully completed the Tender Offer and accepted for payment 52.38% of the Companys outstanding
shares of common stock on a fully diluted basis.

Pursuant to an engagement letter dated March 23, 2010, we retained Credit Suisse as our
financial advisor in connection with, among other things, the proposed merger with Quest. Under the terms of the engagement letter, we became obligated to pay Credit Suisse a fee upon the closing of the Tender Offer of approximately $8.8 million, of
which $250,000 was paid following execution of the engagement letter and $1.0 million became payable upon the delivery of its written fairness opinion, which is included as Annex II to Schedule 14D-9, filed with the SEC on March 28, 2011.



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##### Table of Contents

Business Overview

We are a healthcare business focusing on the integration of genetic testing into routine clinical care through a combination of products and services incorporating proprietary discoveries. We are
organized into three reporting segments: a clinical laboratory testing service business (Lab Services); a products business (Products); and a segment that includes other activities under corporate management (Corporate). Our Lab Services business,
conducted through Berkeley HeartLab, Inc. (BHL), offers a broad portfolio of clinical laboratory tests and disease management services designed to help physicians improve cardiovascular disease treatment regimens for their patients. Our
Products business develops, manufactures, and oversees the commercialization of molecular diagnostic products. Most of this business is conducted through distribution and royalty agreements with Abbott Molecular (Abbott), a subsidiary of Abbott
Laboratories. Our Corporate segment includes revenues from royalties, licenses, funded collaborations and milestones related to the licensing of certain intellectual property and from our former small molecule and proteomic programs.

Basis of Presentation

The discussion
and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements and related disclosures, which have been prepared in conformity with accounting principles generally accepted in
the United States of America, or GAAP. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules. All significant intracompany
transactions and balances have been eliminated in consolidation.

Business Developments

In April, the U.S. Food and Drug Administration sent a decision letter to Celera stating that the Pre-Market Approval (PMA) application the Company
submitted for its KIF6 Genotyping Assay was not approvable without major amendment. The letter stated that the clinical data and peer-reviewed publications submitted in support of the PMA are insufficient to demonstrate the safety and
effectiveness of the device for its proposed intended use. Further, the FDA stated that it believes that the approach to demonstrate the safety and effectiveness of the KIF6 Genotyping Assay for the intended indications would be to collect
additional data on clinical utility, which could include conducting a prospective, randomized, controlled clinical trial. Celera has requested a meeting with the agency to discuss the deficiencies cited in the letter as well as next steps toward
seeking approval of the KIF6 Genotyping Assay.



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##### Table of Contents

Results of Operations

The following discussion and analysis relates to our results of operations for the three months ended March 26, 2011 and March 27, 2010. The selected financial information contained in the table
below should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes.



|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 
|----------------------------------------------------- |  | ------------------ | ---- | - | ------------- | - | ----- | -------- |  |  | ------ | 
|                                                      |  | Three Months Ended |      |   |               |  
|(Dollar amounts in millions)                          |  | March 26,2011      |      |   | March 27,2010 |   |       | % Change | 
|Net revenues                                          |  | $                  | 34.8 |   |               | $ | 30.5  |          |  |  | 14%    | 
|Cost of sales                                         |  |                    | 13.0 |   |               |   | 11.9  |          |  |  | 9%     | 
|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 
|Gross margin                                          |  |                    | 21.8 |   |               |   | 18.6  |          |  |  | 17%    | 
|Selling, general and administrative                   |  |                    | 20.3 |   |               |   | 22.7  |          |  |  | (11%)  | 
|Research and development                              |  |                    | 6.5  |   |               |   | 6.6   |          |  |  | (2%)   | 
|Amortization of purchased intangible assets           |  |                    | 2.5  |   |               |   | 2.6   |          |  |  | (4%)   | 
|Employee-related charges, asset impairments and other |  |                    | 0.1  |   |               |   | 0.2   |          |  |  | (50%)  | 
|Legal settlement                                      |  |                    | (3.2 | ) |               |   |      |          |  |  |       | 
|Merger-related costs                                  |  |                    | 2.0  |   |               |   |      |          |  |  |       | 
|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 
|Operating loss                                        |  |                    | (6.4 | ) |               |   | (13.5 | )        |  |  | (53%)  | 
|Interest income, net                                  |  |                    | 1.0  |   |               |   | 1.2   |          |  |  | (17%)  | 
|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 
|Loss before income taxes                              |  |                    | (5.4 | ) |               |   | (12.3 | )        |  |  | (56%)  | 
|Benefit (provision) for income taxes                  |  |                    | 0.1  |   |               |   | (0.2  | )        |  |  | (150%) | 
|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 
|Net loss                                              |  | $                  | (5.3 | ) |               | $ | (12.5 | )        |  |  | (58%)  | 
|                                                      |  |                    |      |   |               |   |       |          |  |  |        | 

The following table summarizes the components of our net revenues from external customers by segment:



|                             |  |                    |      |  |               |   |      |          |  |  |       | 
|---------------------------- |  | ------------------ | ---- |  | ------------- | - | ---- | -------- |  |  | ----- | 
|                             |  | Three Months Ended |      |  |               |  
|(Dollar amounts in millions) |  | March 26,2011      |      |  | March 27,2010 |   |      | % Change | 
|Lab Services                 |  | $                  | 19.3 |  |               | $ | 16.6 |          |  |  | 16%   | 
|Products                     |  |                    | 13.2 |  |               |   | 9.9  |          |  |  | 33%   | 
|Corporate                    |  |                    | 2.3  |  |               |   | 4.0  |          |  |  | (43%) | 
|                             |  |                    |      |  |               |   |      |          |  |  |       | 
|Net revenues                 |  | $                  | 34.8 |  |               | $ | 30.5 |          |  |  | 14%   | 
|                             |  |                    |      |  |               |   |      |          |  |  |       | 

The following table summarizes our operating income (loss) by segment:



|                             |  |                    |       |   |               |   |       |          |  |  |        | 
|---------------------------- |  | ------------------ | ----- | - | ------------- | - | ----- | -------- |  |  | ------ | 
|                             |  | Three Months Ended |       |   |               |  
|(Dollar amounts in millions) |  | March 26,2011      |       |   | March 27,2010 |   |       | % Change | 
|Lab Services                 |  | $                  | 2.3   |   |               | $ | (4.6  | )        |  |  | (150%) | 
|Products                     |  |                    | 4.0   |   |               |   | 1.5   |          |  |  | 167%   | 
|Corporate                    |  |                    | (12.7 | ) |               |   | (10.4 | )        |  |  | 22%    | 
|                             |  |                    |       |   |               |   |       |          |  |  |        | 
|Operating loss               |  | $                  | (6.4  | ) |               | $ | (13.5 | )        |  |  | (53%)  | 
|                             |  |                    |       |   |               |   |       |          |  |  |        | 



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Three Months Ended March 26, 2011 Compared to Three Months Ended March 27, 2010

Revenues

Revenues for our Lab Services
segment for the three months ended March 26, 2011 increased by $2.7 million compared to the three months ended March 27, 2010. The increase was primarily due to a higher average price per sample, partially offset by lower sample volume,
which declined approximately 4% year over year.

Revenues for our Products segment for the three months ended
March 26, 2011 increased by $3.3 million compared to the three months ended March 27, 2010. The increase was primarily due to higher sales of Celera manufactured products distributed by Abbott and increased royalties from sales of
RealTimeTMassays used on the m2000TMsystem.

Corporate revenues, which primarily consist of royalties, licenses and milestones, decreased by $1.7 million for the three months ended March 26, 2011 compared to the three months ended
March 27, 2010. The decrease was due primarily to lower licensing revenue, including the completion of payments from three licensees in the first quarter of 2010, and lower royalty revenue received from a licensee.

Gross Margin

Gross margin for the three
months ended March 26, 2011 increased by $3.2 million compared to the three months ended March 27, 2010 primarily as a result of the increase in net revenues. Gross margin as a percentage of net revenue increased to 63% for the three
months ended March 26, 2011 from 61% for the three months ended March 27, 2010, primarily as a result of the increased price per sample in our Lab Services segment, and increased royalty revenue in our Products segment.

Operating Expenses

SG&A expenses
decreased by $2.4 million for the three months ended March 26, 2011 compared to the prior year quarter. The decrease was primarily due to lower employee-related costs in our Lab Services segment and lower professional and consulting fees in our
Corporate and Products segments.

Research and development expenses decreased by $0.1 million for the three months ended March 26, 2011
compared to the prior year quarter primarily due to the completion of certain discovery research projects, and associated lower employee-related costs in our Corporate segment.

The amortization of purchased intangible assets for the three months ended March 26, 2011 and March 27, 2010 related to our acquisitions of BHL and Atria Genetics, Inc. (Atria) in 2007.

For the three months ended March 26, 2011, we recorded a net charge of $0.1 million in employee-related charges, asset impairments and
other. This included a charge of $0.5 million for severance and related costs associated with the restructuring program that we announced in November 2010, of which $0.3 million related to our Lab Services segment and $0.2 million related to our
Corporate segment. We also recorded the receipt of sublease income of $0.4 million, recorded in our Corporate segment, related to excess space in a facility previously used by Paracel, Inc. (Paracel), a business Celera acquired in 2000 and closed in
2005, the cost of which had previously been expensed.

For the three months ended March 27, 2010, we recorded a net charge of $0.2
million in employee-related charges, asset impairments and other. This included a charge of $0.4 million for additional lease expenses related to a facility previously used by Paracel. The charge was recorded in our Corporate segment. Also for the
three months ended March 27, 2010, we recorded the reversal of a previously established accrual of $0.2 million in employee-related charges, asset impairments and other. The reversal, which was primarily recorded in our Lab Services segment,
related to severance and related costs associated with our 2009 restructuring activities.



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We received cash payments of $3.2 million, recorded in legal settlement, during the three months ended
March 26, 2011 related to our settlement with Health Diagnostic Laboratory, Inc. (HDL), which we recorded in our Lab Services segment. A further $0.6 million was received in April 2011 and payment of an additional $0.8 million is expected to be
received in 2011.

We incurred costs of $2.0 million during the three months ended March 26, 2011 in our Corporate segment related to our
proposed merger with Quest.

Operating Income (Loss)

Our Lab Services segment had operating income of $2.3 million for the three months ended March 26, 2011 compared to an operating loss of $4.6 million for the three months ended March 27, 2010.
This was primarily due to an increase in revenue, a reduction in SG&A expenses and proceeds from the HDL settlement. These changes are further described above.

Our Products segment had operating income of $4.0 million for the three months ended March 26, 2011 compared to $1.5 million for the three months ended March 27, 2010. This change was primarily
due to an increase in revenue and a decrease in SG&A expenses, as described above.

Our Corporate segment had an operating loss of $12.7
million for the three months ended March 26, 2011 compared to $10.4 million for the three months ended March 27, 2010. This change was primarily due to a decrease in revenue and merger-related costs, partially offset by decreased SG&A
expenses, as described above.

Interest Income, Net

Interest income, net for the three months ended March 26, 2011 decreased $0.2 million compared with the prior year quarter primarily due to lower interest rates. Interest income, net for the three
months ended March 26, 2011 and the three months ended March 27, 2010 included $0.2 million related to the long-term receivable from Abbott.

Benefit (Provision) for Income Taxes

We recorded a tax benefit of $0.1 million for the
three months ended March 26, 2011, primarily due to the release of a reserve, partially offset by an increase in the deferred tax liability associated with the acquisition of Atria in 2007.

We recorded a tax provision of $0.2 million for the three months ended March 27, 2010, primarily due to an increase in the deferred tax liability
associated with the acquisition of Atria in 2007.

Discussion of Financial Resources and Liquidity

We had cash and cash equivalents and short-term investments of $326.5 million at March 26, 2011 and $326.9 million at December 25, 2010. We
believe that existing funds are adequate to satisfy our normal operating cash flow needs and planned capital expenditures for at least the next twelve months.

The following table summarizes the components of our financial resources at March 26, 2011 and December 25, 2010:



|                                                           |  |                 |       |  |                    |   |       | 
|---------------------------------------------------------- |  | --------------- | ----- |  | ------------------ | - | ----- | 
|(Dollar amounts in millions)                               |  | AtMarch 26,2011 |       |  | AtDecember 25,2010 |  
|Cash and cash equivalents                                  |  | $               | 55.8  |  |                    | $ | 35.0  | 
|Short-term investments                                     |  |                 | 270.7 |  |                    |   | 291.9 | 
|                                                           |  |                 |       |  |                    |   |       | 
|Total cash and cash equivalents and short-term investments |  | $               | 326.5 |  |                    | $ | 326.9 | 
|                                                           |  |                 |       |  |                    |   |       | 

We maintain a portfolio of investments in marketable debt securities, which are recorded at fair value. To minimize our
exposure to credit risk, we invest in corporate and government securities with strong credit ratings and have established guidelines relative to credit, diversification and maturity with the primary objective of maintaining safety of principal. We
do not invest in derivative financial instruments or auction rate securities. While global market and economic conditions have improved recently, credit conditions continue to be restrained. Deterioration in the credit markets may have an
adverse effect on the fair value of our investment portfolio.



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A prolonged economic downturn or a continuing scarcity of credit could adversely affect the financial
condition and levels of business activity of our customers. This may in turn have a corresponding negative impact on our future operating results as our customers may delay payment or suffer business failures that may cause us to record additional
allowances for doubtful accounts in the future.

The overall decrease of cash and cash equivalents and short-term investments for the three
months ended March 27, 2010 was due to additions to property, plant and equipment of $0.4 million and $0.3 million of payments to satisfy tax obligations on the vesting of restricted stock, partially offset by cash provided by operations,
excluding the amortization of the premium on purchase of investments, of $0.1 million and proceeds from the exercise of stock options of $0.2 million.

Net cash flows for the three months ended March 26, 2011 and March 27, 2010 were as follows:



|                                                 |  |                    |      |   |               |   |      |  
|------------------------------------------------ |  | ------------------ | ---- | - | ------------- | - | ---- | -
|                                                 |  | Three Months Ended |     
|(Dollar amounts in millions)                     |  | March 26,2011      |      |   | March 27,2010 |  
|Net cash provided (used) by operating activities |  | $                  | 1.1  |   |               | $ | (5.0 | )
|Net cash provided by investing activities        |  |                    | 19.8 |   |               |   | 4.6  |  
|Net cash used by financing activities            |  |                    | (0.1 | ) |               |   | (0.2 | )
|                                                 |  |                    |      |   |               |   |      |  
|Net change in cash and cash equivalents          |  | $                  | 20.8 |   |               | $ | (0.6 | )
|                                                 |  |                    |      |   |               |   |      |  

Operating activities

For the three months ended March 26, 2011, net cash provided by operating activities of $1.1 million consisted of income-related cash inflow of $2.0 million, partially offset by changes in operating
assets and liabilities of $0.9 million. Income-related cash flow represents the net loss for the period adjusted for non-cash charges related to depreciation and amortization, allowance for doubtful accounts, employee-related charges, asset
impairments and other, share-based compensation, deferred income taxes, non-cash interest income and amortization of premium on purchase of investments.

The changes in operating assets and liabilities for the three months ended March 26, 2011 were due to a decrease of $1.1 million in accounts payable and other liabilities caused primarily by the
timing of payments, an increase in prepaid expenses and other assets of $0.4 million, and an increase in accounts receivable of $0.4 million, partially offset by a decrease in inventories of $1.0 million.

For the three months ended March 27, 2010, net cash used by operating activities of $5.0 million consisted of income-related cash outflow of $5.7
million, partially offset by changes in operating assets and liabilities of $0.7 million.

The changes in operating assets and liabilities for
the three months ended March 27, 2010 were due to a decrease of $4.9 million in accounts payable and other liabilities caused primarily by the timing of bonus payments and the payment of a previously accrued legal settlement, and an increase in
inventories of $1.0 million, partially offset by a decrease of $6.1 million in accounts receivable due primarily to collections in our Lab Services and Products segments, and a decrease of $0.5 million in prepaid expenses and other assets.



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Investing activities

For the three months ended March 26, 2011, net cash provided by investing activities of $19.9 million was primarily due to proceeds from the maturity and sale of available-for-sale investments
exceeding the purchases of available-for-sale investments by $20.3 million, partially offset by additions to property, plant and equipment, net of $0.4 million, which included $0.3 million for the purchase of software and $0.1 million for the
purchase of machinery and equipment.

For the three months ended March 27, 2010, net cash provided by investing activities of $4.6
million was primarily due to proceeds from the maturity and sale of available-for-sale investments exceeding the purchases of available-for-sale investments by $6.3 million, partially offset by additions to property, plant and equipment and
intangible assets, net of $1.7 million, which included $1.1 million for the purchase of machinery and equipment, $0.3 million for leasehold improvements and $0.3 million for the purchase of a technology license.

Financing activities

For the three
months ended March 26, 2011, the net cash used by financing activities of $0.1 million related primarily to payments made to satisfy tax obligations on the vesting of restricted stock, partially offset by proceeds from the exercise of stock
options.

The net cash used by financing activities of $0.2 million for the three months ended March 27, 2010 related to payments made to
satisfy tax obligations on the vesting of restricted stock.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement includes any contractual obligation, agreement or transaction arrangement involving an unconsolidated entity under which
we would have: (1) retained a contingent interest in transferred assets; (2) an obligation under derivative instruments classified as equity; (3) any obligation arising out of a material variable interest in an unconsolidated entity
that provides financing, liquidity, market risk or credit risk support to us, or that engages in leasing, hedging or research and development services with us; or (4) made guarantees.

At March 26, 2011 and March 27, 2010, we had no off-balance sheet arrangements or obligations.

Critical Accounting Estimates

There have been no material changes to our critical
accounting policies and estimates from the disclosures made in Managements Discussion and Analysis of Financial Conditions and Results of Operations included in our Annual Report on Form 10-K for the year ended December 25, 2010 filed
with the SEC on March 18, 2010.

Recent Accounting Pronouncements

Refer to Note 3 to our unaudited condensed consolidated financial statements for a description of the effect of recently adopted accounting pronouncements.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Our principal exposures to financial market risk are changes in interest rates and changes in equity prices. Changes in interest rates will affect the interest earned on our cash, cash equivalents, and
short-term investments, as well as the value of those investments. Our primary objectives for these investments are to ensure the preservation of capital, meet liquidity requirements, and optimize returns.



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We manage our interest rate risk by maintaining an investment portfolio generally consisting of debt
instruments of high credit quality and relatively short maturities. As of March 26, 2011, our cash, cash equivalents and short-term investments were invested in a diversified, liquid portfolio of corporate bonds, treasury and agency securities,
as well as asset-backed securities and money market instruments.

To provide an assessment of the interest rate risk associated with our
investment portfolio, we considered the volatility of interest rates experienced in prior years as well as the duration of the holdings in our portfolio. We determined that it is reasonably possible that an adverse change of 100 basis points
(1.0%) could be experienced in the near term. A hypothetical 1.0% increase in interest rates would result in a decrease in the fair value of our portfolio of $2.7 million. This loss would only be realized if these investments were sold prior to
maturity. The decline reflects only the direct impact of the change in interest rates. Other market fluctuations, such as changes in credit risk, could result in additional declines in the value of our investment portfolio.

We do not hedge our equity positions in other companies or our short-term investments. Our exposure on these instruments is limited to changes in quoted
market prices. For marketable equity securities, a reasonably possible decline in market prices of approximately 10% in the near term would result in a decrease in their fair value of less than $0.1 million.

We have minimal exposure to foreign currency risk as our operations are primarily in the U.S. and overseas sales are typically billed in U.S. dollars.

Impact of Inflation and Changing Prices

Inflation and changing prices are monitored and we attempt to minimize the impact of inflation by improving productivity and efficiency through review of both manufacturing capacity and operating expense
levels. When operating costs increase, we attempt to recover such costs by increasing, over time, the selling price of our products and services. We believe the effects of inflation have been appropriately managed and therefore have not had a
material impact on our historic consolidated operations and resulting financial position.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Background

As previously disclosed under Part II  Item 9A  Controls and Procedures in the Companys Annual Report on
Form 10-K for the year ended December 25, 2010, management concluded that the Companys internal control over financial reporting was not effective as of December 25, 2010 based on the criteria established in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) due to a material weakness related to the application of FASB Accounting Standards Codification Topic 954, Health Care Entities (ASC
954). This material weakness resulted in the restatement of financial statement line items and related financial disclosures in the Companys previously issued consolidated financial statements.

The Companys management has been actively engaged in the implementation of remediation efforts to address the material weakness. For a complete
description of managements remediation plan, see Part II  Item 9A  Controls and Procedures in the Companys Annual Report on Form 10-K for the year ended December 25, 2010.



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Evaluation of Disclosure Controls and Procedures

Under the supervision of and with the participation of management, including the Companys Chief Executive Officer and Chief Financial Officer, the
Company conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), as of
March 26, 2011. Based on that evaluation and the material weakness referenced above, the Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were not effective as of
March 26, 2011.

Progress on Plan for Remediation

Management has been actively engaged in the planning for, and implementation of, remediation efforts to address the material weakness related to the application of ASC 954. These remediation efforts,
outlined below, are intended both to address the identified material weakness and to enhance the Companys overall financial control environment. During the three months ended March 26, 2011, the following changes to our internal control
over financial reporting were made to address the material weakness:



| |  |  | the Companys accounting policy associated with BHLs revenue recognition has been revised to incorporate the guidance provided for under ASC
954;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a thorough review has been undertaken of the Companys policies and procedures for analyzing and ensuring the appropriate classification and
reporting of unreimbursed and uncollectible charges for services; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | training of personnel has been implemented related to the tracking and recording of unreimbursed and uncollectible charges for services in accordance
with ASC 954.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Management has not yet completed its remediation efforts and any remediation actions put in place must be
effective over a period of time, fully documented and tested. As of the end of the three months ended March 26, 2011, management was still in the process of implementing and testing the remediation actions, including the implementation of a new
billing system with enhanced tracking and reporting functionality.

Changes in Internal Control Over Financial Reporting

As a result of the remediation efforts noted above, there were changes in the Companys internal control over financial reporting during the three
months ended March 26, 2011 that materially affected, or were reasonably likely to materially affect, the Companys internal control over financial reporting.



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PART II  Other Information



|ITEM 1. | Legal Proceedings
|------- | -----------------

We have from time to
time been involved in various lawsuits, arbitrations, investigations, and other legal actions. These legal actions have involved, for example, commercial, intellectual property, securities, and employment matters. We believe that we have meritorious
defenses against the claims currently asserted against us and intend to defend them vigorously. In cases where we are the plaintiff, we believe we have valid claims and intend to pursue our rights. However, the outcome of legal actions is
inherently uncertain, and we cannot be sure that we will prevail in our defense of claims currently asserted against us or in our pursuit of claims made by us.

In addition to legal actions to which we are a party, we may be required under our separation agreement with Life Technologies to indemnify Life Technologies for damages, costs and other liabilities
incurred by Life Technologies relating to existing and future lawsuits, arbitrations, investigations, and other legal actions to which Life Technologies is or may become a party, to the extent related to our business. For more information, see Note
13 to our unaudited condensed consolidated financial statements and the section entitled Risk Factors  Our separation agreement with Life Technologies requires us to indemnify Life Technologies for specified liabilities, including
liabilities relating to the Celera business, specified litigation and one-half of any liabilities resulting from the split-off.

Securities Litigation

2011
Securities Litigation

Delaware Court of Chancery Cases (New Orleans, Ariel and Henderson)

During March 2011, the following putative class action lawsuits were filed in the Delaware Court of Chancery: New Orleans Employees Retirement System
v. Ayers, et al. (filed on March 22, 2011), Ariel Holdings LLC v. Ayers, et al. (filed on March 24, 2011) and Henderson, et al. v. Ayers, et al.(filed on March 29, 2011) (together, the Delaware Complaints). The
Delaware Complaints named as defendants the members of the Companys Board of Directors (the Company Board), as well as the Company, Quest and Purchaser. The plaintiffs in the Delaware Complaints alleged that members of the Company Board
breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and further claimed that Quest aided and abetted those alleged breaches of fiduciary duty. The Delaware Complaints alleged that
the Tender Offer and the Merger involve an unfair price, an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves personally. The Delaware Complaints sought
compensatory damages and injunctive relief, including to enjoin the Tender Offer and the Merger, and an award of attorneys and other fees and costs, in addition to other relief. On April 1, 2011, the Delaware Complaints were consolidated
into one asIn re Celera Corporation Shareholder Litigation, Consolidated C.A. No. 6304-VCP (the Amended Delaware Complaint).

On
April 1, 2011, a verified consolidated amended class action complaint was filed in the Amended Delaware Complaint, which superseded the existing complaints pending in the Delaware Court of Chancery, and named as defendants the members of the
Company Board, as well as the Company, Quest and Purchaser. The Amended Delaware Complaint alleged that the members of the Company Board breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the
Merger, and further claimed that the Company, Quest and Purchaser aided and abetted those alleged breaches of fiduciary duty. The Amended Delaware Complaint alleged that the Tender Offer and Merger between the Company and Quest involves an unfair
price, an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves personally. The Amended Delaware Complaint further alleged that the Companys Schedule 14D-9 filed
with the SEC on March 28, 2011 (the Schedule 14D-9) failed to fully and fairly disclose all material information relating to the background of the Tender Offer, the Companys financial projections, and the fairness opinion of Credit Suisse
directed to the Company Board. The Amended Delaware Complaint sought compensatory damages and injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief.



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Alameda County Superior Court Cases (Lauver, Hobby and Wolf)

During March 2011, the following putative class action lawsuits were filed in the Alameda County Superior Court: Lauver v. Celera Corp., et al.
(filed on March 23, 2011), Hobby v. Celera Corp., et al. (filed on March 23, 2011) and Eric Wolf v. Celera Corporation, et al., (filed on March 29, 2011) (together, the Alameda County Complaints). The Lauver and
Wolfcomplaints named as defendants the members of the Company Board, the Company, Quest and Purchaser. The Hobby complaint named as defendants the members of the Company Board, the Company and Quest. The Alameda County Complaints
alleged that the Company and its directors breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and further claimed that Quest aided and abetted those alleged breaches of fiduciary
duty. The Alameda County Complaints alleged that the Tender Offer and the Merger involve an unfair price, an inadequate sales process and unreasonable deal protection devices and that defendants agreed to the transactions to benefit themselves
personally. The Lauver complaint further alleged that the Companys Schedule 14D-9 failed to disclose material information relating to the Companys financial forecasts, the fairness opinion of Credit Suisse directed to the Company
Board, and the background of the Tender Offer and the Merger. The Wolfcomplaint further alleged that the fairness opinion of Credit Suisse directed to the Company Board was materially false and misleading. The Alameda County Complaints
sought injunctive relief, including to enjoin the Tender Offer and the Merger, and an award of attorneys and other fees and costs, in addition to other relief. On April 5, 2011, the Alameda Superior Court consolidated the Alameda County
Complaints as Lauver v. Ordoñez, et al.

Settlement of Delaware Court of Chancery and Alameda County Superior
Court Cases

On April 18, 2011, the Company and other defendants entered into a memorandum of understanding (the MOU) with the parties
to the actions pending in the Delaware Court of Chancery and the three cases pending in the Alameda County Superior Court consolidated as Lauver v. Ordoñez, et al., pursuant to which the Company and such parties agreed in principle,
and subject to certain conditions, to settle those stockholder lawsuits. Subject to approval of the Delaware Court of Chancery and further definitive documentation, the MOU establishes a framework to resolve the allegations by the settling
plaintiffs against the Company and other defendants in connection with the Tender Offer and the Merger Agreement and contemplates a release and settlement by the Companys stockholders of all claims against the Company and other defendants and
their affiliates and agents in connection with the Tender Offer and the Merger Agreement (including release of those claims brought in the non-settling actions). In exchange for the release and settlement, pursuant to the terms of the MOU, the
parties agreed, after arms length discussions, that (i) the Company would provide certain additional disclosures in an amendment to the Schedule 14D-9, (ii) the Company, Quest and Purchaser would amend the Merger Agreement,
(iii) the Company would release third parties currently subject to confidentiality agreements with the Company from any standstill restrictions contained in such agreements and (iv) the Company would file a Current Report on Form 8-K and
related press release disclosing the amendment of the Merger Agreement and the terms of the MOU. The Company filed the foregoing Current Report on Form 8-K on April 18, 2011. The settlement is also contingent upon, among other things,
consummation of the Tender Offer and the Merger. As part of the settlement, the Company agreed that counsel to the plaintiffs in the settling actions established a right to an award of attorneys fees and expenses based upon the benefits that
the settlement provided to the class, which award would be paid by the Company or its successors. It is not possible to estimate at this time what amount of fees and expenses may be awarded by the court. In the event that the settlement is not
approved or otherwise does not become final, the Company will resume its vigorous defense of the actions.

On May 2, 2011, BVF Partners L.P.
filed a Notice of Intention to Object to Proposed Settlement with the Delaware Court of Chancery indicating its intent to object to approval of the proposed settlement, to seek appraisal for their shares, and to seek to opt-out of the proposed
settlement, if approved by the court.



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McCreary, Andal and Korngold Cases

On April 1, 2011, a putative class action lawsuit captioned McCreary v. Celera Corp., et al. was filed in the United States District Court for
the Northern District of California. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the Company and its directors violated sections 14(d)(4) and 14(e)
of the Securities Exchange Act of 1934, as amended (the Exchange Act) by filing a materially misleading Schedule 14D-9, that the Companys directors breached their fiduciary duties to the Companys stockholders in connection with the
Tender Offer and the Merger, and further claims that the Company and Quest aided and abetted those alleged breaches of fiduciary duty. The complaint alleges that the Tender Offer and Merger between the Company and Quest involves an unfair price, an
inadequate sales process and unreasonable deal protection devices, that the Companys directors agreed to the transactions to benefit themselves personally, and that the Schedule 14D-9 fails to adequately disclose information relating to the
opinion provided by Credit Suisse to the Company Board. The complaint seeks injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief. On
April 13, 2011, the United States District Court for the Northern District of California entered an order staying the McCreary case pending the resolution of the consolidated class action pending in the Delaware Court of Chancery.

On April 11, 2011, a putative class action lawsuit captioned Andal v. Celera Corp., et al., was filed in the United States
District Court for the Northern District of California. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the Company and its directors violated
section 14(e) of the Exchange Act by filing a materially misleading Schedule 14D-9, that the Companys directors breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, that Quest,
the Company and its directors aided and abetted those alleged breaches of fiduciary duty, and further claims that the Company and its directors violated section 20(a) of the Exchange Act by aiding and abetting those alleged breaches of fiduciary
duty. The complaint alleges that the Tender Offer and Merger between the Company and Quest involves an unfair price, an inadequate sales process and unreasonable deal protection devices, that defendants agreed to the transactions to benefit
themselves personally, and that the Schedule 14D-9 fails to adequately disclose information relating to the opinion provided by Credit Suisse to the Company Board. The complaint seeks injunctive relief, including to enjoin the Tender Offer and
Merger, and an award of attorneys and other fees and costs, in addition to other relief.

On April 7, 2011, a putative class action
lawsuit captioned Korngold v. Ayers, et al., was filed in the Alameda County Superior Court. The complaint names as defendants the members of the Company Board, as well as the Company, Quest and Purchaser. The plaintiff alleges that the
Companys directors breached their fiduciary duties to the Companys stockholders in connection with the Tender Offer and the Merger, and that Quest and Purchaser aided and abetted those alleged breaches of fiduciary duty. The complaint
alleges that the Tender Offer and Merger between the Company and Quest involves an unfair price, an inadequate sales process and unreasonable deal protection devices, and that defendants agreed to the transactions to benefit themselves personally.
The complaint seeks compensatory damages and injunctive relief, including to enjoin the Tender Offer and Merger, and an award of attorneys and other fees and costs, in addition to other relief.



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The Company will continue to vigorously defend the McCreary, Andal andKorngold cases,
including by asserting that the release contained in the MOU encompasses all claims asserted in those actions.

2010 Securities Litigation

On June 14, 2010, a purported class action captioned Washtenaw County Employees Retirement System v. Celera Corporation
was filed in the United States District Court for the Northern District of California against Celera and certain of its directors and current and former officers. On September 23, 2010, the court appointed a lead plaintiff and renamed the
action In re Celera Corp. Securities Litigation. An amended complaint was filed on October 15, 2010. The amended complaint alleged that, from April 24, 2008, through July 22, 2009, the defendants set inadequate allowances for
doubtful accounts, concealed the extent to which Celeras accounts receivable were impaired, and made other false and misleading statements regarding the Companys business and financial results with an intent to defraud investors. The
amended complaint sought unspecified damages on behalf of an alleged class of purchasers of the Companys stock during the period in which the alleged misrepresentations were made, as well as an award to the lead plaintiff of its costs and
attorneys fees. On March 24, 2011, pursuant to the parties stipulation, the Court ordered the lead plaintiff to file a second amended complaint on or before May 6, 2011. Celera believes that plaintiffs claims are without
merit and intends to vigorously defend the action.

On July 2, 2010, and July 9, 2010, two stockholder derivative actions, captioned
Kahn v. Ordoñez and Greenberg v. Ordoñez, respectively, were filed in the United States District Court for the Northern District of California. The two actions were consolidated into a single action on September 23,
2010, captioned In re Celera Corp. Derivative Litigation. On April 22, 2011, plaintiffs in the consolidated action filed an amended complaint. The amended complaint alleges that certain current and former Celera officers and directors
breached their fiduciary duties by allowing the Company to set inadequate allowances for doubtful accounts, conceal the extent to which the Companys accounts receivable were impaired, and make other allegedly false and misleading statements
regarding the Companys business and financial results. The action seeks to recover damages on behalf of Celera against the director and officer defendants, an award to plaintiffs of their costs and attorneys fees, and other appropriate
relief. Celera believes that plaintiffs lack standing to pursue litigation on behalf of Celera.

Health Diagnostic Laboratory, Inc.

On January 14, 2010, BHL filed a lawsuit in the United States District Court for the Eastern District of Virginia against Health
Diagnostic Laboratory, Inc. (HDL), Blue Wave Healthcare Consultants, Inc. (Blue Wave) and seven former employees of BHL. In the litigation, BHL sought injunctive relief and damages for contractual, tort and statutory claims against the
defendants, including claims for misappropriation of trade secrets and tortious interference with BHLs client relationships. On April 22, 2010, we announced that BHL had settled the litigation. The settlement agreement provides
for the payment by HDL to BHL of an aggregate amount of approximately $7.1 million to be made in a series of payments in 2010 and 2011. We received approximately $3.9 million in 2010, with the balance of $3.2 million owed in 2011, of which $2.4
million has been received. The settlement agreement also provides for HDL to pay BHL an additional amount in 2011 based on samples HDL received during 2010 from an agreed upon set of healthcare providers. We received $0.8 million in March 2011
and $0.6 million in April 2011 relating to the additional payment.

The settlement agreement contains prohibitions, which have now expired, on
HDL, Blue Wave and the individuals named in the litigation from performing lab testing services for healthcare providers that were BHL customers during the latter half of 2009. HDL, Blue Wave and the individuals named in the litigation were
also prohibited from soliciting or hiring BHL employees for a defined period, which has now expired.



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|ITEM 1A. | Risk Factors
|-------- | ------------

The following information
sets forth facts that could cause our actual results to differ materially from those contained in forward-looking statements we have made in this Quarterly Report and those we may make from time to time. The risk factors set forth below include all
changes to, and supersede, the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 25, 2010.

Our net revenues will be negatively affected if third-party payors decide that our products or services are not approved for reimbursement or if healthcare providers do not accept our diagnostic
products as clinically useful.

Our revenues are highly dependent on our clinical laboratory tests and diagnostic products being approved
for reimbursement by Medicare and other government healthcare programs, as well as private insurance companies and managed care organizations, commonly referred to, collectively, as third-party payors. We have experienced denials of
reimbursement from certain third-party payors. Third-party payors may deny clinical laboratory tests and diagnostic products for reimbursement if they determine that these tests and products are not medically necessary or otherwise not approved for
reimbursement under standards independently established by these third-party payors, which may take into consideration factors such as the investigational nature of a particular test or product, or whether less expensive alternatives are available.
Each third-party payor makes its own decision as to whether a given diagnostic test is medically necessary and worthy of payment. If Medicare or any other third-party payor determines that any one or more of our clinical laboratory tests are not
medically necessary or are not otherwise suitable for reimbursement, healthcare providers may be reluctant to prescribe these tests. Similarly, if the use of our diagnostic products is not approved for reimbursement, purchasers of any one or more of
these products could decrease or eliminate their orders of these products. Any change by one or more third-party payors with regard to their existing reimbursement practices could impact the tests and products we offer, the revenue received on
each of the tests and products we sell and harm our operating results and financial condition.

In addition, the growth and success of our
sales of diagnostic products depends on market acceptance of our products as clinically useful and cost-effective by healthcare providers and clinical laboratories. We expect that most of our diagnostic products will use genotyping and gene
expression information to predict predisposition to diseases, disease progression or severity, or responsiveness to treatment. Market acceptance depends on the widespread acceptance and use by healthcare providers of genetic testing for these
purposes. The use of genotyping and gene expression information by healthcare providers for these purposes is relatively new. Healthcare providers may not want to use our products designed for these purposes. Also, Medicare and other third-party
payors are continually looking at the clinical utility of genetic testing and making determinations as to whether to continue reimbursement for certain genetic tests. These events could impact the tests and products we offer, the revenue
received on each of the tests and products we sell and harm our operating results and financial condition.



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Third-party payors and healthcare providers may look to treatment guidelines such as the National
Cholesterol Education Programs current clinical guidelines for cholesterol testing and management that are contained in the Third Report of the Expert Panel on Detection, Evaluation, and Treatment of High Blood Cholesterol in Adults (ATP III),
anticipated to be updated in 2011, in making their determinations as to the clinical utility of some of our diagnostic tests. Some of our advanced diagnostic tests are not included in the current guidelines and may not be incorporated in the
future, and other existing tests may be removed, any of which could harm our operating results and financial condition.

Efforts by
third-party payors, including Medicare, to reduce utilization and reimbursement rates could decrease our net revenues and profitability.

Third-party payors have increased their efforts to control the cost, utilization and delivery of healthcare services. From time to time, Congress has
considered and implemented changes in the Medicare fee schedules in conjunction with budgetary legislation. The Medicare clinical laboratory rates were increased approximately 4.5% as of January 1, 2009, decreased by approximately 1.9% and
1.75% as of January 1, 2010 and January 1, 2011, respectively, and may decrease further in 2012. Reductions in the reimbursement rates of other third-party payors have also occurred and may occur in the future. In the past, these
reimbursement rate changes have resulted in reduced prices, added costs and decreased test utilization for the clinical laboratory industry and future rate reductions could have a similar impact on us or the industry. If the payment amount we
receive for our clinical laboratory testing services is further reduced, it could harm our operating results and financial condition. Also, if clinical laboratories that purchase our diagnostic products receive reduced payment for their testing
services, the reduced payments may cause them to seek lower pricing for our diagnostic products, which could, in turn, harm our operating results and financial condition.

We expect efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services will continue. These efforts, including changes in law or
regulations, may harm our operating results and financial condition.

Payment and other practices by third-party payors where we are
out-of-network can harm our operating results and financial condition.

A large portion of BHLs clinical laboratory non-Medicare
fee-for-service testing business is currently reimbursed by non-governmental third-party payors on an out-of-network, non-participating basis. This means that BHL does not have contracted reimbursement rates with these companies. Blue
Cross/Blue Shield and its related entities are the most significant payors of our services with whom we are out-of-network. Blue Cross/Blue Shield sends payment for our services to their beneficiaries instead of us in all states where we conduct
business, except for Alabama where we have secured an in-network contract. As a result of this practice, we, in turn, must then seek to collect both the non-contractual payors receivables and the patients receivables from these
beneficiaries. This increases the length of time and cost it takes for us to collect a receivable and reduces the probability of collecting the full amount due. Though we have implemented programs aimed at improving our collections, there
can be no assurance that these will be successful. The amounts we are required to spend to collect monies owed to us from patients are significant and harm our operating results and financial condition.

In addition, physicians with whom we do business have on occasion been contacted by non-governmental third-party payors where we are out-of-network to
direct their patients to in-network providers. If these physicians switch their referral patterns to in-network providers, our operating results and financial condition may be harmed.



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We may need to accept lower prices for some of our testing services in exchange for participating in
provider networks.

In order to contain medical expenses, third-party payors may require BHL to become an in-network, participating
provider of clinical laboratory testing services. BHLs past practice was to be an out-of-network provider. BHL has entered into contracts with several third-party payors as an in-network, participating provider. In-network, participating
reimbursement rates are usually substantially lower than those reimbursement rates currently being received by BHL for its testing services on an out-of-network basis and there is no assurance that all of BHLs tests will be allowed by any
particular third-party payors coverage determination policies. In addition, even if a contract is secured, third-party payors may unilaterally decrease reimbursement rates and enact negative coverage determination policies for BHLs
tests. Therefore, joining these networks could reduce BHLs net income and harm our operating results and financial condition.

Our
business is affected by macroeconomic conditions, and adverse changes in U.S. and global economic conditions have had and may continue to have an adverse effect on our business.

Various macroeconomic factors have affected, and may continue to affect, our business and the results of our operations. Slow economic activity, high unemployment and the related loss of
employee-sponsored health insurance, decreased consumer confidence and other factors related to adverse market and economic conditions have and may continue to increase our business costs, cause supplier difficulties, lower our revenues and/or
affect the ability of our customers to purchase and pay for our products and services. This, in turn, may harm our operating results and financial condition and cause us to record higher allowances for doubtful accounts in the future.

Interest rate changes, illiquid credit market conditions and other factors related to adverse market and economic conditions could also affect the value
of our investments and/or adversely affect our ability to obtain external financing.

Medicare contracting reforms could change
Medicares reimbursement policies or rates for our laboratory testing services.

Because a large percentage of our revenue is derived
from the Medicare fee-for-service program, the Medicare coverage and reimbursement rules are significant to our operations.

The clinical
laboratory fee schedule sets the maximum amount payable under Medicare for each specific laboratory test, identified by its Current Procedural Terminology (CPT) code. We bill the Medicare fee-for-service program directly and must accept no more than
the scheduled amount as payment in full for covered tests performed on behalf of Medicare fee-for-service beneficiaries. Under current law, those services reimbursed under the clinical laboratory fee schedule generally do not result in coinsurance
amounts payable by Medicare beneficiaries.

The payment amount under Medicares clinical laboratory fee schedule is important not only
for our reimbursement from Medicare, but also because the laboratory fee schedule often establishes the payment amounts set by other third-party payors. Accordingly, a reduction in Medicare reimbursement rates pursuant to the clinical laboratory fee
schedule, such as the rate reduction of approximately 1.75% as of January 1, 2011, could result in a corresponding reduction in the reimbursement rates we receive from such third-party payors. Any further reductions in reimbursement levels for
our laboratory services would decrease our revenues and harm our operating results and financial condition.



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Our business could be adversely impacted by healthcare reform that focuses on reducing healthcare costs
and/or does not recognize the value and importance of diagnostic testing.

Government oversight of and attention to the healthcare industry
in the United States is significant and may increase. In March 2010, the President signed into law The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the
PPACA). The PPACA is one of the most significant health reform measures signed into law in decades. It substantially changes the way health care is financed by both governmental and private insurers, and includes payment reform, cost control and
anti-fraud and abuse provisions. The PPACA includes, among other things, measures that directly impact Medicare payment for clinical laboratory tests, including changes to the annual adjustment factor for the Medicare clinical laboratory fee
schedule and excise taxes on medical devices. Although the PPACA retains the existing 0.5 percent reduction to the inflation update for the clinical laboratory fee schedule for 2010, it establishes a 1.75 annual percentage point reduction in the
inflation update for 2011 through 2015. This adjustment could cause the annual adjustment to the fee schedule to be below zero and harm our revenues. The PPACA also includes an additional productivity adjustment to the fee schedules annual
inflation update that begins in 2011 and continues beyond 2015. This productivity adjustment will vary from year to year. For calendar year 2011, the Medicare payments will be adjusted by a negative 1.75 percent update factor, with no impact from
the application of the productivity adjustment. Additionally, the PPACA contains a requirement that a clinical laboratorys referral sources be enrolled in the Medicare Provider Enrollment, Chain and Ownership System (PECOS). CMS has
indicated that effective July 1, 2011 it would implement changes to automatically reject claims made by providers that do not have their PECOS applications approved. Our business may be harmed if our referring physicians have not satisfied the
enrollment procedures.

In addition, the PPACA establishes a deductible excise tax on entities that manufacture or import certain medical
devices offered for sale in the United States, beginning in 2013. Further, the PPACA establishes a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in and conduct comparative clinical research. The PPACA also
appropriates funding for comparative effectiveness research, an initiative that has received considerable Federal funding under the American Recovery and Reinvestment Act of 2009. It is unclear how this research information will be used to develop
new or modify current coverage and reimbursement policies. Our business could be adversely impacted if such research does not recognize the value and importance of diagnostic testing. We cannot predict the full impact of the PPACA on our business or
whether changes in the PPACA or other healthcare laws, regulations or policies may be introduced or adopted. Our operating results and financial condition may be harmed by these or future reform measures.

The competition in the biotechnology and healthcare industries is intense and evolving.

There is intense competition among healthcare, diagnostic, and biotechnology companies attempting to develop new diagnostic products.
We are aware of competitors who are engaged in research and development projects that address the same diseases that we are targeting. Our Products business competes with companies in the U.S. and abroad that are engaged in the development and
commercialization of products and services that provide genetic information. These companies may develop products or services that are competitive with, and could be more effective and/or cost-effective than, the diagnostic products offered by us or
our collaborators or licensees, such as analyte specific reagents (ASRs), diagnostic test kits, or diagnostic testing services that perform the same or similar purposes as our or our collaborators or licensees diagnostic products. Key
competitors for our leading products include Luminex Corporation and Hologic, Inc. for our cystic fibrosis products, Siemens for our ViroSeq® HIV-1 Genotyping System, F. Hoffmann-La Roche, Ltd., Siemens and Qiagen for the m2000 system and assays, and Life Technologies for our HLA products.
Also, clinical laboratories may offer testing services that are competitive with the diagnostic products sold by us or our collaborators or licensees. For example, a clinical laboratory can use either reagents purchased from manufacturers other than
us, or their own internally developed reagents, to provide diagnostic testing services. In this manner, clinical laboratories could offer testing services for a particular disease as an alternative to purchasing diagnostic products sold by us or our
collaborators or licensees for use in their testing of the same disease. The testing services offered by clinical laboratories may be easier and more cost-effective to develop and market than test kits developed by us or our collaborators or
licensees because the testing services are not subject to the same clinical validation requirements that are applicable to the FDA cleared or approved diagnostic test kits. For example, clinical reference laboratories such as Laboratory Corporation
of America Holdings, or LabCorp, and Quest offer laboratory-developed tests that compete with our ViroSeq® HIV-1
Genotyping System.



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In addition, BHLs clinical laboratory testing services, and its associated disease monitoring,
management, and educational services compete primarily with existing diagnostic, detection and monitoring technologies and disease management service companies. In particular, many clinical reference laboratories, including LabCorp, Sonic Healthcare
Limited, Mayo Medical Laboratories, Quest, and other regional laboratory companies, offer clinical testing services using a traditional lipid panel test, which is simpler to perform and less expensive than BHLs more extensive and proprietary
lipid fractionation and related cardiovascular bio-marker tests, and which is widely accepted as an adequate test for assessing and managing risk of cardiovascular disease. Also, other companies, including Atherotech, Inc.,
LipoScience, Inc. and Boston Heart Lab Corporation currently provide alternative methods for lipoprotein subclass analysis using different technologies than BHLs testing services. Other competitors to BHL in the cardiovascular disease
testing and management market are HDL and Cleveland HeartLab. Many of BHLs actual or potential competitors have longer operating histories, better name recognition and greater financial, technical, sales, marketing, and distribution
capabilities than BHL has. These competitors also may have more experience in research and development, billing and collections, regulatory matters and manufacturing. Many of these companies, particularly those selling the traditional lipid panel
test, offer tests or services that have been approved for third-party reimbursement. BHLs current or potential competitors may use, or develop in the future, technologies that are superior to, or more effective than, BHLs, which could
make BHLs tests noncompetitive or obsolete.

We do not have contracts with healthcare providers that require them to send samples to
BHL. These providers use the lab provider of their choice and may use multiple labs for their testing services. Any loss of business to our competitors in the lab testing service industry, especially with respect to those healthcare providers that
refer a high volume of samples to our lab, harms our operating results and financial condition.

The activities of the parties identified
in our settled litigation with HDL have adversely affected and may continue to adversely affect BHLs business.

In 2010, we settled
litigation with HDL, Blue Wave Healthcare Consultants, Inc. and certain former employees of BHL. Among other things, the settlement agreement contains prohibitions on HDL and the individuals named in the litigation from performing lab testing
services for healthcare providers that were BHL customers during the latter half of 2009. This restriction has recently expired. The settlement agreement also prohibited HDL, Blue Wave and the individuals named in the litigation from soliciting or
hiring BHL employees for a defined period. This restriction has also recently expired. The activities of the parties identified in the litigation have adversely affected and may continue to adversely affect BHLs business due to lost business
from accounts serviced by the former sales representatives identified in the litigation and the lapse of the restrictions noted above.



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Failure to collect receivables, or to timely or accurately bill for our services, could have a material
adverse effect on our business.

Billing for clinical testing services is complex and is subject to extensive and non-uniform rules and
administrative requirements. Depending on the billing arrangement and applicable law, we bill various third-parties, such as patients, insurance companies, Medicare, physicians and hospitals. Any failure to collect receivables, or a deterioration in
our receivables, will harm our operating results and financial condition.

A significant portion of our accounts receivable is owed to us by
individual patients. Blue Cross/Blue Shield sends payment for our services to most of their beneficiaries instead of us in states where we conduct business, except for Alabama where we have secured an in-network contract. As a result of this
practice, we, in turn, must then seek to collect both the non-contractual payors receivables and the patients receivables from these beneficiaries. In general, it is difficult to collect amounts owed to us by individuals. Changes in laws
and regulations could increase the complexity and cost of our billing process. Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures adds further cost and complexity to the
billing process. Further, our billing processes and systems require significant and continuing technology and human resource investments.

Missing or incorrect information on requisitions adds complexity to and slows the billing process, creates backlogs of unbilled requisitions, and
generally increases the aging of accounts receivable. Failure to timely or correctly bill may lead to our not being reimbursed for our services or an increase in the aging of our accounts receivable, which could harm our operating results and
financial condition. In addition, failure to comply with applicable laws and regulations relating to billing federal healthcare programs and private third-party payors could lead to various penalties, including: exclusion from participation in the
Medicare program; asset forfeitures; civil and criminal fines and penalties; and the loss of various licenses, certificates and authorizations necessary to operate our business, any of which could harm our operating results and financial condition.

The restatement of our consolidated financial statements subjects us to a number of additional risks and uncertainties, including
increased costs for accounting and legal fees and the increased possibility of legal proceedings.

As discussed in our Annual Report on
Form 10-K filed with the SEC on March 18, 2011, we determined that, because of errors identified in our previously issued consolidated financial statements for the year ended June 30, 2008, the six months ended December 27, 2008, the
year ended December 26, 2009, each quarter in the year ended December 26, 2009 and the first three quarters in the year ended December 25, 2010, we restated our previously issued consolidated financial statements, including the
quarterly data for the years ended December 26, 2009 and December 25, 2010 and our selected financial data for the relevant periods. As a result of the restatement, we have become subject to a number of additional risks and uncertainties.
For example, we have incurred substantial unanticipated costs for accounting and legal fees in connection with the restatement. Although the restatement is complete, we expect to continue to incur increased accounting and legal costs. In addition,
as a result of the restatement, we may become subject to lawsuits or administrative proceedings. We may incur substantial defense costs regardless of the outcome of these actions, and insurance and indemnification may not be sufficient to cover the
losses we may incur. Likewise, such events would cause a diversion of our managements time and attention. If we do not prevail in one or more of these actions, we could be required to pay substantial damages or settlement costs, which could
harm our operating results and financial condition.



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Managements determination that a material weakness exists in our internal control over financial
reporting and our disclosure controls and procedures could have a material adverse impact on us.

We are required to maintain internal
control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting
principles. We are also required to maintain disclosure controls and procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the SEC. In Part I, Item 4 of this Quarterly Report on Form 10-Q, management reports that a material weakness exists in our internal control over financial reporting, principally that
the Company did not have effective controls to provide assurance as to the appropriate application of ASC 954 with respect to the classification and timely recognition of unreimbursed and uncollectible charges for services. Due to this material
weakness, management concluded that the Companys internal control over financial reporting was not effective as of March 26, 2011. Management has also concluded that our disclosure controls and procedures were not effective at the
reasonable assurance level as of March 26, 2011 because of the material weakness in internal control over financial reporting that has been identified.

Consequently, we may be unable to report properly or timely our financial results and we may be unable to properly or timely meet our reporting obligations under the Exchange Act. We are currently in the
process of remediating the material weakness we have identified. Any material weakness or unsuccessful remediation could affect investor confidence in the accuracy and completeness of our consolidated financial statements and our Exchange Act
reporting. This could also materially and adversely affect our business, our strategic alternatives, our financial condition and the market value of our securities. In addition, perceptions of us among customers, lenders, investors, securities
analysts and others could also be adversely affected. Our current material weakness or any weaknesses or deficiencies identified in the future could also hurt confidence in our business and the accuracy and completeness of our consolidated financial
statements and Exchange Act reports, and adversely affect our ability to do business.

We can give no assurances that the measures we have
taken to date, or any future measures we may take, will remediate the material weakness we have identified or that any additional material weaknesses will not arise in the future due to our failure to implement and maintain adequate internal control
over financial reporting. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or ensure the fair and accurate presentation of
our consolidated financial statements included in our periodic reports filed with the SEC or to ensure that the reports we file or submit under the Exchange Act are timely and accurate.

Our competitive position depends on maintaining our intellectual property protection.

Our
ability to compete depends, in part, on our ability to protect our proprietary discoveries and technologies through obtaining and enforcing intellectual property rights, including patent rights, copyrights, trade secrets, and trademarks, and
operating without infringing the intellectual property rights of others. Our ability to obtain patent protection for the inventions we make, including those relating to novel methods of diagnosing and/or treating diseases, is uncertain. The
patentability of these and other types of biotechnology inventions involves complex factual, scientific, and legal questions. As a result, it is difficult to predict whether patents will issue or the breadth of claims that will be allowed in
biotechnology patents. This may be particularly true with regard to the patenting of gene sequences, gene functions, genetic variations and methods of diagnosis of disease based on genetic variations. Certain types of gene patents have recently been
invalidated in a lawsuit filed by public interest groups. Future changes in policies or laws, or interpretations of these policies or laws, relevant to the patenting of biotechnology inventions could harm our patent position in the U.S. or other
countries. Opposition to the protection of these inventions in the U.S. or other countries could result in stricter standards for obtaining or enforcing biotechnology patent rights.



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In some instances, patent applications in the U.S. are maintained in secrecy until a patent issues. In most
instances, the content of U.S. and international patent applications is made available to the public approximately eighteen months after the initial filing from which priority is claimed. As a result, we may not be aware that others have filed
patent applications for inventions covered by our patent applications and may incorrectly believe that our inventors were the first to make the invention. Accordingly, our patent applications may be preempted or we may have to participate in
interference proceedings before the U.S. Patent and Trademark Office. These proceedings determine the priority of invention and the right to a patent for the claimed invention in the U.S. In addition, disputes may arise in the future with regard to
the ownership of rights to any invention developed with collaborators, which could result in delays in, or prevent, the development of related products.

We also rely on trade secret protection for our confidential and proprietary information and procedures, including procedures related to sequencing genes and to searching and identifying important regions
of genetic information. We protect our trade secrets through recognized practices, including access control, confidentiality and non-use agreements with employees, consultants, collaborators and customers, and other security measures. These
confidentiality and non-use agreements may be breached, however, and we may not have adequate remedies for a breach. In addition, our trade secrets may otherwise become known or be independently developed by competitors. Accordingly, it is uncertain
whether our reliance on trade secret protection will be adequate to safeguard our confidential and proprietary information and procedures.

Following the split-off from Life Technologies, Life Technologies may compete with us in our diagnostics business directly or enable others to compete
with us by providing them access to its intellectual property, reagents, instruments and technologies.

Life Technologies reagent and
clinical laboratory testing service business in human diagnostics was historically operated exclusively through Celera. As a result, Life Technologies has not competed with us in this business, nor was it permitted to enable others to compete with
us in the business by providing them access to its intellectual property, reagents, and technologies. Since the split-off, Life Technologies may directly compete with us or enable others to compete with us in human diagnostics, except that for a
period of three years following the July 1, 2008 split-off date, Life Technologies, subject to specified exceptions, is restricted in its ability to supply any reseller with capillary electrophoresis sequencers for commercialization of human
diagnostic tests outside of Asia, Africa, the Middle East and South America, nor is it able to itself commercialize these tests anywhere in the world for the same three year period. In addition, Life Technologies is restricted from supplying any
third-party reseller with real-time instruments for use in the human in vitro diagnostics, or HIVD, field, unless the third party has obtained a license to Life Technologies real-time intellectual property in the field, although the third
party cannot commercialize human diagnostic tests for specified conditions on these instruments for three years following the split-off date. Competition from Life Technologies in all other areas of our business may limit our success in expanding
our product offerings into new areas and disease indications.



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The restrictions on Life Technologies described above do not apply to the commercialization of an existing
competing product (as specifically defined in the operating agreement between us and Life Technologies) acquired as part of an acquisition of a third party by Life Technologies, nor do they prohibit an acquiror of Life Technologies from continuing
to commercialize an existing competing product following an acquisition. Accordingly, Life Technologies is not prohibited from continuing to commercialize existing competing products commercialized by Invitrogen prior to the Applied
Biosystems/Invitrogen merger. We understand that Life Technologies has high resolution HLA typing products that might be characterized as existing competing products. In addition, Life Technologies may have existing competing products, that we are
not aware of, that may not be subject to the restrictions described above.

The allocation of intellectual property rights between Life
Technologies and us in connection with the split-off may harm our business.

Prior to the split-off from Life Technologies, we had access
to all intellectual property owned or licensed by Life Technologies for use in the human diagnostics field. Under the separation agreement with Life Technologies, intellectual property developed by Celera or used primarily in our business was
transferred to us on or prior to the split-off date. However, some intellectual property currently used in substantially all of our diagnostic products is also used by Life Technologies and has been retained by Life Technologies. All intellectual
property that has been retained by Life Technologies and that is used in our diagnostic products is being made available to us through a master purchase agreement with Life Technologies. The early termination or failure to comply with the terms of
the master purchase agreement or an increase in the prices for these goods and services after its expiration could harm our business. Also, we may need to obtain additional licenses from third parties for rights that were not transferred to us from
Life Technologies. Our inability to obtain these licenses or to obtain these licenses on commercially acceptable terms could affect our ability to develop and sell some of our diagnostic products. Any change to our product development or production
activities could harm our operating results and financial condition.

The negotiation of the split-off agreements between us and Life
Technologies were effected through discussions among Life Technologies employees, some of whom, following the split-off, became our employees but some of whom did not and may have remained as employees of Life Technologies, and without involvement
in, or review of, the agreements by independent outside advisors to us or an independent Board of Directors of Celera.

Celera Corporation
was formed to effect the split-off and has only operated as an independent company with an independent Board of Directors and independent advisors since July 1, 2008. The split-off agreements between us and Life Technologies were negotiated
through discussions among Life Technologies employees, some of whom, following the split-off, became our employees but some of whom did not and may have remained as employees of Life Technologies, and without review by independent advisors to, or an
independent Board of Directors of, our Company. Accordingly, the agreements may not reflect terms that would be as favorable to us as would have been negotiated by us if we had been an independent company or had been allowed access to independent
advisors.

We may be required to record additional impairment of our long-lived assets, including goodwill and other intangible assets, and
these impairment charges would adversely affect our operating results.

As of March 26, 2011, we had $116.3 million of goodwill
on our balance sheet. This amount primarily represents the remaining excess of the total purchase price of our acquisitions over the fair value of the net assets acquired. At March 26, 2011, we also had $88.0 million of intangible assets,
net on our balance sheet. As a result of a combination of factors, including broad economic pressures, and the effects of changing business conditions, an interim impairment review for goodwill and long-lived assets was triggered during 2009,
resulting in a charge of $15.7 million. Our stock price is a significant factor in assessing our fair value for purposes of the goodwill impairment assessment. If our market capitalization remains below our carrying value for a sustained period, we
may determine that our long-lived assets are further impaired. Valuation of our long-lived assets requires us to make assumptions including forecasted revenue and operating costs, discount rates and other variables. These and other assumptions are
used to forecast future cash flows. If actual market conditions differ or our forecasts change, we may be required to assess long-lived assets and could record an additional impairment charge. If we are required to record an additional impairment
charge relating to goodwill or long-lived assets, such charges could harm our business, financial condition and results of operations.



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We have incurred losses since our split-off from Life Technologies, and we may never achieve or maintain
profitability.

For the years ended December 25, 2010 and December 26, 2009, and for the six months ended December 27, 2008,
we had net losses of $24.6 million, $25.0 million and $23.2 million, respectively. Since our split-off from Life Technologies in July 2008, we have consistently sustained operating losses. We expect to incur additional losses in the
future, and we may never be profitable. Our ability to achieve profitability will depend upon numerous factors, including third-party payor reimbursement rates and practices, market acceptance of our products, macroeconomic conditions,
healthcare reform, competition, and our ability to protect our intellectual property rights, among other things. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual
basis. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.

We may become
involved in expensive intellectual property legal proceedings.

There has been substantial litigation and other legal proceedings regarding
patents and other intellectual property rights relevant to diagnostic and biotechnology products and services. The intellectual property rights of biotechnology companies, including those held by us, are generally uncertain and involve complex
factual, scientific, and legal questions. Our success in diagnostic product development, clinical laboratory testing, and therapeutic target discovery may depend, in part, on our ability to operate without infringing the intellectual property rights
of others and our ability to prevent others from infringing our intellectual property rights. Also, contractual disputes related to existing license rights to patents owned by others may affect our ability to develop, manufacture, and sell our
products and clinical laboratory testing services.

We may initiate proceedings at the U.S. Patent and Trademark Office to determine our
patent rights with respect to others. Also, we may initiate patent litigation to enforce our patent rights or invalidate patents held by others. These legal actions may similarly be initiated against us by others alleging that we are infringing
their rights. The cost to us of any patent litigation or proceedings, even if we are successful, could be substantial, and these legal actions may absorb significant management time. Even if we are successful on the merits in any such proceeding,
the cost of these proceedings could harm our operating results and financial condition.

If infringement claims against us are resolved
unfavorably to us, we may be enjoined from manufacturing or selling our products or services without a license from a third party, and we may not be able to obtain a license on commercially acceptable terms, or at all. Also, we could become subject
to significant liabilities to others if these claims are resolved unfavorably to us. Similarly, our business could be harmed and we could be subject to liabilities because of lawsuits brought by others against Abbott Laboratories, who serves as the
exclusive distributor for most of our diagnostic products, and from whom we obtain royalties for sales of certain of their molecular diagnostic products.



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We have a dispute with Life Technologies concerning the tax matters agreement entered into in connection
with our separation from Life Technologies.

We believe that Life Technologies has materially breached the tax matters agreement entered
into in connection with the split-off by eliminating a tax asset transferred to us. Other disputes may arise in connection with the parties obligations under the split-off agreements. Any legal proceedings on these matters may be expensive,
take significant time and divert managements attention from other business concerns.

We rely on independent healthcare providers,
laboratories, and others to collect and process patient specimens.

We have a limited internal network of BHL employees and contractors who
are able to collect blood specimens for us. We rely on independent healthcare providers and other clinical laboratories to collect and send to our laboratory for testing most of our clinical laboratory specimens and the information required for
proper billing. If we are unable to obtain or maintain needed collection and processing services, we would be unable to obtain patient samples for testing, which would harm our operating results and financial condition.

Some of our diagnostic research and product development programs require access to human tissue and/or blood samples, other biological materials, and
related information, which may be in limited supply.

We may not be able to obtain or maintain access to human tissue, blood and other
biological materials and information on acceptable terms, or may not be able to obtain needed consents from individuals providing tissue, blood, or other samples. In addition, government regulation in the U.S. and foreign countries could result in
restricted access to, or use of, human tissue or blood samples or other biological materials. For example, the European Union Directive on Data Protection may restrict our access to human samples and related clinical data from countries of the
European Union if we are not able to meet the required standard of privacy protection. If we lose access to sufficient numbers or sources of tissue or blood samples or other required biological materials, or if tighter restrictions are imposed on
the use of related clinical or other information or information generated from tissue or blood samples or other biological materials, these research and development programs and our operating results and financial condition could be harmed. Also,
the supply by Life Technologies of some goods and services used in our business is governed by the terms of the master purchase agreement we entered into at the split-off date, and Life Technologies no longer provides us with exclusive access to
these goods and services. These differences may harm our operating results and financial condition.

If the split-off is determined to be
taxable for U.S. federal income tax purposes, we and our stockholders could incur significant income tax liabilities, and we could be required to indemnify Life Technologies for taxes.

On June 18, 2008, Life Technologies received a tax opinion from Skadden, Arps, Slate, Meagher & Flom LLP to the effect that the split-off, together with certain related transactions
necessary to effectuate the split-off, (i) should qualify under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code as an exchange that is tax-free to the Celera Group tracking stock holders, although in light of the then pending
Invitrogen/Applied Biosystems merger there is a significant risk that the Internal Revenue Service (IRS) and a court could conclude to the contrary, and (ii) will be tax-free to Celera. The opinion relies on certain facts, assumptions,
representations and undertakings, including those relating to the pre or post split-off activities of Life Technologies and Celera. Actions taken by Life Technologies or us that are inconsistent with such facts, assumptions, representations or
undertakings could result in the split-off being treated by the IRS as a taxable transaction. The IRS is not bound by the opinion and could determine that the split-off should be treated as a taxable transaction if it determines that any of these
facts, assumptions, representations or undertakings is not correct or has been violated by either Celera or Life Technologies as a result of pre or post split-off activity, or if it disagrees with the conclusions in the opinion.



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If the split-off fails to qualify for tax-free treatment, Life Technologies would be subject to tax as if it
had sold the Celera Corporation common stock in a taxable sale at fair market value, and our initial public stockholders, the former holders of Celera Group tracking stock whose stock was redeemed in exchange for shares of our common stock in the
split-off, should recognize either (A) gain or loss equal to the difference between the fair market value of the shares of Celera Corporation common stock received and the holders tax basis in the Celera Group tracking stock redeemed in
exchange for the shares of Celera Corporation common stock or (B) in certain circumstances, a distribution equal to the fair market value of the shares of Celera Corporation common stock received, which should be taxed (i) as a dividend to
the extent of such holders pro rata share of Life Technologies current and accumulated earnings and profits, then (ii) as a non-taxable return of capital to the extent of such holders tax basis in the Celera Group tracking
stock redeemed, and finally (iii) as capital gain with respect to the remaining value. Under the tax matters agreement between Life Technologies and us, we would generally be required to indemnify Life Technologies against any tax resulting
from the exchange if the tax resulted from:



| |  |  | an issuance of our equity securities, a redemption of our equity securities, or our involvement in other acquisitions of our equity securities,
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | other actions or failures to act by us, or
| | - |  | ------------------------------------------



| |  |  | any of our representations or undertakings being incorrect and violated.
| | - |  | ------------------------------------------------------------------------

Our indemnification obligations to Life Technologies and its subsidiaries, officers and directors are not limited by any maximum amount. If we are required to indemnify Life Technologies or any other
person under the circumstances set forth in the tax matters agreement, we may be subject to substantial liabilities.

We conduct our
clinical laboratory testing business in a heavily regulated industry and changes in regulations or violations of regulations could, directly or indirectly, harm our operating results and financial condition.

The clinical laboratory testing industry is highly regulated and there can be no assurance that the regulatory environment in which we operate will not
change significantly and adversely in the future. Areas of the regulatory environment that may affect our ability to conduct business include, without limitation:



| |  |  | federal and state laws applicable to billing and claims payment;
| | - |  | ----------------------------------------------------------------



| |  |  | federal and state laboratory anti-mark-up laws;
| | - |  | -----------------------------------------------



| |  |  | federal and state anti-kickback laws;
| | - |  | -------------------------------------



| |  |  | federal and state false claims laws;
| | - |  | ------------------------------------



| |  |  | federal and state self-referral and financial inducement laws, including the federal physician anti-self-referral law, or the Stark Law;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | coverage and reimbursement levels by Medicare and other governmental payors and private insurers;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | federal and state laws governing laboratory licensing and testing, including CLIA;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | federal and state laws governing the development, use and distribution of diagnostic medical tests known as laboratory-developed tests or
LDTs;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Health Insurance Portability and Accountability Act of 1996, or HIPAA, along with the revisions to HIPPA as a result of the HITECH Act, and
analogous state laws;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | federal, state and foreign regulation of privacy, security, electronic transactions and identity theft;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | federal, state and local laws governing the handling and disposal of medical and hazardous waste;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | Occupational Safety and Health Administration rules and regulations;
| | - |  | --------------------------------------------------------------------



| |  |  | changes to laws, regulations and rules as a result of the PPACA; and
| | - |  | --------------------------------------------------------------------



| |  |  | changes to other federal, state and local laws, regulations and rules, including tax laws.
| | - |  | ------------------------------------------------------------------------------------------



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These laws and regulations are extremely complex and in many instances, there are no significant regulatory
or judicial interpretations of these laws and regulations. Any determination that we have violated these laws or regulations, or the public announcement that we are being investigated for possible violations of these laws or regulations, could harm
our operating results and financial condition. In addition, a significant change in any of these laws or regulations may require us to change our business model in order to maintain compliance with these laws or regulations, which could harm our
operating results and financial condition.

Our clinical laboratory testing services are subject to federal and state anti-kickback and
anti-referral laws and regulations.

Federal and state anti-kickback laws prohibit payment, or offers of payment, in exchange for referrals
of products and services for which reimbursement may be made by Medicare or other federal and state healthcare programs. Some state laws contain similar prohibitions that apply without regard to the payor of reimbursement for the services. Federal
and state anti-referral laws, including the Stark Law, prohibit physicians from referring their Medicare or other federally funded healthcare program patients or specimens to healthcare providers with which the physicians or their immediate family
members have a financial relationship involving some types of health services. The financial relationships covered by these prohibitions include clinical laboratory services such as those provided by BHL. Some state laws also contain similar
prohibitions that apply without regard to the payor of reimbursement for the services.

Federal officials responsible for administering and
enforcing the healthcare laws and regulations have made a priority of eliminating healthcare fraud. While we seek to conduct our business in compliance with all applicable laws and regulations, many of the laws and regulations applicable to our
business, particularly those relating to billing and reimbursement of tests and those relating to relationships with physicians, hospitals and patients, contain language that has not been interpreted by courts. We must rely on our interpretation of
these laws and regulations based on the advice of our counsel, and regulatory or law enforcement authorities may not agree with our interpretation of these laws and regulations and may seek to enforce legal remedies or penalties against us for
violations. From time to time we may need to change our operations, particularly pricing or billing practices, in response to changing interpretations of these laws and regulations or regulatory or judicial determinations with respect to these laws
and regulations. These occurrences, regardless of their outcome, could damage our reputation and harm important business relationships that we have with healthcare providers, laboratories, and others. Furthermore, if a regulatory or judicial
authority finds that we have not complied with applicable laws and regulations, we would be required to refund amounts that were billed and collected in violation of such laws and regulations. In addition, we may voluntarily refund amounts that were
alleged to have been billed and collected in violation of applicable laws and regulations. In either case, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare programs and the loss
of licenses, certificates and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could harm our operating results and financial condition. Moreover, regardless of the outcome, if we
or physicians or other third parties with whom we do business are investigated by a regulatory or law enforcement authority we could incur substantial costs, including legal fees, and our management may be required to divert a substantial amount of
time to an investigation.



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Our clinical laboratory testing service business is subject to HIPAA and other laws and regulations
pertaining to privacy and security.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its related privacy and
security regulations establish federal standards governing the use and disclosure of certain individually identifiable health information, which is referred to as protected health information, or PHI. We are also subject to state privacy and
security laws that in some cases impose more stringent requirements than HIPAA and its related regulations. In addition, we must comply with the laws of other countries that regulate the transfer of healthcare data relating to citizens of those
countries. HIPAA, as well as state and foreign privacy and security regulations, provide for significant fines and other penalties for the wrongful use or disclosure of PHI, including potential civil and criminal fines and penalties. Although HIPAA
and the related regulations do not expressly provide for a private right of action, we also could incur damages under state and foreign laws to individuals claiming that we wrongfully used or disclosed their confidential health information or other
private personal information.

In February 2009, President Obama signed into law economic stimulus legislation known as the American
Recovery and Reinvestment Act of 2009 (ARRA). Title XIII of the ARRA, also known as the Health Information Technology for Economic and Clinical Health (HITECH) Act, contains extensive revisions to HIPAA. The changes to HIPAA include new
restrictions on the use of PHI without an individuals written authorization, a new requirement to account for routine disclosures of PHI held in an electronic health record, a requirement to notify individuals of breaches to their PHI, new
rights of a state attorney general to enforce HIPAA violations, extension of certain HIPAA privacy and security law provisions and penalties to business associates of covered entities, and significantly increased penalties for violations of the law.
These changes are significant and have required, and will continue to require, investment and management attention. In addition, since several of the provisions contemplate future adoption of implementing regulations, we cannot at this time
determine the full extent to which these changes will impact our business, or how much it will cost us to comply in total.

Certain of our
specialized diagnostic tests take advantage of the laboratory-developed test exception from FDA review and any changes to the FDAs policies with respect to this exception could adversely affect our operating results and financial
condition.

A number of esoteric tests that are developed and validated internally at BHL are offered as laboratory developed tests, or
LDTs. The FDA maintains that it has authority to regulate the development and use of LDTs as diagnostic medical devices under the Federal Food, Drug and Cosmetic Act but to date has decided not to exercise its authority with respect to
most LDTs performed by high complexity CLIA-certified laboratories as a matter of enforcement discretion. A portion of BHLs diagnostic tests are LDTs for which it has not obtained FDA premarket clearance or approval. The FDA regularly
considers the application of additional regulatory controls over the sale and use of ASRs and the development and use of LDTs by laboratories such as ours. Further, the FDA has been petitioned to exercise regulatory authority over certain LDTs and
to initiate enforcement action against companies that make effectiveness claims about LDTs that are without sufficient analytical and clinical support. Based on recent comments, the FDA is looking at the sale and use of LDTs with heightened scrutiny
and has announced its intent to modify its regulatory approach with respect to LDTs. In a meeting notice for a public meeting on LDTs held in July 2010, FDA cited a variety of safety concerns related to current LDTs, noting that the tests have
become increasingly complex and utilized for significant medical decisions. As a result, FDA stated it would be considering a risk based regulatory framework for all LDTs. Following the public comment period which ended in September 2010, and
further input from the laboratory industry and other interested parties, FDA is expected to issue a guidance document or documents on the regulation of LDTs. The FDA has recently sent letters to a number of companies that offer direct-to-consumer
LDTs for genetic markers asking these companies to explain why they do not need FDA clearance for their products. We do not offer direct-to-consumer LDTs, however, if FDA regulation of LDTs increases or if regulation of the various medical devices
used in laboratory-developed testing ensues, it would lead to an increased regulatory burden, which may prevent or hinder us from marketing current products or services and developing new products or services, and could harm our operating results
and financial condition.



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There is a high demand for, and short supply of, key personnel needed for our clinical laboratory testing
services.

Our existing clinical laboratory services operations require individuals who are licensed as Clinical Laboratory Scientists in
the State of California. We must continue to attract and retain these licensed Clinical Laboratory Scientists. There is a shortage of licensed Clinical Laboratory Scientists in the State of California, and we compete for these personnel with
hospitals, other clinical laboratories, and other healthcare providers. Licensed Clinical Laboratory Scientists may prefer to work for these other organizations either because of the compensation offered, the reputations of the organizations, or
other personal considerations. If we are unable to attract and retain a sufficient number of licensed Clinical Laboratory Scientists, the current operations of our clinical laboratory testing business could be harmed and the future growth of these
services could be delayed or prevented.

A portion of our workforce has unionized, and our operations may be adversely affected by
increased labor costs, work stoppages or strikes.

On February 16, 2010, our clinical laboratory scientists (21 employees) elected to
be represented by the Office & Professional Employees International Union, Local 29. We are in the process of negotiating with the union for the terms of a collective bargaining agreement. The outcome of the negotiations may not be
favorable to us. We may reach agreements in collective bargaining that increase our operating expenses and harm our operating results as a result of higher wages or benefits expenses. In addition, negotiations could divert management attention and
disrupt operations, which may adversely affect our operating results. If we are unable to negotiate a satisfactory collective bargaining agreement, we could be involved in a labor dispute or strike that could lead to a shutdown in BHLs
clinical laboratory and harm our operating results and financial condition.

We rely on single suppliers or a limited number of suppliers
of instruments, key components of our products and a test kit used in our clinical laboratory testing services.

Several key components of
our diagnostic products and a test kit used in our clinical laboratory testing services come from, or are manufactured for us by, a single supplier or a limited number of suppliers, including Life Technologies. Key components of our diagnostic
products include enzymes, fluorescent dyes, phosphoramidites, and oligonucleotides. We acquire some of these and other key components on a purchase-order basis, meaning that the supplier is not required to supply us with specified quantities over
any set period of time or set aside part of its inventory for our forecasted requirements. We have not arranged for alternative supply sources for some of these components should suppliers become unable to meet our demand or become unwilling to do
so on terms that are acceptable to us. It may be difficult, if not impossible, to find alternative suppliers, especially to replace enzymes, fluorescent dyes, phosphoramidites, and oligonucleotides. In addition, we rely on single source suppliers,
particularly Life Technologies, to provide instruments, associated software, and consumables for use in our Products business.



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If any of the components of our products or any of the kits used for our laboratory testing services are no
longer available in the marketplace, or are not available on commercially acceptable terms, we may be forced to further develop our products or testing services to use alternative components or test kits or discontinue the products or testing
services. Changes in our products or services or the use of new components may require us to seek new regulatory clearances, approvals or licenses and may be costly.

Our success will depend on our ability to retain our key employees.

One of our primary
assets is our highly skilled personnel. These personnel could leave us and thereby deprive us of the skill and knowledge essential for performance of our existing and new business. The overall level of benefits and compensation offered to employees
of Celera may be less than that of our competitors. If any of our key personnel leaves, it could harm our operating results and financial condition. This is particularly true with respect to key employees leaving our employment and joining a
competitor.

Ethical, legal, and social issues may decrease demand for our diagnostic products and clinical laboratory testing business.

Genetic testing has raised issues regarding confidentiality and the appropriate uses of the resulting information. For example, concerns
have been expressed regarding the use of genetic test results by insurance carriers or employers to discriminate on the basis of this information, resulting in barriers to the acceptance of genetic tests by consumers. These concerns could lead to
governmental authorities calling for limits on, or regulation of the use of, genetic testing or prohibiting testing for genetic predisposition to some diseases, particularly those that have no known cure. Were any of these scenarios to occur, it
could reduce the potential markets for our business and, therefore, harm our operating results and financial condition.

Our scientific
discoveries may not be replicated in studies by other investigators, which may negatively impact the acceptance of, or reimbursement for, our diagnostic products and testing services.

In nine previously published peer-reviewed articles on genetic studies of KIF6, including four prospective randomized clinical trials of statin therapy (CARE, WOSCOPS, PROSPER, and PROVE IT),
KIF6 carriers had greater risk for coronary heart disease (CHD) and received greater benefit from pravastatin therapy (or from high-dose atorvastatin compared with pravastatin in the PROVE IT trial) than did noncarriers. However, our
scientific discoveries of an association between KIF6 or certain other genetic variants and risk for disease or drug response may not be replicated in studies by other investigators. As examples, a publication in 2010 in the Journal of the
American College of Cardiology stated that the KIF6 gene variant did not associate with coronary artery disease, or CAD, or with nonfatal myocardial infarction in a combined analysis of 19 case-control studies and was accompanied by an
editorial that questioned the usefulness of KIF6 testing. Previously, a publication described a case control study (the Ottawa Heart Study) in which the KIF6 gene variant did not associate with CAD or with nonfatal myocardial
infarction in subjects with CAD. Two recent papers in peer-reviewed publications on the JUPITER clinical trial (Justification for use of Statins in primary Prevention, an Intervention Trial Evaluating Rosuvastatin) and the Heart Protection Study
(HPS), and two posters presented at the annual meeting of the American College of Cardiology in April 2011, provided new information relative to KIF6that differed in several important respects from the above-mentioned genetic studies. For
example, in March 2011, the Journal of the American College of Cardiology published a study of KIF6 in the HPS that compared simvastatin versus placebo in patients with prior cardiovascular disease, noncoronary vascular disease,
diabetes, or hypertension. In HPS, KIF6 carriers received a significant reduction of both major coronary and stroke events from simvastatin therapy and noncarriers did not receive a significant reduction in stroke events. However, in contrast
to previous genetic studies, KIF6 noncarriers treated with simvastatin had significantly reduced cardiovascular events. Like the HPS results, the JUPITER results suggested that KIF6 carriers do not receive preferential cardiovascular
event reduction from treatment with every statin.

Non-replication might be due to a variety of reasons including studies of different design,
studies that enroll different types of patients, or studies that compare different drugs. Other reasons include: studies that are statistically under-powered to find such an association; limitations common to case-control studies, such as the
absence of fatal myocardial infarctions in cases; analysis of a different clinical phenotype (such as coronary stenosis in CAD, or non-coronary vascular events in MVE) than was done in prior studies; the absence of clinical information on underlying
drug use in the case control patients; statin treatment of all HPS subjects during the run-in phase and statin use in the placebo arm; and potentially different effects of different statins on KIF6 noncarriers. Reports on non-association
or non-replication, and other negative press regarding our diagnostic products and testing services, whatever the cause, may negatively affect the acceptance of our diagnostic products and testing services by the medical community, customers and
regulators, and could harm our operating results and financial condition.



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Our business could be adversely impacted by CMSs adoption of new coding for molecular genetic
tests.

A substantial number of our molecular diagnostic tests require multiple CPT codes for billing purposes. In October 2010, the
American Medical Association CPT Editorial Panel approved 27 new analyte specific codes (and are considering approximately 100 additional codes in 2011) to describe several molecular genetic tests that currently require multiple CPT codes for
billing purposes. The new codes could replace the current codes for payors, including Medicare, beginning January 1, 2012. Reimbursement levels for the new codes have yet to be determined. If reimbursement levels for the new codes do not
recognize the value of the molecular genetic tests, or codes cannot be secured for our molecular genetic tests, our operating results and financial condition could be harmed.

Our clinical laboratory testing service business could be adversely impacted by CMSs adoption of the new coding set for diagnoses.

CMS has adopted a new coding set for diagnosis, commonly known as ICD-10, which significantly expands the coding set for diagnoses. The new coding set is currently required to be implemented by
October 1, 2013. We may be required to incur significant expense in implementing the new coding set, and if we do not adequately implement it, our business could be adversely impacted. In addition, if physicians fail to provide appropriate
codes for desired tests as a result of the new coding set, we may not be reimbursed for such tests.

We need to maintain federal and state
operating licenses and similar clearances to conduct our clinical laboratory testing.

BHLs clinical laboratory, located in Alameda,
California, is regulated by the Clinical Laboratory Improvement Amendments of 1988, or CLIA. CLIA is a federal law that regulates clinical laboratory testing performed on specimens derived from humans for the purpose of providing information for the
diagnosis, prevention, or treatment of disease. CLIA is intended to ensure the quality and reliability of clinical laboratory testing in the United States. BHLs CLIA certification requires BHLs clinical laboratory to be inspected every
other year by inspectors from the College of American Pathologists (CAP) in addition to being subject to other random inspections. BHLs clinical laboratory is also subject to license requirements imposed by the State of California. California
laws establish quality standards for day-to-day operation of the clinical laboratory, including the training and skills required of personnel and quality control. BHLs California and New York state licenses require periodic inspections by the
state laboratory licensing authorities. If a CAP or state inspector finds deficiencies, that finding could lead to the revocation or suspension of, or limitations being placed upon, BHLs CLIA accreditation or California, New York, or other
state licenses. Any revocation, suspension, or limitation of any licenses could prevent BHL from performing all or some of its clinical laboratory testing services and could harm our operating results and financial condition.



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We no longer have early access to Life Technologies instrumentation, reagents, and technologies for
use in our diagnostic products and services.

Prior to the split-off from Life Technologies, we had access to Life Technologies
instrumentation, reagents and technologies before they were made available to unaffiliated third parties. This early access provided a competitive advantage to us in developing our products business. After the split-off, our business relationship
with Life Technologies is similar to that of any other customer. This change in access to new technologies could harm our competitive position.

We do not manufacture the instruments used for our diagnostics products and thus are reliant on third parties for their supply. Life Technologies is the manufacturer of the instruments used to perform
certain of our tests including our ViroSeq® HIV-1 Genotyping System and HLA products. The instruments supplied
by Life Technologies are Research Use Only instruments. The FDA now requires that diagnostic products such as these be submitted as systems that include an IVD instrument. We have been in discussions with Life Technologies and other parties for
access to a next generation capillary electrophoresis sequencing instrument that may be developed under requirements needed to achieve FDA clearance or approval for our HLA sequencing products as well as new and next-generation sequencing products
for U.S. commercialization. We have not reached agreement on this matter and may not in the future. Failure to reach agreement with Life Technologies on access to a suitably developed instrument and the required documentation to support an FDA
submission for such products, or another instrument manufacturer with a suitable instrument or that is willing to work with us, could lead to our inability to sell such products that run on capillary electrophoresis sequencing instruments in the
U.S.

The historical financial information of Celera prior to our split-off from Life Technologies may not be representative of our results
as an independent entity, and, therefore, may not be reliable as an indicator of our historical or future results as an independent entity.

The historical financial information for the year ended June 30, 2008 included in our Annual Report on Form 10-K for the year ended December 25,
2010 filed with the SEC on March 18, 2011, may not reflect what our results of operations, financial position and cash flows would have been had we been an independent entity during the period. This is because, in part, the financial
information reflects allocations for services provided to Celera by Life Technologies. These allocations may not reflect the costs we incur for similar or incremental services as an independent entity.

We could encounter difficulties if we were to expand our diagnostic product manufacturing and clinical laboratory testing services.

If there were a substantial increase in the demand for our products or services, we would have to increase the capacity of our facilities or establish
alternate manufacturing or service arrangements with other companies. We may not be able to effectively manage large increases in capacity. In addition to the difficulties that are inherent in the expansion, development, or acquisition of new
facilities, our operations are government regulated and any facility expansion or acquisition would require regulatory approvals, clearances or licenses and/or would need to meet standards specified in applicable laws and regulations. Facilities
used for clinical laboratory testing services are subject, on an ongoing basis, to federal and state regulation under CLIA and California, New York, and other state laws and regulations, which is described above in these risk factors. Also, our
diagnostic product manufacturing facilities are subject, on an ongoing basis, to the FDAs Quality System Regulation, international quality standards and other regulatory requirements, including requirements for good manufacturing practices,
and the State of California Department of Health Services Food and Drug Branch requirements. We may encounter difficulties expanding our diagnostic product manufacturing operations or our laboratory testing services in accordance with these
regulations and standards, which could result in a delay or termination of product manufacturing or laboratory testing services.



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Our business may be harmed by any disruption to our computer hardware, software, and internet
applications.

Our business requires manipulating and analyzing large amounts of data, communicating the results of the analysis to our
internal research personnel and our collaborators via the internet and tracking and communicating the results, via the internet and other modalities, of the tests performed by our clinical laboratory testing business. Also, we rely on a global
enterprise software system to operate and manage our business. Our business, therefore, depends on the continuous, effective, reliable, and secure operation of our computer hardware, software, networks, internet servers, and related infrastructure.
To the extent that our hardware or software malfunctions or there is an interruption in internet service in a way that affects access to our data by our accounting and billing departments, internal research personnel or collaborators, or access to
our laboratory testing results by referring professionals or patients, our operating results and financial condition could be harmed.

Our
computer and communications hardware is protected through physical and software safeguards. However, it remains vulnerable to fire, storm, flood, power loss, earthquakes, telecommunications failures, physical or software break-ins, software viruses,
and similar events. If we fail to maintain the necessary computer capacity and data to support our accounting and billing departments and our collaborators and licensees discovery, research, and development activities, including our
associated computational needs, we could experience a loss of or delay in revenues. In addition, any sustained disruption in Internet access provided by other companies could harm our operating results and financial condition.

Our rights under the split-off agreements we have with Life Technologies may be less favorable to us than if we had remained a business segment of
Life Technologies and the terms of the master purchase agreement we have with Life Technologies may be less favorable to us than if it had been negotiated with an unaffiliated third party.

The terms of the split-off agreements we have with Life Technologies may be less favorable to us than if we remained part of Life Technologies. For example, some of the intellectual property rights are
being made available to us on a non-exclusive basis through the master purchase agreement, which also covers materials currently provided to us by Life Technologies used in our products and services and research and development, as well as future
Life Technologies materials. The master purchase agreement provides for price increases for materials and components during each year of the agreement after the one year anniversary subject to a combination of the Producer Price Index and Employment
Cost Index. This could result in us paying more for these products than if we remained part of Life Technologies. In addition, Life Technologies has licensed to us specified intellectual property rights which we and Life Technologies may license to
various third parties in the human in vitro diagnostics field. Revenues from these third-party licenses will be shared equally between us and Life Technologies. This could result in us receiving less from these licenses than if we remained part of
Life Technologies.

In addition, we negotiated our split-off agreements, including our master purchase agreement, with Life Technologies. Had
these agreements been negotiated with unaffiliated third parties, their terms might have been more favorable to us.



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Our separation agreement with Life Technologies requires us to indemnify Life Technologies for specified
liabilities, including liabilities relating to the Celera business, specified litigation and one-half of any liabilities resulting from the split-off.

Under the terms of our separation agreement with Life Technologies, we have agreed from and after the split-off date to indemnify Life Technologies for indemnifiable losses relating to or resulting from,
among other things:



| |  |  | the failure to satisfy or otherwise discharge liabilities of Celera;
| | - |  | --------------------------------------------------------------------



| |  |  | our assets and liabilities;
| | - |  | ---------------------------



| |  |  | our failure to observe our obligations under the separation agreement or our other split-off agreements with Life Technologies from and after the
split-off date;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain actions pending on the split-off date or that may arise in the future, to the extent such actions are ultimately determined to relate to or
arise out of the Celera business, assets or liabilities;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | one-half of liabilities resulting from the split-off, the separation agreement and/or the registration statement filed in connection therewith; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | liabilities resulting from the oversight and/or management of the businesses and affairs of Life Technologies or one or both of Celera or Life
Technologies prior to the split-off, but only to the extent that such liabilities arise out of or relate to the businesses, assets or liabilities of Celera prior to the split-off or Celera benefited from such oversight and/or management prior to the
split-off,
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

in each case to the extent not covered by Life Technologies insurance. There is no limit on the maximum
amount of monetary damages for which we may be required to indemnify Life Technologies under the separation agreement. As a result, successful indemnification claims could harm our financial condition and results of operations.

Our clinical laboratory testing services depend primarily on a single courier for the delivery of our clinical specimens.

Substantially all patient specimens are sent by healthcare providers and other clinical laboratories to our clinical testing laboratory by an established
international overnight shipping service. We use overnight shipping because patient specimens are biological materials that can spoil if not tested on a timely basis after collection from a patient. Therefore, any interruption in shipping, even one
that is short in duration, could interfere with our services and harm our business. Our primary couriers shipping network relies on various modes of transportation, including trucks and airplanes. The transportation of specimens could
therefore be delayed or prevented by natural or man-made disasters or other events that interfere with these modes of transportation, including earthquakes, floods, power outages, inclement weather, and terrorism. If there is a delay in the delivery
of patient samples that are in-transit, we would have no way to prevent these samples from spoiling. Although there are other companies that provide similar overnight courier services, many of the circumstances that could interfere with our primary
couriers services likely would interfere with the services of other similar couriers. Additionally, we currently have a favorable pricing arrangement with our primary courier. This pricing arrangement is not guaranteed and may be subject to
unanticipated price changes. If we need to switch to a different courier because of circumstances that are unique to our primary courier or due to a change in our primary couriers pricing, it could take us several days or longer to establish
an agreement with a new courier, the shipping rates might not be as favorable to us, and our testing services would likely be interrupted. The inability to receive the specimens and perform our tests, even if only for a short period of time, or the
loss of specimens due to shipping delays, could interrupt our business and harm our reputation.



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Commercialization of our diagnostic products is dependent on our agreements with Abbott Molecular, Inc.,
and we could be harmed if Abbott or other distributors fail to perform under or terminate their agreements with us.

We
lack our own sales organization to sell our diagnostic products to unaffiliated clinical testing laboratories. Accordingly, we rely on the efforts of our distributor, Abbott Molecular, Inc., for the sales, promotion, and distribution of most
molecular diagnostic products manufactured by us. Our revenues under the agreements are dependent on Abbotts sales price to end-users, which may change over reporting periods. Our ViroSeq® HIV-1 Genotyping System, cystic fibrosis and HLA products are mature products that represent a majority of our product revenues. Current market conditions are leading
to pricing declines for these products that may not be offset by increased growth in the overall market or our ability to increase our market share for these products, resulting in declining revenue for these products. In addition, a majority of the
sales of our diagnostics products and Abbotts m2000 products are made outside the United States and are subject to foreign exchange effects. Changes in foreign exchange rates will have an effect on the revenue of Celera through both
product sales and the royalties we receive on m2000 product sales. Although these are long-term arrangements, the agreements contain provisions that could result in early termination if there is an uncured material breach of an agreement by
either party or upon specified insolvency events, among other matters. The amount and timing of resources to be devoted to sales activities by Abbott are generally not within our control. Failure by Abbott to devote sufficient resources to the
distribution of our products or the termination of a distribution agreement could harm our operating results and financial condition.

We
expect that other distribution and similar agreements we enter into in the future, if any, will have similar terms and limitations. Furthermore, even if these agreements contain commitments regarding commercialization activities, our distributors
may not perform their obligations as expected. If they terminate their agreements or otherwise fail to conduct their activities in a timely manner, or at all, the commercialization of our diagnostic products may be delayed or prevented. If we take
on the responsibility for commercializing our diagnostic products on our own or through a new distributor, we may be required to devote additional resources to such activities. Any reallocation of additional resources to product commercialization
may harm our operating results and financial condition.

Our successful development of diagnostic products may depend on entering into
other collaborations, alliances, and partnership arrangements with other companies.

Our strategy for the discovery, development, clinical
testing, manufacturing and/or commercialization of most of our diagnostic product candidates includes entering into collaborations and similar arrangements with other companies, in addition to our agreements with Abbott. Depending on the nature of
the product candidate, our potential collaborators may include pharmaceutical companies, clinical reference laboratories, diagnostic equipment suppliers, or other companies. We have identified some potential new collaborators, but have not yet
entered into any collaboration arrangements with them. Although we have expended, and continue to expend, time and money on internal research and development programs, we may be unsuccessful in creating diagnostic product candidates that would
enable us to form additional collaborations and alliances and, if applicable, receive milestone and/or royalty payments from collaborators. Other companies may not be interested in entering into these relationships with us, or may not be interested
in doing so on terms that we consider acceptable.



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Our licensing and royalty revenues depend on our licensees and partners maintenance of their
agreements with us and their sales of their products.

We derive revenues from our licensees and partners product sales under a
number of agreements. Such agreements include our royalty agreement with Abbott, our small molecule sale agreements and our intellectual property license agreements. In addition, we derive licensing revenues from intellectual property licensed from
Life Technologies to third parties in the human diagnostics field. Even if these licensees and partners perform their obligations as required by these agreements, their ability to develop, manufacture and commercialize products successfully is
uncertain. Since the royalties payable to us under these agreements generally depend on our licensees and partners sales of their products, which are not within our control, their failure in commercializing their products or maintaining
or increasing the sales volumes of their products may harm our operating results and financial condition. In addition, certain of these intellectual property license agreements permit our licensees to pay us an upfront license fee over a period of
time during which they have the right to terminate the agreements. In the event that a licensee terminates its license agreement before the upfront license fee is paid in full, we will not be paid any remaining license fee.

Our diagnostic product candidates may never result in a commercialized product.

Most of our diagnostic product candidates are in various stages of research and development and the ability to commercialize those product candidates, including through collaborators or licensees, is
uncertain. Development of existing product candidates will require significant additional research and development efforts by us or our collaborators or licensees before they can be marketed. For potential diagnostic products, these efforts include
extensive clinical testing to confirm the products are safe and effective and may require lengthy regulatory review and clearance or approval by the FDA and comparable agencies in other countries. Furthermore, even if these products are found to be
safe and effective and receive necessary regulatory clearances or approvals, they may never be developed into commercial products due to considerations such as inability to obtain needed licenses to intellectual property owned by others, market and
competitive conditions, and manufacturing difficulties or cost considerations. Our inability to produce commercialized products could harm our operating results and financial condition.

Development and commercialization of diagnostic product candidates depends on the satisfaction of regulatory requirements.

In the U.S., either we or our collaborators or licensees must show through pre-clinical studies and clinical trials that each of our or our collaborators or licensees diagnostic product
candidates is safe and effective for each indication before obtaining regulatory clearance or approval from the FDA for the commercial sale of that product as an in vitro diagnostic product with clinical claims. Outside of the U.S., the
regulatory requirements for commercialization vary from country to country. This regulatory review and approval process can take many years and require substantial expense and may not be successful. If we or our collaborators or licensees fail to
adequately show the safety and effectiveness of a diagnostic product candidate because, for example, the results from pre-clinical studies are different from the results that are obtained in clinical trials, regulatory clearance or approval could be
delayed or denied. Without regulatory clearance or approval, we or our collaborators or licensees may be unable to complete the development or commercialization of the product for which clearance or approval was sought. The inability of us or our
collaborators or licensees to commercialize products could harm our operating results and financial condition.



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In April 2011, the FDA sent a decision letter stating that the PMA application we submitted for our
KIF6 Genotyping Assay was not approvable without major amendment. The letter stated that the clinical data and peer-reviewed publications submitted in support of the PMA are insufficient to demonstrate the safety and effectiveness of the
device for its proposed intended use. Further, the FDA stated that it believes that the approach to demonstrate the safety and effectiveness of the KIF6 Genotyping Assay for the intended indications would be to collect additional data on
clinical utility, which could include conducting a prospective, randomized, controlled clinical trial. We have requested a meeting with the agency to discuss the deficiencies cited in the letter as well as next steps toward seeking approval of the
KIF6 Genotyping Assay. There can be no assurance that approval will be received, in which case we will not be able to sell the KIF6 Genotyping Assay as an in vitrodiagnostic product.

The FDA has issued an interpretation of the regulations governing the sale of ASRs which could prevent or delay our or our collaborators or
licensees sales of these products and make development of new ASR products more difficult, all of which could harm our operating results and financial condition. We believe that all of our current ASR products, other than our HLA ASR products,
meet the regulatory definition of an ASR, as set forth in the FDA guidance document. Our products sold as ASRs include products for HLA, Fragile X, KIF6, ApoE, Chromosome 9p21, LPA, Cytochrome 2C19 and deep vein thrombosis. We
similarly believe that all of the ASR products manufactured and sold by Abbott for which Abbott pays us royalties meet the regulatory definition of an ASR, as set forth in the FDA guidance document. If the FDA does not agree with our interpretations
of our ASR products, we may need to establish an appropriate action plan for any affected product, such as reconfiguring the product to bring it into compliance with the ASR definition or seeking clearance pursuant to Section 510(k) of the
FFDCA.

In June 2008, the FDA issued a letter that stated that the FDA might employ enforcement discretion to the sale of ASR
products that did not meet the regulatory definition of an ASR, if a manufacturer met with the FDA and developed an approved plan to bring the products into compliance by reconfiguring the product or seeking the appropriate registration. We
applied for and received assurance of such enforcement discretion for the sale of our HLA ASR products from the FDA, while working with the FDA under a pre-IDE for registering the HLA products. In late July 2009, the FDA notified us
that it could no longer consider extending such enforcement discretion. Based on additional correspondence, the FDA has reinstated such enforcement discretion on a conditional basis pending additional meetings with the FDA.
We are actively assessing potential regulatory solutions; however, none may be available, requiring us to discontinue marketing the HLA ASRs. This discontinuation could be permanent and we would no longer receive any revenues from these
products and our business could be harmed.

Commercialization of our products depends on satisfaction of ongoing regulatory requirements.

The manufacture of our and our collaborators and licensees diagnostic products is subject to the FDAs Quality System
Regulation. Manufacturing problems with respect to any product, including non-compliance with this regulation, could result in withdrawal of regulatory clearance or approval for that product, and could also force us or our collaborators or licensees
to suspend manufacturing of, reformulate, conduct additional testing for, and/or change the labeling for, that product. This could delay or prevent us from generating revenues from the sale of any affected diagnostic product.

Clinical trials of diagnostic product candidates may not be successful.

Potential clinical trials of product candidates may not begin on time, may not be completed on budget or schedule, or at all, or may not be sufficient for registration of the products or result in
products that can receive necessary clearances or approvals. Numerous unforeseen events during, or as a result of, clinical testing could delay or prevent commercialization of our or our collaborators or licensees diagnostic product
candidates. Diagnostic product candidates that appear to be promising at early stages of development or early clinical trials may later be found to be unsafe, ineffective, or to have limited medical value. If we are unable to successfully complete
clinical trials for diagnostic product candidates, our operating results and financial condition would be harmed.



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We could be harmed by disruptions to our critical manufacturing, clinical laboratory, or other
facilities.

We have headquarters, research and development, manufacturing, administrative, and clinical laboratory facilities in Alameda
and South San Francisco, California and do not have alternative facilities or manufacturing or testing backup plans. Our California facilities are located near major earthquake faults. Although following the split-off we have purchased insurance
policies covering damages to our operations and facilities resulting from some natural disasters, including flooding, windstorm and lightning, the ultimate impact of disruptions caused by earthquakes, other natural disasters or weather-related
events, or other causes, such as acts of terrorism, on us, our significant suppliers, and the general infrastructure is unknown, and our operating results could be harmed if a major earthquake or other disaster occurs. In particular, all of our
laboratory testing services are performed at our clinical laboratory facility in Alameda and we do not have access to any backup facility should there be an interruption in operations due to earthquakes or other disasters. It would be expensive and
time consuming to repair or replace our laboratory facility or the equipment located at that facility. Furthermore, if operations at our Alameda facility are interrupted, it may be difficult and time-consuming for us to hire another company to
perform laboratory testing services, because we would need to find a laboratory that has the required state and federal licenses and would perform our testing services on terms and conditions that are acceptable to us. An earthquake or other
disaster could likewise harm our manufacturing capabilities. However, the impact of a manufacturing disruption would depend, in part, on factors such as customer demand and inventory levels of our products. Also, the repair or replacement of our
facility or equipment may require new regulatory approvals, clearances or licenses, which would further delay operations. A prolonged or sustained interruption in our facility or equipment could harm our operating results and financial condition.

We may pursue acquisitions, investments, or other strategic relationships or alliances, which may consume significant resources, may be
unsuccessful, may require us to obtain financing on a stand-alone basis, and could dilute the holders of our common stock.

Acquisitions,
investments and other strategic relationships and alliances, if pursued, may involve significant cash expenditures, debt incurrence, additional operating losses, and expenses that could have a material adverse effect on our financial condition and
operating results. Acquisitions involve numerous other risks, including:



| |  |  | diversion of management time and attention from daily operations;
| | - |  | -----------------------------------------------------------------



| |  |  | difficulties integrating acquired businesses, technologies and personnel into our business;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | inability to obtain required regulatory approvals and/or required financing on favorable terms;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | entry into new markets in which we have little previous experience;
| | - |  | -------------------------------------------------------------------



| |  |  | potential loss of key employees, key contractual relationships, or key customers of acquired companies or of us; and
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | assumption of the liabilities and exposure to unforeseen liabilities of acquired companies.
| | - |  | -------------------------------------------------------------------------------------------



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If these types of transactions are pursued, it may be difficult for us to complete these transactions
quickly and to integrate these acquired operations efficiently into our current business operations. Any acquisitions, investments or other strategic relationships and alliances by us may ultimately harm our business and financial condition. In
addition, future acquisitions may not be as successful as originally anticipated and may result in impairment charges. We have incurred these charges in recent years in relation to acquisitions. For example, during the second quarter of 2009, we
incurred charges of $15.7 million for the impairment of trade names related to our acquisitions of BHL and Atria.

In the event we need to
obtain financing to complete an acquisition, investment or other strategic relationship or alliance, we may not be able to secure adequate debt or equity financing on desirable terms. In addition, acquisitions and other transactions may involve the
issuance of a substantial amount of our common stock without the approval of our stockholders. Any issuances of this nature could be dilutive to our stockholders.

The market price and trading volume of our common stock has been volatile and may face negative pressure.

Our common stock issued in the split-off traded publicly for the first time following the split-off. The market price of our common stock from July 1, 2008 through March 26, 2011 has been
volatile, ranging from a high of $17.56 to a low of $5.03.

The market price of our common stock may be volatile due to the risks and
uncertainties described in this Risk Factors section, as well as other factors that may affect the market price, such as:



| |  |  | conditions and publicity regarding the genomics, biotechnology, pharmaceutical, diagnostics, or life sciences industries generally;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------



| |  |  | price and volume fluctuations in the stock market at large which do not relate to our operating performance; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | comments by securities analysts or government officials, including those with regard to the viability or profitability of the biotechnology sector
generally or with regard to intellectual property rights of life science companies, or our ability to meet market expectations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The stock market has from time to time experienced extreme price and volume fluctuations that are unrelated to the operating performance of particular companies or the industries in which they compete.

In addition, our ability to achieve previously announced financial targets is subject to a number of risks, uncertainties, and other factors
affecting our business and the genomics, biotechnology, pharmaceutical, diagnostics, and life sciences industries generally, many of which are beyond our control. These factors may cause actual results to differ materially. We describe a number of
these factors throughout this document, including in this Risk Factors section. We cannot assure you that we will meet these targets. If we are not able to meet these targets, it could harm the market price of our common stock.

Future sales of our stock could adversely affect our stocks market price and our ability to raise capital in the future.

Sales of substantial amounts of our common stock could harm the market price of our stock. This also could harm our ability to raise
capital in the future. Any sales of substantial amounts of our common stock in the public market, or the perception that those sales might occur, could harm the market price of our common stock.

We will not solicit the approval of our stockholders for the issuance of authorized but unissued shares of our common stock unless this approval is
deemed advisable by our Board of Directors or is required by applicable law, regulation or stock exchange listing requirements. The issuance of those shares could dilute the value of our outstanding shares of common stock.



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We do not expect to pay dividends on our common stock.

We currently do not expect to pay any dividends on our common stock for the foreseeable future. Holders of our common stock will have to rely on a rise in
the market price of our common stock, if any, to earn a return on their investment in our common stock, which rise is uncertain and unpredictable. As a result, you should not rely on an investment in our common stock as a source of dividend income.

Anti-takeover provisions could deter takeover attempts of Celera Corporation and limit appreciation of the market price for shares of our
common stock.

Our amended and restated certificate of incorporation, amended and restated by-laws, and Delaware law contain provisions
that may have the impact of delaying or precluding an acquisition of our company without the approval of our Board of Directors. These provisions may limit the price that investors might be otherwise willing to pay in the future for shares of our
common stock. These provisions include providing for a staggered Board of Directors, advance notice procedures for stockholder proposals and director nominations, as well as a provision in our amended and restated certificate of incorporation that
does not afford stockholders the right to call a special meeting of stockholders. In addition, there are provisions of Delaware law that may also have the effect of precluding an acquisition of us without the approval of our Board of Directors.

Our collaborations with outside experts may be subject to restriction and change.

We collaborate with scientific and clinical experts at academic and other institutions that provide assistance and guidance to our research and
development efforts. These advisors and collaborators are not our employees and may have other commitments that limit their availability to us. Although they generally agree not to collaborate with our competitors, if a conflict of interest arises
between their work for us and their work for another company or institution, we may lose the services of these experts. In addition, our advisors and collaborators sign confidentiality agreements that generally prohibit their use or disclosure of
our confidential information other than in connection with our collaboration and, where applicable, require disclosure and assignment to us of their ideas, developments, discoveries and inventions arising under our collaboration. These
confidentiality agreements generally have a term that lasts for so long as the collaboration is in effect, plus a specified period afterward and are generally terminable by either party upon a breach of the agreement by the other party and, in some
cases, upon written notice. These agreements generally permit us to seek injunctive or other relief to prevent unpermitted use or disclosure of our confidential information. However, it is possible that valuable proprietary knowledge may become
publicly known or otherwise available to other parties, including our competitors, through these experts.

We may be exposed to product
liability or other legal claims relating to our products and services.

Clinicians, patients, third-party payors, and others may at times
seek damages from us based on testing or analysis errors caused by a technicians misreading of results, mishandling of the patient samples, or similar claims. Product liability or other claims, or product recalls, regardless of the ultimate
outcome, could harm our reputation and require us to spend significant time and money in litigation and to pay significant damages. These damages, if not covered by adequate insurance, could harm our operating results and financial condition.



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Our operations are subject to potential exposure to environmental liabilities.

Our research and development activities, manufacturing activities, and clinical laboratory testing activities involve the controlled use of potentially
hazardous materials, including biological materials, chemicals, and various radioactive compounds. Also, some of our diagnostic products are hazardous materials or include hazardous materials. We cannot completely eliminate the risk of accidental or
other contamination or injury from these materials, and we could be held liable for resulting damages, which could be substantial. We do not maintain environmental liability insurance and any potential environmental damages for which we become
liable may not be covered under our existing insurance policies. Under some laws and regulations, a party can be subject to strict liability for damages caused by some hazardous materials, which means that a party can be liable without
regard to fault or negligence. We could be held similarly responsible for the actions of our other collaborators or licensees. In addition, we are subject to federal, state, local, and foreign laws, regulations, and permits governing the use,
storage, handling, and disposal of hazardous materials and specified waste products, as well as the shipment and labeling of materials and products containing hazardous materials. If we are found to be liable for our use of hazardous materials, or
fail to comply with any of these laws, regulations, or permits, or if we are held indirectly responsible for the conduct of our collaborators or licensees found to be non-compliant, we could be subject to substantial fines or penalties, payment of
remediation costs, loss of permits, and/or other adverse governmental action. Any of these events could harm our operating results and financial condition.



|ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Issuer Purchases of Equity Securities

This table provides information about our purchases
of Celera Corporation common stock during the three months ended March 26, 2011:



|                                     |  |                                    |        |  |                            |   |      |                                                                           |  |  |                                                                         |  |  |  |   | 
|------------------------------------ |  | ---------------------------------- | ------ |  | -------------------------- | - | ---- | ------------------------------------------------------------------------- |  |  | ----------------------------------------------------------------------- |  |  |  | - | 
|Period                               |  | Total Numberof SharesPurchased (1) |        |  | AveragePrice Paidper Share |   |      | Total Numberof SharesPurchasedas Part ofPubliclyAnnouncedPlans
orPrograms |  |  | MaximumNumber ofShares thatMay Yet bePurchasedUnder thePlans
orPrograms | 
|December 26, 2010 - January 22, 2011 |  |                                    | 12,930 |  |                            | $ | 6.09 |                                                                           |  |  |                                                                        |  |  |  |  | 
|January 23, 2011 - February 19, 2011 |  |                                    | 7,578  |  |                            |   | 6.19 |                                                                           |  |  |                                                                        |  |  |  |  | 
|February 20, 2011 - March 26, 2011   |  |                                    | 23,832 |  |                            |   | 6.30 |                                                                           |  |  |                                                                        |  |  |  |  | 
|                                     |  |                                    |        |  |                            |   |      |                                                                           |  |  |                                                                         |  |  |  |   | 
|Total                                |  |                                    | 44,340 |  |                            | $ | 6.22 |                                                                           |  |  |                                                                        |  |  |  |  | 
|                                     |  |                                    |        |  |                            |   |      |                                                                           |  |  |                                                                         |  |  |  |   | 



|(1) | During the three months ended March 26, 2011, we repurchased 44,340 shares of our common stock, at an average price of $6.22, to satisfy tax obligations upon the
vesting of restricted stock under the 2008 Stock Incentive Plan. We may make similar repurchases in the future to satisfy employee tax obligations upon the vesting of restricted stock.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|ITEM 6. | Exhibits
|------- | --------



|            |  |                                                                                                                                                                                                                                                                                                                    
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DOCUMENT                                                                                                                                                                                                                                                                                                           
|            | 
|2.1         |  | Agreement and Plan of Merger, dated as of March 17, 2011, by and among Celera Corporation, Quest Diagnostics Incorporated and Spark Acquisition Corporation (incorporated by
reference to Exhibit 2.1 to the Companys Current Report on Form 8-K dated as of March 17, 2011, File No. 001-34116).                 
|            | 
|2.2         |  | Amendment to Agreement and Plan of Merger, effective as of April 18, 2011, by and among Quest Diagnostics Incorporated, Spark Acquisition Corporation and Celera Corporation
(incorporated by reference to Exhibit 2.1 to the Companys Current Report on Form 8-K dated as of April 18, 2011, File No. 001-34116).
|            | 
|10.1+       |  | Fourth Amendment to Lease, dated as of February 15, 2011, by and between Celera Corporation and SKS Harbor Bay Associates, LLC.                                                                                                                                                                                    
|            | 
|10.2#       |  | Amendment No. 1 to the Celera Corporation Executive Change in Control Plan, as amended and restated effective December 1, 2010 (incorporated by reference to Exhibit 2.2 to the
Companys Current Report on Form 8-K dated as of March 17, 2011, File No. 001-34116).                                              
|            | 
|10.3*       |  | Letter Agreement, dated as of March 17, 2011, by and among Celera Corporation, Abbott Molecular Inc. and Abbott Laboratories (incorporated by reference to Exhibit (e)(3) to the
Companys Schedule 14D-9 filed on March 28, 2011, File No. 005-84124).                                                            
|            | 
|31.1+       |  | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)                                                                                                                                                                                                                                   
|            | 
|31.2+       |  | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)                                                                                                                                                                                                                                   
|            | 
|32.1+       |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                  
|            | 
|32.2+       |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                                                                                  



|+ | Indicates filed herewith.
|- | -------------------------



|# | Management contract or compensatory plan or arrangement.
|- | --------------------------------------------------------



|* | Certain information in this document has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been granted by the
Securities and Exchange Commission.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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SIGNATURES

Pursuant to the requirements 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.



CELERA CORPORATION/s/ KATHY ORDOÑEZName:

Kathy OrdoñezTitle:

Chief Executive OfficerDate:

May 5, 2011/s/ ALFRED MERRIWEATHERName:

Alfred MerriweatherTitle:

Chief Financial OfficerDate:

May 5, 2011




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