BioSource International, Inc. Announces Third Quarter 2003 Financial Results.

Business Editors

CAMARILLO, Calif.--(BUSINESS WIRE)--Nov. 7, 2003

BioSource International, Inc. (Nasdaq:BIOI) announced today its operating results for the third quarter and nine months ended September 30, 2003.

Results for the three months ended September 30, 2003:

Net sales for the three months ended September 30, 2003 were $10.7 million, an increase of $600,000, or 6%, compared to net sales for the three months ended September 30, 2002, and the net loss for the quarter ended September 30, 2003 was $81,000 compared to a net income of $951,000 for the comparable period in 2002. Negatively affecting the third quarter 2003 operating results was a $235,000 charge for costs incurred in connection with the previously announced indefinite leave of absence and resignation of Mr. Len Hendrickson, the Company's previous CEO. Affecting the net income for the three months ended September 30, 2002 was a favorable adjustment of $423,000 due to an arbitration settlement impacting the Company's goodwill and cumulative effect of the accounting for goodwill.

"The results of the third quarter of 2003 for BioSource were a reflection of sluggish July and August spending patterns from the major Biotech and Pharmaceutical companies and from internal activities related to Mr. Hendrickson resigning from the Company under very unfortunate circumstances," commented Mr. Robert J. Weltman, a director of the Company and former interim President and Chief Executive Officer. "I am encouraged to see that in September and October our sales patterns appeared to be getting back on track." Mr. Terrance J. Bieker, the Company's newly appointed President and Chief Executive Officer, replaced Mr. Weltman on November 3, 2003.

As has been announced during 2003, to better drive growth and focus on key market opportunities, the Company has divided its business into three core areas: The Strategic Business Units ("SBU's") of Signal Transduction Products, Cytokine Products, and Custom Products. Signal Transduction Products consist of the proteins, antibodies, assays and other reagents used to study internal cellular processes. Phosphospecific antibodies and phosphoELISAs(TM) are included in this SBU. Cytokine Products include the proteins, antibodies, assays and other reagents that are used to study the processes by which cells communicate. Interleukin, growth factor and other biological response modifier products are included in this group. Custom Products include oligonucleotides, custom peptides and antibodies, cell culture and clinical diagnostics and other reagents not specifically categorized.

For the three months ended September 30, 2003, sales of the Company's Signaling product lines grew 15% compared to the comparable prior year quarter, from $2,013,000 to $2,308,000. The Company's sales growth in its Cytokine product lines for the quarter ending September 30, 2003 was 5%, growing from $4,627,000 to $4,862,000, compared to the three months ended September 30, 2002. The Company's sales in its Custom product lines increased 3% compared to the comparable prior year quarter, from $3,461,000 to $3,574,000.

The Company's revenues benefited by a $358,000 positive impact of foreign exchange for the three months ended September 30, 2003 when compared to the three months ended September 30, 2002.

"I like the Company's strategic business unit approach and believe it will help the Company, as well as the investment community, understand our business and our objectives," stated Mr. Weltman. "Our sales through the first nine months of this year have grown 11%. We are growing 34% in our Signal Transduction product lines and 10% in our Cytokine product lines. Both are encouraging numbers. BioSource implemented some cost cutting measures during the third quarter of 2003 that helped reduce its operating expenses from $5.9 million in the second quarter of 2003 to $5.5 million in the third quarter of 2003, excluding the charge of $235,000 incurred in connection with Mr. Hendrickson's departure."

Gross profit margin was 53% for the three months ended September 30, 2003 and 57% for the three months ended September 30, 2002. Lower margins in our custom product lines, an increase in our royalty expense and an increase in our scrap and obsolescence accounted for a significant portion of the margin decrease.

Research and development expense for the three months ended September 30, 2003 and 2002 were $1.7 million and $1.6 million and represented 16% and 15% of sales, respectively. The increase of approximately $100,000 reflects the Company's incremental investment in additional personnel and materials primarily in the Cytokine and Signal Transduction research areas. This total investment in the Company's research capabilities has resulted in the increased release of higher quality and novel products, which has produced increased sales in both the Cytokine and Signaling product lines. The Company expects its fourth quarter of 2003 R&D expenditures to be lower than levels incurred in the third quarter of 2003 due to completed and ongoing cost reduction activities.

Selling, marketing and administrative expenses were $3.9 million for the three months ended September 30, 2003 and $3.4 million for the three months ended September 30, 2002, representing 36% and 33% of sales, respectively. G&A expenses were approximately $300,000 higher in the three months ended September 30, 2003 when compared to the three months ended September 20, 3002, due primarily to the charge of $235,000 related to costs incurred in connection with the resignation of Mr. Hendrickson. Sales and marketing expenses increased approximately $200,000 in the third quarter of 2003, compared to the third quarter of 2002 due primarily to increased payroll costs and increased marketing programs. The Company expects its fourth quarter 2003 run rate of SG&A expenditures to be lower than levels incurred in the third quarter of 2003 due to completed and ongoing cost reduction activities.

Results for the nine months ended September 30, 2003:

Net sales for the nine months ended September 30, 2003 were a record $33.4 million, an increase of $3.2 million, or 11%, compared to net sales for the nine months ended September 30, 2002, and net income for the nine months ended September 30, 2003 was $346,000 compared to net loss of $1,097,000 for the comparable period in 2002. Through the first three quarters of 2002, the Company recognized a non-cash charge, net of applicable income taxes of $2,447,000, representing the cumulative effect of a change in accounting principle resulting from the implementation of Financial Accounting Standard 142, Accounting for Goodwill and Other Intangible Assets. Operating income for the nine months ended September 30, 2003 was $524,000 compared to $1,659,000 for the nine months ended September 30, 2002. Included in the operating results for the nine months ended September 30, 2003 is a charge of $235,000 for costs incurred in connection with the previously announced indefinite leave of absence and resignation of Mr. Hendrickson, the Company's previous CEO.

The Company's revenues benefited by a $1,529,000 positive impact of foreign exchange for the nine months ended September 30, 2003 when compared to the nine months ended September 30, 2002.

For the nine months ended September 30, 2003, sales of the Company's Signaling product lines grew 34% compared to the comparable prior year period, from $5,273,000 to $7,049,000. The Company's sales growth in its Cytokine product lines for the nine months ending September 30, 2003 was 10%, growing from $13,871,000 to $15,222,000. The Company's sales in its Custom product lines increased 1% compared to the comparable prior year period, from $11,030,000 to $11,107,000.

Gross profit margin was 55% for the nine months ended September 30, 2003 and 57% for the nine months ended September 30, 2002. The Company's margin decreased 2% in part due to increases in its scrap and obsolescence and lower margins in its custom product lines during the first nine months of 2003. Lower margins from its European operations also contributed to this margin reduction.

Research and development expense for the nine months ended September 30, 2003 and 2002 were $5.5 million and $4.4 million and represented 17% and 14% of sales, respectively. The increase in research and development expenses for the nine months ended September 30, 2003 when compared to the comparable prior year period reflects the Company's increased expenses in additional personnel and materials in the cytokine and signal transduction research areas. The Company has made significant investments in its R&D capabilities since the beginning of 2002. The result of this investment has been the release of significantly more and higher quality novel products and increased sales in both the Cytokine and Signaling product lines.

Selling, marketing and administrative expenses were $11.7 million for the nine months ended September 30, 2003 and $10.6 million for the nine months ended September 30, 2002, representing 35% of sales for each of the periods presented. Excluding the charge of $235,000 related to the costs incurred in connection with the resignation of Mr. Hendrickson, SG&A as a percentage of sales for the nine months ended September 30, 2003 would be 34%. In the nine months ended September 30, 2003, our G&A expenses, excluding the charge of $235,000, increased approximately $100,000 compared to the first nine months of 2002. Our sales and marketing expenses for the nine months ended September 30, 2003 increased approximately $800,000 when compared to the nine months ended September 30, 2003 due primarily to increased personnel costs and marketing programs.

The effective tax rate for the nine months ending September 30, 2003 is 23%. The Company's effective tax rate can fluctuate depending on a number of factors, including the use of forecasts of the Company's financial performance for the year ended December 31, 2003 and beyond. The Company continues to benefit 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.

"The Board of Directors and I are excited that Terry has joined BioSource as CEO, and we are confident he will be able to guide the Company effectively going forward," stated Mr. Weltman. "He has exhibited a track record of strong financial control and we are confident that he will align the Company's expenses and investments with anticipated areas of growth and return."

"I like how the Company has positioned itself for long term financial success," stated Mr. Bieker. "We are in a market that should continue to see solid levels of spending in the years ahead. This, along with our increased focus on our core areas of expertise in the development and manufacturing of signal transduction and cytokine research products, should result in increased success for us and our shareholders."

The Company will conduct a conference call today, Friday, November 7, 2003, at 10:00 a.m. Pacific Time. All interested parties may call 800-901-5213, reservation number 31975516, to participate in the call. In addition, the Company will be web casting the conference call. You can participate by going to our website at www.biosource.com and entering the investor relations' portion of the website.

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, 2003 and 2002
             (Amounts in thousands, except per share data)
                              (Unaudited)


                                       Three Months    Nine Months
                                      Ended Sept. 30, Ended Sept. 30,
                                       2003    2002    2003    2002
                                       ----    ----    ----    ----

Net sales                            $10,744  10,101  33,377  30,175
Cost of sales                          5,079   4,365  15,160  13,109
    Gross profit                       5,665   5,736  18,217  17,066

Operating expenses:
    Research and development           1,687   1,557   5,530   4,362
    Sales and marketing                2,188   1,961   7,064   6,239
    General and administrative         1,729   1,394   4,664   4,325
    Amortization of intangibles          145     160     435     481
         Total operating expenses      5,749   5,072  17,693  15,407
Operating income (loss)                  (84)    664     524   1,659

Interest income (expense), net            (2)     21      26      82
Other expense, net                       (19)     (8)   (101)    (10)
Income (loss) before income taxes       (105)    677     449   1,731
Income tax expense (benefit)             (24)    149     103     381
        Income (loss) before
         cumulative effect of
          accounting change              (81)    528     346   1,350
Cumulative effect of accounting
 change (net of applicable
     income taxes of $1,759)              --     423      --  (2,447)
Net income (loss)                    $   (81)    951     346  (1,097)

Net income (loss) per share before
 accounting change:
    Basic                            $ (0.01)   0.05    0.04    0.14
    Diluted                          $ (0.01)   0.05    0.04    0.13

Net income (loss) per share:
    Basic                            $ (0.01)   0.10    0.04   (0.11)
    Diluted                          $ (0.01)   0.09    0.04   (0.11)

Shares used to compute per share amounts:
    Basic                              9,181   9,651   9,418   9,830
    Diluted                            9,181  10,029   9,729  10,289


            BIOSOURCE INTERNATIONAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                        (Amounts in thousands)

                                               Sept. 30, Dec. 31,
                                                   2003     2002
                                                   ----     ----
                   ASSETS
Current assets:
   Cash and cash equivalents                 $    1,544    5,941
   Accounts receivable, less allowance
    for doubtful accounts of $221 at
    September 30, 2003 and $261 at
    December 31, 2002                             7,199    6,157
   Inventories, net                              10,485    8,880
   Prepaid expenses and other current assets      1,106      538
   Deferred income taxes                          2,245    1,873
              Total current assets               22,579   23,389

Property and equipment, net                       6,675    7,398
Intangible assets net of accumulated
 amortization of $3,090 at September 30, 2003
 and $2,655 at December 31, 2002                  5,641    6,076
Goodwill                                            307      307
Other assets                                        569      526
Deferred tax assets                               8,810    8,810

                                             $   44,581   46,506

     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                          $    2,547    3,115
   Accrued expenses                               3,085    2,910
   Deferred revenue                                 291      427
   Income tax payable                               403      341
              Total current liabilities           6,326    6,793

Commitments and contingencies

Stockholders' equity:
Common stock, $.001 par value. Authorized
 20,000,000 shares: issued and outstanding
 9,260,020 shares at September 30, 2003
 and 9,676,931 at December 31, 2002                   9       10
Additional paid-in capital                       41,975   44,500
Accumulated deficit                              (3,036)  (3,382)
Accumulated other comprehensive loss               (693)  (1,415)
              Net stockholders' equity           38,255   39,713

                                             $   44,581   46,506