<PAGE>
 
================================================================================

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C.  20549

                                   FORM 10-K


(MARK ONE)

     [X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                For the fiscal year ended:  SEPTEMBER 30, 1997.
                                       OR
  [_]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
            THE SECURITIES EXCHANGE ACT OF 1934
           For the transition period from ___________ to ___________.
                        Commission File Number: 0-20032

                          PERSEPTIVE BIOSYSTEMS, INC.

            (Exact name of registrant as specified in its charter)


           DELAWARE                                      04-2987616
(State or other jurisdiction of            (I.R.S. employer identification no.)
incorporation or organization)
 
     500 OLD CONNECTICUT PATH                               01701
     FRAMINGHAM, MASSACHUSETTS                            (Zip code)
(Address of principal executive offices)

      Registrant's telephone number, including area code:  (508) 383-7700
          Securities registered pursuant to Section 12(b) of the Act:
                                     NONE
          Securities registered pursuant to Section 12(g) of the Act:
                    COMMON STOCK, $.01 PAR VALUE PER SHARE
              CLASS E WARRANTS TO PURCHASE SHARES OF COMMON STOCK
              CLASS G WARRANTS TO PURCHASE SHARES OF COMMON STOCK
         SERIES B JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS
                               (Title of class)

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

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

     Aggregate market value, as of December 24, 1997, of Common Stock held by
non-affiliates of the Company: $253,288,768 based on the last reported sale
price on The Nasdaq National Market.

     NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AT DECEMBER 24, 1997: 
22,785,758

                      DOCUMENTS INCORPORATED BY REFERENCE

     The Company intends to file a definitive proxy statement pursuant to
Regulation 14A within 120 days of the end of the fiscal year ended September 30,
1997.  Portions of such proxy statement are incorporated by reference in Part
III of this Form 10-K.

================================================================================
<PAGE>
 
ITEM 1.   BUSINESS

OVERVIEW

     PerSeptive Biosystems, Inc. develops, manufactures and markets an
integrated line of proprietary advanced instrumentation systems and consumable
products for the purification, analysis and synthesis of biomolecules.  The
Company's enabling products are used in the life sciences industry to
significantly reduce the time and costs required for the discovery, development
and manufacture of novel pharmaceutical products.  The Company's current and
planned products are based on its patented core technologies in the fields of
chromatography, immunoassay, biological mass spectrometry, solid-phase synthesis
and microfluidic assay devices.  Unless the context otherwise requires, all
references to "PerSeptive" or the "Company" are to PerSeptive Biosystems, Inc.
and its subsidiaries./1/

RECENT DEVELOPMENTS

     Pending Merger with Perkin-Elmer Corporation.  On August 27, 1997, The
Perkin-Elmer Corporation ("Perkin-Elmer"), Seven Acquisition Corp., a wholly
owned subsidiary of Perkin-Elmer, and PerSeptive entered into an Agreement and
Plan of Merger (the "Merger Agreement").  Pursuant to the Merger Agreement, all
outstanding shares of PerSeptive common stock, $.01 per share par value per
share (the "PerSeptive Common Stock"), will be converted into shares of Perkin-
Elmer common stock, $1.00 par value per share (the "Perkin-Elmer Common Stock")
at an exchange rate equal to $13.00 divided by the average of the closing sales
prices of Perkin-Elmer Common Stock on the New York Stock Exchange composite
tape on each of the 20 consecutive trading days preceding the second trading day
prior to the effective date of the merger.  In no event, however, will the
exchange rate be more than 0.1926, or less than 0.1486, of a share of Perkin-
Elmer Common Stock for each share of PerSeptive Common Stock.  At the effective
time of the merger, PerSeptive will become a wholly owned subsidiary of Perkin-
Elmer.  On December 4, 1997, the proposed merger was approved by PerSeptive's
stockholders.  The completion of the merger is subject to regulatory approvals
and other closing conditions.  There can be no assurance that the proposed
merger will be completed.  Either party has the right to terminate the merger 
agreement if the merger is not consummated on or before January 31, 1998, unless
the parties agree to extend that date.

--------------------------------------------------------------------------------
     Any statements which are not historical facts contained in this Annual
Report on Form 10-K, including without limitation projections or statements
concerning revenues, operating or other results or improvements thereto, use and
success of technology, progress of programs, completion, timing and benefits of
development programs, liquidity, suitability of products for specific
applications, product performance, advantages or significance of technology and
benefits and results of acquisitions, collaborations and strategic and other
alliances, are forward-looking statements that involve risks and uncertainties,
including but not limited to those relating to product demand, pricing, market
acceptance, the effect of economic conditions, intellectual property rights and
litigation, the results of governmental proceedings, competitive products, risks
in product and technology development, the results of financing efforts, the
ability to exploit technologies, the ability to complete transactions including
the pending merger with Perkin-Elmer, and other risks identified under the
caption "Certain Factors That May Affect Future Results" and elsewhere in this
Annual Report, as well as in the Company's other Securities and Exchange
Commission filings. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements.
--------------------------------------------------------------------------------

---------------
/1/  AutoPilot(R), BioCAD(R), BioMag(R), Biosearch(R), CytoFluor(R), Perfusion
Chromatography(R), PerSeptive Biosystems(R), POROS(R),Poroszyme(R), RPM(R),
SelfPack(R) and TiterZyme(R), are registered trademarks of the Company.
Biospectrometry/TM/, Capillary-Perfusion, ConSep, DEcode, Delayed Extraction
Technology, Expedite, GeneSpectrometry, ImmunoDetection(ID)/TM/, INTEGRAL,
InterPlate, MemSyn, Oligo R3, OligoPak, Mariner, MemSep, PEG-PS, PepMap C18,
PinPoint, Pioneer,Rational Surface Design/TM/ ,  SCOUT, Sequazyme, SPRINT/TM/,
Symbiot, TiterFluor, TiterScreen, VISION, Voyager-DE, and  Voyager/TM /are
trademarks of the Company.  Microsoft(R) and Windows(R)  are registered
trademarks of Microsoft Corporation.  LifeSeq is a trademark of Incyte
Pharmaceuticals Inc. Any other trademarks or trade names used in this Report are
the property of their respective owners.

                                      -1-
<PAGE>
 
GLOSSARY OF TERMS

Analytes........................  the target molecules to be measured in
                                  diagnostic tests.

Amino acids.....................  a group of chemical compounds that are the
                                  basic structural units of all proteins and
                                  peptides.

Antibody........................  a protein molecule capable of binding to an
                                  antigen.

Antigen.........................  a molecule, typically a portion of a protein,
                                  that is recognized by the immune system as a
                                  foreign substance.

Assay...........................  analysis for one or more specific components.

Biomolecules....................  molecules that have biological activity or are
                                  derived from biological sources, such as
                                  proteins, peptides, oligonucleotides and
                                  genes.

Biopharmaceuticals..............  therapeutic drugs that are biomolecules.

Bioseparations..................  a means of extracting a biomolecule from a
                                  mixture of biomolecules for the purpose of
                                  purification or analysis.

Biospectrometry.................  an analytical technique used to detect and
                                  measure biomolecules based on their molecular
                                  weight.

Chemiluminescence detection.....  an analytical method for detecting
                                  biomolecules using light_generated by a
                                  chemical reaction.

Cholesterol.....................  a type of lipid found in cell membranes: high
                                  cholesterol levels in circulating blood have
                                  been linked to atheroschlerosis (accumulation
                                  of fatty tissue on the lining of the
                                  arteries), coronary heart disease and stroke.

Chromatography..................  as used in this Report, liquid chromatography,
                                  which is a method of separating biomolecules
                                  for purification and analysis by binding them
                                  to the internal surfaces of porous particles.

Chromatography skid.............  a portable, skid-mounted chromatography system
                                  designed for pilot and production scale
                                  purification of biomolecules.

Clinical diagnostics............  the testing of samples derived from body
                                  fluids.

Diffusion.......................  random molecular motion.

DNA.............................  deoxyribonucleic acid, strands of nucleic
                                  acids that contain genetic coding
                                  instructions.

Electrophoresis.................  an analytical technique that separates
                                  molecules based on their differential movement
                                  in a solution to which electrical charge has
                                  been applied, such differential movement being
                                  characteristic of the size and charge of the
                                  molecule.

ELISA immunoassays..............  Enzyme Linked ImmunoSorbent Assays: i.e.
                                  assays that use enzymes linked to 

                                      -2-
<PAGE>

                                  antibodies to detect antigens.
 
Enzymes.........................  biomolecules that have a catalytic effect on
                                  chemical reactions.

Fluorogenic.....................  a non-fluorescent substrate for an enzyme that
                                  when acted on by an enzyme induces
                                  fluorescence.

Fluorescent assay...............  an assay using a very sensitive fluoregenic
                                  substrate to detect and measure enzyme
                                  activity in living cells.

Genomic(s)......................  relating to genes encoded by DNA; used in
                                  connection with the process of identifying the
                                  sequence of nucleotides in DNA-encoded genes.

HPLC............................  high performance liquid chromatography, a
                                  predominantly analytical chromatography
                                  technique in which liquid samples are forced
                                  to flow through columns using high pressure.

Immunoassay.....................  a laboratory procedure that uses an antibody
                                  reagent to detect the presence of a target
                                  biomolecule based on its specific binding to
                                  such antibody reagent.

ImmunoDetection.................  an immunoassay technique that can be performed
                                  with antibodies in a flow-through cartridge
                                  format.

In vitro........................  refers to laboratory measurements or tests
                                  carried out in test tubes, microtitre plates
                                  and similar devices.

Magnetic separation.............  a separation method in which a target is
                                  labeled with specific surface binding
                                  molecules which have magnetic properties, via
                                  iron groups and then separated by attraction
                                  to a magnetic field.

Mass spectrometry...............  an analytical technique used to identify
                                  chemical compounds by their mass-to-charge
                                  ratio.

MALDI-TOF.......................  Matrix Assisted Laser Desorption Ionization
                                  Time of Flight Mass spectrometry systems for
                                  analyzing the mass of proteins, peptides, and
                                  DNA molecules based on measuring the time of
                                  flight of charged molecules, where small
                                  molecules fly faster than large molecules.

Microfluidic assay devices......  an automated instrument designed to perform
                                  assays at microscopic scale using capillaries
                                  not much larger than human hairs and requiring
                                  5-10 ul sample volumes instead of 50-10,000 ul
                                  volumes.

mRNA............................  messenger ribonucleic acid, the form of RNA in
                                  a cell which transfers genetic information
                                  from a DNA molecule to the ribosome used in
                                  the production of peptides and protein chains.

Nucleotides.....................  building blocks of nucleic acids, each of
                                  which consists of one of four different bases
                                  along with sugar and phosphate groups to which
                                  each base is attached.

Oligonucleotide.................  a short strand of DNA or RNA.

Peptide.........................  a fragment of a protein consisting of at least
                                  two amino acids.

                                      -3-
<PAGE>
 
Peptide synthesis...............  the combining of short chains of amino acids,
                                  called peptides, ranging in length from 20 to
                                  60 amino acids.

Perfusion Chromatography........  a liquid chromatography technique in which
                                  liquid flows through and around
                                  chromatographic particles to increase the rate
                                  at which separations occur.

Phosphoramidites................  a family of nonnatural, organic molecules used
                                  to synthesize RNA and DNA oligomers
                                  (molecules).

PNA.............................  peptide nucleic acid, a synthetic DNA analog
                                  of a DNA molecule that can be used as a probe
                                  with higher affinity and specificity than
                                  traditional DNA and RNA probes.

Protein.........................  chains of amino acids linked by peptide bonds
                                  and often folded in various ways based on the
                                  sequence of amino acids.

Rational Surface Design.........  a technique for the creation of a non-
                                  biological, synthetic surface to which target
                                  biomolecules bind with the high specificity of
                                  antibodies.

Reagents........................  consumable products that are active
                                  ingredients in scientific experiments and
                                  clinical diagnostics.

Ribosome........................  any of several minute particles composed of
                                  protein and RNA.

RNA.............................  ribonucleic acid, chains of nucleic acids that
                                  transport and translate genetic instructions
                                  encoded in DNA.

RPM.............................  a real-time, on-line product monitoring system
                                  for the measurement of biomolecule purity,
                                  concentration and product consistency.

Solid-phase synthesis...........  chemical synthesis of molecules using an
                                  organic or inorganic substrate in either a
                                  bead, membrane or other matrix configuration.

Substrate.......................  a substance acted upon by an enzyme.

                                      -4-
<PAGE>
 
INDUSTRY BACKGROUND

Biopharmaceutical Product Development and Manufacture

     The identification, development and manufacture of a biopharmaceutical
product involve a number of interdependent stages that generally overlap in
time.  In the discovery stage, scientists isolate and identify a candidate
biomolecule with potential therapeutic applications and analyze its physical,
chemical and biological characteristics.   This can  involve the synthesis of
multiple compounds to create a library of potential molecules from which certain
promising drug candidates are isolated.   Next, a biopharmaceutical company must
develop an effective means of producing and purifying small quantities of the
target biomolecule for testing. Generally, cells are genetically engineered to
produce the target biomolecule.  These engineered cells, however, produce only
small quantities of the desired biomolecule compared to the volume of culture
medium in which the cells are grown.  For example, one liter of culture medium
containing mammalian cells engineered to produce a biopharmaceutical protein may
yield only milligrams of purified protein.

     After the therapeutic potential of a biomolecule has been established by
preclinical testing, the biopharmaceutical company must complete three
interrelated development programs.  First, it conducts clinical trials (in three
phases) to evaluate the safety and efficacy of the biopharmaceutical in humans.
Second, the biopharmaceutical company must develop a manufacturing process to
produce increasing amounts of the pure biopharmaceutical as the product passes
through each phase of clinical testing and into commercial manufacture.  Third,
the company must develop commercial-scale manufacturing capacity with the
appropriate quality control and quality assurance programs to ensure that the
commercial product is of sufficient purity and consistent quality.  In each
case, the U.S.  Food and Drug Administration (the "FDA") either reviews
purification and analysis procedures directly or reviews data derived from those
procedures as part of the overall biopharmaceutical approval process.


     Once approved by the FDA for commercial sale, the biopharmaceutical must
continue to be produced in a highly purified form with constant quality control
and quality assurance monitoring.  Significant changes in the manufacturing
process, including purification, are subject to FDA review.

Synthesis, Purification and Analysis

     A variety of synthesis, purification and analysis procedures are conducted
in each stage in the discovery, development and production of a
biopharmaceutical product.  Synthesis involves the creation and replication of
multiple compounds that can be identical or subtly differentiated by as little
as one amino acid.   Purification involves the isolation and separation of a
target biomolecule from other substances, such as contaminants, without
destroying the biological activity of the biomolecule.  Analysis involves
techniques used to measure the quantity of a biomolecule, to identify its
biological characteristics and to assess the nature and quantity of
contaminants.   The synthesis, purification and analysis of biopharmaceuticals,
especially proteins, is generally more difficult than for conventional drugs.
Only very small amounts of the target biomolecule are produced in large volumes
of cell culture medium containing many different kinds of contaminants.  In
addition, biopharmaceuticals are often fragile molecules that can easily lose
their biological activity if subjected to excessive physical or chemical forces
during purification.  Finally, the contaminants that must be identified by
analysis and removed by purification are often biomolecules that are similar in
structure to the target biomolecule and are consequently difficult to separate.
The purification process must produce target biopharmaceuticals that are
typically at least 99.9% pure, because contaminants can be harmful if
administered internally to humans.

Conventional Separations and Analysis Technologies

     The biopharmaceutical industry today relies primarily on purification and
analysis technologies developed 10 to 20 years ago for small-scale research use
in biochemistry laboratories. Purification techniques are, in order of
increasing efficiency: centrifugation, membrane filtration and chromatography.
Efficiency in purification is the speed of the technique in separating the
target biomolecule from contaminants without loss of or damage to the
biomolecule.  Analysis techniques are, in order of increasing sensitivity:
electrophoresis, chromatography and immunoassay.  Sensitivity in analysis is the
effectiveness of the technique in detecting very small amounts of one specific
biomolecule in a mixture of other substances.  The preferred technique for the
purification of biomolecules is chromatography.  Chromatography and immunoassay
are the preferred methods for biomolecule analysis.

                                      -5-
<PAGE>
 
     Chromatography.  Chromatography is a method of separating biomolecules by
binding them to surfaces of porous particles (chromatography media) contained in
columns. Active chemical coatings may be applied to the internal surfaces of
these particles to bind selectively with biomolecules of interest. These
coatings determine performance factors, including degree of purification and
percentage of product recovery. Chromatography column volumes range from less
than one milliliter to more than 1,000 liters. A liquid mixture containing the
target biomolecule and contaminants is pumped into the top of the column. As the
mixture flows through the column, the target biomolecules move by diffusion
(random molecular motion) and bind to the surfaces of the pores in the
particles. A series of chemical washes are used to remove contaminants and
collect the target biomolecules in a purified form. When used for analysis,
chromatography also employs a detector to measure the concentration of each
component as it exits the column. There are two methods of chromatography used
for biomolecule separations: liquid chromatography ("LC") and high performance
liquid chromatography ("HPLC").

     Conventional liquid chromatography is a slow process and previous attempts
to accelerate its performance have resulted in a reduction in separation
performance and capacity. Speed in conventional chromatography is limited by the
rate at which biomolecules diffuse into the pores of particles and bind to their
surfaces. The relatively large size of biomolecules causes them to diffuse
slowly, especially within the confines of the porous network of conventional
chromatography particles. Conventional LC purifications usually require two to
five hours to complete and, in commercial-scale applications, can require 12
hours or more. For example, a commercial-scale purification of 200 grams of
monoclonal antibodies from 4,000 liters of cell culture may require 100 hours
and three or more separate purification steps to complete.

     High performance liquid chromatography uses smaller diameter particles and
higher pressure within the column than are used with conventional LC to reduce
the time required to complete a separation. Consequently, a typical HPLC
separation can be completed in 30 to 60 minutes. HPLC is widely used for the
analysis of biomolecules, but it is infrequently used for commercial-scale
purification of biomolecules because of cost and safety concerns related to
pumping mixtures through large columns at high pressures.

     Immunoassay.  Immunoassays are laboratory procedures that use an antibody
reagent to detect the presence of a specific biomolecule and are conventionally
performed in shallow reservoirs contained in plastic devices known as
microtitre-well plates. During an immunoassay, a biological sample containing
the targeted biomolecule is first allowed to react with the antibody in a series
of processing steps, which usually requires several hours to complete. When
added to the sample, a second reagent generates a signal (for example, by
fluorescence) proportional to the amount of the biomolecule present. In addition
to being relatively slow, conventional immunoassays can have high margins of
error, are very labor intensive and are difficult and costly to automate.

PERSEPTIVE'S TECHNOLOGIES

     PerSeptive's current and planned products for the purification, analysis
and synthesis of biomolecules are based on the following core technologies:

     Perfusion Chromatography.  The Company's patented Perfusion Chromatography
process and media, which use proprietary flow-through particles, separate
biomolecules 10 to 1,000 times faster than conventional LC or HPLC and achieve
the same or better levels of purity. Prior to the invention of Perfusion
Chromatography, it was generally accepted in the chromatography industry that
the slow speed of diffusion was an inherent limitation to the potential speed of
chromatography.

     In conventional chromatography, liquid flows around porous particles and
biomolecules diffuse slowly from the flowing liquid into pores in those
particles where they bind.  In contrast, the particles in the Company's
Perfusion Chromatography media have two types of pores. One type of pore is a
large transecting "throughpore," which permits rapid flow of the liquid through
the particles and ready access to the interior of the particles.  The other type
of pore is a smaller pore that lines the throughpores to provide a large surface
area into which the targeted biomolecules can diffuse and bind.  This pore
structure creates very short diffusion paths to the large accessible surface
area within the particles.  This reduction in diffusion distance is the main
reason for the increased speed associated with Perfusion

                                      -6-
<PAGE>
 
Chromatography.

     PerSeptive has developed a variety of coating techniques and surface
chemistries to separate biomolecules based on their electrical charge,
hydrophobicity, bioaffinity and other factors.  These chemistries have enabled
the Company to offer a broad range of products that are more durable than
competing products because of the stability of the Company's proprietary coating
chemistries and base particle materials.

     ImmunoDetection.  PerSeptive has developed novel immunoassays that can be
performed using its Perfusion Chromatography technology with antibodies to
perform the steps of an immunoassay in a flow-through column format
("ImmunoDetection").  ImmunoDetection permits target molecule detection in
seconds or minutes, far faster than conventional immunoassay techniques, which
require several hours to complete.  ImmunoDetection also takes advantage of the
higher degree of automation available in chromatography instruments, as compared
with immunoassay instruments, and can produce results with much lower margins of
error.   The Company has filed a patent application for its ImmunoDetection
technology.

     The Company has also developed a novel, patent-pending method for in-line
process monitoring that provides continuous analysis of the concentration,
purity and structural integrity of a target biomolecule during the manufacturing
process.  In addition, the Company has developed a patented method of analyzing
extremely small amounts of contaminants in a biopharmaceutical product by
removing all of the biopharmaceutical from a sample and concentrating the
remaining contaminants until they are present in detectable quantities.  The
Company is commercializing these techniques as a part of its INTEGRAL
workstation and RPM technology.  See "Business-- Purification Products."

     Rational Surface Design.  The Company is working to develop products based
on Rational Surface Design ("RSD"), a method of creating synthetic surfaces to
which target biomolecules bind with the high specificity characteristic of
antibodies.  This specificity is achieved by engineering RSD surfaces to behave
in a manner analogous to antibody binding sites.  These surfaces do not,
however, contain any antibodies or other biological materials.  RSD is an
extension of the Company's expertise in developing new chemistries to coat the
surfaces of chromatography media.  The Company owns a U.S. patent relating to
its RSD technology and compositions of matter for surfaces engineered for
specific biomolecules.

     Biospectrometry.  PerSeptive owns a significant body of technology relating
to biological mass spectrometry ("Biospectrometry").  Biospectrometry is an
analytical technique used to detect and measure biomolecules based on their
molecular weight (mass).  Mass spectrometers work by producing charged particles
of the injected molecular sample and then sorting ionized species of the
original molecule based on its mass/charge ratio.  Although there are many
different kinds of mass spectrometers, most instruments are defined by
differences in two subsystems.  One is the ionization source that creates the
ionic species and the other is the detection system.  Biomolecular analysis
using mass spectrometry has been limited to date due to the inability of mass
spectrometers to resolve (identify) large biomolecules as well as the high cost
and difficulty of use of mass spectrometry.  PerSeptive believes that the use of
its technology in the integration of mass spectrometry with liquid
chromatography and other separation systems, laser desorption and electrospray
ionization sources, and time-of-flight detection systems is broadly enabling in
overcoming the deficiencies of mass spectrometry for biomolecular analysis.

     Microfluidic Assays.  The Company is developing technology to perform
assays at microscopic scale using capillaries not much larger than human hairs
and requiring minimal sample volumes.   The MicroElectrophoresis Assay System
(MEASure) technology evolved from PerSeptive's early expertise with immunoassays
and the Company's desire to develop a system that provides highly sensitive and
instantaneous detection in an easy to use, automated, low sample volume format.
Largely funded by PTC-II, the development work done to date on MEASure has
extended beyond early feasibility and prototype phases.  The Company believes
the use of this technology will enable the next generation of diagnostic tests
where low sample volumes, minimal sample handling, high sensitivity and
simultaneous detection are desired parameters.

     DNA and Peptide Synthesis.  PerSeptive owns leading technology for DNA and
peptide synthesis.  The preparation of synthetic replicas or analogs of
naturally occurring molecules such as nucleic acids (DNA and RNA) and 

                                      -7-
<PAGE>
 
peptides has been made routine through the use of instruments called
synthesizers.  Synthesizers contain a small reaction chamber into which is
placed disposable "support" media on which the molecules are built.  
Synthesizers also contain an array of bottles containing the building-block
reagents: for DNA or RNA synthesis, nucleotide monomers (each corresponding to a
"base"); and for peptide synthesis, the 20 amino acids from which peptides are
formed.  A personal computer and dedicated software are used to program and
control a pump which adds these reagents in the programmed sequence (along with
other protecting/deprotecting, activator and wash reagents).  After synthesis,
the material must be chemically removed from the support and be purified and
analyzed.  PerSeptive's patented phosphoramidite chemistries (bulk and small-
pack DNA reagents) are the industry standard for synthesizing oligonucleotides.

     PerSeptive has an exclusive license for technology to manufacture and sell
peptide nucleic acid ("PNA") for molecular biology research and, subject to
certain limited reservations, for other applications. PNA is a synthetic mimic
of the DNA molecule with a modified neutrally charged peptide-like "backbone."
The unique chemical structure of PNA enhances its affinity and specificity as a
DNA or RNA probe.


     PerSeptive's peptide synthesis chemistry products are differentiated from
competing products by the use of proprietary support structures of polyethylene
glycol polystyrene and by innovative amino acid activation reagents that allow
synthesis of complex peptides, which are otherwise difficult to synthesize.


     Superparamagnetic Bead-Based Separations.  PerSeptive owns technology
relating to magnetic separations particles and processes.  Magnetic separations
enable biomedical researchers to improve the speed, purity and yield of many
common laboratory protocols, including separation of cell populations and
isolation and purification of nucleic acids.  Researchers can perform techniques
based on magnetic separation either manually or with automated instruments.

PURIFICATION PRODUCTS

     PerSeptive's purification products can be incorporated readily into any
stage of the development and manufacture of a biopharmaceutical product and
offer productivity advantages over conventional counterparts.  The Company
believes that the integration and use of a single family of purification
products, such as POROS columns and media and BioCAD Workstations, will
facilitate the transition of biopharmaceutical products from discovery, through
laboratory-scale development, to commercial-scale production.  Companies using
conventional purification technology usually make several significant changes in
materials, equipment and processes in moving from the development stage to
commercial manufacture.  As a result, an integrated line of purification
products is expected to enhance productivity by reducing or eliminating these
costly and time-consuming changes.  Moreover, because the FDA must approve
significant changes in manufacturing processes, an integrated line of
purification products may simplify and expedite the process of obtaining
approvals from the FDA.

     The Company's family of purification products includes consumables and
instrumentation systems.  The following table shows the Company's primary
purification products and their applications to the four main functional groups
within companies developing and commercializing biopharmaceuticals: research and
development; process development; quality control and quality assurance; and
manufacturing.  The estimated timing of future product introductions, including
those described below and in the following sections, depends on a number of
factors, such as timely completion of current development programs.  There can
be no assurance that these development programs will be completed successfully
or within the expected time frames:


<TABLE>
<CAPTION>
                                  PRODUCT            
       PRODUCT                    LAUNCH         APPLICATION/USE                    TARGET MARKETS* 
       -------                    ------         --------------                     --------------- 
CONSUMABLES AND REAGENTS:                                                      R&D       PD   QC   MFG
                                                                               ---       --   --   ---
<S>                               <C>            <C>                           <C>       <C>  <C>  <C>  
POROS Chromatography               1990          Methods development,           *         *    *
Prepacked Columns                                analysis and small-scale         
                                                 purification               
</TABLE> 

                                      -8-
<PAGE>
 
<TABLE> 
<S>                               <C>            <C>                           <C>       <C>  <C>  <C>  
POROS Bulk Media                   1991          Biopharmaceutical                                  *
                                                 manufacturing              

POROS Self Pack                    1994          Laboratory-scale               *         *
                                                 purification and analysis        

Oligo R3                           1995          Purification of                *         *         *
                                                 oligonucleotides and           
                                                 antisense compounds           

INSTRUMENT SYSTEMS:

BioCAD Workstation                 1991 -        Laboratory and                 *         *    *    * 
  Family                           1996          development scale               
                                                 purification and analysis       
                                                                                 
SCOUT                              1995          Automated, multi-column        *         *    *    *  
                                                 switching device                

Vision Workstation                 1996          Integrated purification                  *    *    * 
                                                 and analysis system with        
                                                 sample-handling robotics        
                                                 and RPM                         

Real-Time Monitoring               1992          On-line product monitoring                     *    * 
                                                 in manufacturing.               

Integral 100Q System               1997          Fully integrated               *         *    *    
Multi-dimensional Biospecific HPLC               workstation optimized to        
                                                 perform rapid protein           
                                                 analysis, characterization      
                                                 and micropurification            
</TABLE>
___________________
*  R&D - Research & Development; PD - Process Development; QC - Quality Control
   & Assurance; MFG - Manufacturing.

Consumables and Reagents

     PerSeptive's POROS products consist of a family of consumable
chromatography columns and media used to perform Perfusion Chromatography for
both purification and analysis.  POROS products enable purification and analysis
procedures to be performed 10 to 1,000 times faster than with conventional
chromatography media. The POROS media particles are made of polystyrene polymers
and are coated with the Company's proprietary surface chemistries.  These
materials are rigid and can withstand the high pressures associated with HPLC,
although high pressure is not required for their use.  The coatings can also
withstand chemicals employed in cleaning that are harsher than those generally
tolerated by conventional media, significantly extending the useful life of
POROS products.  The efficiency and durability of POROS products are significant
cost-saving features.

     The Company has developed and currently markets a line of POROS products
representing different combinations of two particle types, three particle sizes,
more than 25 surface chemistries and various column configurations.  These
products can be used with conventional HPLC and LC equipment for purposes
ranging from laboratory-scale analyses through large-scale manufacturing
processes.  The Company's POROS 50 chromatography media provides high resolution
separations at the low pressures typical of pilot-scale production and
manufacturing applications.  PerSeptive sells POROS in prepacked columns for
methods development, analytical applications and 

                                      -9-
<PAGE>
 
small-scale purifications and in bulk for biopharmaceutical manufacturing.  The
POROS Self Pack Column Packing System allows for laboratory-scale purification
and analysis at lower cost than conventional prepacked columns.

     Other purification media such as Olgio R3 have been designed for specific
purification applications.  Oligo R3 was developed specifically to optimize the
purification of oligonucleotides.

Purification Instrumentation

     The Company's BioCAD Workstation is a computer-aided instrumentation system
designed to achieve the optimal use of the Company's POROS chromatography media
for laboratory and development scale purifications and for analysis. Each BioCAD
Workstation combines high speed pumps, valves, detectors and a built-in computer
and proprietary software used with Microsoft Windows.  The BioCAD Workstation is
able to collect and process the large amounts of data generated by Perfusion
Chromatography over short periods of time.  Unlike conventional chromatography
instruments, the BioCAD Workstation can be used equally well for both analysis
and purification.  The BioCAD Workstation facilitates the design, optimization
and execution of purification and analysis procedures by allowing the user to
test and optimize various operating parameters.  Results of completed procedures
can be quickly reviewed and grouped using integrated computational and graphics
software.

     The Company is currently reviewing its software to determine whether its
customers are likely to experience any performance issues related to use of two
digits to represent years, which is commonly called the "year 2000 problem."  If
such issues exist, the Company does not believe that they, or the steps to be
taken by the Company or its vendors to correct them, will have a material
adverse effect on the Company.

     The Company believes that a single BioCAD Workstation has the analytical
productivity of at least five HPLC instruments using POROS media and up to 15
HPLC instruments using conventional chromatographic media.  For example, a
BioCAD Workstation using a POROS column typically has a separation cycle of two
minutes and can complete up to approximately 600 cycles in a day, taking into
account cleaning and preparation time.  A conventional HPLC instrument using a
POROS column typically has a 12-minute cycle and can complete 100 cycles in a
day.  A conventional HPLC instrument using a conventional HPLC column typically
has a 30-minute cycle and can complete only 40 cycles in the same time period.

     PerSeptive has developed and introduced new versions of the BioCAD
Workstation for specific markets, including BioCAD SPRINT, a lower cost model
directed at the academic market, and the  BioCAD 700E, a second-generation
version of PerSeptive's industry leading BioCAD System introduced during fiscal
1996 with enhanced features.  The SCOUT Column Switching Device, a fully
integrated, software-driven, automated multi-column switching device that
greatly enhances systematic purification methods of the Company's instruments,
was introduced in 1995.

     PerSeptive introduced the Vision Workstation, the first chromatography
system to offer simultaneous biomolecule purification and analysis in a single
instrument through robotics.  Components and features such as the SCOUT and RPM
are integrated into the Vision Workstation.

     Real-Time Process Monitor ("RPM") technology is incorporated into several
automated purification and analysis instruments such as the Vision and BioCAD
workstations to analyze and monitor target biomolecules during production on a
continuous basis. Biopharmaceuticals are generally produced in cell culture and
are extracted through a series of purification steps. The Company believes that
RPM technology is the biopharmaceutical industry's first real-time, on-line
product monitoring system for the measurement of biomolecule purity,
concentration and product consistency. Prior to the introduction of RPM
technology, biopharmaceutical companies were unable to monitor these production
and purification processes without lengthy delays (typically one-half to two
days) in obtaining the results from conventional analytical techniques. The
Company believes that RPM technology represents an important tool in developing
optimal purification and fermentation processes. Furthermore, the Company also
believes that RPM technology has the potential to provide information important
for process monitoring, regulatory review and quality control.

                                      -10-
<PAGE>
 
     PerSeptive recently released the Integral 100Q System, which represents a
redesign of PerSeptive's Integral instrument which was originally introduced in
1993, which incorporates PerSeptive's unique technology of "Biospecific MDLC
("Multidimensional Liquid Chromatography) which is based on the combining of
orthogonal chromatography with on-line biospecific chemistries for accurate
selection and characterization of picomole amounts of biomolecules.

ANALYSIS PRODUCTS

     The following table shows the Company's primary analysis products and their
applications to the four main functional groups within companies developing and
commercializing biopharmaceuticals:

<TABLE>
<CAPTION>
                                                                                            
         PRODUCT                       PRODUCT                                                                  
         -------                       LAUNCH         APPLICATION/USE                             TARGET MARKETS*  
                                       -------        ---------------                             ---------------       
CONSUMABLES AND REAGENTS:                                                                R&D       PD        QC        MFG  
                                                                                         ---       --        --        ---  
<S>                                    <C>            <C>                                <C>       <C>       <C>       <C>    
                                                                                                                   
                                                                                                                   
CytoFluor Reagent Kits                  1990          Cell studies and fluorescence       *                   *
                                                      immunoassays and other binding       
                                                      assays                               

ID Sensor Cartridges and ID SelfPack    1992 -        Immunoassay analysis                *         *         *         *  
                                        1995                                               

TiterZyme, TiterScreen, and other       1992          Enzyme immunoassays for research    *                   *         
 Immunoassay Test Kits                                and clinical diagnostics             

BioMag Magnetic Particles               1993          Molecular biology and cell          *                   *        
                                                      separations                          

Poroszyme Cartridges                    1995          Enzyme digests                      *         *         *         

TiterFluor Kits                         1995-         Fluorescence immunoassays           *         *         
                                        1996                                               

PepMap C18 Pre-packed Columns           1996          Peptide mapping                     *         

Capillary Perfusion Tool Kits           1996          Micro-analysis and purification     *         

Sequazyme Kits                          1996          Enzyme digestion for mass           *                   *         
                                                      spectrometry analysis and            
                                                      sequencing                           
                                                                                           
Sequazyme Mass Standard Kit             1997          GMP and GLP compliance issues                 *         *         

INSTRUMENT SYSTEMS:                                                                        

CytoFluor Fluorescence Plate Readers    1990 -        Cell studies and fluorescence       *                   *         
                                        1996          immunoassays and other binding       
                                                      assays                               
</TABLE> 

                                      -11-
<PAGE>
 
<TABLE> 
<S>                                    <C>            <C>                                <C>       <C>       <C>       <C>    
Voyager Biospectrometry                 1994 -        Easy measurement and analysis of    *         *         *         
 Workstations and Delayed Extraction    1996          molecular weight using Mass          
 Technology                                           Spectrometry, suitable for           
                                                      sequencing biomolecules              
                                                                                           
InterPlate Micro-Fraction Collector     1996          Automated sample preparation for    *         *         *         
                                                      MALDI analysis                       

Symbiot Sample Workstation              1997          Automated Sample preparation        *         *         *         

Mariner LC/MS System                    1997          Interfaces Mass Spectrometry with   *         *         *         
                                                      Liquid Chromatography                
</TABLE>

_______________
*  R&D - Research & Development; PD - Process Development; QC - Quality Control
   & Assurance; MFG - Manufacturing.

CytoFluor Reagent Kits

     The Company sells a line of fluorescence assay reagent kits to be used with
its CytoFluor Fluorescence Plate Reader described below.  Fluorescence assays
determine what kinds of cells will accept or receive an experimental therapeutic
agent or nutrient, can detect whether a cell is infected with a virus or other
microorganism and can determine toxicity of molecules that may be carcinogens.
CytoFluor is also used extensively as a fluorescence plate reader for the
increasing number of fluorescence-based assays for molecular biological research
and for immunoassays.

ID Sensor Cartridges and SelfPack

     The Company's ID Sensor Cartridges are a line of new products designed to
combine the flow-through characteristics of Perfusion Chromatography with the
specificity and sensitivity of antibodies for immunoassays in a flow-through
column format, permitting target molecule detection in seconds to minutes, with
very low coefficients of variation.  ID Sensor Cartridges are designed to be
customized with specific antibodies by users in order to perform immunoassays on
BioCAD and INTEGRAL Workstations or conventional HPLC instruments.  The Company
introduced ID SelfPack for cost conscious customers in 1995.

Immunoassay Test Kits

     PerSeptive sells a line of in vitro products that includes immunoassay test
kits for use in medical and pharmaceutical research applications.  These tests
are used to measure levels of certain hormones, lymphokines, eicosanoids,
cytokines and growth factors in several applications, including the evaluation
of new pharmaceutical products.  These kits are manufactured in microtitre plate
or coated tube formats.  The Company also provides research, development and
manufacturing services related to in vitro diagnostic products on a fee basis to
third parties.

BioMAG Magnetic Particles

     Magnetic separation enables the biomedical researcher to greatly improve
the speed, purity, and yield for many common laboratory protocols including
selection of cell subpopulations and the isolation of mRNA and DNA for genetic
studies and sequencing.  PerSeptive's superparamagnetic bead technology offers
both a manual and an automatic system for separations.

Sequazyme Kits and DEcode software

     Related to the launch of PerSeptive's Delayed Extraction (DE) Technology,
the Company developed Sequazyme Kits and DEcode software to enable scientists to
determine the sequence of proteins and peptides using Voyager Biospectrometry
Workstations.  Sequazyme Kits use optimized enzyme digestion procedures to
sequentially eliminate either nucleic or amino acids from oligonucleotides or
peptides, respectively, and to allow scientists to unravel a given molecular
sequence.  The Sequazyme Mass Standard Kit provides an essential set of
standards for ensuring instrument 

                                      -12-
<PAGE>
 
GMP and GLP compliance. DEcode software then automates and facilitates the
identification process using the mass to charge ratios detected by the Voyager-
DE Biospectrometry Workstation and the known molecular weight of all amino acids
or nucleotide bases.

CytoFluor Fluorescence Plate Reader

     The Company's CytoFluor line of fluorescence detection and scanning
instruments are used principally for the monitoring of cell behavior by
fluorescence assays.  The market for fluorescence scanners of the type produced
by the Company has grown due to the desire to replace radioactivity-based
research assays in order to alleviate health, safety and environmental concerns
and disposal expense inherent in the use of radioactive assays.  The Company
launched the CytoFluor 4000 in 1996 with Temperature Control and enhanced
features and is currently launching TiterFluor fluorescence in vitro assays for
use with the CytoFluor 4000.

Voyager Biospectrometry Workstations

     The Voyager matrix-assisted laser desorption ionization time-of-flight
("MALDI-TOF") Biospectrometry Workstations enable molecular biologists and
biochemists to determine very accurately the purity and structure of a
biomolecule's mass in their laboratories, rather than in conventional
centralized mass spectrometry laboratories.  Mass spectrometry is an analytical
technique used to identify the molecular weight of molecules.  Molecular weight
determines the molecule's unique identity or "fingerprint."  Mass spectrometry
can also be used to detect other impurities or foreign elements in a given
sample.

     The Company is a leader in technical innovations in the field of mass
spectrometry.  In recent years, the Company has focused on the application of
mass spectrometry to biopharmaceutical development.  In 1995, the Company
introduced the Voyager Elite-Biospectrometry System for advanced research
applications, and recently launched a complete line of Voyager MALDI-TOF
Biospectrometry Workstations enhanced with PerSeptive's proprietary Delayed
Extraction ("DE") Technology which enables the sequencing of biomolecules.
PerSeptive received two patents covering Delayed Extraction in 1997.  Recently,
the Voyager Elite was redesigned and the Voyager-DE STR was released as a higher
performance instrument.

InterPlate

     PerSeptive's InterPlate Micro-fraction Collector for MALDI analysis
facilitates sample preparation for life scientists.  InterPlate can be used to
automate the process by taking purified product from an INTEGRAL workstation and
depositing it directly onto a Voyager Biospectrometry sample plate, for example.
In December 1996, PerSeptive announced the development of a range of new
techniques called GeneSpectrometry to accelerate high throughput identification
of gene mutations using the Company's PinPoint mutation detection technology,
which allows you to detect single point mutations.

Symbiot Sample Workstation

     The Symbiot Sample Workstation fully automates and dramatically accelerates
the current manual sample  treatment steps involved with Time-of-Flight ("TOF")
Mass Spectrometry.  With the introduction of this new platform, scientists
involved with protein and peptide analysis, with DNA sequence and variation
analysis, or with combinatorial chemistry, can now easily take advantage of the
unequaled analytical capabilities of Mass Spectrometry.

Mariner LC/MS System

     Per Septive recently launched the Mariner LC/MS system which is based on
the Company's proprietary Time-of-Flight mass spectrometry ("TOF/MS")
technology.  Mariner is a bench-top detector with an electrospray interface
which couples to liquid chromatography systems.  Key features of the instrument
include its wide mass range and extremely fast data acquisition speed along with
the capability to provide high resolution mass spectra with minimal sample
consumption.  These characteristics make the instrument an ideal detector for
all forms of fast liquid chromatography.  The high resolution mass separation
allows more accurate, exact mass measurements.  Liquid Chromatography/mass
spectrometry ("LC/MS") has recently emerged as a preferred technology for
complex anaylsis problems in the pharmaceutical industry and in biomedical
research labs.

                                      -13-
<PAGE>
 
SYNTHESIS PRODUCTS

     PerSeptive has been a technological leader in the development of new
chemistries and instruments for the synthesis of nucleic acids and peptides.
PerSeptive's family of over 3000 synthesis products includes instruments and
consumable reagents, supports, activators, linkers and other chemical products
used for nucleic acid and peptide synthesis.  The following table shows
PerSeptive's primary synthesis products and the applications for which they are
used:


<TABLE>
<CAPTION>
                                       PRODUCT
              PRODUCT                  LAUNCH              APPLICATION/USE                      TARGET MARKETS/*/
              -------                  -------             ---------------                      -----------------
SYNTHESIS CHEMICALS:                                                                     R&D       PD        QC        MFG
                                                                                         ---       --        --        ---
<S>                                    <C>            <C>                                <C>       <C>       <C>       <C>
Nucleic Acid and Peptide Synthesis     1986 -         Synthesis of DNA, PNA and RNA       *         *                   * 
 Reagents, Activators, Linkers and      1996     
 Supports                                         
                                                  
EDITH                                  1997           Sulfur transfer reagent for         *                             * 
                                                      synthesis of DNA               
NUCLEIC ACID SYNTHESIS PRODUCTS:                                                     

Expedite System                        1992 -         Synthesis of research and           *         *                   * 
                                        1995          manufacturing quantities of    
                                                      DNA, RNA and PNA               
                                                                                     
Multiple Oligo Synthesizer System      1995 -         Permits sixteen column parallel     *         *                   * 
 (MOSS)                                 1996             oligonucleotide synthesis   
                                                                                     
MemSyn, MemSyn HV                      1995 -         DNA and RNA membrane synthesis      *         *                   * 
                                        1996          devices                        
                                                                                     
PEPTIDE SYNTHESIS PRODUCTS:                                                          

Pioneer Peptide Synthesizer            1996           Synthesis of both simple and        *         *                   * 
                                                      complex peptides               

Multiple Peptide Synthesis (MPS)       1997           Permits 32 column parallel          *         *                   * 
                                                      peptide synthesis              

Pioneer Peptide Synthesizer            1997           Expanded peptide synthesis          *                   *         
 Workstation Software                                 capacity                        
</TABLE>
_______________
*  R&D - Research & Development; PD - Process Development; QC - Quality Control
   & Assurance; MFG - Manufacturing.

     PerSeptive's patented phosphoramidite chemistries (bulk and small-pack DNA
reagents) are the industry 

                                      -14-
<PAGE>
 
standard for synthesizing oligonucleotides.  In addition, the Company believes
that its Expedite family of reagents enables even faster DNA/RNA synthesis than
conventional systems.  Expedite reagents are compatible with PerSeptive's and
competitors' instruments.

Synthesis Chemicals

     PerSeptive offers a wide range of standard and specialty chemicals for
synthesis of nucleic acids, nucleic acid analogues, and peptides.  Products
include standard and modified bases for nucleic acid synthesis, bead and
membrane based synthesis supports for peptides, RNA and DNA, and other high
quality reagents manufactured under ISO 9002 guidelines.  Certain chemistries
such as peptide activators including TFFH, HATU, and HOAT and PNA oligomers are
highly proprietary and exclusively available for research purposes from
PerSeptive.

     Recently PerSeptive launched a new DNA synthesis reagent which dramatically
improves the sulfur transfer efficiencies over the other existing reagents on
the market.  With sulfur transfer efficiencies greater than 99% at each cycle,
EDITH will enable the synthesis of phosphothioated oligonucleotides with minimal
contamination of phoshodiester linkages.

     Recently PerSeptive announced a new technique for single point mutation
analysis based on PerSeptive's proprietary PNA technology.  This new technique,
"Pre-Gel Hybridization," developed by PerSeptive scientists, is a rapid
alternative for one of the most fundamental techniques in molecular biology,
"Southern blotting."

Expedite System

     The Expedite Nucleic Acid Synthesis System performs solid-phase synthesis
of DNA, RNA and PNA utilizing a unique and patented microfluidic system which is
designed to consume less reagent and generate less waste during operation than
prior and competing instruments, potentially allowing significant operational
savings for Expedite users.  This results in a reduction of reagent consumption
of 50% and reduced cycle times, giving high quality oligonucleotide at
significantly lower cost. Expedite products can be used for the synthesis of
RNA, normally a very difficult task.  While currently this is a relatively small
application, there is increasing customer interest in the synthesis of RNA for
use in RNA-based drugs that have either a catalytic or anti-sense effect on
genetic processes.

Multiple Oligo Synthesis System (MOSS)

     The MOSS, when used in conjunction with the Expedite Nucleic Acid Synthesis
System, extends the synthesis throughput and overall capacity of PerSeptive's
synthesis instruments.  The MOSS enables customers to efficiently synthesize
nucleic acid and peptides in less time and with less effort.  The MOSS can be
used in conjunction with recently introduced MemSyn and reusable MemSyn HV
membrane devices to further facilitate ease of use and handling in the synthesis
process.

Pioneer Peptide Synthesizer

     Pioneer Peptide Synthesizer is an automated, versatile peptide system
introduced in 1996 for research applications.  The multiple column instrument
utilizes enhanced monitoring and flexible programming for high efficiency
synthesis of standard and difficult peptides.  Innovative design lowers reagent
consumption and increases throughput.

Multiple Peptide Synthesis Option (MPS)

     The MPS can be used in conjunction with the Pioneer to run up to 32 peptide
synthesis runs in parallel or to create two independent entry operated
synthesizers using the Pioneer as a workstation.

Pioneer Workstation Software

     The Pioneer Workstation Software expands the capabilities of the peptide
synthesis system.  New capabilities include multiple instrument control,
synthesis monitoring, and use of an internal database as well as other features.

                                      -15-
<PAGE>
 
BUSINESS DEVELOPMENT

     The Company believes that its core technologies are directly applicable to
many biomedical industry applications as well as applications in other
industries. The Company plans to explore corporate collaborations or other
business arrangements to address the broader application of its technologies to
clinical diagnostics and other businesses.

PTC-II

     In December 1993, the Company and PTC-II completed a public offering with
total net proceeds to PTC-II of $54.1 million. PerSeptive formed PTC-II as a
separate special purpose corporation in order to accelerate research and
development aimed at the application of PerSeptive's core technologies to
commercial opportunities in large life science markets.  From December 1993 to
March 1996, PTC-II operated as a separate company from PerSeptive and pursued
applications of PerSeptive's technologies in four programs: DNA and peptide
synthesis; DNA and protein sequencing; clinical diagnostics; and systematic
screening of chemical and biological compounds for drug discovery.  During this
time period, PerSeptive licensed to PTC-II the technology necessary to pursue
these programs and PTC-II contracted with PerSeptive to develop products and
services aimed at these market opportunities which extended beyond PerSeptive's
principal business.

     In November 1995, PerSeptive, PerSeptive Acquisition Corporation ("PAC"), a
wholly owned subsidiary of PerSeptive, and PTC-II entered into a definitive
agreement pursuant to which PerSeptive agreed to an exchange offer for all of
the 2,645,000 outstanding units of PTC-II followed by a merger of PTC-II with
PAC.  Each PTC-II unit consisted of one share of Callable Common Stock, $.01 par
value per share, of PTC-II and one Class E Warrant of PerSeptive exercisable for
one share of PerSeptive Common Stock at $33.00 per share until December 1998.
Effective March 8, 1996, PerSeptive acquired 2,603,125 PTC-II units that were
validly tendered and not withdrawn in the exchange offer.  The PTC-II unit
holders, who participated in the exchange offer, exchanged their PTC-II units
for 2,603,125 shares of PerSeptive Common Stock and new Class I Warrants which
expired on August 8, 1997.  On March 13, 1996, PTC-II merged with PAC and became
a wholly owned subsidiary of PerSeptive.  Each of the remaining 41,875 shares of
callable common stock of PTC-II not exchanged in the exchange offer were
automatically converted into a right to receive one share of PerSeptive Common
Stock upon the merger of PTC-II with PAC.  The total value of the Company's
Common Stock issued in the exchange offer was approximately $16 million based on
the last reported sales price or closing price of the Company's Common Stock on
The Nasdaq National Market on March 8, 1996.  See "--Recent Developments."

     PerSeptive pursued the following research and development programs on
behalf of PTC-II, and except for its Drug Discovery Program (See "-- ChemGenics
and Millennium Transactions" below) will continue to pursue certain of these
projects through its own research and development programs:

     DNA and Peptide Synthesis Program.  PerSeptive has worked towards the
development of DNA and peptide synthesis systems that are based on the superior
mass transport characteristics of PerSeptive's POROS media.  PerSeptive believes
that the systems it is developing will substantially reduce the costs of DNA and
peptides synthesis and will more readily enable the large-scale manufacture and
commercialization of DNA- and peptide-based biotherapeutics.

     DNA and Protein Sequencing Program.  PerSeptive has pursued the use of its
high-resolution, high-sensitivity mass spectrometers and innovative separations
analysis of DNA and protein molecules.  Sequencers identify the order of
chemical groups that constitute DNA and proteins.  Continuing research directed
toward an understanding of biology at a molecular level has caused the expansion
of the market for automated sequencers.  PerSeptive believes that the mass
spectrometry and separations technologies it is developing will substantially
increase productivity in sequencing of biomolecules and that this increase in
sequencing productivity at the gene and protein level can have an enabling
effect on biomedical research aimed at identifying better diagnostics and
therapeutics.

     PerSeptive has developed a range of new techniques for faster and more
accurate detection and analysis of genomic sequences and mutations.  The new
techniques, which are based on PerSeptive's mass spectrometry instrumentation,
are called GeneSpectrometry.

                                      -16-
<PAGE>
 
     Clinical Diagnostics Program.  PerSeptive has pursued development of
several clinical diagnostic systems, which are being developed to include
innovations both in instrument and reagent technology.  These systems will
incorporate new separation and detection formats that are designed to result in
substantial improvements in speed, precision, sensitivity and cost.  For
example, the MEASure system has been extended beyond early feasibility and
prototype development stages and is expected to provide considerable advantages
over current technology.  These systems will be designed to detect and measure
target molecules (analytes) currently measured by existing diagnostic systems,
as well as analytes related to the emerging genetic testing market.

     Another facet of this program area was the development of clinical
diagnostic kits for use on random access analyzers.  PerSeptive has developed
clinical diagnostic assays for a number of companies as part of PerSeptive's
contract research services which generates a small amount of revenue.

     Drug Discovery Program.  Through its work for PTC-II, PerSeptive developed
new methodologies for the screening of libraries of biological and chemical
compounds based on its high-throughput separations technologies and automated
instrumentation systems. Pharmaceutical drug discovery has traditionally been
based on random screening techniques. The time-consuming and costly nature of
drug development, together with advances in life sciences technologies, have
propelled many developers to pursue rational drug design approaches that are
intended to enhance productivity in drug discovery. PerSeptive has developed
novel screening methods that it believes will combine the benefits of both
random and rational drug design approaches to increase productivity in drug
discovery significantly.

ChemGenics and Millennium Transactions

     In June 1996, the Company entered into a transaction with ChemGenics
Pharmaceuticals, Inc. (ChemGenics") (formerly, Myco Pharmaceuticals Inc.), in
which the Company transferred certain assets and employees of the Company's drug
discovery program to ChemGenics and granted a non-exclusive license to
ChemGenics to use the Company's technology (including technology developed
through PTC-II) in the field of drug discovery in exchange for shares of
ChemGenics common stock and warrants to purchase additional shares of ChemGenics
common stock exercisable until June 28, 2000.  The warrants were exercisable at
$5.00 per share.  The Company was subject to certain contractual restrictions on
the sale or distribution of its holdings of ChemGenics common stock.  In
December 1996, the Company and ChemGenics executed amendments to their
agreements pursuant to which the Company exchanged a portion of its ChemGenics
common stock for a promissory note for $3 million payable on the earlier of the
closing of ChemGenics' initial public offering or December 31, 2002.  The
Company held approximately 34% of the outstanding common stock of ChemGenics as
of December 28, 1996.

     In January 1997, ChemGenics and Millennium Pharmaceuticals, Inc.
("Millennium") entered into an Agreement and Plan of Merger ("Agreement").
Under the terms of the Agreement, the stockholders of ChemGenics received common
stock of Millennium in exchange for their common stock of ChemGenics.  At the
closing on February 10, 1997, the Company received 1,612,582 shares of
Millennium common stock, $.001 par value per share ("Millennium common stock"),
in exchange for its shares of ChemGenics common stock.  In addition, the Company
received $4 million cash in exchange for the warrants for ChemGenics common
stock and in satisfaction of the above referenced promissory note.  The parties
to the Agreement contemplate that the transaction will qualify as a tax-free
merger.  The Company's shares of Millennium common stock were subject to
restrictions on sale which expired in increments between June and September
1997.  During the quarter ended June 28, 1997, the Company sold approximately
50% of its investment in Millennium for $12.9 million and realized a gain on the
sale of approximately $800,000.

RESEARCH AND DEVELOPMENT

     As of December 24, 1997, PerSeptive's technical research and development
group consisted of approximately 85 persons, many of whom have graduate degrees
in fields such as biochemistry, chemical engineering, organic chemistry, polymer
science and protein chemistry.  During the Company's fiscal years ended
September 30, 1997, 1996 and 1995 research and development expenditures funded
internally were approximately $15.2 million, $11.3 million and $7.0 million,
respectively.

     The Company believes that applications of its technologies extend beyond
use in biopharmaceutical and clinical 

                                      -17-
<PAGE>
 
applications to uses in the environmental services, agriculture and food
processing industries. PerSeptive may seek collaborative arrangements to develop
future products for these applications.  The Company is considering entering
into research and development and collaborative arrangements to develop specific
products, processes and technologies with third parties, including customers.  
No assurance can be given that the Company will be successful in entering into
such arrangements or developing commercially valuable products or technologies
as a result of such arrangements.

MARKETING AND SALES

     PerSeptive markets its products in the United States, Germany, France, the
United Kingdom, Canada and Japan through a direct sales and marketing staff.
Approximately 50% of the Company's product revenues are from outside North
America.  As of December 24, 1997, the Company's sales, marketing and customer
support organization consisted of approximately 258 employees.  PerSeptive also
has independent distributors in Australia, Austria, Benelux (Belgium, the
Netherlands, Luxembourg), the People's Republic of China, Denmark, Egypt,
Finland, Greece, Iceland, India, Israel, Italy, Korea, Malaysia, New Zealand,
Norway, Philippines, Singapore, South Africa, Spain, Sweden, Switzerland,
Taiwan, Thailand, Turkey, and Vietnam.

CUSTOMERS

     PerSeptive began sales of the first of its products, POROS chromatography
media, in April 1990 and its BioCAD Workstation in September 1991.  No single
customer accounts for more than 10% of the Company's products sales.  Contract
research and development revenue generated by the Company from PTC-II was 12%
and 22% of the Company's total revenues in fiscal 1996 and 1995, respectively.
No revenue was generated from PTC-II in the fiscal year ended September 30,
1997.  At September 30, 1997, the Company had a backlog estimated at
approximately $3.3 million.

COMPETITION

     PerSeptive's products compete on the basis of superior performance, cost
effectiveness, breadth of product line and expertise in application support.  
The Company is not aware of any other companies with patented or proprietary
technologies comparable to its Perfusion Chromatography, ImmunoDetection, PNA,
Expedite or RSD technologies.  The Company's products, however, compete with
products using a number of other technologies, including LC, HPLC, immunoassay
and other conventional technologies.  Additional competitive products using new
technologies may also be introduced.  Many of the companies selling or
developing such products have financial, manufacturing and distribution
resources significantly greater than those of the Company.  In addition, many of
these competing companies have had long-term supplier relationships with the
Company's existing and potential customers.  See "Legal Proceedings," for
information concerning the Company's Perfusion Chromatography patent
infringement litigation.

     The Company's POROS chromatography products compete primarily with products
that differ in base material, particle size and composition, surface chemistries
and operating environment.  The dominant suppliers of chromatography instruments
and supplies are Pharmacia AB Biotech, Inc., a subsidiary of Pharmacia & Upjohn
Co., and Waters Corporation.

     Direct competition for the Company's analysis products, INTEGRAL Micro-
Analytical Workstation and RPM process monitoring technology comes primarily
from conventional immunoassay technology.  The Company believes that its
products offer cost-effectiveness and performance capabilities not available
with products based on other existing technologies.

     In its biospectrometry products business, the Company competes with well-
established suppliers of mass spectrometers and other analytical instruments.
The Company believes, however, that it has a major presence in time-of-flight
mass spectrometry for biological analysis and that it is the only competitor
with a dedicated focus on biomolecular analysis.  The Company also believes that
its products have superior performance capabilities, but the Company also
competes on the basis of price, technical support and service.

     The Company's synthesis products business faces vigorous competition and it
is anticipated that competition will become more intense in the future.  The
Company generally competes on the basis of product performance, innovative

                                      -18-
<PAGE>
 
product design and technology, superior technical support of customer
applications and cost effectiveness.  With respect to its synthesis products,
the Company's principal competitor is the Applied Biosystems Division of The
Perkin-Elmer Corporation.

     Competition in the marketing of immunodiagnostic tests and reagents is
intense.  Many of the Company's competitors in this market have substantially
greater resources than those of the Company.  PerSeptive believes that market
shares in its sector of the immunodiagnostic and research industry have
historically been volatile because of continuing technological developments.
PerSeptive believes that its ability to develop and manufacture superior and
novel products at commercially acceptable prices will in large part determine
its success in the immunodiagnostic and research market.

MANUFACTURING

     PerSeptive manufactures substantially all of its own consumable products
and instrumentation systems.  POROS media is manufactured from raw chemicals
utilizing standard synthesis techniques and proprietary Company technology.
Coating chemicals are synthesized and applied to the particles using the
Company's patented and proprietary techniques.  POROS media is shipped in bulk
quantities or in columns pre-packed using proprietary techniques developed by
the Company.

     Manufacturing activities for the Company's synthesis reagents are
conducted at the Company's manufacturing facility in Hamburg, Germany which was
completed during fiscal 1996. See "Properties."

GOVERNMENT REGULATION

     Government regulations play a significant role in the research,
development, production and commercialization of health care products, such as
biopharmaceuticals.  While none of the Company's current purification, analysis
and synthesis products require FDA approval, many of the Company's customers are
required to obtain the approval of the FDA and similar health authorities in
foreign countries for the clinical testing and commercial sale of
biopharmaceuticals for human use.  FDA regulations apply not only to health care
products, but also to the process and production facilities used to produce such
products.  These regulations are called FDA current Good Manufacturing Practices
("cGMP").  The Company is often required to adopt aspects of cGMP regulations to
support its customer's use of its products.

     The Company's in vitro clinical diagnostic products, as well as any
clinical diagnostic applications of the Company's ImmunoDetection technologies,
are subject to FDA device and reagent approval and regulation.  This means that
before any new medical devices can be commercially distributed, the manufacturer
must submit to the FDA either a premarket notification ("510(k)") or a premarket
approval ("PMA") application.  A 510(k) notification can be submitted when the
Company believes the device is substantially equivalent to another device
currently being marketed by itself or by another organization.  There can be no
assurance that the use of a 510(k) notification will be available for any of the
Company's future diagnostic products.

     A PMA, which is required for medical devices not eligible to be marketed
under a 510(k) notification, must demonstrate that the product is safe and
effective, requires more time to prepare and is a much more complex submission
to the FDA.  Following completion of laboratory evaluations and adequate
controlled clinical trials to establish safety and efficacy of the product for
its intended use, the Company would be required to file a PMA application, which
includes the results of all research and product development, clinical studies
and related information.  FDA review and approval of a PMA application often
takes 12 to 18 months, or even longer, and must be completed before the product
may be sold for clinical diagnostic use in the United States.  The process of
obtaining PMAs from the FDA and other regulatory authorities can be costly, time
consuming and subject to unanticipated delays.  There can be no assurance that
the approvals of the Company's or its customers' products, processes or
facilities will be granted.  Any failure to obtain, or delay in obtaining, any
such required approval could adversely affect the Company's marketing efforts.

     The Company believes that its production and documentation procedures for
its current clinical diagnostic products comply with FDA cGMP requirements.  In
support of its customer's requirements to comply with FDA regulations regarding
the use of its purification, analysis, and synthesis products, the Company
strives to maintain 

                                      -19-
<PAGE>
 
production and documentation procedures for them that parallel applicable parts
of the FDA cGMP requirements.

     In addition to the regulatory framework for clinical trials and product
approvals, PerSeptive is subject to regulation under federal, state and local
law, including requirements regarding occupational safety, laboratory practices,
environmental protection and hazardous substance control, and may be subject to
other present and possible future local, state, federal and foreign regulation.

PATENTS, PROPRIETARY TECHNOLOGY AND LICENSES

     PerSeptive's policy since its inception has been to seek patent protection
for certain of its inventions. The Company pursues patent protection in the
United States and files corresponding patent applications in certain foreign
jurisdictions.  The Company believes that patent protection is an important
element in the protection of its competitive and proprietary position, but other
elements, including trade secrets and customer service, are of at least equal
importance.  The Company owns or has exclusive rights to more than 82 patents
worldwide, of which more than 58 are U.S. patents.  The Company has more than 88
patent applications on file worldwide, of which more than 40 are U.S. patent
applications.

     PerSeptive currently holds five issued U.S. Patents relating to its
Perfusion Chromatography technology. See "--PerSeptive's Technologies--Perfusion
Chromatography."  The last of these patents expire in 2013.  PerSeptive also has
additional U.S. patents and pending U.S. patent applications that relate to its
Perfusion Chromatography, surface coating, ImmunoDetection, RSD and related
technologies.  There can be no assurance that any of such applications will
result in the issuance of a patent or that an issued patent will afford the
Company any significant protection.  The invalidation of key patents owned by
the Company or the failure of patents to issue on pending patent applications
could create increased competition, with potential adverse effects on the
Company and its business prospects.  PerSeptive has pending applications in
various other technologies, including time-of-flight, laser desorption mass
spectrometry and its use in DNA sequencing, isoelectric focusing, drug
screening, peptides, sequencing of nucleic acids and applications of magnetic
particles to both biomolecule separations and binding assays.

     Certain of the Company's coating technologies and patent rights have been
derived in collaboration with Purdue University ("Purdue").  The Company has an
exclusive license to, including the right to sublicense, United States patents
covering such technologies.  Under the license agreement, the Company has
certain royalty obligations, including minimum royalties.

     Certain of PerSeptive's patent rights were acquired from Millipore
Corporation in connection with PerSeptive's acquisition of its synthesis
business.  As a result of this acquisition, PerSeptive either owns or holds
license rights to more than fifty-one U.S. patents and pending U.S. patent
applications related to preparation of oligonucleotides using phosphoramidite
reagent products, a nucleic acid synthesis product, the Expedite Synthesizer and
PNA products.

     The Company also relies upon trade secret protection for its confidential
and proprietary information. There can be no assurance that others will not
independently develop substantially equivalent proprietary information or
techniques, gain access to the Company's trade secrets or disclose such
technology, or that the Company can effectively protect its trade secrets. The
unauthorized disclosure of the Company's trade secrets could have a material
adverse effect on the Company's business.

     The Company's policy is to require each of its employees, consultants and
significant scientific collaborators to execute confidentiality agreements upon
the commencement of an employment or consulting relationship with the Company.
These agreements generally provide that all confidential information developed
or made known to the individual during the course of the individual's
relationship with the Company is to be kept confidential and not disclosed to
third parties except in specific circumstances. In the case of employees and
consultants, the agreements generally provide that all inventions conceived by
the individual in the course of rendering services to the Company shall be the
exclusive property of the Company. There can be no assurance, however, that
these agreements will provide meaningful protection or adequate remedies for the
Company's trade secrets in the event of unauthorized use or disclosure of such
information.

                                      -20-
<PAGE>
 
EMPLOYEES

     As of December 24, 1997, the Company employed approximately 605 persons
full time.  None of the Company's employees is covered by a collective
bargaining agreement.  The Company considers its relations with its employees to
be good.

ITEM 2.   PROPERTIES

     In connection with its core business, PerSeptive leases the following
properties:  196,000 square feet of space in Framingham, Massachusetts;
approximately 10,000 square feet of space in Cambridge, Massachusetts; 12,000
square feet in Holliston, Massachusetts; and additional space in: Weisbaden,
Germany; Voisins le Bretonneux, France; Hertfordshire, England; Ontario, Canada;
and Tokyo and other locations in Japan.  In addition, PerSeptive leases
approximately 2,300 square feet in San Francisco, California; and approximately
14,000 square feet in Houston, Texas.  These facilities are used for
manufacturing, laboratories, warehouses, distribution centers and offices. The
leases expire beginning in 1997 through 2009.

     In early calendar 1996, the Company moved its synthesis operations in
Hamburg, Germany to a new 58,000 square foot facility built on land purchased by
PerSeptive for manufacturing, office and laboratory use.   See "--
Manufacturing."  In addition, the Company's synthesis products business shares
distribution facilities with Millipore Corporation in Yonezawa, Japan.

ITEM 3.  LEGAL PROCEEDINGS

     1.   The Company has sued Pharmacia Biotech, Inc. and certain of its
affiliates, and their parent Pharmacia AB (collectively, "Pharmacia"), now part
of Pharmacia & Upjohn Co., Sepracor Inc. ("Sepracor") and BioSepra Inc.
("BioSepra"), a company partially owned by Sepracor, for willful infringement of
three PerSeptive patents (U.S. Nos. 5,019,270, 5,228,989 and 5,384,042),
covering the process of Perfusion Chromatography(R) and the manufacture, sale
and use of chromatography particles and matrices that enable Perfusion
Chromatography (collectively, the "Original Perfusion Patents").  The Company
commenced its action against Pharmacia and Sepracor on October 14, 1993, and the
consolidated action has been pending in the United States District Court for the
District of Massachusetts.  BioSepra was added as a party on May 19, 1994.  The
lawsuit also claims that Sepracor and BioSepra made false and misleading
representations of fact with respect to the Company's products, and that
BioSepra engaged in false and misleading advertising.  The lawsuit, in an
amended complaint filed by Purdue University and the Company, also claims that
Sepracor and BioSepra infringe a fourth patent ("the Coatings Patent"), licensed
exclusively by PerSeptive, covering novel coatings for chromatography media.
The lawsuit seeks to enjoin the defendants from infringing the four patents and
asks for treble damages, as well as other relief and damages.  Pharmacia,
Sepracor and BioSepra each have asserted that their products do not infringe the
Original Perfusion Patents and that the Original Perfusion Patents are invalid
and unenforceable, and have asserted counterclaims against the Company alleging
that the Company's assertions that they have infringed the patents, and that
statements allegedly made by the Company to customers concerning the litigation,
constitute unfair competition, commercial disparagement, unfair trade practices,
tortious interference with customer relationships and violation of the Lanham
Act, and seeking an unspecified amount of damages, and, under certain asserted
claims, double or treble damages, as well as attorneys' fees and expenses.  The
Company has denied any liability on these counterclaims.

     On January 9, 1996, the Court entered an order denying the Company's motion
for partial summary judgment relating to the inventorship of the Original
Perfusion Patents, granting the Defendants' motions for partial summary judgment
that inventorship of the Original Perfusion Patents is improper for failure to
name one or more persons as additional joint inventors, and requiring the
Company to move to correct inventorship or have the patents declared invalid.
On March 12, 1996, the Court entered a ruling directing the Company to correct
inventorship and placed on the Company the burden of proving the absence of
deceptive intent in the designation of inventors at a hearing.  The Company
moved to correct inventorship.  The Company has preserved its right to appeal a
number of issues, including the Court's January 9, 1996 order that the Original
Perfusion Patents failed to name additional persons as joint inventors and the
Court's March 12, 1996 order imposing the burden of proof on PerSeptive.  The
hearing was held in May and June 1996.  On April 3, 1997, the Court issued a
ruling denying the Company's motion to correct inventorship, ruling 

                                      -21-
<PAGE>
 
that the Company had not met its burden of proving that two British scientists,
who worked for a company that is not a party to the litigation, were not named
on the Original Perfusion Patents without deceptive intent within the meaning of
Section 256 of Title 35 United States Code, and granted judgment in favor of
Sepracor, BioSepra and Pharmacia on the Company's claims relating to the
Original Perfusion Patents.  On April 16, 1997, the Company filed a motion to
permit an immediate appeal of the April 3, 1997 decision, and the related
January 9, 1996 and March 12, 1996 decisions, to the United States Court of
Appeals for the Federal Circuit, which has exclusive jurisdiction in the United
States to hear appeals in patent cases.  On April 30, 1997, the defendants filed
a motion requesting that the District Court render a decision on the defendants'
defense of inequitable conduct prior to permitting the Company's appeal.  On
July 30, 1997, the Company filed a motion seeking to (i) vacate the Court's
April 3, 1997 decision and (ii) enter a final judgment that will permit the
Company to appeal the Court's earlier January 9, 1996 and March 12, 1996 orders
that the patents do not name all of the inventors and imposing the burden of
proof on PerSeptive.  The Company's motion is based on a decision by the Court
of Appeals for the Federal Circuit in an unrelated case, Stark v. Advanced
                                                         -----------------
Magnetics, Inc., issued on July 11, 1997, which the Company contends rendered
---------------                                                              
the Court's April 3, 1997 decision erroneous.  The defendants filed motions
again requesting that the District Court render a decision on their defense of
inequitable conduct prior to permitting an appeal.  The Court has not rendered a
decision on the Company's or the defendants' motions.  The Court has not yet
considered the issue of infringement of the Original Perfusion Patents or the
Coatings Patent.

     On December 12, 1997, the Company announced that it had settled the
litigation with Sepracor and BioSepra.  Under the terms of the settlement, the
Company received an unspecified amount and BioSepra obtained a non-exclusive
license under PerSeptive's Perfusion Chromatography patents.  Sepracor and
BioSepra were removed as defendants in the litigation.  The Company intends to
continue to vigorously pursue the litigation against Pharmacia, which remains a
defendant.

     The Company may incur substantial expenses relating to these lawsuits.
There can be no assurance that the outcome of the litigation will not have a
material adverse effect on the Company.

     In September 1996 and February 1997, two new United States patents relating
to Perfusion Chromatography systems were issued to the Company.  Neither of
these patents, which cover instruments and systems that perform the high-speed,
high resolution chromatography which is the subject of the Original Perfusion
Patents, are the subject of the current litigation.  Prior to the issuance of
these patents, the Company had submitted to the patent examiner the District
Court's January 9, 1996 order, and non-confidential portions of related briefs
filed by the parties, and the patents were issued naming only PerSeptive's
scientific founders as the inventors nonetheless.

     2.   Since November 1994, the Company has been responding to informal
requests for information from the Securities and Exchange Commission relating to
certain of the Company's financial matters. In May 1995, the Company was advised
by the Commission that it had obtained a formal order of investigation so that,
among other matters, it may utilize subpoena powers to obtain information
relevant to its inquiry. The Commission has and may in the future utilize its
subpoena powers to obtain information from various officers, directors and
employees of the Company and from persons not presently associated with the
Company. If, after completion of its investigation, the Commission finds that
violations of the federal securities laws have occurred, the Commission has the
authority to order persons to cease and desist from committing or causing such
violations and any future violations. The Commission may also seek
administrative, civil and criminal fines and penalties and injunctive relief.
The Department of Justice has the authority in respect of criminal matters.
There can be no assurance as to the timeliness of the completion of the
investigation or as to the final result thereof, and no assurance can be given
that the final result of the investigation will not have a material adverse
effect on the Company. The Company is cooperating fully with the investigation,
and has responded and will continue to respond to requests for information in
connection with the investigation.

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

          No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1997.

                                      -22-
<PAGE>
 
                                    PART II


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

MARKET, STOCKHOLDER AND DIVIDEND INFORMATION

     PerSeptive's Common Stock is quoted on The Nasdaq National Market under the
symbol "PBIO."  The following table sets forth the range of quarterly high and
low sales prices for PerSeptive's Common Stock for the two most recent fiscal
years:

<TABLE>
<CAPTION>

FISCAL 1997
                                                    HIGH            LOW
                                                    ----            ---
<S>                                               <C>             <C>
     First Quarter...........................      $ 7 3/4         $5 5/8
     Second Quarter..........................        9 3/4          5 3/4
     Third Quarter...........................       8 1/16          4 5/8
     Fourth Quarter..........................       12 5/8          5 7/8

    FISCAL 1996

     First Quarter...........................      $11 1/8         $8 3/8
     Second Quarter..........................        9 3/8          5 7/8
     Third Quarter...........................       10 7/8          6 3/4
     Fourth Quarter..........................       10 3/8          6 5/8
</TABLE>

     On December 24, 1997, the closing sale price of the Company's Common Stock
was $11 7/16 per share.  As of December 24, 1997, there were approximately 739
holders of record of the Company's Common Stock and an estimated 3,000
additional beneficial holders.

     The Company has never paid cash dividends on its Common Stock and has no
present intention to pay cash dividends in the future.  The Company intends to
retain any future earnings to finance the growth of the Company.

                                      -23-
<PAGE>
 
ITEM 6.   SELECTED CONSOLIDATED  FINANCIAL DATA

                     SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data of PerSeptive Biosystems, Inc. set
forth below as of and for each of the three years in the period ended September
30, 1997 has been derived from PerSeptive's Consolidated Financial Statements
which have been audited by Coopers & Lybrand L.L.P., independent accountants,
and which are included elsewhere in this Annual Report on Form 10-K.  The
statement of operations data for each of the two years in the period ended
September 30, 1994 and the balance sheet data as of September 30, 1993 and 1994
were derived from PerSeptive's audited Consolidated Financial Statements not
included in this Annual Report on Form 10-K.  The data set forth below should be
read in conjunction with the Consolidated Financial Statements and related notes
thereto of PerSeptive included elsewhere in this Annual Report on Form 10-K.

                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                             Year Ended September 30,
                                                     -------------------------------------------------------------------------
                                                          1993            1994            1995            1996           1997
                                                     -------------------------------------------------------------------------
<S>                                                 <C>            <C>             <C>             <C>             <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
    Product revenue                                     $ 10,535       $  30,707       $  69,430       $  75,916       $96,516
    Contract revenue (1)                                   4,431          15,348          19,999          10,102             -
                                                        --------       ---------       ---------       ---------       -------
     Total revenue                                        14,966          46,055          89,429          86,018       $96,516
Cost of revenue:
    Cost of product revenue                                3,756          15,524          33,169          37,813        49,815
    Cost of contract revenue (1)                           2,924          13,009          16,968           8,571             -
    Other charges (2)                                          -               -               -           9,906             -
                                                        --------       ---------       ---------       ---------       -------
     Total cost of revenue                                 6,680          28,533          50,137          56,290        49,815
Gross Profit                                               8,286          17,522          39,292          29,728        46,701
Operating expenses:
    Research and development                               3,222           6,828           6,999          11,342        15,215
    Selling, general and administrative                    9,193          27,757          32,771          39,518        40,425
    Other charges (2)                                          -          14,681          15,459          24,239             -
    Amortization                                             349           2,209           3,080           2,158         1,041
                                                        --------       ---------       ---------       ---------       -------
     Loss from operations                                 (4,478)        (33,953)        (19,017)        (47,529)       (9,980)
    Other income (expense), net (12)                       1,259             307          (1,553)         (2,938)       25,223
    Provision for income taxes                                 -            (366)              -               -             -
                                                        --------       ---------       ---------       ---------       -------
Net income (loss)                                       $ (3,219)      $ (34,012)      $ (20,570)      $ (50,467)      $15,243
                                                        ========       =========       =========       =========       =======
Net income (loss) per common share, 
 primary (3)(4)(7)                                      $  (0.31)      $   (2.88)      $   (1.88)      $   (3.22)      $  0.63
                                                        ========       =========       =========       =========       =======
Net income (loss) per common share, 
 fully diluted                                                                                                         $  0.60
                                                                                                                       =======
Weighted average common shares outstanding (3)(4)         10,240          11,903          12,340          16,296        21,905
                                                        ========       =========       =========       =========       =======
Weighted average common shares                                 -               -               -               -        25,552
outstanding, fully diluted                                                                                             =======
</TABLE>

                                      -24-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                                        September 30,
                                                              ------------------------------------------------------------------
 
                                                                  1993          1994          1995          1996          1997
                                                              ------------------------------------------------------------------
<S>                                                             <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Cash, cash equivalents and
   investments                                                   $36,357      $ 36,794      $ 23,816      $ 24,657      $ 34,929
Working capital                                                   21,561        34,668        27,096        26,572        42,547
Total assets                                                      54,888       137,246       138,209       121,655       133,951
Total long-term debt (including obligations under capital
 lease) (5)(8)                                                       137        27,230        32,559        33,165        25,834
 
Redeemable convertible preferred stock (6)(9)(10)                      -        33,342             -             -             -
Total stockholders' equity (3)(9)(10)(11)                         50,658        40,349        65,107        50,285        67,398
</TABLE>

__________________
(1)  In December 1992, March 1993 and December 1993, the Company entered into
     certain technology license and research and development agreements with
     PerSeptive Technologies Corporation ("PTC"), PerIsis II Development
     Corporation ("PerIsis") and PTC-II, respectively. As of September 30, 1996,
     all technology rights granted to these entities have been re-acquired by
     the Company and no further contract revenue is anticipated to be derived
     from these entities.  See Note 15 of Notes to the Consolidated Financial
     Statements.

(2)  Other charges of $9.9 million recorded as part of cost of goods sold during
     the year ended September 30, 1996 relate to various actions taken to
     realign the current product offering and to write-off certain manufacturing
     related assets.  Other charges of $24.2 million recorded as part of
     operating expenses during the year ended September 30, 1996 related to
     various matters including the write-off of in-process research and
     development in connection with the acquisition of PTC-II, write-off of
     certain intangibles related to acquisitions reported in prior years, and
     additional provisions for estimated litigation costs associated with
     certain matters including the ongoing patent litigation. Charges of $15.5
     million in the year ended September 30, 1995 include charges associated
     with the Company's settlement of shareholder litigation related to the
     restatement of the consolidated financial statements for the year ended
     September 30, 1993 and in-process research and development charges related
     to the purchase of the outstanding shares of PerIsis.  Other charges of
     $14.7 million in the year ended September 30, 1994 reflect the write-off of
     in-process research and development in connection with the acquisition of
     PTC effective December 28, 1993 and Vestec Corporation in the year ended
     September 30, 1994. See Notes 13, 14, 15, and 16 of Notes to the
     Consolidated Financial Statements.

(3)  On June 5, 1992, the Company completed an initial public offering of
     2,500,000 shares of its Common Stock.  The net proceeds to the Company were
     approximately $15,520,000.  On July 2, 1992, the Company issued 375,000
     shares of its Common Stock in exchange for $2,441,000 in net proceeds
     pursuant to the exercise of the underwriters' over-allotment option in
     connection with the Company's initial public offering.  On March 4, 1993,
     the Company completed a second public offering of 2,000,000 shares of its
     Common Stock.  The net proceeds to the Company were approximately
     $33,840,000. On August 16, 1996, the Company completed a private placement
     of 2,579,286 shares of its Common Stock.  The net proceeds to the Company
     were approximately $17 million (after commissions, but before offering
     expenses).

(4)  Effective March 27, 1992, the Company's Board of Directors authorized a
     four-for-one stock split of the Company's Common Stock in the form of a
     stock dividend.  All common shares and per share amounts have been adjusted
     to give retroactive effect to the Common Stock split for all years
     presented.

(5)  On August 22, 1994, the Company issued $25,000,000 aggregate principal
     amount of 8-1/4% Convertible Subordinated Notes Due 2001 (the "Notes"). On
     September 22, 1994, the Company issued an additional $2,230,000 aggregate
     principal amount of the Notes pursuant to the exercise of the Initial
     Purchasers' over-allotment option in connection with this offering. See
     Note 8 of Notes to the Consolidated Financial Statements. The long-term
     debt as of September 30, 1997 excludes the current portion which has been
     reclassified to current liabilities in connection with the Company's
     sinking fund obligation which begins in August 1998.

(6)  On August 22, 1994, the Company issued to Millipore Corporation 4,000
     shares of a newly designated series of non-voting redeemable convertible
     preferred stock (the "Series A Preferred Shares").  See Note 9 of Notes to
     the Consolidated Financial Statements.

(7)  Net income/loss per share, primary, for the years ended September 30, 1994,
     1995, 1996 and 1997 includes accretion of the Series A Preferred Shares.
     See Note 2 of Notes to the Consolidated Financial Statements.

                                      -25-
<PAGE>
 

(8)  During the year ended September 30, 1995, the Company secured financing
     with several banks and financial institutions including a line of credit
     for borrowings up to 8.5 million DM (approximately $6 million at September
     30, 1995) for use in financing the construction of a new manufacturing
     facility in Hamburg, Germany, short-term financing collateralized by the
     Company's short-term investments, and a sale-leaseback transaction for $5
     million secured by certain of the Company's fixed assets.  See Note 8 of
     Notes to the Consolidated Financial Statements.

(9)  In August 1995, 1996, and 1997, the Company issued 912,199 shares,
     1,248,050 shares, and 1,019,108 shares, respectively, of Common Stock to
     satisfy the first three of four redemption payments of $10 million each to
     Millipore in connection with the Series A Preferred Shares.  See Note 9 of
     Notes to the Consolidated Financial Statements.

(10) The Company has reclassified the redeemable convertible preferred stock to
     stockholders' equity based on the Company's intent to redeem the future
     remaining amounts through the issuance of Common Stock.  See Note 9 of
     Notes to the Consolidated Financial Statements.

(11) In September 1995, the Company issued 157,565 shares of Common Stock to
     Boehringer Mannheim GmbH in exchange for $2 million. See Note 9 of Notes to
     the Consolidated Financial Statements.

(12) Other income included a gain of $27.5 million recorded upon receipt and
     subsequent partial sale of Millenium common stock which the Company had
     received pursuant to the merger of Chemgenics and Millennium.  See Note 16
     of Notes to the Consolidated Financial Statements.

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

     This report on Form 10-K including Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward looking
statements that involve risks and uncertainties.  The Company's actual results
may differ significantly from the results discussed in the forward looking
statements.   Factors that may cause such differences include, but are not
limited to, those discussed under the caption "Certain Factors That May Affect
Future Results," as well as elsewhere in this Management's Discussion and
Analysis of Financial Condition and Results of Operations, and those discussed
in the Company's other filings with the Securities and Exchange Commission.

     The following discussion and analysis is based on the Company's financial
statements and should be read in conjunction with the Consolidated Financial
Statements and Notes thereto contained elsewhere herein.

RECENT DEVELOPMENTS

     Pending Merger with Perkin-Elmer Corporation.  On August 27, 1997, the
Perkin-Elmer Corporation ("Perkin-Elmer"), Seven Acquisition Corp., a wholly-
owned subsidiary of Perkin-Elmer, and PerSeptive entered into an Agreement and
Plan of Merger (the "Merger Agreement").  Pursuant to the Merger Agreement, all
outstanding shares of PerSeptive common stock, $.01 par value per share (the
"PerSeptive Common Stock"), will be converted into shares of Perkin-Elmer common
stock, $1.00 par value per share (the "Perkin-Elmer Common Stock") at an
exchange rate equal to $13.00 divided by the average of the closing sales prices
of Perkin-Elmer Common Stock on the New York Stock Exchange composite tape on
each of the 20 consecutive trading days preceding the second trading day prior
to the effective date of the merger.  In no event, however, will the exchange
rate be more than 0.1926, or less than 0.1486, of a share of Perkin-Elmer Common
Stock for each share of PerSeptive Common Stock.  At the effective time of the
merger, PerSeptive will become a wholly-owned subsidiary of Perkin-Elmer.  On
December 4, 1997, the proposed merger was approved by PerSeptive's stockholders.
The completion of the merger is subject to regulatory approvals and other
closing conditions.  There can be no assurance that the proposed merger will be
completed.  Either party has the right to terminte the merger agreement if the 
merger is not consummated on or before January 31, 1998, unless the parties
agree to extend that date.

RESULTS OF OPERATIONS

     Years Ended September 30, 1997 and 1996

     Revenue

     Total revenue amounted to $96.5 million and $86 million in fiscal 1997 and
1996, respectively, reflecting an annual growth rate of 12%.  This growth has
been offset by the elimination of approximately $10 million in contract revenue
derived during fiscal 1996 under a contract research and development agreement
between the Company and 

                                      -26-
<PAGE>
 
PTC-II.  The Company acquired PTC-II in March 1996 and has not generated any
significant contract revenue since the completion of the PTC-II acquisition.

     Product revenue for fiscal 1997 was $96.5 million compared with $75.9
million for fiscal 1996, an increase of $20.6 million or 27.1%.  The increase in
product revenue is attributable to continued growth in each of the analysis,
purification and synthesis product lines, further expansion into international
markets as well as improved sales productivity arising from increased
investments in the Company's North American field sales organization.

     From a geographic perspective, fiscal 1997 product revenue generated in
North America grew by approximately $7 million or 17% from fiscal 1996 levels.
This growth was principally attributable to the growth experienced in the
Synthesis and Analysis product lines.  Product revenue generated in Europe
increased by approximately $5.6 million or 34% and was attributable to increased
product sales in the Purification, Analysis and Synthesis product lines.
Product revenue in Japan and the Pacific Rim increased by approximately $8
million or 43%.  This growth is attributable to increased product sales in the
Purification and Analysis product lines.

     Gross Profit

     Gross profit from product sales for fiscal 1997 was $46.7 million, or 48.4%
of product sales, as compared with $38.1 million, excluding other charges, or
50.2% of product sales 1996.   The decline in gross profit as a percentage of
sales is primarily attributable to erosion of product pricing in a competitive
selling environment and to a lesser extent higher field service costs and
fluctuations in geographical and product mix as compared to fiscal 1996.
Offsetting the factors that led to a decline in gross profit was a reduction in
the level of unabsorbed overhead reflecting increased utilization levels of the
Company's various manufacturing facilities resulting from the increased level of
product shipments realized in fiscal 1997.

     Other charges of $9.9 million reported as part of costs of goods sold for
fiscal 1996 relate to various charges recorded in connection with activities
undertaken to realign the Company's product offerings and to record impairment
charges associated with certain underutilized production assets.  No similar
charges were recorded in fiscal 1997.  See Notes 2 and 13 of Notes to the
Consolidated Financial Statements.

     Contract revenue gross profit during fiscal 1996 equals the contractual
markup on contract research services provided by the Company as set forth in the
governing agreements between the Company and PTC-II, and the inclusion of
amortization of the license fee paid by PTC-II to the Company for technology
licensed to PTC-II at the time of its formation.  These agreements in general
provided for a 10% profit on costs incurred by the Company on behalf of PTC-II.
Costs included in the cost of contract revenue for fiscal 1996 include
specifically allocable research and development expense and an allocation of
general and administrative expense as provided for under the agreements.  As a
result of the Company's acquisition of PTC-II in March 1996, no contract
revenues or gross profits were realized during fiscal 1997.

     Research and Development Expense

     Research and development expense for fiscal 1997 was $15.2 million or 15.8%
of product sales, compared to $11.3 million or 14.9% of product sales for fiscal
1996.  The increase in research and development expense as a percent of product
sales is attributable to the higher expense levels following the acquisition of
PTC-II in March 1996.  The gross levels of research and development expenditures
for fiscal 1997 and 1996, which includes research and development expenditures
reflected in cost of contract revenue, were approximately$15.2 million (15.8% of
product sales) and $19.1 million (25.3% of product sales), respectively.
Various management initiatives were implemented following the acquisition that
resulted in a significant reduction in the ongoing level of research and
development expenditures. During fiscal 1997, incremental research and
development costs were incurred in connection with several new product launches
including Mariner, MPS and the redesigned Integral 100Q products. This
incremental spending offset some of the savings realized during the second half
of fiscal 1996 following the acquisition of PTC-II.

     Selling, General and Administrative Expense

     Selling, general and administrative expenses for fiscal 1997 were $40.4
million or 42% of product sales, compared with $39.5 million or 52% of product
sales for fiscal 1996.  The reduction in selling, general and administrative

                                      -27-
<PAGE>
 
expense as a percent of product sales is attributable to various factors,
including realization of efficiency gains from earlier investments in the
Company's European infrastructure and sales organization, which delivered a
significant increase in fiscal 1997 product revenues, and investment gains
realized on the ramp-up in domestic field sales organization resources and
related productivity improvements.

     Amortization declined by approximately $1.1 million during fiscal 1997 from
fiscal 1996.  The principal factor contributing to this decline relates to the
write-off of the unamortized portion of the PTC-II purchase options as part of
the PTC-II acquisition charge recorded during fiscal 1996.  Interest expense
totaled approximately $3.5 million in both fiscal 1997 and 1996.

     The Company did not record a provision for taxes in either fiscal 1997 or
fiscal 1996 due to recurring losses.

     Accretion of redeemable preferred stock to its redemption value amounted to
$1.4 million during fiscal 1997 as compared to $2.1 million for fiscal 1996.
The reduction in the level of accretion is principally associated with the $10
million reduction in the level of preferred stock on which accretion is being
calculated for the current period.

     Years Ended September 30, 1996 and 1995

     Product Revenue

     Product revenue for fiscal 1996 was $75.9 million compared with $69.4
million for fiscal 1995, an increase of $6.5 million or 9.4%.  Total product
revenue growth excluding the impact of adverse currency effects was
approximately $9.7 million or 14%.  The principal product revenue growth was in
the Company's Purification and Analysis product lines.

     From a geographic perspective, fiscal 1996 product revenue generated in
North America declined by approximately $2 million or 5% from fiscal 1995
levels.  This decline was principally attributable to the decline experienced in
the Synthesis product line.  Product revenue generated in Europe increased by
approximately $5.6 million or 49% and was primarily attributable to increased
product sales in the Purification and Analysis product lines.  Product revenue
generated in the Pacific Rim increased by $3 million or 20%, and was due to
growth primarily in the Analysis product line.

     Contract Revenue

     Contract revenue for fiscal 1996 was $10.1 million compared with $20
million in fiscal 1995. The decrease in contract revenue is attributable to the
elimination of contract revenue previously recorded in connection with the
Company's development efforts on behalf of PTC-II, following the acquisition of
PTC-II during the quarter ended March 31, 1996.  See Note 15 of Notes to the
Consolidated Financial Statements.

     Gross Profit

     Gross profit from product sales for fiscal 1996 excluding other charges was
$38.1 million, or 50.2% of product sales, as compared with $36.3 million or
52.2% of product sales for fiscal 1995.   The decline in gross profit as a
percentage of sales is primarily attributable to an increase in unabsorbed
overhead associated with the increase in manufacturing capacity resulting in
part from the addition of a new POROS manufacturing facility and the new
synthesis plant in Hamburg, Germany.  In addition, unabsorbed overhead
associated with the Framingham instrumentation facility was higher during fiscal
1996. The Framingham facility was occupied beginning in March 1995, resulting in
the inclusion of only six months of under-absorption in fiscal 1995 and a full
year in fiscal 1996.  Excess capacity currently exists within each of these
facilities.  This excess capacity has been put in place to support future growth
within the product lines served by the respective facilities.  See Notes 2 and
13 of Notes to the Consolidated Financial Statements.

     Other charges of $9.9 million reported as part of costs of goods sold
relate to various charges recorded in connection with activities undertaken to
realign the Company's product offerings and to record impairment charges
associated with certain underutilized production assets.  See Notes 2 and 13 of
Notes to the Consolidated Financial Statements.

                                      -28-
<PAGE>
 
     Contract revenue gross profits during fiscal 1996 and 1995 equal the
contractual markup on contract research services provided by the Company as set
forth in the governing agreements between the Company and PTC-II, and the
inclusion of amortization of the license fee paid by PTC-II to the Company for
technology licensed to PTC-II at the time of its formation.  These agreements in
general provided for a 10% profit on costs incurred by the Company on behalf of
PTC-II.  Costs included in the cost of contract revenue for fiscal 1996 and 1995
include specifically allocable research and development expense and an
allocation of general and administrative expense as provided for under the
agreements.

     Research and Development Expense

     Research and development expense for fiscal 1996 was $11.3 million or 14.9%
of product sales, compared to $7.0 million or 10% of product sales for fiscal
1995.  The increase in research and development expense as a percent of product
sales is attributable to the higher expense levels following the acquisition of
PTC-II in March 1996.  The gross level of quarterly research and development
expenditures, which includes research and development expenditures reflected in
cost of contract revenue, following the acquisition was approximately $5.5
million.  Various management initiatives were implemented following the
acquisition that resulted in the reduction of this quarterly expenditure run
rate by approximately $2 million or 35%.

     Selling, General and Administrative Expense

     Selling, general and administrative expenses for fiscal 1996 were $39.5
million or 52% of product sales, compared with $32.8 million or 47% of product
sales for fiscal 1995.  The increase in selling, general and administrative
expense both in aggregate dollars and as a percent of product sales is
attributable to various factors, including investment in the European
infrastructure and sales organization which delivered a significant increase in
fiscal 1996 product revenues, increased marketing expenditures associated with
the introduction of several new products, investment ramp-up in domestic field
sales organization resources, and strategic investments in the general and
administration organization to add key members to the senior management team as
well as enhance the Company's management information system capabilities.  On a
run-rate basis, selling, general and administrative expenses declined from a
high of 57% of product sales in the second quarter of fiscal 1996, to a low of
47% of product sales in the fourth quarter of fiscal 1996.

     Other Charges

     Other charges of $24.2 million were recognized during fiscal 1996 and
related to charges recorded in connection with the PTC-II acquisition, a
provision for the impairment of certain intangible assets, accruals for
estimated legal costs related primarily to the ongoing patent enforcement action
and other miscellaneous matters.  Elements of the charge recorded in connection
with the PTC-II acquisition included a $6.8 million in-process research and
development charge and a charge for costs relating to an organizational
realignment following the acquisition of approximately $3.3 million.  The charge
also included provisions recorded in connection with ongoing litigation matters
totaling $5.2 million.  The impairment charge recorded in connection with the
write-off of the goodwill associated with the purchase of the In Vitro Division
of Advanced Magnetics, Inc. totaled $5.3 million.  Charges related to other
miscellaneous matters totaled $3.6 million.

     Amortization declined by approximately $900,000 during fiscal 1996 from
levels in fiscal 1995.  The principal factor contributing to this decline
relates to the write-off of the unamortized portion of the PTC-II purchase
options as part of the PTC-II acquisition charge.

     The increase in interest expense of $515,000 is attributable to incremental
interest expense associated with a full year of interest cost on capital lease
obligations as well as the mortgage obtained to partially fund the construction
of the Company's new synthesis plant in Hamburg, Germany.

     The Company did not record a provision for taxes in either fiscal 1997 or
fiscal 1996 due to recurring losses.

     Accretion of redeemable preferred stock to its redemption value amounted to
$2.1 million during fiscal 1996 as compared to $2.7 million for fiscal 1995.
The reduction in the level of accretion is principally associated with the $10

                                      -29-
<PAGE>
 
million reduction in the level preferred stock on which accretion is being
calculated for the current period.

LIQUIDITY AND CAPITAL RESOURCES

     From inception through the end of fiscal 1997, the Company has met its
funding needs primarily through private placements of equity and debt
securities, public offerings of Common Stock and to a lesser extent through
various other types of borrowing and financing arrangements.  In the event that
the pending merger with Perkin-Elmer is ultimately not completed, management
intends to pursue various funding alternatives in order to obtain adequate
capital to fund the operating and capital needs of the Company (see "--Certain
Factors That May Affect Future Results" below).  These alternatives include but
are not limited to the generation of cash through managed reductions in the
Company's working capital investment; bank financings; cash generation through
the establishment of strategic partnerships, alliances and technology license
arrangements; and the sale of securities through private placements or public
offerings of debt and/or equity securities.  There can be no assurance however,
that management will be able to obtain adequate future funding sources on
acceptable terms, if at all.

     At September 30, 1997, the Company had available cash and cash equivalents,
and short-term investments totaling $34.9 million as compared with cash and cash
equivalents and short-term investments totaling $24.6 million as of September
30, 1996.  During the year the Company realized value from a prior technology
spin-off in the form of the Common Stock of Millennium Stock Pharmaceuticals,
Inc. (see Note 16 of Notes to the Consolidated Financial Statements) and cash
totaling $30.6  million and approximately $2.4 million in net proceeds generated
principally from the exercise of employee stock options.  On a net basis the
Company consumed approximately $22.7 million of cash and investments during
fiscal 1997.  The principal uses of cash during fiscal 1997 were to:  fund cash
operating losses (before the Millennium gain) of $4.7 million; to fund working
capital changes of $12.5 million resulting principally from the reduction of
various accrued liabilities and investments in accounts receivable and inventory
required to support the higher revenue levels achieved in fiscal 1997; to fund
various capital expenditures totaling $3.5 million; and to fund debt repayment
obligations totaling $2 million.

     The Company's net accounts receivable increased to $20.8 million at
September 30, 1997 from $16.1 million as of September 30, 1996.  This increase
is attributable to the 27.1% increase in product revenues in fiscal 1997 over
comparable fiscal 1996 revenues. The average days sales outstanding has been
reduced to 71 days as of September 30, 1997 from 75 days as of September 30,
1996.  This decline is due to management's efforts to control the quality of
receivables and enhanced collection efforts.

     The Company's net inventory increased to $23 million at September 30, 1997
from $21.1 million at September 30, 1996.  The net $1.9 million increase in
inventory reflects a decrease in gross inventories of approximately $1.2
million, offset by a utilization of previously established inventory reserves of
$3.1 million during the year.  The reserves established during fiscal 1996 were
associated with provisions recorded to eliminate identified inventory exposures
that resulted from the Company's fiscal 1996 product realignment initiatives and
new product introductions.  Inventory turns improved from 1.9 times as of
September 30, 1996 to 2.5 times as of September 30, 1997.  Management intends to
continue its focus on improving relative inventory levels during fiscal 1998.

     On August 22, 1994, the Company acquired the Synthesis product business
from Millipore Corporation ("Millipore").  Under the acquisition agreement, the
Company paid Millipore $1.1 million in cash, assumed certain liabilities of the
business and issued Millipore 4,000 shares of a newly created non-voting
redeemable convertible preferred stock.  The preferred stock is redeemable in
four equal installments on each of the first four anniversaries of the closing
of the acquisition in $10 million installments payable at the Company's option
in cash or Common Stock.  In August 1997, the Company issued 1,019,108 shares of
Common Stock to Millipore in satisfaction of the third of four annual
installments related to the preferred stock issued in connection with this
acquisition.  In August 1996, the Company issued 1,248,050 shares of Common
Stock to Millipore in satisfaction of the second annual installment.  In August
1995, the Company issued 912,199 shares of Common Stock to Millipore in
satisfaction of the first annual installment.  Management's intent is to satisfy
the remaining future annual installments under this preferred stock arrangement
as they become due through the issuance of Common Stock.  As a result of the
action taken during fiscal 1995 and management's continued intent to satisfy
future installments with Common Stock, the remaining fair value of this
outstanding security has been reflected as a component of the Company's equity
beginning in September 1995.

                                      -30-
<PAGE>
 
     In June 1996, the Company entered into a transaction with ChemGenics in
which the Company transferred certain assets and employees of the Company's drug
discovery program to ChemGenics and granted a non-exclusive license to
ChemGenics to use the Company's technology (including technology developed
through PTC-II) in the field of drug discovery in exchange for shares of
ChemGenics Common Stock and warrants to purchase additional shares of ChemGenics
Common Stock exercisable until June 28, 2000.  See "Business--Business
Development--ChemGenics and Millennium Transactions" and Note 16 of Notes to the
Consolidated Financial Statements.

     In January 1997, ChemGenics and Millennium entered into an Agreement and
Plan of Merger ("Agreement").  Under the terms of the Agreement, the
stockholders of ChemGenics received common stock of Millennium in exchange for
their common stock of ChemGenics.  At the closing on February 10, 1997, the
Company received 1,612,582 shares of Millennium common stock, $.001 par value
per share ("Millennium common stock"), in exchange for its shares of ChemGenics
common stock.  In addition, the Company received $4 million cash in exchange for
the warrants for ChemGenics common stock and in satisfaction of a promissory
note.  The parties to the Agreement contemplate that the transaction will
qualify as a tax-free merger.  In connection with this event, the Company
recorded a gain of $25.8 million during the second quarter of fiscal 1997,
reflecting the fair market value of the cash received and the Company's
investment in Millennium common stock as of March 29, 1997.  In June 1997, the
Company sold approximately 50% of its investment in Millennium for $12.9 million
and realized a gain on the sale of approximately $.8 million.  During the fourth
quarter of fiscal 1997, the Company recognized an additional gain for book
purposes of $.8 million in connection with the release of a previously existing
contingency on approximately 52,000 shares of Millennium stock.  The taxable
gain arising from this transaction will be offset by available net operating
loss carryforwards with the exception of a portion of the gain potentially
subject to the Federal alternative minimum tax.

     At September 30, 1997, the Company had net operating loss carryforwards of
approximately $64 million for tax purposes.  The net operating losses expire
through 2012.  In addition, the Company has research and tax development credit
carryforwards which expire through 2012 of approximately $1.2 million.  See Note
7 of Notes to the Consolidated Financial Statements.

     The Company believes that its capital resources are sufficient to fund its
operations through the end of fiscal 1998.  The Company believes that additional
financing will be required for the development of some of its currently planned
product introductions and to support the Company's future operations and revenue
growth.  The Company's future working capital and capital requirements will
depend on numerous factors, including the progress of the Company's research and
development of new products, the level of resources that the Company devotes to
the development of manufacturing and marketing capabilities, the consistency of
cash collections, the ability to reduce working capital investment levels, the
success of cost containment initiatives, the competitive environment and the
growth in the Company's business, and the potential adverse impact of the
failure or continued delay of consummating the pending merger with Perkin Elmer,
any of which factors may cause the Company's actual future capital resources and
needs to differ materially, notwithstanding the forward looking statement in the
first sentence of this paragraph.  The Company believes that the level of
financial resources available to it is an important competitive factor. In the
event that the pending merger with Perkin-Elmer is ultimately not completed, the
Company will resume its efforts to actively seek to raise additional capital
through various initiatives, including through an equity or debt financing in
the near future and/or corporate partnering arrangements. There can be no
assurance, however, that the Company will be able to successfully raise
additional capital at acceptable terms, and any failure to do so could have
adverse consequences on planned future product introductions and the Company's
growth and operations.  In the event that additional financing is not obtained,
the Company is committed to take actions to significantly reduce its cost
structure in the future.

     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years 
ended after December 15, 1997, including interim periods. SFAS 128 requires the 
presentation of basic and diluted earnings per share ("EPS").  Basic EPS, which 
replaces primary EPS, excludes dilution and is computed by dividing income 
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that 
could occur if securities or other contracts to issue common stock were 
exercised or converted into common stock or resulted in the issuance of common 
stock that then shared in the earnings of the entity. Diluted EPS is computed 
similarly to fully diluted EPS under the existing rules. SFAS 128 requires 
restatement of all prior-period earnings per share data presented after the 
effective date.  The Company will adopt SFAS 128 in its fiscal year ended 
September 30, 1998 and does not anticipate adoption to have a material effect on
the financial statements.

     In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive 
Income," which is effective for fiscal years ended after December 15, 1997, 
including interim periods. SFAS 130 requires the presentation of comprehensive 
income and its components. Comprehensive income presents a measure of all 
changes in equity that results from recognized transactions and other economic 
events of the period other than transactions with owners. SFAS 130 requires 
restatement of all prior-period statements presented after the effective date.  
The Company will adopt SFAS 130 in its fiscal year ended September 30, 1998 and 
has not yet determined the impact of such adoption.

     In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments
of an Enterprise and Related Information" which is effective for fiscal years
ended after December 15, 1997.  The interim reporting disclosures are not
required in the first year of adoption.  SFAS 131 specifies revised guidelines
for determining an entity's operating segments and the type and level of
financial information to be disclosed.  SFAS 131 changes current practice under
SFAS 14 by establishing a new framework on which to base segment reporting.  The
"management" approach expands the required disclosures for each segment.  The
Company will adopt SFAS 131 in its fiscal year ended September 30, 1998 and has
not yet determined the impact of such adoption.

                                      -31-
<PAGE>
 
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

     Pending Merger. In August 1997, PerSeptive agreed to be acquired by The
Perkin-Elmer Corporation. Upon completion of the proposed merger, Perceptive
will become a wholly owned subsidiary of Perkin-Elmer. The consummation of the
merger is subject to regulatory approval and other closing conditions. There can
be no assurance that the proposed merger will be completed. Either party has the
right to terminate the merger agreement if the merger is not consummated on or
before January 31, 1998, unless the parties agree to extend that date. See
"Business-- Recent Developments."

     Additional Financing Requirements.  If the proposed acquisition by Perkin-
Elmer is not completed, additional long-term financing will be required for the
development of some of the Company's currently planned product introductions and
to support its planned operations and capital expenditures in its core business
relating to the purification, analysis and synthesis of biomolecules.  Under
those circumstances, the Company intends to actively seek to raise additional
capital through equity or debt financing or to enter into corporate partnering
arrangements; however, there can be no assurances that this funding will be made
available or that terms acceptable to the Company will be reached.

     Potential Fluctuations in Operating Results.  The Company's operating
results may vary significantly from quarter to quarter or year to year,
depending on factors such as the timing of biopharmaceutical development and
commercialization programs of the Company's customers, the timing of increased
research and development and sales and marketing expenses, the timing and size
of orders, the introduction of new products by the Company and the capital
resources of the Company's customers.  The Company's current and planned expense
levels are based in part on its expectations as to future revenue.
Consequently, revenue or profits may vary significantly from quarter to quarter
or year to year and revenue or profits in any period will not necessarily be
predictive of results in subsequent periods.

     Uncertainties Associated With Future Performance.  The Company expects to
continue to improve operating results in future periods; however, there can be
no assurance that the Company will achieve or maintain profitability or that its
revenue growth can be sustained in the future.  The Company's success in the
market for biopharmaceutical purification, analysis and synthesis products will
depend, in part, on attracting and maintaining key employees, continued
development of foreign sales operations, successful integration of recent
acquisitions, continued support from current customers, development of new
customers and successful enforcement of the Company's patent rights.  See "Legal
Proceedings" and Note 14 of Notes to the Consolidated Financial Statements.

     Uncertainties Associated with Expansion of Marketing and Manufacturing
Operations.  The Company intends to continue expanding its sales and marketing
efforts in the United States and other countries.  The Company's ability to
accomplish this objective is dependent on many factors, including, among others:
attracting and retaining a significant number of additional sales and marketing
professionals; expanding foreign sales operations; and developing distributor
relationships in certain markets.  This continued expansion will involve
significant additional expense and the risks inherent in integrating new sales
and marketing personnel into the Company's existing organization.  Increasing
sales may also require expansion of the Company's manufacturing capabilities for
the Biospectrometry product line, which would require significant capital
expenditures and management attention.  There can be no assurance that the
Company will be able to accomplish its sales, marketing and manufacturing
objectives.

     Potential Costs Associated with Patent Litigation.  Patent litigation is
widespread in the biotechnology industry and, in general, it is not possible to
predict how any such litigation would affect the Company's business.  The
Company has sued two competitors for infringement of Company patents relating to
Perfusion Chromatography.  The defendants in that suit are seeking to have these
patents declared invalid and have asserted counterclaims against the Company.
The Company may incur substantial additional expenses relating to this and other
proceedings.  There can be no assurance that the outcome of the litigation will
not have a material adverse effect on the Company.  See "Legal Proceedings."

     Patent and License Uncertainties.  Proprietary rights relating to the
Company's products will be protected from unauthorized use by third parties only
to the extent that they are covered by valid and enforceable patents or are
maintained in confidence as trade secrets.  There can be no assurance that any
pending patent applications filed by the Company will result in patents being
issued or that any patents now or hereafter owned by the Company will afford

                                      -32-
<PAGE>
 
protection against competitors.  In the absence of patent protection, the
Company's business may be adversely affected by competitors that independently
develop functionally equivalent technology.  The Company has established a
policy of vigorously enforcing its patent rights.  See "Legal Proceedings" and
Note 14 of Notes to the Consolidated Financial Statements.  If the Company
participates in interference or other proceedings under the jurisdiction of the
U.S. Patent and Trademark Office, such proceedings could result in substantial
costs to the Company.  Competitors, including those with substantially greater
resources than those of the Company, may initiate litigation to challenge the
validity of the Company's patents.  Others may use their resources to design
comparable products that do not infringe the Company's patents.  There may also
be pending or issued patents, of which the Company is not aware, held by parties
not affiliated with the Company that relate to the Company's products or
technology.  The Company may need to acquire licenses to, or contest the
validity of, any such patents.  It is likely that significant funds would be
required to contest the validity of any such patents.  There can be no assurance
that any license required under any such patent would be made available on
acceptable terms or that the Company would prevail in any such contest.

     Pending Governmental Investigation.  Since November 1994, the SEC has been
conducting an investigation into certain financial matters of the Company.  If,
after completion of its investigation, the SEC finds that violations of the
federal securities laws have occurred, the SEC has the authority to order
persons to cease and desist from committing or causing such violations and any
future violations.  The SEC may also seek administrative, civil and criminal
fines and penalties and injunctive relief.  The Department of Justice has the
authority in respect of criminal matters.  The Company has been cooperating
fully with the investigation.  There can be no assurance as to the timeliness of
the completion of this investigation or as to the final result thereof, and no
assurance can be given that the final result of the investigation will not have
a material adverse effect on the Company.  See "Legal Proceedings."

     Intense Competition and Risk of Technological Obsolescence.  The Company
encounters, and expects to continue to encounter, intense competition in the
sale of its current and future products.  There can be no assurance that
developments by others will not render the Company's products or technologies
obsolete or non-competitive.  Many of the Company's competitors and potential
competitors have substantially greater resources, manufacturing and marketing
capabilities, research and development staff and production facilities than
those of the Company.

ITEM 8.  CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

   The information required by this item is contained in the financial
statements included elsewhere in this Annual Report on Form 10-K.

CONSOLIDATED FINANCIAL STATEMENTS.

   Report of Independent Accountants.

   Consolidated Balance Sheets at September 30, 1997 and 1996.

   Consolidated Statements of Operations for the years ended September 30, 1997,
1996 and 1995.

   Consolidated Statements of Changes in Stockholders' Equity for the years
ended September 30, 1997, 1996 and 1995.

   Consolidated Statements of Cash Flows for the years ended September 30, 1997,
1996 and 1995.

   Notes to the Consolidated Financial Statements.

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

   None.

                                      -33-
<PAGE>
 
                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

DIRECTORS

     The information concerning directors of the Company required under this
item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the SEC not later than
120 days after the close of the Company's fiscal year ended September 30, 1997,
under the heading "Election of Directors."

EXECUTIVE OFFICERS

     The information concerning executive officers of the Company required under
this item is incorporated herein by reference to the Company's definitive proxy
statement pursuant to Regulation 14A, to be filed with the SEC not later than
120 days after the close of the Company's fiscal year ended September 30, 1997,
under the heading "Election of Directors."

ITEM 11.  EXECUTIVE COMPENSATION.

     The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the SEC not later than 120 days after the close of the
Company's fiscal year ended September 30, 1997, under the heading "Compensation
and Other Information Concerning Directors and Officers."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the SEC not later than 120 days after the close of the
Company's fiscal year ended September 30, 1997, under the headings "Securities
Ownership of Management" and "Election of Directors."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required under this item is incorporated herein by
reference to the Company's definitive proxy statement pursuant to Regulation
14A, to be filed with the SEC within 120 days after the close of the Company's
fiscal year ended September 30, 1997, under the headings "Securities Ownership
of Management" and "Election of Directors."

                                      -34-
<PAGE>
 
                                    PART IV

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

     (A)  1.   CONSOLIDATED FINANCIAL STATEMENTS.
               For the following financial information included herein, see
               Index on page F-1:

               Report of Independent Accountants.

               Consolidated Balance Sheets at September 30, 1997 and 1996.

               Consolidated Statements of Operations for the years ended
               September 30, 1997, 1996 and 1995.

               Consolidated Statements of Changes in Stockholders' Equity for
               the years ended September 30, 1997, 1996 and 1995.

               Consolidated Statements of Cash Flows for the three years ended
               September 30, 1997, 1996 and 1995.

               Notes to the Consolidated Financial Statements.

          2.   FINANCIAL STATEMENT SCHEDULES.
               For the following financial information included herein, see
               Index on page F-1:
               II   - Valuation and Qualifying Accounts.

                    All other schedules are omitted because
                    they are not applicable, not required or
                    because the information is included in the
                    Consolidated Financial Statements or Notes
                    to the Consolidated Financial Statements.

          3.   LIST OF EXHIBITS.


          Exhibit   
          Number    Description of Exhibit
          ------    ---------------------- 

          2.1       Agreement and Plan of Reorganization dated as of October 8, 
                    1993 by and among the Company, PV Merger Corporation and   
                    Vestec Corporation, as amended (filed as Exhibit 2.1 to the
                    Company's Current Report on Form 8-K dated October 8, 1993,
                    as amended and incorporated herein by reference).           

          2.2       Agreement and Plan of Merger by and among the Company, PV
                    Merger Corporation and Vestec Corporation (filed as Exhibit
                    2.2 to the Company's Current Report on Form 8-K dated
                    October 8, 1993, as amended and incorporated herein by
                    reference).
                    
          2.3       Escrow and Exchange Agreement by and among the Company,
                    Vestec Corporation, Marvin L. Vestal as the representative
                    of the stockholders of Vestec, American Stock Transfer &
                    Trust Company and the stockholders of Vestec Corporation
                    whose names appear on the signature pages thereto (filed as
                    Exhibit 2.3 to the Company's Current Report on Form 8-K
                    dated October 8, 1993, as amended and incorporated herein by
                    reference).

                                      -35-
<PAGE>
 
          2.4       Registration Rights Agreement by and among the Company, PV
                    Merger Corporation and Vestec Corporation (filed as Exhibit
                    2.4 to the Company's Current Report on Form 8-K dated
                    October 8, 1993, as amended and incorporated herein by
                    reference).
              
          2.5       Asset Purchase Agreement dated as of October 15, 1993 by and
                    between the Company and Advanced Magnetics, Inc. (filed as
                    Exhibit 2.1 to the Company's Current Report on Form 8-K
                    dated October 15, 1993, as amended and incorporated herein
                    by reference).
              
          2.6       Asset Purchase and Sale Agreement dated as of July 14, 1994
                    by and among the Company, Millipore Corporation and
                    Millipore Investment Holdings Limited (filed as Exhibit 2.1
                    to the Company's Current Report on Form 8-K dated August 22,
                    1994, as amended and incorporated herein by reference).
              
          2.7       Registration Rights Agreement by and among the Company,
                    Millipore Corporation and Millipore Investment Holdings
                    Limited dated August 22, 1994 (filed as Exhibit 2.3 to the
                    Company's Current Report on Form 8-K dated August 22, 1994,
                    as amended and incorporated herein by reference).
              
          2.8       Registration Rights Agreement by and among the Company,
                    Alex. Brown & Sons Incorporated and Lehman Brothers Inc.
                    dated August 26, 1994 (filed as Exhibit 4.2 to the Company's
                    Registration Statement No. 33-74600 on Form S-3 and
                    incorporated herein by reference).
              
          2.9       Agreement and Plan of Merger, dated as of November 1, 1995
                    among the Company, PerSeptive Acquisition Corporation and
                    PerSeptive Technologies II Corporation (filed as Exhibit
                    10.26 to the Company's Annual Report on Form 10-K for the
                    year ended September 30, 1995 and incorporated herein by
                    reference).
              
          2.10      Amendment No. 1 to Agreement and Plan of Merger, dated
                    January 29, 1996 among the Company, PerSeptive Acquisition
                    Corporation and PerSeptive Technologies II Corporation
                    (filed as Exhibit 2.1 to the Company's Registration
                    Statement No. 333-1016 on Form S-4 and incorporated herein
                    by reference).
              
          2.11      Agreement and Plan of Merger dated as of August 23, 1997
                    among The Perkin-Elmer Corporation, Seven Acquisition Corp.
                    and PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the
                    Company's Current Report on Form 8-K dated August 26, 1997
                    and incorporated herein by reference).
              
          3.1       Amended and Restated Certificate of Incorporation of the
                    Company (filed as Exhibit 3.2, 4.2 to the Company's
                    Registration Statement No. 33-46871 on Form S-1 and
                    incorporated herein by reference).

                                      -36-
<PAGE>
 
          3.2       Certificate of Amendment of Restated Certificate of
                    Incorporation of the Company (filed as Exhibit 4.1 to the
                    Company's Registration Statement No. 33-80856 on Form S-8
                    and incorporated herein by reference).
            
          3.3       Amended and Restated By-Laws of the Company (filed as
                    Exhibit 3.4, 4.4 to the Company's Registration Statement No.
                    33-46871 on Form S-1 and incorporated herein by reference).
            
          3.4       Certificate of Designations for the Series A Redeemable
                    Convertible Preferred Stock filed with the Secretary of
                    State of the State of Delaware on August 19, 1994 (filed as
                    Exhibit 2.2 to the Company's Current Report on Form 8-K
                    dated August 22, 1994, as amended, and incorporated herein
                    by reference).
            
          3.5       Certificate of Amendment of the Amended and Restated
                    Certificate of Incorporation of the Company filed with the
                    Secretary of State of the State of Delaware on May 8, 1995
                    (filed as Exhibit 3.1 to the Company's Quarterly Report on
                    Form 10-Q for the period ended June 30, 1995 and
                    incorporated herein by reference).
            
          3.6       Certificate of Designations for the Series B Junior
                    Participating Preferred Stock filed with the Secretary of
                    State of the State of Delaware on March 2, 1995 (exhibit to
                    Exhibit 4.9) (filed as Exhibit 3.6 to the Company's Annual
                    Report on Form 10-K for the year ended September 30, 1995
                    and incorporated herein by reference).
            
          3.7       Amended Certificate of Designation for the Series B Junior
                    Participating Preferred Stock filed with the Secretary of
                    State of the State of Delaware on October 24, 1995 (filed as
                    Exhibit 3.7 to the Company's Annual Report on Form 10-K for
                    the year ended September 30, 1995 and incorporated herein by
                    reference).
            
          4.1       Description of Capital Stock contained in the Company's
                    Amended and Restated Certificate of Incorporation, as
                    amended, filed as Exhibits 3.1 through 3.7 hereto.
            
          4.2       Form of Class A Warrants for the purchase of the Company's
                    Common Stock dated as of December 23, 1992 issued to the
                    stockholders of PTC-I (filed as Exhibit 4.1 to the Company's
                    Quarterly Report on Form 10-Q for the three-month period
                    ended March 31, 1993 and incorporated herein by reference).
            
          4.3       Form of Class C Warrants for the purchase of the Company's
                    Common Stock dated as of March 15, 1993 issued to the
                    stockholders of PerIsis II (filed as Exhibit 4.3 to the
                    Company's Report on Form 10-Q for the three-month period
                    ended March 31, 1993 and incorporated herein by reference).

                                      -37-
<PAGE>
 
          4.4       Warrant Agreement relating to the issuance of Class E
                    Warrants of the Company dated as of December 29, 1993, as
                    executed (supersedes Exhibit 4.7 to Amendment No. 1 to the
                    Company's Registration Statement Nos. 33-71812, 33-71814 on
                    Form S-1/S-3) (filed as Exhibit 4.2 to the Company's
                    Quarterly Report on Form 10-Q for the Quarterly Period ended
                    March 31, 1994 and incorporated herein by reference).
              
          4.5       Specimen Class E Warrant Certificate (filed as Exhibit 4.3
                    to Amendment No. 1 to the Company's Registration Statement
                    Nos. 33-71812, 33-71814 on Form S-1/S-3 and incorporated
                    herein by reference).
              
          4.6       Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment
                    No. 1 to the Company's Registration Statement Nos. 33-71812,
                    33-71814 on Form S-1/S-3 and incorporated herein by
                    reference).
              
          4.7       Indenture dated as of August 26, 1994 between the Company
                    and State Street Bank and Trust Company, as Trustee (filed
                    as Exhibit 4.9 to the Company's Annual Report on Form 10-K
                    for the year ended September 30, 1994 and incorporated
                    herein by reference).
              
          4.8*      Rights Agreement, dated as of March 1, 1995, between the
                    Company and American Stock Transfer & Trust Company, as
                    amended on September 27, 1995 and August 23, 1997.
              
          4.9       Warrant Purchase Agreement relating to the issuance of Class
                    F Warrants (filed as Exhibit 4.1 to the Company's Quarterly
                    Report on Form 10-Q for the period ended March 31, 1995 and
                    incorporated herein by reference).
              
          4.10      Form of Class F Warrant (filed as Exhibit 4.2 to the
                    Company's Quarterly Report on Form 10-Q for the period ended
                    March 31, 1995 and incorporated herein by reference).
              
          4.11      Warrant Agreement dated as of September 11, 1995 between the
                    Company and American Stock Transfer & Trust Company relating
                    to the Class G Warrants (filed as Exhibit 4.1 to the
                    Company's Current Report on Form 8-K dated as of September
                    11, 1995 and incorporated herein by reference).
              
          4.12      Specimen of Class G Warrant Certificate (filed as Exhibit
                    4.2 to the Company's Current Report on Form 8-K dated as of
                    September 11, 1995 and incorporated herein by reference).
              
          4.13      Form of Amendment to Class C Warrants (filed as Exhibit 4.15
                    to the Company's Annual Report on Form 10-K for the year
                    ended September 30, 1995 and incorporated herein by
                    reference).
              
          4.14      Class H Warrant dated as of September 1, 1995 (filed as
                    Exhibit 4.19 to the Company's Annual Report on Form 10-K for
                    the year ended September 30, 1995 and incorporated herein by
                    reference).

                                      -38-
<PAGE>
 
          4.15      Amendment No. 1, dated as of September 27, 1995, to the
                    Rights Agreement, dated as of March 1, 1995, between the
                    Company and American Stock Transfer & Trust Company (filed
                    as Exhibit 4.20 to the Company's Annual Report on Form 10-K
                    for the year ended September 30, 1995 and incorporated
                    herein by reference).
               
          4.16      Form of Warrant Agreement between the Company and American
                    Stock Transfer & Trust Company relating to the Company's
                    Class I Warrants (filed as Exhibit 4.7 to the Company's
                    Registration Statement No. 333-1016 on Form S-4 and
                    incorporated herein by reference).
               
          4.17      Specimen of Class I Warrant Certificate (filed as Exhibit
                    4.8 to the Company's Registration Statement No. 333-1016 on
                    Form S-4 and incorporated herein by reference).
               
          4.18      Stock Option Agreement dated August 23, 1997 between
                    PerSeptive Biosystems, Inc. and The Perkin-Elmer Corporation
                    (filed as Exhibit 4.1 to the Company's Current Report on
                    Form 8-K dated as of August 26, 1997 and incorporated by
                    reference herein).
               
          10.1+     1989 Stock Plan (filed as Exhibit 10.1 to the Company's
                    Registration Statement No. 33-46871 on Form S-1 and
                    incorporated herein by reference).
               
          10.2+     1992 Stock Plan of the Company, as amended on January 20,
                    1997 (filed as Exhibit 4.1 to the Company's Quarterly Report
                    on Form 10-Q for the Quarterly Period ended March 29, 1997
                    and incorporated herein by reference).
               
          10.3+     1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to
                    the Company's Registration Statement No. 33-46871 on Form S-
                    1 and incorporated herein by reference).
               
          10.4+     1992 Non-Employee Director Stock Option Plan, as amended on
                    March 11, 1996 (filed as Exhibit 4.2 to the Company's
                    Quarterly Report on Form 10-Q for the Quarterly Period ended
                    March 31, 1996 and incorporated herein by reference).
               
          10.5      Consulting Agreement with Dr. Fred E. Regnier dated June 1,
                    1988 (filed as Exhibit 10.7 to the Company's Registration
                    Statement No. 33-46871 on Form S-1 and incorporated herein
                    by reference).
               
          10.6      License Agreement with Purdue Research Foundation dated as
                    of June 16, 1990 (filed as Exhibit 10.8 to the Company's
                    Registration Statement No. 33-46871 on Form S-1 and
                    incorporated herein by reference).
               
          10.7      Sublease Agreement with the Massachusetts Institute of
                    Technology dated October 1, 1990 (filed as Exhibit 10.10 to
                    the Company's Registration Statement No. 33-46871 on Form S-
                    1 and incorporated herein by reference).

                                      -39-
<PAGE>
 
          10.8      Form of Indemnity Agreement with directors and officers
                    (filed as Exhibit 10.15 to the Company's Registration
                    Statement No. 33-46871 on Form S-1 and incorporated herein
                    by reference).
               
          10.9      Product License and Supply Agreement between Millipore
                    Corporation and the Company granting the Company an
                    exclusive worldwide royalty free license within the Life
                    Science market to use certain patented technology to process
                    membrane products and to carry out certain processes useful
                    to DNA synthesis operations and providing for the supply of
                    membrane products (filed as Exhibit 10.24 to the Company's
                    Annual Report on Form 10-K for the fiscal year ended
                    September 30, 1994 and incorporated herein by reference).
               
          10.10     OEM Purchase and Supply Agreement between BioSearch, Inc.
                    and the Waters Chromatography Division of Millipore
                    Corporation with respect to the supply of certain high
                    performance liquid chromatography components, machined parts
                    and other materials to BioSearch, Inc. (filed as Exhibit
                    10.25 to the Company's Annual Report on Form 10-K for the
                    fiscal year ended September 30, 1994 and incorporated herein
                    by reference).
               
          10.11     Assignment of Settlement Agreement between Millipore
                    Corporation, University Patents, Inc. and Applied
                    Biosystems, Inc. ("ABI") involving cross license of certain
                    patents, granting ABI a license under U.S. Patent No.
                    4,725,677, "Process for the Preparation of Oligonucleotides"
                    and Millipore a license under U.S. Patent Nos. 4,458,066 and
                    4,415,732 (filed as Exhibit 10.26 to the Company's Annual
                    Report on Form 10-K for the fiscal year ended September 30,
                    1994 and incorporated herein by reference).
               
          10.12     License Agreement dated January 23, 1991 between the
                    University of Minnesota and Millipore Corporation granting
                    Millipore an exclusive worldwide license to make, use and
                    sell products under U.S. Patent Nos. 5,235,028, 5,196,566
                    and 5,117,009 and related pending applications covering
                    support structures for peptide synthesis operations (filed
                    as Exhibit 10.27 to the Company's Annual Report on Form 10-K
                    for the fiscal year ended September 30, 1994 and
                    incorporated herein by reference).
               
          10.13     License Agreement dated January 1, 1988 between Hoffman-La
                    Roche Inc. and Millipore Corporation granting Millipore a
                    non-exclusive license to make, use and sell so-called FMOC
                    chemistries on laboratory instruments (filed as Exhibit
                    10.28 to the Company's Annual Report on Form 10-K for the
                    fiscal year ended September 30, 1994 and incorporated herein
                    by reference).
               
          10.14     License Agreement dated March 9, 1992 between Novabiochem AG
                    and Millipore Corporation granting Millipore a non-exclusive
                    license to make, use and sell instruments for the monitoring
                    of certain peptide reactions related to the synthesis of
                    peptides (filed as Exhibit 10.29 to the Company's Annual
                    Report on Form 10-K for the fiscal year ended September 30,
                    1994 and incorporated herein by reference).
 
                                      -40-
<PAGE>

          10.15     License Agreement dated December 17, 1991 between Ole
                    Burkhardt, Peter E. Nielsen, Rolf H. Berg, Michael Egholm
                    and Millipore Corporation granting an exclusive, worldwide
                    license Danish Patent Application No. 0986/91
                    "Oligonucleotide Analogs Termed PNA" and corresponding
                    international counterparts (filed as Exhibit 10.30 to the
                    Company's Annual Report on Form 10-K for the fiscal year
                    ended September 30, 1994 and incorporated herein by
                    reference).
               
          10.16     Lease Agreement between the Company and the Massachusetts
                    Institute of Technology dated March 19, 1993 for space
                    located at 12 Emily Street, Cambridge, Massachusetts (filed
                    as Exhibit 10.31 to the Company's Annual Report on Form 10-K
                    for the fiscal year ended September 30, 1994 and
                    incorporated herein by reference).
               
          10.17     Lease Agreement between the Company and 500 Old Connecticut
                    Path Limited Partnership for space located at 500 Old
                    Connecticut Path, Framingham, Massachusetts (filed as
                    Exhibit 10.32 to the Company's Annual Report on Form 10-K
                    for the fiscal year ended September 30, 1994 and
                    incorporated herein by reference).
               
          10.18     Master Lease Agreement between the Company and Hambrecht &
                    Quist Guaranty Finance, L.P. dated March 31, 1995 (filed as
                    Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
                    for the period ended March 31, 1995 and incorporated herein
                    by reference).
               
          10.19     Security Agreement between the Company and Hambrecht & Quist
                    Guaranty Finance, L.P. dated March 31, 1995 (filed as
                    Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
                    for the period ended March 31, 1995 and incorporated herein
                    by reference).
               
          10.20     Stipulation and Compromise of Settlement dated as of June
                    14, 1995 relating to the action entitled In re: PerSeptive
                    Biosystems, Inc. Securities Litigation, Civ. Action No. 94-
                    12575(PBS), brought in the U.S. District Court for the
                    District of Massachusetts (filed as Exhibit 10.1 to the
                    Company's Current Report on Form 8-K dated as of September
                    11, 1995 and incorporated herein by reference).
               
          10.21     Credit Agreements between the Company's subsidiary
                    PerSeptive Biosystems GmbH - Hamburg (formerly, "BioSearch
                    GmbH") IKB Deutsche Industriebank and Dresdner Bank (filed
                    as Exhibit 10.27 to Form 10K/A Amendment No. 1 to the
                    Company's Annual Report on Form 10-K for the year ended
                    September 30, 1995 and incorporated herein by reference).
               
          10.22     Master Agreement, dated as of May 7, 1996, between the
                    Company and ChemGenics Pharmaceuticals a d/b/a of Myco
                    Pharmaceuticals Inc. (filed as Exhibit 2 to the Company's
                    Current Report on Form 8-K dated as of June 28, 1996 and
                    incorporated herein by reference).
 
                                     -41-
<PAGE>
 
          10.23     Omnibus Amendment Agreement dated December 18, 1996 between
                    the Company and ChemGenics Pharmaceuticals, Inc.
                
          10.24     1997 Non-Qualified Stock Option Plan, as amended (filed as
                    Exhibit 4.1 to the Company's Registration Statement No. 333-
                    38989, on Form S-8 and incorporated herein by reference).
                
          10.25+    Employment Agreement dated as of January 17, 1997 between
                    PerSeptive Biosystems, Inc. and John F. Smith (filed as
                    Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
                    for the period ended June 28, 1997 and incorporated by
                    reference herein).
                
          10.26+    Employment Agreement dated as of January 17, 1997 between
                    PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as
                    Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q
                    for the period ended June 28, 1997 and incorporated by
                    reference herein).
                
          21*       Subsidiaries of the Company.
                
          23.1*     Consent of Coopers & Lybrand L.L.P.
                
          24        Power of Attorney (included in the signature page to the
                    Company's Annual Report on Form 10-K for the year ended
                    September 30, 1997).
________________________________
         *Indicates exhibits filed herewith.  All other exhibits have been
          previously filed unless otherwise indicated.
         +Indicates a management contract or compensatory plan or arrangement.

(B)  REPORTS ON FORM 8-K.

     Current Report on Form 8-K dated April 16, 1997, reporting under Item 5,
     the Company's announcement that the Company had filed a motion to permit an
     immediate appeal of an April 3, 1997 decision of the United States District
     Court for the District of Massachusetts (C.A. No. 93-12237-PBS) denying the
     Company's motion to correct inventorship of three U.S. patents issued to
     the Company, Nos. 5,019,270, 5,228,989 and 5,384,042, covering the
     Perfusion Chromatography (R) process and particles and matrix structures
     used in that process.

     Current Report on Form 8-K dated August 22, 1997, reporting the Company's
     announcement that the Company issued 1,019,108 shares of its common stock,
     $.01 par value per share, to Millipore Corporation in payment of the third
     $10 million installment due upon the redemption by Millipore Corporation of
     1,000 shares of the Company's non-voting Series A Redeemable Convertible
     Preferred Stock, $.01 par value per share.

     Current Report on Form 8-K dated August 26, 1997, reporting that the
     Company, The Perkin-Elmer Corporation, and Seven Acquisition Corp., a
     wholly owned subsidiary of Perkin-Elmer had entered into an Agreement and
     Plan of Merger.

(C)  EXHIBITS.

     The Company hereby files as exhibits to this Annual Report on Form 10-K
     those exhibits listed in Item 14(a)(3), above and denoted with an asterisk.

(d)  FINANCIAL STATEMENT SCHEDULES.

     The Company hereby files as financial statement schedules to this Annual
     Report on Form 10-K those financial statement schedules listed in Item
     14(a)(2), above, which are attached hereto.

                                      -42-
<PAGE>
 
                                  SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, in the Town of
Framingham, Commonwealth of Massachusetts, on the 29th day of December, 1997.

                                            PERSEPTIVE BIOSYSTEMS, INC.


                                            By:  /s/ Noubar B. Afeyan
                                                 -------------------------------
                                                 Noubar B. Afeyan
                                                 Chief Executive Officer

                       POWER OF ATTORNEY AND SIGNATURES

     We, the undersigned officers and directors of the Registrant, hereby
severally constitute and appoint Noubar B. Afeyan, John F. Smith and Samuel P.
Hunt III, and each of them singly, our true and lawful attorneys with full power
to them, and each of them singly, to sign for us and in our names in the
capacities indicated below, the Annual Report on Form 10-K filed herewith and
any and all amendments to said Annual Report on Form 10-K, and generally to do
all such things in our names and on our behalf in our capacities as officers and
directors to enable the Company to comply with the provisions of the Securities
and Exchange Act of 1934, as amended, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Annual Report on Form
10-K and any and all amendments thereto.

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

Signature                    Title                         Date
---------                    -----                         ----


/s/ Noubar B. Afeyan         Chief Executive Officer       December 29, 1997
------------------------     (Principal Executive 
  Noubar B. Afeyan           Officer), Director and
                             Chairman of the Board of
                             Directors


/s/ John F. Smith            President and Director        December 29, 1997
------------------------
 John F. Smith


/s/ Thomas G. Ruane          Senior Vice President         December 29, 1997
------------------------     and Chief Financial
  Thomas G. Ruane            Officer (Principal Financial
                             and Accounting Officer)



/s/ Daniel I.C. Wang         Director                      December 29, 1997
------------------------
  Daniel I.C. Wang

                                      -43-
<PAGE>
 
/s/ Edwin M. Kania, Jr.      Director                      December 29, 1997
------------------------
  Edwin M. Kania, Jr.


/s/ William F. Pounds        Director                      December 29, 1997
------------------------
 William F. Pounds


/s/ Bruce J. Ryan            Director                      December 29, 1997
------------------------
 Bruce J. Ryan

                                      -44-
<PAGE>

                          PERSEPTIVE BIOSYSTEMS, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
 
 
<S>                                                                                 <C>
Report of Independent Accountants................................................   F-2
 
Consolidated Balance Sheets at September 30, 1997 and 1996.......................   F-3
 
Consolidated Statements of Operations for the years ended
 September 30, 1997, 1996 and 1995...............................................   F-4
 
Consolidated Statements of Changes in Stockholders' Equity for the years ended
 September 30, 1997, 1996 and 1995...............................................   F-5
 
Consolidated Statements of Cash Flows for the years ended
 September 30, 1997, 1996 and 1995...............................................   F-8
 
Notes to the Consolidated Financial Statements...................................   F-9

Financial Statement Schedules:

Report of Independent Accountants................................................   S-1

  II - Valuation and Qualifying Accounts.........................................   S-2
</TABLE> 

                                      F-1
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders
of PerSeptive Biosystems, Inc.:

We have audited the accompanying consolidated balance sheets of PerSeptive
Biosystems, Inc., as of September 30, 1997 and 1996 and the related consolidated
statements of operations, cash flows and stockholders' equity for each of the
three years in the period ended September 30, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of PerSeptive
Biosystems, Inc. as of September 30, 1997 and 1996 and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended September 30, 1997, in conformity with generally accepted
accounting principles.


Boston, Massachusetts                            Coopers & Lybrand L.L.P.
December 1, 1997

                                      F-2
<PAGE>
 
<TABLE>
<CAPTION>
                          PerSeptive Biosystems, Inc.
                          Consolidated Balance Sheets
                       (in thousands, except share data)

                                                                    September 30,  September 30,
                                                                         1997           1996
                                                                    -------------- --------------
<S>                                                                 <C>            <C>  
Assets:
Current Assets:
  Cash and cash equivalents                                              18,283          5,384
  Short-term investments, available for sale                             16,646         19,273
  Trade accounts receivable, net of allowance for doubtful accounts
   of $1,963 and $2,386 at September 30, 1997 and 1996, respective       20,814         16,052
  Inventories, net                                                       22,602         21,074
  Other current assets                                                    3,600          2,107
                                                                     -----------   ------------
    Total current assets                                                 81,945         63,890

  Fixed assets, net                                                      27,626         32,017
  Patent and license costs, net                                           5,458          5,913
  Goodwill, net                                                          17,478         18,518
  Other long-term assets                                                  1,444          1,317
                                                                     -----------   ------------
    Total assets                                                        133,951        121,655
                                                                     ===========   ============

Liabilities and stockholders' equity:
Current liabilities:
  Accounts payable                                                       13,484          9,292
  Accrued expenses                                                       10,583         18,699
  Current portion of deferred revenue                                     2,271          1,158
  Short-term borrowing                                                    5,055          5,032
  Current portion of obligations and other current liabilities            8,004          3,137
                                                                     -----------   ------------
    Total current liabilities                                            39,397         37,318

Long-term liabilities:
  Convertible subordinated notes                                         20,423         27,230
  Long-term debt                                                          5,130          5,574
  Capital lease obligations, less current portion                           281            361
  Deferred revenue and other liabilities                                  1,322            887
                                                                     -----------   ------------
    Total long-term liabilities                                          27,156         34,052

Commitments & contingencies (Note 12)

Stockholders' equity:
  Redeemable convertible preferred stock, $10 par value; 4000 shares
    authorized; 1,000 and 2,000 issued and outstanding at
    September 30, 1997 and 1996, respectively; redemption value
    $10,000 and $20,000 at September 30, 1997 and 1996, respective        9,480         18,053
  Common stock, $.01 par value; 100,000,000 shares authorized;
    22,649,980 and 21,315,456 shares issued and outstanding
    at September 30, 1997 and 1996, respectively                            226            213
  Additional paid-in-capital                                            170,669        158,556
  Accumulated deficit                                                  (111,278)      (125,094)
                                                                     -----------   ------------
                                                                         69,097         51,728

  Cumulative translation adjustment                                      (4,785)        (1,373)
  Unrealized gain (loss) on investments                                   3,086            (70)
                                                                     -----------   ------------
    Total stockholders' equity                                           67,398         50,285
                                                                     -----------   ------------
    Total liabilities and stockholders' equity                          133,951        121,655
                                                                     ===========   ============
</TABLE> 



   The accompanying notes are an integral part of these financial statements


                                     F-3 

<PAGE>
 


                          PerSeptive Biosystems, Inc.
                     Consolidated Statements of Operations
                     (in thousands, except per share data)

<TABLE> 
<CAPTION> 
                                                      Year ended September 30,
                                                -----------------------------------
                                                  1997          1996          1995
                                                -------       -------       -------
<S>                                             <C>           <C>           <C> 
Revenue:
   Product revenue                              $96,516       $75,916       $69,430
   Contract revenue                                            10,102        19,999
                                                -------       -------       -------
                                                 96,516        86,018        89,429
                                                -------       -------       -------
Cost of goods sold:
   Cost of product revenue                       49,815        37,813        33,169
   Cost of contract revenue                                     8,571        16,968
   Other charges                                                9,906           -
                                                -------       -------       -------
                                                 49,815        56,290        50,137
                                                -------       -------       -------
       Gross profit                              46,701        29,728        39,292

Operating expenses:
   Research and development                      15,215        11,342         6,999
   Selling, general and administrative           40,425        39,518        32,771
   Other charges                                               24,239        15,459
   Amortization                                   1,041         2,158         3,080
                                                -------       -------       -------
                                                 56,681        77,257        58,309
                                                -------       -------       -------
       Loss from operations                      (9,980)      (47,529)      (19,017)
                                                -------       -------       -------
Other income (expense):
   Interest income                              $   648       $   482       $ 1,209
   Interest expense                              (3,534)       (3,473)       (2,958)
   Other income, net                             28,109            53           196
                                                -------       -------       -------
Net Income (Loss)                               $15,243      ($50,467)     ($20,570)
                                                =======       =======       =======

Net income (loss) per common share, primary     $  0.63        ($3.22)       ($1.88)
                                                =======       =======       =======
Net income per common share, fully diluted      $  0.60
                                                =======
Weighted average common and common equivalent
shares outstanding, primary                      21,905        16,296        12,340
                                                =======       =======       =======
Weighted average common and common equivalent
shares outstanding, fully diluted                25,552
                                                =======  


</TABLE> 



  The accompanying notes are an integral part of these financial statements.

                                      F-4
<PAGE>



                          PerSeptive Biosystems, Inc.
           Consolidated Statement of Changes in Stockholders' Equity
          For the Three Years in the Period Ended September 30, 1997
                                (in thousands)

<TABLE> 
<CAPTION> 

                                                                     Redeemable             
                                                                     Convertible                                        
                                                                    Preferred Stock                          Common Stock
                                                              Shares            Par Value             Shares            Par Value
                                                              ------            ---------             ------            ---------
<S>                                                          <C>                <C>                   <C>               <C>      
                                                                                                                                 
Balance at September 30, 1994                                      -                    -             12,097                 $120
Modification of warrants in connection with the                                                                                  
  acquisition of PerIsis II                                                                                                      
Issuance of warrants pursuant to shareholder                                                                                     
  litigation settlement                                                                                                          
Issuance of common stock pursuant to shareholder                                                                                 
  litigation settlement                                                                                  494                    5
Reclassification of redeemable preferred stock pursuant                                                                          
  to the acquisition of the synthesis products business        3,000              $25,709                                        
Conversion of preferred stock into common stock                                                          912                    9
Sale of common stock pursuant to stock                                                                                           
  purchase agreement                                                                                     158                    2
Sale of common stock pursuant to employee stock                                                                                  
  purchase plan and exercise of stock options and warrants                                               249                    4
Accretion on redeemable convertible preferred stock                                   283 
Cumulative translation adjustment                                                                                                
Amortization of deferred compensation                                                                                            
Net loss                                                                                                                         
                                                          ----------           ----------         ----------           ----------  
Balance at September 30, 1995                                  3,000               25,992             13,910                  140
Issuance of contengent consideration relating to the                                                                             
  acquisition of AMI                                                                                     373                     4
Issuance of common stock pursuant to the                                                                                          
  acquisition of PTC II                                                                                2,640                    26
Issuance of common stock, through a private placement,                                                                            
  net of issuance costs                                                                                2,579                    26
Conversion of warrants into common stock                                                                 331                     3
Conversion of preferred stock into common stock               (1,000)             (10,000)             1,248                    12
Sale of common stock pursuant to employee stock                                                                                   
  purchase plan and exercise of stock options and warrants                                               235                     2
Accretion on redeemable convertible preferred stock                                 2,061     
Cumulative translation adjustment                                                                                                 
Unrealized gain (loss) on investments
Amortization of deferred compensation                                                                                             
Net loss                                                                                                                          
                                                          ----------           ----------         ----------           ----------
Balance at September 30, 1996                                  2,000               18,053             21,316                   213
Conversion of preferred stock into common stock               (1,000)             (10,000)             1,019                    10
Sale of common stock pursuant to employee stock                                                                                   
 purchase plan and exercise of stock options and warrants                                                315                     3
Accretion on redeemable convertible preferred stock                                 1,427
Cumulative translation adjustment                                                                                                 
Unrealized gain on investments                                                                                                    
Net Income                                                                                                                        
                                                          ==========           ==========         ==========            ========== 
Balance at September 30, 1997                                  1,000               $9,480             22,650                  $226
                                                          ==========           ==========         ==========            ==========


</TABLE> 

  The accompanying notes are an integral part of these financial statements.

                                      F-5

<PAGE>

                         Perspective Biosystems, Inc.
              Consolidated Statement of Changes in Stockholders'
          For the Three Years in the Period Ended September 30, 1997
                                (in thousands)
<TABLE> 
<CAPTION>
                                                                              Additional                  Cumulative    
                                                                                Paid-in    Accumulated    Translation   
                                                                                Capital      Deficit       Adjustment    
                                                                              ----------   -----------    -----------    
<S>                                                                           <C>          <C>            <C> 
Balance at September 30, 1994                                                   $ 89,743     $ (49,346)               
Modification of warrants in connection with the                                                                   
  acquisition of PerIsis II                                                        1,870                                       
Issuance of warrants pursuant to shareholder                                                                               
  litigation settlement                                                            2,000                                       
Issuance of common stock pursuant to shareholder                                                                           
  litigation settlement                                                            5,071                                       
Reclassification of redeemable preferred stock pursuant                                                                    
  to the acquisition of the synthesis products business 3,000                                                              
Conversion of preferred stock into common stock                                    9,991                                       
Sale of common stock pursuant to stock                                                                                     
  purchase agreement                                                               1,998                                       
Sale of common stock pursuant to employee stock                                                                            
  purchase plan and exercise of stock options and warrants                           699                                       
Accretion on redeemable convertible preferred stock                                             (2,650)                         
Cumulative translation adjustment                                                                                  225             
Amortization of deferred compensation                                                                                      
Net loss                                                                                       (20,570)                         
                                                                                                                           
                                                                                --------     ----------       --------         
Balance at September 30, 1995                                                    111,372       (72,566)            225             
Issuance of contengent consideration relating to the                                                                       
  acquisition of AMI                                                               3,461                                       
Issuance of common stock pursuant to the                                                                                   
  acquisition of PTC II                                                           15,534                                       
Issuance of common stock, through a private placement,                                                                     
  net of issuance costs                                                           16,822                                       
Conversion of warrants into common stock                                                                                   
Conversion of preferred stock into common stock                                    9,988                                       
Sale of common stock pursuant to employee stock                                                                            
  purchase plan and exercise of stock options and warrants                         1,379                                       
Accretion on redeemable convertible preferred stock                                             (2,061)                         
Cumulative translation adjustment                                                                               (1,598)            
Unrealized loss on investments                                                                                             
Amortization of deferred compensation                                                                                      
Net loss                                                                                       (50,467)                         
                                                                                --------    ----------        --------         
Balance at September 30, 1996                                                    158,556      (125,094)         (1,373)            
Conversion of preferred stock into common stock                                    9,990                                       
Sale of common stock pursuant to employee stock                                                                            
 purchase plan and exercise of stock options and warrants                          2,123                                       
Accretion on redeemable convertible preferred stock                                             (1,427)                         
Cumulative translation adjustment                                                                               (3,412)            
Unrealized gain on investments                                                                                             
Net Income                                                                                      15,243                          
                                                                                --------     ---------        -------- 
Balance at September 30, 1997                                                   $170,669     $(111,278)       $ (4,785)         
                                                                                ========     =========        ========          
</TABLE> 

  The accompanying notes are an integral part of these financial statements.

                                      F-6
                                                                  
<PAGE>
                          PerSeptive Biosystems, Inc.
              Consolidated Statement of Changes in Stockholders'
          For the Three Years in the Period Ended September 30, 1997
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                        Unrealized                           
                                                                      Gain (Loss) on   Deferred       Total      
                                                                       Investments   Compensation     Equity     
                                                                       -----------   ------------   ------------ 
 <S>                                                                    <C>          <C>           <C> 
                                                                                                    
Balance at September 30, 1994                                                           ($168)       $40,349     
Modification of warrants in connection with the acquisition of                                                   
   PerIsis II                                                                                          1,870      
Issuance of warrants pursuant to shareholder litigation settlement                                     2,000
Issuance of common stock pursuant to shareholder litigation                                                  
   settlement                                                                                          5,076      
Reclassification of redeemable preferred stock pursuant to the                                            
   acquisition of the synthesis products business                                                     25,709      
Conversion of preferred stock into common stock                                                       10,000      
Sale of common stock pursuant to stock purchase agreement                                              2,000                    
Sale of common stock pursuant to employee stock purchase plan                                                   
   and exercise of stock options and warrants                                                            703      
Accretion on redeemable convertible preferred stock                                                   (2,367)     
Cumulative translation adjustment                                                                        225      
Amortization of deferred compensation                                                     112            112      
Net loss                                                                                             (20,570)   
                                                                        -----------  ------------  ------------ 
Balance at September 30, 1995                                                             (56)        65,107      
Issuance of contengent consideration relating to the acquisition of                                              
   AMI                                                                                                 3,465      
Issuance of common stock pursuant to the acquisition of PTC II                                        15,560
Issuance of common stock, through a private placement, net of                                            
   issuance costs                                                                                     16,848      
Conversion of warrants into common stock                                                                   3      
Conversion of preferred stock into common stock                                                            -       
Sale of common stock pursuant to employee stock purchase plan                                                   
   and exercise of stock options and warrants                                                          1,381      
Accretion on redeemable convertible preferred stock                                                       -       
Cumulative translation adjustment                                                                     (1,598)     
Unrealized loss on investments                                                  (70)                     (70)     
Amortization of deferred compensation                                                      56             56      
Net loss                                                                                             (50,467)   
                                                                        -----------  ------------  ------------ 
Balance at September 30, 1996                                                   (70)       -          50,285      
Conversion of preferred stock into common stock                                            
Sale of common stock pursuant to employee stock purchase plan                                                   
   and exercise of stock options and warrants                                                          2,126      
Accretion on redeemable convertible preferred stock                                                      -       
Cumulative translation adjustment                                                                     (3,412)     
Unrealized gain on investments                                                3,156                    3,156      
Net Income                                                                                            15,243      
                                                                        --------------------------------------
Balance at September 30, 1997                                                $3,086                  $67,398  
                                                                        ======================================
</TABLE> 
The accompanying notes are an integral part of these financial statements
                                                             
                                      F-7
 
<PAGE>
 
<TABLE>
<CAPTION>
                                          PerSeptive Biosystems, Inc.
                                     Consolidated Statements of Cash Flows
                                                 (in thousands)

                                                                            
                                                                                               Year ended September 30,
                                                                             -------------------------------------------------------
                                                                                 1997                    1996               1995
                                                                             -----------            --------------      ------------
<S>                                                                         <C>                     <C>                 <C>  
Cash flows from operating activities:
   Net income (loss)                                                            (15,243)               ($ 50,467)       ($ 20,570)
   Adjustments to reconcile net loss to net cash
     used in operating activities, net of acquired amounts:
       Depreciation and amortization                                             (7,862)                  10,530           11,009
       Gain on ChemGenics exchange                                              (27,481)
       Bad debt expense                                                               -                    1,275              438
       Non-cash portion of other charges                                              -                   33,073            8,946
  Changes in assets and liabilities:
       (Increase) decrease in accounts receivable                                (5,788)                     220           (6,589)
       (Increase) decrease in inventories                                        (2,690)                  (5,263)           3,059
       (Increase) decrease in other assets                                       (1,621)                     388             (651)
       Increase (decrease) in accounts payable                                    4,192                      (59)          (2,979)
       (Decrease) increase in accrued expenses                                   (8,116)                  (6,935)           2,592
       Increase (decrease) in other liabilities                                   1,548                   (2,488)             571
                                                                            -----------             -------------      -----------
Net cash (used in) operating activities                                         (16,851)                 (19,726)          (4,174)
                                                                            -----------             -------------      -----------
Cash flows from investing activities:
   Purchase of fixed assets, net                                                 (3,483)                 (10,725)         (21,328)
   Cash and securities available-for-sale acquired from PTC II                        -                   11,851
   Proceeds from ChemGenics notes and warrants                                   (4,000)
   Purchase of securities available-for-sale                                          -                  (88,498)         (53,156)
   Proceeds from sale and maturities of securities available-for-sale           (29,263)                  80,756           71,615
   Increase in patents and licenses                                                   -                      (27)          (1,442)
                                                                            -----------             -------------      -----------
Net cash provided by (used in) investing activities                             (29,780)                  (6,643)          (4,311)
                                                                            -----------             -------------      -----------
Cash flows from financing activities:
   Proceeds from capital lease financing                                              -                      373            5,000
   Principal payments under capital lease obligations                            (2,019)                  (2,173)            (687)
   Net proceeds from facility financing                                               -                    2,404            3,170
   Payment of finance costs                                                           -                     (225)            (254)
   Net proceeds from short-term borrowing                                          (320)                   1,089            3,943
   Proceeds from issuance of common stock                                        (2,126)                  18,298            2,706
                                                                            -----------             -------------      -----------
  Net cash provided by financing activities                                        (427)                  19,766           13,878
                                                                            -----------             -------------      -----------
Effect of exchange rate changes on cash and cash equivalents                       (457)                    (228)             222
                                                                            -----------             -------------      -----------
Increase (decrease) in cash and cash equivalents                                (12,899)                  (6,831)           5,615
Cash and cash equivalents at beginning of year                                   (5,384)                  12,215            6,600
                                                                            -----------             -------------      -----------
Cash and cash equivalents at end of year                                       $(18,283)                 $ 5,384         $ 12,215
                                                                            ===========             =============      ===========

Supplemental disclosure of cash flow information:
    Interest paid                                                               ($3,284)              $    3,259           $1,203

Supplemental disclosure of non-cash activities:
    Accretion of Series A Preferred Stock                                       ($1,427)                  $2,061         $  2,650
    Issuance of stock in exchange for redemption of  
      Series A Preferred Stock                                                  (10,000)                  10,000           10,000
    Stock and warrants issued in connection with acquisition of PTC II,
      net of warrants exchanged                                                       -                   15,592                -
    Issuance of stock and warrants pursuant to shareholder 
      litigation settle                                                               -                                     7,076
    Stock issued in connection with acquisition of Perlsis II                         -                                     1,870
    Stock issued to AMI in exchange for remaining acquisition costs                   -                    3,423                -
    Value of Millennium stock received, net of stock sold                       (10,575)
    Value of Millennium stock unrealized Gain                                    (3,108)
</TABLE> 
 The accompanying notes are an integral part of these financial statements

                                      F-8
<PAGE>
 
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION

     Organization

PerSeptive Biosystems, Inc. (the "Company") develops, manufactures, and markets
proprietary products and systems for the purification, analysis and synthesis of
biomolecules.

Pending Merger with Perkin-Elmer Corporation.

On August 27, 1997, The Perkin-Elmer Corporation ("Perkin-Elmer"), Seven
Acquisition Corp., a wholly-owned subsidiary of Perkin-Elmer, and PerSeptive
entered into an Agreement and Plan of Merger (the "Merger Agreement"). Pursuant
to the Merger Agreement, all outstanding shares of PerSeptive common stock, $.01
par value per share (the "PerSeptive Common Stock"), will be converted into
shares of Perkin-Elmer common stock, $1.00 par value per share (the "Perkin-
Elmer Common Stock"), at the exchange rate equal to $13.00 divided by the
average of the closing sales prices of Perkin-Elmer Common Stock on the New York
Stock Exchange composite tape on each of the 20 consecutive trading days
preceding the second trading day prior to the effective date of the merger. In
no event, however, will the exchange rate be more than 0.1926, or less than
0.1486, of a share of Perkin-Elmer Common Stock for each share of PerSeptive
Common Stock. At the effective time of the merger, PerSeptive will become a
wholly-owned subsidiary of Perkin-Elmer. On December 4, 1997, the proposed
merger was approved by PerSeptive's stockholders. The completion of the merger
is subject to regulatory approvals and other closing conditions. There can be no
assurance that the proposed merger will be completed. None of the financial
statements reflect the effects of the proposed transaction. Either party has the
right to terminate the merger agreement if the merger is not consummated on or
before January 31, 1998, unless the parties agree to extend that date on or
before January 31, 1998. The Company has incurred costs of $878,000 through
September 30, 1997 in connection with the merger, which costs have been deferred
until the closing of the merger.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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

Revenue Recognition

The Company recognizes revenue upon shipment of its products to the customer.
Significant future obligations, such as satisfaction of subjective or more than
perfunctory customer-mandated performance criteria, and sales-related
contingencies, such as unilateral rights to return product, delay revenue
recognition until the obligation is satisfied or the contingency is resolved.
Cost of insignificant obligations are accrued when revenue is recognized.

The Company recognizes revenue from research contracts as the related costs are
incurred on a cost-plus basis and from development contracts using the
percentage of completion method.

Foreign Currency

Effective July 1, 1995, the Company changed the functional currency designation
of its foreign subsidiaries from the U.S. dollar to the local currency of its
subsidiaries.  The change was based on significant changes in the nature of the
Company's foreign operations.  Accordingly, the Company's foreign subsidiaries
translate assets and liabilities at year-end exchange rates and capital accounts
at historical exchanges rates.  Income and expense accounts are translated at
the average exchange rates in effect during the year.  The resulting translation
gains and losses are 

                                      F-9
<PAGE>
 
reported as a separate component of stockholders' equity.

The functional currency designation in the first three quarters of 1995 and in
previous years' financial statements was the U.S. dollar.  Monetary assets and
liabilities were translated at year-end exchange rates, while nonmonetary items
were translated at historical exchange rates.  Income and expense accounts were
translated at the average exchange rates in effect during the year, except for
depreciation, amortization, and cost of revenue which were translated at
historical rates.  Gains and losses from changes in exchange rates were
recognized in the statement of operations.  Translation gains and losses prior
to the change in functional currency designation were not material.  Transaction
gains and losses which are immaterial, are included in other income.

Cash and Cash Equivalents

Cash equivalents consist of investments in money market funds, short term
government securities and highly liquid commercial paper of companies in varied
industries.  Accordingly, these investments are subject to minimal credit and
market risk.  The Company considers investments with an original maturity of
three months or less, at date of acquisition, to be cash equivalents.

Investments

The Company invests in high credit quality, interest-bearing instruments,
primarily government and corporate debt securities and Millennium
Pharmaceuticals Inc. common stock.  (See Concentrations of Credit and Market
Risk, below)

Investments that mature within one year or that are expected to be sold within
the year to meet cash-flow requirements are classified as current assets.  All
other investments are classified as long-term assets and are recorded at market
value, while securities classified as held-to-maturity are recorded at amortized
cost. Unrealized gains and losses on available-for-sale securities are reported
as a separate component of stockholders' equity.  At September 30, 1997 and
1996, all of the Company's investments are classified as available-for-sale.

Investment income consists primarily of interest income, net realized gains and
losses from the sale of securities, and the amortization of premiums and
discounts.  The cost of securities sold is based on the specific identification
method.

Inventories

Inventories are stated at the lower of cost or market with cost being determined
on the first-in, first-out basis (FIFO).

Fixed Assets

Fixed assets are recorded at cost and are depreciated over their estimated
useful lives on a straight-line basis.  Leasehold improvements are depreciated
over their estimated useful lives or the terms of the lease, if shorter.  Upon
retirement or other disposition of fixed assets the cost and related accumulated
depreciation are removed from the accounts and the resulting gain or loss is
reflected in income.  Additions, renewals and betterments are capitalized.
Expenditures for maintenance and repairs are charged to expense as incurred.

Intangible Assets

Organization costs are amortized on a straight-line basis over a five year
period.  Costs associated with patents and the licensing of patents are
capitalized as incurred and amortized on a straight-line basis over the shorter
of the legal term or the estimated economic life of the 

                                     F-10
<PAGE>
 
patent. Purchase options, consisting of the value ascribed to the options to
acquire the callable stock of certain research and development corporations,
were amortized over the term of the option. All purchase options outstanding at
September 30, 1995 were exercised during fiscal year 1996 in connection with the
acquisition of PTC-II. Goodwill is amortized on a straight-line basis over 20
years. Intangible assets are shown net of accumulated amortization of $5,744,000
and $5,174,000 at September 30, 1997 and 1996, respectively. Amortization
expense for intangible assets amounted to $1,752,000, $3,022,000 and $3,993,000
in fiscal year 1997, 1996 and 1995, respectively.

Deferred Financing Costs

Deferred financing costs, which consist of the costs associated with the
issuance of convertible subordinated notes, and obtaining other sources of
financing, are deferred and amortized on a straight-line basis, which
approximates the effective interest method, over the term of the debt.

Income Taxes

The Company accounts for income taxes on the liability method, which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of temporary differences between the carrying amounts and the
tax bases of assets and liabilities, measured using the enacted tax rates to be
in effect when those differences reverse net of any required valuation
allowance.

Product Warranty

The Company provides customers with up to a one year warranty from the date of
installation.  Estimated warranty obligations, which are included in the results
of operations, are evaluated and provided for at the time of sale.  Product
warranty costs were not significant.

Long-Lived Assets

Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.  An impairment loss is
recognized if the sum of the estimated future cash flows expected to result from
use of the asset is less than the carrying amount of the asset.  In 1996, the
Company compared the estimated future cash flows expected to result from
previous acquisitions and noted that the cash flows were greater than the
respective net goodwill amounts associated with those acquisitions, except for
the goodwill associated with the fiscal 1994 acquisition of the In Vitro
Division of Advanced Magnetics, Inc. which was written off during the fourth
quarter of fiscal 1996 (Note 13).

Concentrations of Credit and Market Risk

Financial instruments which subject the Company to concentrations of credit risk
consist primarily of accounts receivable, cash equivalents and investments.  The
Company is subject to significant market risk through its investment in
Millennium stock (see Note 3).

In the normal course of business, the Company extends credit, on open accounts,
to its customers after credit and business analysis.  The Company performs on-
going credit evaluation of its customers, does not require collateral and
maintains a reserve for potential credit losses.  Historically, the Company has
not experienced significant losses related to its accounts receivables.

In addition, the Company has certain receivables, payables, borrowings and other
assets and liabilities denominated in foreign currencies, which are not hedged
and therefore are subject to 

                                     F-11
<PAGE>
 
exchange rate fluctuations. To date, the Company has not incurred significant
losses as a result of currency fluctuations.

Net Income (Loss) Per Share

Net income per share applicable to common shareholders is determined by dividing
net income, including accretion on preferred stock, by the weighted average
number of common and common equivalent shares outstanding during the period.
Net loss per share applicable to common shareholders is determined by dividing
net loss, including accretion on preferred stock, by the weighted average common
shares outstanding during the period.  Common stock equivalents, consisting of
options, warrants, contingently issuable shares and shares held in escrow, are
included in the per share calculations, where the effect of their inclusion
would have been dilutive.  Fully diluted earnings per share is calculated under
the if converted method which includes preferred stock as if it had been
converted to common stock at the beginning of the period.  Under the if
converted method, accretion is not considered in the calculation of fully
diluted earnings per share."  Net income (loss) (in thousands) and net income
(loss) per common share after preferred stock accretion for the year ended
September 30, 1997, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
                                                                    Year ended September 30,
                                                            1997                 1996                1995
                                                          --------             --------            --------
<S>                                                      <C>                  <C>                  <C>
Net income (loss) before preferred stock                   $15,243             ($50,467)           ($20,570)
 accretion
Accretion of redeemable preferred stock                     (1,427)              (2,061)             (2,650)
                                                           -------             --------            --------
Net income (loss) after preferred stock                                                                         
 accretion                                                  13,816             ($52,528)           ($23,220)    
                                                           =======             ========            ========     
Net income (loss) per common share after                                                                        
 preferred stock accretion, primary                          $0.63               ($3.22)             ($1.88)    
                                                           =======             ========            ========     

Net income per common share, fully diluted                   $0.60
                                                           =======
Weighted average common and common equivalent                                                                   
 shares outstanding, primary                                21,905               16,296              12,340     
                                                           =======             ========            ========     
Weighted average common and common equivalent                                                                   
 shares outstanding, fully diluted                          25,552                                              
                                                           =======                                              
</TABLE> 

New Accounting Pronouncements


In February 1997, the Financial Accounting Standards Board issued Statement No.
128 ("SFAS 128"), "Earnings per Share," which is effective for fiscal years
ended after December 15, 1997, including interim periods.  SFAS 128 requires the
presentation of basic and diluted earnings per share ("EPS").  Basic EPS, which
replaces primary EPS, excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period.  Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.  Diluted EPS is computed
similarly to fully diluted EPS under the existing rules.  SFAS 128 requires
restatement of all prior-period earnings per share data presented after the
effective date.  The Company will adopt SFAS 128 in its fiscal year ended
September 30, 1998 and does not 

                                     F-12
<PAGE>
 
anticipate adoption to have a material effect on the financial statements.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive
Income", which is effective for fiscal years ended after December 15, 1997,
including interim periods.  SFAS 130 requires the presentation of comprehensive
income and its components.  Comprehensive income presents a measure of all
changes in equity that result from recognized transactions and other economic
events of the period other than transactions with owners.  SFAS 130 requires
restatement of all prior-period statements presented after the effective date.
The Company will adopt SFAS 130 in its fiscal year ended September 30, 1998 and
has not yet determined the impact of such adoption.

In July 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments
of an Enterprise and Related Information" which is effective for fiscal years
ended after December 15, 1997.  The interim reporting disclosures are not
required in the first year of adoption.  SFAS 131 specifies revised guidelines
for determining an entity's operating segments and the type and level of
financial information to be disclosed.  SFAS 131 changes current practice under
SFAS 14 by establishing a new framework on which to base segment reporting.  The
"management" approach expands the required disclosures for each segment. The
Company will adopt SFAS 131 in its fiscal year ended September 30, 1998 and has
not yet determined the impact of such adoption.

Use of Estimates

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

3.  INVESTMENTS

As of September 30, 1997 all securities available-for-sale are stated at market
value. These securities consist of U.S. Government and U.S. Government Agency
debt securities and Millennium Pharmaceuticals Inc. Common Stock and are
included in current assets based on the securities' maturity dates and the
Company's expected utilization of the securities.

The estimated fair value of investments available for sale, by contractual
maturity, at September 30, 1997 is as follows (in thousands):

Common Stock                                                  $13,678
Due in one year or less                                         2,968
                                                              -------
                                                              $16,646
                                                              =======

The Common Stock value shown above includes unrealized gain (in thousands) of
$3,108.

Securities and cash equivalents with an estimated fair market value of
approximately $5,500,000 at September 30, 1997 and 1996 are pledged as
collateral to secure short-term borrowings.


4.  INVENTORIES

     Inventories consist of the following (in thousands):

                                     F-13
<PAGE>
 
<TABLE> 
<CAPTION> 
                                                                                  September 30,
                                                                                1997          1996
                                                                               --------     --------
<S>                                                                           <C>          <C>
Raw materials                                                                   $ 9,450      $ 7,368
Work in progress                                                                  2,338        2,751
Finished goods                                                                   10,814       10,955
                                                                                -------      -------
                                                                                $22,602      $21,074
                                                                                =======      =======
</TABLE> 

5.  FIXED ASSETS

Fixed assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                Estimated                    September 30,
                                            useful life (years)         1997                1996
                                            ------------------         -------            --------
<S>                                              <C>                 <C>                 <C>
 
Land                                                                  $  1,296            $  1,496
Building                                               20                8,096               9,084
Construction in progress                                                   488                 917
Demonstration equipment                                 3                4,520               4,317
Laboratory equipment                                 3-10                7,681              10,762
Computer and office equipment                         3-7                5,969               4,814
Production equipment                                 3-10                6,051               4,970
Leasehold improvements                                  5                9,992               9,789
                                                                      --------            --------
                                                                        44,093              46,149
Accumulated depreciation and
amortization                                                           (16,467)            (14,132)
                                                                      --------            --------
                                                                      $ 27,626            $ 32,017
                                                                      ========            ========
</TABLE>

Depreciation and amortization expense amounted to $6,366,000, $7,508,000, and
$6,851,000 in fiscal years 1997, 1996, and 1995, respectively.

At September 30, 1997 and 1996, laboratory, computer and office equipment under
capital leases included in fixed assets amounted to approximately $1,553,000 and
$5,891,000 respectively.  Accumulated amortization related to assets under
capital leases was approximately $670,000 and $2,731,000 at September 30, 1997
and 1996, respectively, and is included in accumulated depreciation and
amortization.  Fixed assets under capital leases are depreciated over the
shorter of the term of the lease or the useful life of the asset.

6.  ACCRUED EXPENSES

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                        September 30,
                                                    1997            1996
                                                  --------        ---------
<S>                                               <C>             <C>
Accrued professional fees                          $ 1,976         $ 5,041
Accrued transaction fees and purchase
 accounting costs                                      378           1,732
 
Accrued warranty costs                               1,088           1,297
Accrued wages and commissions                        3,402           2,807
Other accrued expenses                               3,739           7,822
                                                   -------         -------
                                                   $10,583         $18,699
                                                   =======         =======
</TABLE>

                                     F-14
<PAGE>
 
7.  INCOME TAXES

Pre-tax loss incurred under the following jurisdictions (in thousands):
<TABLE>
<CAPTION>
                                                          Year ended September 30,
                                                   1997               1996                1995
                                                  -------           ---------           --------
<S>                                              <C>               <C>                 <C>
Income (Loss) before income taxes:
       Domestic                                   $22,361            $(44,777)          $(21,781)
       Foreign                                     (7,118)             (5,690)             1,211
                                                  -------            --------           --------
                                                  $15,243            $(50,467)          $(20,570)
                                                  =======            ========           ========
</TABLE>

The provision for income taxes was as follows (in thousands):


<TABLE>
<CAPTION>
                                                          Year ended September 30,
                                                   1997               1996                1995
                                                  -------           ---------           --------
<S>                                              <C>               <C>                 <C>
Current tax expense:
     State and local                             $     -          $      -             $     -
     Foreign                                           -                 -                 527
                                                 -------          --------             -------
       Total current                             $     _          $      -             $   527
                                                 -------          --------             -------
 
Deferred tax expense (benefit)
     Federal                                       7,855          $(17,521)            $  (898)
     State                                           822            (1,947)               (148)
     Foreign                                      (6,966)             (974)               (527)
                                                 -------          --------             -------
       Total deferred                              1,711           (20,442)             (1,573)
                                                 -------          --------             -------
Deferred tax asset valuation allowance            (1,711)           20,442               1,046
                                                 -------          --------             -------
Total provision                                  $     -          $      -             $     -
                                                 =======          ========             =======
</TABLE>

Deferred tax assets (liabilities) are comprised of the following (in thousands):

<TABLE>
<CAPTION>
                                                          Year ended September 30,
                                                          1997                  1996
                                                        -------               --------
<S>                                                   <C>                    <C>                
Net operating loss carryforwards                       $ 39,013               $ 32,869
Research and development credit                           1,169                    863
Expense accruals                                          1,285                  2,607
Depreciation                                               (605)                    44
Inventory reserves                                        2,214                  3,553
Millennium stock transaction                             (4,285)                     -
Patent amortization                                        (344)                  (355)
Accounts receivable                                         697                    888
Warranty reserve                                            407                    536
Other reserves and temporary differences                  3,630                  3,887
                                                       --------               --------
Gross deferred tax assets                                43,181                 44,892
Deferred tax assets valuation allowance                 (41,908)               (43,619)
                                                       --------               --------
                                                       $  1,273               $  1,273
                                                       ========               ========
</TABLE>

                                     F-15
<PAGE>
 
A reconciliation between the amount of reported income tax expense and the
amount computed using the U.S. Federal Statutory rate of 35% is as follows (in
thousands):


<TABLE>
<CAPTION>
                                                                              Year ended September 30,
                                                                     1997              1996               1995
                                                                    -------          --------           --------
<S>                                                                <C>              <C>               <C>
Income/(Loss) at statutory rate                                     $ 5,335          $(20,757)           $(7,200)
Foreign loss net benefited                                            2,195                 -                  -
Utilization of US NOL's                                              (7,656)
Shareholder settlement                                                                 (2,020)             3,546
Nondeductible amortization                                               65                 -                194
ChemGenics Transaction                                                    -             1,250                  -
PDI book goodwill write-off                                               -             1,446                  -
Charge for purchased research and development
  acquired from PTC-II, net of anticipated tax benefit                    -             2,375                  -
State tax benefit, net of federal tax liability                           -            (2,613)                 -
R & D Credit                                                              -              (149)
Other                                                                    61                26                  2
                                                                    -------          --------            -------
                                                                          -           (20,442)            (3,458)
Benefit of loss not recognized                                            -            20,442              3,458
                                                                    -------          --------            -------
Provision for income taxes                                          $     -          $      -            $     -
                                                                    =======          ========            =======
</TABLE>

The Company has provided a valuation allowance for certain deferred tax assets,
since it is not more likely than not that future benefits will be realized.  If
the Company achieves profitability, these deferred assets would be available to
offset future income tax liabilities and expense, subject to the limitations
described below.

At September 30, 1997, the Company has net operating loss carryforwards and
research and development tax credits for federal income tax reporting purposes
of approximately $64 million and $1,169,000, respectively, which will expire
between 2003 and 2012. The net operating loss carryforward is offset by
$4,700,450 relating to deductions for non-qualified stock option exercises which
will be credited to additional paid-in-capital upon realization. The Company has
a net operating loss carryforward for foreign income tax reporting of $12
million some of which will expire between 1998 and 2002 and the rest with an
unlimited carryforward period.

Ownership changes, as defined in the Internal Revenue Code, resulting from the
issuance of Series A, Series B and Series C convertible preferred stock and from
the issuance of common stock may have limited the amount of net operating loss
and tax credit carryforwards that can be utilized annually to offset future
taxable income or tax liability.


8.  CREDIT FACILITIES AND BORROWINGS

Convertible Subordinated Notes

In August 1994, the Company issued $27,230,000 aggregate principal amount of 8-
1/4% Convertible Subordinated Notes Due 2001 (the "Notes").  As of September 30,
1997, $6.8 million, representing the payment that is due on August 15, 1998, is
classified as a current liability. The Notes are convertible into the

                                     F-16
<PAGE>
 
Company's common stock at any time after the expiration of 60 days following the
last date of original issuance through maturity, unless previously redeemed or
repurchased, at a conversion price of $13.80 per share, subject to adjustment in
certain circumstances. Beginning on August 15, 1998 and on each anniversary date
through the year 2000, the Company is required to deposit in a sinking fund,
cash sufficient to redeem, on each August 15, 25% of the outstanding principal
and accrued interest.

Interest on the Notes is payable semi-annually on each February 15 and August
15, commencing on February 15, 1995, and the Notes will mature on August 15,
2001, unless previously redeemed or repurchased.  Interest expense in fiscal
year 1997, 1996 and 1995 was $2,246,000.  The Notes are not redeemable by the
Company prior to August 25, 1997.  Thereafter, the Notes will be redeemable at
the option of the Company, in whole or in part, at any time, at specified
redemption prices plus accrued and unpaid interest to the date of redemption.
The Notes are unsecured general obligations of the Company and are subordinated
to all existing and future senior indebtedness (as defined in the agreement) of
the Company.

Long-term Debt

The Company secured financing totaling 8.5 million DM (approximately $6 million
at September 30, 1995) in bank loans from two German banks during fiscal year
1995 to contribute to the construction of the Company's new manufacturing
facility in Hamburg, Germany.  During fiscal year 1996 additional proceeds were
received to complete the construction.  At September 30, 1996, total proceeds of
8.5 million DM (approximately $6 million at September 30, 1996) were received
from the Facility Financing.

The bank loans are payable in semi-annual installments of 363,640 DM
(approximately $206,657 at September 30, 1997) beginning March 31, 1997 through
September 30, 2007.  Interest is calculated at 7.5% per annum and is payable at
the end of each year.  The bank loans are collateralized by all real estate and
buildings owned by the Company in Hamburg, Germany.

Short-term Borrowing

The Company has secured short-term financing from an investment bank which is
collateralized by the Company's short-term investments.  The short-term
borrowing is classified as a current liability and approximates $5 million at
September 30, 1997 and 1996, respectively.  Interest is payable monthly and is
calculated daily, based on the broker call rate plus a percentage of the amount
borrowed.  The rate paid in fiscal year 1997, 1996 and 1995 ranged from 6.10% to
8.25%.

9.  STOCKHOLDERS' EQUITY

Redeemable Convertible Preferred Stock

In connection with its acquisition of the synthesis products business acquired
from Millipore Corporation ("Millipore"), the Company's Board of Directors
authorized the designation and issuance to Millipore of 4,000 shares of a newly
designated series of non-voting redeemable convertible preferred stock (the
"Series A Preferred Shares"), valued at approximately $33,121,000 as of the
acquisition date using an imputed interest rate of 8% (Note 16).  The Series A
Preferred Shares are redeemable in four equal installments on each of the first
four anniversaries of the closing of the acquisition in $10 million
installments, payable at the Company's option in cash or the Company's common
stock. The Company will have the right to redeem all or any part of the Series A
Preferred Shares prior to their stated redemption date by paying cash or by
delivering shares of its common stock with a market value equal to the
redemption price.  The holders of the Series A Preferred Shares will have
certain rights to 

                                     F-17
<PAGE>
 
convert, at the election of holders of 66-2/3% of the Series A Preferred Shares,
all, but not less than all, of the outstanding Series A Preferred Shares into
shares of common stock in the first year if the market price of the stock
exceeds $32.00 per share, and in the second year, if the market price exceeds
$38.00 per share. The conversion rate will be determined by dividing the
redemption value of the Series A Preferred Shares to be converted by the then
fair market value of the common stock at the time of conversion.

In August 1995, the Company issued 912,199 shares of common stock at $10.96 per
share to satisfy its first redemption payment due August 22, 1995.  In August
1996, the Company issued 1,248,050 shares of common stock at $8.01 per share to
satisfy its second redemption payment due August 22, 1996.  In August 1997, the
Company issued 1,019,108 shares of common stock at $9.81 per share to satisfy
its third redemption payment due August 22, 1997.  Management's intent is to
satisfy the remaining installment under this preferred stock arrangement as it
becomes due through the issuance of common stock.  As a result of the action
taken during fiscal year 1995 to convert the first installment of the preferred
stock to common stock and management's intent to satisfy future installments
with common stock, the remaining fair value of this outstanding security has
been reflected as a component of the Company's equity beginning in September 30,
1995.

The difference between the fair value of the Series A Preferred Shares recorded
at the date of issuance and the redemption value is accreted as a charge to
accumulated deficit using the effective interest method.

Capital Stock

The authorized capital stock of the Company consists of (i) 100,000,000 shares
of common stock and (ii) 1,000,000 shares of preferred stock, par value $.01 per
share, of which 4,000 shares have been designated Series A Redeemable
Convertible Preferred Stock ("Series A Preferred Stock") and 400,000 shares have
been designated Series B Junior Participating Preferred Stock ("Series B
Preferred Stock").

As of September 30, 1997 the Company had reserved 4,951,672 shares of common
stock for use in the Company's 1989, 1992 and 1997 Stock Plans and the Company's
1992 Non-Employee Director Plan (Note 10) and 59,039 shares of common stock for
use in the Company's 1992 Employee Stock Purchase Plan (Note 10).

Warrants

In addition, the Company also has outstanding the following warrants to purchase
common stock:

<TABLE>
<CAPTION>
                            Note        Number of      Exercise        Date           Expiration
                         Reference       Shares          Price       Exercisable         Date
                   -------------------------------------------------------------------------------------------
 
<S>                   <C>          <C>             <C>           <C>                  <C>
Class A Warrants              15         401,100        $20.00     December 1992       December 1997
Class C Warrants              15          40,000          7.31     September 1993      March 1999
Class E Warrants              15          41,875         33.00     January 1996        December 1998
Class F Warrants              12         100,000          7.62     March 1996          October 2002
Class G Warrants              13         279,330         12.66     March 1996          September 2003
</TABLE>

The exercise prices and the number of shares of the Company's common stock
issuable upon exercise of the Class C, E, and G warrants will be appropriately
adjusted in the event of stock 

                                     F-18
<PAGE>
 
splits, combinations, rights offering, stock dividends or certain other special
dividends with respect to the Company's common stock. The Class A warrants
expired unexercised on December 23, 1997.

10.  STOCK OPTION PLANS AND OTHER BENEFITS

1989 and 1992 Stock Plans

In June 1989 and March 1992, the Company adopted the 1989 and 1992 Stock Plans,
respectively (the "1989 Plan" and the "1992 Plan"), which provide for the
granting of incentive stock options, non-qualified stock options, stock purchase
rights and awards of stock.  The Board of Directors determines the term of each
option, option price, number of shares for which each option is granted, whether
restrictions will be imposed on the shares subject to options, and the rate at
which each option is exercisable.  The exercise price for incentive stock
options granted generally may not be less than the fair market value per share
of the underlying common stock on the date granted.  The exercise price per
share for non-qualified options will be as determined by the Board of Directors.
Additionally, the term of the options cannot exceed ten years (five years for
options granted to holders of more than 10% of the voting stock of the Company).
The options vest on an annual or quarterly basis from the date of grant over
periods determined by the Board of Directors.

As a result of the decline in the market price of the Company's common stock,
during fiscal year 1995, the Company allowed holders of 1,230,000 options to
surrender their existing options having exercise prices ranging from $7.63 to
$26.75 in exchange for new options totaling 615,000 at an exercise price of
$5.38.

Under the 1989 Plan, 984,000 options were authorized for issuance and options
covering 130,625 shares are currently outstanding, of which all were exercisable
as of September 30, 1997.  No further options will be granted under this plan.

On June 16, 1993, the Company amended the 1992 Plan to increase the number of
shares of common stock authorized for issuance under the 1992 Plan from 800,000
to 1,700,000.  On March 10, 1994, May 1, 1995, May 6, 1996 and March 5, 1997 the
Company amended the 1992 Plan to increase the number of shares of common stock
authorized for issuance to 2,300,000; 2,900,500; 3,585,500; and 4,585,500;
respectively.  In addition, the 1992 Plan was amended on March 10, 1994 and
March 5, 1997 to limit the number of shares of common stock that any participant
may purchase under the Plan to 600,000 and 1,400,000, respectively.  Under the
1992 Plan, options covering 4,087,017 shares are currently outstanding, of which
1,760,402 options were exercisable and 35,530 were available for grant as of
September 30, 1997.

1992 Non-Employee Director Plan

During March 1992, the Company adopted the 1992 Non-Employee Director Stock
Option Plan.  This plan provides for grants of non-qualified options to non-
employee members of the Board of Directors.  The exercise prices of options
granted under this plan will equal the fair market value of the underlying
common stock on the date granted.  The term of options under this plan is ten
years.  The original plan provided that Directors receive 1,500 non-qualified
options per year, except that persons who were directors on June 1, 1992
received an initial grant of 6,000 options, and persons first elected as
directors subsequent to June 1, 1992 receive an initial grant of 10,000 options.
On March 11, 1996, the plan was amended to increase the annual automatic grant
under the Director Plan from 1,500 to 7,500 shares of the Company' s Common
Stock. Initial and annual grants of options will vest in four and three equal
annual amounts, respectively, commencing on the grant date.  In the event that a
director ceases to be a member of the Board of 

                                     F-19
<PAGE>
 
Directors, any unexercised portion of options granted will terminate. Under this
plan, 200,000 shares of common stock have been authorized for issuance, and
options covering 107,000 shares are currently outstanding, of which 70,163
options were exercisable and 91,500 were available for grant as of September 30,
1997.

1997 Employee Non-Qualified Stock Option Plan

During 1997, the Company adopted the 1997 Non-Qualified Stock Option Plan.  This
plan provides for grants of non-qualified options to employees, consultants and
certain new officers.  The number of shares for which each option is granted,
whether restrictions will be imposed on the shares subject to options, and the
rate at which each is exercisable shall be determined at the discretion of the
Board of Directors.  The maximum term of options under this plan is ten years.

The original plan authorized 200,000 shares of common stock for issuance.  On
August 21, 1997, the number of shares of common stock authorized for issuance
was increased to 550,000.  As of September 30, 1997, options covering 474,114
shares are currently outstanding, of which 15,000 options were exercisable, and
25,886 options were available for grant.

Stock-based Compensation Plans

The Company has adopted the disclosure requirements of Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation."
The Company continues to recognize compensation costs using the intrinsic value
based method described in Accounting Principles Board Opinion No. 25,
"Accounting for Stock issued to Employees."

Net income (loss) and net income (loss) per share as reported in these
consolidated financial statements and on a pro forma basis, as if the fair value
based method described in SFAS No. 123 had been adopted, are as follows (in
thousands, except per share amounts):


<TABLE>
<CAPTION>
                                                            Year Ended September 30
                                                            -----------------------
                                                           1997                   1996
                                                          ------                 ------
----------------------------------------------------------------------------------------
<S>                      <C>                            <C>                   <C>
Net income                As reported                    $15,243                $(50,467)
                          Pro forma                       12,625                 (51,368)

Primary net income        As reported                    $   .63                $  (3.22)
per share                 Pro forma                          .51                   (3.28)

Fully diluted net         As reported                    $   .60                       -
income per share          Pro forma                          .44                       -
</TABLE>

The effects of applying SFAS No. 123 in fiscal year 1997 and 1996 are not
necessary indicative of the effects on reported net income in future years.

The following table summarizes the Company's stock option activity at September
30, 1997, 1996, and 1995, and changes during the years then ended:

                                     F-20
<PAGE>
 
<TABLE> 
<CAPTION> 

                                   1997                       1996                       1995
                         ------------------------   ------------------------   ------------------------
-------------------------------------------------------------------------------------------------------
                                        WEIGHTED-                 WEIGHTED                   WEIGHTED
                          SHARES         AVERAGE       SHARES      AVERAGE     SHARES        AVERAGE 
                           UNDER         EXERCISE      UNDER      EXERCISE      UNDER        EXERCISE   
                           OPTION         PRICE        OPTION      PRICE        OPTION        PRICE
-------------------------------------------------------------------------------------------------------
<S>                      <C>             <C>          <C>          <C>         <C>           <C>
Outstanding at
 beginning of year         3,560          $7.83        2,491        $7.37       2,332         $15.79
Granted at fair
 market value              1,646           7.04        1,604         7.98       1,908           6.39
Exercised                   (260)          6.22         (180)        5.30        (190)          1.85
Canceled                    (147)          7.40         (355)        6.83      (1,559)         19.28
-------------------------------------------------------------------------------------------------------
Outstanding at
end of year                4,799          $7.70        3,560        $7.83       2,491          $7.37
-------------------------------------------------------------------------------------------------------
</TABLE>

Options exercisable at September 30, 1997, 1996 and 1995 were 1,976,190,
1,227,458 and 1,208,184, respectively.  The weighted-average grant-date fair
value of options granted during 1997 and 1996 were $4.19 and $3.99,
respectively.

The following table summarizes information about stock options outstanding at
September 30, 1997:

<TABLE>
<CAPTION>
                                 OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
                                 -------------------                         -------------------             
                                      Weighted  
                                       Average                                                     
                                      Remaining       Weighted                            Weighted 
                       Number        Contractual      Average       Number                 Average      
Range of             Outstanding        Life         Exercise     Outstanding              Exercise                
Exercise prices      At 9/30/97      (In Years)        Price       At 9/30/97               Price
----------------------------------------------------------------------------------------------------------
<S>                 <C>                 <C>           <C>       <C>                        <C> 
$0.39  -  $6.10        1,048,762         6.25          $5.11       765,872                   $4.98 
                                                                                                     
$6.38  -  $6.81          311,525         9.34          $6.61        17,990                   $6.57
                                                                  
$7.13  -  $7.13        1,117,879         9.32          $7.13        53,632                   $7.13
                                                                  
$7.63  -  $7.63        1,107,507         8.75          $7.63       364,673                   $7.63 
                                                                                                   
$7.81 - $31.50         1,213,084         7.47         $10.81       774,023                  $11.68
                       ---------         ----         ------    ----------                  ------
$0.39 - $31.50         4,798,756         8.05          $7.70     1,976,190                   $8.17
</TABLE>

For the purpose of providing pro forma disclosures, the fair values of options
granted were estimated using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997 and 1996,
respectively: a risk-free interest rate of 6.02 % and 6.13 %, an expected life
of 4 years, expected volatility of 57.27 %, and no expected dividends.

Employee Stock Purchase Plan
On May 29, 1992, the Company adopted the 1992 Employee Stock Purchase Plan. This
plan provides eligible employees the opportunity to purchase shares of common
stock annually at 85% of the fair market value at the lower of the beginning or
ending stock price of the shares during two six-month periods of each year. A
maximum of 250,000 shares of common stock have been authorized for issuance
under this plan. The term of this plan is ten years. Purchases under this plan
were 51,000 shares in fiscal year 1997 at prices ranging between $5.53 and $5.75
per share and 54,000 shares in fiscal year 1996 at prices ranging between $7.50
and $8.25 per share and 188,000 shares since inception through September 30,
1997. The plan was terminated by the Board of Directors effective November 30,
1997.

                                     F-21

<PAGE>
 
Savings Plan

Effective May 1, 1993 the Company established the PerSeptive Biosystems, Inc.
401(k) Savings Plan (the "Plan") to provide employees the opportunity to defer
taxes on their savings.  The Plan is a defined contribution plan covering all
full-time employees of the Company who have completed six months of service and
are age twenty-one or older. The Plan is subject to the provisions of the
Employee Retirement Income Security Act of 1974.  The Company is not required to
contribute to, and has made no contributions, to the Plan.


11.  STOCKHOLDER RIGHTS PLAN

Effective March 2, 1995, the Company's Board of Directors implemented a
Stockholder Rights Plan by declaring a dividend of one preferred stock purchase
right (a "Right") for each outstanding share of the Company's common stock.
Each Right entitles the registered holder to purchase from the Company one one-
hundredth of a share (a "Unit") of Series B Junior Participating Preferred
Stock, $.01 par value per share at a purchase price of $47.00 per Unit (the
"Purchase Price"), subject to adjustment.  Such rights are transferred with any
change in ownership of the Company's common stock.

The Rights will be exercisable only upon the occurrence of certain triggering
events.  Such events would include the acquisition of or a tender offer that, in
the aggregate, equals or exceeds 15% of the outstanding shares of common stock
of the Company.  Until a Right is exercised, the holder thereof will have no
rights as a stockholder of the Company.  Until a triggering event occurs, the
Rights will not trade separately from the Company's common stock.  The Rights
are not exercisable until the occurrence of a triggering event and will expire
at the close of business on March 2, 2005, unless earlier redeemed by the
Company.

On August 23, 1997, the Stockholder Rights Plan was amended in anticipation of
approving a merger pursuant to an Agreement and Plan of Merger with Perkin-Elmer
Corporation ("Merger").  This amendment stated that no triggering event has
occurred as a result of the approval of the Merger and consequently, no rights
have become exercisable.

12.  COMMITMENTS AND CONTINGENCIES

Commitments

The Company has entered into license agreements pursuant to which it pays
royalties generally ranging from 1% to 6% on sales of certain consumable
products contained in the Company's finished goods.  Royalty rates are higher on
bulk sales of consumable products to other resellers.  Royalty expense incurred
in connection with these agreements for the years ended September 30, 1997, 1996
and 1995 totaled $535,000, $398,000 and $367,000, respectively.

The Company leases manufacturing facilities, office space and equipment under
noncancelable operating and capital leases expiring at various dates through
2009.  The approximate minimum rental commitments under all noncancelable leases
as of September 30, 1997 are as follows (in thousands):

                                              Operating           Capital
                                                leases            leases
                                              ---------           -------  
1998                                            $ 3,102           $  512
1999                                              2,646              447
2000                                              2,559              239
2001                                              1,550               44

                                     F-22
<PAGE>
 
2002                                              1,352                2
Thereafter                                        9,536                0
                                                -------           ------
Total minimum lease payments                    $20,745            1,244
                                                =======
Less-amount representing interest                                   (175)
                                                                  ------
Present value of obligations under                                $1,069
 capital leases                                                   ======


Total rent expense was approximately $2,331,000, $2,651,000 and $4,415,000 for
the years ended September 30, 1997, 1996, and 1995, respectively.

On March 31, 1995, the Company entered into an agreement for the subsequent sale
and leaseback of equipment totaling $4,790,000 for $5 million.  Under the terms
of the lease agreement, the Company has the option to repurchase the equipment
and is required to remit 30 equal monthly lease payments of approximately
$186,000 commencing March 31, 1995.  Interest on the lease is calculated at 9%
per annum.  For financial accounting purposes this lease had been recorded as a
capital lease.  At September 30, 1997, the obligation under this lease was
fulfilled.  The Company currently is negotiating an operating lease for this
equipment.

In conjunction with the sale and leaseback transaction: (1) Class F warrants to
purchase 100,000 shares of the Company's common stock were issued at an initial
per share exercise price of $7.25 and were exercised by the lessor during fiscal
1996; (2) the Company did not elect to exercise its right to repurchase the
equipment during fiscal 1996 and as a result additional Class F warrants to
purchase 100,000 shares of the Company's common stock were issued at an initial
per share exercise price of $7.62 and are exercisable any time on or after March
31, 1996 and on or before October 1, 2002. The value of the warrants issued has
been determined to be de minimus, and, therefore, no value has been ascribed.

Contingencies

During 1997 and 1996, the Company sold certain receivables for approximately
$17,518,000 and $11,936,000, respectively, to a financial institution with
recourse.  At September 30, 1997 and 1996, approximately  $4,572,018 and
$2,636,000, respectively, of the receivables sold had not been collected by the
financial institution.  The Company paid interest on receivables sold of
approximately  $78,855 and $55,000 during fiscal year 1997 and 1996,
respectively.

13. OTHER CHARGES

Other charges consist of costs of the following (in thousands):

<TABLE>
<CAPTION>
                                                        1996          1995
                                                     -----------------------
<S>                                                  <C>           <C>
In-process research and                                  
development (Notes 15,16)                             $ 6,785       $ 1,879
Other charges                                          27,360        13,580
                                                      -------       ------- 
                                                      $34,145       $15,459
 Total other charges                                  =======       ======= 
</TABLE>

1996 Charges


Other charges of $9,900,000 reported as part of costs of goods sold relate to
various charges recorded in connection with activities undertaken to realign the
Company's product offerings 

                                     F-23
<PAGE>
 
and to record impairment charges associated with certain underutilized
production assets.

Other charges of $17,460,000 were recognized during fiscal 1996 and related
to charges recorded in connection with the PTC-II acquisition, a provision for
the impairment of certain intangible assets, accruals for estimated legal costs
related primarily to the enforcement of the ongoing patent enforcement action
and other miscellaneous matters. The charge recorded in connection with the PTC-
II acquisition related to costs associated with organizational realignment
following the acquisition of approximately $3,300,000. The charge also included
provisions recorded in connection with ongoing litigation matters totaling
$5,200,000.  The impairment charge recorded in connection with the write-off of
the goodwill associated with the purchase of the In Vitro Division of Advanced
Magnetics, Inc. ("AMI") totaled $5,300,000.  Charges related to other
miscellaneous matters totaled $3,660,000.

1995 Charges

On December 26, 1994, the Company announced a restatement of its financial
results for its fiscal year ended September 30, 1993 and for the first three
quarters of its 1994 fiscal year.  Shortly thereafter, a number of class action
lawsuits were filed in the U.S. District Court for the District of Massachusetts
against the Company and certain of its officers.  These lawsuits were
consolidated in an amended complaint filed on March 8, 1995.  The complaint
asserted, on behalf of the class of all purchasers of the Company's common stock
from February 2, 1993 through December 26, 1994,  violations of federal
securities laws and common law consisting of the issuing of allegedly materially
false and misleading financial results with respect to the Company's quarterly
and year-end fiscal 1993 financial statements and the Company's quarterly
financial statements for the first, second and third quarters of fiscal 1994.
The complaint sought unspecified damages, interest, costs and fees.  On May 8,
1995, the Company filed its answer which denied all of plaintiffs' material
allegations and raised several affirmative defenses.

On June 14, 1995, the Court entered a preliminary order of approval of a
stipulation of compromise and settlement (the "Stipulation") between the
defendants in this action and the plaintiff class.  On August 11, 1995, the
court approved the Stipulation.  Pursuant to the terms of the Stipulation, the
purchasers of (a) the Company's Class E Warrants, which were originally issued
as part of units with the common stock of PerSeptive Technologies II
Corporation, and (b) its 8 1/4% Convertible Subordinated Notes due 2001, are
included in the plaintiff class in addition to the purchasers of the Company's
common stock.  In exchange for releases of the defendants, the plaintiff class
is entitled to receive: $5,000,000 in cash, a portion of which is paid by third
parties; $5,000,000 in shares of the Company's common stock; and $2,000,000 in
warrants to purchase shares of the Company's common stock.  In August of 1995,
the Company issued 493,827 shares of common stock with an aggregate market value
of $5,000,000.  The final cash payment of $1.5 million due under a promissory
note issued pursuant to the Stipulation, together with interest thereon, was
made on April 1, 1996.  The Company issued the Class G Warrants to purchase up
to 279,330 shares of the Company's common stock for $12.66 per share.  The
warrants became exercisable at any time on or after March 11, 1996 and will
expire September 11, 2003.  The costs of the settlement, including professional
fees associated with the settlement were recorded as a charge during the quarter
ended June 30, 1995.


14.  LITIGATION

The Company has sued Pharmacia Biotech, Inc. and certain of its affiliates, and
their parent Pharmacia AB (collectively, "Pharmacia"), now part of Pharmacia &
Upjohn Co., Sepracor Inc. 

                                     F-24
<PAGE>
 
("Sepracor") and BioSepra Inc. ("BioSepra"), a company partially owned by
Sepracor, for willful infringement of three PerSeptive patents (U.S. Nos.
5,019,270, 5,228,989 and 5,384,042), covering the process of Perfusion
Chromatography/(R)/ and the manufacture, sale and use of chromatography
particles and matrices that enable Perfusion Chromatography (collectively, the
"Original Perfusion Patents"). The Company commenced its action against
Pharmacia and Sepracor on October 14, 1993, and the consolidated action has been
pending in the United States District Court for the District of Massachusetts.
BioSepra was added as a party on May 19, 1994. The lawsuit also claims that
Sepracor and BioSepra made false and misleading representations of fact with
respect to the Company's products, and that BioSepra engaged in false and
misleading advertising. The lawsuit, in an amended complaint filed by Purdue
University and the Company, also claims that Sepracor and BioSepra infringe a
fourth patent ("the Coatings Patent"), licensed exclusively by PerSeptive,
covering novel coatings for chromatography media. The lawsuit seeks to enjoin
the defendants from infringing the four patents and asks for treble damages, as
well as other relief and damages. Pharmacia, Sepracor and BioSepra each have
asserted that their products do not infringe the Original Perfusion Patents and
that the Original Perfusion Patents are invalid and unenforceable, and have
asserted counterclaims against the Company alleging that the Company's
assertions that they have infringed the patents, and that statements allegedly
made by the Company to customers concerning the litigation, constitute unfair
competition, commercial disparagement, unfair trade practices, tortious
interference with customer relationships and violation of the Lanham Act, and
seeking an unspecified amount of damages, and, under certain asserted claims,
double or treble damages, as well as attorneys' fees and expenses. The Company
has denied any liability on these counterclaims.

On January 9, 1996, the Court entered an order denying the Company's motion for
partial summary judgment relating to the inventorship of the Original Perfusion
Patents, granting the Defendants' motions for partial summary judgment that
inventorship of the Original Perfusion Patents is improper for failure to name
one or more persons as additional joint inventors, and requiring the Company to
move to correct inventorship or have the patents declared invalid.  On March 12,
1996, the Court entered a ruling directing the Company to correct inventorship
and placed on the Company the burden of proving the absence of deceptive intent
in the designation of inventors at a hearing.  The Company moved to correct
inventorship.  The Company has preserved its right to appeal a number of issues,
including the Court's January 9, 1996 order that the Original Perfusion Patents
failed to name additional persons as joint inventors and the Court's March 12,
1996 order imposing the burden of proof on PerSeptive.  The hearing was held in
May and June 1996.  On April 3, 1997, the Court issued a ruling denying the
Company's motion to correct inventorship, ruling that the Company had not met
its burden of proving that two British scientists, who worked for a company that
is not a party to the litigation, were not named on the Original Perfusion
Patents without deceptive intent within the meaning of Section 256 of Title 35
United States Code, and granted judgment in favor of Sepracor, BioSepra and
Pharmacia on the Company's claims relating to the Original Perfusion Patents.
On April 16, 1997, the Company filed a motion to permit an immediate appeal of
the April 3, 1997 decision, and the related January 9, 1996 and March 12, 1996
decisions, to the United States Court of Appeals for the Federal Circuit, which
has exclusive jurisdiction in the United States to hear appeals in patent cases.
On April 30, 1997, the defendants filed a motion requesting that the District
Court render a decision on the defendants' defense of inequitable conduct prior
to permitting the Company's appeal.  On July 30, 1997, the Company filed a
motion seeking to (i) vacate the Court's April 3, 1997 decision and (ii) enter a
final judgment that will permit the 

                                     F-25
<PAGE>
 
Company to appeal the Court's earlier January 9, 1996 and March 12, 1996 orders
that the patents do not name all of the inventors and imposing the burden of
proof on PerSeptive. The Company's motion is based on a decision by the Court of
Appeals for the Federal Circuit in an unrelated case, Stark v. Advanced
                                                      -----------------
Magnetics, Inc., issued on July 11, 1997, which the Company contends rendered
--------------
the Court's April 3, 1997 decision erroneous. The defendants filed motions again
requesting that the District Court render a decision on their defense of
inequitable conduct prior to permitting an appeal. The Court has not rendered a
decision on the Company's or the defendants' motions. The Court has not yet
considered the issue of infringement of the Original Perfusion Patents or the
Coatings Patent.

On December 12, 1997, the Company announced that it had settled the litigation
with Sepracor and BioSepra.  Under the terms of the settlement, the Company
received an unspecified amount (which is not material to the financial
statements) and BioSepra obtained a non-exclusive license under PerSeptive's
Perfusion Chromatography patents. Sepracor and BioSepra were removed as
defendants in the litigation. The Company intends to continue to vigorously
pursue the litigation against Pharmacia, which remains a defendant.

The Company may incur substantial expenses relating to these lawsuits.  There
can be no assurance that the outcome of the litigation will not have a material
adverse effect on the Company.

In September 1996 and February 1997, two new United States patents relating to
Perfusion Chromatography systems were issued to the Company.  Neither of these
patents, which cover instruments and systems that perform the high-speed, high
resolution chromatography which is the subject of the Original Perfusion
Patents, are the subject of the current litigation.  Prior to the issuance of
these patents, the Company had submitted to the patent examiner the District
Court's January 9, 1996 order, and non-confidential portions of related briefs
filed by the parties, and the patents were issued naming only PerSeptive's
scientific founders as the inventors nonetheless.

Since November 1994, the Company has been responding to informal requests for
information from the Securities and Exchange Commission relating to certain of
the Company's financial matters. In May 1995, the Company was advised by the
Commission that it had obtained a formal order of investigation so that, among
other matters, it may utilize subpoena powers to obtain information relevant to
its inquiry. The Commission has and may in the future utilize its subpoena
powers to obtain information from various officers, directors and employees of
the Company and from persons not presently associated with the Company. If,
after completion of its investigation, the Commission finds that violations of
the federal securities laws have occurred, the Commission has the authority to
order persons to cease and desist from committing or causing such violations and
any future violations. The Commission may also seek administrative, civil and
criminal fines and penalties and injunctive relief. The Department of Justice
has the authority in respect of criminal matters. There can be no assurance as
to the timeliness of the completion of the investigation or as to the final
result thereof, and no assurance can be given that the final result of the
investigation will not have a material adverse effect on the Company. The
Company is cooperating fully with the investigation, and has responded and will
continue to respond to requests for information in connection with the
investigation.

15. CONTRACT RESEARCH AND CONTRACT DEVELOPMENT

PerSeptive Technologies II Corporation

                                     F-26
<PAGE>
 
In December 1993, the Company and PerSeptive Technologies II Corporation ("PTC-
II") completed an initial public offering of 2,645,000 units for net proceeds of
approximately $53.2 million (including the underwriters overallotment).  Each
unit consisted of one share of callable common stock of PTC-II and one Class E
warrant to purchase one share of the Company's common stock.  The Company had an
option exercisable at any time through December 31, 1997 to purchase all (but
not less than all) of the shares of PTC-II common stock that form a part of the
units at a premium over the public offering price per unit; the option price per
share ranged from $33.83 to $57.23 depending on the date of exercise.  The
Company also had options to acquire PTC-II's rights under certain development
programs at option prices per share ranging from $5.58 to $15.74 depending both
on the program acquired and the date of exercise.  The option prices may be paid
in cash, shares of the company's common stock, or any combination thereof, at
the Company's discretion.  The Company had no obligation to exercise the stock
purchase option or any of the program purchase options.  Any warrants not
exchanged in the exchange offer discussed below are exercisable at any time from
January 1, 1996 through December 31, 1998.  The exercise price of the warrants
is $33.00 per share.

In connection with the unit offering, the Company and PTC-II entered into
various agreements, including a technology license agreement and a research and
development agreement.  Pursuant to the technology license agreement, the
Company licensed technology to PTC-II for the development of products for
certain life sciences applications.  In this respect, the Company received a
non-refundable license fee of $4.0 million, recorded as deferred revenue, which
was being amortized into income over a 36 month period at a rate of $333,333 per
quarter.  In accordance with the research and development agreement, PTC-II
agreed to use the Company's services exclusively to develop the licensed
technology.  During the years ended September 30, 1996, 1995, and 1994 the
Company recognized $10.1 million, $19.8 million, and $12.8 million respectively,
in research and development revenue in connection with these agreements,
including the amortization of the license fee.  The Company considers the
warrants issued to the investors to have been in exchange for the call option on
PTC-II's stock.  Accordingly, such option has been recorded at the $5.3 million
valuation of the warrants in other intangible assets in the accompanying balance
sheet and was being amortized over the 36-month life of the option.  The value
of the warrant remaining as of the acquisition date was included in the extra
space in-process research and development charge described below.

Effective March 8, 1996, the Company completed an exchange offer in which PTC-II
unit holders exchanged 2,603,125 of their units for 2,603,125 shares of the
Company's common stock and 2,603,125 new Class I warrants to purchase the
Company's common stock exercisable until August 8, 1997 at an exercise price per
share of $13.50.  The total value of common stock and warrants issued in the
exchange offer was approximately $16 million based on the market value of the
common stock on March 8, 1996.  The Company recorded an in-process research and
development charge of approximately $6.8 million, which represents the
approximated value of acquired technologies which have not reached
commercialization (Note 16).

PerIsis II Development Corporation

In March 1993, the Company completed a transaction related to the formation of
two research and development corporations.  In connection with this transaction,
the Company and Isis Pharmaceuticals, Inc. ("Isis") licensed certain
applications of their technologies to two newly formed research and development
corporations.  One of these corporations ("PerIsis I") was pursuing the
development of products for the purification, analysis and synthesis of
oligonucleotides manufactured by Isis and the second corporation ("PerIsis II")
was pursuing the development of such products for commercialization and sale to
all other entities.  Under the 

                                     F-27
<PAGE>
 
agreements, the Company was paid for performing contract research and
development services over a period of approximately two years. During the years
ended September 30, 1995 and 1994, the Company recognized research and
development revenue totaling $0.2 million and $0.5 million respectively, in
connection with these agreements.

In exchange for an option to purchase all of the stock of PerIsis II at a price
ranging from approximately $2.7 million to $3.6 million, the Company issued
Class C warrants to purchase 40,000 shares of the Company's common stock at an
exercise price of $25.00 per share, exercisable from the period beginning
September 15, 1993 and ending March 15, 1999, and Class D warrants that, if they
become exercisable, will be exercisable from the period beginning March 15, 1996
and ending September 15, 2000 for a number of shares ranging from 172,914 to
345,829, determined as defined by the agreement.

In April 1995, the Company exercised its option to purchase all of the common
stock of PerIsis II.  In consideration for all of the stock of PerIsis II, the
exercise price of the Class C Warrants was amended to $7.31 per share and the
Class D Warrants were amended to be exercisable for 300,573 shares of common
stock at an exercise price of $0.01 per share.  The Class D Warrants were
exercised during fiscal 1996.  There were no tangible assets of PerIsis II
acquired, therefore, the value of the consideration paid of $1.8 million was
recorded an in-process research and development charge during the quarter ended
June 30, 1995.

16.  ACQUISITIONS

Advanced Magnetics, Inc. - In Vitro Diagnostics Division

At September 30, 1995, the Company had a liability of approximately $3.4 million
for the final settlement of the Company's acquisition of the In Vitro
Diagnostics Division of AMI.  In December 1995, the Company issued 373,080
shares of common stock with a value of $3.4 million, to satisfy this obligation.

Perceptive Technologies II Corporation

On November 1, 1995, the Company, PerSeptive Acquisition Corporation ("PAC"), a
wholly owned subsidiary of the Company, and PTC-II entered into a definitive
agreement pursuant to which the Company agreed to an exchange offer for all of
the 2,645,000 outstanding units of PTC-II followed by a merger of PTC-II with
PAC.  Each PTC-II unit consisted of one share of callable common stock of PTC-II
and one Class E Warrant of the Company, exercisable at $33.00 until December
1998.  Effective March 8, 1996, the Company acquired 2,603,125 units of PTC-II
that were validly tendered and not withdrawn in the exchange offer.  The PTC-II
shareholders, who participated in the exchange offer, exchanged their units for
2,603,125 shares of the Company's common stock and 2,603,125 new Class I
Warrants to purchase the Company's common stock, exercisable until August 8,
1997 at an exercise price per share of $13.50.  On March 13, 1996, PTC-II merged
with PAC and became a wholly owned subsidiary of the Company.  Each of the
remaining 41,875 shares of callable common stock of PTC-II not exchanged in the
exchange offer were automatically converted into a right to receive one share of
the Company's common stock upon the merger of PTC-II with PAC.  During the
quarter ended June 30, 1996, 36,475 rights were exchanged for an equivalent
number of shares of the Company's common stock.  The total value of the common
stock issued in the exchange offer was approximately $16 million based on the
market value of the Company's common stock on March 8, 1996.  The transaction
has been accounted for as a purchase and the Company has recorded an in-process
research and development charge of approximately $6.8 million which represents
the value of acquired technologies which have not reached commercialization.

                                     F-28
<PAGE>
 
During the six month period ended March 31, 1996, the Company recognized
research and development revenue from PTC-II totaling approximately $10.1
million.

The following is a summary of the purchase price and the allocation of the
purchase price to the net assets acquired, calculated using the closing price of
PerSeptive's common stock of $5.875 on March 8, 1996:
<TABLE>
<CAPTION>

Purchase Price:                                                                  (000's)
--------------                                                                  ----------
<S>                                             <C>                            <C>
Shares of Common Stock Issued                   2,639,600 at $5.875                $15,508
Shares of Common Stock to be Issued             5,400 at $5.875                         32
Warrants Issued                                 2,603,125 at $0.90                   2,343
Warrants Returned                               2,603,125 at $0.88                  (2,291)
Provision For Purchase Obligations                                                   1,000
Write off of Purchase Option Cost                                                    1,082
Transaction costs (i)                                                                1,620
                                                                                   -------
Total purchase price                                                               $19,294
                                                                                   =======
</TABLE>
                                                                               
(i) Amount represents acquisition costs associated with the Transaction which
include professional fees, printing costs and regulatory filing fees.

<TABLE>
<CAPTION>

Allocation of the Purchase Price:                                               March 8,
--------------------------------                                                 1996
                                                                                (000's)
                                                                               ----------
<S>                                                                             <C> 
Net asset values:
Cash and investments                                                             $11,851
Other current assets                                                                 693
Accrued expenses                                                                     (35)
In-process research and development                                                6,785
                                                                                 -------
Allocation of consideration                                                      $19,294
                                                                                 =======
</TABLE>

The unaudited pro forma results of operations for the years ended September 30,
1996 and 1995 reflecting the acquisition of PTC-II as if the companies had been
combined as of September 30, 1995 and 1994, respectively, are as follows (in 
thousands except for per share data):

<TABLE>
<CAPTION>
                                                      1996               1995
                                                   ---------           ---------      
<S>                                               <C>                 <C>
Revenue                                              $75,916             $69,613
Net loss                                            ($57,263)           ($37,108)
Net loss per share                                    ($3.41)             ($2.48)
</TABLE>
                                                                               
ChemGenics Pharmaceuticals Inc.

In June 1996, the Company entered into a transaction with ChemGenics
Pharmaceuticals Inc. ("ChemGenics") (formerly, Myco Pharmaceuticals Inc.), in
which the Company transferred certain assets and employees of the Company's drug
discovery program to ChemGenics and granted a non-exclusive license to GemGenics
to use the Company's technology (including technology developed through PTC-II)
in the field of drug discovery in exchange for shares of 

                                     F-29
<PAGE>
 
ChemGenics' common stock, $.001 par value per share ("ChemGenics Common Stock")
and warrants to purchase additional shares of ChemGenics Common Stock
exercisable until June 28, 2000. The warrants were exercisable at $5.00 per
share ($13.25 per share after a proposed 2.65-for-1 reverse stock split). The
Company was subject to certain contractual restrictions on the sale or
distribution of its holdings of ChemGenics Common Stock. In December 1996, the
Company and ChemGenics executed amendments to their agreements pursuant to which
the Company exchanged a portion of its ChemGenics Common Stock for a promissory
note for $3 million payable on the earlier of the closing of ChemGenics' initial
public offering or December 31, 2002. The Company held at September 30, 1996
approximately 34% of the outstanding capital stock of ChemGenics, and warrants
which, if exercised, would increase the Company's holdings to approximately 47%
(of which, warrants sufficient to increase the Company's holdings to
approximately 40% were currently exercisable prior to the merger with
Millennium).

In January, 1997 ChemGenics and Millennium Pharmaceuticals, Inc. ("Millennium")
entered into an Agreement and Plan of Merger ("Agreement").  Under the terms of
the Agreement, the stockholders of ChemGenics received common stock of
Millennium in exchange for their common stock of ChemGenics.  At the closing on
February 10, 1997, the Company received 1,612,582 shares of Millennium common
stock,  $.001 par value per share ("Millennium common stock"), in exchange for
its shares of ChemGenics common stock.  In addition, the Company received $4
million cash in exchange for the warrants for ChemGenics common stock and in
satisfaction of the above referenced promissory note.  The transaction qualified
as a tax-free merger.  The Company's shares of Millennium common stock are
subject to restrictions on sale which expired in increments between June and
September 1997.  In connection with this event, the Company recorded a gain of
$25.8 million, reflecting the fair market value of the cash received and the
Company's investment in Millennium common stock as of March 29, 1997.  During
the quarter ended June 28, 1997, the Company sold approximately 50% of its
investment in Millennium for $12.9 million and realized a gain on the sale of
approximately $800,000.  During the fourth quarter of fiscal 1997, the Company
recognized an additional gain  for book purposes of $800,000 in connection with
the release of a previously existing contingency on approximately 52,000 shares
of Millennium stock.  The taxable gain arising from this transaction will be
offset by available net operating loss carryforwards with the exception of a
portion of the gain potentially subject to the Federal Alternative Minimum Tax.
The total gain included in other income was for the year ended September 30,
1997 $27.4 million.

17. SALES TO SIGNIFICANT CUSTOMERS

The Company recorded sales to one significant customer, PTC-II, of $10.1
million and $19.8 million for the years ended September 30, 1997 and 1996,
respectively. No customer accounted for greater than 10% of revenue for the year
ended September 30, 1997.

18. GEOGRAPHICAL INFORMATION

The Company's areas of operation outside of the North America include Europe and
Asia.  Information about the Company's operations in different geographic
locations for the fiscal years 1997 and 1996 is shown below (in thousands).  The
Company's operations in geographic locations other than North America for prior
years are not significant.


                                     F-30
<PAGE>
 
<TABLE>
<CAPTION>
                                       North
                                      America         Europe          Asia         Eliminations       Consolidated
                                     -----------------------------------------------------------------------------------
<S>                                   <C>            <C>            <C>               <C>                 <C>
1997 Net sales to unaffiliated
       customers                        $ 54,322       $18,052        $24,142                   -           $ 96,516

Transfer between areas                    26,830         9,094              -             (35,924)                 -
                                        --------       -------        -------             -------           --------
 
Total sales                               81,152        27,146         24,142             (35,924)            96,516
 
Net income (loss)                         22,361        (2,820)        (4,298)                  -             15,243
 
Identifiable assets                      122,999        12,004         (1,052)(1)               -            133,951
</TABLE>
(1)  Identifiable assets information does not exclude intercompany balances.

<TABLE> 
<CAPTION> 
                                               North
                                              America     Europe       Asia       Eliminations     Consolidated
                                              -------     -------     -------     ------------     ------------
<S>                                          <C>          <C>         <C>         <C>              <C>  
1996 Net sales to unaffiliated customers      $56,480     $13,447     $16,091        $       -          $86,018 

Transfer between areas                         17,004       8,942           -          (25,946)               -
                                              -------     -------     -------     ------------     ------------

Total sales                                    73,484      22,389      16,091          (25,946)          86,018

Net income (loss)                             (48,176)       (552)     (1,739)               -          (50,467)

Identifiable assets                           100,906      15,693       5,056                -          121,655
</TABLE>

                                     F-31
<PAGE>
 
 
                       REPORT OF INDEPENDENT ACCOUNTANTS

                        ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Stockholders of PerSeptive Biosystems, Inc.:

Our report on other consolidated financial statements of PerSeptive Biosystems,
Inc., is included on page F-2 of this Annual Report on Form 10-K.  In connection
with our audits of such financial statements, we have also audited the related
financial statement schedule for each of the three years in the period ending
September 30, 1997, listed in the index of this Annual Report on Form 10-K.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.

                                               Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 1, 1997

                                     S-1

<PAGE>
 
 
                          PERSEPTIVE BIOSYSTEMS, INC.


                         FINANCIAL STATEMENT SCHEDULES
                SCHEDULE II - VALUATIONS AND QUALIFYING ACCOUNTS


<TABLE>
<CAPTION>
                             Balance             Additions                                                         Balance at
                            beginning         charges to costs                                                       end of
   Classifications          of period           and expenses             Other               Deductions              period
<S>                     <C>                  <C>                  <C>                    <C>                   <C>
Allowance for
doubtful accounts
for the year ended
September 30,
1997                        $2,386,000           $  138,000             ($250,000)            ($311,000)           $1,963,000    
1996                        $1,699,000           $1,275,000            $        0             ($588,000)           $2,386,000    
1995                        $1,778,000           $  438,000            $        0             ($517,000)           $1,699,000    
Inventory reserves                                                                                                               
for the year ended                                                                                                               
September 30,                                                                                                                    
1997                        $8,877,000           $3,580,000            $        0           ($6,627,000)           $5,829,682    
1996                        $4,448,000           $6,682,000            $        0           ($2,253,000)           $8,877,000    
1995                        $4,594,000           $2,327,000            $        0           ($2,473,000)           $4,448,000     
</TABLE>

                                     S-2

<PAGE>
 
                                 EXHIBIT INDEX

Exhibit
Number         Description of Exhibit
------         ----------------------

2.1            Agreement and Plan of Reorganization dated as of October 8, 1993
               by and among the Company, PV Merger Corporation and Vestec
               Corporation, as amended (filed as Exhibit 2.1 to the Company's
               Current Report on Form 8-K dated October 8, 1993, as amended and
               incorporated herein by reference).
 
2.2            Agreement and Plan of Merger by and among the Company, PV Merger
               Corporation and Vestec Corporation (filed as Exhibit 2.2 to the
               Company's Current Report on Form 8-K dated October 8, 1993, as
               amended and incorporated herein by reference).
 
2.3            Escrow and Exchange Agreement by and among the Company, Vestec
               Corporation, Marvin L. Vestal as the representative of the
               stockholders of Vestec, American Stock Transfer & Trust Company
               and the stockholders of Vestec Corporation whose names appear on
               the signature pages thereto (filed as Exhibit 2.3 to the
               Company's Current Report on Form 8-K dated October 8, 1993, as
               amended and incorporated herein by reference).
 
2.4            Registration Rights Agreement by and among the Company, PV Merger
               Corporation and Vestec Corporation (filed as Exhibit 2.4 to the
               Company's Current Report on Form 8-K dated October 8, 1993, as
               amended and incorporated herein by reference).
 
2.5            Asset Purchase Agreement dated as of October 15, 1993 by and
               between the Company and Advanced Magnetics, Inc. (filed as
               Exhibit 2.1 to the Company's Current Report on Form 8-K dated
               October 15, 1993, as amended and incorporated herein by
               reference).
 
2.6            Asset Purchase and Sale Agreement dated as of July 14, 1994 by
               and among the Company, Millipore Corporation and Millipore
               Investment Holdings Limited (filed as Exhibit 2.1 to the
               Company's Current Report on Form 8-K dated August 22, 1994, as
               amended and incorporated herein by reference).
 
2.7            Registration Rights Agreement by and among the Company, Millipore
               Corporation and Millipore Investment Holdings Limited dated
               August 22, 1994 (filed as Exhibit 2.3 to the Company's Current
               Report on Form 8-K dated August 22, 1994, as amended and
               incorporated herein by reference).
<PAGE>
 
2.8            Registration Rights Agreement by and among the Company, Alex.
               Brown & Sons Incorporated and Lehman Brothers Inc. dated August
               26, 1994 (filed as Exhibit 4.2 to the Company's Registration
               Statement No. 33-74600 on Form S-3 and incorporated herein by
               reference).
 
2.9            Agreement and Plan of Merger, dated as of November 1, 1995 among
               the Company, PerSeptive Acquisition Corporation and PerSeptive
               Technologies II Corporation (filed as Exhibit 10.26 to the
               Company's Annual Report on Form 10-K for the year ended September
               30, 1995 and incorporated herein by reference).
 
2.10           Amendment No. 1 to Agreement and Plan of Merger, dated January
               29, 1996 among the Company, PerSeptive Acquisition Corporation
               and PerSeptive Technologies II Corporation (filed as Exhibit 2.1
               to the Company's Registration Statement No. 333-1016 on Form S-4
               and incorporated herein by reference).
 
2.11           Agreement and Plan of Merger dated as of August 23, 1997 among
               The Perkin-Elmer Corporation, Seven Acquisition Corp. And
               PerSeptive Biosystems, Inc. (filed as Exhibit 2.1 to the
               Company's Current Annual Report on Form 8-K dated August 26, 1997
               and incorporated herein by reference).
 
3.1            Amended and Restated Certificate of Incorporation of the Company
               (filed as Exhibit 3.2, 4.2 to the Company's Registration
               Statement No. 33-46871 on Form S-1 and incorporated herein by
               reference).
 
3.2            Certificate of Amendment of Restated Certificate of Incorporation
               of the Company (filed as Exhibit 4.1 to the Company's
               Registration Statement No. 33-80856 on Form S-8 and incorporated
               herein by reference).
 
3.3            Amended and Restated By-Laws of the Company (filed as Exhibit
               3.4, 4.4 to the Company's Registration Statement No. 33-46871 on
               Form S-1 and incorporated herein by reference).
 
3.4            Certificate of Designations for the Series A Redeemable
               Convertible Preferred Stock filed with the Secretary of State of
               the State of Delaware on August 19, 1994 (filed as Exhibit 2.2 to
               the Company's Current Report on Form 8-K dated August 22, 1994,
               as amended, and incorporated herein by reference).
 
3.5            Certificate of Amendment of the Amended and Restated Certificate
               of Incorporation of the Company filed with the Secretary of State
               of the State of Delaware on May 8, 1995 (filed as Exhibit 3.1 to
               the Company's Quarterly Report on Form 10-Q for the period ended
               June 30, 1995 and incorporated herein by reference).
<PAGE>
 
3.6            Certificate of Designations for the Series B Junior Participating
               Preferred Stock filed with the Secretary of State of the State of
               Delaware on March 2, 1995 (exhibit to Exhibit 4.9) (filed as
               Exhibit 3.6 to the Company's Annual Report on Form 10-K for the
               year ended September 30, 1995 and incorporated herein by
               reference).
 
3.7            Amended Certificate of Designation for the Series B Junior
               Participating Preferred Stock filed with the Secretary of State
               of the State of Delaware on October 24, 1995 (filed as Exhibit
               3.7 to the Company's Annual Report on Form 10-K for the year
               ended September 30, 1995 and incorporated herein by reference).
 
4.1            Description of Capital Stock contained in the Company's Amended
               and Restated Certificate of Incorporation, as amended, filed as
               Exhibits 3.1 through 3.7 hereto.
 
4.2            Form of Class A Warrants for the purchase of the Company's Common
               Stock dated as of December 23, 1992 issued to the stockholders of
               PTC-I (filed as Exhibit 4.1 to the Company's Quarterly Report on
               Form 10-Q for the three-month period ended March 31, 1993 and
               incorporated herein by reference).
 
4.3            Form of Class C Warrants for the purchase of the Company's Common
               Stock dated as of March 15, 1993 issued to the stockholders of
               PerIsis II (filed as Exhibit 4.3 to the Company's Report on Form
               10-Q for the three-month period ended March 31, 1993 and
               incorporated herein by reference).
 
4.4            Warrant Agreement relating to the issuance of Class E Warrants of
               the Company dated as of December 29, 1993, as executed
               (supersedes Exhibit 4.7 to Amendment No. 1 to the Company's
               Registration Statement Nos. 33-71812, 33-71814 on Form S-1/S-3)
               (filed as Exhibit 4.2 to the Company's Quarterly Report on Form
               10-Q for the Quarterly Period ended March 31, 1994 and
               incorporated herein by reference).
 
4.5            Specimen Class E Warrant Certificate (filed as Exhibit 4.3 to
               Amendment No. 1 to the Company's Registration Statement Nos. 33-
               71812, 33-71814 on Form S-1/S-3 and incorporated herein by
               reference).
 
4.6            Specimen Unit Certificate (filed as Exhibit 4.1 to Amendment No.
               1 to the Company's Registration Statement Nos. 33-71812, 33-71814
               on Form S-1/S-3 and incorporated herein by reference).
<PAGE>
 
4.7            Indenture dated as of August 26, 1994 between the Company and
               State Street Bank and Trust Company, as Trustee (filed as Exhibit
               4.9 to the Company's Annual Report on Form 10-K for the year
               ended September 30, 1994 and incorporated herein by reference).
 
4.8*           Rights Agreement, dated as of March 1, 1995, between the Company
               and American Stock Transfer & Trust Company, as amended on August
               23, 1997.
 
4.9            Warrant Purchase Agreement relating to the issuance of Class F
               Warrants (filed as Exhibit 4.1 to the Company's Quarterly Report
               on Form 10-Q for the period ended March 31, 1995 and incorporated
               herein by reference).
 
4.10           Form of Class F Warrant (filed as Exhibit 4.2 to the Company's
               Quarterly Report on Form 10-Q for the period ended March 31, 1995
               and incorporated herein by reference).
 
4.11           Warrant Agreement dated as of September 11, 1995 between the
               Company and American Stock Transfer & Trust Company relating to
               the Class G Warrants (filed as Exhibit 4.1 to the Company's
               Current Report on Form 8-K dated as of September 11, 1995 and
               incorporated herein by reference).
 
4.12           Specimen of Class G Warrant Certificate (filed as Exhibit 4.2 to
               the Company's Current Report on Form 8-K dated as of September
               11, 1995 and incorporated herein by reference).
 
4.13           Form of Amendment to Class C Warrants (filed as Exhibit 4.15 to
               the Company's Annual Report on Form 10-K for the year ended
               September 30, 1995 and incorporated herein by reference).
 
4.14           Class H Warrant dated as of September 1, 1995 (filed as Exhibit
               4.19 to the Company's Annual Report on Form 10-K for the year
               ended September 30, 1995 and incorporated herein by reference).
 
4.15           Amendment No. 1, dated as of September 27, 1995, to the Rights
               Agreement, dated as of March 1, 1995, between the Company and
               American Stock Transfer & Trust Company (filed as Exhibit 4.20 to
               the Company's Annual Report on Form 10-K for the year ended
               September 30, 1995 and incorporated herein by reference).
<PAGE>
 
4.16           Form of Warrant Agreement between the Company and American Stock
               Transfer & Trust Company relating to the Company's Class I
               Warrants (filed as Exhibit 4.7 to the Company's Registration
               Statement No. 333-1016 on Form S-4 and incorporated herein by
               reference).
 
4.17           Specimen of Class I Warrant Certificate (filed as Exhibit 4.8 to
               the Company's Registration Statement No. 333-1016 on Form S-4 and
               incorporated herein by reference).
 
4.18           Stock Option Agreement dated August 23, 1997 between PerSeptive
               BioSystems, Inc. and the Perkin-Elmer Corporation (filed as
               Exhibit 4.1 to the Company's Current Report on Form 8-K dated as
               of August 26, 1997).
 
10.1+          1989 Stock Plan (filed as Exhibit 10.1 to the Company's
               Registration Statement No. 33-46871 on Form S-1 and incorporated
               herein by reference).
 
10.2+          1992 Stock Plan of the Company, as amended on January 20, 1997
               (filed as Exhibit 4.1 to the Company's Quarterly Report on Form
               10-Q for the Quarterly Period ended March 29, 1997 and
               incorporated herein by reference).
 
10.3+          1992 Employee Stock Purchase Plan (filed as Exhibit 10.3 to the
               Company's Registration Statement No. 33-46871 on Form S-1 and
               incorporated herein by reference).
 
10.4+          1992 Non-Employee Director Stock Option Plan, as amended on March
               11, 1996 (filed as Exhibit 4.2 to the Company's Quarterly Report
               on Form 10-Q for the Quarterly Period ended March 31, 1996 and
               incorporated herein by reference).
 
10.5           Consulting Agreement with Dr. Fred E. Regnier dated June 1, 1988
               (filed as Exhibit 10.7 to the Company's Registration Statement
               No. 33-46871 on Form S-1 and incorporated herein by reference).
 
10.6           License Agreement with Purdue Research Foundation dated as of
               June 16, 1990 (filed as Exhibit 10.8 to the Company's
               Registration Statement No. 33-46871 on Form S-1 and incorporated
               herein by reference).
 
10.7           Sublease Agreement with the Massachusetts Institute of Technology
               dated October 1, 1990 (filed as Exhibit 10.10 to the Company's
               Registration Statement No. 33-46871 on Form S-1 and incorporated
               herein by reference).
<PAGE>
 
10.8           Form of Indemnity Agreement with directors and officers (filed as
               Exhibit 10.15 to the Company's Registration Statement No. 33-
               46871 on Form S-1 and incorporated herein by reference).
 
10.9           Product License and Supply Agreement between Millipore
               Corporation and the Company granting the Company an exclusive
               worldwide royalty free license within the Life Science market to
               use certain patented technology to process membrane products and
               to carry out certain processes useful to DNA synthesis operations
               and providing for the supply of membrane products (filed as
               Exhibit 10.24 to the Company's Annual Report on Form 10-K for the
               fiscal year ended September 30, 1994 and incorporated herein by
               reference).
 
10.10          OEM Purchase and Supply Agreement between BioSearch, Inc. and the
               Waters Chromatography Division of Millipore Corporation with
               respect to the supply of certain high performance liquid
               chromatography components, machined parts and other materials to
               BioSearch, Inc. (filed as Exhibit 10.25 to the Company's Annual
               Report on Form 10-K for the fiscal year ended September 30, 1994
               and incorporated herein by reference).
 
10.11          Assignment of Settlement Agreement between Millipore Corporation,
               University Patents, Inc. and Applied Biosystems, Inc. ("ABI")
               involving cross license of certain patents, granting ABI a
               license under U.S. Patent No. 4,725,677, "Process for the
               Preparation of Oligonucleotides" and Millipore a license under
               U.S. Patent Nos. 4,458,066 and 4,415,732 (filed as Exhibit 10.26
               to the Company's Annual Report on Form 10-K for the fiscal year
               ended September 30, 1994 and incorporated herein by reference).
 
10.12          License Agreement dated January 23, 1991 between the University
               of Minnesota and Millipore Corporation granting Millipore an
               exclusive worldwide license to make, use and sell products under
               U.S. Patent Nos. 5,235,028, 5,196,566 and 5,117,009 and related
               pending applications covering support structures for peptide
               synthesis operations (filed as Exhibit 10.27 to the Company's
               Annual Report on Form 10-K for the fiscal year ended September
               30, 1994 and incorporated herein by reference).
 
10.13          License Agreement dated January 1, 1988 between Hoffman-La Roche
               Inc. and Millipore Corporation granting Millipore a non-exclusive
               license to make, use and sell so-called FMOC chemistries on
               laboratory instruments (filed as Exhibit 10.28 to the Company's
               Annual Report on Form 10-K for the fiscal year ended September
               30, 1994 and incorporated herein by reference).
<PAGE>
 
10.14          License Agreement dated March 9, 1992 between Novabiochem AG and
               Millipore Corporation granting Millipore a non-exclusive license
               to make, use and sell instruments for the monitoring of certain
               peptide reactions related to the synthesis of peptides (filed as
               Exhibit 10.29 to the Company's Annual Report on Form 10-K for the
               fiscal year ended September 30, 1994 and incorporated herein by
               reference).
 
10.15          License Agreement dated December 17, 1991 between Ole Burkhardt,
               Peter E. Nielsen, Rolf H. Berg, Michael Egholm and Millipore
               Corporation granting an exclusive, worldwide license Danish
               Patent Application No. 0986/91 "Oligonucleotide Analogs Termed
               PNA" and corresponding international counterparts (filed as
               Exhibit 10.30 to the Company's Annual Report on Form 10-K for the
               fiscal year ended September 30, 1994 and incorporated herein by
               reference).
 
10.16          Lease Agreement between the Company and the Massachusetts
               Institute of Technology dated March 19, 1993 for space located at
               12 Emily Street, Cambridge, Massachusetts (filed as Exhibit 10.31
               to the Company's Annual Report on Form 10-K for the fiscal year
               ended September 30, 1994 and incorporated herein by reference).
 
10.17          Lease Agreement between the Company and 500 Old Connecticut Path
               Limited Partnership for space located at 500 Old Connecticut
               Path, Framingham, Massachusetts (filed as Exhibit 10.32 to the
               Company's Annual Report on Form 10-K for the fiscal year ended
               September 30, 1994 and incorporated herein by reference).
 
10.18          Master Lease Agreement between the Company and Hambrecht & Quist
               Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit
               10.1 to the Company's Quarterly Report on Form 10-Q for the
               period ended March 31, 1995 and incorporated herein by
               reference).
 
10.19          Security Agreement between the Company and Hambrecht & Quist
               Guaranty Finance, L.P. dated March 31, 1995 (filed as Exhibit
               10.2 to the Company's Quarterly Report on Form 10-Q for the
               period ended March 31, 1995 and incorporated herein by
               reference).
 
10.20          Stipulation and Compromise of Settlement dated as of June 14,
               1995 relating to the action entitled In re: PerSeptive
               Biosystems, Inc. Securities Litigation, Civ. Action No. 94-
               12575(PBS), brought in the U.S. District Court for the District
               of Massachusetts (filed as Exhibit 10.1 to the Company's Current
               Report on Form 8-K dated as of September 11, 1995 and
               incorporated herein by reference).
<PAGE>
 
10.21          Credit Agreements between the Company's subsidiary PerSeptive
               Biosystems GmbH - Hamburg (formerly, "BioSearch GmbH") IKB
               Deutsche Industriebank and Dresdner Bank (filed as Exhibit 10.27
               to Form 10K/A Amendment No. 1 to the Company's Annual Report on
               Form 10-K for the year ended September 30, 1995 and incorporated
               herein by reference).
 
10.22          Master Agreement, dated as of May 7, 1996, between the Company
               and ChemGenics Pharmaceuticals a d/b/a of Myco Pharmaceuticals
               Inc. (filed as Exhibit 2 to the Company's Current Report on Form
               8-K dated as of June 28, 1996 and incorporated herein by
               reference).
 
10.23          Omnibus Amendment Agreement dated December 18, 1996 between the
               Company and ChemGenics Pharmaceuticals, Inc. (filed as exhibit 
               10.23 to the Company's Annual Report on Form 10-K for the year 
               ended September 30, 1996 and incorporated herein by reference).
 
10.24          1997 Non-Qualified Stock Option Plan, as amended (filed as
               Exhibit 4.1 to the Company's Registration Statement No. 333-
               38989, on Form S-8 and incorporated herein by reference).
 
10.25+         Employment Agreement dated as of January 17, 1997 between
               PerSeptive Biosystems, Inc. and John F. Smith (filed as Exhibit
               10.1 to the Company's Quarterly Report on Form 10-Q for the
               period ended June 28, 1997 and incorporated by reference herein.
 
10.26+         Employment Agreement dated as of January 17, 1997 between
               PerSeptive Biosystems, Inc. and Noubar B. Afeyan (filed as
               Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for
               the period ended June 28, 1997 and incorporated by reference
               herein.
 
21*            Subsidiaries of the Company.
 
23.1*          Consent of Coopers & Lybrand L.L.P.
 
24             Power of Attorney (included in the signature page to the
               Company's Annual Report on Form 10-K for the year ended September
               30, 1997).
________________________________
          *Indicates exhibits filed herewith.  All other exhibits have been
           previously filed unless
           otherwise indicated.
          +Indicates a management contract or compensatory plan or arrangement.