Applied Biosystems Reports Fiscal 2005 Third Quarter Results.FOSTER CITY, Calif. -- Applied Biosystems Applied Biosystems, Inc. (formerly NASDAQ: ABIO) is the original name of a pioneer biotechnology company founded in 1981 in Foster City, California, among the Silicon Valley cities of the southern San Francisco Bay Area. Group (NYSE NYSE See: New York Stock Exchange :ABI Abi (ā`bī) [short for Abijah], in the Bible, King Hezekiah's mother. (Application Binary Interface) A specification for a specific hardware platform combined with the operating system. ) --Fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of $0.28 ($0.28 on a non-GAAP basis, excluding specified items) --Net revenues of $455 million Applied Biosystems Group (NYSE:ABI), an Applera Corporation business, today reported revenues of $455 million for the third quarter of fiscal 2005, a 3% increase over the prior year quarter. Net revenues include favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency effects Foreign Currency Effects The extent to which the changes in a foreign currency affects the return on a foreign investment. Notes: Foreign investments are complicated by the currency fluctuation and conversion between countries. of approximately 2%, compared to the prior year quarter. Net income was $56 million, compared to $46 million for the prior year quarter. Earnings per share (EPS) for the quarter were $0.28, compared to $0.22 for the prior year quarter. EPS for the quarter on a non-GAAP basis were $0.28, compared to $0.21 for the prior year quarter, excluding the specified items described below. The net effect of foreign currency on EPS was a benefit of approximately $0.02, compared to the prior year quarter. All per share amounts refer to Applera Corporation-Applied Biosystems Group Common Stock. "We were pleased with Applied Biosystems' significant third quarter EPS growth. This growth primarily was driven by operating improvements, a higher-than-trend increase in royalty and licensing revenue, and foreign currency. However, due to the constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. funding environment, we remain cautious," said Tony L. White, Chief Executive Officer, Applera Corporation. "To position Applied Biosystems for future success, Cathy Burzik and her team are focused on new initiatives to drive long-term revenue growth." Catherine M. Burzik, President, Applied Biosystems said, "Overall revenue results for the third quarter were mixed. While we saw in total only slight revenue growth from the prior year, we had double-digit revenue growth in the Real-Time PCR/Applied Genomics product category, driven by increased sales of our biosecurity, human identification, and TaqMan(R) Gene Expression Assay and Low Density Array products. We also saw a slight increase in DNA Sequencing DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. revenue as a result of increased sales of low- to medium-throughput instruments. However, these results were largely offset by a decline in Mass Spectrometry mass spectrometry or mass spectroscopy Analytic technique by which chemical substances are identified by sorting gaseous ions by mass using electric and magnetic fields. revenue driven by lower sales of the 4000 Q TRAP(R) LC/MS/MS System. In the prior year quarter, we filled a substantial backlog of orders for this system. Additionally, we remain concerned about factors that may have a negative influence on future sequencing revenue." During the third quarters of both fiscal 2005 and 2004, the Group recorded items that affected the comparability of results. For fiscal 2005, the total pre-tax amount of these items increased income by approximately $1 million. These items included a reduction in severance costs previously recorded and a reduction of a charge recorded in the fourth quarter of fiscal 2004 related to the decision to transfer a product line back to HTS HTS Heights HTS Harmonized Tariff System HTS High Throughput Screening (biomolecular assay screening) HTS High-Throughput Screening (Pharmaceutical Industry) HTS Harmonized Tariff Schedule Biosystems, Inc. During the third quarter of fiscal 2004, the Group recorded pre-tax net gains of $4 million. This net amount included pre-tax gains for a legal settlement and the sales of investments, and charges for severance and related costs. The following table summarizes the impact of these items on EPS calculations:
Reconciliation of GAAP amounts to Adjusted amounts
(Dollar amounts in millions)
Three months ended Three months ended
March 31, 2005 March 31, 2004
GAAP Adjusted GAAP Adjusted
amounts Adj. amounts amounts Adj. amounts
------- ------- ------- ------- ------- -------
Operating income $ 73.7 $ 0.9 $ 72.8 $ 58.0 $ 0.4 $ 57.6
Income before income
taxes 77.9 0.9 77.0 64.4 4.0 60.4
Provision for income
taxes 22.4 0.8 21.6 18.4 1.3 17.1
Net income 55.5 0.1 55.4 46.0 2.7 43.3
Earnings per share
allocations(1) 0.1 0.1
Adjusted net income
for earnings per
share $ 55.6 $ 0.2 $ 55.4 $ 46.0 $ 2.7 $ 43.3
Total diluted earnings
per share $ 0.28 $ - $ 0.28 $ 0.22 $0.01 $ 0.21
(1) Represents allocation of interperiod taxes to adjust net income
for purposes of calculating earnings per share.
Additional Financial Highlights --Revenues for the five product categories and their change relative to the prior year quarter were: $141 million for DNA Sequencing, a 3% increase; $134 million for Real-Time PCR/Applied Genomics, a 20% increase; $105 million for Mass Spectrometry, a 4% decline; $50 million for Core PCR PCR polymerase chain reaction. PCR abbr. polymerase chain reaction Polymerase chain reaction (PCR) and DNA Synthesis DNA synthesis commonly refers to:
--Revenues by source and their change relative to the prior year quarter were: $199 million for Instruments, a 2% decline; $176 million for Consumables, a 6% increase; and $80 million for Other Sources, including service and support, royalties, licenses, and consulting, a 14% increase. --Revenues for the major geographic regions and their change relative to the prior year quarter were: $197 million in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , a 3% increase; $147 million in Europe, a 1% increase, including favorable foreign currency effects of approximately 4%; and $91 million in Asia Pacific, a 7% increase, including favorable foreign currency effects of approximately 2%. Revenues in Japan, which are included in total revenues for Asia Pacific, increased 3% from the prior year quarter, including favorable foreign currency effects of approximately 3%. --Gross Margin increased to 54.3% from 52.4% in the prior year quarter, primarily reflecting an increase in royalty and licensing revenue, which included a $2.5 million non-recurring licensing fee for certain mass spectrometry technology, the effects of foreign currency, and a decrease in both software amortization and warranty costs. --Selling, general, and administrative (SG&A) expenditures were $123 million for the quarter, an increase of $3 million, or 2%, over the prior year quarter. This increase included increased personnel and outside consultant costs and unfavorable foreign currency effects of approximately $2 million, partially offset by decreased litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and pension and insurance costs. These fiscal 2005 and 2004 results reflect a reclassification Reclassification The process of changing the class of mutual funds once certain requirements have been met. These requirements are generally placed on load mutual funds. Reclassification is not considered to be a taxable event. of certain costs supporting the Group's patent related activities from R&D to SG&A. --Research, development and engineering (R&D) expenses were $51 million for the quarter, a decrease of $1 million, or 2%, below the prior year quarter. These fiscal 2005 and 2004 results reflect the reclassification referred to above. --Cash flow from operations was $87 million for the quarter and capital expenditures were $49 million. During the quarter, the Group spent $42 million to purchase several buildings at its Foster City location. As of the end of the quarter, cash and short-term investments were $676 million, up from $655 million as of December 31, 2004, accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were $377 million, representing 63 days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). , and inventory was $133 million, representing 3.1 months of inventory on hand. Business Highlights --During the third quarter, the Group began shipments of the API (Application Programming Interface) A language and message format used by an application program to communicate with the operating system or some other control program such as a database management system (DBMS) or communications protocol. 5000(TM) LC/MS/MS system. In April, the Group announced two additional new mass spectrometers, the 3200 Q TRAP(R) and the API 3200(TM) LC/MS/MS Systems. The 3200 line of systems is designed for food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. , environmental, forensic, clinical research, and pharmaceutical analysis markets. Sales of these systems are expected to begin in the current quarter. --In March, the U.S. District Court in New Haven New Haven, city (1990 pop. 130,474), New Haven co., S Conn., a port of entry where the Quinnipiac and other small rivers enter Long Island Sound; inc. 1784. Firearms and ammunition, clocks and watches, tools, rubber and paper products, and textiles are among the many , CT, based on a jury's April 2004 finding that MJ Research, a division of Bio-Rad Laboratories, Inc. (AMEX AMEX See: American Stock Exchange : BIO bi·o n. pl. bi·os Informal 1. A biography. 2. A biographical sketch or outline. ), had willfully willfully adv. referring to doing something intentionally, purposefully and stubbornly. Examples: "He drove the car willfully into the crowd on the sidewalk." "She willfully left the dangerous substances on the property." (See: willful) infringed patents relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc polymerase chain reaction polymerase chain reaction (pŏl`ĭmərās') (PCR), laboratory process in which a particular DNA segment from a mixture of DNA chains is rapidly replicated, producing a large, readily analyzed sample of a piece of DNA; the process is (PCR) owned by Applera and Roche Molecular Systems (Roche), increased damages awarded to Applera and Roche to approximately $35 million, in addition to awarding reasonable attorneys' fees. The Court also dismissed all of MJ Research's antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. counterclaims against Applera and Roche. Applera filed for an injunction against further infringement by MJ Research. --In March, the Japanese Patent Office held invalid Applera's Japanese Patent No. 3136129 covering real-time PCR thermal cycler The Thermal cycler (also known as a thermocycler, PCR machine or DNA amplifier) is a laboratory apparatus used for PCR. The device has a thermal block with holes where tubes with the PCR reaction mixtures can be inserted. technology. Applera intends to appeal the decision. --In March, the Group began a collaborative research study with the National Center for Toxicological Research The National Center for Toxicological Research is the branch of the United States Food and Drug Administration which conducts research to define biological mechanisms of action underlying the toxicity of products regulated by the FDA. It is located off Interstate 530 in Arkansas. of the U.S. Food and Drug Administration (FDA/NCTR) whereby Applied Biosystems will use its Expression Array System and Rat Genome genome: see genetics. genome all the genetic content contained within an organism. An organism's genome is made up of molecules of deoxyribonucleic acid (DNA) that form long strands that are tightly wound into chromosomes, which are found in the Survey Microarray See micro array. microarray - A technique for performing many DNA experiments in parallel. Nothing to do with computers. to investigate the toxicity toxicity /tox·ic·i·ty/ (tok-sis´i-te) the quality of being poisonous, especially the degree of virulence of a toxic microbe or of a poison. of a common class of diabetes drugs using samples provided by the FDA/NCTR. Applied Biosystems Outlook Applied Biosystems has the following expectations regarding its financial performance for fiscal 2005: --The Group expects low-single-digit revenue growth compared to fiscal 2004. --Product Category Revenue Growth: Real-Time PCR/Applied Genomics and Mass Spectrometry revenues are expected to increase compared to fiscal 2004. Revenues from DNA Sequencing, Core PCR and DNA Synthesis, and Other Product Lines are expected to decline. --Margins and Expenses: The gross margin is expected to equal or exceed the fiscal 2004 gross margin. SG&A expense as a percent of total revenues should exceed, and R&D expense as a percent of total revenues should decline from, the fiscal 2004 levels. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: should increase from the fiscal 2004 level. These expectations exclude certain types of items which are included in EPS under GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). , as set forth below under "Use of Non-GAAP Financial Information." --The effective tax rate is expected to be 28 percent. --The Group expects EPS growth for the fourth quarter of fiscal 2005 compared to the fourth quarter of fiscal 2004 at a rate exceeding that of the annual revenue growth rate. For fiscal 2005, the Group expects double-digit EPS growth compared to fiscal 2004. This expectation excludes certain types of items which are included in EPS under GAAP, as set forth below under "Use of Non-GAAP Financial Information." --Capital spending should be in the range of $80 to 85 million. This amount includes the purchase of the buildings referred to above. The Company is currently in the process of evaluating the impact of the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. provision of the American Jobs Creation Act of 2004. It is expected that a repatriation plan will be presented to the Company's Board of Directors before the end of fiscal 2005. If approved, the Company will record a one-time tax charge associated with the repatriation. In addition, the Company anticipates that various tax matters in multiple jurisdictions may be resolved in the Company's favor before the end of fiscal 2005 or in fiscal 2006. The Group believes this outlook and its fiscal year 2005 financial performance will continue to be affected by, among other things, the availability of funding in the U.S. for DNA sequencing, competitive pricing pressure on certain PCR-related consumables products, and the level of pharmaceutical company R&D spending. Other risks and uncertainties that may affect Applied Biosystems' financial performance are detailed in the "Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " section of this release. The comments in the Outlook sections of this press release, including the Celera Diagnostics Joint Venture Outlook below, reflect management's current outlook. Applera does not have any current intention to update this outlook and plans to revisit re·vis·it tr.v. re·vis·it·ed, re·vis·it·ing, re·vis·its To visit again. n. A second or repeated visit. re the outlook for its businesses only once each quarter when financial results are announced. Celera Diagnostics Joint Venture Celera Diagnostics is a 50/50 joint venture between Applied Biosystems and Celera Genomics. For the third quarter of fiscal 2005, end-user sales for all products sold through its alliance with Abbott Laboratories Abbott Laboratories (NYSE: ABT) is a diversified pharmaceuticals and health care company. It has over 65,000 employees and operates in 130 countries. The corporate headquarters are in Abbott Park, Illinois, a neighborhood of North Chicago, Illinois. increased 24 percent to $15.7 million from $12.7 million in the same quarter last year. During the recently completed quarter, the pre-tax loss decreased to $7.8 million, compared to $11.9 million in the same quarter last year. The smaller pre-tax loss was due primarily to increased revenues and lower R&D expenses. Reported revenues differ from end-user sales and consist primarily of equalization payments Equalization payments are cash payments made in some federal systems of government from the federal government to state or provincial governments with the objective of offsetting differences in available revenue or in the cost of providing services. from Abbott resulting from the profit-sharing arrangement between Abbott and Celera Diagnostics and technology-related revenues. Reported revenues increased to $9.0 million, compared to $7.5 million in the same quarter last year, primarily as a result of increased equalization In communications, techniques used to reduce distortion and compensate for signal loss (attenuation) over long distances. revenues and increased license and collaborative revenues. Fluctuation Fluctuation A price or interest rate change. in equalization payments can lead to variability in reported revenues, gross margins, and cash use from period to period due to differences in end-user sales of alliance products and operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. between the alliance partners. Net cash used during the quarter was $3.0 million, compared to $9.2 million in the third quarter of fiscal 2004. Cash use was approximately $5.0 million lower than it otherwise would have been due to the timing of receipt of an equalization payment. "Increased sales of our Hepatitis C Virus
HPV abbr. human papilloma virus Human papilloma virus (HPV) ). We are also working closely with our collaborators and clinical partners toward the completion and publication of our medical utility studies in breast cancer metastasis metastasis /me·tas·ta·sis/ (me-tas´tah-sis) pl. metas´tases 1. transfer of disease from one organ or part of the body to another not directly connected with it, due either to transfer of pathogenic microorganisms or to , cardiovascular disease Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease , rheumatoid arthritis rheumatoid arthritis Chronic, progressive autoimmune disease causing connective-tissue inflammation, mostly in synovial joints. It can occur at any age, is more common in women, and has an unpredictable course. , and liver disease Liver Disease Definition Liver disease is a general term for any damage that reduces the functioning of the liver. Description The liver is a large, solid organ located in the upper right-hand side of the abdomen. ." Celera Diagnostics Highlights --Celera Diagnostics recently presented the results of a study of its prototype HPV assay for detection of high risk HPV strains that are associated with cervical cancer Cervical Cancer Definition Cervical cancer is a disease in which the cells of the cervix become abnormal and start to grow uncontrollably, forming tumors. . These results were presented at the 15th European Congress of Clinical Microbiology Clinical microbiology The adaptation of microbiological techniques to the study of the etiological agents of infectious disease. Clinical microbiologists determine the nature of infectious disease and test the ability of various antibiotics to inhibit or kill and Infectious Diseases infectious diseases: see communicable diseases. in April. The study demonstrated the potential of the Celera Diagnostics prototype assay to detect high risk HPV in samples that were inconclusive INCONCLUSIVE. What does not put an end to a thing. Inconclusive presumptions are those which may be overcome by opposing proof; for example, the law presumes that he who possesses personal property is the owner of it, but evidence is allowed to contradict this presumption, and show who is when typed by a commercially available HPV diagnostic test. --Findings based on research conducted at Celera Diagnostics to develop procedures for testing for Fragile X were presented at the annual meeting of the American College of Medical Genetics The American College of Medical Genetics (ACMG) is an organization composed of biochemical, clinical, cytogenetic, medical and molecular geneticists, genetic counselors and other health care professionals committed to the practice of medical genetics. meeting in February. Celera Diagnostics is collaborating with several major clinical reference laboratories to develop procedures to test for this leading cause of inherited inherited received by inheritance. inherited achondroplastic dwarfism see achondroplastic dwarfism. inherited combined immunodeficiency see combined immune deficiency syndrome (disease). mental retardation mental retardation, below average level of intellectual functioning, usually defined by an IQ of below 70 to 75, combined with limitations in the skills necessary for daily living. . --At the American College of Cardiology The American College of Cardiology (ACC) is a nonprofit medical association established in 1949 to educate, research and influence health care public policy. The president for the 2006–2007 year is Steven E. Nissen. [1] The organization has 39 chapters in the U.S. meeting in March, Celera Diagnostics and its collaborators reported findings related to studies of cardiovascular disease. In a discovery and replicated study in functional SNPs that are associated with myocardial infarction myocardial infarction: see under infarction. (MI), a variant variant /var·i·ant/ (var´e-ant) 1. something that differs in some characteristic from the class to which it belongs. 2. exhibiting such variation. var·i·ant adj. in a gene that is a member of a family of targets for drug therapies was identified that conferred con·fer v. con·ferred, con·fer·ring, con·fers v.tr. 1. To bestow (an honor, for example): conferred a medal on the hero; conferred an honorary degree on her. approximately twice the risk for MI. These results broaden our understanding of the genetic risk for MI, and may have implications for therapeutic development around this family of targets. --At the European Association for the Study of the Liver in April, Celera Diagnostics and its collaborators reported findings related to genetic markers genetic marker n. A gene phenotypically associated with a particular, easily identified trait and used to identify an individual or cell carrying that gene. , which predict patients predisposed pre·dis·pose v. pre·dis·posed, pre·dis·pos·ing, pre·dis·pos·es v.tr. 1. a. To make (someone) inclined to something in advance: to develop liver fibrosis fibrosis /fi·bro·sis/ (fi-bro´sis) formation of fibrous tissue.fibrot´ic congenital hepatic fibrosis . This study involved a functional SNP SNP Scottish National Party Noun 1. SNP - (genetics) genetic variation in a DNA sequence that occurs when a single nucleotide in a genome is altered; SNPs are usually considered to be point mutations that have been evolutionarily genome scan in 1,625 patients, and found that the variants in a key enzyme involved in fatty acid metabolism Fatty acids are an important source of energy for many organisms. Excess glucose can be stored efficiently as fat. Triglycerides yield more than twice as much energy for the same mass as do carbohydrates or proteins. were associated with advanced fibrosis in multiple sample sets. These results may have implications for other liver diseases and for using certain existing drugs for new disease indications. --Celera Diagnostics has begun to transfer technology to Laboratory Corporation of America, as part of an ongoing collaboration between the two businesses to develop methods to predict risk for breast cancer metastasis. Celera Diagnostics believes that multiple test procedures could result from this work. Celera Diagnostics Joint Venture Outlook Celera Diagnostics anticipates increased sales of existing and new products sold through its alliance with Abbott, including a new in vitro in vitro /in vi·tro/ (in ve´tro) [L.] within a glass; observable in a test tube; in an artificial environment. in vi·tro adj. In an artificial environment outside a living organism. molecular diagnostic system now in evaluation in European customer sites. Celera Diagnostics also intends to continue advancing its disease association and medical utility studies through the remainder of fiscal 2005. For fiscal 2005, Celera Diagnostics anticipates pre-tax losses to be in a range of $30 to $33 million, and fiscal 2005 net cash use to be in a range of $35 to $40 million. Total end-user sales for the alliance between Celera Diagnostics and Abbott are anticipated to be in range of $60 to $65 million for fiscal 2005. Risks and uncertainties that may affect Celera Diagnostics' financial performance are detailed in the Forward-Looking Statements section of this release. Use of Non-GAAP Financial Information This press release contains non-GAAP information, including earnings per share adjusted to exclude certain costs, expenses, gains and losses and other specified items. These measures are not in accordance with, or an alternative for, generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting and may be different from non-GAAP measures used by other companies. Among the items included in GAAP earnings but excluded for purposes of determining adjusted earnings are: gains or losses from sales of operating assets Operating Assets Another term for working capital. and investments; restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , including severance charges; charges and recoveries relating to significant legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. and asset impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges. In addition, for non-GAAP EPS purposes, we have also excluded the allocation of interperiod taxes and intercompany sales from our calculation of non-GAAP EPS. We believe the presentation of non-GAAP information provides useful information to management and investors regarding various financial and business trends relating to our financial condition and results of operations, and that when GAAP information is viewed in conjunction with non-GAAP information, investors are provided with a more meaningful understanding of our ongoing operating performance. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. This information is not intended to be considered in isolation or as a substitute for GAAP financial information. Conference Call & Webcast A conference call to discuss financial results will be held today at 11:00 a.m. (ET). During the call, management will focus on each of the Applera businesses separately at the approximate times below: --Applied Biosystems Group 11:00 a.m. (ET) --Celera Diagnostics 11:45 a.m. (ET) --Celera Genomics Group 12:00 p.m. (ET) The conference call number is 706.634.4992 (code "Applera"). The conference call will also be webcast and can be accessed on the "Investors & Media" section of either www.applera.com or www.celera.com, or the "Investors" section of www.appliedbiosystems.com. A recording of the conference call will be available approximately two hours after the completion of the call on April 26 until May 7, 2005. Interested parties should call 706.645.9291 and enter conference ID 5579986. About Applera Corporation and Applied Biosystems Applera Corporation consists of two operating groups. The Applied Biosystems Group serves the life science industry and research community by developing and marketing instrument-based systems, consumables, software, and services. Customers use these tools to analyze nucleic acids Nucleic acids The cellular molecules DNA and RNA that act as coded instructions for the production of proteins and are copied for transmission of inherited traits. (DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. and RNA RNA: see nucleic acid. RNA in full ribonucleic acid One of the two main types of nucleic acid (the other being DNA), which functions in cellular protein synthesis in all living cells and replaces DNA as the carrier of genetic ), small molecules, and proteins to make scientific discoveries, develop new pharmaceuticals, and conduct standardized testing A standardized test is a test administered and scored in a standard manner. The tests are designed in such a way that the "questions, conditions for administering, scoring procedures, and interpretations are consistent" [1] . Applied Biosystems is headquartered in Foster City, CA, and reported sales of $1.7 billion during fiscal 2004. The Celera Genomics Group (NYSE:CRA See Community Reinvestment Act. ) is engaged principally in the discovery and development of targeted therapeutics therapeutics Treatment and care to combat disease or alleviate pain or injury. Its tools include drugs, surgery, radiation therapy, mechanical devices, diet, and psychiatry. for cancer, autoimmune autoimmune /au·to·im·mune/ (-i-mun´) directed against the body's own tissue; see under disease and response. au·to·im·mune adj. and inflammatory diseases Noun 1. inflammatory disease - a disease characterized by inflammation disease - an impairment of health or a condition of abnormal functioning NEC, necrotizing enterocolitis - an acute inflammatory disease occurring in the intestines of premature infants; . Celera Genomics is leveraging its proteomic, bioinformatic, and genomic genomic pertaining to a genome. genomic clone see clone. genomic DNA the DNA sequences making up the genome of an individual. genomic library see gene bank. capabilities to identify and validate drug targets, and to discover and develop small molecule therapeutics. It is also seeking to advance therapeutic antibody and selected small molecule drug programs in collaboration with global technology and market leaders. Celera Diagnostics, a 50/50 joint venture between Applied Biosystems and Celera Genomics, is focused on discovery, development, and commercialization of diagnostic products. Information about Applera Corporation, including reports and other information filed by the company with the Securities and Exchange Commission, is available at http://www.applera.com, or by telephoning 800.762.6923. Information about Applied Biosystems is available at http://www.appliedbiosystems.com/. Forward-Looking Statements Certain statements in this press release, including the Outlook sections, are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," "should," "anticipate," and "planned," among others. These forward-looking statements are based on Applera Corporation's current expectations. The Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 provides a "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " for such forward-looking statements. In order to comply with the terms of the safe harbor, Applera Corporation notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of Applied Biosystems include but are not limited to: (1) rapidly changing technology could adversely affect demand for Applied Biosystems' products, and its business is dependent on development and customer acceptance of new products; (2) Applied Biosystems' sales are dependent on customers' capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. policies and government-sponsored research; (3) Applied Biosystems' significant overseas operations, with attendant exposure to fluctuations in the value of foreign currencies; (4) risks associated with Applied Biosystems' growth strategy, including difficulties in integrating acquired operations or technologies; (5) the risk of earthquakes, which could interrupt A signal that gets the attention of the CPU and is usually generated when I/O is required. For example, hardware interrupts are generated when a key is pressed or when the mouse is moved. Software interrupts are generated by a program requiring disk input or output. Applied Biosystems' or Celera Diagnostics' operations; (6) risks associated with lawsuits, arbitrations, investigations, and other legal actions with private parties and governmental entities, particularly involving claims for infringement of patents and other intellectual property rights; (7) Applied Biosystems' dependence on the operation of computer hardware, software, and Internet applications and related technology for its businesses, particularly those focused on the development and marketing of information-based products and services; (8) Celera Diagnostics' reliance on existing and future collaborations, including its strategic alliance with Abbott Laboratories, which may not be successful; (9) Celera Diagnostics' unproven unproven Dubious, nonscientific, not proven, quack, questionable, unscientific adjective Relating to that which has not been validated by reproducible experiments or other scientific methods for determining effect or efficacy ability to discover, develop, or commercialize proprietary diagnostic products; (10) the risk that clinical trials of products that Celera Diagnostics does discover and develop will not proceed as anticipated or may not be successful, or that such products will not receive required regulatory clearances or approvals; (11) the uncertainty that Celera Diagnostics' products will be accepted and adopted by the market, including the risks that these products will not be competitive with products offered by other companies, or that users will not be entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive adequate reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. for these products from fourth party payors such as private insurance companies and government insurance plans; (12) Celera Diagnostics' reliance on access to biological materials and related clinical and other information, which may be in limited supply or access to which may be limited; (13) legal, ethical, and social issues which could affect demand for Celera Diagnostics' products; (14) Celera Diagnostics' limited commercial manufacturing experience and capabilities and its reliance on a single principal manufacturing facility; (15) Applied Biosystems' and Celera Diagnostics' reliance on a single supplier or a limited number of suppliers for key components of some of their products; (16) potential product liability or other claims against Celera Diagnostics as a result of the testing or use of its products; (17) intense competition in the industry in which Celera Diagnostics operates; and (18) other factors that might be described from time to time in Applera Corporation's filings with the Securities and Exchange Commission. All information in this press release is as of the date of the release, and Applera does not undertake any duty to update this information, including any forward-looking statements, unless required by law. Copyright 2005. Applera Corporation. All Rights Reserved. Applied Biosystems and Celera are registered trademarks, and AB (Design), Applera, Celera Diagnostics, and Celera Genomics are trademarks of Applera Corporation or its subsidiaries in the U. S. and/or certain other countries. Q TRAP is a registered trademark, and API 3200 and API 5000 are trademarks of Applied Biosystems/MDS SCIEX, which is a joint venture between Applera Corporation and MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there Inc. TaqMan is a registered trademark of Roche Molecular Systems, Inc.
APPLERA CORPORATION
APPLIED BIOSYSTEMS GROUP
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollar amounts in millions except per share amounts)
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
2005 2004 (1) 2005 (1) 2004 (1)
-------- -------- -------- --------
Net revenues $ 454.8 $ 439.6 $1,308.5 $1,280.6
Cost of sales 207.7 209.1 610.7 614.1
-------- -------- -------- --------
Gross margin 247.1 230.5 697.8 666.5
Selling, general
and administrative 123.4 120.9 360.9 341.3
Research,
development and
engineering 50.9 52.0 144.0 162.8
Employee-related
charges, asset
impairments and
other (0.9) 6.3 11.6 5.7
Asset dispositions
and legal
settlements (6.7) (38.2) (6.7)
-------- -------- -------- --------
Operating income 73.7 58.0 219.5 163.4
Gain on
investments, net 3.6 11.2
Interest income,
net 3.5 3.0 9.4 9.1
Other income
(expense), net 0.7 (0.2) 2.8 (0.1)
-------- -------- -------- --------
Income before
income taxes 77.9 64.4 231.7 183.6
Provision for
income taxes 22.4 18.4 66.4 51.8
-------- -------- -------- --------
Net income $ 55.5 $ 46.0 $ 165.3 $ 131.8
======== ======== ======== ========
Earnings per
share analysis
----------------
Net income $ 55.5 $ 46.0 $ 165.3 $ 131.8
Allocated
interperiod
taxes(2) 0.1 1.1
-------- -------- -------- --------
Total net income
allocated 55.6 46.0 166.4 131.8
Less dividends
declared on
common stock 8.4 8.6 25.0 26.2
-------- -------- -------- --------
Undistributed
earnings $ 47.2 $ 37.4 $ 141.4 $ 105.6
======== ======== ======== ========
Allocation of
basic earnings
per share
Basic distributed
earnings per share $ 0.04 $ 0.04 $ 0.13 $ 0.13
Basic undistributed
earnings per share 0.24 $ 0.19 0.72 0.51
-------- -------- -------- --------
Total basic
earnings per share $ 0.28 $ 0.23 $ 0.85 $ 0.64
======== ======== ======== ========
Allocation of
diluted earnings
per share
Diluted
distributed
earnings per share $ 0.04 $ 0.04 $ 0.13 $ 0.13
Diluted
undistributed
earnings per share 0.24 0.18 0.71 0.50
-------- -------- -------- --------
Total diluted
earnings per share $ 0.28 $ 0.22 $ 0.84 $ 0.63
======== ======== ======== ========
Weighted average
number of common
shares
Basic 196,415,000 203,973,000 195,949,000 206,425,000
Diluted 199,092,000 208,380,000 198,579,000 210,506,000
(1) Certain prior period amounts have been reclassified for
comparative purposes.
(2) Represents allocation of interperiod taxes to adjust net income
for purposes of calculating earnings per share.
APPLERA CORPORATION
APPLIED BIOSYSTEMS GROUP
Revenues By Product Categories
(Dollar amounts in millions)
(Unaudited)
Three months ended
March 31,
2005 2004 (1) Change
---------- ---------- --------
DNA Sequencing $ 141.1 $ 137.5 3%
% of total revenues 31% 31%
Real-Time PCR/Applied Genomics(1) 133.5 111.6 20%
% of total revenues 29% 25%
Mass Spectrometry 104.9 109.4 -4%
% of total revenues 23% 25%
Core PCR & DNA Synthesis(2) 49.8 50.2 -1%
% of total revenues 11% 12%
Other Product Lines 25.5 30.9 -17%
% of total revenues 6% 7%
---------- ----------
Total $ 454.8 $ 439.6 3%
========== ==========
Nine months ended
March 31,
2005 2004 (1) Change
---------- ---------- --------
DNA Sequencing $ 398.4 $ 432.7 -8%
% of total revenues 30% 34%
Real-Time PCR/Applied Genomics(1) 380.0 310.1 23%
% of total revenues 29% 24%
Mass Spectrometry 307.9 295.3 4%
% of total revenues 24% 23%
Core PCR & DNA Synthesis(2) 144.4 152.5 -5%
% of total revenues 11% 12%
Other Product Lines 77.8 90.0 -14%
% of total revenues 6% 7%
---------- ----------
Total $ 1,308.5 $ 1,280.6 2%
========== ==========
(1) The product category Real-Time PCR/Applied Genomics was
previously called SDS/Other Applied Genomics.
(2) The product category Core PCR & DNA Synthesis was previously
called Core DNA Synthesis & PCR.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2005
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimin- Consoli-
Group Group Diagnostics ations dated
---------- -------- ----------- ------- --------
Net revenues $ 454.8 $ 8.2 $ 9.0 $ (2.6) $ 469.4
Cost of sales 207.7 1.1 3.8 (1.7) 210.9
--------- -------- ----------- ------- -------
Gross margin 247.1 7.1 5.2 (0.9) 258.5
Selling, general
and administrative 123.4 7.1 3.8 0.1 134.4
Research,
development and
engineering 50.9 27.7 9.2 (1.0) 86.8
Amortization of
intangible assets 0.7 0.7
Employee-related
charges, asset
impairments and
other (0.9) (0.9)
--------- -------- ----------- ------- -------
Operating income
(loss) 73.7 (28.4) (7.8) - 37.5
Interest income,
net 3.5 4.0 7.5
Other income
(expense), net 0.7 (0.1) 0.1 0.7
Loss from joint
venture (7.8) 7.8
--------- -------- ----------- ------- -------
Income (loss)
before income
taxes 77.9 (32.3) (7.8) 7.9 45.7
Provision (benefit)
for income taxes 22.4 (11.3) (1) (0.1) 11.0
--------- -------- ----------- ------- -------
Net income (loss) $ 55.5 $ (21.0) $ (7.8) $ 8.0 $ 34.7
========= ======= ========== ======= =======
Net income (loss)
per share
Basic $ 0.28 $ (0.29)
Diluted $ 0.28 $ (0.29)
(1) The tax benefit associated with the operating loss generated by
Celera Diagnostics is recorded by the Celera Genomics group since
the Celera Genomics group has recorded 100% of Celera Diagnostics'
losses.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2004
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimin- Consoli-
Group Group Diagnostics ations dated
---------- -------- ----------- ------- --------
Net revenues $ 439.6 $ 11.2 $ 7.5 $ (3.1) $ 455.2
Cost of sales 209.1 2.0 5.5 (2.0) 214.6
--------- -------- ----------- ------- -------
Gross margin 230.5 9.2 2.0 (1.1) 240.6
Selling, general
and administrative 120.9 7.7 3.2 131.8
Research,
development and
engineering 52.0 27.7 10.7 (1.1) 89.3
Amortization of
intangible assets 0.7 0.7
Employee-related
charges, asset
impairments and
other 6.3 6.3
Asset dispositions
and litigation
settlements (6.7) (6.7)
--------- -------- ----------- ------- -------
Operating income
(loss) 58.0 (26.9) (11.9) - 19.2
Gain on
investments, net 3.6 3.6
Interest income,
net 3.0 2.5 5.5
Other income
(expense), net (0.2) 0.5 0.3
Loss from joint
venture (11.9) 11.9
--------- -------- ----------- ------- -------
Income (loss)
before income
taxes 64.4 (35.8) (11.9) 11.9 28.6
Provision (benefit)
for income taxes 18.4 (13.9) (1) 2.0 6.5
--------- -------- ----------- ------- -------
Net income (loss) $ 46.0 $ (21.9) $ (11.9) $ 9.9 $ 22.1
========= ======= ========== ======= =======
Net income (loss)
per share
Basic $ 0.23 $ (0.30)
Diluted $ 0.22 $ (0.30)
(1) The tax benefit associated with the operating loss generated by
Celera Diagnostics is recorded by the Celera Genomics group since
the Celera Genomics group has recorded 100% of Celera Diagnostics'
losses.
Certain fiscal 2004 amounts have been reclassified for comparative
purposes.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Nine Months Ended March 31, 2005
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimin- Consoli-
Group Group Diagnostics ations dated
---------- -------- ----------- ------- ---------
Net revenues $ 1,308.5 $ 26.0 $ 26.1 $ (6.5) $1,354.1
Cost of sales 610.7 5.0 11.2 (4.4) 622.5
--------- ------- ---------- ------ --------
Gross margin 697.8 21.0 14.9 (2.1) 731.6
Selling, general
and
administrative 360.9 19.3 10.0 390.2
Research,
development and
engineering 144.0 76.2 30.2 (2.2) 248.2
Amortization of
intangible assets 2.2 2.2
Employee-related
charges, asset
impairments and
other 11.6 2.8 14.4
Asset dispositions
and litigation
settlements (38.2) (38.2)
--------- -------- ----------- ------- --------
Operating income
(loss) 219.5 (79.5) (25.3) 0.1 114.8
Interest income,
net 9.4 10.2 19.6
Other income
(expense), net 2.8 1.1 3.9
Loss from joint
venture (25.3) 25.3
---------- ------- ----------- ------ ---------
Income (loss)
before income
taxes 231.7 (93.5) (25.3) 25.4 138.3
Provision
(benefit) for
income taxes 66.4 (32.7) (1) (1.1) 32.6
--------- ------- ----------- ------ --------
Net income (loss) $ 165.3 $ (60.8) $ (25.3) $ 26.5 $ 105.7
========= ======= ========== ====== ========
Net income (loss)
per share
Basic $ 0.85 $ (0.83)
Diluted $ 0.84 $ (0.83)
(1) The tax benefit associated with the operating loss generated by
Celera Diagnostics is recorded by the Celera Genomics group since
the Celera Genomics group has recorded 100% of Celera Diagnostics'
losses.
Certain prior period amounts have been reclassified for
comparative purposes.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Nine Months Ended March 31, 2004
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimin- Consoli-
Group Group Diagnostics ations dated
---------- -------- ----------- ------- ---------
Net revenues $ 1,280.6 $ 47.7 $ 27.0 $ (9.8) $1,345.5
Cost of sales 614.1 8.3 15.4 (5.7) 632.1
--------- -------- ----------- ------- --------
Gross margin 666.5 39.4 11.6 (4.1) 713.4
Selling, general
and
administrative 341.3 25.1 11.2 377.6
Research,
development and
engineering 162.8 72.7 33.7 (4.1) 265.1
Amortization of
intangible assets 2.2 2.2
Employee-related
charges, asset
impairments and
other 5.7 5.7
Asset dispositions
and litigation
settlements (6.7) (6.7)
--------- -------- ----------- ------- --------
Operating income
(loss) 163.4 (60.6) (33.3) - 69.5
Gain (loss) on
investments, net 11.2 (0.5) 10.7
Interest income,
net 9.1 8.3 17.4
Other income
(expense), net (0.1) 1.4 1.3
Loss from joint
venture (33.3) 33.3
--------- -------- ----------- ------- --------
Income (loss)
before income
taxes 183.6 (84.7) (33.3) 33.3 98.9
Provision
(benefit) for
income taxes 51.8 (33.0) (1) (0.6) 18.2
--------- -------- ----------- ------- --------
Net income (loss) $ 131.8 $ (51.7) $ (33.3) $ 33.9 $ 80.7
========= ======= ========== ======= ========
Net income (loss)
per share
Basic $ 0.64 $ (0.71)
Diluted $ 0.63 $ (0.71)
(1) The tax benefit associated with the operating loss generated by
Celera Diagnostics is recorded by the Celera Genomics group since
the Celera Genomics group has recorded 100% of Celera Diagnostics'
losses.
Certain fiscal 2004 amounts have been reclassified for comparative
purposes.
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