10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

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

 For the quarterly period ended September 26, 2004

or

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

Commission file number 001-5075

PerkinElmer, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	04-2052042
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

45 William Street, Wellesley, Massachusetts	02481
(Address of principal executive offices)	(Zip Code)

(781) 237-5100

(Registrant’s telephone number, including area code)

NONE

(Former name, former address and former fiscal year, if changed since last report)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

Number of shares outstanding of each of the issuer’s classes of common stock:

Class	Outstanding at November 1, 2004
Common Stock, $1 par value per share	128,099,015

TABLE OF CONTENTS

		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Income Statements	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Cash Flows	3
	Notes to Consolidated Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview	24
	Consolidated Results of Continuing Operations	24
	Reporting Segment Results of Continuing Operations	31
	Liquidity and Capital Resources	33
	Off-Balance Sheet Arrangements	36
	Dividends	36
	Application of Critical Accounting Policies and Estimates	36
	Forward-Looking Information and Factors Affecting Future Performance	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	43
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 6.	Exhibits	44
Signature		45
Exhibit Index		46

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(Unaudited)						(Unaudited)
	(In thousands except per share data)						(In thousands except per share data)
Sales	$	403,403		$	366,185		$	1,208,625		$	1,100,177
Cost of sales		243,270			213,243			729,292			654,360
Research and development expenses		21,359			19,659			63,425			61,467
Selling, general and administrative expenses		89,042			91,544			282,396			281,720
Restructuring charges (reversals), net		—			179			—			(2,994	)
Gains on dispositions		(299	)		(369	)		(662	)		(2,057	)
Amortization of intangible assets		7,140			7,013			21,318			21,240
Operating income from continuing operations		42,891			34,916			112,856			86,441
Interest and other expense, net		8,484			13,287			27,895			41,789
Income from continuing operations before income taxes		34,407			21,629			84,961			44,652
Provision for income taxes		9,806			6,863			24,640			14,406
Income from continuing operations		24,601			14,766			60,321			30,246
Loss from discontinued operations, net of income taxes		(318	)		(635	)		(1,734	)		(3,682	)
(Loss) gain on disposition of discontinued operations, net of income taxes		(269	)		138			(467	)		(1,535	)
Net income	$	24,014		$	14,269		$	58,120		$	25,029
Basic earnings per share:
Continuing operations	$	0.19		$	0.12		$	0.47		$	0.24
Loss from discontinued operations, net of income tax		—			(0.01	)		(0.01	)		(0.03	)
Loss on disposition of discontinued operations, net of income tax		—			—			—			(0.01	)
Net income	$	0.19		$	0.11		$	0.46		$	0.20
Diluted earnings per share:
Continuing operations	$	0.19		$	0.12		$	0.47		$	0.24
Loss from discontinued operations, net of income tax		—			—			(0.01	)		(0.03	)
Loss on disposition of discontinued operations, net of income tax		—			—			—			(0.01	)
Net income	$	0.19		$	0.11		$	0.45		$	0.20
Weighted average shares of common stock outstanding:
Basic		127,562			126,287			127,123			126,346
Diluted		129,395			128,034			129,230			127,568
Cash dividends per common share	$	0.07		$	0.07		$	0.21		$	0.21

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

1

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	September 26, 2004			December 29, 2003
	(Unaudited)
	(In thousands except share and per share data)
Current assets:
Cash and cash equivalents	$	220,041		$	191,499
Accounts receivable, net		272,460			288,027
Inventories		189,082			188,602
Other current assets		94,236			94,679
Current assets of discontinued operations		1,323			3,493
Total current assets		777,142			766,300
Property, plant and equipment:
At cost		621,458			618,651
Accumulated depreciation		(382,277	)		(352,290	)
Net property, plant and equipment		239,181			266,361
Investments		10,230			10,874
Intangible assets		403,970			424,703
Goodwill, net		1,030,241			1,034,911
Other assets		98,037			100,220
Long-term assets of discontinued operations		513			4,358
Total assets	$	2,559,314		$	2,607,727
Current liabilities:
Short-term debt	$	4,995		$	5,167
Accounts payable		131,227			154,260
Accrued restructuring and integration costs		3,824			8,055
Accrued expenses		301,017			283,695
Current liabilities of discontinued operations		858			846
Total current liabilities		441,921			452,023
Long-term debt		469,493			544,307
Long-term liabilities		257,611			262,347
Commitments and contingencies
Stockholders’ equity:
Preferred stock — $1 par value per share, authorized 1,000,000 shares; none issued or outstanding		—			—
Common stock — $1 par value per share, authorized 300,000,000 shares; issued 128,094,000 and 145,101,000 at September 26, 2004 and December 28, 2003, respectively; and outstanding 128,094,000 and 126,909,000 at September 26, 2004 and December 28, 2003, respectively		128,094			145,101
Capital in excess of par value		532,667			681,550
Unearned compensation		(4,358	)		(3,494	)
Retained earnings		703,923			672,616
Accumulated other comprehensive income		29,963			30,908
Cost of shares held in treasury — 18,192,000 shares at December 28, 2003		—			(177,631	)
Total stockholders’ equity		1,390,289			1,349,050
Total liabilities and stockholders’ equity	$	2,559,314		$	2,607,727

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

2

PERKINELMER, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Nine Months Ended
	September 26, 2004			September 28, 2003
	(Unaudited)
	(In thousands)
Operating activities:
Net income	$	58,120		$	25,029
Add net loss from discontinued operations		1,734			3,682
Add net loss on disposition of discontinued operations		467			1,535
Net income from continuing operations		60,321			30,246
Adjustments to reconcile net income from continuing operations to net cash provided by continuing operations:
Restructuring reversals, net of expense		—			(2,994	)
Stock-based compensation		4,819			5,941
Amortization of debt discount and issuance costs		4,870			8,245
Depreciation and amortization		56,361			58,014
Gains on dispositions and sales of investments, net		(662	)		(2,057	)
Changes in operating assets and liabilities:
Accounts receivable		14,679			56,652
Inventories		(771	)		14,380
Accounts payable		(23,068	)		(8,798	)
Accrued restructuring costs		(4,231	)		(16,292	)
Accrued expenses and other		16,949			(53,165	)
Net cash provided by operating activities from continuing operations		129,267			90,172
Net cash provided by (used in) operating activities from discontinued operations		477			(600	)
Net cash provided by operating activities		129,744			89,572
Investing activities:
Cash withdrawn from escrow to repay debt		—			187,477
Capital expenditures		(12,565	)		(11,194	)
Proceeds from dispositions or settlement of property, plant and equipment, net		3,442			3,295
Settlement of disposition of businesses, net		—			(846	)
Proceeds related to acquisitions		2,765			534
Net cash (used in) provided by investing activities from continuing operations		(6,358	)		179,266
Net cash provided by investing activities from discontinued operations		646			1,400
Net cash (used in) provided by investing activities		(5,712	)		180,666
Financing activities:
Payment of debt issuance costs		—			(1,725	)
Prepayment of zero coupon convertible notes		—			(189,901	)
Prepayment of term loan debt		(75,000	)		(50,000	)
Decrease in other credit facilities		(280	)		(1,737	)
Proceeds from issuance of common stock		6,092			2,355
Cash dividends		(26,814	)		(26,531	)
Net cash used in financing activities		(96,002	)		(267,539	)
Effect of exchange rate changes on cash and cash equivalents		512			8,002
Net increase in cash and cash equivalents		28,542			10,701
Cash and cash equivalents at beginning of period		191,499			130,615
Cash and cash equivalents at end of period	$	220,041		$	141,316

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

3

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

The consolidated financial statements included herein have been prepared by PerkinElmer, Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information in footnote disclosures normally included in financial statements has been condensed or omitted in accordance with the rules and regulations of the SEC. These statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2003 (the “2003 Form 10-K”). The balance sheet amounts at December 28, 2003 in this report were derived from the Company’s audited 2003 financial statements included in the 2003 Form 10-K and have been restated to reflect the discontinuance of the Company’s Electroformed Products, Ultraviolet Lighting and Computer-To-Plate businesses. Certain prior period amounts have been reclassified to conform to the current-year financial statement presentation. The information reflects all adjustments that, in the opinion of management, are necessary to present fairly the Company’s results of operations, financial position and cash flows for the periods indicated. All such adjustments are of a normal recurring nature with the exception of those entries resulting from discontinued operations, gains and losses on dispositions. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The results of operations for the nine months ended September 26, 2004 and September 28, 2003 are not necessarily indicative of the results for the entire fiscal year.

In September 2004, the Company approved a plan to shut down its Computer-To-Plate business. The Company has accounted for this business as discontinued operations in accordance with Statement of financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”).

(2) Stockholders’ Equity

Effective July 1, 2004, companies incorporated in Massachusetts became subject to the Massachusetts Business Corporation Act, Chapter 156D. Chapter 156D provides that shares that are reacquired by a company become authorized but unissued shares. As a result, Chapter 156D eliminates the concept of “treasury shares” and provides that shares reacquired by a company become “authorized but unissued” shares. Accordingly, at September 26, 2004, the Company has redesignated its existing treasury shares, at an aggregate cost of $168,338,000, as authorized but unissued and has allocated this amount to the common stock par value and additional paid in capital.

(3) Gains on Dispositions

During the third quarter of 2004, the Company recognized pre-tax gains and losses consisting of a $0.4 million net gain from the sale of machinery and equipment and a $0.1 million net loss from the sale of a building. During the nine months ended September 26, 2004, the Company recognized pre-tax gains consisting of a $0.4 million net gain from the sale of machinery and equipment and a $0.3 million net gain from the sale of buildings.

During the third quarter of 2003, the Company recognized $0.4 million of previously deferred pre-tax gain from a transaction on the sale of a business. During the nine months ended September 28, 2003, the Company recognized pre-tax gains consisting of a $1.4 million net gain from the sale of buildings, a $0.4 million net gain from the aforementioned sale of a business and a previously deferred $0.3 million gain from the sale of a separate business.

4

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(4) Restructuring Charges (Reversals)

The Company has undertaken four separate restructuring actions over the past three years related to the impact of acquisitions, divestitures and the integration of its business units. Restructuring actions in 2001 and 2002 were recorded in accordance with Emerging Issues Task Force (“EITF”) 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Restructuring actions taken since 2002 were recorded in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”). The principal actions associated with these plans related to workforce reductions and overhead reductions resulting from reorganization activities, including the closure of certain manufacturing and selling facilities. Details of these plans are discussed more fully in the Company’s 2003 Form 10-K.

For the nine-month period ended September 2003, the Company recorded a net restructuring reversal of approximately $3.0 million. The majority of this net reversal was a result of the reversal of $5.8 million in the Q4 2002 Plan due to lower than expected severance payments. This reversal was offset in part by $0.5 million in higher than anticipated charges relating to the Q4 2001 Plan and $2.3 million in new qualifying charges associated with the Q2 2003 Plan.

A description of each of the four restructuring plans and the activity recorded for the nine-month period ended September 26, 2004 is as follows:

Q2 2003 Plan

During 2003, the Company recognized a $2.0 million restructuring charge in the Life and Analytical Sciences business and a $0.3 million restructuring charge in the Optoelectronics business (the “Q2 2003 Plan”). The purpose of the restructuring was to further improve performance and take advantage of synergies between the Company’s former Life Sciences and Analytical Instruments businesses. The principal actions in the Q2 2003 Plan included lower headcount due to the continued integration of the Life and Analytical Sciences business in a European manufacturing facility and a customer care center as well as a headcount reduction at one of the Optoelectronics manufacturing facilities to reflect recent declining demand for several product lines.

The following table summarizes the components of the Q2 2003 Plan activity for the nine-month period ended September 26, 2004:

	Severance and Separation
	(In thousands)
Balance at December 28, 2003	$	288
Amounts paid		(86	)
Balance at September 26, 2004	$	202

The Company expects that all remaining Q2 2003 Plan actions will be completed by the end of 2004.

Q4 2002 Plan

In connection with the Company’s decision to combine the Life Sciences and Analytical Instruments businesses in order to reduce costs and achieve operational efficiencies, the Company recorded a pre-tax restructuring charge of $26.0 million during the fourth quarter of 2002 (the “Q4 2002 Plan”). The Q4 2002 Plan allowed the Company to combine many business functions worldwide, with the intention to better serve its customers and more fully capitalize on the strengths of the businesses’ sales, service and research and development organizations. The principal actions in the restructuring plan included workforce reductions, closure

5

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

of facilities and disposal of underutilized assets. The following table summarizes the components of the Q4 2002 Plan for the nine-month period ended September 26, 2004:

	Severance			Abandonment of Excess Facilities			Total
	(In thousands)
Balance at December 28, 2003	$	2,770		$	1,530		$	4,300
Amounts paid		(1,792	)		(841	)		(2,633	)
Balance at September 26, 2004	$	978		$	689		$	1,667

The Q4 2002 Plan resulted in the integration of the United States’ Life and Analytical Sciences sales, service and customer care centers, the integration of European customer care and finance centers, the merging of a former Life Sciences European manufacturing facility with a former Analytical Instruments European manufacturing facility and the merging of a portion of a former Life Sciences research and development European facility with a former Analytical Instruments European facility.

The Company expects to settle the remaining severance liability under the Q4 2002 Plan by the end of 2004. The Company’s current estimates of its lease commitments on unoccupied buildings under the Q4 2002 Plan extend until 2005.

Q1 2002 Plan

During the first quarter of 2002, the Company’s management developed a plan to restructure several businesses within its Life and Analytical Sciences and Optoelectronics segments (the “Q1 2002 Plan”). The Q1 2002 Plan resulted in pre-tax restructuring charges totaling $9.2 million. The principal actions in the Q1 2002 Plan included workforce and overhead reductions resulting from reorganization activities, including the closure of a manufacturing facility, disposal of underutilized assets and general cost reductions. The restructuring activities under the Q1 2002 Plan were completed in 2003 with the exception of payments due on a leased facility exited in 2002, which were finalized in 2004. The following table summarizes the components of the Q1 2002 Plan for the nine-month period ended September 26, 2004:

	Abandonment of Excess Facilities
	(In thousands)
Balance at December 28, 2003	$	100
Amounts paid		(100	)
Balance at September 26, 2004	$	—

Q4 2001 Plan

During the fourth quarter of 2001, in connection with the integration of Packard BioScience Company (“Packard”), which the Company acquired that quarter, and a restructuring of sales offices in Europe, the Company recorded a restructuring charge of $9.2 million in the Life and Analytical Sciences segment (the “Q2 2001 Plan”). The principal actions in the Q4 2001 Plan included the closing or consolidation of several leased sales and service offices in Europe, as well as costs associated with the closure of a manufacturing facility in Europe, the closure of leased manufacturing facilities in the United States and the disposal of related assets. These actions were designed to streamline the organization and take advantage of the synergies offered by the Packard acquisition as they relate to the legacy Life and Analytical Science segment.

6

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the components of the Q4 2001 Plan for the nine-month period ended September 26, 2004:

	Severance
	(In thousands)
Balance at December 28, 2003	$	2,471
Amounts paid		(1,024	)
Balance at September 26, 2004	$	1,447

The remaining liability under the Q4 2001 Plan relates to European severance obligations and is expected to be paid during 2005.

Integration Charges

In addition, as discussed in the Company’s 2003 Form 10-K, the Company established integration reserves relating primarily to the acquisition of Packard. The following table summarizes the activity in the reserves for the nine-month period ended September 26, 2004:

	(In thousands)
Accrued integration costs at December 28, 2003	$	896
Amounts paid		(388	)
Accrued integration costs at September 26, 2004	$	508

The integration activities were completed in 2003 with the exception of payments due on leased facilities exited in 2001. Our current estimates of our lease commitments extend through 2005.

(5) Inventories

Inventories consisted of the following:

	September 26, 2004		December 28, 2003
	(In thousands)
Raw materials	$	79,093	$	80,885
Work in progress		18,780		16,018
Finished goods		91,209		91,699
Total Inventories	$	189,082	$	188,602

(6) Debt

In December 2002, the Company entered into a senior credit facility. This facility was comprised of a six-year term loan in the amount of $315.0 million and a $100.0 million five-year revolving credit facility. This senior credit facility is secured primarily by a substantial portion of the Company’s and its subsidiaries’ domestic assets. During the nine months ended September 26, 2004, the Company repaid $75.0 million of principal on its term loan which resulted in $1.9 million of accelerated amortization of debt issuance costs, included in Interest and Other Expense, Net. As of September 26, 2004 there was $170.0 million of outstanding principal on the term loan and no outstanding principal balance under the revolving credit facility. In October 2004, the Company amended its senior credit facility primarily to allow greater flexibility regarding acquisitions, stock repurchases and debt reduction.

In January 2004, the Company entered into interest rate swap agreements (the “Swaps”) that effectively converted the fixed interest rate on $100.0 million of the Company’s 8 ⁷/8% senior subordinated notes due 2013

7

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(the “8 ⁷/8% Notes”) to a variable interest rate which is reset semi-annually in arrears based upon six-month USD LIBOR plus 427 basis points. The Swaps have the economic effect of modifying the interest obligations associated with these notes so that the interest payable on the notes effectively becomes variable. The Swaps reduced the annualized interest rate on the 8 ⁷/8% Notes by approximately 79 basis points during the nine months ended September 26, 2004. The Swaps have been designated as fair value hedges. Accordingly, the Swaps are marked to market in the Company’s consolidated financial statements. The fair value of these swap instruments as of September 26, 2004 was approximately $0.7 million and is reported within the carrying amount of the debt. The increase in the fair value of the Swaps is offset by a commensurate decrease in the fair market value of the 8 ⁷/8% Notes.

(7) Earnings Per Share

Basic earnings per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding plus all dilutive common shares outstanding, primarily shares issuable upon the exercise of stock options using the treasury stock method:

	Three Months Ended		Nine Months Ended
	September 26, 2004	September 28, 2003	September 26, 2004	September 28, 2003
	(In thousands)		(In thousands)
Number of common shares — basic	127,562	126,287	127,123	126,346
Effect of dilutive securities
Stock options and employee stock purchase plan	1,521	1,277	1,788	745
Restricted stock	312	470	319	477
Number of common shares — diluted	129,395	128,034	129,230	127,568
Number of potentially dilutive securities excluded from calculation due to antidilution	8,715	8,701	7,140	11,626

Earnings per share shown on the face of the income statement may not always add due to rounding of certain captioned amounts.

(8) Comprehensive Income

Comprehensive income consisted of the following:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)						(In thousands)
Net income	$	24,014		$	14,269		$	58,120		$	25,029
Other comprehensive income (loss):
Foreign currency translation adjustments		7,608			(2,810	)		(626	)		38,262
Unrealized (losses) gains on securities, net of tax		(11	)		153			(319	)		1,091
		7,597			(2,657	)		(945	)		39,353
Comprehensive income	$	31,611		$	11,612		$	57,175		$	64,382

8

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The components of accumulated other comprehensive income were as follows:

	September 26, 2004			December 28, 2003
	(In thousands)
Foreign currency translation adjustments	$	43,278		$	43,904
Minimum pension liability		(13,038	)		(13,038	)
Unrealized (losses) gains on securities		(277	)		42
Accumulated other comprehensive income	$	29,963		$	30,908

(9) Industry Segment Information

The accounting policies of the Company’s reportable segments are the same as those described in Note 1 of the Notes to Consolidated Financial Statements in the Company’s 2003 Form 10-K. The Company evaluates the performance of its operating segments based on operating profit. Intersegment sales and transfers are not significant. The operating segments and their principal products and services are:

• Life and Analytical Sciences: The Company is a leading provider of drug discovery, genetic screening, and environmental and chemical analysis tools, including instruments, reagents, consumables, and services.

• Optoelectronics: The Company provides a broad range of digital imaging, sensor and specialty lighting components used in the biomedical, consumer products and other specialty end markets.

• Fluid Sciences: The Company provides a variety of precision valves, seals, bellows and pneumatic joints for critical control and containment systems for highly demanding environments such as turbine engines and semiconductor fabrication equipment.

Sales and operating profit by segment are shown in the table below:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)						(In thousands)
Life & Analytical Sciences
Sales	$	243,704		$	235,085		$	750,820		$	713,317
Operating profit		18,914			21,312			57,032			53,611
Optoelectronics
Sales		98,610			87,214			279,164			258,326
Operating profit		17,313			11,860			41,814			33,886
Fluid Sciences
Sales		61,089			43,886			178,641			128,534
Operating profit		10,378			5,613			27,868			11,126
Other
Sales		—			—			—			—
Operating loss		(3,714	)		(3,869	)		(13,858	)		(12,182	)
Continuing Operations
Sales	$	403,403		$	366,185		$	1,208,625		$	1,100,177
Operating profit		42,891			34,916			112,856			86,441

(10) Discontinued Operations

In September 2004, the Company approved a plan to shut down its Computer-To-Plate business as part of its continued efforts to focus on higher growth opportunities. The results of this business were previously

9

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

reported as part of the Optoelectronics reporting segment. The Company has accounted for this business as a discontinued operation in accordance with SFAS No. 144 and, accordingly, has presented the results of operations and related cash flows as a discontinued operation for all periods presented. The assets and liabilities of this business have been presented separately and are reflected within the assets and liabilities from discontinued operations in the accompanying consolidated balance sheets as of September 26, 2004 and December 29, 2003. The abandonment of this business resulted in a $1.4 million write-down of certain fixed assets and inventory which is recognized in the loss on dispositions in the three and nine months ended September 26, 2004.

During the nine-month period ended September 26, 2004, the Company settled various claims under certain long-term contracts with the Company’s former Technical Services business, which was sold in August 1999. The net settlements resulted in a pre-tax gain of $0.7 million that was recognized in the third quarter of 2004, for a total of $1.5 million for the nine-month period ended September 26, 2004 and is included in gain on dispositions of discontinued operations for the nine-month period ended September 26, 2004.

During the nine months ended September 28, 2003, the Company completed the sale of a significant portion of its Entertainment Lighting business and abandoned the remaining assets. The Company recorded an incremental loss of $2.1 million on this transaction in the second and third quarters of 2003 as a loss on the disposition of discontinued operations.

In June 2004, the Company approved and executed separate plans to shut down its Electroformed Products business and sell its Ultraviolet Lighting business. The net assets of the Electroformed Products business were written off resulting in a $1.2 million loss for the nine months ended September 26, 2004. The fixed assets and inventory of the Ultraviolet Lighting business were sold in July 2004 for their approximate book value. Such businesses were considered discontinued operations and have been reflected as such in the accompanying summary operating results of discontinued operations and summary of losses (gains) on dispositions of discontinued operations.

Summary operating results of the discontinued operations of the Computer-To-Plate, Entertainment Lighting, Telecommunication Component, Electroformed Products and Ultraviolet Lighting businesses for the periods prior to disposition were as follows:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)						(In thousands)
Sales	$	308		$	581		$	3,426		$	6,691
Costs and expenses		717			1,576			6,171			12,659
Operating loss from discontinued operations		(409	)		(995	)		(2,745	)		(5,968	)
Other (expense) income, net		(105	)		(4	)		2			309
Operating loss from discontinued operations before income taxes		(514	)		(999	)		(2,743	)		(5,659	)
Benefit for income taxes		(196	)		(364	)		(1,009	)		(1,977	)
Loss from discontinued operations, net of taxes	$	(318	)	$	(635	)	$	(1,734	)	$	(3,682	)

10

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company recorded the following gains and losses, which have been reported as the loss (gain) on dispositions of discontinued operations:

	Three Months Ended					Nine Months Ended
	September 26, 2004			September 28, 2003		September 26, 2004			September 28, 2003
	(In thousands)					(In thousands)
Loss on Computer-To-Plate business	$	(1,354	)	$	—	$	(1,354	)	$	—
Gain on contract settlement associated with the Technical Services business		730			—		1,487			—
Gain (loss) on Entertainment Lighting business		—			202		—			(2,115	)
Loss on Electroformed Products business		—			—		(1,160	)		—
Gain (loss) on Security and Detection Systems business		—			6		—			(41	)
(Loss) gain on disposition of discontinued operations before income taxes		(624	)		208		(1,027	)		(2,156	)
(Benefit) provision for income taxes		(355	)		70		(560	)		(621	)
(Loss) gain on disposition of discontinued operations, net of income taxes	$	(269	)	$	138	$	(467	)	$	(1,535	)

(11) Stock-Based Compensation

The Company accounts for stock option plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employee, and related interpretations. No stock-based employee compensation cost related to stock options is reflected in net income, as all options granted under those plans had an exercise price at least equal to the market value of the underlying common stock on the date of grant.

However, the Company has issued restricted stock to certain employees that vests over time and has reflected the fair value of these awards as unearned compensation until the restrictions are released and the compensation is earned. In addition, the Company has awarded performance-contingent restricted stock to certain executive officers that vests only upon achievement of specific performance targets within three years. If the performance targets are not achieved within the applicable three-year period, the shares are forfeited. These shares were awarded under the Company’s 2001 Incentive Plan. Under current accounting rules, the compensation expense associated with the fair market value of these awards is variable; that is, the expense is determined based on the then-current stock price at the end of each quarter and is recognized over the period that the performance targets are expected to be achieved.

As allowed by SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), the Company has elected to account for stock-based compensation at intrinsic value with disclosure of the effects of fair value accounting on net income and earnings per share on a pro forma basis.

11

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands, except per share data)						(In thousands, except per share data)
Net income as reported	$	24,014		$	14,269		$	58,120		$	25,029
Add: Stock-based employee compensation expense (gain) included in net income, net of related tax effects		(179	)		455			717			1,364
Deduct: Total stock-based employee compensation expense determined under fair market value method for all awards, net of related tax effects		(3,919	)		(4,016	)		(12,615	)		(13,592	)
Pro forma net income	$	19,916		$	10,708		$	46,222		$	12,801
Earnings per share:
Basic — as reported	$	0.19		$	0.11		$	0.46		$	0.20
Basic — pro forma	$	0.16		$	0.08		$	0.36		$	0.10
Diluted — as reported	$	0.19		$	0.11		$	0.45		$	0.20
Diluted — pro forma	$	0.15		$	0.08		$	0.36		$	0.10

(12) Goodwill and Intangible Assets

In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and other Intangible Assets (“SFAS No. 142”), the Company is required to test goodwill for impairment at the reporting unit level upon initial adoption and at least annually thereafter. As part of the Company’s on-going compliance with SFAS No. 142, the Company, assisted by independent valuation consultants, completed its annual assessment of goodwill using a measurement date of January 1, 2004. The results of this annual assessment at January 1, 2004 resulted in no impairment charge.

The changes in the carrying amount of goodwill for the nine-month period ended September 26, 2004 from December 28, 2003 are as follows:

	Life and Analytical Sciences			Optoelectronics			Fluid Sciences		Consolidated
	(In thousands)
Balance, December 28, 2003	$	967,479		$	36,590		$	30,842	$	1,034,911
Purchase accounting adjustments		(2,765	)		—			—		(2,765	)
Foreign currency translation		(1,898	)		(7	)		—		(1,905	)
Balance, September 26, 2004	$	962,816		$	36,583		$	30,842	$	1,030,241

Purchase accounting adjustments of $2.8 million represent net amounts remitted back to the Company from an escrow account established in connection with an entity purchased in 2000.

12

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Intangible asset balances at September 26, 2004 and December 28, 2003 were as follows:

	September 26, 2004			December 28, 2003
	(In thousands)
Amortizable intangible assets
Patents	$	95,460		$	95,260
Less: Accumulated amortization		(34,634	)		(27,612	)
Net patents		60,826			67,648
Licenses		48,767			48,490
Less: Accumulated amortization		(16,415	)		(12,430	)
Net licenses		32,352			36,060
Core technology		208,692			208,692
Less: Accumulated amortization		(56,933	)		(46,730	)
Net core technology		151,759			161,962
Net amortizable intangible assets		244,937			265,670
Non-amortizable intangible assets, primarily trademarks and tradenames		159,033			159,033
TOTALS	$	403,970		$	424,703

(13) Warranty Reserves

The Company provides warranty protection for certain products for periods ranging from one to three years beyond the date of sale. The majority of costs associated with warranty obligations include the replacement of parts and the time of service personnel to respond to repair and replacement requests. A warranty reserve is recorded based upon historical results, supplemented by management’s expectations of future costs. A summary of warranty reserve activity for the three and nine months ended September 26, 2004 and September 28, 2003 is as follows:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)						(In thousands)
Balance beginning of period	$	9,960		$	10,600		$	9,798		$	9,809
Provision		3,027			3,345			9,674			11,658
Charges		(3,608	)		(4,408	)		(9,994	)		(12,341	)
Other		76			4			(23	)		415
Balance end of period	$	9,455		$	9,541		$	9,455		$	9,541

13

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(14) Employee Benefit Plans

Net periodic benefit cost (credit) included the following components for the three and nine months ended September 26, 2004 and September 28, 2003:

	Defined Benefit Pension Benefits						Post-Retirement Medical Benefits
	Three Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)
Service cost	$	1,534		$	1,247		$	24		$	29
Interest cost		5,491			5,252			136			137
Expected return on plan assets		(5,598	)		(5,424	)		(224	)		(187	)
Net amortization and deferral		483			233			(126	)		(117	)
Net periodic benefit cost (credit)	$	1,910		$	1,308		$	(190	)	$	(138	)

	Defined Benefit Pension Benefits						Post-Retirement Medical Benefits
	Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)
Service cost	$	4,584		$	3,742		$	93		$	89
Interest cost		16,423			15,754			392			410
Expected return on plan assets		(16,751	)		(16,270	)		(579	)		(560	)
Net amortization and deferral		1,444			698			(361	)		(352	)
Net periodic benefit cost (credit)	$	5,700		$	3,924		$	(455	)	$	(413	)

To the extent the fair value of plan assets of the pension plan fall below the Accumulated Benefit Obligation, the Company will have to reclassify the amount of the prepaid pension to Stockholders’ Equity.

(15) Guarantor Financial Information

The Company has outstanding $300.0 million in aggregate principal amount of its 8 ⁷/8% Notes. The Company’s payment obligations under the 8 ⁷/8% Notes are guaranteed by some of the Company’s domestic subsidiaries (the “Guarantor Subsidiaries”). Such guarantee is full and unconditional. Separate financial statements of the Guarantor Subsidiaries are not presented because the Company’s management has determined that they would not be material to investors. The following supplemental financial information sets forth, on an unconsolidated basis, income statement, balance sheet and statement of cash flow information for the Company (“Parent Company Only”), for the Guarantor Subsidiaries and for the Company’s other subsidiaries (the “Non-Guarantor Subsidiaries”). The supplemental financial information reflects the investments of the Company and the Guarantor Subsidiaries in the Guarantor and Non-Guarantor Subsidiaries using the equity method of accounting.

14

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Income Statement

Three months ended September 26, 2004

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	71,252		$	176,976		$	197,713	$	(42,538	)	$	403,403
Cost of sales		53,138			124,011			108,659		(42,538	)		243,270
Research and development expenses		735			12,303			8,321		—			21,359
Selling, general and administrative expenses		11,956			36,282			40,804		—			89,042
Other operating expense, net		143			5,445			1,253		—			6,841
Operating income (loss) from continuing operations		5,280			(1,065	)		38,676		—			42,891
Other expenses (income) net		8,651			(491	)		324		—			8,484
(Loss) income from continuing operations before income taxes		(3,371	)		(574	)		38,352		—			34,407
(Benefit) provision for income taxes		(920	)		(171	)		10,897		—			9,806
(Loss) Income from continuing operations		(2,451	)		(403	)		27,455					24,601
Equity earnings (loss) from subsidiaries, net of tax		27,052			27,455			—		(54,507	)		—
Income (loss) from continuing operations		24,601			27,052			27,455		(54,507	)		24,601
Loss from discontinued operations, net of income taxes		(587	)		—			—		—			(587	)
Net income (loss)	$	24,014		$	27,052		$	27,455	$	(54,507	)	$	24,014

15

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Income Statement

Nine months ended September 26, 2004

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
Sales	$	208,273		$	532,132		$	597,282	$	(129,062	)	$	1,208,625
Cost of sales		157,322			362,649			338,383		(129,062	)		729,292
Research and development expenses		1,959			35,731			25,735		—			63,425
Selling, general and administrative expenses		39,630			116,714			126,052		—			282,396
Other operating expense, net		1,034			17,241			2,381		—			20,656
Operating income (loss) from continuing operations		8,328			(203	)		104,731		—			112,856
Other expenses (income) net		28,309			(950	)		536		—			27,895
(Loss) income from continuing operations before income taxes		(19,981	)		747			104,195		—			84,961
(Benefit) provision for income taxes		(5,794	)		216			30,218		—			24,640
(Loss) Income from continuing operations		(14,187	)		531			73,977		—			60,321
Equity earnings (loss) from subsidiaries, net of tax		74,508			73,977			—		(148,485	)		—
Income (loss) from continuing operations		60,321			74,508			73,977		(148,485	)		60,321
Loss from discontinued operations, net of income taxes		(2,201	)		—			—		—			(2,201	)
Net income (loss)	$	58,120		$	74,508		$	73,977	$	(148,485	)	$	58,120

16

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Income Statement

Three months ended September 28, 2003

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales	$	52,505		$	167,462		$	185,132		$	(38,914	)	$	366,185
Cost of sales		41,550			106,783			103,824			(38,914	)		213,243
Research and development expenses		922			11,174			7,563			—			19,659
Selling, general and administrative expenses		10,956			38,134			42,454			—			91,544
Other operating (income) expense, net		(175	)		9,111			(2,113	)		—			6,823
Operating income from continuing operations		(748	)		2,260			33,404			—			34,916
Other expenses (income) net		13,080			(1,029	)		1,236			—			13,287
(Loss) income from continuing operations before income taxes		(13,828	)		3,289			32,168			—			21,629
(Benefit) provision for income taxes		(4,389	)		1,084			10,168			—			6,863
(Loss) income from continuing operations		(9,439	)		2,205			22,000			—			14,766
Equity earnings (loss) from subsidiaries, net of tax		24,205			22,000			—			(46,205	)		—
Income (loss) from continuing operations		14,766			24,205			22,000			(46,205	)		14,766
Loss from discontinued operations, net of income taxes		(497	)		—			—			—			(497	)
Net income (loss)	$	14,269		$	24,205		$	22,000		$	(46,205	)	$	14,269

17

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Income Statement

Nine months ended September 28, 2003

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Sales	$	157,781		$	456,512		$	563,310		$	(77,426	)	$	1,100,177
Cost of sales		124,492			286,716			320,578			(77,426	)		654,360
Research and development expenses		3,017			33,826			24,624			—			61,467
Selling, general and administrative expenses		35,425			116,944			129,351			—			281,720
Other operating expense (income), net		151			18,917			(2,879	)		—			16,189
Operating (loss) income from continuing operations		(5,304	)		109			91,636			—			86,441
Other expenses net		31,300			7,999			2,490			—			41,789
(Loss) income from continuing operations before income taxes		(36,604	)		(7,890	)		89,146			—			44,652
(Benefit) provision for income taxes		(11,807	)		(2,545	)		28,758			—			14,406
(Loss) income from continuing operations		(24,797	)		(5,345	)		60,388			—			30,246
Equity earnings (loss) from subsidiaries, net of tax		55,043			60,388			—			115,431			—
Income (loss) from continuing operations		30,246			55,043			60,388			115,431			30,246
Loss from discontinued operations, net of income taxes		(5,217	)		—			—			—			(5,217	)
Net income (loss)	$	25,029		$	55,043		$	60,388		$	115,431		$	25,029

18

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

September 26, 2004

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	36,724		$	—	$	183,317	$	—		$	220,041
Accounts receivable, net		30,990			42,359		199,111		—			272,460
Inventories		23,482			75,719		89,881		—			189,082
Other current assets		38,122			17,984		38,130		—			94,236
Current assets of discontinued operations		1,323			—		—		—			1,323
Total current assets		130,641			136,062		510,439		—			777,142
Property, plant and equipment, net		27,811			133,886		77,484		—			239,181
Investments		8,221			1,150		859		—			10,230
Intangible assets		34,709			1,069,848		329,654		—			1,434,211
Intercompany (payable)/receivable, net		(1,141,867	)		854,892		286,975		—			—
Investment in subsidiary		2,897,870			886,227		—		(3,784,097	)		—
Other assets		78,365			4,307		15,365		—			98,037
Long-term assets of discontinued operations		513			—		—		—			513
Total assets	$	2,036,263		$	3,086,372	$	1,220,776	$	(3,784,097	)	$	2,559,314
Current liabilities:
Short-term debt	$	3,150		$	—	$	1,845	$	—		$	4,995
Accounts payable		21,661			45,687		63,879		—			131,227
Accrued restructuring and integration costs		—			1,723		2,101		—			3,824
Accrued expenses		108,388			77,580		115,049		—			301,017
Current liabilities of discontinued operations		858			—		—		—			858
Total current liabilities		134,057			124,990		182,874		—			441,921
Long-term debt		469,493			—		—		—			469,493
Long-term liabilities		42,424			63,512		151,675		—			257,611
Total stockholders’ equity		1,390,289			2,897,870		886,227		(3,784,097	)		1,390,289
Total liabilities and stockholders’ equity	$	2,036,263		$	3,086,372	$	1,220,776	$	(3,784,097	)	$	2,559,314

19

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet

December 28, 2003

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Current assets:
Cash and cash equivalents	$	39,360		$	—	$	152,139		—		$	191,499
Accounts receivable, net		27,208			57,019		203,800		—			288,027
Inventories		20,459			78,714		89,429		—			188,602
Other current assets		38,082			20,714		35,883		—			94,679
Current assets of discontinued operations		3,493			—		—		—			3,493
Total current assets		128,602			156,447		481,251		—			766,300
Property, plant and equipment, net		29,439			149,394		87,528		—			266,361
Investments		7,910			994		1,970		—			10,874
Goodwill and intangible assets		29,470			1,098,624		331,520		—			1,459,614
Intercompany (payable)/receivable, net		(1,013,702	)		767,949		245,753		—			—
Investment in subsidiary		2,804,799			829,571		—		(3,634,370	)		—
Other assets		85,139			4,442		10,639		—			100,220
Long-term assets of discontinued operations		4,358			—		—		—			4,358
Total assets	$	2,076,015		$	3,007,421	$	1,158,661	$	(3,634,370	)	$	2,607,727
Current liabilities:
Short-term debt	$	3,150		$	—	$	2,017		—		$	5,167
Accounts payable		26,311			51,580		76,369		—			154,260
Accrued restructuring and integration costs		—			4,497		3,558		—			8,055
Accrued expenses		107,689			83,993		92,013		—			283,695
Current liabilities of discontinued operations		846			—		—		—			846
Total current liabilities		137,996			140,070		173,957		—			452,023
Long-term debt		544,307			—		—		—			544,307
Long-term liabilities		44,662			62,552		155,133		—			262,347
Total stockholders’ equity		1,349,050			2,804,799		829,571		(3,634,370	)		1,349,050
Total liabilities and stockholders’ equity	$	2,076,015		$	3,007,421	$	1,158,661	$	(3,634,370	)	$	2,607,727

20

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Cash Flow Statement

Nine months ended September 26, 2004

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Operating Activities
Net cash provided by continuing operating activities	$	87,391		$	6,818		$	35,058		$	—	$	129,267
Net cash provided by discontinued operating activities		477			—			—			—		477
Net cash provided by operating activities		87,868			6,818			35,058			—		129,744
Investing Activities
Proceeds from disposition of businesses, PP&E, net		3,442			—			—			—		3,442
Capital expenditures		(1,527	)		(6,818	)		(4,220	)		—		(12,565	)
Proceeds related to acquisitions, net of cash acquired		2,765			—			—			—		2,765
Net cash provided by (used in) Continuing Operations		4,680			(6,818	)		(4,220	)		—		(6,358	)
Net cash provided by Discontinued Operations		646			—			—			—		646
Net cash provided by (used in) investing activities		5,326			(6,818	)		(4,220	)		—		(5,712	)
Financing Activities
Payment of term loan debt		(75,000	)		—			—			—		(75,000	)
Decrease in other credit facilities		(108	)		—			(172	)		—		(280	)
Proceeds from issuance of common stock for employee benefit plans		6,092			—			—			—		6,092
Cash dividends		(26,814	)		—			—			—		(26,814	)
Net cash used in financing activities		(95,830	)		—			(172	)		—		(96,002	)
Effect of exchange rates on cash and cash equivalents		—			—			512			—		512
Net (decrease) increase in cash and cash equivalents		(2,636	)		—			13,689					28,542
Cash and cash equivalents, beginning of period		39,360			—			152,139			—		191,499
Cash and cash equivalents, end of period	$	36,724		$	—		$	183,317		$	—	$	220,041

21

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Consolidating Cash Flow Statement

Nine months ended September 28, 2003

(Unaudited)

(In thousands)

	Parent Company Only			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Consolidated
Operating Activities
Net cash provided by (used in) continuing operating activities	$	75,610		$	(688	)	$	15,250		$	—	$	90,172
Net cash used in discontinued operating activities		(600	)		—			—			—		(600	)
Net cash provided by (used in) operating activities		75,010			(688	)		15,250			—		89,572
Investing Activities
Cash withdrawn from escrow to pay debt		187,477			—			—			—		187,477
Proceeds from disposition of businesses, PP&E, net		3,295			—			—			—		3,295
Capital expenditures		(907	)		(5,826	)		(4,461	)		—		(11,194	)
Settlement of the disposition of business, net		(846	)		—			—			—		(846	)
Proceeds related to acquisitions, net of cash Acquired		534			—			—			—		534
Net cash provided by (used in) Continuing Operations		189,553			(5,826	)		(4,461	)		—		179,266
Net cash provided by Discontinued Operations		1,400			—			—			—		1,400
Net cash provided by (used in) investing activities		190,953			(5,826	)		(4,461	)		—		180,666
Financing Activities
Payment of Zero Coupon Convertible Notes		(189,901	)		—			—			—		(189,901	)
Payment of term loan debt		(50,000	)		—			—			—		(50,000	)
(Decrease) increase in other credit facilities		(1,827	)		—			90			—		(1,737	)
Proceeds from issuance of common stock for employee benefit plans		2,355			—			—			—		2,355
Payment of debt issuance costs		(1,725	)		—			—			—		(1,725	)
Cash dividends		(26,531	)		—			—			—		(26,531	)
Net cash (used in) provided by financing activities		(267,629	)		—			90			—		(267,539	)
Effect of exchange rates on cash and cash equivalents		—			—			8,002			—		8,002
Net increase (decrease) in cash and cash equivalents		(1,666	)		(6,514	)		18,881					10,701
Cash and cash equivalents, beginning of period		27,745			6,981			95,889			—		130,615
Cash and cash equivalents, end of period	$	26,079		$	467		$	114,770		$	—	$	141,316

22

PERKINELMER, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(16) Contingencies

The Company is subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of its business activities. The Company intends to defend itself vigorously in these matters. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner that is unfavorable to the Company. The Company has established accruals for matters when it is determined that a loss is probable and reasonably estimable. The Company is currently unable, however, to determine whether resolution of these matters will have a material adverse impact on its financial position or results of operations.

The Company and certain officers have been named as defendants in a class action lawsuit filed in July 2002, and the Company and certain officers and directors have been named as defendants in purported derivative lawsuits filed in June and July 2004. The plaintiffs in all of these suits have alleged various statements made by the Company and management, during the same time period for all three suits, were misleading with respect to the Company’s prospects and future operating results. Further information with respect to these lawsuits is contained in Part II, Item 1 Legal Proceedings of this quarterly report. The Company believes that it has meritorious defenses to these lawsuits and is contesting the actions vigorously. The Company is currently unable however, to reasonably estimate the amount of the loss, if any, that may result from resolution of these matters.

In addition, the Company is conducting a number of environmental investigations and remedial actions at current and former Company locations and, along with other companies, has been named a potentially responsible party (“PRP”) for certain waste disposal sites. The Company accrues for environmental issues in the accounting period that the Company’s responsibility is established and the cost can be reasonably estimated. The Company had accrued $4.3 million as of September 26, 2004, representing management’s estimate of the total cost of ultimate disposition of known environmental matters. Such amount is not discounted and does not reflect the recovery of any amounts through insurance or indemnification arrangements. These cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the timeframe over which remediation may occur and the possible effects of changing laws and regulations. For sites where the Company has been named a PRP, management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. The Company expects that such accrued amounts could be paid out over a period of up to ten years. As assessments and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had or are expected to have a material effect on the Company’s financial position or results of operations. While it is reasonably possible that a material loss exceeding the amounts recorded may have been incurred, the potential exposure is not expected to be materially different than the amounts recorded.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q, including the following management’s discussion and analysis, contains forward-looking information that you should read in conjunction with the consolidated financial statements and notes to consolidated financial statements that we have included elsewhere in this quarterly report on Form 10-Q. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Words such as “believes,” “plans,” “anticipates,” “expects,” “will” and similar expressions are intended to identify forward-looking statements. Our actual results may differ materially from the plans, intentions or expectations we disclose in the forward-looking statements we make. We have included important factors below under the heading “Forward-Looking Information and Factors Affecting Future Performance” that we believe could cause actual results to differ materially from the forward-looking statements we make. We are not obligated to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a leading provider of scientific instruments, consumables and services to the pharmaceutical, biomedical, environmental testing and general industrial markets. We design, manufacture, market and service products and systems within three businesses, each constituting one reporting segment:

• Life and Analytical Sciences. We are a leading provider of drug discovery, genetic screening, and environmental and chemical analysis tools, including instruments, reagents, consumables, and services.

• Optoelectronics. We provide a broad range of digital imaging, sensor and specialty lighting components used in the biomedical, consumer products and other specialty end markets.

• Fluid Sciences. We provide a variety of precision valves, seals, bellows and pneumatic joints for critical control and containment systems for highly demanding environments such as turbine engines and semiconductor fabrication equipment.

Formation of our Life and Analytical Sciences Business Unit

We combined our Life Sciences and Analytical Instruments businesses to form our Life and Analytical Sciences business in the fourth quarter of 2002 to improve our operational scale, which we believe enables us to better serve our customers and more fully capitalize on the strengths of the combined businesses’ sales, service and research and development organizations.

In connection with the combination of our Life Sciences and Analytical Instruments business units, we recorded a $26.0 million restructuring charge in the fourth quarter of 2002 as a result of workforce reductions, facility closures and contract terminations. These actions were completed during 2003, with the exception of lease commitment payouts, which we expect to complete in 2005. We achieved in excess of the original range of $12 million to $25 million in anticipated pre-tax cost savings in fiscal 2003 from the combination of our Life Sciences and Analytical Instruments businesses relative to our fiscal 2002 cost levels. We are targeting additional pre-tax cost savings from the combination of between $5 million and $20 million in fiscal 2004, for combined pre-tax cost savings in 2004 of between $30 million and $45 million relative to our fiscal 2002 cost levels. Unforeseen factors may offset some or all of the estimated cost savings or other benefits from the integration. As a result, our actual cost savings, if any, could differ or be delayed, compared to our estimates.

Consolidated Results of Continuing Operations

Sales

Sales for the third quarter of 2004 were $403.4 million, versus $366.2 million for the third quarter of 2003, an increase of $37.2 million, or 10%. Changes in foreign exchange rates, primarily the Euro, increased sales by approximately $9.2 million in the third quarter of 2004 as compared to the third quarter of 2003. The overall increase in sales reflects an $8.6 million, or 4%, increase in our Life and Analytical Sciences segment sales,

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which grew from $235.1 million in the third quarter of 2003 to $243.7 million in the third quarter of 2004. Approximately $7.4 million of the increase in Life and Analytical Sciences segment sales was attributable to favorable changes in foreign exchange rates compared to the third quarter of 2003. Our Optoelectronics segment sales grew $11.4 million, or 13%, from $87.2 million in the third quarter of 2003 to $98.6 million in the third quarter of 2004. Approximately $1.6 million of the increase in Optoelectronics segment sales was attributable to favorable changes in foreign exchange rates compared to the third quarter of 2003. Our Fluid Sciences segment sales grew $17.2 million, or 39%, from $43.9 million in the third quarter of 2003 to $61.1 million in the third quarter of 2004. Approximately $0.2 million of the increase in Fluid Sciences segment sales was attributable to favorable changes in foreign exchange rates compared to the third quarter of 2003.

Sales for the nine-month period ended September 26, 2004 were $1,208.6 million, versus $1,100.2 million for the nine-month period ended September 28, 2003, an increase of $108.4 million, or 10%. Changes in foreign exchange rates, primarily the Euro, increased sales by approximately $34.5 million in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003. The overall increase in sales reflects a $37.5 million, or 5%, increase in our Life and Analytical Sciences segment sales, which grew from $713.3 million in the nine-month period ended September 28, 2003, to $750.8 million in the nine-month period ended September 26, 2004. Approximately $28.5 million of the increase in Life and Analytical Sciences segment sales was attributable to favorable changes in foreign exchange rates compared to the nine-month period ended September 28, 2003. Our Optoelectronics segment sales grew $20.9 million, or 8%, from $258.3 million in the nine-month period ended September 28, 2003, to $279.2 million in the nine-month period ended September 26, 2004. Approximately $5.0 million of the increase in Optoelectronics segment sales was attributable to favorable changes in foreign exchange rates compared to the nine-month period ended September 28, 2003. Our Fluid Sciences segment sales grew $50.1 million, or 39%, from $128.5 million in the nine-month period ended September 28, 2003 to $178.6 million in the nine-month period ended September 26, 2004. Approximately $1.0 million of the increase in Fluid Sciences segment sales was attributable to favorable changes in foreign exchange rates compared to the nine-month period ended September 28, 2003.

Cost of Sales

Cost of sales for the third quarter of 2004 was $243.3 million, versus $213.2 million for the third quarter of 2003, an increase of $30.1 million, or 14%. As a percentage of sales, cost of sales increased to 60.3% in the third quarter of 2004 from 58.2% in the third quarter of 2003, resulting in a decrease in gross margin of 210 basis points from 41.8% in the third quarter of 2003 to 39.7% in the third quarter of 2004. The decrease in gross margin was primarily attributable to a higher percentage of total sales coming from our Fluid Sciences segment, which has lower gross margins than our Optoelectronics and Life and Analytical Sciences segments. Although our Fluid Sciences segment has lower gross margins than our Optoelectronics and Life and Analytical Sciences segments, it also has lower operating expenses as a percentage of sales. Also contributing to the decrease in gross margin were site consolidation costs relating to the closure of certain Life and Analytical Science segment sites.

Cost of sales for the nine-month period ended September 26, 2004 was $729.3 million, versus $654.4 million for the nine-month period ended September 28, 2003, an increase of $74.9 million, or 11%. As a percentage of sales, cost of sales increased to 60.3% in the nine-month period ended September 26, 2004 from 59.5% in the nine-month period ended September 28, 2003, resulting in a decrease in gross margin of 80 basis points from 40.5% in 2003 to 39.7% in 2004. The decrease in gross margin was primarily attributable to a higher percentage of total sales coming from our Fluid Sciences segment, which has lower gross margins than our Optoelectronics and Life and Analytical Sciences segments. Although our Fluid Sciences segment has lower gross margins than our Optoelectronics and Life and Analytical Sciences segments, it also has lower operating expenses as a percentage of sales.

Research and Development Expenses

Research and development expenses for the third quarter of 2004 were $21.4 million versus $19.7 million for the third quarter of 2003, an increase of $1.7 million, or 9%. As a percentage of sales, research and development expenses decreased to 5.3% in the third quarter of 2004 from 5.4% in the third quarter of 2003,

25

primarily due to the consolidation of research and development activities and sites. We directed our research and development efforts during the third quarters of 2004 and 2003 primarily toward genetic screening and biopharmaceutical end markets within our Life and Analytical Sciences reporting segment and digital imaging and industrial products within our Optoelectronics reporting segment. We expect our research and development efforts to continue to emphasize the health sciences end markets. We expect our research and development spending as a percentage of revenue for fiscal 2004 to remain in line with our historical levels in fiscal 2003.

Research and development expenses for the nine-month period ended September 26, 2004 were $63.4 million versus $61.5 million for the nine-month period ended September 28, 2003, an increase of $1.9 million, or 3%. As a percentage of sales, research and development expenses decreased to 5.2% in the nine-month period ended September 26, 2004 from 5.6% in the nine-month period ended September 28, 2003, primarily due to increased synergies and associated cost savings resulting from our consolidation of research and development activities and sites.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the third quarter of 2004 were $89.0 million, versus $91.5 million for the third quarter of 2003, a decrease of $2.5 million, or 3%. As a percentage of sales, selling, general and administrative expenses decreased 2.9% to 22.1% in the third quarter of 2004 from 25.0% in the third quarter of 2003. The decrease as a percentage of was primarily the result of productivity improvements resulting from prior year integration and restructuring efforts, increased sales from our Fluid Sciences segment and increased service revenue from our Life and Analytical Sciences segment. Our Fluid Sciences segment revenues and our Life and Analytical Sciences segment service revenues have lower operating expenses as a percentage of sales than our Optoelectronics segment and other Life and Analytical Sciences product lines.

Selling, general and administrative expenses for the nine-month period ended September 26, 2004 were $282.4 million, versus $281.7 million for the nine-month period ended September 28, 2003, an increase of $0.7 million, or 0.2 %. As a percentage of sales, selling, general and administrative expenses decreased 2.2% to 23.4% in the nine-month period ended September 26, 2004 from 25.6% in the nine-month period ended September 28, 2003. The decrease as a percentage of sales was primarily the result of productivity improvements resulting from prior year integration and restructuring efforts, increased sales from our Fluid Sciences segment and increased service revenue from our Life and Analytical Sciences segment. Our Fluid Sciences segment revenues and our Life and Analytical Sciences segment service revenues have lower operating expenses as a percentage of sales than our Optoelectronics segment and other Life and Analytical Sciences product lines.

Restructuring Charges (Reversals), Net

As discussed more fully in our annual report on Form 10-K for the fiscal year ended December 28, 2003, we have undertaken four separate restructuring actions over the past three years related to the impact of acquisitions, divestitures and the integration of our business units. Restructuring actions in 2001 and 2002 were recorded in accordance with EITF 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). Restructuring actions taken since 2002 were recorded in accordance with SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (“SFAS No. 146”). The principal actions associated with these plans related to workforce reductions and overhead reductions resulting from reorganization activities, including the closure of certain manufacturing and selling facilities. Details of these plans are discussed more fully in our 2003 Form 10-K.

For the nine-month period ended September 2003, we had a net restructuring reversal of approximately $3.0 million. The majority of this net reversal was a result of a reversal of $5.8 million in the Q4 2002 Plan and was due to lower than expected severance payments. This reversal was offset in part by $0.5 million in higher than anticipated charges relating to the Q4 2001 Plan and $2.3 million in new qualifying charges associated with the Q2 2003 Plan. There were no such reversals in the nine-month period ended September 26, 2004.

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A description of each of our four restructuring plans and the activity recorded for the nine-month period ended September 26, 2004 is as follows:

Q2 2003 Plan

During 2003, we recognized a $2.0 million restructuring charge in the Life and Analytical Sciences business and a $0.3 million restructuring charge in the Optoelectronics business. The purpose of this Q2 2003 Plan was to further improve performance and take advantage of synergies between our former Life Sciences and Analytical Instruments businesses. The principal actions in this restructuring plan included lower headcount due to the continued integration of the Life and Analytical Sciences business in a European manufacturing facility and a customer care center as well as a headcount reduction at one of the Optoelectronics manufacturing facilities to reflect recent declining demand for several product lines.

The following table summarizes the components of our Q2 2003 Plan activity for the nine-month period ended September 26, 2004:

	Severance and Separation
	(In thousands)
Balance at December 28, 2003	$	288
Amounts paid		(86	)
Balance at September 26, 2004	$	202

We anticipate that all remaining Q2 2003 Plan actions will be completed by the end of 2004.

Q4 2002 Plan

In connection with our decision to combine the Life Sciences and Analytical Instruments businesses in order to reduce costs and achieve operational efficiencies, we recorded a pre-tax restructuring charge of $26.0 million during the fourth quarter of 2002. The Q4 2002 Plan allowed us to combine many business functions worldwide, with the intention to better serve our customers and more fully capitalize on the strengths of the businesses’ sales, service and research and development organizations. The principal actions in the Q4 2002 Plan included workforce reductions, closure of facilities and disposal of underutilized assets. The following table summarizes the components of our Q4 2002 Plan for the nine-month period ended September 26, 2004:

	Severance			Abandonment of Excess Facilities			Total
	(In thousands)
Balance at December 28, 2003	$	2,770		$	1,530		$	4,300
Amounts paid		(1,792	)		(841	)		(2,633	)
Balance at September 26, 2004	$	978		$	689		$	1,667

The Q4 2002 Plan resulted in the integration of U.S. Life and Analytical Sciences sales, service and customer care centers, the integration of European customer care and finance centers, the merging of a former Life Sciences European manufacturing facility with a former Analytical Instruments European manufacturing facility and the merging of a portion of a former Life Science research and development European facility with a former Analytical Instruments European facility.

We expect to settle the remaining severance liability under the Q4 2002 Plan by the end of 2004. Our current estimates on our lease commitments on unoccupied buildings extend until 2005.

Q1 2002 Plan

During the first quarter of 2002, we developed a plan to restructure several businesses within our Life and Analytical Sciences and Optoelectronics segments. The Q1 2002 Plan resulted in pre-tax restructuring charges totaling $9.2 million. The principal actions in the Q1 2002 Plan included workforce and overhead reductions

27

resulting from reorganization activities, including the closure of a manufacturing facility, disposal of underutilized assets and general cost reductions. The restructuring activities were completed in 2003 with the exception of payments due on a leased facility exited in 2002, which were paid in 2004. The following table summarizes the components of our Q1 2002 Plan for the nine-month period ended September 26, 2004:

	Abandonment of Excess Facilities
	(In thousands)
Balance at December 28, 2003	$	100
Amounts paid		(100	)
Balance at September 26, 2004	$	—

Q4 2001 Plan

During the fourth quarter of 2001, in connection with the integration of Packard Bioscience Company, which we acquired that quarter, and a restructuring of sales offices in Europe, we recorded a restructuring charge of $9.2 million in the Life and Analytical Sciences segment. The principal actions in the Q4 2001 Plan include the closing or consolidation of several leased sales and services offices in Europe, as well as costs associated with the closure of a manufacturing facility in Europe, the closure of leased manufacturing facilities in the United States and the disposal of related assets. These actions were designed to streamline the organization and take advantage of the synergies offered by the Packard acquisition as they relate to the legacy Life and Analytical Science segment.

The following table summarizes the components of our Q4 2001 Plan for the nine-month period ended September 26, 2004:

	Severance
	(In thousands)
Balance at December 28, 2003	$	2,471
Amounts paid		(1,024	)
Balance at September 26, 2004	$	1,447

The remaining liability under the Q4 2001 Plan relates to European severance obligations that we expect to pay during 2005.

Integration Charges

In addition, as discussed in our annual report on Form 10-K for the fiscal year ended December 28, 2003, we have established integration reserves relating to the acquisition of Packard. The integration activities were completed in early 2003 with the exception of $0.9 million of remaining payments due on leased facilities exited in 2001 that will be paid through 2005. During the nine-month period ended September 26, 2004, we expended $0.4 million to execute these actions.

Gains on Dispositions

Gains on dispositions resulted in a net gain of $0.3 million in the three-month period ended September 26, 2004 compared to a net gain of $0.4 million in the three-month period ended September 28, 2003. Gains on dispositions in the three-month period ended September 26, 2004 included a $0.4 million net gain from the sale of machinery and equipment and a $0.1 million net loss from the sale of a building. Gains on dispositions in the three-month period ended September 28, 2003 included $0.4 million of previously deferred gain from a transaction on the sale of a business.

Gains on dispositions resulted in a net gain of $0.7 million in the nine-month period ended September 26, 2004 compared to a net gain of $2.1 million in the nine-month period ended September 28, 2003. Gains on

28

dispositions in the nine-month period ended September 26, 2004 included a $0.4 million net gain from the sale of machinery and equipment and a $0.3 million net gain from the sale of buildings. Gains on dispositions in the nine-month period ended September 28, 2003 included a $1.4 million net gain from the sale of buildings, a $0.4 million net gain from the aforementioned sale of a business and a previously deferred $0.3 million gain from the sale of a separate business.

Amortization of Intangible Assets

Amortization of intangible assets was $7.1 million for the third quarter of 2004 and $7.0 for the third quarter of 2003. Amortization expense was $21.3 million for the nine-month period ended September 26, 2004 and $21.2 million for the nine-month period ended September 28, 2003.

Interest and Other Expense, Net

Interest and other expense, net consisted of the following:

	Three Months Ended						Nine Months Ended
	September 26, 2004			September 28, 2003			September 26, 2004			September 28, 2003
	(In thousands)						(In thousands)
Interest income	$	(618	)	$	(475	)	$	(1,458	)	$	(2,190	)
Interest expense		9,413			12,458			28,460			40,763
Acceleration of amortization of debt issue costs		345			383			1,877			1,002
Other		(656	)		921			(984	)		2,214
	$	8,484		$	13,287		$	27,895		$	41,789

Interest and other expense, net for the three months ended September 26, 2004 was $8.5 million, versus $13.3 million for the three months ended September 28, 2003, a decrease of $4.8 million, or 36%. For the nine months ended September 26, 2004, interest and other expense was $27.9 million versus $41.8 million for the comparable period in 2003, a decrease of $13.9 million, or 33%. The decrease in interest and other expense, net in 2004 as compared to 2003, was due primarily to lower outstanding borrowings and, to a lesser extent, lower average borrowing rates resulting from the December 2003 amendment of our credit facility that reduced the interest rate margin attributable to our term loan. Fixed to floating interest rate swaps that we entered into in January 2004, applicable to $100 million of our outstanding fixed rate debt, further decreased our effective interest rate during 2004 as compared to 2003. The decrease in interest expense in 2004, as compared to the comparable periods in 2003, was offset in part by an increase in accelerated amortization of debt issuance costs resulting from partial prepayments of our term debt during the nine months ended September 26, 2004. A discussion of our liquidity and our prospective borrowing costs is set forth below under the heading “Liquidity and Capital Resources.”

Provision/Benefit for Income Taxes

The third quarter 2004 provision for income taxes was $9.8 million, compared to a provision of $6.9 million for the third quarter of 2003. The effective tax rate for the third quarter of 2004 was 28.5%, compared to an effective tax rate of 31.7% for the third quarter of 2003. The provision for income taxes was $24.6 million for the nine-month period ended September 26, 2004, compared to a provision of $14.4 million for the nine-month period ended September 28, 2003. The effective tax rate was 29.0% during the nine-month period ended September 26, 2004 compared to an effective tax rate of 32.3% for the nine-month period ended September 28, 2003. The increased provisions for income taxes for the quarter and nine-month periods ended September 26, 2004, compared to the corresponding periods ended September 28, 2003, were due to increases in net income for the periods ended September 26, 2004. The reduced effective tax rates for the quarter and nine-month periods ended September 26, 2004, compared to the corresponding periods ended September 28, 2003, were due to changes in our anticipated 2004 geographic pattern of income and losses and a lower U.S. tax cost on foreign earnings.

29

Discontinued Operations

We recorded the following gains and losses, which we report as the loss on dispositions of discontinued operations, during the three- and nine-month periods ended September 26, 2004 and September 28, 2003:

	Three Months Ended					Nine Months Ended
	September 26, 2004			September 28, 2003		September 26, 2004			September 28, 2003
	(In thousands)					(In thousands)
Loss on Computer-To-Plate business	$	(1,354	)	$	—	$	(1,354	)	$	—
Gain on contract settlement associated with the Technical Services business		730			—		1,487			—
Gain (loss) on Entertainment Lighting business		—			202		—			(2,115	)
Loss on Impairment of Electroformed Products business		—			—		(1,160	)		—
Gain (loss) on Security and Detection Systems business		—			6		—			(41	)
Net (loss) gain on disposition of discontinued operations before income taxes		(624	)		208		(1,027	)		(2,156	)
(Benefit) provision for income taxes		(355	)		70		(560	)		(621	)
(Loss) gain on disposition of discontinued operations, net of income taxes	$	(269	)	$	138	$	(467	)	$	(1,535	)

Contingencies

We are conducting a number of environmental investigations and remedial actions at our current and former locations and, along with other companies, have been named a potentially responsible party for certain waste disposal sites. We accrue for environmental issues in the accounting period that our responsibility is established and when the cost can be reasonably estimated. We have accrued $4.3 million as of September 26, 2004, representing our management’s estimate of the total cost of ultimate disposition of known environmental matters. This amount is not discounted and does not reflect any recovery of any amounts through insurance or indemnification arrangements. These cost estimates are subject to a number of variables, including the stage of the environmental investigations, the magnitude of the possible contamination, the nature of the potential remedies, possible joint and several liability, the timeframe over which remediation may occur and the possible effects of changing laws and regulations. For sites where we have been named a potentially responsible party, our management does not currently anticipate any additional liability to result from the inability of other significant named parties to contribute. We expect that such accrued amounts could be paid out over a period of up to ten years. As assessment and remediation activities progress at each individual site, these liabilities are reviewed and adjusted to reflect additional information as it becomes available. There have been no environmental problems to date that have had or are expected to have a material adverse effect on our financial position or results of operations. While it is possible that a material loss exceeding the amounts recorded may be incurred, we do not expect the potential exposure to be materially different from the amounts we recorded.

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Reporting Segment Results of Continuing Operations

Life and Analytical Sciences

Sales for the third quarter of 2004 were $243.7 million, versus $235.1 million for the third quarter of 2003, an increase of $8.6 million, or 4%. Changes in foreign exchange rates, primarily the Euro, increased sales by approximately $7.4 million in the third quarter of 2004, as compared to the third quarter of 2003. The following analysis compares selected sales by market and product type for the third quarter of 2004, as compared to the third quarter of 2003, and includes the effect of foreign exchange rate fluctuations. Sales to environmental and chemical analysis customers increased $5.6 million, sales of our OneSourceTM laboratory services increased $3.9 million, sales to biopharmaceutical customers decreased $3.5 million and sales to genetic screening customers increased $2.6 million. Sales by type of product included increases in sales of instruments of $7.6 million and services of $3.9 million, offset in part by a decrease in sales of consumables of $2.9 million.

Sales for the nine-month period ended September 26, 2004 were $750.8 million, versus $713.3 million for the nine-month period ended September 28, 2003, an increase of $37.5 million, or 5%. Changes in foreign exchange rates, primarily the Euro, increased sales by approximately $28.5 million in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003. The following analysis compares selected sales by market and product type for the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, and includes the effect of foreign exchange rate fluctuations. Sales to environmental and chemical analysis customers increased $16.3 million, sales of our OneSourceTM laboratory services increased $11.9 million, sales to genetic screening customers increased $5.9 million and sales to biopharmaceutical customers increased $3.4 million. Sales by type of product included increases in sales of instruments of $27.0 million and services of $11.9 million, offset in part by a decrease in consumables of $1.4 million.

Operating profit for the third quarter of 2004 was $18.9 million, versus $21.3 million for the third quarter of 2003, a decrease of $2.4 million, or 11%. The operating profit for the third quarter of 2004 included $2.2 million of net plant closure costs. The benefits of increased sales volume and productivity improvements during the quarter were offset by the unfavorable impact of price and product mix. In addition, operating profit for the third quarter of 2004 included losses on dispositions of $0.1 million, compared to a loss on restructuring reversals and gains on dispositions of $0.1 million in the third quarter of 2003. Amortization of intangible assets was $6.6 million for the third quarter of 2004, versus $6.5 million for the third quarter of 2003.

Operating profit for the nine-month period ended September 26, 2004 was $57.0 million, versus $53.6 million for the nine-month period ended September 28, 2003, an increase of $3.4 million, or 6%. The increase in operating profit in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, was primarily the result of increased sales volume and productivity improvements resulting from prior year integration and restructuring efforts, offset in part by the above mentioned third quarter 2004 site consolidation costs. In addition, operating profit for the nine-month period ended September 26, 2004 included gains on dispositions of $0.3 million and for the nine-month period ended September 28, 2003 included restructuring reversals and gains on dispositions of $3.2 million. Amortization of intangible assets was $19.7 million for the nine-month period ended September 26, 2004, versus $19.5 million for the nine-month period ended September 28, 2003.

Optoelectronics

Sales for the third quarter of 2004 were $98.6 million, versus $87.2 million for the third quarter of 2003, an increase of $11.4 million, or 13%. Changes in foreign exchange rates increased sales by approximately $1.6 million in the third quarter of 2004, as compared to the third quarter of 2003. The following analysis of sales by product line for the third quarter of 2004, as compared to the third quarter of 2003, includes the effects of changes in foreign exchange rates. Sales of digital imaging products increased by $7.3 million, sales within our sensors product line increased $3.8 million, and sales within our industrial systems product line increased by $2.5 million. These increases were offset in part by sales decreases totaling $2.2 million in our specialty lighting product line.

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Sales for the nine-month period ended September 26, 2004 were $279.2 million, versus $258.3 million for the nine-month period ended September 28, 2003, an increase of $20.9 million, or 8%. Changes in foreign exchange rates increased sales by approximately $5.0 million in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003. The following analysis of sales by product line for the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, includes the effects of changes in foreign exchange rates. Sales of digital imaging products increased by $14.1 million, sales within our industrial systems product line increased by $6.8 million, and sales within our sensors product line increased $2.7 million. These increases were offset in part by sales decreases totaling $2.7 million in our specialty lighting product line.

Operating profit for the third quarter of 2004 was $17.3 million, versus $11.9 million for the third quarter of 2003, an increase of $5.4 million, or 46%. The increase in operating profit in the third quarter of 2004, as compared to the third quarter of 2003, was primarily the result of increased sales volume, which increased operating profit by approximately $4.9 million, and productivity improvements of approximately $2.9 million, both offset in part by pricing reductions of approximately $2.4 million. Amortization of intangible assets was $0.3 million for both the third quarter of 2004 and the third quarter of 2003.

Operating profit for the nine-month period ended September 26, 2004 was $41.8 million, versus $33.9 million for the nine-month period ended September 28, 2003, an increase of $7.9 million, or 23%. The increase in operating profit in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, was primarily the result of increased sales volume, which increased operating profit by approximately $9.0 million, and productivity improvements of approximately $6.0 million, both offset by pricing reductions of approximately $6.6 million. In addition, operating profit for the nine-month period ended September 26, 2004 included gains on dispositions of $0.4 million and for the nine-month period ended September 28, 2003 included restructuring reversals and gains on dispositions of $0.9 million. Amortization of intangible assets was $0.9 million for the nine-month period ended September 26, 2004 and for the nine-month period ended September 28, 2003.

Fluid Sciences

Sales for the third quarter of 2004 were $61.1 million, versus $43.9 million for the third quarter of 2003, an increase of $17.2 million, or 39%. Changes in foreign exchange rates increased sales by approximately $0.2 million in the third quarter of 2004, as compared to the third quarter of 2003. The following analysis of sales by product line for the third quarter of 2004, as compared to the third quarter of 2003, includes the effects of changes in foreign exchange rates. Sales increased $8.5 million in our semiconductor business, $7.8 million in our aerospace business, $0.7 million in our fluid testing business and $0.2 million in our energy technology business. The increase in our semiconductor business was partly attributable to a recovery in that market, and the increase in our aerospace business is partly attributable to a gradual recovery in the end markets for these products.

Sales for the nine-month period ended September 26, 2004 were $178.6 million, versus $128.5 million for the nine-month period ended September 28, 2003, an increase of $50.1 million, or 39%. Changes in foreign exchange rates increased sales by approximately $1.0 million in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003. The following analysis of sales by product line for the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, includes the effects of changes in foreign exchange rates. Sales increased $25.1 million in our semiconductor business, $21.0 million in our aerospace business, $3.6 million in our fluid testing business and $0.4 million in our energy technology business. The increase in our semiconductor business was partly attributable to a recovery in that market, and the increase in our aerospace business is partly attributable to a gradual recovery in the end markets for these products.

Operating profit for the third quarter of 2004 was $10.4 million, versus $5.6 million for the third quarter of 2003, an increase of $4.8 million, or 85%. The increase in operating profit in the third quarter of 2004, as compared to the third quarter of 2003, was the result of increased sales with relatively stable fixed costs. In addition, operating profit for the third quarter of 2003 included restructuring reversals and gains on dispositions

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totaling $0.3 million. There were no restructuring reversals or gains on dispositions in the third quarter of 2004. Amortization of intangible assets was $0.2 million for both the third quarter of 2004 and the third quarter of 2003.

Operating profit for the nine-month period ended September 26, 2004 was $27.9 million, versus $11.1 million for the nine-month period ended September 28, 2003, an increase of $16.8 million, or 150%. The increase in operating profit in the nine-month period ended September 26, 2004, as compared to the nine-month period ended September 28, 2003, was primarily the result of relatively stable fixed costs and higher sales volume. In addition, operating profit for the nine months ended September 28, 2003 included restructuring reversals and gains on dispositions totaling $0.9 million. There were no restructuring reversals or gains on dispositions in the nine-month period ended September 26, 2004. Amortization of intangible assets was $0.7 million for the nine-month period ended September 26, 2004 and $0.9 million for the nine-month period ended September 28, 2003.

Liquidity and Capital Resources

We require cash to pay our operating expenses, make capital expenditures, service our debt and other long-term liabilities and pay dividends on our common stock. Our principal sources of funds are from our operations and the capital markets, particularly the debt markets. In the near term, we anticipate that our operations will generate sufficient cash to fund our operating expenses, capital expenditures, interest payments on our debt and dividends on our common stock. In the long-term, we expect to use internally generated funds and external sources to satisfy our debt and other long-term liabilities.

Principal factors that could affect the availability of our internally generated funds include:

• deterioration of sales due to weakness in markets in which we sell our products and services,

• changes in our working capital requirements, and

• our ability to successfully repatriate cash balances from our foreign subsidiaries for use in settling domestic obligations which may be affected by recently enacted legislation.

Principal factors that could affect our ability to obtain cash from external sources include:

• financial covenants contained in our borrowings that limit our total borrowing capacity,

• increases in interest rates applicable to our outstanding variable rate debt,

• a ratings downgrade that would limit our ability to borrow under our accounts receivable facility and our overall access to the corporate debt market,

• volatility in the markets for corporate debt,

• a decrease in the market price for our common stock, and

• volatility in the public equity markets.

Cash Flows

Operating Activities. Net cash generated by continuing operations operating activities was $129.3 million in the nine months ended September 26, 2004, compared to cash generated by continuing operations operating activities of $90.2 million for the nine months ended September 28, 2003. Contributing to the generation of cash from operating activities during the nine months ended September 26, 2004 were net income from continuing operations of $60.3 million and depreciation and amortization of $56.4 million. These amounts were offset in part by a net increase in working capital accounts of $9.2 million, consisting primarily of a decrease in accounts payable of $23.1 million, offset in part by a $14.7 million reduction in accounts receivable and an increase in inventory of $0.8 million. There was no incremental use of our accounts receivable securitization facility during the nine months ended September 26, 2004. The amount outstanding under this facility totaled $45.0 million at both December 28, 2003 and September 26, 2004. Net cash generated from changes in accrued expenses, restructuring, other assets and liabilities, and other items totaled $21.8 million during the nine months ended September 26, 2004.

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Investing Activities. Investing activities related to continuing operations used $6.4 million of cash in the nine months ended September 26, 2004, compared to $179.3 million of cash from continuing operations investing activities in the nine months ended September 28, 2003. In the nine months ended September 26, 2004, we made capital expenditures of $12.6 million mainly for tooling and productivity improvements and for system and facility costs related to integration activities. We also derived $3.4 million from sales of a building and equipment, $2.8 million from the settlement of an escrow related to an entity acquired in 2000 and $0.6 million from discontinued operations investing activities in the nine months ended September 26, 2004. The $179.3 million of cash generated from continuing operations investing activities in the nine month period ended September 28, 2003 was primarily comprised of $187.5 million of cash withdrawn from escrow to repay debt, $3.3 million of proceeds from dispositions of property, plant and equipment, $0.5 million from proceeds related to acquisitions and $1.4 million from discontinued operations investing activity, offset in part by capital expenditures of $11.2 million and business disposition transaction payments of $0.8 million. In fiscal year 2004, we expect to incur a total of approximately $15.0 million to $20.0 million in capital expenditures; however, our capital expenditures are dependent on economic conditions.

Financing Activities. In the nine months ended September 26, 2004, we used $96.0 million of net cash in financing activities, compared to $267.5 million of cash used in the nine months ended September 28, 2003. Debt reductions during the nine months ended September 26, 2004 totaled $75.3 million, primarily comprised of $75.0 million used to repay a portion of our term loan. We paid $26.8 million in dividends and received net cash proceeds from the exercise of employee stock options of $6.1 million in the nine months ended September 26, 2004.

Borrowing Arrangements

Senior Secured Credit Facility. In December 2002, we entered into a senior credit facility. This facility is comprised of a six-year term loan in the amount of $315.0 million and a $100.0 million five-year revolving credit facility. Over the last seven quarters, we have paid down approximately $145.0 million of this loan, which we may not borrow upon again in the future. In the third quarter of 2004, we made $15.0 million of principal payments on the term loan. At September 26, 2004 we had $170.0 million outstanding under our term loan. We had no outstanding principal balance under our revolving credit facility at September 26, 2004 or at any other time during the year. Our senior credit facility is secured primarily by a substantial portion of our and our subsidiaries’ domestic assets. In October 2004, the Company amended its senior credit facility primarily to allow greater flexibility regarding acquisitions, stock repurchases and debt reduction.

Interest rates under the senior credit facility applicable to the term loan and to the revolving credit facility are determined as a margin over either the Eurodollar rate or the base rate and are reset on a one month, three month or six month basis, at our option. The base rate is the higher of (1) the corporate base rate announced from time to time by Bank of America, N.A. and (2) the Federal Funds rate plus 50 basis points. Effective as of May 14, 2004, and for all periods thereafter, the applicable margin for the term loan was 200 basis points for the Eurodollar rate and 100 basis points for the base rate. We may allocate all or a portion of our indebtedness under the senior credit facility to interest based upon the margin over the Eurodollar rate or the base rate. For the third quarter of 2004, we allocated our term loan indebtedness primarily to the Eurodollar-based interest rate, resulting in an average rate of 355 basis points.

The term loan is repayable in mandatory nominal quarterly installments of $0.8 million until December 2007, and thereafter in four equal quarterly installments of 25% of the then outstanding balance until December 2008. Additionally, annual principal payments ranging from 0% to 50% of excess cash flow based on the leverage ratio at the end of the prior fiscal year, as defined in the credit agreement, are payable six months following the end of each fiscal year. The revolving credit facility is available to us through December 2007 for our working capital needs. At no point during the nine months ended September 26, 2004 did we have any outstanding principal balance under the revolving credit facility.

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Our senior credit facility contains covenants that require us to maintain specific financial ratios, including:

• a minimum interest coverage ratio,

• a minimum fixed charge coverage ratio,

• a maximum senior leverage ratio, and

• a maximum total leverage ratio.

As of September 26, 2004, and at all other times during the third quarter of 2004, we were in compliance with all applicable covenants.

8 ⁷/8% Notes. In December 2002, we issued and sold ten-year senior subordinated notes at a rate of 8 ⁷/8% with a face value of $300.0 million. We received $297.5 million in gross proceeds from the issuance. We recorded deferred issuance costs of $7.0 million as a non-current asset. The debt, which matures in January 2013, is unsecured but is guaranteed by substantially all of our domestic subsidiaries. Interest on our 8 ⁷/8% notes is payable semi-annually on January 15 and July 15. Interest payments began on July 15, 2003. In January 2004, we swapped the fixed rate on $100.0 million of these notes to a floating rate using swap instruments which reset semi-annually in arrears based upon six-month USD LIBOR plus a spread of 427 basis points. The maturity dates of the swaps are the same as the maturity date of the related notes. The swap instruments reduced the effective annualized interest rate on the 8 ⁷/8% notes by approximately 79 basis points during the nine months ended September 26, 2004.

If a change of control occurs, each holder of 8 ⁷/8% notes may require us to repurchase some or all of its notes at a purchase price equal to 101% of the principal amount of the notes, plus accrued interest. Before January 15, 2006, we may redeem up to 35% of the aggregate principal amount of our 8 ⁷/8% notes with the net proceeds of specified public equity offerings at 108.875% of the principal amount of the notes, plus accrued interest, if at least 65% of the aggregate principal amount of the notes remains outstanding after the redemption. We may redeem some or all of our 8 ⁷/8% notes at any time on or after January 15, 2008, at a redemption price of 104.438%. The redemption price decreases to 102.958% on January 15, 2009, to 101.479% on January 15, 2010 and to 100% on January 15, 2011. The 8 ⁷/8% notes are subordinated to our senior credit facility. Our 8 ⁷/8% notes contain financial and other covenants. Most of these covenants terminate if the notes obtain an investment grade rating by Standard & Poor’s Rating Services and Moody’s Investors Service. At September 26, 2004, we were in compliance with all applicable covenants. We may from time to time repurchase 8 ⁷/8% notes through open market purchases, privately negotiated transactions or otherwise.

6.8% Notes. In December 2002, we initiated a tender offer for all of our outstanding 6.8% notes. We completed the tender offer and repurchased all but $4.7 million of these notes as of December 26, 2002. We paid consent payments pursuant to a consent solicitation we made concurrently with the tender offer. The consent solicitation eliminated substantially all of the restrictive covenants contained in the indenture governing our 6.8% notes as of December 29, 2002. We may from time to time repurchase outstanding 6.8% notes through open market purchases, privately negotiated transactions or otherwise. These notes are due to be paid in 2005.

Off-Balance Sheet Arrangements

Receivables Securitization Facility

In December 2001, we established a wholly owned consolidated subsidiary to purchase, on a revolving basis, certain of our accounts receivable balances and simultaneously sell an undivided interest in this pool of receivables to a financial institution. In September 2003, we amended the facility to increase total funding capacity from $50.0 million to $65.0 million to expand our sources of liquidity. Amounts funded under this facility were $45.0 million at September 26, 2004 and $45.0 million at December 28, 2003. As of September 26, 2004, we had approximately $20.0 million of un-drawn capacity available under the facility. The facility had an effective interest rate of approximately LIBOR plus 86 basis points as of September 26, 2004. The facility

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includes conditions that require us to maintain a senior unsecured credit rating of BB or above, as defined by Standard & Poor’s Rating Services, and Ba2 or above, as defined by Moody’s Investors Service. At September 26, 2004, we had a senior unsecured credit rating of BB+ with a stable outlook from Standard & Poor’s Rating Services, and of Ba2 with a recent upgrade to a positive outlook from Moody’s Investors Service. In January 2004, we entered into an agreement to extend the term of our accounts receivable securitization facility to January 28, 2005. We currently plan to renew this facility again in January 2005 as it provides us a vehicle to accelerate the cash collection of customer receivables.

Dividends

Our Board of Directors declared regular quarterly cash dividends of seven cents per share in the third quarters of 2004 and 2003. Our senior credit facility and the indenture governing our outstanding 8 ⁷/8% senior subordinated notes contain restrictions that may limit our ability to pay our regular quarterly cash dividend in the future.

Application of Critical Accounting Policies and Estimates

The preparation of consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, income taxes, restructuring, pensions and other post-retirement benefits, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are those policies that affect our more significant judgments and estimates used in preparation of our consolidated financial statements. We believe our critical accounting policies include our policies regarding revenue recognition, allowances for doubtful accounts, inventory valuation, value of long-lived assets, including intangibles, employee compensation and benefits, restructuring activities, gains or losses on dispositions and income taxes. For a more detailed discussion of our critical accounting policies, please refer to our annual report on Form 10-K for the fiscal year ended December 28, 2003.

Forward-Looking Information and Factors Affecting Future Performance

The following important factors affect our business and operations generally or affect multiple segments of our business and operations:

Economic, political and other risks associated with foreign operations could adversely affect our international sales.

Because we sell our products worldwide, our businesses are subject to risks associated with doing business internationally. Our sales originating outside the United States represented more than 50% of our total sales in both the fiscal year ended December 28, 2003 and the first nine months of 2004. We anticipate that sales from international operations will continue to represent a substantial portion of our total sales. In addition, many of our manufacturing facilities, employees and suppliers are located outside the United States. Accordingly, our future results could be harmed by a variety of factors, including:

• changes in foreign currency exchange rates,

• changes in a country’s or region’s political or economic conditions, particularly in developing or emerging markets,

• longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions,

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• trade protection measures and import or export licensing requirements,

• differing tax laws and changes in those laws,

• difficulty in staffing and managing widespread operations,

• differing labor laws and changes in those laws,

• differing protection of intellectual property and changes in that protection, and

• differing regulatory requirements and changes in those requirements.

If we do not introduce new products in a timely manner, our products could become obsolete and our operating results would suffer.

We sell many of our products in industries characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. Without the timely introduction of new products and enhancements, our products could become technologically obsolete over time, in which case our sales and operating results would suffer. The success of our new product offerings will depend upon several factors, including our ability to:

• accurately anticipate customer needs,

• innovate and develop new technologies and applications,

• successfully commercialize new technologies in a timely manner,

• price our products competitively and manufacture and deliver our products in sufficient volumes and on time, and

• differentiate our offerings from our competitors’ offerings.

Many of our products are used by our customers to develop, test and manufacture their products. Therefore, we must anticipate industry trends and develop products in advance of the commercialization of our customers’ products. In developing new products, we may be required to make significant investments before we can determine the commercial viability of the new product. If we fail to accurately foresee our customers’ needs and future activities, we may invest heavily in research and development of products that do not lead to significant sales.

In addition, some of our licensed technology is subject to contractual restrictions, which may limit our ability to develop or commercialize products for some applications. For example, some of our license agreements are limited to the field of life sciences research, and exclude clinical diagnostics applications.

Our debt may adversely affect our cash flow and may restrict our investment opportunities.

As of September 26, 2004, we had approximately $474.5 million in outstanding indebtedness.

Our level of indebtedness increases the possibility that we may be unable to generate sufficient cash to pay the principal or interest in respect of our indebtedness. We have $100.0 million in additional borrowing capacity available to us under our revolving credit facility. We may also obtain additional long-term debt and working capital lines of credit to meet future financing needs, which would have the effect of increasing our total leverage.

Our leverage could have negative consequences, including:

• increasing our vulnerability to adverse economic and industry conditions,

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• limiting our ability to obtain additional financing,

• limiting our ability to acquire new products and technologies through acquisitions or licensing,

• requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of our cash flow available for other purposes, including capital expenditures,

• limiting our flexibility in planning for, or reacting to, changes in our business and the industries in which we compete, and

• placing us at a possible competitive disadvantage with less leveraged competitors and competitors that may have better access to capital resources.

A significant portion of our indebtedness bears interest at floating rates. As a result, our interest payment obligations on this indebtedness will increase if interest rates increase.

Our ability to satisfy our obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow to meet these obligations or to successfully execute our business strategy. If we are unable to service our debt and fund our business, we may be forced to reduce or delay capital expenditures, seek additional financing or equity capital, restructure or refinance our debt or sell assets. We may not be able to obtain additional financing or refinance existing debt or sell assets on terms acceptable to us or at all.

Restrictions in our senior credit facility and the indenture governing our 8 ⁷/8% notes may limit our activities.

Our senior credit facility and the indenture relating to our 8 ⁷/8% notes contain, and future debt instruments to which we may become subject may contain, restrictive covenants that limit our ability to engage in activities that could otherwise benefit our company, including restrictions on our ability and the ability of our subsidiaries to:

• incur additional indebtedness,

• pay dividends on, redeem or repurchase our capital stock,

• make investments,

• create liens,

• sell assets,

• in the case of our restricted subsidiaries, incur obligations that restrict their ability to make dividend or other payments to us,

• in the case of our restricted subsidiaries, guarantee or secure indebtedness,

• enter into transactions with affiliates,

• create unrestricted subsidiaries, and

• consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries on a consolidated basis.

We are also required to meet specified financial ratios under the terms of our senior credit facility. Our ability to comply with these financial restrictions and covenants is dependent on our future performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as foreign exchange rates, interest rates, changes in technology and changes in the level of competition.

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Our failure to comply with any of these restrictions or covenants may result in an event of default under the applicable debt instrument, which could permit acceleration of the debt under that instrument and require us to prepay that debt before its scheduled due date. Also, an acceleration of the debt under our senior credit facility would trigger an event of default under our 8 ⁷/8% notes, and a default under our 8 ⁷/8% notes would trigger an event of default under the senior credit facility and possibly other debt.

If an event of default occurs, we may not have sufficient funds available to make the required payments under our indebtedness. If we are unable to repay amounts owed under our senior credit facility, those lenders may be entitled to foreclose on and sell the collateral that secures our borrowings under that agreement. Our inability to repay amounts owed under our senior credit facility may also cause a default under other of our obligations including our accounts receivable securitization facility.

Our operating results may continue to be harmed by cyclical downturns affecting several of the industries into which we sell our products.

Some of the industries and markets into which we sell our products are cyclical. Industry downturns are often characterized by reduced product demand, excess manufacturing capacity and erosion of average selling prices and profits. Significant downturns in our customers’ markets and in general economic conditions have resulted in a reduced demand for several of our products and have hurt our operating results. For example, during 2003, our operating results were adversely affected by downturns in many of the markets we serve, including the pharmaceutical, biomedical, semiconductor and aerospace markets. Recent economic conditions have caused a decrease in capital spending by many of our customers, which in turn has adversely affected our sales and business. Although in the third quarter of 2004 some of our customers have demonstrated increased demand for our products, this increased demand may be only temporary and may not be sustained.

Our quarterly operating results are subject to significant fluctuation, and we may not be able to adjust our operations to effectively address changes we do not anticipate.

Given the nature of the markets in which we participate, we cannot reliably predict future sales and profitability. Changes in competitive, market and economic conditions may require us to adjust our operations, and we can offer no assurance of our ability to make such adjustments or to make them quickly enough to adapt to changing conditions. A high proportion of our costs are fixed, due in part to our significant sales, research and development and manufacturing costs. Thus, small declines in sales could disproportionately affect our operating results in a quarter. Factors that may affect our quarterly operating results include:

• demand for and market acceptance of our products,

• competitive pressures resulting in lower selling prices,

• adverse changes in the level of economic activity in regions in which we do business,

• adverse changes in industries, such as pharmaceutical, biomedical, semiconductors and aerospace, on which we are particularly dependent,

• changes in the portions of our sales represented by our various products and customers,

• delays or problems in the introduction of new products,

• our competitors’ announcement or introduction of new products, services or technological innovations,

• increased costs of raw materials or supplies, and

• changes in the volume or timing of product orders.

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We may not be able to successfully execute acquisitions or license technologies, integrate acquired businesses or licensed technologies into our existing business or make acquired businesses or licensed technologies profitable.

We have in the past, and may in the future, supplement our internal growth by acquiring businesses and licensing technologies that complement or augment our existing product lines, such as our acquisition of Packard BioScience Company in November 2001. We may be unable to identify or complete promising acquisitions or license transactions for many reasons, including:

• competition among buyers and licensees,

• the need for regulatory and other approvals,

• our inability to raise capital to fund these acquisitions,

• the high valuations of businesses and technologies, and

• restrictions in the instruments governing our indebtedness, including the indenture governing our 8 ⁷/8% notes and our new senior credit facility.

Some of the businesses we may seek to acquire may be unprofitable or marginally profitable. Accordingly, the earnings or losses of acquired businesses may dilute our earnings. For these acquired businesses to achieve acceptable levels of profitability, we must improve their management, operations, products and market penetration. We may not be successful in this regard and may encounter other difficulties in integrating acquired businesses into our existing operations.

To finance our acquisitions, we may have to raise additional funds, either through public or private financings. We may be unable to obtain such funds or may be able to do so only on terms unacceptable to us.

If we are unable to renew our licenses or otherwise lose our licensed rights, we may have to stop selling products or we may lose competitive advantage.

We may not be able to renew our existing licenses or licenses we may obtain in the future on terms acceptable to us, or at all. If we lose the rights to a patented or other proprietary technology, we may need to stop selling products incorporating that technology and possibly other products, redesign our products or lose a competitive advantage. Potential competitors could in-license technologies that we fail to license and potentially erode our market share.

Our licenses typically subject us to various economic and commercialization obligations. If we fail to comply with these obligations we could lose important rights under a license, such as the right to exclusivity in a market. In some cases, we could lose all rights under the license. In addition, rights granted under the license could be lost for reasons out of our control. For example, the licensor could lose patent protection for a number of reasons, including invalidity of the licensed patent, or a third party could obtain a patent that curtails our freedom to operate under one or more licenses.

If we do not compete effectively, our business will be harmed.

We encounter aggressive competition from numerous competitors in many areas of our business. We may not be able to compete effectively with all of these competitors. To remain competitive, we must develop new products and periodically enhance our existing products. We anticipate that we may also have to adjust the prices of many of our products to stay competitive. In addition, new competitors, technologies or market trends may emerge to threaten or reduce the value of entire product lines.

If we fail to maintain satisfactory compliance with the regulations of the United States Food and Drug Administration and other governmental agencies, we may be forced to recall products and cease their manufacture and distribution, and we could be subject to civil or criminal penalties.

Some of the products produced by our Life and Analytical Sciences business unit are subject to regulation by the United States Food and Drug Administration and similar international agencies. In addition, some of the

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activities of our Fluid Sciences business unit are subject to regulation by the United States Federal Aviation Administration. These regulations govern a wide variety of product activities, from design and development to labeling, manufacturing, promotion, sales, resales and distribution. If we fail to comply with those regulations or those of similar international agencies we may have to recall products and cease their manufacture and distribution, as we had to do on a temporary basis earlier this year in response to an FDA directive at one of our Life and Analytical Sciences locations until we were able to resolve the matter by implementing additional testing and labeling conditions on the relevant product. In addition, we could be subject to fines or criminal prosecution.

Changes in governmental regulations may reduce demand for our products or increase our expenses.

We compete in markets in which we or our customers must comply with federal, state, local and foreign regulations, such as environmental, health and safety and food and drug regulations. We develop, configure and market our products to meet customer needs created by these regulations. Any significant change in these regulations could reduce demand for our products or increase our costs of producing these products.

Obtaining and enforcing patent protection for our proprietary products, processes and technologies may be difficult and expensive; we may infringe intellectual property rights of third parties.

Patent and trade secret protection is important to us because developing and marketing new technologies and products is time-consuming and expensive. We own many United States and foreign patents and intend to apply for additional patents to cover our products. We may not obtain issued patents from any pending or future patent applications owned by or licensed to us. The claims allowed under any issued patents may not be broad enough to protect our technology.

Third parties may seek to challenge, invalidate or circumvent issued patents owned by or licensed to us or claim that our products and operations infringe their patent or other intellectual property rights.

In addition to our patents, we possess an array of unpatented proprietary technology and know-how and we license intellectual property rights to and from third parties. The measures that we employ to protect this technology and these rights may not be adequate. Moreover, in some cases, the licensor can terminate a license or convert it to a non-exclusive arrangement if we fail to meet specified performance targets.

We may incur significant expense in any legal proceedings to protect our proprietary rights or to defend infringement claims by third parties. In addition, claims of third parties against us could result in awards of substantial damages or court orders that could effectively prevent us from manufacturing, using, importing or selling our products in the United States or abroad.

Our results of operations will be adversely affected if we fail to realize the full value of our intangible assets.

As of September 26, 2004, our total assets included $1.4 billion of net intangible assets. Net intangible assets consist principally of goodwill associated with acquisitions and costs associated with securing patent rights, trademark rights and technology licenses, net of accumulated amortization. These assets have historically been amortized on a straight-line basis over their estimated useful lives. In connection with our adoption of SFAS No. 142, we discontinued the amortization of goodwill and indefinite lived intangible assets beginning in fiscal 2002. Instead, we test these items, at a minimum, on an annual basis for potential impairment by comparing the carrying value to the fair market value of the reporting unit to which they are assigned.

Adverse changes in our business or the failure to grow our Life and Analytical Sciences business may result in impairment of our intangible asset which could adversely affect our results of operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

We are exposed to market risks, relating to both currency exchange rates and interest rates. On occasion, in order to manage the volatility relating to these exposures, we may enter into various derivative transactions

41

pursuant to our policies to hedge against known or forecasted market exposures. We briefly describe several of the market risks we face below. The following disclosure supplements the disclosure provided under the heading “Item 7A. Quantitative and Qualitative Disclosure About Market Risk” in our annual report on Form 10-K for the fiscal year ended December 28, 2003.

Foreign Exchange Risk. As a multinational corporation, we are exposed to changes in foreign exchange rates:

(1) Because a significant portion of our sales are international, volatility in exchange rates could have a material impact on our financial results. Reported sales made in foreign currencies by our international subsidiaries, when translated into U.S. dollars for financial reporting purposes, can fluctuate due to exchange rate movements. While exchange rate fluctuations can affect reported revenues and earnings, these effects are purely a result of the translation effect and generally do not materially impact our short-term cash flows.

(2) Our foreign subsidiaries, on occasion, invoice third-party customers in foreign currencies other than the functional currency in which they primarily conduct business. Movements in the invoiced currency, as compared to the functional currency, result in both realized and unrealized transaction gains or losses that directly affect our cash flows and our results of operations.

(3) Our manufacturing and distribution organization is multinational in nature. Accordingly, inventories may be manufactured in one location, stored in another, and distributed in a third location. This can result in a variety of intercompany transactions that are billed and paid in many different currencies. Our cash flows and our results of operations are therefore directly affected by fluctuations in these currencies.

(4) The cash flow needs of each of our foreign subsidiaries vary through time. Accordingly, there may be times when a subsidiary is on the receiving side or the lending side of a short-term advance from either the parent company or another subsidiary. These advances, again being denominated in currencies other than a particular entity’s functional currency, can expose us to fluctuations in exchange rates that can affect both our cash flows and results of operations.

(5) In order to repay debt or take advantage of tax saving opportunities, we may remit cash from our foreign locations to the United States. When this occurs, we are liquidating foreign currency net asset positions and converting them into U.S. dollars. Our cash flows and our results of operations are therefore also affected by these transactions.

We currently do not have outstanding any foreign exchange transactions to hedge translation exposures; however, from time to time, we enter into various financial instruments to hedge exposures to foreign currencies. The principal currencies we hedge are the British Pound, Canadian Dollar, Euro, Japanese Yen, and Singapore Dollar.

Foreign Currency Risk — Value-at-Risk Disclosure — We continue to measure foreign currency risk using the Value-at Risk model described in our annual report on Form 10-K for the fiscal year ended December 28, 2003. We believe that these measures continue to approximate our risks.

Interest Rate Risk. Our debt portfolio includes both fixed rate and variable rate instruments. Fluctuations in interest rates can therefore have a direct effect on both our short-term cash flows (as they relate to interest) and our earnings. In January 2004, we entered into interest rate swap agreements that effectively converted the fixed interest rate on $100 million of our 8 ⁷/8% notes to a variable interest rate which is reset semi-annually in arrears based upon six-month USD LIBOR plus 427 basis points. The swaps have the economic effect of modifying the interest obligations associated with these notes so that the interest payable on the notes effectively becomes variable. These swaps have been designated as fair value hedges. These swaps will be marked to market in our consolidated financial statements so that fair value movements in these swaps will be offset by the fair value movement in the debt.

Interest Rate Risk — Sensitivity — Our annual report on Form 10-K for the fiscal year ended December 28, 2003 presents sensitivity measures for our interest rate risk. We refer to the annual report on Form 10-K for the fiscal year ended December 28, 2003 for our sensitivity disclosure.

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Item 4. Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of September 26, 2004. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of September 26, 2004, our disclosure controls and procedures were (1) designed to ensure that material information relating to PerkinElmer, including its consolidated subsidiaries, is made known to our chief executive officer and chief financial officer by others within those entities, particularly during the period in which this report was being prepared, and (2) effective, in that they provide reasonable assurance that information required to be disclosed by PerkinElmer in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 26, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various claims, legal proceedings and investigations covering a wide range of matters that arise in the ordinary course of our business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner that is unfavorable to us.

In papers dated July 16, 2004, Charles Miller and Alan Freberg filed a purported derivative lawsuit in the United States District Court for the District of Massachusetts, Civil Action No. 04-CV-11599 GAO, against certain of our senior officers and four of our directors, and nominal defendant PerkinElmer, Inc. The lawsuit, which is substantially similar to a derivative action filed in June 2004 by David Jaroslawicz, seeks an unspecified amount of damages and purports to make claims of breach of fiduciary duty, gross negligence, breach of contract, breach of duty of loyalty and unjust enrichment. On August 24, 2004, the plaintiffs in the two derivative complaints filed in June and July 2004 filed a motion seeking to have their cases consolidated, which we did not oppose. The derivative complaints contain allegations similar to those included in a currently pending class action lawsuit, which is described below, in addition to claims that certain defendants engaged in insider trading and that members of our Audit Committee breached their duties to us by failing to establish and maintain an adequate system of internal controls to assure that proper revenue recognition practices were being followed.

In papers dated July 1, 2002, Kevin Hatch filed a purported class action lawsuit in the United States District Court for the District of Massachusetts, Civil Action No. 02-11314 GAO, against PerkinElmer, Inc. and certain of our senior officers, on behalf of himself and purchasers of our common stock between July 15, 2001 and April 11, 2002. The lawsuit seeks an unspecified amount of damages and claims violations of Sections 10(b) and 20(a) of, and Rule 10b-5 under, the Securities Exchange Act of 1934, alleging various statements made during the putative class period by PerkinElmer and its management were misleading with respect to our prospects and future operating results. At least eleven virtually identical lawsuits subsequently have been filed in the United States District Court for the District of Massachusetts against PerkinElmer. The court granted the plaintiffs’ motion to consolidate these matters, and on January 13, 2003, the plaintiffs filed an amended complaint. On February 25, 2003, we and the other defendants filed a motion to dismiss the lawsuit. The motion was opposed by the plaintiffs, and oral arguments concerning the motion took place on May 5, 2003. On September 30, 2003, the Court issued a memorandum and order denying the motion to dismiss. On October 10, 2003, we and the other defendants filed a motion for reconsideration or, in the alternative, for an order allowing immediate appeal of several issues of law to the appellate court. On October 23, 2003, the plaintiffs filed an opposition to the motion for reconsideration. Our and the other defendants’ answers to the amended complaint were filed on November 6, 2003. On September 7, 2004, the Court denied our motion for reconsideration.

We believe that we have meritorious defenses to these lawsuits and we intend to defend ourselves vigorously in all of the above matters. We are currently unable, however, to determine whether resolution of these matters will have a material adverse impact on our financial position or consolidated results of operations.

Item 6. Exhibits

Exhibit Number	Exhibit Name
10.1	PerkinElmer, Inc. Supplemental Executive Retirement Plan, as amended through July 23, 2004.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PERKINELMER, INC.
By:	/S/    ROBERT F. FRIEL
	Robert F. Friel Executive Vice President and Chief Financial Officer (Principal Financial Officer)

November 5, 2004

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EXHIBIT INDEX

Exhibit Number	Exhibit Name
10.1	PerkinElmer, Inc. Supplemental Executive Retirement Plan, as amended through July 23, 2004.
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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EX-10.1

Exhibit 10.1

PERKINELMER, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(Effective January 1, 2001)

TABLE OF CONTENTS

ARTICLE		PAGE
1.	PURPOSE AND INTENT	1
2.	DEFINITIONS	2
3.	ADMINISTRATION	6
4.	PARTICIPATION	7
5.	PLAN BENEFITS	8
6.	VESTING	9
7.	CHANGE IN CONTROL	10
8.	FORFEITURE OF BENEFITS	11
9.	AMENDMENT OR TERMINATION	12
10.	CLAIMS PROCEDURES	13
11.	GENERAL PROVISIONS	14
APPENDIX A		A-1

Article 1

PURPOSE AND INTENT

PerkinElmer, Inc. maintains the PerkinElmer, Inc. Supplemental Executive Retirement Plan (the “Plan”) to increase the overall effectiveness of the Company’s executive compensation program to attract, retain and motivate qualified senior executives; to provide retirement benefits more closely related to Total Compensation; and to soften the financial impact of early retirement for Participants. The Plan is intended to be “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, and shall be interpreted and administered in a manner consistent therewith.

This amendment and restatement of the Plan is effective January 1, 2001. The rights and benefits, if any, of each Participant who terminates service before January 1, 2001 shall be determined in accordance with the respective provisions of the Plan in effect on the date such Participant separated from service. The original effective date of the Plan was January 1, 1978.

Article 2

DEFINITIONS

Whenever used herein, unless the context clearly indicates otherwise, the following words and phrases shall have the meanings herein specified, and the following definitions shall be equally applicable to both the singular and plural forms of any of the terms herein defined. The masculine pronoun whenever used herein shall include the feminine and neuter genders and the singular number as used herein shall include the plural, and the plural the singular, unless the context clearly indicates a different meaning.

2.1 Actuarial Equivalence means a benefit of equivalent value to the benefit which otherwise would have been provided determined on the basis of the 1971 Group Annuity Mortality Table with no loading, and projected by Scale E, with a one-year age setback for the Participant and a five (5) year age setback for any Beneficiary, and on the basis of an interest rate of 7%. If a lump sum payment is made pursuant to Section 7.4, the single sum present value shall be calculated using the applicable interest rate and applicable mortality table promulgated by the Internal Revenue Service under Code Section 417(e)(3) as in effect on the first day of the calendar year.

2.2 Average Total Compensation means the average annual Total Compensation of a Participant for the highest five (5) successive years of Credited Service for which the Participant is directly compensated by the Company out of the last ten (10) years of such Credited Service prior to age 65 or earlier termination of employment.

2.3 Basic Plan means the PerkinElmer, Inc. Employees Retirement Plan and any other Company retirement plan under which a Participant is entitled to receive benefits.

2.4 Basic Plan Benefit means the annual benefit payable under the Basic Plan in the form of a straight-life annuity at the time of retirement or at age 65, whichever benefit is greater.

2.5 Change In Control means an event or occurrence set forth in any one or more of paragraphs (a) through (d) below (including an event or occurrence that constitutes a Change in Control under one of such subsections but is specifically exempted from another such subsection):

a. the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock of the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) twenty percent (20%) or more of either

(i) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or

(ii) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control:

(A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company),

(B) any acquisition by the Company,

(C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or

(D) any acquisition by any corporation pursuant to a transaction which complies with clauses (i) and (ii) of paragraph (c) of this Section 2.5; or

b. such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board

(i) who was a member of the Board on the date of the execution of this Agreement, or

(ii) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided however, that there shall be excluded from this clause (ii) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

c. the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two (2) conditions is satisfied:

(i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than fifty percent (50%) of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively; and

(ii) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, twenty percent (20%) or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

d. approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

2.6 Committee means the Senior Executive and Governance Committee of the PerkinElmer, Inc. Board of Directors.

2.7 Company means PerkinElmer, Inc. and any subsidiary of which PerkinElmer, Inc. controls 50 percent or more of the voting stock.

2.8 Credited Service shall be determined in accordance with the following:

a. A Participant shall accrue a full year of Credited Service for each year in which he has at least 2,080 Hours of Service. In any year in which a Participant has less than 2,080 Hours of Service, the Participant shall be deemed to complete 1/12 of a year of Credited Service for each 173-1/3 Hours of Service completed during such year.

b. Service with a company other than the Company may, at the discretion of the Committee, be deemed to be Credited Service.

c. If a Participant who has completed ten (10) or more Years of Service becomes a Disabled Participant, the period of disability up to age 65 shall be counted as Credited Service regardless of whether the Participant remains in the employ of the Company.

d. A Participant shall in no event be deemed to accrue more than one full year of Credited Service with respect to any year.

e. If the Participant was an Employee of the Company, terminated his Employment and is rehired, the following rules shall apply in determining his years of Credited Service:

(i) in the case of a Participant who had five (5) or more Years of Service, his years of Credited Service accrued during his prior period of Employment shall be reinstated as of the date of his re-employment; and

(ii) in the case of a Participant whose Employment terminated before completing five (5) Years of Service, his years of Credited Service accrued during his prior period of Employment shall be reinstated unless the “Break-in-Service” exceeds the greater of: (a) five (5) years, or (b) the number of prior Years of Service.

2.9 Disabled Participant means a Participant who incurs a physical or mental condition which, as determined by the Federal Social Security Administration, renders the Participant eligible to receive disability benefits under Title II of the Federal Social Security Act, as amended from time to time.

2.10 Eligible Spouse means a person who was legally married to the Participant on the date of retirement or, if not retired, the date of death.

2.11 Employee means any person employed by the Company or a successor in a merger or other reorganization.

2.12 Employment means service in the employ of the Company, or a successor in a merger or other reorganization.

2.13 Executive Officer means an officer of PerkinElmer, Inc. at or above the Vice Presidential level, the General Counsel, the Treasurer, the Corporate Controller, Assistant Treasurer, and Assistant Clerk.

2.14 Participant means either an Executive Officer of PerkinElmer, Inc. or any other employee of the Company who is so designated by the Committee.

2.15 Plan Benefit means the annual benefit payable in accordance with the Plan.

2.16 Social Security Benefit means the estimated annual Primary Old Age Insurance Amount which the Participant would be entitled to receive at retirement under the Federal Social Security Act; provided, however, that the Social Security Benefit for a Participant who dies or retires prior to age 65 shall be calculated on such date as if:

a. the Participant will not receive any future wages which would be treated as wages for purposes of the Federal Social Security Act; and

b. the Participant had elected to begin receiving Social Security as of the earliest age then allowable to the Participant under said Act.

2.17 Social Security Tax Base means the 35 year average of maximum wages upon which Social Security taxes were based during each of the calendar years ending with the calendar year in which the Employee reaches his Normal Retirement Date (as defined under the Basic Plan), assuming no change in the Social Security maximum taxable wage after the Employee’s termination of Employment. In order to determine the Social Security Tax Base for an Employee who works beyond his Normal Retirement Date, it will be assumed that the Employee’s Normal Retirement Date occurs in the year of termination.

2.18 Surviving Spouse Option means a 50% Joint and Survivor form of payment under which a reduced amount shall be paid to the Participant during his lifetime and the Eligible Spouse, if surviving at the Participant’s death, shall receive a lifetime benefit equal to 50% of the reduced benefit which had been payable to the Participant. The Surviving Spouse Option is the Actuarial Equivalent of the Participant’s Plan Benefit had it been paid in the form of a Lifetime Income Option.

2.19 Total Compensation means the total cash compensation in the form of base salary paid to a Participant by the Company. Total Compensation shall also include incentive awards under the PerkinElmer, Inc. Management Incentive Program. Such incentive awards shall be taken into account for purposes of this Section 2.19 as of the earliest date the Participant could have elected to receive the incentive award in cash.

2.20 Years of Service shall be determined in accordance with the following:

a. A Participant shall accrue a Year of Service for each Year in which he has 1,000 or more Hours of Service with the Company. Any Year in which the Participant has less than 1,000 but more than 500 Hours of Service shall not constitute a Break-in-Service but will not be considered as a Year of Service. If in any Year, the Participant has less than 500 Hours of Service, he shall incur a Break-In-Service.

b. A Participant shall be considered as accruing Hours of Service in accordance with his normal work week for each week:

(i) while on an authorized leave of absence, if at or before the end of such leave, the Participant returns to service, provided however, that a Participant on a leave who fails to return to service at or before the end of such leave, will be considered to have terminated his Employment as of the last day of service with the Company. If, however, such failure to return was due to death, disability, or retirement on his early or normal retirement date, the Participant’s date of termination will be the date on which one of the above occurs;

(ii) during the one (1) year period following the date on which a Participant is laid off due to a reduction in work force, provided the Participant returns to service within the one-year period following his date of termination. If the Participant does not return to service within said one-year period, whether because he was not recalled or was recalled but did not return to service, the Participant shall be considered to have terminated his service as of the last day of service.

If a Participant terminates his Employment and is rehired, the following rules shall apply in determining his Years of Service:

a. In the case of a Participant who had five (5) or more Years of Service, his Years of Service accrued during his prior period of Employment shall be reinstated as of the date of his re-employment.

b. In the case of a Participant whose Employment terminated before completing five (5) Years of Service, his Years of Service accrued during his prior period of Employment shall be reinstated unless the “Break-in-Service” exceeds five (5) years.

In no event shall a Participant be deemed to have more than one Year of Service with respect to any Year.

Article 3

ADMINISTRATION

The Plan shall be administered by the Committee. The Committee shall have the authority to interpret the provisions of the Plan and decide all questions and settle all disputes which may arise in connection with the Plan, all in the sole exercise of its discretion. The Committee may establish operative and administrative rules and procedures in connection therewith, provided that such procedures are consistent with the requirements of Section 503 of ERISA. All interpretations, decisions and determinations made by the Committee shall be final, conclusive and binding on all persons concerned. No member of the Committee who is a Participant may vote or otherwise participate in any decision or act with respect to a matter relating to himself or his beneficiaries. The Committee and the individual members thereof shall be indemnified by the Company against any and all liabilities arising by reason of any act or failure to act made in good faith pursuant to the provisions of the Plan, including expenses reasonably incurred in the defense of any claim relating thereto.

Article 4

PARTICIPATION

4.1 Participation. Each Participant in the Plan on December 31, 2000, shall continue to be a Participant in the amended and restated Plan on January 1, 2001.

The remaining Participants shall be those Executive Officers or other Employees who are both selected by the Committee and are “management” or “highly compensated” employees within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.

4.2 Selection by Committee. Effective July 31, 2000, no Executive Officer or other Employee shall have the right to become a Participant in the Plan unless selected by the Committee in the sole exercise of its discretion.

4.3 Termination of Participation. A Participant’s participation in the Plan shall end upon his termination of service with the Company for any reason or his ceasing to be a management or highly compensated employee. In addition, the Committee may terminate a Participant’s participation in the Plan, but such termination shall not reduce the obligation of the Company to any Participant below the amount to which he would be entitled under the Plan as in effect immediately prior to such termination of participation if his employment with the Company were then terminated.

Article 5

PLAN BENEFITS

5.1 Amount of Plan Benefit. The amount of Plan Benefit payable upon retirement as a monthly retirement income for life to a Participant who, while in the employ of the Company, has both attained age 55 and completed five (5) Years of Service shall be equal to (a) less (b) plus (c) plus (d) calculated as follows:

a. .85 percent of Average Total Compensation for each year of Credited Service, plus .75 percent of Average Total Compensation in excess of the Social Security Tax Base for each year of Credited Service not exceeding thirty-five (35);

Less

b. 100 percent of the Participant’s Basic Plan Benefit;

Plus

c. The reduction, if any, to the early retirement benefit payable from the Basic Plan due to the limitations as set forth in Section 415(b) of the Internal Revenue Code of 1986;

Plus

d. For each Participant listed in Appendix J of the Basic Plan, an amount equal to (i) minus (ii):

(i) the portion of the Participant’s Basic Plan Benefit determined under Section 4.2(b)(iii) of the Basic Plan payable at age 65,

and

(ii) the portion of the Basic Plan Benefit determined under Section 4.2(b)(iii) payable as of the date the Participant commences his Plan Benefit.

The benefit payable under the Plan, however, shall in no event be less than (c) above. Years of Service and/or Credited Service after age 65 shall not be counted in determining the Plan Benefit in 5.1(a) above, nor shall any actuarial adjustment be made as the result of either retirement before or after age 65.

5.2 Pre-Retirement Death Benefit. If a Participant who, while in the employ of the Company, had attained age 55 and completed five (5) Years of Service dies prior to retirement, the Participant’s Eligible Spouse, if any, shall be entitled to receive an annual Plan Benefit determined as if the Participant had retired and elected a Surviving Spouse Option on the day before the Participant died.

If a Participant dies while in the employ of the Company prior to attaining age 55, but after the completion of five (5) Years of Service, the Participant’s benefit will be calculated on the date of the Participant’s death; and the Participant’s Eligible Spouse, if any, shall be entitled to receive an annual Plan Benefit in the form of a Surviving Spouse Option commencing on the day the Participant would have attained age 55, if still living.

5.3 Form of Payment. The form of payment shall be selected by the Participant from among the optional forms of payment made available under the Basic Plan. All optional forms of payment shall be the Actuarial Equivalent of a monthly retirement income for life.

5.4 Time of Payment. At the election of the Participant, benefit payments will commence on the first of the month following the month in which the Participant retires, but in no event later than April 1^st of the Calendar Year following the Participant attaining age 70½.

5.5 Except as provided in Article 8 and in Section 11.1, the Company shall promptly pay all Participants or Eligible Spouses the benefits due them under the Plan without any right to offset or to delay any benefits pending the outcome of any arbitration, lawsuit or other dispute with any such Participant.

Article 6

VESTING

6.1 Full Vesting. A Participant who both attains age 55 and completes at least five (5) Years of Service while in the employ of the Company shall be 100% vested in his Plan Benefit.

6.2 Termination of Employment. A Participant who terminates employment with the Company before he satisfies both conditions stated in Section 6.1 shall not be entitled to any benefits hereunder.

6.3 Change of Control. Upon a Change in Control, Article 7 may become operative to override the provisions of Sections 6.1 and 6.2.

Article 7

CHANGE IN CONTROL

7.1 Additional Retirement Security. Upon a Change in Control, the provisions of this Article VII shall become operative and shall supersede any conflicting provisions in the Plan unless the Board of Directors of PerkinElmer, Inc. votes not to implement this Article VII within twenty (20) days of the occurrence of the Change in Control.

7.2 Participation Frozen. No new Participants shall be admitted to participation after the occurrence of the Change in Control.

7.3 Accelerated Vesting. Each Participant in the employ of the Company on the date of the Change in Control shall be 100% vested in his Plan Benefit.

7.4 Accelerated Payment of Plan Benefit. Each Participant in the employ of the Company on the date of the Change in Control shall receive a single sum distribution of the Actuarial Equivalent of his Plan Benefit determined as of the Change in Control and paid within forty-five (45) days of the Change in Control.

Article 8

FORFEITURE OF BENEFITS

To the extent permitted by applicable law and notwithstanding anything in the Plan to the contrary, a Participant who acts in a manner prejudicial to the interests of the Company shall forfeit his rights to benefits under the Plan. A Participant shall be deemed to have acted in a manner prejudicial to the interests of the Company if, at any time within one (1) year after termination of employment, the Participant engages in any activity in competition with any business activity of the Company, or inimical, contrary or harmful to the interests of the Company, including, but not limited to:

(i) conduct related to the Participant’s employment for which either criminal or civil penalities may be sought against the Participant,

(ii) violation of Company policies, including, without limitation, the Company’s personnel and insider trading policies,

(iii) accepting employment that is in competition with or acting against the interests of the Company,

(iv) employing or recruiting any present, former of future employee of the Company,

(v) disclosing or misusing any confidential information or material concerning the Company, or

(vi) participating in a hostile takeover attempt, tender offer of proxy contest.

If this Article 8, or any portion thereof, is held to be illegal, invalid, or unenforceable under present or future law, and not subject to reformation, then such provision shall be fully severable, and the remaining provisions of the Plan shall remain in full force and effect and shall not be affected by the severed provision or by its severance.

Article 9

AMENDMENT OR TERMINATION

The Company intends the Plan to be permanent but reserves the right to amend or terminate the Plan upon action of the Board of Directors of PerkinElmer, Inc. Any amendment approved by the board must be in writing and be executed by the officer authorized to take such action. An amendment shall be effective when approved by the board in its resolution. No amendment or termination shall directly or indirectly deprive any current or former Participant or beneficiary of all or any portion of any benefit payment which has commenced prior to the effective date of such amendment or termination or which could be payable if the Participant terminated employment for any reason, including death, immediately prior to the effective date such amendment or termination.

Article 10

CLAIMS PROCEDURES

10.1 General. Any claim for benefits under the Plan shall be filed by the Participant or beneficiary (claimant) of the Plan on the form prescribed for such purpose with the Committee, or in lieu thereof, by written communication which is made by the claimant’s authorized representative in a manner reasonably calculated to bring the claim to the attention of the Committee.

10.2 Denials. If a claim for a Plan benefit is wholly or partially denied, notice of the decision shall be furnished to the claimant by the Committee within a reasonable period of time after receipt of the claim by the Committee.

10.3 Notice. Any claimant who is denied a claim for benefits shall be furnished written notice setting forth:

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent Plan or provision upon which the denial is based;

(c) a description of any additional material or information necessary for the claimant to perfect the claim; and

(d) an explanation of the Plan’s claim review procedure.

10.4 Appeals Procedure. To appeal the denial of a claim, a claimant or his duly authorized representative:

(a) may request a review by written application to the Company’s board of directors, or its designate, not later than sixty (60) days after receipt by the claimant of written notification of denial of claim;

(b) may review pertinent documents; and

(c) may submit issues and comments in writing.

10.5 Review. A decision on review of a denied claim shall be made not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered within a reasonable period of time, but not later than 120 days after receipt of a request for review. The decision on review shall be in writing and shall include the specific reason(s) for the decision and the specific reference(s) to the pertinent Plan provisions on which the decision is based.

10.6 Arbitration. Any controversy or claim arising under or relating to a claim for benefits under the Plan shall be resolved by binding arbitration in accordance with the rules and procedures of the American Arbitration Association. The Plan shall not be required to submit any such claim or controversy until the claimant has first exhausted the procedures described in Section 10.5 although the Committee may voluntarily do so at any point in processing an appeal from a prior claim denial or other disputed benefit determination.

The Company shall bear all costs of an arbitration, except that the arbitrator shall have the power to apportion among the parties other expenses such as prehearing discovery, travel costs and attorney’s fees. The decision of the arbitrator shall be final and binding on all parties and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.

Article 11

GENERAL PROVISIONS

11.1 Plan Not Funded. The Plan is intended to be and shall be construed and administered as an employee pension benefit plan under Section 3(2)(A) of ERISA which is unfunded and maintained by the Company solely to provide deferred compensation to a “select group of management or highly compensated employees” within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. The obligation of the Company to make payments under the Plan constitutes nothing more than an unsecured promise of the Company to make such payments. No Participant, beneficiary or any other person shall have any interest in any particular assets of the Company by reason of the right to receive a benefit under the Plan and any such Participant, beneficiary or other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan. PerkinElmer, Inc., in its sole discretion, may create one or more trusts to hold assets of the Plan and to provide for the payment of benefits. PerkinElmer, Inc. shall be the owner of each trust and the trust corpus shall be subject to the claims of general creditors in the event of the bankruptcy or insolvency of PerkinElmer, Inc. The trusts shall contain such other terms and conditions as PerkinElmer, Inc. may deem necessary or advisable to ensure that benefits are not includable, by reason of the trusts, in the income of trust beneficiaries prior to actual distribution and that the existence of the trusts does not cause the Plan to be considered “funded” for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended.

11.2 No Guaranty of Benefits. Nothing contained in the Plan shall constitute a guaranty by the Company or any other entity or person that the assets of the Company will be sufficient to pay any benefit hereunder.

11.3 No Enlargement of Employee Rights. No Participant or beneficiary shall have any right to a benefit under the Plan except in accordance with terms of the Plan. Establishment of the Plan shall not be construed to give any Participant the right to be retained in the service of the Company.

11.4 Spendthrift Provision. No interest of any person or entity in, or right to receive a benefit under, the Plan shall be subject in any manner to sale, transfer, assignment, pledge, attachment, garnishment, or other alienation or encumbrance of any kind; nor may such interest or right to receive a benefit be taken, either voluntarily or involuntarily, for the satisfaction of the debts or other obligations or claims against, such person or entity, including claims for alimony, support, separate maintenance and claims in bankruptcy proceedings.

11.5 Applicable Law. The Plan shall be construed and administered under the laws of the Commonwealth of Massachusetts.

11.6 Incapacity of Recipient. If any person entitled to a benefit payment under the Plan is deemed by the Company to be incapable of personally receiving and giving a valid receipt for such payment, then, unless and until claim therefor shall have been made by a duly appointed guardian or other legal representative of such person, the Company may provide for such payment or any part thereof to be made to any other person or institution than contributing toward or providing for the care and maintenance of such person. Any such payment shall be a payment for the account of such person and a complete discharge of any liability of the Company and the Plan thereof.

11.7 Corporate Successors. The Plan shall not be automatically terminated by a transfer or sale of assets of the Company.

IN WITNESS WHEREOF, the Company has caused the Plan to be executed by its duly authorized representative this 13th day of December, 2000.

(SEAL)	PERKINELMER, INC.
Attest:
	By:	/S/    TERRANCE L. CARLSON
Its	Its:	Senior Vice President and General Counsel

APPENDIX A

The Plan Benefit payable to Participant Angelo Castellana shall commence effective February 1, 2002 regardless of whether the Participant remains in service with the Company on that date. On the date the Participant separates from service with the Company for any reason, his Plan Benefit shall be recalculated on the basis of his average total compensation, Basic Plan Benefit and years of Credited Service as of the date of termination. This Appendix A shall become inoperative and of no effect if the Participant separates from service for any reason before February 1, 2002.

PerkinElmer, Inc.

Supplemental Executive Retirement Plan

(as amended and restated Effective January 1, 2001)

First Amendment

WHEREAS, PerkinElmer, Inc. a Massachusetts corporation (the “Company”) and Robert A. Barrett (“Executive”) have entered into an employment agreement (the “Agreement”) on even date herewith;

WHEREAS, pursuant to Paragraph 3(c) of the Agreement, the Company and Executive has agreed that Executive will participate in the PerkinElmer, Inc. Supplemental Executive Retirement Plan (the “Plan”) on such terms and conditions as shall be set by the Company; and

WHEREAS, the Agreement has been entered into in order to retain Executive through a period of strategic review and possible disposition of the Fluid Sciences SBU, and the Company wishes to ensure Executive’s retention and motivation as the leader of the Fluid Sciences SBU through the transition period.

NOW WHEREFORE, pursuant to the Agreement, the Plan is, with the consent of the Executive, amended as follows:

A new Appendix B is added to the Plan to read in its entirety as follows:

“Appendix B

Notwithstanding any provision of the Plan to the contrary, the Plan Benefit payable to Participant Robert A. Barrett shall be subject to the following vesting provisions:

1. Such Plan Benefit shall be 100% vested on such Participant’s termination of employment pursuant to Paragraphs 5(b), (c), or (e) of the Participant’s Employment Agreement or upon divestiture of the Fluid Sciences SBU.

2. In the case of Participant’s voluntary termination of employment pursuant to Paragraph 5(a) of the Participant’s Employment Agreement, the following vesting schedule shall apply:

Resignation Date	Vesting Percentage
Prior to January 1, 2004	55	%
On or after January 1, 2004	100	%

The provisions of the Plan addressing payment and amount of benefits in the event of death, upon a change in control, or in the event of prejudicial acts by the Participant, as well as all other provisions of the Plan, remain unchanged and in full force and effect with respect to the Participant.”

IN WITNESS WHEREOF, this First Amendment has been executed, with the consent of Robert A. Barrett, this 31st day of October, 2002.

PERKINELMER, INC.
By:	/S/    RICHARD F. WALSH
	Richard F.Walsh Senior Vice President, Human Resources

Consented to:

I acknowledge that I have read and understand the foregoing First Amendment to the PerkinElmer, Inc. Supplemental Executive Retirement Plan (as amended and restated effective January 1, 2001) (the “Plan”). I fully understand and agree to the terms, validity and enforceability of the First Amendment, notwithstanding the provisions of Section 6.1, Article 9 or any other language to the contrary contained in the Plan, and hereby fully release, waive and discharge the Company from any and all claims for benefits under the Plan relating to the First Amendment and the amended vesting schedule set forth therein, including but not limited to any claims arising under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq.

/S/    ROBERT A. BARRETT        

Robert A. Barrett

PerkinElmer, Inc.

Supplemental Executive Retirement Plan

(as amended and restated effective January 1, 2001)

Second Amendment

WHEREAS, PerkinElmer, Inc., a Massachusetts corporation (the “Company”) maintains the PerkinElmer, Inc. Supplemental Executive Retirement Plan (the “Plan”);

WHEREAS, the Plan has been historically administered by the committee of the Company’s Board of Directors (the “Board”) charged with responsibilities relating to compensation of the Company’s executive officers; and

WHEREAS, the committee of the Board so charged has, since January 1, 2001, been the Compensation and Benefits Committee.

NOW, WHEREFORE, the Plan is amended as follows, effective January 1, 2001:

1. Section 2.6 is amended in its entirety to read as follows:

“Committee means the Compensation and Benefits Committee of the PerkinElmer, Inc. Board of Directors, or any successor committee charged with responsibility relating to compensation of the Company’s executive officers.”

2. The first three sentences of Article 9 are deleted and replaced with the following language:

“The Company intends the Plan to be permanent but reserves the right to amend or terminate the Plan upon action of the Committee. Any amendment approved by the Committee must be in writing and be executed by an officer of the Company authorized to take such action.”

IN WITNESS WHEREOF, this Second Amendment has been executed this 22nd day of July, 2003.

PERKINELMER, INC.
By:	/S/    TERRANCE L. CARLSON
	Terrance L. Carlson Senior Vice President and General Counsel

July 23, 2004

PerkinElmer, Inc.

Supplemental Executive Retirement Plan

(as amended and restated effective January 1, 2001)

Third Amendment

WHEREAS, PerkinElmer, Inc., a Massachusetts corporation (the “Company”) maintains the PerkinElmer, Inc. Supplemental Executive Retirement Plan (the “Plan”); and

WHEREAS, pursuant to the Plan, as previously amended by the First and Second Amendments thereto, the Compensation and Benefits Committee has the power to amend the Plan.

NOW, WHEREFORE, the Plan is amended as follows, effective as of July 23, 2004:

1. Section 2.5 is amended in its entirety to read as follows:

“Change in Control means an event or occurrence set forth in any one or more of clauses (i) through (iv) below (including an event or occurrence that constitutes a Change in Control under one or such clauses but is specifically exempted from another such clause):

(i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”) of beneficial ownership of any capital stock or the Company if, after such acquisition, such Person beneficially owns (within the meaning of Rule 13d-3 promulgated under the Exchange Act) 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this paragraph (i), none of the following acquisitions of Outstanding Company Common Stock or Outstanding Company Voting Securities shall constitute a Change in Control: (I) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the Person exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (II) any acquisition by the Company, (III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (IV) any acquisition by any corporation pursuant to a transaction which complies with subclauses (A) and (B) of clause (iii) of this Section 2.5; or

(ii) such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director” means at any date a member of the Board (A) who was a member of the Board on the date of the execution of this Agreement or (B) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (B) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(iii) the consummation of a merger, consolidation, reorganization, recapitalization or statutory share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly

or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then outstanding securities entitled to vote generally in the election of directors, respectively, of the surviving, resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more other entities) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Stock and Outstanding Company Voting Securities, respectively; and (B) no Person beneficially owns, directly or indirectly, 20% or more of the then outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination); or

(iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.”

2. Section 2.8 is amended by adding new subparagraphs f. and g. to read in their entirety as follows:

“f. In the case of a Participant who receives payment of his Plan Benefit following a Change in Control pursuant to Section 7.4, Credited Service shall mean the Participant’s Credited Service as otherwise determined pursuant to (a) through (e) above increased by three (3) additional years.

g. If so provided in an employment agreement in effect between the Participant and the Company, for purposes of calculating a Participant’s Plan Benefit following his termination by the Company without cause, Credited Service shall mean the Participant’s Credited Service as otherwise determined pursuant to (a) through (e) above increased by the period of months or years provided in the Participant’s employment agreement.”

3. Section 2.13 is amended in its entirety to read as follows:

“Executive Officer means an officer of the Company.”

4. Section 2.14 is amended in its entirety to read as follows:

“Participant means an individual who participates in the Plan in accordance with Article 4.”

5. So much of Section 5.1 as precedes (a) is amended in its entirety to read as follows:

“Amount of Plan Benefit. The amount of Plan Benefit payable upon retirement as a monthly retirement income for life to a Participant who, while in the employ of the Company, has both attained age 55 and completed five (5) Years of Service (or to a Participant who becomes entitled to payment of his Plan Benefit pursuant to Article 7) shall be equal to (a) less (b) plus (c) plus (d) calculated as follows:”

6. The last paragraph of Section 5.1 is amended in its entirety to read as follows:

“The benefit payable under the Plan, however, shall in no event be less than (c) above. No actuarial adjustment shall be made as the result of either retirement before or after age 65.”

7. Section 7.1 is amended in its entirety to read as follows:

“Additional Retirement Security. Upon a Change in Control, the provisions of this Article 7 shall become operative and shall supersede any conflicting provisions in the Plan.”

8. Section 7.4 is amended in its entirety to read as follows:

“Plan Benefits; Payment. Each Participant in the employ of the Company on the date of the Change in Control shall receive, within forty-five (45) days of the Change in Control, a single sum distribution of the Actuarial Equivalent of his Plan Benefit determined as of the Change in Control taking into account paragraph (f) of Section 2.8.”

9. The last paragraph of Section 10.6 is amended in its entirety to read as follows:

“The costs of any such arbitration shall be borne equally by the Company and the claimant. Each party shall be responsible for its own legal expenses. The decision of the arbitrator shall be final and binding on all parties and judgment on the arbitrator’s award may be entered in any court of competent jurisdiction.”

IN WITNESS WHEREOF, this Third Amendment has been executed this 23rd day of July, 2004.

PERKINELMER, INC.
By:	/S/    RICHARD F. WALSH
	Richard F. Walsh Senior Vice President, Human Resources

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Gregory L. Summe, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PerkinElmer, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(3) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Not Applicable]

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2004	/S/    GREGORY L. SUMME
	Gregory L. Summe
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Robert F. Friel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PerkinElmer, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) [Not Applicable]

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 5, 2004	/S/    ROBERT F. FRIEL
	Robert F. Friel
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of PerkinElmer, Inc. (the “Company”) for the period ended September 26, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Gregory L. Summe, Chairman of the Board, Chief Executive Officer and President of the Company, and Robert F. Friel, Executive Vice President and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

(1) Based on my knowledge, the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) Based on my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 5, 2004	/S/    GREGORY L. SUMME
	Gregory L. Summe
	Chairman of the Board, Chief Executive Officer and President
Dated: November 5, 2004	/S/    ROBERT F. FRIEL
	Robert F. Friel
	Executive Vice President and Chief Financial Officer