Applied Biosystems Reports Fiscal 2006 Second 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. ): --Net Revenues increased 4% to $482 million; 6% excluding the impact of currency --Q2 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 $0.17, including a tax charge of $28 million related to 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. of cash --Q2 non-GAAP EPS was $0.32 excluding specified items Applied Biosystems Group (NYSE: ABI), an Applera Applera Corporation of Norwalk, Connecticut, at #874 on the 2007 Fortune 1000 list, is one of the largest international biotechnology companies based in the United States. It is the successor company to what was the Life Sciences Division of Perkin-Elmer Corporation. Corporation business, today reported net revenues of $482 million for the second quarter of fiscal 2006, a 4% increase over the prior year quarter and 6% excluding the unfavorable impact from foreign currency. Net income was $31 million compared to $73 million for the prior year quarter and was affected by specified items in both periods. Earnings per share (EPS) for the quarter was $0.17, compared to $0.37 for the prior year quarter. EPS for the quarter on a non-GAAP basis, excluding the specified items described in the following reconciliation schedule, was $0.32, a 14% increase compared to $0.28 for the prior year quarter. The net effect of foreign currency on EPS was an unfavorable impact of approximately $0.02 compared to the prior year quarter. All per share amounts refer to Applera Corporation-Applied Biosystems Group Common Stock. "Applied Biosystems is executing on the initiatives that we have talked about over the past several quarters and is tracking well towards our long term expectations. Excluding specified items, Applied Biosystems 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 eighth consecutive quarter compared to prior year periods," said Tony L. White, Chief Executive Officer, Applera Corporation. "I am encouraged by our second consecutive quarter of 6% operational revenue growth. We continue to see strong customer acceptance of our new instruments and consumables platforms across all of our markets," said Catherine M. Burzik, President, Applied Biosystems. "Our top priorities continue to be revenue growth in our core markets and extending the scope of Applied Biosystems' technology into new opportunities." During the second quarters of both fiscal 2006 and 2005, the Group recorded items that affected the comparability of results. For the second quarter of fiscal 2006, these items decreased income before taxes by $3.4 million. These items included pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $3.1 million for an arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the settlement and $0.3 million for severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when . Also included in the second quarter of fiscal 2006 was a tax charge of $28 million related to the repatriation of cash balances held outside the U. S. and anticipated taxes on additional overseas dividends. During the second quarter of fiscal 2005, the Group recorded pre-tax items that increased income before taxes by $24.5 million. This amount included a pre-tax gain of $29.7 million from the sale of certain MALDI MALDI Matrix-Assisted Laser Desorption/Ionization Time-of-Flight For the mass spectrometry technique, see . The time of flight (TOF) describes the method used to measures the time that it takes for a particle, object or stream to reach a detector while traveling over a known distance. assets to MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there Inc. and pre-tax charges of $2.9 million for severance and benefit costs and $2.3 million for charges related to a facility lease agreement. 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
December 31, 2005 December 31, 2004
GAAP Adj. Adjusted GAAP Adj. Adjusted
amounts amounts amounts amounts
------- ------- -------- ------- ------ --------
Operating income $77.8 $(3.4) $81.2 $97.3 $24.5 $72.8
Income before income
taxes 82.3 (3.4) 85.7 102.3 24.5 77.8
Provision for income
taxes 51.4 26.5 24.9 29.6 7.8 21.8
Net income 30.9 (29.9) 60.8 72.7 16.7 56.0
Earnings per share
allocations(1) 0.5 0.5 1.6 1.6
Adjusted net income
for earnings per
share $31.4 $(29.4) $60.8 $74.3 $18.3 $56.0
Total diluted
earnings per share $0.17 $(0.15) $0.32 $0.37 $0.09 $0.28
(1) Represents allocation of interperiod taxes to adjust net income
for purposes of calculating earnings per share.
Quarterly Financial Highlights --Revenues by source and the change relative to the prior year quarter were: $223 million for Instruments, a 3% increase; $178 million for Consumables, a 5% increase; and $81 million for Other Sources, including service and support, royalties, licenses, and consulting, a 7% increase. --Revenues for major geographic regions and their change relative to the prior year quarter were: $207 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 9% increase; $173 million in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , a 1% increase including unfavorable
foreign currency effects Foreign Currency EffectsThe 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 4%; $50 million in Japan, a 12% decline including unfavorable currency effects of approximately 9%; and $33 million in Other Asia Pacific countries, a 16% increase including unfavorable foreign currency effects of approximately 1%. --Gross margin in the second quarter of fiscal 2006 was 54.4% versus 52.5% in the prior year quarter. The increase in gross margin was primarily attributable to higher service and royalty revenues in addition to sales of certain higher margin products within the Real-Time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. PCR PCR polymerase chain reaction. PCR abbr. polymerase chain reaction Polymerase chain reaction (PCR) and Applied Genomics applied genomics Molecular genetics Molecular medicine The use of genetic information to diagnose, prognosticate and manage disease, based on the techniques of PCR, real time-PCR, DNA sequencing, and gene rearrangement studies for leukemia and lymphoma. product category. --Selling, general, and administrative (SG&A) expenditures in the second quarter of fiscal 2006 were $136 million, or 28.2% of revenues, compared to $123 million, representing 26.6% of revenues, in the prior year quarter. The change in SG&A was driven by sales force investments, web portal See portal. development and strategic initiatives. --Research, development, and engineering (R&D) expenditures in the second quarter of fiscal 2006 were $45 million, representing 9.3% of revenues, compared to $47 million, representing 10.2% 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 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 Inc. --The Group repurchased approximately 10.1 million shares of Applera Corporation-Applied Biosystems group common stock during the quarter at a cost of approximately $256 million. This represents the completion of the authorization The right or permission to use a system resource; the process of granting access. See access control. granted by the Board of Directors and announced in July July: see month. 2005 for the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to 10% of Applera Corporation-Applied Biosystems group outstanding shares. --Cash flow from operations was $135 million and capital expenditures were $11 million for the quarter. Depreciation and amortization was $21 million. As of the end of the quarter, cash and short term investments were $503 million, down from $618 million as of September 30, 2005, largely as a result of our 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. 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 $339 million, representing 53 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 $126 million, representing 2.6 months of inventory on hand. Recent Business Highlights --In November, the Group, together with its joint venture partner MDS Sciex, announced the launch of the Tempo(TM) high performance, nano-flow liquid chromatography chromatography (krō'mətŏg`rəfē), resolution of a chemical mixture into its component compounds by passing it through a system that retards each compound to a varying degree; a system capable of accomplishing this is called a systems, providing integrated front end solutions for researchers performing LC/MS LC/MS Liquid Chromatography/Mass Spectrometry and LC-MALDI based experiments. --In December, the Group announced that it had entered into an agreement to acquire the Research Products Division of Ambion, Inc., a premium provider of 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 based consumables, for approximately $273 million in cash. --In January, following the close of the Group's second quarter of fiscal 2006, Applera announced a restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of the Celera Diagnostics (1) Software routines that test hardware components (memory, keyboard, disks, etc.). Diagnostics are often stored in ROM chips and activated on startup. (2) Error messages in a programmer's source code that refer to statements or syntax that the compiler or assembler joint venture, effective January 1, 2006, whereby Applied Biosystems has transferred its 50% interest in the joint venture to Celera Genomics for various considerations. Since its formation in 2001, Celera Diagnostics was owned jointly by Applied Biosystems and Celera Genomics. One of the considerations gives Applied Biosystems the freedom to develop and sell instruments to the end-user clinical diagnostic instrumentation instrumentation, in music: see orchestra and orchestration. instrumentation In technology, the development and use of precise measuring, analysis, and control equipment. market. 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 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. 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 DNA sequencing The determination of the sequence of nucleotides in a sample of DNA. instruments and consumables; and the success of the Group's expanded licensing program for real-time PCR technology. Subject to the inherent uncertainty associated with these factors, Applied Biosystems has the following expectations for fiscal 2006. This Outlook excludes the impact from the pending acquisition of the Research Products Division of Ambion, Inc. --At current exchange rates, the Group expects low to mid single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. revenue growth for fiscal 2006. --The Group anticipates revenue growth in the Real-Time PCR/Applied Genomics and 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. product categories and revenue declines in the remaining categories: Core PCR and DNA Synthesis DNA synthesis commonly refers to:
--Excluding specified 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 continues to expect the effective tax rate to be approximately 29%. 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 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 $65-70 million. --The Group expects the pre-tax impact of adopting FAS 123R (accounting for stock based compensation) to be approximately $8 million, with an EPS impact of approximately $0.03. In addition, the Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the repurchase of up to 5 million additional shares of Applera Corporation-Applied Biosystems group common stock. This authorization supplements the Group's existing authority to replenish re·plen·ish v. re·plen·ished, re·plen·ish·ing, re·plen·ish·es v.tr. 1. To fill or make complete again; add a new stock or supply to: replenish the larder. 2. shares issued under its employee stock benefit plans. This new authorization has no time restrictions and delegates to management discretion to purchase shares at times and prices it deems appropriate through open market purchases, privately negotiated transactions, tender offers, exchange offers, or otherwise. It is anticipated that repurchases will be made from time to time depending on market conditions and will be funded using the Group's U.S. cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. and cash generated from domestic operations, as well as funds to be borrowed under Applera's Revolving Credit Agreement Revolving credit agreement A legal commitment in which a bank promises to lend a customer up to a specified maximum amount during a specified period. revolving credit agreement See line of credit. , if and when required. 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 section of this press release 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 Through December 31, 2005, Celera Diagnostics was a 50/50 joint venture between the Applied Biosystems group of Applera Corporation and Celera Genomics. For the second quarter of fiscal 2006, 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 28 percent to $19.1 million from $14.9 million in the same quarter last year, due primarily to increased sales of HCV HCV abbr. hepatitis C virus HCV 1 Hepatitis C virus, see there 2. Human coronavirus. See Coronavirus. and 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. RealTime(TM) assays used on the m2000 system and increased sales of third party high resolution 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 (HLA HLA human leukocyte antigens. HLA abbr. human leukocyte antigen HLA (human leuckocyte antigen) ) products, as well as Celera Diagnostics' 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 for HCV. During the recently completed quarter, the pre-tax loss decreased to $5.1 million, compared to $8.2 million in the same quarter last year. The smaller pre-tax loss was due to higher revenues and lower R&D and SG&A 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 $8.2 million, compared with $7.9 million in the same quarter last year, primarily as a result of higher equalization payments from Abbott. Fluctuation Fluctuation A price or interest rate change. in equalization payments can lead to variability 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 during the most recent quarter was $3.1 million, compared to $13.3 million in the second quarter of fiscal 2005, due primarily to the smaller pre-tax loss in the current quarter, and an equalization In communications, techniques used to reduce distortion and compensate for signal loss (attenuation) over long distances. payment from Abbott and increased working capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. in the prior year quarter. 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 Genomics Group 11:45 a.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 January 25 until February 12, 2006. Interested parties should call 706.645.9291 and enter conference ID 4084340. 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), 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 Belonging to courts of justice. forensic 1) adj. from Latin forensis for "belonging to the forum," ancient Rome's site for public debate, and currently meaning pertaining to the courts. and paternity testing paternity testing see parentage testing. ); biosecurity biosecurity security from transmission of infectious diseases, parasites and pests. , 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 Involving malice; characterized by wicked or mischievous motives or intentions. An act done maliciously is one that is wrongful and performed willfully or intentionally, and without legal justification. DESERTION, MALICIOUS. , accidental accidental /ac·ci·den·tal/ (ak?si-den´t'l) 1. occurring by chance, unexpectedly, or unintentionally. 2. nonessential; not innate or intrinsic. , 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 is focused on discovery, development, and commercialization of diagnostic products as well as 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 To prove something to be sound or logical. Also to certify conformance to a standard. Contrast with "verify," which means to prove something to be correct. For example, data entry validity checking determines whether the data make sense (numbers fall within a range, numeric data drug targets, and is also seeking to advance therapeutic antibody and selected small molecule drug programs in collaboration Working together on a project. See collaborative software. with global technology and market leaders. 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 section, 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 businesses, including its new activities in the clinical diagnostics instrumentation market, 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 ATTENDANT. One who owes a duty or service to another, or in some sort depends upon him. Termes de la Ley, h.t. As to attendant terms, see Powell on Morts. Index, tit. Attendant term; Park on Dower, c. 1 7. exposure to fluctuations in the value of foreign currencies; (4) risks associated with Applied Biosystems' growth strategy, including difficulties in integrating acquired operations or technology; (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' operations; (7) risks associated with lawsuits, arbitrations, investigations, and other legal actions with private parties and governmental entities, particularly involving claims for infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. of patents and other intellectual property rights, and the possibility that Applied Biosystems 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 Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the applications and related technology for its businesses, particularly those focused on the development and marketing of information-based products and services; (9) uncertainty that clinical diagnostic instruments to be developed by Applied Biosystems will receive required regulatory clearances and/or will be accepted and adopted by the market, including the risk that these products will not be competitive with products offered by other companies; (10) Applied Biosystems' reliance on a single supplier or a limited number of suppliers for some key products and key components of some of its products; and (11) 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 2006. Applera Corporation. All Rights Reserved. AB (Design), Applied Biosystems and Celera are registered trademarks, and Applera, Celera Diagnostics, and Celera Genomics are trademarks of Applera Corporation or its subsidiaries in the U. S. and/or certain other countries.
APPLERA CORPORATION
APPLIED BIOSYSTEMS GROUP
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollar amounts in millions except per share amounts)
(Unaudited)
Three months ended Six months ended
December 31, December 31,
2005 2004 (1) 2005 2004 (1)
------------ ------------ ------------ ------------
Net revenues $481.9 $463.4 $897.4 $853.7
Cost of sales 219.7 220.3 413.3 403.0
------------ ------------ ------------ ------------
Gross margin 262.2 243.1 484.1 450.7
Selling, general
and
administrative 135.8 123.1 257.8 237.5
Research,
development and
engineering 45.2 47.2 86.1 93.0
Employee-related
charges, asset
impairments and
other 0.3 5.2 1.2 12.5
Asset dispositions
and legal
settlements 3.1 (29.7) 25.9 (38.2)
------------ ------------ ------------ ------------
Operating income 77.8 97.3 113.1 145.9
Interest income,
net 3.3 3.5 7.7 5.9
Other income
(expense), net 1.2 1.5 2.9 2.0
------------ ------------ ------------ ------------
Income before
income taxes 82.3 102.3 123.7 153.8
Provision for
income taxes 51.4 29.6 49.7 44.0
------------ ------------ ------------ ------------
Net income $30.9 $72.7 $74.0 $109.8
============ ============ ============ ============
Earnings per share
analysis
------------------
Net income $30.9 $72.7 $74.0 $109.8
Allocated
interperiod
taxes(2) 0.5 1.6 (0.7) 1.0
------------ ------------ ------------ ------------
Total net income
allocated 31.4 74.3 73.3 110.8
Less dividends
declared on
common stock 7.8 8.4 16.1 16.7
------------ ------------ ------------ ------------
Undistributed
earnings $23.6 $65.9 $57.2 $ 94.1
============ ============ ============ ============
Allocation of
basic earnings
per share
Basic distributed
earnings per
share $0.04 $0.04 $0.09 $ 0.09
Basic
undistributed
earnings per
share 0.13 0.34 0.29 0.48
------------ ------------ ------------ ------------
Total basic
earnings per
share $0.17 $0.38 $0.38 $ 0.57
============ ============ ============ ============
Allocation of
diluted earnings
per share
Diluted
distributed
earnings per
share $0.04 $0.04 $0.09 $ 0.09
Diluted
undistributed
earnings per
share 0.13 0.33 0.29 0.47
------------ ------------ ------------ ------------
Total diluted
earnings per
share $0.17 $0.37 $0.38 $ 0.56
============ ============ ============ ============
Weighted average
number of common
shares
Basic 185,903,000 195,905,000 190,724,000 195,716,000
Diluted 190,244,000 198,341,000 194,183,000 198,317,000
(1) Certain prior year 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
December 31,
2005 2004 Change
------- -------- ---------
DNA Sequencing $140.7 $142.4 -1%
% of total revenues 29% 31%
Real-Time PCR/Applied Genomics 146.6 133.2 10%
% of total revenues 30% 29%
Mass Spectrometry 119.5 113.8 5%
% of total revenues 25% 24%
Core PCR & DNA Synthesis 47.7 47.2 1%
% of total revenues 10% 10%
Other Product Lines 27.4 26.8 2%
% of total revenues 6% 6%
------- --------
Total $481.9 $463.4 4%
======= ========
Six months ended
December 31,
2005 2004 Change
------- -------- ---------
DNA Sequencing $265.6 $259.1 3%
% of total revenues 30% 30%
Real-Time PCR/Applied Genomics 268.4 244.1 10%
% of total revenues 30% 29%
Mass Spectrometry 216.8 202.9 7%
% of total revenues 24% 24%
Core PCR & DNA Synthesis 95.0 94.6 -%
% of total revenues 10% 11%
Other Product Lines 51.6 53.0 -3%
% of total revenues 6% 6%
------- --------
Total $897.4 $853.7 5%
======= ========
Certain prior year amounts have been reclassified for comparative
purposes.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, 2005
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimi- Consol-
Group Group Diagnostics nations idated
---------- -------- ----------- ------- -------
Net revenues $481.9 $ 2.1 $ 8.2 $(2.5) $489.7
Cost of sales 219.7 1.7 3.5 (1.7) 223.2
---------- -------- ----------- ------- -------
Gross margin 262.2 0.4 4.7 (0.8) 266.5
Selling,
general and
administrative 135.8 6.8 2.0 144.6
Research,
development
and
engineering 45.2 20.9 7.8 (0.8) 73.1
Amortization of
intangible
assets 0.4 0.4
Employee-related
charges, asset
impairments and
other 0.3 0.3
Asset
dispositions
and legal
settlements 3.1 3.1
---------- -------- ----------- ------- -------
Operating
income (loss) 77.8 (27.7) (5.1) - 45.0
Interest
income, net 3.3 5.9 9.2
Other income
(expense), net 1.2 (0.2) 1.0
Loss from joint
venture (5.1) 5.1
---------- -------- ----------- ------- -------
Income (loss)
before income
taxes 82.3 (27.1) (5.1) 5.1 55.2
Provision
(benefit) for
income taxes 51.4 (9.8) (1) (0.5) 41.1
---------- -------- ----------- ------- -------
Net income
(loss) $ 30.9 $(17.3) $ (5.1) $ 5.6 $ 14.1
========== ======== =========== ======= =======
Net income
(loss) per
share
Basic $0.17 $(0.23)
Diluted $0.17 $(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 December 31, 2004
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimi- Consol-
Group Group Diagnostics nations idated
---------- -------- ----------- ------- -------
Net revenues $463.4 $ 8.2 $ 7.9 $(2.0) $477.5
Cost of sales 220.3 1.2 4.3 (1.5) 224.3
---------- -------- ----------- ------- -------
Gross margin 243.1 7.0 3.6 (0.5) 253.2
Selling,
general and
administrative 123.1 5.9 3.2 132.2
Research,
development
and
engineering 47.2 25.0 8.6 (0.5) 80.3
Amortization of
intangible
assets 0.7 0.7
Employee-related
charges, asset
impairments and
other 5.2 5.2
Asset
dispositions
and legal
settlements (29.7) (29.7)
---------- -------- ----------- ------- -------
Operating
income (loss) 97.3 (24.6) (8.2) - 64.5
Interest
income, net 3.5 3.3 6.8
Other income
(expense), net 1.5 (0.4) 1.1
Loss from joint
venture (8.2) 8.2
---------- -------- ----------- ------- -------
Income (loss)
before income
taxes 102.3 (29.9) (8.2) 8.2 72.4
Provision
(benefit) for
income taxes 29.6 (10.5) (1) (1.6) 17.5
---------- -------- ----------- ------- -------
Net income
(loss) $ 72.7 $(19.4) $ (8.2) $ 9.8 $54.9
========== ======== =========== ======= =======
Net income
(loss) per
share
Basic $ 0.38 $(0.27)
Diluted $ 0.37 $(0.27)
(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.
APPLERA CORPORATION
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Six Months Ended December 31, 2005
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimi- Consol-
Group Group Diagnostics nations idated
----------- -------- ----------- ------- -------
Net revenues $ 897.4 $ 4.2 $ 15.3 $ (5.0) $ 911.9
Cost of sales 413.3 2.4 7.2 (3.6) 419.3
----------- -------- ----------- ------- -------
Gross margin 484.1 1.8 8.1 (1.4) 492.6
Selling,
general and
administrative 257.8 13.4 5.3 276.5
Research,
development
and
engineering 86.1 42.7 15.5 (1.5) 142.8
Amortization of
intangible
assets 1.1 1.1
Employee-related
charges, asset
impairments and
other 1.2 1.2
Asset
dispositions
and legal
settlements 25.9 0.5 0.2 26.6
----------- -------- ----------- ------- -------
Operating
income (loss) 113.1 (55.9) (12.9) 0.1 44.4
Gain on
investments,
net 4.5 4.5
Interest
income, net 7.7 11.2 18.9
Other income
(expense), net 2.9 (0.2) 2.7
Loss from joint
venture (12.9) 12.9
----------- -------- ----------- ------- -------
Income (loss)
before income
taxes 123.7 (53.3) (12.9) 13.0 70.5
Provision
(benefit) for
income taxes 49.7 (19.2) (1) 0.7 31.2
----------- -------- ----------- ------- -------
Net income
(loss) $ 74.0 $ (34.1) $ (12.9) $ 12.3 $ 39.3
=========== ======== =========== ======= =======
Net income
(loss) per
share
Basic $ 0.38 $ (0.46)
Diluted $ 0.38 $ (0.46)
(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 Six Months Ended December 31, 2004
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied Celera
Biosystems Genomics Celera Elimi- Consol-
Group Group Diagnostics nations idated
---------- -------- ----------- -------- -------
Net revenues $853.7 $ 17.9 $ 17.1 $ (4.0) $884.7
Cost of sales 403.0 3.8 7.5 (2.7) 411.6
---------- -------- ----------- -------- -------
Gross margin 450.7 14.1 9.6 (1.3) 473.1
Selling,
general and
administrative 237.5 12.2 6.1 255.8
Research,
development
and
engineering 93.0 48.6 21.0 (1.2) 161.4
Amortization of
intangible
assets 1.5 1.5
Employee-related
charges, asset
impairments and
other 12.5 2.8 15.3
Asset
dispositions
and legal
settlements (38.2) (38.2)
---------- -------- ----------- -------- -------
Operating
income (loss) 145.9 (51.0) (17.5) (0.1) 77.3
Interest
income, net 5.9 6.2 12.1
Other income
(expense), net 2.0 1.1 0.1 3.2
Loss from joint
venture (17.5) 17.5
---------- -------- ----------- -------- -------
Income (loss)
before income
taxes 153.8 (61.2) (17.5) 17.5 92.6
Provision
(benefit) for
income taxes 44.0 (21.4) (1) (1.0) 21.6
---------- -------- ----------- -------- -------
Net income
(loss) $109.8 $(39.8) $(17.5) $18.5 $71.0
========== ======== =========== ======== =======
Net income
(loss) per
share
Basic $ 0.57 $(0.54)
Diluted $ 0.56 $(0.54)
(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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