Stratagene Corp. Reports First Quarter Results for Stand-Alone Stratagene Operations; Year-Over-Year Revenue Up 15%; Net Income Grows 63%.Business Editors/Health/Medical Writers LA JOLLA La Jolla (lə hoi`yə), on the Pacific Ocean, S Calif., an uninc. district within the confines of San Diego; founded 1869. The beautiful ocean beaches, in particular La Jolla shores and Black's Beach, and sea-washed caves attract visitors and , Calif.--(BUSINESS WIRE)--June 9, 2004 Company Completed Acquisition of Hycor Biomedical bi·o·med·i·cal adj. 1. Of or relating to biomedicine. 2. Of, relating to, or involving biological, medical, and physical sciences. on June 2, 2004; Conference Call to be Held Tomorrow to Discuss Results and Outlook for Combined Company Stratagene Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :STGN), a developer, marketer and manufacturer of life science research and diagnostic products, today released financial results for the stand-alone operations of Stratagene Corp. for the quarter ended March 31, 2004 and provided guidance for the combined operations For the department of the British War Office during World War II, see . In the military, combined operations are operations conducted by forces of two or more allied nations acting together for the accomplishment of a single mission. See also
A firm whose shares are held within a relatively small circle of owners and are not traded publicly. until June 2, 2004, when it merged with Hycor. Stratagene's common stock began trading on the Nasdaq National Market under the symbol STGN as of June 3, 2004. Hycor was formerly listed on Nasdaq with the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors HYBD and separately released its financial results on April 27, 2004. The financial results of Stratagene presented for the first quarter of 2004 and 2003 also include the results of BioCrest Holdings LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control due to common control and management. Stratagene acquired the assets of BioCrest Holdings LLC on June 2, 2004. First Quarter Results For the first quarter of 2004, Stratagene's stand-alone revenues grew 15% (11% in constant currency) to $19.4 million compared with $16.9 million in the first quarter of 2003. Approximately 45% of the first quarter revenue growth was attributable to the shipment of backordered products ordered in 2003. A significant contributor to revenue growth was the demand for the Mx3000P(TM) Real-Time QPCR QPCR Quantitative Polymerase Chain Reaction instrument, launched in the second quarter of 2003. The Mx3000P instrument provides life science researchers with quantitative polymerase chain reaction Quantitative polymerase chain reaction (qPCR) is a modification of the polymerase chain reaction used to rapidly measure the quantity of DNA, complementary DNA or ribonucleic acid present in a sample. (QPCR) features and software in a low cost/high performance instrument solution. Sales increases of QPCR kits, mutagenesis mutagenesis /mu·ta·gen·e·sis/ (mu?tah-jen´e-sis) 1. the production of change. 2. the induction of genetic mutation. mu·ta·gen·e·sis n. pl. kits and bioinformatics software also contributed to revenue growth during the first quarter of 2004. Gross margin during the first quarter of 2004 increased nearly one percent to 69.5% of revenue primarily due to increased sales of higher margin products and reductions in the cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold with respect to certain instrumentation products. Research and development expenses decreased from the first quarter of 2003 by $0.3 million to $2.5 million. Selling, general and administrative expenses increased 13% to $7.1 million compared with $6.3 million in the first quarter of 2003. The increase was partially attributable to legal costs associated with entering into a new senior credit facility prior to the closing of the merger with Hycor and legal costs associated with patent 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. . Net income in the first quarter of 2004 grew 63% to $2.1 million compared to $1.3 million in the first quarter of 2003. The company views the first quarter of 2004 earnings results to be stronger due in part to the positive 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. and in part due to the reduction in product backorder in the first quarter of 2004. Future earnings results are not expected to reflect this growth rate. On April 27, 2004, Hycor Biomedical reported first quarter revenue growth of 12% to $5.5 million compared with $4.9 million in the first quarter of 2003. Hycor also reported net income growth of 59% to $528,000 or $0.06 per diluted Hycor share compared with $331,000 or $0.04 per diluted Hycor share in the first quarter of 2003. 2004 Guidance Given the June 2nd merger closing between Hycor and Stratagene, the company is providing guidance for both the second quarter and second half of 2004 for Stratagene and Hycor on a consolidated basis. For the second quarter, the company is expecting the sales cycle of its Mx3000P instrument to lengthen length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. . While interest in the product remains strong,
competitors have begun to discount their offerings, causing customers to
take more time in making a purchasing decision. While Stratagene has
responded to these competitive activities, the growth rate in revenue
for the second quarter of 2004 is expected to be lower than in first
quarter of 2004. Moreover, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency effects are not expected to be as large in second quarter of 2004 as they were in the first quarter of 2004. The company anticipates total revenues of approximately $19 million and non-recurring merger-related expenses of approximately $2.7 million in the second quarter of 2004, resulting in an expected net loss for the second quarter of 2004 of approximately $400,000 to $800,000. For the second half of 2004, the company is currently expecting revenue of approximately $44 to $46 million and earnings of approximately $0.13 to $0.15 per common share. The company is expecting fully diluted weighted average common shares outstanding for the second half of the year to be approximately 22.5 million. Conference Call Tomorrow Stratagene will conduct a conference call beginning at 8 a.m. Pacific Time on Thursday, June 10 to discuss its results, the merger with Hycor Biomedical and provide management's outlook and guidance for the remainder of 2004. The dial-in number for the conference call is 800-218-4007 for domestic participants and 303-262-2211 for international participants. A taped replay of the conference call will also be available beginning approximately one hour after the call's conclusion and will remain available through Midnight EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT on Thursday, June 17, 2004 and can be accessed by dialing 800-405-2236 for domestic callers and 303-590-3000 for international callers, using the passcode 582466#. To access the live webcast of the call, go to Stratagene's Web site at http://www.stratagene.com and click on the Investors icon. An archived webcast will also be available at http://www.stratagene.com. About Stratagene Corp. Stratagene is a developer, marketer and manufacturer of life science research and diagnostic products. The company's life science research operations support advances in science by inventing, manufacturing and distributing products that simplify, accelerate and improve research. These products are used throughout the academic, industrial, and government research sectors in fields spanning molecular biology molecular biology, scientific study of the molecular basis of life processes, including cellular respiration, excretion, and reproduction. The term molecular biology was coined in 1938 by Warren Weaver, then director of the natural sciences program at the Rockefeller , genomics, proteomics, drug discovery and toxicology toxicology, study of poisons, or toxins, from the standpoint of detection, isolation, identification, and determination of their effects on the human body. Toxicology may be considered the branch of pharmacology devoted to the study of the poisonous effects of drugs. . The company's diagnostic operations develop and manufacture products including high quality automated instrument and reagent reagent /re·a·gent/ (re-a´jent) a substance used to produce a chemical reaction so as to detect, measure, produce, etc., other substances. re·a·gent n. systems that use blood samples to test for more than 1,000 different allergies and autoimmune disorders Autoimmune Disorders Definition Autoimmune disorders are conditions in which a person's immune system attacks the body's own cells, causing tissue destruction. and urinalysis urinalysis (y  r'ənăl`ĭsĭs), clinical examination of urine for the purpose of medical diagnosis. controls. More information is
available at http://www.stratagene.comSafe 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. Statement Certain statements in this news release that are not historical fact constitute "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. " within the meaning of 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. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements. Stratagene generally identifies forward-looking statements by using words like "believe," "intend," "target," "expect," "estimate," "may," "should," "plan," "project," "contemplate," "anticipate," "predict" or similar expressions. You can also identify forward-looking statements by discussions of strategies, plans or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results of Stratagene to be materially different from historical results or from any results expressed or implied by such forward-looking statements. These factors, such as the absence of a public market for the Stratagene common stock prior to the Hycor merger, the challenges of integrating Stratagene and Hycor, Stratagene's ability to introduce new products and the acceptance of these products by the marketplace, competition, the inability to sell products as a result of the termination of license agreements, fluctuations in operating results, dependence on key employees, Stratagene's substantial indebtedness, future capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , the possibility of unproductive research and development projects, ability to manage growth, price volatility of Stratagene's common stock, the impact of future sales of common stock on Stratagene's stock price and potential declines in research and development budgets or funding, are discussed from time to time in the reports filed by Stratagene with the Securities and Exchange Commission, including the Form S-4 Registration Statement relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the merger transaction with Hycor.
STRATAGENE CORP. AND SUBSIDIARIES AND
BIOCREST HOLDINGS LLC AND SUBSIDIARIES
(unaudited)
(Dollars in thousands)
COMBINED INCOME STATEMENTS Three Months Ended
March 31,
2004 2003
Product sales $19,422 $16,876
Costs and expenses:
Cost of products sold 5,926 5,293
Research and development 2,521 2,838
Sales and marketing 4,054 3,986
General and administrative 3,094 2,326
Impairment of long-lived assets 51 -
Total costs and expenses 15,646 14,443
Income from operations 3,776 2,433
Other income and expenses:
Gain (loss) on foreign currency transactions (129) 159
Equity in loss of joint venture (24) (48)
Other income, net 85 4
Interest expense (694) (663)
Interest income 67 59
Total other expenses (695) (489)
Income before income taxes 3,081 1,944
Income tax expense 1,007 670
Net income $2,073 $1,275
COMBINED BALANCE SHEETS March 31, Dec. 31,
2004 2003
Cash and cash equivalents $3,066 $2,004
Other current assets 23,202 21,663
Total current assets 26,268 23,667
Property and equipment, net 9,989 10,321
Other assets, net 4,547 4,600
Total assets $40,804 $38,588
Current portion of long-term debt $3,587 $920
Other current liabilities 13,416 13,262
Total current liabilities 17,003 14,182
Long-term debt, less current portion 26,489 29,462
Other long-term liabilities 1,230 891
Stockholders' (and members') deficit (3,918) (5,947)
Total liabilities and stockholders' (and
members') deficit $40,804 $38,588
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