Applied Biosystems Reports Fiscal 2006 First Quarter Results; Net Revenues Increased 6% to $416 Million; Q1 Fully Diluted EPS of $0.29 ($0.24 on a Non-GAAP Basis, Excluding Specified Items).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. ), an Applera Corporation business, today reported net revenues of $416 million for the first quarter of fiscal 2006, a 6% increase over the prior year quarter. Net income was $57.5 million compared to $37.1 million for the prior year quarter. Earnings per share (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. ) for the quarter was $0.29, compared to $0.18 for the prior year quarter. EPS for the quarter on a non-GAAP basis, excluding the specified items described in the reconciliation schedule below, was $0.24, a 33% increase compared to $0.18 for the prior year quarter. The net effect of foreign currency on EPS was immaterial Not essential or necessary; not important or pertinent; not decisive; of no substantial consequence; without weight; of no material significance. immaterial adj. compared to the prior year quarter. All per share amounts refer to Applera Corporation-Applied Biosystems Group Common Stock. "Financial performance at Applied Biosystems in the last quarter was strong. Excluding special items, the Group generated double digit Noun 1. double digit - a two-digit integer; from 10 to 99 integer, whole number - any of the natural numbers (positive or negative) or zero; "an integer is a number that is not a fraction" earnings growth for the seventh consecutive quarter compared to prior year periods. The restructuring and refocusing Noun 1. refocusing - focusing again focalisation, focalization, focusing - the act of bringing into focus that has occurred at Applied Biosystems over the past year is delivering results," said Tony L. White, Chief Executive Officer, Applera Corporation. "I am pleased by the results that we generated this quarter. We saw solid, balanced performance across all of our major product categories with growth in both instruments and consumables. While this is a positive start to fiscal 2006, we remain cautious about the growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in our end-user markets throughout the remainder of the fiscal year," said Catherine M. Burzik, President, Applied Biosystems. During the first quarters of both fiscal 2006 and 2005, the Group recorded items that affected the comparability of results. For the first quarter of fiscal 2006, these items decreased income before taxes by $4.2 million. These items included pre-tax charges of $3.3 million for outstanding 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 $1.1 million for asset impairments. Also recorded during the first quarter of fiscal 2006 were tax benefits of $13.5 million related to the settlement of certain transfer pricing Transfer pricing refers to the pricing of goods and services within a multi-divisional organization, particularly in regard to cross-border transactions. For example, goods from the production division may be sold to the marketing division, or goods from a parent company may be matters in Japan. During the first quarter of fiscal 2005, the Group recorded pre-tax items that increased income before taxes by $1.1 million. This amount included a pre-tax gain of $8.5 million for a legal settlement and a pre-tax charge of $7.4 million for severance and benefit 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
September 30, 2005 September 30, 2004
GAAP Adj. Adjusted GAAP Adj. Adjusted
amounts amounts amounts amounts
-------- ------ -------- -------- ----- --------
Operating income $55.8 $(4.2) $60.0 $48.6 $1.1 $47.5
Income before income
taxes 61.9 (4.2) 66.1 51.6 1.1 50.5
Provision for income
taxes 4.4 (14.8) 19.2 14.5 0.3 14.2
Net income 57.5 10.6 46.9 37.1 0.8 36.3
Earnings per share
allocations(1) (0.4) (0.4) - (0.7) (0.7) -
Adjusted net income for
earnings per share $57.1 $10.2 $46.9 $36.4 $0.1 $36.3
Total diluted earnings
per share $0.29 $0.05 $0.24 $0.18 $- $0.18
(1) Represents allocation of interperiod taxes and intercompany sales
of assets to adjust net income for purposes of calculating
earnings per share.
Quarterly Financial Highlights --Revenue for the five product categories and the change relative to the prior year quarter were: $125 million for DNA Sequencing DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. , an 8% increase; $122 million for Real-Time PCR/Applied Genomics, a 9% increase; $98 million for 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. , a 9% increase; $47 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 the change relative to the prior year quarter were: $171 million for Instruments, a 5% increase; $166 million for Consumables, a 7% increase; and $79 million for Other Sources, including service and support, royalties, licenses, and consulting, a 9% increase. --Revenues for major geographic regions and their change relative to the prior year quarter were: $200 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 4% increase; $129 million in Europe, a 12% increase with negligible foreign currency impact; $73 million in Asia Pacific, a 2% increase, including unfavorable 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% primarily due to a declining Yen. --Gross margin in the first quarter of fiscal 2006 was 53.6%. The gross margin in the prior year quarter was 53.2%. The increase in gross margin was primarily attributable to higher royalty revenue and decreased software amortization. --Selling, general, and administrative (SG&A) expenditures in the first quarter of fiscal 2006 were $122.0 million or 29.4% of revenues, compared to $114.4 million, representing 29.3% of revenues, in the prior year quarter. The change in SG&A was primarily due to increased compensation and investments in sales growth initiatives. --Research, development, and engineering (R&D) expenditures in the first quarter of fiscal 2006 were $40.8 million, representing 9.8% of revenues, compared to $45.7 million, representing 11.7% of revenues, in the prior year quarter. The decrease in R&D expenditures was due primarily to cost savings realized from the integration in fiscal 2005 of the MALDI MALDI Matrix-Assisted Laser Desorption/Ionization TOF (Top Of Form) The beginning of a physical paper form. To position paper in many printers, the printer is turned offline, the forms are aligned properly and the TOF button is pressed. product line into the Applied Biosystems/MDS Sciex Instruments joint venture with MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there Inc. --The Group repurchased approximately 9.3 million shares of Applera Corporation-Applied Biosystems Group outstanding common stock during the quarter at a cost of approximately $201 million. --Cash flow from operations was $51 million and capital expenditures were $13 million for the quarter. As of the end of the quarter, cash and short term investments were $618 million, down from $756 million as of June 30, 2005. 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 $324 million, representing 60 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 $131 million, representing 3.2 months of inventory on hand. Quarterly Business Highlights --In July, the Group introduced its TaqMan(R) Drug Metabolism Drug Metabolism/Interactions Definition Drug metabolism is the process by which the body breaks down and converts medication into active chemical substances. Precautions Drugs can interact with other drugs, foods, and beverages. Genotyping Genotyping refers to the process of determining the genotype of an individual with a biological assay. Current methods of doing this include PCR, DNA sequencing, and hybridization to DNA microarrays or beads. Assays for the detection and study of polymorphisms in the drug metabolism pathway. The collection includes more than 2,000 unique assays for the detection of genetic variants in more than 220 genes that code for drug metabolism enzymes. --In August, the Group announced a strategic marketing and technology alliance with DuPont Qualicon to develop next-generation 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. detection tests and systems for food testing, targeted at food safety and quality assessment. New products will be based on Applied Biosystem's TaqMan(R) assay-based Real-Time PCR technology. --In September, the Group announced commercial release of its TaqMan(R) microRNA Assays for the detection and quantitation of mature human microRNA expression levels, a promising new area of genomics that is expected to stimulate research in areas such as cancer, stem cells stem cells, unspecialized human or animal cells that can produce mature specialized body cells and at the same time replicate themselves. Embryonic stem cells are derived from a blastocyst (the blastula typical of placental mammals; see embryo), which is very young and developmental biology Developmental biology A large field of investigation that includes the study of all changes associated with an organism as it progresses through the life cycle. The life cycles of all multicellular organisms exhibit many similarities. . Applied Biosystems Outlook The Group believes that its fiscal year 2006 outlook and financial performance will be affected by, among other things: the introduction and adoption of new products; the level of commercial investments in life science R&D; the level of government funding for life science research; the outcome of pending litigation matters; competitive product introductions and pricing; purchasing patterns from large 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 centers for DNA sequencing instruments and consumables; and the success of the Group's expanded licensing program for PCR technology. Subject to the inherent uncertainty associated with these factors, Applied Biosystems has the following expectations for fiscal 2006: --Despite the strengthening of the dollar since the Group's last Outlook statement, at current exchange rates, the Group expects low to mid single digit revenue growth. --The Group anticipates revenue growth in the Real-Time PCR/Applied Genomics and Mass Spectrometry product categories and a revenue decline in the Core PCR and DNA Synthesis category. Revenues are also expected to decline in the DNA Sequencing category despite first quarter growth in this category. Revenues in the Other Product Lines Category are expected to approximately equal those in fiscal 2005. --Excluding special items that affect the comparability of both fiscal periods, the Group expects EPS growth to increase at a rate above the fiscal 2006 revenue growth rate. --The Group expects the effective tax rate to be approximately 29% versus our previous guidance of 30% reflecting higher than anticipated Canadian R&D tax credits. We continue to analyze certain tax strategies that could positively impact the rate. In addition, we anticipate that several outstanding tax matters may be resolved in our favor during fiscal 2006. --The Group expects to complete its planned share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program of up to a total of 10% of Applera Corporation-Applied Biosystems Group Common Stock. --The Group expects 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. for fiscal 2006 to be in the range of $70-75 million. --The Group expects the pre-tax impact of adopting FAS 123R (accounting for stock based compensation) to be in the range of $6-7 million. The Group continues to develop a plan to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. cash balances held outside the U.S. during fiscal 2006 consistent with 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. 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 the Applied Biosystems group of Applera Corporation and Celera Genomics. For the first quarter of fiscal 2006, end-user sales for all products sold through the 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 38% to $17.8 million from $12.9 million in the same quarter last year. This increase was primarily due to increased sales of hepatitis C virus
abbr. hepatitis C virus HCV 1 Hepatitis C virus, see there 2. Human coronavirus. See Coronavirus. ) genotyping and HCV viral load viral load n. The concentration of a virus, such as HIV, in the blood. viral load, n a measure of the number of virus particles present in the bloodstream, expressed as copies per milliliter. products, human leukocyte antigen human leukocyte antigen n. Abbr. HLA A gene product of the major histocompatibility complex; these antigens have been shown to have a strong influence on human allotransplantation, transfusions in refractory patients, and certain disease products, and the RealTime(TM) HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. and HCV assays that run on the m2000(TM) system that was recently launched in Europe. During the recently completed quarter, the pre-tax loss decreased to $7.8 million, compared to $9.3 million in the same quarter last year. The lower pre-tax loss was primarily a result of increased end-user sales and decreased R&D spending. This decrease in R&D spending was due to enhanced operational efficiencies and to the reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. by Applied Biosystems of certain expenses incurred by Celera Diagnostics for research performed to assist Applied Biosystems in product development activities. Reported revenues declined to $7.1 million, compared with $9.2 million in the same quarter last year, primarily as a result of decreased 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. . Reported revenues differ from end-user sales and consist primarily of equalization payments from Abbott resulting from the profit and cost sharing arrangement between Abbott and Celera Diagnostics and technology-related revenues. Fluctuation Fluctuation A price or interest rate change. in equalization payments can lead to fluctuation in both reported revenues and gross margins 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 was $14.8 million in the quarter, compared with $10.3 million in the first quarter of fiscal 2005 due to increased working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. offset by lower pre-tax losses. "We're pleased with the sales performance of the products that were sold through our alliance with Abbott and with the successful launch of the m2000 system(TM) in Europe in this last quarter," said Kathy Ordonez, President, Celera Diagnostics. "We continue to make good progress with new products in development, most notably with our new reagents for Fragile X, which we anticipate will be launched in the coming months." "We're encouraged by advances we've made in the development of a Genetic Risk Score(TM) for individual predisposition predisposition /pre·dis·po·si·tion/ (-dis-po-zish´un) a latent susceptibility to disease that may be activated under certain conditions. pre·dis·po·si·tion n. 1. to heart attack and other cardiovascular diseases Cardiovascular disease Disease that affects the heart and blood vessels. Mentioned in: Lipoproteins Test cardiovascular disease ," added Kathy Ordonez. "Together with our collaborators and clinical partners, we're continuing to publish findings from our broad population-based studies demonstrating the clinical utility of this Genetic Risk Score(TM), with the ultimate goal being the commercialization of this index as a diagnostic procedure." Business & Scientific Highlights --In July, Celera Diagnostics extended its collaboration with Merck & Co., Inc. aimed at developing new treatments for Alzheimer's disease Alzheimer's disease (ăls`hī'mərz, ôls–), degenerative disease of nerve cells in the cerebral cortex that leads to atrophy of the brain and senile dementia. . The primary goal of the collaboration is to accelerate the discovery of targets for drugs to address the unmet un·met adj. Not satisfied or fulfilled: unmet demands. clinical need for better treatments for Alzheimer's disease. --Celera Diagnostics published novel findings linking genetic variations in four genes with an increased risk for myocardial infarction myocardial infarction: see under infarction. (MI), or heart attack, in the October 2005 edition of the American Journal of Human Genetics The American Journal of Human Genetics is a leading journal in the field of human genetics. Since its inception in 1948 by the American Society for Human Genetics, the Journal has provided a record of research and review relating to heredity in humans and to the application . None of these gene variants has previously been associated with MI, and they could lead to the identification of new mechanisms for the causes of coronary heart disease coronary heart disease: see coronary artery disease. coronary heart disease or ischemic heart disease Progressive reduction of blood supply to the heart muscle due to narrowing or blocking of a coronary artery (see atherosclerosis). . --This week, Celera Diagnostics and its collaborators at Bristol Myers Squibb and Harvard University Harvard University, mainly at Cambridge, Mass., including Harvard College, the oldest American college. Harvard College Harvard College, originally for men, was founded in 1636 with a grant from the General Court of the Massachusetts Bay Colony. published an article in the journal Stroke describing a study of genetic variation in a family of proteins that have an anti-oxidant effect on low density cholesterol. The paper reported on 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 the paraoxonase 1 gene that is associated with a 2.4-2.7 fold increase in risk for stroke that is independent of standard risk factors such as high blood pressure, diabetes and smoking. --Celera Diagnostics and Laboratory Corporation of America (LabCorp) recently entered into a license agreement to support LabCorp's implementation of hormone responsiveness testing linked to breast cancer that will incorporate Celera Diagnostics' technology. Celera Diagnostics Joint Venture Outlook Celera Diagnostics anticipates that its fiscal 2006 financial performance will be affected by, among other things: continued growth in demand for current products, such as analyte specific reagents The FDA defines analyte specific reagents (ASRs) in 21 CFR 864.4020 as “antibodies, both polyclonal and monoclonal, specific receptor proteins, ligands, nucleic acid sequences, and similar reagents which, through specific binding or chemical reaction with (ASR (Automatic Speech Recognition) Using voice recognition to replace keypad entry for telephone voice menus. Typically used to speak the digits 0 through 9 insted of keying them, ASR systems may be able to recognize a limited vocabulary. See voice recognition and AVSR. ) for cystic fibrosis cystic fibrosis (sĭs`tĭk fībrō`sĭs), inherited disorder of the exocrine glands (see gland), affecting children and young people; median survival is 25 years in females and 30 years in males. and HCV; sales of new products for infectious disease Infectious disease A pathological condition spread among biological species. Infectious diseases, although varied in their effects, are always associated with viruses, bacteria, fungi, protozoa, multicellular parasites and aberrant proteins known as prions. testing on the m2000(TM) system sold through the alliance with Abbott and others in development at Celera Diagnostics; and new alliance product sales for ASRs for Fragile X and other genetic diseases. Celera Diagnostics intends to continue advancing its 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. research and its medical utility studies to create value from diagnostic testing Diagnostic testing Testing performed to determine if someone is affected with a particular disease. Mentioned in: Von Willebrand Disease and, together with Celera Genomics, to seek partnerships to leverage proteomic capabilities to identify novel targets, pharmacogenomic markers and biomarkers. Subject to the inherent uncertainty associated with these factors, Celera Diagnostics has the following expectations regarding its financial performance for fiscal 2006: For fiscal 2006, Celera Diagnostics anticipates pre-tax losses to be in the range of $19 to $23 million, and fiscal 2006 net cash use to be in the range of $25 to $30 million. Total end user sales for the alliance between Celera Diagnostics and Abbott are anticipated to be in the range of $80 to $90 million. Conference Call & Webcast A conference call with Applera Corporation executives will be held today at 11:00 a.m. (ET) to discuss these results and other matters related to the businesses. The call will be formatted to focus on each of the Applera businesses separately, approximately at the times indicated below, although the exact timing may be different as the call will proceed without pause between segments: --Applied Biosystems Group 11:00 a.m. (ET) --Celera Diagnostics 11:45 a.m. --Celera Genomics Group 12:00 p.m. During each segment, the management team will make prepared remarks and answer questions from securities analysts and investment professionals. Investors, securities analysts, representatives of the media and other interested parties who would like to participate should dial 706.634.4992 (code "Applera") at any time from 10:45 a.m. until the end of the call. This conference call will also be webcast. Interested parties who wish to listen to the webcast should visit the "Investors & Media" section of either www.applera.com or www.celera.com, or the "Investors" section of www.appliedbiosystems.com. A digital recording will be available approximately two hours after the completion of the conference call on October 27 until November 13, 2005. Interested parties should call 706.645.9291 and enter conference ID 1432429. 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 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 and develop new pharmaceuticals. Applied Biosystems' products also serve the needs of some markets outside of life science research, which we refer to as "applied markets," such as the fields of: human identity testing (forensic and paternity testing paternity testing see parentage testing. ); biosecurity, which refers to products needed in response to the threat of biological terrorism Noun 1. biological terrorism - terrorism using the weapons of biological warfare bioterrorism act of terrorism, terrorism, terrorist act - the calculated use of violence (or the threat of violence) against civilians in order to attain goals that are and other malicious, accidental, and natural biological dangers; and quality and safety testing, for example in food and the environment. Applied Biosystems is headquartered in Foster City, CA, and reported sales of nearly $1.8 billion during fiscal 2005. 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 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 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) potential liabilities related to the use of hazardous materials, (6) 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; (7) 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, and the possibility that Applied Biosystems or Celera Diagnostics may need to license intellectual property from third parties to avoid or settle such claims; (8) 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; (9) Celera Diagnostics' reliance on existing and future collaborations, including its strategic alliance with Abbott Laboratories, which may not be successful; (10) 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; (11) the risk that clinical trials of products that Celera Diagnostics does discover and develop will not proceed as anticipated, may take several years and be very expensive, or may not be successful, or that such products will not receive required regulatory clearances or approvals; (12) 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 for these products from fourth party payors such as private insurance companies and government insurance plans; (13) 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; (14) legal, ethical, and social issues which could affect demand for Celera Diagnostics' products; (15) Celera Diagnostics' limited commercial manufacturing experience and capabilities and its reliance on a single principal manufacturing facility; (16) Applied Biosystems' and Celera Diagnostics' reliance on a single supplier or a limited number of suppliers for key components of some of their products; (17) potential product liability or other claims against Celera Diagnostics as a result of the testing or use of its products; (18) intense competition in the industry in which Celera Diagnostics operates; and (19) 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. 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
September 30,
2005 2004 (1)
------------ -------------
Net revenues $415.5 $390.3
Cost of sales 192.7 182.7
------------ -------------
Gross margin 222.8 207.6
Selling, general and
administrative 122.0 114.4
Research, development and
engineering 40.8 45.7
Employee-related charges, asset
impairments and other 0.9 7.4
Asset dispositions and litigation
settlements 3.3 (8.5)
------------ -------------
Operating income 55.8 48.6
Interest income, net 4.4 2.4
Other income (expense), net 1.7 0.6
------------ -------------
Income before income taxes 61.9 51.6
Provision for income taxes 4.4 14.5
------------ -------------
Net income $57.5 $37.1
============ =============
Earnings per share analysis
---------------------------
Net income $57.5 $37.1
Allocated intercompany sales of
assets (0.1)
Allocated interperiod taxes(2) (0.4) (0.6)
------------ -------------
Total net income allocated 57.1 36.4
Less dividends declared on common
stock 8.3 8.3
------------ -------------
Undistributed earnings $48.8 $28.1
============ =============
Allocation of basic earnings per
share
Basic distributed earnings per
share $0.04 $0.04
Basic undistributed earnings per
share 0.25 0.15
------------ -------------
Total basic earnings per share $0.29 $0.19
============ =============
Allocation of diluted earnings
per share
Diluted distributed earnings per
share $0.04 $0.04
Diluted undistributed earnings
per share 0.25 0.14
------------ -------------
Total diluted earnings per share $0.29 $0.18
============ =============
Weighted average number of common
shares
Basic 195,546,000 195,526,000
Diluted 197,877,000 198,252,000
(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
September 30,
2005 2004 Change
------- ------- ------
DNA Sequencing $124.9 $116.1 8%
% of total revenues 30% 30%
Real-Time PCR/Applied Genomics 121.8 111.8 9%
% of total revenues 29% 29%
Mass Spectrometry 97.3 89.1 9%
% of total revenues 24% 23%
Core PCR & DNA Synthesis(1) 47.3 47.4 -%
% of total revenues 11% 12%
Other Product Lines 24.2 25.9 -7%
% of total revenues 6% 6%
------- -------
Total $415.5 $390.3 6%
======= =======
(1) 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 September 30, 2005
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera
Group Group Diagnostics Eliminations Consolidated
---------- -------- ----------- ------------ ------------
Net revenues $415.5 $2.1 $7.1 $(2.5) $422.2
Cost of sales 192.7 0.7 3.7 (1.9) 195.2
---------- -------- ----------- ------------ ------------
Gross margin 222.8 1.4 3.4 (0.6) 227.0
Selling,
general and
administrative 122.0 6.6 3.3 131.9
Research,
development
and
engineering 40.8 21.8 7.7 (0.6) 69.7
Amortization of
intangible assets 0.7 0.7
Employee-related
charges, asset
impairments
and other 0.9 0.9
Asset
dispositions
and litigation
settlements 3.3 0.5 0.2 4.0
---------- -------- ----------- ------------ ------------
Operating
income (loss) 55.8 (28.2) (7.8) - 19.8
Gain on
investments,
net 4.5 4.5
Interest
income, net 4.4 5.3 9.7
Other income
(expense), net 1.7 1.7
Loss from joint
venture (7.8) 7.8
---------- -------- ----------- ------------ ------------
Income (loss)
before income
taxes 61.9 (26.2) (7.8) 7.8 35.7
Provision
(benefit) for
income taxes 4.4 (9.5) (1) 0.4 (4.7)
---------- -------- ----------- ------------ ------------
Net income
(loss) $57.5 $(16.7) $(7.8) $7.4 $40.4
========== ======== =========== ============ ============
Net income
(loss) per
share
Basic $0.29 $(0.23)
Diluted $0.29 $(0.23)
(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 September 30, 2004
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera
Group Group Diagnostics Eliminations Consolidated
---------- -------- ----------- ------------ ------------
Net revenues $390.3 $9.6 $9.2 $(1.9) $407.2
Cost of sales 182.7 2.6 3.1 (1.1) 187.3
---------- -------- ----------- ------------ ------------
Gross margin 207.6 7.0 6.1 (0.8) 219.9
Selling,
general and
administrative 114.4 6.3 3.0 (0.1) 123.6
Research,
development
and
engineering 45.7 23.6 12.4 (0.6) 81.1
Amortization of
intangible assets 0.7 0.7
Employee-related
charges, asset
impairments
and other 7.4 2.8 10.2
Asset dispositions
and litigation
settlements (8.5) (8.5)
---------- -------- ----------- ------------ ------------
Operating
income (loss) 48.6 (26.4) (9.3) (0.1) 12.8
Interest
income, net 2.4 2.9 5.3
Other income
(expense), net 0.6 1.5 2.1
Loss from joint
venture (9.3) 9.3
---------- -------- ----------- ------------ ------------
Income (loss)
before income
taxes 51.6 (31.3) (9.3) 9.2 20.2
Provision
(benefit) for
income taxes 14.5 (11.0) (1) 0.6 4.1
---------- -------- ----------- ------------ ------------
Net income
(loss) $37.1 $(20.3) $(9.3) $8.6 $16.1
========== ======== =========== ============ ============
Net income
(loss) per
share
Basic $0.19 $(0.28)
Diluted $0.18 $(0.28)
(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 2005 amounts have been reclassified for comparative
purposes.
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