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Share statistics

(per registered share of CHF 10 nominal value)

1999 CHF High/low prices High Low Year end Earnings per share Net cash provided by operating activities per share Equity per share 21.35 90.99 20.15 68.39 18.32 53.36 7.31 38.20 0.86 26.79 680 440 675 21.66 500 300 490 17.66 383 187 330 15.69 190 105 189 8.57 122 58 105 0.95 1998 CHF 1997 CHF 1996 CHF 1995 CHF

Tecan shares compared to SPI

50 in CHF millions 40 30 20 10 0 95 96 97 98 Tecan 1.1.95 - 31.12.99

Swiss Performance Index 99

Tecan AG Feldbachstrasse CH-8634 Hombrechtikon T. + 41 (0) 55 254 81 11 F. + 41 (0) 55 244 38 83 Email [email protected] Internet http://www.tecan.com

Created by OTM Zurich and OTM London

Tecan Group

1999 in mill. Orders received Sales Order backlog (31.12.) Operating profit (EBIT) as percentage of sales Net profit as percentage of sales Cash flow from operating activities as percentage of sales Development costs as percentage of sales Employees (31.12.) Shareholders' equity as percentage of total assets Return on equity (in %) Free Cash Flow CHF 203.1 193.1 35.7 41.0 21.2% 28.1 14.5% 27.7 14.3% 25.9 13.4% 556 117.9 76.2% 27.2% 21.8 1998 CHF 158.5 163.6 24.5 31.5 19.3% 22.9 14.0% 26.1 16.0% 19.0 11.6% 507 88.6 73.8% 29.0% 21.5 1997 CHF 158.9 141.9 29.6 28.1 19.8% 20.3 14.3% 23.7 16.7% 12.8 9.0% 454 69.1 65.8% 34.3% 18.4 1996 CHF 102.5 102.0 12.6 13.8 13.5% 11.1 10.9% 9.5 9.3% 10.3 10.1% 383 49.5 64.5% 26.4% 6.3 1995 CHF 77.8 75.4 12.1 2.4 3.2% 1.2 1.6% 1.1 1.5% 11.3 15.0% 343 34.7 62.8% 3.7% (1.8)

Executive Leadership Committee Dr Emile Sutcliffe Franz Rutzer Carl Severinghaus Angie Milbank Jan Timmers Martin von Lueder Toni Schrofner

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decades of discovery

Annual Report 1999

Tecan is proud to present our 20th Annual Report.

Two decades of fruitful partnership with the world's scientific community form the foundation of our strength today. We are poised to play a rapidly expanding role as enablers of discovery in the race for knowledge of the science of life. The goal is the benefit of all mankind. We embrace the challenges of the decades to come.

Clinical Diagnostics 12

Customer Services 16

Financial Review 20

Marion Scatchard 6

Daniel Stock 10

Life Sciences 4

Peter Siesel 18

Reiko Itoh 14

Foreword 2

OEM 8

The year 1999 was marked by several major milestones for the Tecan Group. In our 20th year of operation, we became a100% publicly-owned company following the successful secondary placement of PE Corporation controlling stock.

Main photo: Dr. Emile C. Sutcliffe, CEO, at the recent ground breaking ceremony of Tecan's new headquarters in Männedorf, Switzerland Inset: Members of Tecan's Executive Leadership Committee at a strategy meeting

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Annual Report 1999

We are living in an age of change more rapid than ever before. A new Biotech Era of discovery about the very building blocks of life with the potential for advances in healthcare that past generations could only dream of. As the global leader in the automation of laboratory processes, Tecan works in partnership with the scientists of the world to spearhead the search for biological knowledge. Our innovation, technical pre-eminence and market presence directly contribute to the acceleration and success of this quest. Tecan became a 100% publicly-owned company in 1999 following the successful secondary placement of PE Corporation controlling stock. Our new unitary registered shares were launched in the Mid-cap index on the main board of the Swiss Stock Exchange in June and were well received by the international investment community. Shareholder value rose from CHF 598 million to CHF 878 million from the placement in June to the end of 1999. Once again sales exceeded expectations and rose by 18% to CHF 193 million. This increase was mainly due to the successful introduction of breakthrough product technologies for the automation of DNA research, as well as new DNA-based platforms for blood screening.Tecan's sales continued to grow in all regions around the world, with particularly pronounced growth in the North American market. Profitability rose even faster than sales, with an operating result (EBIT) of CHF 41 million, equalling 21% of sales. 20 years ago Three new members of the Board were elected at an extraordinary I was completing my studies in Chemical Engineering at the Ecole Polytechnique Fédérale de Lausanne in Switzerland. In 20 years I'll probably smile at the challenges we are facing right now, but I'm sure I'll still feel excited by all the opportunities ahead. Dr. Emile C. Sutcliffe Now as Tecan enters its third decade of operation, we look forward People are at the core of Tecan's business, and employees increased in 1999 by 10% to 556. Many of our new recruits are highly-qualified engineers and scientists. This was reflected by a rise in Research and Development expenditure to an exceptional 13% of sales, representing a strong investment in the continuing development of leading-edge solutions to keep pace with and anticipate future demands. We extend our thanks to the employees of Tecan, whose creativity, flexibility and dedication form the heart of our company, and to our shareholders, customers and partners for an excellent year of teamwork and trust. Dr. Emile C. Sutcliffe Armin Seiler Acting Chairman of the Board to continuing and extending our successful partnerships with the key players in the biotech century. general meeting on February 1, 2000: Timothy B. Anderson (Baxter Corporation), Günter Bauer (CommCept AG) and Hans-Jörg Kummer (Schering-Plough) to replace the four outgoing representatives of PE Corporation. We wish to thank our former Board members for their valuable contribution to Tecan's success. 1999 was a year of transition to new management that laid the groundwork for the development of four global business areas reflecting Tecan's customer focus: Life Sciences,Clinical Diagnostics, Customer Services and OEM (original equipment manufacture). The establishment of a joint global-local organizational structure, which comes into operation in 2000, will enhance Tecan's timeto-market capabilities and responsiveness to customer needs. Tecan's strategy is to maintain its competences in all sectors of the laboratory automation market, from entry level products to capital intensive systems, while developing increasingly sophisticated customized total solutions. If necessary, we will work together with third parties. Our co-promotion in the preanalytic sector with Abbott Diagnostics is a good example.The product was successfully launched in 1999 and will impact sales from the second quarter of 2000 onwards. Tecan placed among the top three European companies of the year when it reached the finals of the "Most Successful Company in Europe" contest, awarded annually by the Association of European Business Press. In 1999 work began on a state-of-the-art production and office facility for Tecan in Männedorf, Canton Zurich, Switzerland, expected to become operational in 2001.

www.tecan.com

Chief Executive Officer

Armin Seiler

foreword

lifesciences

Annual Report 1999

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The Human Genome Project forms a major landmark in mankind's continuing voyage of discovery. Its goal is the identification of all the 100,000 genes, and the sequencing of the three billion chemical bases, that make up human DNA.

Dr. Joshua LaBaer 20 years ago Proteomics refers to the part of the human genome that encodes proteins, which are the basic chemicals that make up the structure of cells and direct their activities. Using Tecan robotics for high throughput assays, expression and cloning, the Institute's team of molecular biologists, engineers, biochemists and computer scientists is constantly creating new methods and tools to expand the frontiers of knowledge. They rely on Tecan's accurate, flexible and reliable platforms, and work in close partnership with Tecan to stretch the limits of high throughput automation technology and develop innovative new equipment and processes to speed the pace of discovery. A genome is all the DNA in an organism. This includes The fruits of these efforts will accelerate the development and testing of new drugs to treat many of mankind's most feared diseases; applications which will themselves require highly sophisticated robotic solutions.

More information about the Human Genome Project via links from www.tecan.com

This information will provide the raw material to usher in a new era of medicine based on knowledge of the deepest causes of disease. Rapid and more accurate diagnostic tests will enable earlier treatment. Insights into genetic susceptibilities to disease and the environment, coupled with preventive therapies, will eliminate some illnesses altogether. New, highly targeted pharmaceuticals for both inherited and communicable ailments will attack sickness at its molecular roots. The Institute of Proteomics at Harvard Medical School is on the cutting edge of research in this international project, which has constantly accelerated the pace of technological advance and discovery over the past decade. With the majority of the human genome sequenced by Spring 2000, Institute Director Dr. Joshua LaBaer explains that the next step is to capture the DNA for all gene sequences in a format that scientists can use for experimentation. "High throughput methods of studying genes are the only way we will be able to achieve full understanding of the details of the human genome, and apply this to developing therapeutics for human disease." I was in college. In 20 years I hope still to be running a successful research program in cancer treatment and to be seeing and helping cancer patients.

Innovative technologies in automation and robotics are the necessary underpinnings of future large-scale sequencing efforts. Defective genes directly account for an estimated 4,000 hereditary diseases.

its genes, which carry information for making the thousands of proteins needed by every organism.

www.hip.harvard.edu

Annual Report 1999

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Marion Scatchard joined Cavro, the OEM (Original Equipment Manufacturer) arm of the Tecan Group, at its Sunnyvale, California plant in 1996. With responsibilities including inventory control, shipping and receiving, she brings a totally customer-focused approach to her work.

Cavro facility "We buy generic packaging and put on the OEM customer's labeling according to their specifications. We have to work with absolute accuracy and reliability to be sure we do what the customer wants." Cavro is the leader in the OEM precision handling market with a market share of 48%. The company supplies pumps to 150 different customers in 15 countries for applications in both the Diagnostics and Life Sciences markets. Marion and her team know that on time delivery and accurate shipments are the major objective. "That's exactly what we give them." Now age 77, Marion brings to her job a lifetime of experience in electronics manufacturing assembly, quality control and manufacturing engineering, enhanced by college courses in time studies, supervisory techniques, inventory control, shipping and corporate quality techniques. She has clearly never lost her hunger for learning: "I have the good fortune to work with some very knowledgeable people, giving me the opportunity to learn something new every day." 20 years ago I was employed as a supervisor of inventory control and shipping for a company manufacturing radiation therapy equipment. If I'm still here on this earth in 20 years, I'll probably be sitting in my rocking chair or on the swing listening to good music with a real fast beat.

www.allaboutjazz.com

oem

Annual Report 1999

9

PE Biosystems, a PE Corporation business,uses pumps supplied by Cavro, Tecan Group's OEM arm, for its latest DNA analysis equipment.

As a leading supplier of instruments, reagents, and software, PE Biosystems is a primary supplier of life science technology for automated DNA analysis, synthesis, and sequencing. Using PE Biosystems products to generate massive volumes of data and to detect information rapidly in a highly sensitive and repetitive manner, life sciences researchers are examining the basic building blocks of life and are accelerating the pace of discovery in pharmaceuticals, human identification, food and environmental testing, agriculture, and basic research. PE Biosystems chose Cavro, the OEM market leader, because of its proven ability to provide the customized pumps required to meet the demands of life science research, where speed-tomarket and being the first to discover new molecular information are essential.

Susan Eddins

20 years ago Twenty years ago I was planning my career with the main criterion being the ability to work in an area of science that would change the world. In 20 years I will see my family, friends, and society in general reaping the benefits from the massive amounts of information being discovered today.

Susan Eddins, product line manager at PE Biosystems, explains: "Cavro supplies a pump that is vital for the liquid handling system in our ABI PRISM ®, 3700 DNA Analyzer. Polymer fluid is a critical element for DNA separation and detection. It is a viscous, honey-like material that we must pump through a capillary 50 microns in diameter--significantly less than the width of a human hair. Cavro customized the pump to achieve this. The 3700 system is a production-level instrument, working in a 24/7 environment. With Cavro's pump at the heart of the system, it is an extremely reliable instrument, and the results are highly reproducible, with minimal instrument-to-instrument variation."

More than 300,000 life science researchers worldwide are engaged in the quest to understand the molecular biology and biochemistry of humans, animals, plants, viruses, and bacteria. The genetic sequencing and analysis market is growing rapidly at all levels, from production to individual research.

PE and PE Biosystems are trademarks and ABI PRISM ® is a registered trademark of PE Corporation or of one of its subsidiaries.

www.pebio.com

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"A real driving force is not just finding innovative and economical solutions that work, but getting them out the door to customers in a very short time."

Annual Report 1999

11

Ask Daniel Stock, Tecan Research and Development systems engineer based in Austria about the spirit of Tecan and he'll say: "We all like our work. When I get up in the morning I look forward to coming in to the lab. We're always looking for solutions and once you've cracked even a small problem, that feeling of success stays with you all day." A graduate of the University of Goettingen in Germany, Daniel trained as a physicist, but now rolls up his sleeves to meet the daily challenge of improving the engineering of Tecan's Ultra fluorescence reader instruments. He is part of a global Research and Development team of over 100 engineers and scientists, representing a level of research commitment usually found only in pharmaceutical companies. "A real driving force is not just finding innovative and economical solutions that work, but getting them out the door to customers in a very short time." Daniel was part of the team that traveled the globe researching customer evaluation of the Ultra prototype, an innovative drug development tool. After close contact with the research laboratories of several major pharmaceutical companies, Daniel stresses that Tecan's clients are looking for the instruments to fit into complete, integrated solutions which may include hardware, software, test kits, application protocols, customer training and other support backup. "Customer needs are changing all the time and we have to keep improving the equipment.And the Life Sciences market is growing very fast,at about 22% a year. It's a great challenge to keep up the innovation. My motto? Give the best you can." 20 years ago I was still at school, and fascinated by junior science kits. Who knows if I'll still be an engineer in 20 years? There are so many ways to develop. I like diversity and I don't like routine ­ and that won't change in the future.

Daniel Stock

www.yahoo.com/science

clinical diagnostics

Annual Report 1999

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For the past 26 years the Taipei Blood Center has been responsible for the supply of blood and blood products to medical centers and hospitals serving over 10 million people in the region. The top priority of the 260 technicians and administrators on the staff is the maintenance and improvement of both the blood supply and blood safety, as well as achieving the highest levels of accuracy,speed and safety during testing.

In pursuit of their continuing contribution to the health of the population the Center's laboratories conduct 1,300 tests every day, including Anti-HTLV type 1 & 2, Anti-HIV type 1 & 2, HBsAg and Anti-HCV tests. Tecan has been a supplier to the Center for 10 years, and recently upgraded its central preparation instrumentation to the latest Tecan Genesis system. The researchers and scientists at the Center are enthusiastic about the system's ease of operation, high performance, reliability, accuracy and flexibility in working with a variety of components. Above all they value the ability of this fully automated solution to shorten test preparation times and run four discrete tests simultaneously, which dramatically improves the speed of analysis. Medical Director Dr. Shi-Shin Huang points out in addition that automated processes have a significant contribution to make to reducing costs and saving manpower ­ an increasingly important requirement in the clinical diagnostics market.

20 years ago I was a hematologist working in a general hospital. In 20 years I hope to serve as a good medical director and make contributions to human health through transfusion medicine.

Dr. Shi-Shin Huang

HBsAg and Anti-HCV tests detect Hepatitis B and C viruses. The Anti-HTLV tests are for Human T-Lymphotropic Virus, which is usually associated with intravenous drug usage.

Useful facts about blood and blood banks can be found at the American Association of Blood Banks website www.aabb.org

Tecan's regular training programs ensure that technical staff maximize the performance of the equipment, and there is continuing dialog with the Center to ensure the highest levels of service and support to meet their growing requirements.

www.tp.blood.org.tw

Annual Report 1999

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Reiko Itoh is proud to describe Tecan's breakthrough in the Japanese market: "In 1997, after a few tough years we started receiving a lot of orders for our TRAC systems from the pharmaceutical market. And it's been good ever since. Our main focus now, however, is on the Workstation, which we're doing very well with. In fact, it just keeps getting better and better."

Reiko Itoh Reiko is the finance and administration manager at Tecan's Tokyo office. Her responsibilities include the consolidation of figures into monthly, quarterly and annual reports, as well as sales support, purchasing from production companies, and general administration. "My team is working with accounts, logistics and also some marketing. A lot of different things. It's very interesting for us and helps us to understand the company as a whole." Reiko has witnessed the transformation of the Japanese market focus from Clinical Diagnostics to Life Sciences, although she is quick to stress how important Clinical Diagnostics remains. 20 years ago "Now we are working on getting more into the Life Sciences market. In the pharmaceutical industry everyone knows Tecan, also in the genome industry. But we still need to make our name in the university research laboratories." One of Tecan Japan's great strengths is its atmosphere of open communication. "Our president shares his strategy and figures with us, so we all know what we are aiming for." Reiko also enjoys working in an office with colleagues of many nationalities. "We have to have a global outlook to understand each other here ­ we have so many people from different countries and cultures. Most Japanese don't have such an opportunity. We enjoy it very much. It works very naturally ­ although we do have to be careful to always communicate clearly." I had graduated from university and had just started working. I was looking for something to nourish and improve myself. In 20 years I'll probably have found my mission in life and I hope to be living in the countryside.

www.nni.nikkei.co.jp

customer services

Annual Report 1999

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Agriculture today feeds twice as many people as in 1960. But if the world's population is to continue to be fed, production must double again over the next 30 years. Experts estimate that currently around one-third of the world's annual yield is simply destroyed. A lot of this destruction occurs in the field ­ as a result of pests, plant diseases and weed infestation. Further losses occur during transport and storage. Therefore crop protection is needed to produce a healthy yield in the necessary quantities.

Dr. Hans C. Steinrücken 20 years ago I was studying for my PhD in Biochemistry at the University of Bochum in Germany. And in 20 years? Although I might be retired by then, I hope to be still involved in challenging projects. World population continues to grow while land available for food production has barely increased over the past three decades. Scientists estimate there are 10,000 different pests, 250 viral diseases, 1,800 weeds and some 800 harmful fungi threatening crops around the world.

Novartis Crop Protection products, technologies, and services are some of the most important tools used by farmers and growers to increase their productivity with environmentallyresponsible methods, and preserve natural resources. The company discovers, develops, manufactures and markets a wide variety of crop protection products allowing farmers to reap harvests providing higher yields and improved quality. Using state-of-the-art technology, Novartis fungicides, herbicides, insecticides and seed treatment products contribute to sustainable, economic and safe agriculture while maintaining the ecological balance and producing food free of harmful residues. Screening is a vital component in the development of new crop protection products. Novartis samples over 100,000 novel compounds a year, a figure expected to rise in future as competitive pressure increases the challenge to find new active compounds. "Novartis depends on Tecan's support as system integrator for two highly sophisticated logistics and application solutions they have developed with us," states Dr. Hans C. Steinrücken, Head of Research Logistics at Novartis in Basel, Switzerland. "High throughput screening using robotics is the only way to ensure the precision and reliability we require working in a productionlike environment. Tecan's customer service is very good. They trained our on-site technician in diagnostic and simple repairs, and are highly competent and extremely fast when it comes to more demanding support ­ including ensuring the seamless operation of system devices originating from other suppliers."

www.novartis.com

Annual Report 1999

Peter Siesel

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"Astronomical" is how Peter Siesel describes the potential of the new proteomics and genomics marketplace for automated precision liquid handling ­ and he is in an ideal position to judge: his job encompasses all facets of sales and application support for the Life Sciences industry, involving a wide range of genomics, proteomics, pharmaceutical and biotech companies.

Peter tells his customers: "Here's our instrument. Let us help you make it do what you want it to," and describes with relish how they use Tecan's equipment to its fullest and sometimes even beyond what he thought was possible. "I constantly ask: What does this machine not do that you would like it to? The key is making sure we satisfy our customers by giving them the solutions they want. That means reliable, accurate instruments, very often finished applications, as well as excellent continuing support." According to Peter, the ideal client relationship happens when the customer uses Tecan as a consultant and both companies work together to build the components and solutions needed to push forward the process of discovery. Sometimes it is hard to be absolutely sure which avenues to go down in order to anticipate future needs. "We look for patterns and focus on these ­ it's a constant dialog with our clients." Anticipation is half the battle to meet customers' crucial time-tomarket needs. "We're engineers and we build excellent devices and excellent software. Software is now one of the strongest parts of the business, and differentiation between products often comes down to how flexible and easy to use that software is. We have a real edge now in this respect, and we'll continue to build on this strength." 20 years ago I was still in Junior High School fixing cars and playing sports. Twenty years from now, with the rapidly accelerating pace of technology in this industry, I hope to be in an equally challenging position with respect to my career goals.

www.ebay.com

financial review

Annual Report 1999

Swiss Stock Exchange

21

1999 was a landmark year for Tecan, marking our transition to a 100% publicly-owned company with the successful secondary placement of PE Corporation controlling stock. Since June 1999 our shares have been traded on the main board of the Swiss Exchange (SWX), where they have consistently shown above-average performance in comparison with the SPI.

We posted another successful year in 1999, with sales up by 18% to CHF 193 million (15% currency adjusted). The operational result before investments in research and development rose by 25% in comparison to 1998, representing 32% of sales. Based on the marketing agreement with Abbott Diagnostics, non-recurring development costs of CHF 3.6 million were capitalized relating to the completion of the Genesis FE series. Franz Rutzer 20 years ago I was just about to finish school in Germany, and starting to look for a place and subject to study. By chance I ended up in Switzerland. We don't really know what will happen 20 years from now, The Board of Directors will propose a dividend of CHF 2.50 per registered share of CHF 10 par value at the Annual General Meeting of May 17, 2000. Tecan follows an earnings-oriented dividend distribution policy. but there will be huge opportunities. It'll be up to everyone to grasp one and make the most of it to become happy and fulfilled. Net profit grew by 23% to CHF 28 million despite higher income tax charges resulting from a change in the tax system now that the one-off reduction no longer applies. We achieved an EBIT of CHF 41 million, representing 21% of sales. Growth was experienced in all geographic markets. Strong demand, particularly from North America with an increase in sales of 21% compared to the previous year, made a crucial contribution to overall growth. Tecan is now on a firm footing to take full advantage of the market opportunities opening up as the Biotech Era gathers pace. We are strong in many of the key growth niches of the Life Sciences, and are vigorously maintaining Tecan's leading position in the Clinical Diagnostics market. Our healthy balance sheet enables us to support vigorous growth, as evidenced by 1999's strategic investment in research and development of 13% of sales. Several new applications were successfully introduced in 1999 and will start contributing to sales in the first half of 2000. In addition, we are in a strong position to explore opportunities for complementary acquisitions and strategic partnerships in order to continue our excellent growth in the future.

www.swissquote.ch

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Tecan Group

Consolidated balance sheet at December 31

1999

Notes CHF 1,000

1998

CHF 1,000

Assets

Cash Time and money market deposits Marketable securities Trade accounts receivable Other receivables Inventories Prepaid expenses Current assets Financial assets Fixed assets Intangible assets Deferred tax assets Non-current assets Assets 5 14 17 4 3 15,936 33,485 10,774 48,651 4,503 16,889 1,108 131,346 513 14,554 3,600 4,559 23,226 154,572 15,172 21,847 10,578 37,380 3,999 13,099 941 103,016 377 12,868 ­ 3,746 16,991 120,007

Liabilities and shareholders' equity

Current bank liabilities Trade accounts payable Other liabilities Provisions Current tax liabilities Accrued expenses Current liabilities Bank loans Other non-current liabilities Provisions Deferred tax liabilities Non-current liabilities Minority interests Share capital Treasury shares Additional paid-in capital Translation differences Retained earnings Shareholders' equity Liabilities and shareholders' equity 8 17 6 6 2,419 10,581 4,408 1,292 2,212 11,548 32,460 ­ 106 708 3,358 4,172 80 13,000 (47) 6,086 2,493 96,328 117,860 154,572 124 6,568 3,721 1,137 4,701 9,978 26,229 3,398 177 666 735 4,976 219 13,000 (46) 6,086 (1,326) 70,869 88,583 120,007

Tecan Group

23

Consolidated income statement

1999

Notes Sales Material costs Personnel expenses Distribution and selling expenses External project costs Depreciation of fixed assets Amortization of intangible assets Other operating expenses Other operating income and development costs capitalized Operating expenses Operating profit Interest expense Interest income Foreign exchange gains / (losses) Financial result Profit before taxes and extraordinary items Extraordinary income Extraordinary expense Extraordinary items Profit before taxes Income taxes Profit before minority interests Minority interests in profit Net profit 17 5, 16 15 14 14 5 7, 13 12 CHF 1,000 193,056 (61,105) (56,342) (10,899) (9,743) (4,592) ­ (13,735) 4,375 (152,041) 41,015 (149) 941 197 989 42,004 ­ ­ ­ 42,004 (13,896) 28,108 (58) 28,050

1998

CHF 1,000 163,605 (51,542) (46,806) (9,171) (7,194) (4,025) (22) (13,300) ­ (132,060) 31,545 (214) 862 (480) 168 31,713 34 (2,000) (1,966) 29,747 (6,766) 22,981 (105) 22,876

Earnings per share (CHF/share)* Diluted earnings per share (CHF/share)*

20 20

21.66 21.58

17.66 17.66

* per registered share with a nominal value of CHF 10

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Tecan Group

Consolidated statement of changes in shareholders' equity

Additional Share capital CHF 1,000 Shareholders' equity at 1/1/1998 Restatement as of 1/1/1998 Net profit Dividends paid Translation differences Shareholders' equity at 12/31/1998 13,000 (46) 6,086 (1,441) (1,326) 13,000 Treasury shares CHF 1,000 (46) paid-in capital CHF 1,000 6,086 Translation differences CHF 1,000 115 earnings CHF 1,000 49,962 (627) 22,876 (1,944) 602 70,869 Total Retained shareholders' equity CHF 1,000 69,117 (627) 22,876 (1,944) (839) 88,583

Shareholders' equity at 1/1/1999 Net profit Dividends paid Purchase of treasury shares Translation differences Shareholders' equity at 12/31/1999 See also note 8.

13,000

(46)

6,086

(1,326)

70,869 28,050 (2,591)

88,583 28,050 (2,591) (1)

(1) 3,819 13,000 (47) 6,086 2,493 96,328

3,819 117,860

Tecan Group

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Consolidated cash flow statement

1999

Notes Profit before minority interests Adjustments to reconcile profit to cash flow from operating activities: Depreciation and amortization Change in deferred taxes Increase in provisions Loss on sale of fixed assets (Increase) decrease in current assets: Trade accounts receivable Inventories Other receivables and prepaid expenses Increase (decrease) in current liabilities: Trade accounts payable Other liabilities and accrued expenses Cash inflows from operating activities Capital expenditures in fixed assets Proceeds from sale of fixed assets Purchase of subsidiary Purchase of marketable securities Increase in financial assets and intangible assets Cash outflows from investing activities Dividends paid Increase in (repayment of) current bank liabilities Increase in (repayment of) bank loans Retirement of option bonds payable Cash outflows from financing activities Translation differences Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at year-end 6 14 1 5 3,446 (1,222) 27,656 (6,023) 151 (108) (196) (3,671) (9,847) (2,683) 1,931 (3,564) ­ (4,316) (1,091) 12,402 37,019 49,421 289 (3,375) 26,097 (4,832) 217 (19) (360) (27) (5,021) (1,944) 124 (159) (3,050) (5,029) (821) 15,226 21,793 37,019 3 4 (7,247) (1,727) (383) (3,034) 1,704 748 5 17 4,592 1,810 127 152 6,047 (1,124) 1,822 39 CHF 1,000 28,108

1998

CHF 1,000 22,981

Interest received Interest paid Income taxes paid

941 149 14,575

862 214 9,545

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Tecan Group

Summary of significant accounting principles

Basis for the consolidated financial statements ­ The consolidated financial statements are based on the individual subsidiaries'

annual accounts as of December 31, which were prepared according to uniform Group accounting principles. These consolidated financial statements are designed to give a true and fair view of the results of operations, financial position and cash flows of the Tecan Group, and are prepared in accordance with International Accounting Standards (IAS) issued by the International Accounting Standards Committee (IASC).

Changes in accounting principles ­ In addition to the I A S Standards which became effective on January 1, 1999, IAS 22 (revised),

I A S 36, and I A S 38 have been considered for the first time in the consolidated financial statements. No retroactive adjustments to the consolidated financial statements resulted therefrom. Individual components of current liabilities have been reclassified, and prior year's figures accordingly revised. As a result of the implementation of the revised IAS 12 (Deferred taxes), deferred tax assets and liabilities were recorded as of January 1, 1998 and credited to or charged against retained earnings (restatement).

Scope of consolidation ­ The consolidated financial statements include Tecan AG and all subsidiaries which are directly or indirectly

under its control (generally those for which over 50% of the voting rights are owned). Minority interests in shareholders' equity and in the net profit of consolidated subsidiaries are shown separately. The companies which are included in the consolidated financial statements are listed in the notes to the financial statements of Tecan AG. Currently Tecan AG owns no investments which are not consolidated.

Capital consolidation ­ The capital consolidation is performed according to the Anglo-Saxon purchase method. Companies included

for the first time in the consolidation are valued according to uniform accounting principles. Any resulting goodwill is capitalized and amortized over its estimated useful life.

Translation of foreign currencies ­ The financial statements of foreign subsidiaries denominated in foreign currencies are translated

into Swiss francs as follows: Assets and liabilities Shareholders' equity Income and expenses current rates at year-end historical rates average rates for the year

The resulting translation differences are directly charged against or credited to shareholders' equity. Foreign currency transactions are translated using rates applicable as of the transaction date. Resulting exchange gains and losses are included in net profit. Monetary assets and liabilities denominated in foreign currencies which were held at December 31 are translated at year-end rates. The resulting translation gains and losses are a component of net profit.

Intercompany sales and profits ­ Intercompany sales and profits, as well as accounts receivable and payable between Group

companies, are eliminated.

Marketable securities ­ Securities are readily marketable, publicly traded titles. Such assets are stated at market value. Receivables ­ Trade accounts receivable and other receivables are shown at their nominal values, less economically necessary

allowance for doubtful accounts.

Inventories ­ Inventories are valued at the lower of purchase / production costs or market values, using the first-in-first-out or

average method. Production costs include costs of material and labor, as well as a reasonable allocation of overhead. Slow-moving and obsolete inventory items have been written down.

Tecan Group

27

Fixed assets ­ Fixed assets are stated at cost less accumulated depreciation as commercially required. Depreciation is calculated

under the straight-line method based on the estimated useful lives of the assets. Furniture and fixtures Machines and motor vehicles EDP equipment Buildings Leasehold improvements 4 - 8 years 3 - 7 years 3 - 5 years 25 - 50 years term of the lease, not exceeding 10 years

Assets held under financing leases (tantamount to the purchase of the assets) are capitalized at the net present value of lease payments and depreciated over their estimated useful lives.

Taxes ­ The Group provides for all taxes estimated to be payable on net profit for the year.

Deferred taxes arising due to temporary differences in the recognition of certain income and expenses for financial and tax reporting purposes are provided. The deferred tax calculation is made based on the balance sheet liability method using local tax rates currently applicable or expected. Deferred tax assets resulting from timing differences and tax loss carry-forwards are recorded to the extent that their future realization is probable. Beginning with the implementation of the revised IAS 12 as of January 1, 1998, deferred taxes on possible dividend distributions from the retained earnings of subsidiaries are provided. (See notes 8 and 17.)

Financial instruments ­ Forward foreign exchange contracts are entered into only as a hedge of specific future foreign currency

cash flows. Gains and losses on forward exchange contracts are included in the determination of net profit at the time the underlying hedged transactions are concluded.

Retirement benefits ­ Within the Group, various pension plan schemes exist. As a rule, the obligations are covered by independent

pension funds, which are maintained as defined contribution plans.

Employee profit sharing ­ In 1997 the company created a conditional share capital designated for employee profit sharing. Based

on this conditional capital, an employee stock option plan was introduced in 1999. Options granted under this employee stock option plan have not yet had an impact on the consolidated financial statements. When such options are exercised, new shares will be issued from the conditional share capital and the exercise prices paid will constitute new share capital and additional paid-in capital.

Development costs ­ In compliance with IAS 38, development costs are capitalized if technical and economical feasibility is assured,

if evidence of future use exists, and if development costs can be separately determined and measured. Development costs related to the Genesis FE project have been capitalized for the first time in 1999 based on the fulfillment of all criteria. (See note 14.) Development costs capitalized, which include material costs and external project costs, are amortized over a maximum of 5 years.

Related parties ­ Transactions with related parties are conducted under arms' length market conditions.

28

Tecan Group

Notes to the consolidated financial statements

1. Changes in Group companies In April 1999 Tecan AG acquired the minority holding of 8% in Tecan Japan Co., Ltd. for JPY 8.4 mill. No goodwill resulted from this transaction.

2. Foreign exchange rates The Tecan Group has used the following foreign exchange rates: Balance sheet Income statement

1999

CHF USD EUR DEM ATS GBP FRF ITL JPY SGD 1 1 100 100 1 100 1000 100 100 1.60 1.60 81.81 11.63 2.58 24.39 0.83 1.56 95.60

1998

CHF 1.38 ­ 82.43 11.60 2.29 24.56 0.83 1.22 82.30

1999

CHF 1.50 1.60 81.81 11.63 2.43 24.39 0.83 1.33 88.70

1998

CHF 1.45 ­ 82.47 11.71 2.41 24.61 0.84 1.11 86.80

3. Trade accounts receivable

1999

CHF 1,000

1998

CHF 1,000 37,896 (516) 37,380 3,033 (337) 1,491

Receivables Allowance for doubtful accounts Total Change compared with previous year Thereof translation differences Thereof amount receivable from related parties

49,470 (819) 48,651 11,271 3,729 ­

4. Inventories

1999

CHF 1,000

1998

CHF 1,000 5,355 9,763 (2,019) 13,099 (1,705) (258)

Raw material and work in process Semi-finished and finished goods Allowance for slow-moving and obsolete inventories Total Change compared with previous year Thereof translation differences

6,321 12,224 (1,656) 16,889 3,790 1,982

Tecan Group

29

5. Changes in fixed assets Machines Furniture and fixtures CHF 1,000 and motor vehicles CHF 1,000 EDP equipment CHF 1,000 Land and CHF 1,000 Leasehold buildings improvements CHF 1,000

Total 1999

CHF 1,000

Total 1998

CHF 1,000

At cost

Balance at 1/1 Additions Disposals Translation differences Balance at 12/31 4,410 536 (109) 260 5,097 7,572 2,706 (357) 288 10,209 11,905 2,451 (655) 687 14,388 10,789 80 (83) 14 10,800 2,316 250 ­ 75 2,641 36,992 6,023 (1,204) 1,324 43,135 35,133 4,832 (2,736) (237) 36,992

Accumulated depreciation

Balance at 1/1 Annual depreciation Disposals Translation differences Balance at 12/31 3,154 458 (63) 150 3,699 5,001 1,344 (231) 172 6,286 7,352 2,448 (602) 400 9,598 6,517 234 (5) 3 6,749 2,100 108 ­ 41 2,249 24,124 4,592 (901) 766 28,581 20,731 6,025 (2,484) (148) 24,124

Net book value

1,398

3,923

4,790

4,051

392

14,554

12,868

The total annual depreciation in 1998 of CHF 6.0 mill. includes CHF 2.0 mill. due to a value adjustment on the manufacturing and administrative building in Switzerland, which is shown in the profit and loss account as an extraordinary expense. Fixed assets are insured in the event of fire for the total value of CHF 39.7 mill. (1998: CHF 30.9 mill.), of which CHF 10.8 mill. (1998: CHF 10.8 mill.) relates to buildings. As of year-end, purchase commitments for capital expenditures for fixed assets amounted to CHF 2.1 mill.

6. Bank loans

1999

CHF 1,000

Due within 1 year

1998

CHF 1,000

Analysis by currency: ATS JPY Total Change compared with previous year Thereof translation differences Analysis by interest rates: 2%­4% 4%­6% 6%­8% Total 2,345 ­ 74 2,419 1,830 187 1,381 3,398 74 2,345 2,419 (979) 518 74 2,345 2,419 1,568 1,830 3,398 (159) 164

30

Tecan Group

7.

Employee benefits

Personnel expenses Personnel expenses include the following:

1999

CHF 1,000

1998

CHF 1,000 37,839 5,397 814 2,756 46,806

Salaries and wages Social security taxes Retirement benefits Other personnel expenses Total Employee stock option plan

46,271 6,247 1,073 2,751 56,342

As of December 31, 1999, an employee stock option plan for Tecan shares was introduced. In addition to salaries, options were granted to all employees of the Tecan Group outside of the USA. Employees in the USA received stock appreciation rights with the same treatment and conditions as the employee stock options. Options issued provide for the purchase of one Tecan share per option at an exercise price of CHF 500. The options are blocked for 4 years, and expire after 5 years. Half of the options issued are subject to an acceleration clause, whereby certain restrictions are removed. At December 31, 1999, 33,792 options and stock appreciation rights not yet exercised were outstanding in connection with the employee stock option plan. All outstanding options are covered by the conditional share capital. Retirement benefits The Tecan Group maintains various retirement benefit plans for its employees. Benefits are distributed for the most part by separate pension funds. These represent financially independent retirement benefit funds administered by insurance companies and banks, and are conceived solely as defined contribution plans. As a rule, financing is achieved through both employee and employer contributions. As of year-end, pension liabilities amounted to

1999

CHF 1,000

1998

CHF 1,000 124 90 214

Funded plans Unfunded plans Total

4 118 122

8. Shareholders' equity The changes in shareholders' equity are presented on page 24. As a result of the implementation of the revised IAS 12 (Deferred taxes), additional provisions for deferred taxes of CHF 0.6 mill. were recognized and charged against retained earnings as of January 1, 1998. (See note 17) Treasury shares consist of 4,128 registered shares with a nominal value of CHF 10 each, and 393 registered shares with a nominal value of CHF 15 each (1998: 3,099 shares with a nominal value of CHF 15 each). The composition of and the changes in share capital are disclosed in the Notes to Tecan AG's financial statements.

9. Financial instruments Credit risks The individual companies and the Group as a whole have no significant concentration of credit risks, as financial instrument contracts are concluded exclusively with first-rate financial institutions. The credit risk associated with trade accounts receivable is limited, as the Group has numerous clients located in various geographical regions. Interest rate risks The Group places its cash and cash equivalents primarily short-term with first-rate bank institutions.

Tecan Group

31

Foreign currency exposure In order to hedge exchange risks related to foreign currency payments to be received in the year 2000, forward foreign currency sales contracts denominated in USD with various maturity dates totalling USD 10.5 mill. have been entered into, and foreign currency options with an underlying volume of USD 2 mill. have been purchased. The market value of the forward contracts and the foreign currency options as of December 31, 1999 was CHF 0.6 mill. below book value (1998: CHF 0.5 mill.). 10. Rental and lease commitments The commitments arising from operating leases are largely rental payments for buildings. During 1999, a 10-year rental agreement was entered into for a new building to be used for operations and production in Switzerland. Operating leases Due date 1999 2000 2001 2002 2003 2004 and beyond Total No significant commitments exist under finance leases. 11. Contingent liabilities and encumbrance of assets As of December 31, 1999 and 1998, the Group had no contingent liabilities to third parties, and, except for assets capitalized under finance leases, none of the Group's assets were pledged, assigned or subject to retention of title. ­ 2,133 2,448 2,267 2,115 10,830 19,793 1,942 1,731 780 358 434 ­ 5,245

1999

CHF 1,000

1998

CHF 1,000

12. Segment information Segment information is disclosed for the first time in accordance with the new, revised IAS 14. The primary segregation is indicated by geographical region. Prior year figures have been adjusted accordingly. Segment information (by location of assets) Corporate/ America CHF 1,000 Europe CHF 1,000 Asia CHF 1,000 consolidation CHF 1,000 Total CHF 1,000

1999

Sales to third parties 86,681 Intersegment sales Total sales Operating profit 6,810 93,491 12,938

1998

69,390 6,495 75,885 9,484

1999

92,511 31,728 124,239 26,842

1998

83,393 25,035 108,428 21,531

1999

13,864 ­ 13,864 1,527

1998

10,822 550 11,372 793

1999

­ (38,538) (38,538) (292)

1998

­ (32,080) (32,080) (263)

1999

193,056 ­ 193,056 41,015

1998

163,605 ­ 163,605 31,545

Total assets Capital expenditures in fixed assets Depreciation of fixed assets Total liabilities

44,240

34,145

124,997

100,922

10,153

8,656

(24,818)

(23,716)

154,572

120,007

984

1,374

4,973

3,392

66

66

­

­

6,023

4,832

(1,031) 19,740

(867) 16,576

(3,424) 24,791

(5,056) 22,760

(137) 7,651

(102) 7,496

­ (15,550)

­ (15,627)

(4,592) 36,632

(6,025) 31,205

During the year 1999 there was no amortization of intangible assets and no significant non-cash expense except for depreciation of fixed assets.

32

Tecan Group

Sales by region (by location of customers) America CHF 1,000 Europe CHF 1,000 Asia CHF 1,000 Others CHF 1,000 Total CHF 1,000

1999

Sales to third parties Changes in local currency versus the prior year in % 21 87,195

1998

69,745

1999

79,496

1998

75,022

1999

21,006

1998

16,592

1999

5,359

1998

2,246

1999

193,056

1998

163,605

21

6

19

12

(4)

140

(5)

15

17

Sales by product group Robotic sample processors CHF 1,000 Readers, washers and dispensers, CHF 1,000 Pumps and valves CHF 1,000 Robotic systems (TRAC) CHF 1,000 Development contract and others CHF 1,000 Total CHF 1,000

1999

Sales to third parties Changes in local currency versus the prior year in % 11

1998

1999

37,943

1998

33,217

1999

1998

1999

7,624

1998

4,802

1999

3,719

1998

1999

1998

115,025 101,571

28,745 20,190

3,825 193,056 163,605

25

13

1

37

35

37

(21)

(3)

(20)

15

17

Assets and capital expenditures in fixed assets cannot be allocated meaningfully to the individual product groups, as these are used for all product groups. A mathematical allocation would not result in reliable or meaningful information.

13 Personnel During the year, an average of 542 employees (1998: 489 employees) were employed by the Tecan Group. At year-end, the Group employed 556 persons (1998: 507 persons).

14. Research and development

1999

CHF 1,000

1998

CHF 1,000 18,987 674 ­ ­ ­ 18,313 7,194

Total research and development costs (gross) Revenues received under development contracts Government research subsidies Development costs capitalized Amortization of development costs capitalized Total research and development costs (net) Thereof external project costs

25,931 422 775 3,600 ­ 21,134 9,743

Costs for research and the development of new products amounted to 13.5% of sales (1998: 11.6%). Based on the sales agreement with Abbott, costs relating to the completion of the Genesis FE amounting to CHF 3.6 mill. were capitalized for the first time at December 31, 1999. The development costs capitalized will be amortized over the useful life associated with the project, but not to exceed 5 years. After offsetting revenues received under development contracts of CHF 0.4 mill. (1998: CHF 0.7 mill.) and government research subsidies, a net research and development expense of CHF 21.1 mill. (1998: CHF 18.3 mill.) results, which represents 11.0% (1998: 11.2%) of sales.

Tecan Group

33

15. Other operating expenses Provisions amounting to CHF 1.8 mill. made in 1998 for expenses in connection with organizational measures were used entirely for such expenditures in 1999.

16. Extraordinary expense The extraordinary expense in 1998 represents a value adjustment of CHF 2.0 mill. on the building used for manufacturing and administrative purposes in Switzerland.

17. Income taxes

1999

CHF 1,000

1998

CHF 1,000 7,890 (1,124) 6,766

Current income taxes Deferred taxes Total

12,086 1,810 13,896

Current income taxes are calculated based on the Group profit as determined under uniform valuation principles. The offset of tax loss carry-forwards during the year resulted in savings in current income taxes of CHF 0.4 mill. (1998: CHF 0.5 mill.). Deferred income taxes arising due to temporary differences in the valuation of assets and liabilities for financial reporting and for tax purposes are determined according to the balance sheet liability method. The Group recognizes both deferred tax assets and liabilities on temporary differences using local tax rates currently applicable or expected. With the implementation of the revised IAS 12 as of January 1,1998, deferred taxes of CHF 0.6 mill. were also provided on possible dividend distributions from the retained earnings of subsidiaries. These adjustments were charged directly against retained earnings as a restatement. Tax loss carry-forwards are available to Group companies, for which the following potential tax benefits have, as in the past, not been capitalized for precautionary reasons:

1999

Expiring in 1999 2000 2001 2002 and beyond Unlimited Total potential tax benefits Thereof capitalized The income tax expense can be analyzed as follows: 150 150 174 188 662 0 CHF 1,000

1998

CHF 1,000 170 225 300 ­ 252 947 0

1999

CHF 1,000

1998

CHF 1,000 29,747 9,993 46 (200) (473) ­ (2,600) 6,766

Profit before taxes Tax expense based on the Group's average rate of 35% (1998: 34%) Non-deductible expenses Tax-free income and tax reductions Application of tax loss carry-forwards Under / (over) provided in prior years One-time impact of tax system changes Tax expense reported

42,004 14,801 39 (329) (363) (252) ­ 13,896

34

Tecan Group

Deferred taxes apply to the following balance sheet line items: Impact on profit

1999

CHF 1,000 Inventories Fixed assets Liabilities and accrued expenses Provisions Others Total net deferred tax assets arising from temporary differences Deferred taxes provided on possible dividend distributions Total net deferred tax assets (1,757) (53) (1,810) 520 (305) 589 (1,595) (966)

1999

CHF 1,000 3,043 4 784 (1,053) (686)

1998

CHF 1,000 2,523 309 195 542 280

2,092 (891) 1,201

3,849 (838) 3,011

Deferred taxes are included in the balance sheet as follows:

1999

1,000 CHF

1998

1,000 CHF 3,746 (735) 3,011

Deferred tax assets Deferred tax liabilities Total

4,559 (3,358) 1,201

18. Subsequent events No events have occurred subsequent to the balance sheet date which would impact the disclosures made in these financial statements. The Board of Directors proposes to the shareholders to approve the creation of a holding structure in Switzerland during their annual meeting on May 17, 2000.

19. Remuneration of directors The total remuneration expense for the Board of Directors of Tecan AG was CHF 141,500 in 1999 (1998: CHF 110,000). Annual individual director's fees are CHF 20,000. In addition, a total of 800 stock options were issued to directors in connection with the employee stock option plan.

Tecan Group

35

20. Earnings per share The earning per share was determined based on the profit attributable to shareholders and the average number of shares outstanding, excluding treasury shares.

1999

CHF Share capital issued Treasury shares (393 registered shares with a CHF 15 par value) Treasury shares (4,128 registered shares with a CHF 10 par value) Share capital entitled to dividends Average number of shares outstanding Registered (CHF 15 par value) Registered (CHF 10 par value) Undiluted profit attributable to shareholders (CHF/share): Registered (CHF 15 par value) Registered (CHF 10 par value) Number of shares under option Registered (CHF 10 par value) Exercise price Number of shares which could be issued from the above proceeds if the company had issued shares at the average trading price for the year of CHF 582.50 Number of shares after dilution Registered (CHF 15 par value) Registered (CHF 10 par value) Diluted earnings per share for shareholders (CHF/share) Registered (CHF 15 par value) Registered (CHF 10 par value) 32.36 21.58 7 1,300,058 (29,006) 33,792 500 32.48 21.66 7 1,295,272 13,000,000 (5,895) (41,280) 12,952,825

1998

CHF 13,000,000 (46,485) ­ 12,953,515

126,901 1,105,000

26.50 17.66

­ ­

­

­ ­

26.50 17.66

In 1997, Tecan AG created a conditional share capital of CHF 1.3 mill. designated for employee profit sharing. As at the end of 1999, 33,792 options had been issued under the employee stock option plan.

36

Tecan Group

Report of the Group auditors to the General Meeting of Shareholders of Tecan AG, Hombrechtikon

As auditors of the Group, we have audited the consolidated financial statements of Tecan AG, Hombrechtikon, and subsidiaries, presented on pages 22 to 35 for the year ended December 31, 1999. These consolidated financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the profession and with the International Standards on Auditing issued by the International Federation of Accountants (IFAC), which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Accounting Standards (IAS) and comply with the Swiss law and the accounting principles of the Listing Rules of the Swiss Exchange. We recommend that the consolidated financial statements submitted to you be approved.

KPMG Fides Peat

Fredy Luthiger Swiss Certified Accountant

Lukas Marty Swiss Certified Accountant

Auditors in Charge

Zurich, February 15, 2000

Tecan AG

37

Tecan AG

Balance sheet at December 31

Assets

1999 CHF Cash Time and money market deposits Marketable securities Trade accounts receivable from third parties Trade accounts receivable from Group companies Other receivables from third parties Other receivables from Group companies Inventories Prepaid expenses Loans to Group companies Current assets Financial assets Treasury shares Fixed assets Non-current assets Total assets 7,502,004 24,840,000 10,729,122 6,488,630 21,647,757 3,433,204 1,882,913 2,021,441 368,609 2,994,725 81,908,405 16,900,018 188,700 3,676,485 20,765,203 102,673,608 1998 CHF 7,499,540 19,500,000 10,578,321 2,837,466 14,817,826 2,291,870 2,149,751 1,991,366 22,671 ­ 61,688,811 19,229,499 185,940 4,573,198 23,988,637 85,677,448

Liabilities and shareholders' equity

Trade accounts payable to third parties Trade accounts payable to Group companies Other liabilities to third parties Other liabilities to Group companies Provisions Provision for taxes Accrued liabilities Current liabilities Non-current liabilities Share capital Legal reserves Retained earnings Shareholders' equity Total liabilities and shareholders' equity 4,270,976 1,255,861 1,280,226 408,869 8,080,244 100,000 1,885,953 17,282,129 ­ 13,000,000 10,437,014 61,954,465 85,391,479 102,673,608 2,719,319 1,107,278 1,904,300 1,749,691 3,949,500 1,100,000 301,806 12,831,894 ­ 13,000,000 10,434,254 49,411,300 72,845,554 85,677,448

38

Tecan AG

Income statement

1999

CHF Sales to third parties Sales to Group companies Total sales Material costs Personnel expenses Distribution and selling expenses External project costs Depreciation of fixed assets Other operating expenses Management fees from Group companies Operating expenses Operating profit Interest expense to third parties Interest expense to Group companies Interest income from third parties Interest income from Group companies Foreign exchange losses Dividend income from Group companies Financial result Profit before taxes and extraordinary items Extraordinary income from third parties Extraordinary expense to third parties Extraordinary items Profit before taxes Income taxes Net profit 28,801,555 47,254,215 76,055,770 (28,136,840) (17,737,576) (2,817,381) (8,377,839) (2,494,091) (7,825,487) 1,636,995 (65,752,219) 10,303,551 (19,712) ­ 471,876 1,010,922 (1,605,882) 8,718,247 8,575,451 18,879,002 ­ ­ ­ 18,879,002 (3,742,512) 15,136,490

1998

CHF 27,225,423 35,083,045 62,308,468 (23,730,690) (13,444,440) (1,476,765) (5,979,025) (1,374,558) (3,635,287) 1,148,600 (48,492,165) 13,816,303 (847) (20,020) 570,025 586,677 (240,653) 8,841,405 9,736,587 23,552,890 939 (253,000) (252,061) 23,300,829 (962,717) 22,338,112

Tecan AG

39

Notes to the financial statements

1. Trade accounts receivable

1999

CHF

1998

CHF 2,837,466 44,805

Total from third parties Amount thereof from related parties

6,488,630 ­

2. Financial assets

1999

CHF

1998

CHF 11,292,499 7,937,000 19,229,499

Investments in subsidiaries Loans to Group companies Total

11,400,018 5,500,000 16,900,018

Overview of investments in subsidiaries: Company Tecan Austria GmbH Tecan US Group Inc.

q q q

Domicile Grödig (A) Research Triangle Park, NC (USA) Research Triangle Park, NC (USA) Sunnyvale, CA (USA) Hillsborough, NC (USA) Crailsheim (D) Goring-on-Thames (UK) Trappes (F) Milan (I) Tokyo (J) Singapore Hannover (D)

Share capital ATS USD USD USD USD DEM GBP FRF ITL JPY SGD DEM 20,000,000 1,500,000 400,000 26,000 500,000 100,000 500,000 3,000,000 150,000,000 50,000,000 800,000 150,000

Tecan US, Inc. Cavro Scientific Instruments Inc. Marsmeadow

Tecan Deutschland GmbH Tecan UK Ltd. Tecan France SA Tecan Italia S.r.l. Tecan Japan Co., Ltd. Tecan Asia (Pte.) Ltd. Tecan Software GmbH

Subsequent to the purchase of an 8% minority interest in Tecan Japan Co., Ltd. in April 1999, all subsidiaries are held completely (100%), except for Tecan Software GmbH (70%).

3. Treasury shares The balance in treasury shares is comprised of 393 registered shares with a nominal value of CHF 15 each and 4,128 registered shares with a nominal value of CHF 10 each.

40

Tecan AG

4. Changes in shareholders' equity Share capital CHF Shareholders' equity at 1/1/1999 Dividends paid Net profit Purchase of treasury shares Shareholders' equity at 12/31/1999 13,000,000 13,000,000

Legal reserves Reserves for General reserve CHF 10,248,314 treasury shares (Note 3) CHF 185,940 Retained earnings CHF 49,411,300 (2,590,565) 15,136,490 2,760 10,248,314 188,700 (2,760) 61,954,465 Total shareholders' equity CHF 72,845,554 (2,590,565) 15,136,490 ­ 85,391,479

5. Share capital During the annual shareholders' meeting on May 12, 1999, it was decided to create uniform registered shares with a CHF 10 nominal value by conversion and splitting. The Company's share capital amounts to CHF 13,000,000, divided into 1,299,400 registered shares with a par value of CHF 10, and 400 registered shares with a par value of CHF 15 (1998: 130,000 registered shares with a par value of CHF 15 each and 110,500 bearer shares with a par value of CHF 100 each). Each share has one voting right during the annual meeting, regardless of its par value. Shareholders are entered in the share register only up to 5% of share capital, and nominees only up to 2%. On June 3, 1999, the new uniform registered shares with a par value of CHF 10 were traded for the first time on the main board of the Swiss stock exchange. At the same time, the secondary placement of the significant investment of PE Corporation, USA, was completed. No funds flowed into the company as a result of this transaction. During their 1997 annual meeting, the shareholders approved a conditional share capital of CHF 1,300,000, reserved for employees' profit sharing. The conditional share capital as now revised consists of 130,000 registered shares with a nominal value of CHF 10 each. Based on this conditional capital, an employee stock option plan was introduced in 1999. At December 31, 1999, 33,792 options not yet exercised were outstanding in connection with the stock option plan. The Company has knowledge of the following significant shareholders as of December 31, 1999: Schweizerische Unfallversicherungsanstalt (SUVA), Lucerne, CH CommCept Trust AG, Zug, CH Pensionskasse des Basler Staatspersonals, Basel, CH 140,000 shares 133,000 shares 120,000 shares

6. Contingent liabilities The total amount of guarantees, indemnity liabilities and pledges in favor of subsidiaries was approximately CHF 3.1 million at December 31, 1999 (1998 CHF 2.5 million). 7.

Encumbrance of assets

As of December 31, 1999 and 1998, none of the Company's assets were pledged, assigned, or subject to retention of title.

8. Unrecorded leasing liabilities At December 31, 1999, as in the prior year, no unrecorded liabilities under lease commitments existed. During 1999, a 10-year rental agreement was entered into for a new building to be used for operations and production in Switzerland. 9. Fire insurance value of fixed assets The insured value of fixed assets in the event of fire was CHF 17.9 million (prior year CHF 13.2 million). 10. Liabilities to pension funds As of the end of the business year 1999, no liabilities to pension funds existed (prior year CHF 0.1 million). No other items existed which would require disclosure under the provisions of Art. 663b of the Swiss Code of Obligations.

Tecan AG

41

Proposal of the Board of Directors for the appropriation of retained earnings

The Board of Directors of Tecan AG proposes that the retained earnings of CHF 61,954,465 be appropriated as follows: CHF 25% dividends on the authorized dividend share capital of CHF 12,952,825 Balance to be carried forward Total 3,238,206 58,716,259 61,954,465

Report of the statutory auditors to the General Meeting of Shareholders of Tecan AG, Hombrechtikon

As statutory auditors, we have audited the accounting records and the financial statements of Tecan AG, Hombrechtikon, presented on pages 37 to 41 for the year ended December 31, 1999. These financial statements are the responsibility of the Board of Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with auditing standards promulgated by the profession, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records, the financial statements and the proposed appropriation of available earnings comply with the law and the company's articles of incorporation. We recommend that the financial statements submitted to you be approved.

KPMG Fides Peat

Fredy Luthiger Swiss Certified Accountant

Lukas Marty Swiss Certified Accountant

Auditors in Charge

Zurich, February 15, 2000

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