BioSource International, Inc. Announces 18% Sales Growth and Diluted EPS Before Cumulative Effect of Accounting Change and Amortization of $0.07 for 3rd Quarter 2002.

Business Editors

CAMARILLO, Calif.--(BUSINESS WIRE)--Oct. 21, 2002

BioSource International, Inc. (Nasdaq:BIOI), announced today its operating results for the third quarter ended September 30, 2002.

Results for the three months ended September 30, 2002:

Net sales for the quarter ended September 30, 2002 were $10.1 million, an increase of $1.5 million, or 18% (15% after eliminating the $254,000 positive impact of foreign exchange), compared to net sales for the quarter ended September 30, 2001. For the three months ended September 30, 2002, the Company achieved net sales growth in North America of 12% as compared to the three months ended September 30, 2001. European sales for the three months ended September 30, 2002 increased 30% (18% in local currency), as compared to the comparable prior year period. Sales in Japan and the rest of the world increased 23%, for the three months ended September 30, 2002 as compared to the three months ended September 30, 2001.

Net income before the cumulative effect of accounting change for the three months ended September 30, 2002 was $528,000 or $.05 per diluted share compared to $266,000 or $.02 per diluted share for the three months ended September 30, 2001. Net income before cumulative effect of accounting change excluding amortization of intangibles, net of tax, was $653,000 or $.07 per diluted share for the three months ended September 30, 2002 compared to $480,000 or $.04 per diluted share for the three months ended September 30, 2001.

Gross profit margin for the three months ended September 30, 2002 was 57%, compared to 56% for the three months ended September 30, 2001. The gross profit margin was 1% higher for the quarter and nine months ended September 30, 2002 primarily due to the selling mix of products.

Research and development expenses for the quarter ended September 30, 2002 and 2001 were $1,557,000 and $1,051,000 and represented 15% and 12% of sales respectively. The increase in research and development expenses for the three months ended September 30, 2002 when compared to the comparable prior year period reflects the Company's investment in additional personnel and materials in the cytokine and signal transduction research areas with the goal of producing additional novel and proprietary products.

Selling, marketing and administrative expenses were $3.4 million for the three months ended September 30, 2002 and $3.6 million for the three months ended September 30, 2001, representing 33% and 41% of sales, respectively. In the quarter ended September 30, 2002, our sales and marketing expenses in personnel and marketing programs increased $155,000 from the comparable prior year period while our general and administrative expenses decreased by $357,000. Excluding $429,000 of G&A charges in the third quarter of 2001 related to severance and termination matters, the Company reduced its SG&A expenses, as a percentage of sales, from 36% to 33%.

Results for the nine months ended September 30, 2002:

Net sales for the nine months ended September 30, 2002 were a record $30.2 million, an increase of $4.2 million, or 16% (15% after eliminating the $204,000 positive impact of foreign exchange), compared to net sales for the nine months ended September 30, 2001. For the nine months ended September 30, 2002, the Company achieved net sales growth in North America of 15% as compared to the nine months ended September 30, 2001. European sales for the nine months ended September 30, 2002 increased 19% (16% in local currency), as compared to the comparable prior year period. Sales in Japan and the rest of the world increased 15%, for the nine months ended September 30, 2002 as compared to the nine months ended September 30, 2001.

Net income before the cumulative effect of accounting change for the nine months ended September 30, 2002 was $1,350,000 or $.13 per diluted share compared to $790,000 or $.07 per diluted share for the nine months ended September 30, 2001. Net income before cumulative effect of accounting change excluding amortization of intangibles, net of tax, was $1,724,000 or $.17 per diluted share for the nine months ended September 30, 2002 compared to $1,431,000 or $.13 per diluted share for the nine months ended September 30, 2001.

Gross profit margin for the nine months ended September 30, 2002 was 57%, compared to 56% for the nine months ended September 30, 2001. The gross profit margin was 1% higher for the quarter and nine months ended September 30, 2002 primarily due to the selling mix of products.

Research and development expense for the nine months ended September 30, 2002 and 2001 were $4,362,000 and $2,930,000 and represented 14% and 11% of sales respectively. The increase in research and development expenses for the nine months ended September 30, 2002 when compared to the comparable prior year period reflects the Company's investment in additional personnel and materials in the cytokine and signal transduction research areas with the goal of producing additional novel and proprietary products.

Selling, marketing and administrative expenses were $10.6 million for the nine months ended September 30, 2002 and $10.5 million for the nine months ended September 30, 2001, representing 35% and 40% of sales, respectively. In the nine months ended September 30, 2002, our sales and marketing expenses in personnel and marketing programs increased $687,000 from the comparable prior year period. Excluding $701,000 of net G&A charges in the third quarter of 2001 that were related to non-recurring employee and legal matters, the Company reduced its SG&A expenses, as a percentage of sales, from 38% to 35%.

The effective tax rate for the nine months ending September 30, 2002 and 2001 was 22% and (4%) respectively. The Company is benefiting from R&D and other tax credits which when applied to income levels for the periods presented is resulting in effective tax rates lower than the current applicable federal and state statutory rates.

In the third quarter of 2002, the Company repurchased 52,000 shares of its common stock under its stock repurchase program, bringing the total number of shares repurchased since October 2001 to 878,000. This has contributed to the reduction in diluted shares outstanding for the three and nine months ended September 30, 2002 of 10,029,000 and 10,289,000 respectively, compared to the 10,868,000 and 11,003,000 diluted shares for the three and nine months ended September 30, 2001.

In the first quarter of 2002, the Company recognized a non-cash charge, net of applicable income taxes, of $2,870,000 representing the cumulative effect of a change in accounting principle resulting from the implementation of Financial Accounting Standards ("FAS") 142, Accounting for Goodwill and Other Intangible Assets. The charge included the write off of goodwill related to the acquisition of Quality Controlled Biochemicals ("QCB") in December 1998. In the third quarter of 2002, the Company received cash proceeds of $800,000 in an arbitration settlement related to its 1998 acquisition of QCB. This recovery, net of legal fees and applicable income taxes, is shown as a cumulative effect of a change in accounting principle for the three months ended September 30, 2002. With these net charges, the Company has recorded a net income for the three months ended September 30, 2002 of $951,000 or $.09 per diluted share and a net loss for the nine months ended September 30, 2002 of ($1,097,000) or ($.11) per diluted share. The effect of the implementation of FAS 142 reduced amortization of intangibles for the nine months ended September from $824,000 to $481,000.

"Our sales for the third quarter and the first nine months of 2002 are very encouraging for BioSource," stated Len Hendrickson, President and Chief Executive Officer. "We grew sales 18% in the third quarter and 16% for the first nine months of 2002. I am comfortable with the consensus analysts' fourth quarter 2002 estimated sales of approximately $10 million and earnings per share of between $.03 to $.05.

"In an effort to bring more efficiencies to our operations, we are combining our Camarillo oligo facility with our oligo facility in Foster City, California," said Mr. Hendrickson. "Bringing the two facilities together will bring our oligo business under one roof and will facilitate operational efficiencies.

"We are excited about the fact that we are on track with our internal R&D product development plan," stated Mr. Hendrickson. "Our 2002 product introductions have received good response from the market. The internal focus on our research and development program continues to be in the cytokine and signal transduction markets," said Mr. Hendrickson. "Last February, we gave guidance on our 2002 financial results and commented on 2003 and 2004. Similarly, we will be reviewing and commenting on our 2003 and 2004 financial projections with our 2002 earnings release in February. I want to again thank all the BioSource employees worldwide for their efforts this year."

The Company will conduct a conference call today at 10:00 A.M. Pacific time. All interested parties may call 973/528-0008, reservation number 5382 to participate in the call.

BioSource International, Inc. is a broad based life sciences company focused on providing integrated solutions in the areas of functional genomics, proteomics, and drug discovery through the development, manufacturing, marketing and distribution of unique biologically active reagent systems which facilitate, enable and accelerate pharmaceutical development and biomedical research.

This press release contains statements about expected future events that are forward-looking and subject to risks and uncertainties. For these statements, we claim the safe harbor for "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors that could cause actual results to differ and vary materially from expectations include, but are not limited to, our ability to expand our product offerings and any transition to new products, product quality and availability, any change in business conditions, changes in our sales strategy and product development plans, competitive pricing pressures, continued market acceptance of our products, name recognition of our products, delays in the development of new technology, intellectual property and proprietary rights may not be valid or infringe the rights of others, changes in customer buying pattern issues, one-time events and other important factors disclosed previously and from time to time in our filings with the Securities and Exchange Commission. These cautionary statements by us should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by us. We cannot always predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. In addition, readers are urged to consider statements that include the terms "believes," "belief," "expects," "plans," "objectives," "anticipates," "intends," "targets," "projections," or the like to be uncertain and forward-looking. All cautionary statements should be read as being applicable to all forward-looking statements wherever they appear. We do not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

            BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
       Three and Nine Months Ended September 30, 2002 and 2001
            (Amounts in thousands, except per share data)
                             (Unaudited)

                                        Three Months    Nine Months
                                            Ended           Ended
                                        September 30,   September 30,
                                         2002    2001    2002    2001

Net sales                             $10,101   8,587  30,175  26,004
Cost of sales                           4,365   3,761  13,109  11,397
  Gross profit                          5,736   4,826  17,066  14,607

Operating expenses:
  Research and development              1,557   1,051   4,362   2,930
  Sales and marketing                   1,961   1,806   6,239   5,552
  General and administrative            1,394   1,751   4,325   4,918
  Amortization of intangibles             160     275     481     824
    Total operating expenses            5,072   4,883  15,407  14,224
Operating income                          664     (57)  1,659     383

Interest income (expense), net             21      85      82     330
Other income (expense), net                (8)    (28)    (10)     47
Income before income taxes (benefit)      677      --   1,731     760
Income tax expense (benefit)              149    (266)    381     (30)
    Net income before cumulative
     effect of accounting change          528     266   1,350     790
Cumulative effect of accounting
 change (net of applicable income
 taxes of $1,500)                         423      --  (2,447)     --
Net income (loss)                     $   951     266  (1,097)    790

Net income per share before
 accounting change:
   Basic                              $  0.05    0.03    0.14    0.08
   Diluted                            $  0.05    0.02    0.13    0.07

Net income (loss) per share
 after accounting change:
   Basic                              $  0.10    0.03   (0.11)   0.08
   Diluted                            $  0.09    0.02   (0.11)   0.07

Shares used to compute net
 income (loss):
   Basic                                9,651  10,443   9,830  10,400
   Diluted                             10,029  10,868  10,289  11,003


            BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                        (Amounts in thousands)
                                                    September December
                                                        30,      31,
                                                       2002     2001

                      ASSETS
Current assets:
   Cash and cash equivalents                         $ 5,798    9,471
   Accounts receivable, less allowance for doubtful
    accounts of $347 at September 30, 2002 and $261
    at December 31, 2001                               6,520    6,184
   Inventories, net                                    8,133    7,184
   Prepaid expenses and other current assets             739      540
   Deferred income taxes                               1,584    1,584
      Total current assets                            22,774   24,963

Property and equipment, net                            6,949    5,408
Intangible assets net of accumulated amortization
 of $2,494 at September 30, 2002 and $3,377 at
 December 31, 2001                                     6,543   11,653
Other assets                                             520      491
Deferred tax assets                                    8,826    7,326
                                                     $45,612   49,841

       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                  $ 2,533    2,416
   Accrued expenses                                    2,702    2,707
   Deferred revenue                                      439      404
   Income tax payable                                    815      436
      Total current liabilities                        6,489    5,963

Commitments and contingencies

Stockholders' equity:
Common stock, $.001 par value. Authorized
 20,000,000 shares: issued 9,696,582 and outstanding
 9,644,582 shares at September 30, 2002; issued
 10,449,817 shares and outstanding 10,353,817 shares
 at December 31, 2001                                     10       10
Additional paid-in capital                            44,373   48,761
Accumulated deficit                                   (3,427)  (2,330)
Accumulated other comprehensive loss                  (1,833)  (2,563)
      Net stockholders' equity                        39,123   43,878
                                                     $45,612   49,841