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Applied Biosystems Reports Financial Results for Fourth Quarter and Fiscal 2008
-- Q4 net revenues increased 9% to $609 million -- Q4 fully diluted GAAP EPS of $0.50 -- Q4 non-GAAP EPS of $0.49
FOSTER CITY, Calif., Jul 24, 2008 (BUSINESS WIRE) -- Applied Biosystems (NYSE: ABI) today reported net revenues of
$609.0 million for the fourth quarter of fiscal 2008, an increase of
approximately 9% over the prior year quarter of $557.3 million. The
net effect of foreign currency on net revenues was a favorable impact
of approximately 5% compared to the prior year quarter.
For the fourth quarter of fiscal 2008, Applied Biosystems reported
income from continuing operations of $86.4 million, or $0.50 per
share, compared to $79.3 million, or $0.42 per share, for the prior
year quarter. Results in both periods were affected by the specified
items described in the paragraph below. Earnings per share (EPS) from
continuing operations on a non-GAAP basis, excluding the items
specified below, were $0.49, a 29% increase compared to $0.38 for the
prior year quarter. The net effect of foreign currency was a benefit
of approximately $0.06 per share compared to the prior-year quarter.
Net income for the fourth quarter of fiscal 2008 was $86.4
million, compared to $87.8 million for the prior year quarter. Net
income for the fourth quarter of fiscal 2007 included an after-tax
benefit of $8.5 million for discontinued operations related to the
settlement of German tax audits.
"This was an eventful quarter for our company with the separation
of Celera and the announced merger with Invitrogen," said Tony L.
White, Chief Executive Officer, Applied Biosystems Inc. "However,
these events should not overshadow the good performance turned in by
our businesses, which generated broad-based revenue growth with very
good earnings and cash flow as well."
Mark Stevenson, President and Chief Operating Officer of the
Applied Biosystems Group, commented further, "During the fourth
quarter we continued to experience double-digit growth in our
consumables business and in other sources of revenue. We saw a
resurgence of strength in our Real-Time PCR/Applied Genomics business,
our largest product category; meaningful gains in DNA sequencing; and
modest growth in mass spectrometry. Our applied markets businesses
showed healthy gains in both DNA and mass spectrometry applications.
We began shipping our SOLiD 2.0 next-generation sequencing platform in
May. It has been well-received by customers and we are gaining good
traction in the marketplace as word spreads about the system's
superior throughput and accuracy and unparalleled ability to support
key studies like cancer genomics and whole-transcriptome expression
analysis."
During the fourth quarters of both fiscal 2008 and 2007 Applied
Biosystems recorded items that affected the comparability of results.
For the fourth quarter of fiscal 2008, Applied Biosystems recorded a
pre-tax charge of $8.6 million for restructuring charges, primarily
for severance and our 50% share of the costs incurred for the
separation of Celera; a pre-tax charge of $7.8 million for costs
associated with the proposed combination with Invitrogen; and a
pre-tax gain of $25.0 million related to the sale of Millennium shares
upon its acquisition by Takeda Pharmaceutical. Applied Biosystems also
recorded amortization expense of $2.6 million related to acquired
intangibles. The fourth quarter of fiscal 2008 also included net tax
benefits of $0.5 million related to foreign tax matters.
During the fourth quarter of fiscal 2007, Applied Biosystems
recorded a pre-tax gain of $3.5 million due to the receipt of past
royalties under new and amended patent licenses. Applied Biosystems
also recorded amortization expense of $2.8 million related to acquired
intangibles. The fourth quarter of fiscal 2007 included a net tax
benefit of $6.9 million primarily related to foreign tax settlements
and the reduction of foreign valuation allowances.
The following table summarizes the impact of these items on EPS
calculations:
Reconciliation of GAAP amounts to Non-GAAP amounts
(Dollar amounts in millions)
Three months ended June Three months ended June
30, 2008 30, 2007
------------------------- ------------------------
GAAP Non-GAAP GAAP Non-GAAP
amounts Adj. amounts amounts Adj. amounts
-------- ------- -------- -------- ------ --------
Operating income $ 95.9 $(19.0) $ 114.9 $ 95.6 $ 0.7 $ 94.9
Income before
income taxes 124.5 6.0 118.5 103.5 0.7 102.8
Provision for
income taxes 38.1 3.9 34.2 24.2 (6.5) 30.7
Income from
continuing
operations 86.4 2.1 84.3 79.3 7.2 72.1
Earnings per share
allocations(1) 0.1 0.1 (0.1) (0.1)
Adjusted income
from continuing
operations for
earnings per share $ 86.5 $ 2.2 $ 84.3 $ 79.2 $ 7.1 $ 72.1
Total diluted
earnings per share
from continuing
operations $ 0.50 $ 0.01 $ 0.49 $ 0.42 $0.04 $ 0.38
(1) Represents allocation of intercompany sales of assets and
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: $254.1 million for Instruments, a 5% increase;
$249.9 million for Consumables, a 13% increase; and $105.0
million for Other Sources, a 13% increase. Revenues from Other
Sources included $74.8 million from our Services business and
$24.5 million from royalties and licenses.
-- Revenues for major geographic regions and their change
relative to the prior year quarter were: $239.2 million in the
United States, a 3% increase; $229.7 million in Europe, a 9%
increase including favorable foreign currency effects of
approximately 9%; $55.3 million in Japan, a 10% increase
including favorable foreign currency effects of approximately
12%; and $57.8 million in Other Asia Pacific countries, a 42%
increase including favorable foreign currency effects of
approximately 6%.
-- Gross margin in the fourth quarter of fiscal 2008 was 56.5%,
versus 55.4% in the prior year quarter. The increase in gross
margin was driven primarily by the favorable impact of foreign
currency and lower enzyme costs, partially offset by mass
spectrometry pricing.
-- Selling, general, and administrative (SG&A) expenditures in
the fourth quarter of fiscal 2008 were $176.4 million, or
29.0% of revenues, compared to $160.2 million, or 28.7% of
revenues, in the prior year quarter. Approximately half of the
increase in SG&A was due to the unfavorable impact of
currency.
-- Research and development (R&D) expenditures in the fourth
quarter of fiscal 2008 were $52.5 million, or 8.6% of
revenues, compared to $53.5 million, or 9.6% of revenues, in
the prior year quarter. The decrease in R&D expenditures was
primarily due to lower employee-related costs and the
termination in June 2007 of a contract with the U.S.
Department of Defense. Partially offsetting the decrease were
investments in programs related to the SOLiD system.
-- Cash flow from continuing operations was $163.6 million and
capital expenditures were $18.2 million for the quarter.
Depreciation and amortization expense was $19.2 million. As of
the end of the quarter, cash and short term investments were
$543.2 million, up from $494.5 million as of June 30, 2007.
This increase is largely the result of cash flow from
operations partially offset by the $602 million payment in
September 2007 to Morgan Stanley for the Accelerated Share
Repurchase transaction, a portion of which was funded with
available cash and the balance of which was funded by $275
million of short-term debt. Of the amount borrowed, $100.0
million was outstanding at the end of the quarter. Subsequent
to quarter end, the company paid off an additional $50
million, leaving a current outstanding balance of $50 million.
Accounts receivable were $475.6 million, representing 58 days
sales outstanding, and inventory was $161.8 million,
representing 3.3 months of inventory on hand.
Recent Business Developments
-- On July 1, the company announced that it had changed its name
to Applied Biosystems Inc. to reflect the remaining business
of the company following the separation of its Celera
business. Celera is now an independent, publicly traded
company that holds the businesses, assets and liabilities
previously attributed to the company's Celera Group. With the
separation of Celera, the company no longer operates under its
former tracking stock structure.
-- On June 12, the company and Invitrogen Corporation (NASDAQ:
IVGN) announced that their respective Boards of Directors had
approved a definitive merger agreement under which Invitrogen
will acquire all of the outstanding shares of Applied
Biosystems stock. The merger is subject to customary closing
conditions, including approval by the stockholders of each
company, and is targeted to close during the fall of 2008.
Following the close of the merger, the combined organization
will be named Applied Biosystems.
-- Also in June, Applied Biosystems and its partner, MDS Sciex,
announced several new mass spectrometry software and workflow
solutions aimed at helping customers achieve greater
productivity across a broad range of applications. The new
products include mTRAQ reagents, which enable customers to
validate, in parallel, several hundred proteins/peptides in
complex samples for targeted quantitation and pathway
analysis; Analyst(R) 1.5 software, a major platform upgrade;
and several important quality and safety testing solutions in
applied markets, particularly for the analysis of municipal
water for trace contaminants.
-- Applied Biosystems' SOLiD 2.0 system began shipping on May 1.
The upgraded system offers the highest throughput and accuracy
of any next-generation sequencing system available today. The
SOLiD systems' mate-pair analysis capability is particularly
suited for the study of complex diseases like cancer, which is
characterized by a wide range of genetic variation and
chromosomal abnormalities. In May, Applied Biosystems
announced a collaboration with the Wellcome Trust Sanger
Institute to study cancer genomics using the SOLiD system.
-- Also in May, the National Center for Victims of Crime (NCVC)
presented its 2008 Leadership Award to Leonard Klevan, Ph.D.
As president for Applied Biosystems' applied markets division,
Dr. Klevan has directed the efforts of a team that has
developed a number of workflow solutions that enable forensic
laboratories worldwide to maximize the use of DNA in human
identification and criminal investigations in order to provide
more evidence in a timely manner to help solve a greater
number of crimes.
-- In April, Applied Biosystems' StepOne(TM) Real-time PCR System
was awarded Best New Life Science Product for 2007 based on
polling more than 40,000 members of the worldwide scientific
community. The StepOne and StepOnePlus(TM) Systems were
developed in response to the growing market of researchers
interested in the increasing number of applications for
real-time PCR, a common laboratory method used to
simultaneously detect and determine the amount of nucleic
acids present in biological samples. During the quarter,
Applied Biosystems also made available a new set of gene
expression analysis tools to make the application of real-time
PCR TaqMan(R) assays more accessible to larger numbers of
researchers.
Fiscal 2008 Financial Highlights
For fiscal 2008, Applied Biosystems reported net revenues of $2.22
billion, an increase of approximately 6% over fiscal 2007 revenues of
$2.09 billion. The net effect of foreign currency increased net
revenues in fiscal 2008 by approximately 4% as compared to the prior
year
Income from continuing operations in fiscal 2008 was $316.6
million as compared to $170.9 million for fiscal 2007 which included a
$114.3 million expense for the write-off of the value of acquired
in-process R&D related to Agencourt technology. EPS from continuing
operations for fiscal 2008 were $1.78, a 98% increase compared to
$0.90 for the prior year. The net effect of foreign currency increased
EPS by approximately $0.18 as compared to the prior year. EPS from
continuing operations on a non-GAAP basis, excluding the specified
items described in the reconciliation schedule below, were $1.73, a
23% increase compared to $1.41 for the prior year. Net income for
fiscal 2007 included an after-tax benefit of $8.5 million for
discontinued operations. Cash flow from operations for fiscal 2008 was
$508.4 million compared to $366.1 million for fiscal 2007.
During both fiscal 2008 and 2007, Applied Biosystems recorded
items that affected the comparability of results.
For fiscal 2008, Applied Biosystems recorded a pre-tax charge of
$12.5 million for restructuring charges, primarily severance-related;
a pre-tax charge of $7.8 million for costs associated with the
proposed combination with Invitrogen; a pre-tax gain of $27.6 million
for gains on the sale of investments; and a pre-tax gain of $7.6
million primarily due to a settlement and licensing agreement. Applied
Biosystems also recorded amortization expense of $10.5 million related
to acquired intangibles. Fiscal 2008 also included tax benefits of
$7.9 million resulting primarily from the settlement of IRS and
foreign audits, tax benefits identified during the tax return
preparation, and the recalculation of deferred tax assets as a result
of a decrease in the statutory tax rate in Germany.
For fiscal 2007, Applied Biosystems recorded pre-tax items that
decreased income before taxes by $123.3 million. These items included:
the previously-mentioned charge of $114.3 million to write off the
value of acquired in-process research and development in connection
with the Agencourt acquisition; net gains of $2.2 million related to
the resolution of legal disputes; and amortization expense of $11.2
million related to acquired intangibles. Fiscal 2007 also included
favorable tax adjustments of $23.8 million primarily related to
foreign tax settlements and a reduction to foreign valuation
allowances.
The following table summarizes the impact of these items on EPS
calculations:
Reconciliation of GAAP amounts to Non-GAAP amounts
(Dollar amounts in millions)
Twelve months ended June Twelve months ended June
30, 2008 30, 2007
------------------------- --------------------------
GAAP Non-GAAP GAAP Non-GAAP
amounts Adj. amounts amounts Adj. amounts
-------- ------- -------- -------- -------- --------
Operating income $ 406.1 $(23.2) $ 429.3 $ 237.1 $(123.3) $ 360.4
Income before
income taxes 445.6 4.4 441.2 259.0 (123.3) 382.3
Provision for
income taxes 129.0 (4.3) 133.3 88.1 (26.4) 114.5
Income from
continuing
operations 316.6 8.7 307.9 170.9 (96.9) 267.8
Earnings per
share
allocations(1) (0.2) (0.2) (0.3) (0.3)
Adjusted income
from continuing
operations for
earnings per
share $ 316.4 $ 8.5 $ 307.9 $ 170.6 $ (97.2) $ 267.8
Total diluted
earnings per
share from
continuing
operations $ 1.78 $ 0.05 $ 1.73 $ 0.90 $ (0.51) $ 1.41
(1) Represents allocation of intercompany sales of assets and
interperiod taxes to adjust net income for purposes of calculating
earnings per share.
Applied Biosystems Outlook
The combination with Invitrogen Corporation is subject to
customary closing conditions and is targeted for completion during the
fall of 2008. The following outlook assumes current exchange rates and
it is provided for Applied Biosystems as if it had not entered into
the merger agreement with Invitrogen and remains an independent
business during all of fiscal 2009.
Applied Biosystems believes that its fiscal year 2009 outlook and
financial performance could be affected by a number of factors,
including: the introduction, manufacturing ramp-up and adoption of new
products including the SOLiD system; global economic uncertainty
including the level of commercial investments in life science R&D and
the level of government funding for life science research; legislation
and funding for applications in the applied markets; the outcome of
pending litigation matters; competitive product introductions and
pricing; and costs associated with the Invitrogen transaction. Subject
to the inherent uncertainty associated with these factors, Applied
Biosystems has the following expectations for fiscal year 2009:
-- Fiscal 2009 Revenue Growth Rate: Applied Biosystems expects
mid single digit growth assuming current exchange rates.
Revenues are expected to increase for both Instruments and for
Consumables.
-- Fiscal 2009 Growth by Product Category: Applied Biosystems
anticipates growth in the DNA Sequencing, Real-Time
PCR/Applied Genomics and Mass Spectrometry product categories
and declines in Core PCR and Other Product Lines. Quarterly
year-over-year revenue changes may be different from our
annual expectations due to a variety of factors, including the
timing of customer orders and disbursements of government
funding.
-- Fiscal 2009 Margins and Expenses: Applied Biosystems expects
gross margin in fiscal 2009 to be slightly higher than the
fiscal 2008 gross margin of 56.9%. SG&A as a percent of total
revenues is expected to be slightly higher than the prior year
level of 28.7%. R&D as a percentage of total revenues is
expected to be slightly below the prior year level of 8.8%.
Applied Biosystems expects operating margin in fiscal 2009 to
be slightly higher than the operating margin of 19.3% in the
prior year, excluding special items in both fiscal years as
described in the Use of Non-GAAP Financial Information section
below.
-- Fiscal 2009 Effective Tax Rate: Due to the implementation of
tax planning strategies in our Singapore location, Applied
Biosystems expects the effective annual tax rate used to
calculate non-GAAP financial measures to be approximately 28%,
compared to approximately 30% in fiscal 2008.
-- Fiscal 2009 non-GAAP Earnings Per Share Growth: Applied
Biosystems expects that non-GAAP EPS will grow faster than
revenue. This includes the incremental impact of stock-based
compensation and the decrease in the effective tax rate over
the prior fiscal year. The total impact of these items on
fiscal 2009 non-GAAP EPS is expected to be approximately
$0.04. We have suspended our open-market share repurchase
program due to the proposed combination with Invitrogen. Over
the last five years, the company has repurchased $1.7 billion
of Applied Biosystems stock through this program.
-- The total pre-tax impact of FAS 123R (accounting for
stock-based compensation) in fiscal 2009 is expected to be
approximately $27 million, compared to approximately $22
million in fiscal 2008, with an EPS impact of approximately
$0.11.
In the first quarter of fiscal 2009, revenue is expected to
increase in line with the growth rate in the first quarter of fiscal
2008. Gross margin and operating margin in the first quarter of fiscal
2009 are expected to be higher than the fiscal 2008 first quarter.
Other risks and uncertainties that may affect Applied Biosystems'
financial performance are detailed in the "Forward-Looking Statements"
section of this release.
The comments in the Outlook section of this press release reflect
management's current outlook. Applied Biosystems does not have any
current intention to update this outlook and plans to revisit the
outlook for its businesses only once each quarter when financial
results are announced. As noted above, this outlook assumes current
exchange rates and it is provided for Applied Biosystems as if it had
not entered into the merger agreement with Invitrogen and remains an
independent business during all of fiscal 2009.
Use of Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, both
historical and forward-looking, and including earnings per share and
operating margin adjusted to exclude some costs, expenses, gains and
losses and other specified items. These measures are not in accordance
with, or an alternative for, generally accepted accounting principles,
or GAAP, and may be different from non-GAAP financial measures used by
other companies. Among the items included in GAAP earnings but
excluded for purposes of determining adjusted earnings or other
non-GAAP financial measures that we present are: gains or losses from
sales of operating assets and investments; restructuring charges,
including severance charges; charges and recoveries relating to
significant legal proceedings; asset impairment charges; amortization
of acquired intangibles; costs incurred in connection with the
separation of Celera from Applera; and special tax items. In addition,
for non-GAAP financial measures, we have also excluded the allocation
of interperiod taxes and intercompany sales. We believe the
presentation of non-GAAP financial measures provides useful
information to management and investors regarding various financial
and business trends relating to our financial condition and results of
operations, and that when GAAP financial measures are viewed in
conjunction with non-GAAP financial measures, investors are provided
with a more meaningful understanding of our ongoing operating
performance. In addition, these non-GAAP financial measures are among
the primary indicators we use as a basis for evaluating performance,
allocating resources, setting incentive compensation targets, and
planning and forecasting future periods. Non-GAAP financial measures
are not intended to be considered in isolation or as a substitute for
GAAP financial measures. To the extent this release contains
historical non-GAAP financial measures, we have also provided
corresponding GAAP financial measures for comparative purposes.
However, in the case of forward-looking non-GAAP financial measures,
we have not provided corresponding forward-looking GAAP financial
measures because these measures are not accessible to us. We cannot
predict the occurrence, timing, or amount of all non-GAAP items that
we exclude from our non-GAAP financial measures but which could
potentially be significant to the calculation of our GAAP financial
measures for future fiscal periods.
Conference Call & Webcast
A conference call with Applied Biosystems executives will be held
today at 11:00 a.m. (ET) to discuss these results and other matters
related to the businesses. During the call, 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 617.614.4078 and enter passcode
15819472 at any time from 10:45 a.m. (ET) 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,
Presentations/Events page at www.appliedbiosystems.com. A digital
recording will be available approximately two hours after the
completion of the conference call on July 24 until August 8, 2008.
Interested parties should call 617.614.4078 and enter passcode
81170458.
About Applied Biosystems Inc.
Applied Biosystems Inc. (formerly known as Applera Corporation) is
a global leader in the development and marketing of instrument-based
systems, consumables, software, and services for academic research,
the life science industry and commercial markets. Driven by its
employees' belief in the power of science to improve the human
condition, the company commercializes innovative technology solutions
for DNA, RNA, protein and small molecule analysis. Customers across
the disciplines of academic and clinical research, pharmaceutical
research and manufacturing, forensic DNA analysis, and agricultural
biotechnology use the company's tools and services to accelerate
scientific discovery, improve processes related to drug discovery and
development, detect potentially pathogenic microorganisms, and
identify individuals based on DNA sources. Applied Biosystems has a
comprehensive service and field applications support team for a global
installed base of high-performance genetic and protein analysis
solutions. Applied Biosystems Inc. is headquartered in Norwalk, CT. On
June 12, 2008, Applera Corporation and Invitrogen Corporation (NASDAQ:
IVGN) announced that their Boards of Directors had approved a
definitive merger agreement under which Invitrogen will acquire all of
the outstanding shares of Applied Biosystems stock. The merger is
subject to customary closing conditions and is targeted to close in
the fall of 2008. Following the close of the merger, the combined
organization will be named Applied Biosystems. Information about
Applied Biosystems, including reports and other information filed by
the company with the Securities and Exchange Commission, is available
at http://www.appliedbiosystems.com. All information in this news
release is as of the date of the release, and Applied Biosystems does
not undertake any duty to update this information unless required by
law.
Additional Information
In connection with the proposed merger between Invitrogen
Corporation and the company, Invitrogen will file with the SEC a
Registration Statement on Form S-4 that will include a joint proxy
statement of the company and Invitrogen. The company and Invitrogen
will mail the joint proxy statement to their respective stockholders.
Investors and security holders are urged to read the joint proxy
statement when it becomes available because it will contain important
information. Investors and security holders may obtain a free copy of
the joint proxy statement (when it is available) and other related
documents filed with the SEC by the company and Invitrogen at the
SEC's website at www.sec.gov. The joint proxy statement (when it is
available) and the other documents may also be obtained for free at
the company's website at http://www.applera.com or at Invitrogen's
website at http://www.invitrogen.com.
The company and Invitrogen and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from stockholders in connection with the
proposed merger. Information regarding the persons who may, under the
rules of the SEC, be considered participants in the solicitation of
stockholders in connection with the merger will be set forth in the
joint proxy statement when it is filed with the SEC. You can find
information about company's executive officers and directors in the
company's definitive proxy statement filed with the SEC on September
6, 2007. You can find information about Invitrogen's executive
officers and directors in its definitive proxy statement filed with
the SEC on March 5, 2008. You may obtain free copies of these
documents from the company or Invitrogen, as applicable, by using the
contact information above.
Applied Biosystems 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," "should,"
"anticipate," "planned," and "expect," among others. These
forward-looking statements are based on our current expectations. The
Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for such forward-looking statements. In order to comply with
the terms of the safe harbor, we note 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 our
business, including the proposed merger with Invitrogen, include but
are not limited to: (1) our proposed merger with Invitrogen is subject
to review by regulatory agencies under antitrust or competition laws
in the U.S., the EU, and some other foreign jurisdictions, and we
cannot provide assurances as to whether we will obtain the necessary
clearances or approvals from these agencies or whether those
clearances or approvals will impose any conditions on the company
resulting from the merger; (2) our proposed merger with Invitrogen
also requires the approval of our and Invitrogen's stockholders and is
subject to the satisfaction of various other conditions specified in
the merger agreement, and we cannot provide assurances that all of the
conditions will be satisfied; (3) the announcement of the proposed
merger and our planning for the integration of the two companies could
disrupt our business plans and operations, adversely affect our
relationships with other companies such as customers and suppliers,
and divert the attention of our management; (4) rapidly changing
technology and evolving industry standards could adversely affect
demand for our products, and our business is dependent on development
and customer acceptance of new products; (5) our sales are dependent
on customers' capital spending policies and government-sponsored
research; (6) we have significant overseas operations, and
fluctuations in the value of foreign currencies could affect our
financial and operating results; (7) our growth depends in part on our
ability to acquire complementary technologies through acquisitions,
investments, or other strategic relationships or alliances, which may
not be successful, may absorb significant resources, may cause
dilution, and may result in impairment or other charges; (8) we may be
subject to liabilities related to our use, manufacture, sale, and
distribution of hazardous materials; (9) some of our principal
facilities are subject to the risk of earthquakes, which could
interrupt operations; (10) our products are based on complex, rapidly
developing technologies, which has resulted in some ongoing legal
actions against us and which creates a constant risk of lawsuits,
arbitrations, investigations, and other legal actions with private
parties and governmental entities, particularly involving claims for
infringement of patents and other intellectual property rights; (11)
some of the intellectual property that is important to our business is
owned by other companies or institutions and licensed to us, and legal
actions against these companies or institutions could harm our
business; (12) we may need to license intellectual property from third
parties to avoid or settle legal actions brought against us; (13) we
are dependent on the operation of computer hardware, software, and
Internet applications and related technology for our business,
particularly those areas of our business focused on the development
and marketing of information-based products and services; (14) new
clinical diagnostic instruments to be developed by us may not receive
required regulatory clearances and/or may not be accepted and adopted
by the market; (15) we rely on a single supplier or a limited number
of suppliers for some key products and key components of some of our
products; and (16) other factors that might be described from time to
time in our filings with the Securities and Exchange Commission. All
information in this press release is as of the date of the release,
and we do not undertake any duty to update this information, including
any forward-looking statements, unless required by law.
(C)Copyright 2008. Applied Biosystems Inc. All rights reserved.
Applera, Applied Biosystems, and AB (Design) are registered trademarks
and SOLiD, StepOne, and StepOnePlus are trademarks of Applied
Biosystems Inc. or its subsidiaries in the U.S. and/or certain other
countries. Invitrogen is a registered trademark of Invitrogen
Corporation. Analyst is a registered trademark of Applied
Biosystems/MDS Sciex Instruments. TaqMan is a registered trademark of
Roche Molecular Systems, Inc.
APPLERA CORPORATION (1)
APPLIED BIOSYSTEMS GROUP
CONDENSED COMBINED STATEMENTS OF OPERATIONS
(Dollar amounts in millions except per share amounts)
(Unaudited)
Three months ended Twelve months ended
June 30, June 30,
2008 2007 2008 2007
------------ ------------- ------------- -------------
Net revenues $ 609.0 $ 557.3 $ 2,224.7 $ 2,093.5
Cost of sales 265.2 248.7 960.0 936.2
------------ ------------- ------------- -------------
Gross margin 343.8 308.6 1,264.7 1,157.3
Selling,
general and
administrative 176.4 160.2 639.3 593.0
Research and
development 52.5 53.5 196.1 203.9
Amortization of
purchased
intangible
assets 2.6 2.8 10.5 11.2
Employee-
related
charges, asset
impairments
and other 16.4 20.3
Asset
dispositions
and legal
settlements (3.5) (7.6) (2.2)
Acquired
research and
development 114.3
------------ ------------- ------------- -------------
Operating
income 95.9 95.6 406.1 237.1
Gain on
investments,
net 25.0 27.6 0.2
Interest income
(expense), net 2.9 6.1 8.6 15.4
Other income
(expense), net 0.7 1.8 3.3 6.3
------------ ------------- ------------- -------------
Income before
income taxes 124.5 103.5 445.6 259.0
Provision for
income taxes 38.1 24.2 129.0 88.1
------------ ------------- ------------- -------------
Income from
continuing
operations 86.4 79.3 316.6 170.9
Income from
discontinued
operations,
net of income
taxes 8.5 8.5
------------ ------------- ------------- -------------
Net income $ 86.4 $ 87.8 $ 316.6 $ 179.4
============ ============= ============= =============
Earnings per
share analysis
---------------
Income from
continuing
operations $ 86.4 $ 79.3 $ 316.6 $ 170.9
Allocated
intercompany
sales of
assets(2) (0.1) (0.2) (0.3)
Allocated
interperiod
taxes(2) 0.1
------------ ------------- ------------- -------------
Total income
from
continuing
operations
allocated 86.5 79.2 316.4 170.6
Less dividends
declared on
common stock 7.2 29.3 31.2
------------ ------------- ------------- -------------
Undistributed
earnings $ 79.3 $ 79.2 $ 287.1 $ 139.4
============ ============= ============= =============
Allocation of
basic earnings
per share
Basic
distributed
earnings per
share $ 0.04 $ - $ 0.17 $ 0.17
Basic
undistributed
earnings per
share 0.47 0.43 1.66 0.76
------------ ------------- ------------- -------------
Total basic
earnings per
share $ 0.51 $ 0.43 $ 1.83 $ 0.93
============ ============= ============= =============
Allocation of
diluted
earnings per
share
Diluted
distributed
earnings per
share $ 0.04 $ - $ 0.16 $ 0.16
Diluted
undistributed
earnings per
share 0.46 0.42 1.62 0.74
------------ ------------- ------------- -------------
Total diluted
earnings per
share $ 0.50 $ 0.42 $ 1.78 $ 0.90
============ ============= ============= =============
Weighted
average number
of common
shares
Basic 168,585,000 183,305,000 172,796,000 183,162,000
Diluted 173,100,000 189,227,000 177,981,000 190,190,000
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
(2) Represents allocation of intercompany sales of assets and
interperiod taxes to adjust net income for purposes of calculating
earnings per share.
APPLERA CORPORATION (1)
APPLIED BIOSYSTEMS GROUP
Revenues By Product Categories
(Dollar amounts in millions)
(Unaudited)
Three months ended
June 30,
2008 2007 Change
--------- --------- ------
DNA Sequencing $ 151.7 $ 138.6 9%
% of total revenues 25% 25%
Real-Time PCR/Applied Genomics 221.9 192.6 15%
% of total revenues 36% 34%
Mass Spectrometry 152.0 146.2 4%
% of total revenues 25% 26%
Core PCR & DNA Synthesis 53.5 48.2 11%
% of total revenues 9% 9%
Other Product Lines 29.9 31.7 -6%
% of total revenues 5% 6%
--------- ---------
Total $ 609.0 $ 557.3 9%
========= =========
Twelve months ended
June 30,
2008 2007 Change
--------- --------- ------
DNA Sequencing $ 573.9 $ 557.6 3%
% of total revenues 26% 27%
Real-Time PCR/Applied Genomics 803.4 704.6 14%
% of total revenues 36% 34%
Mass Spectrometry 539.2 525.4 3%
% of total revenues 24% 25%
Core PCR & DNA Synthesis 199.8 190.5 5%
% of total revenues 9% 9%
Other Product Lines 108.4 115.4 -6%
% of total revenues 5% 5%
--------- ---------
Total $2,224.7 $2,093.5 6%
========= =========
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
APPLERA CORPORATION (1)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2008
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied
Biosystems Celera
Group Group Eliminations Consolidated
---------- ---------- ------------ ------------
Net revenues $ 609.0 $ 43.4 $ (0.3) $ 652.1
Cost of sales 265.2 12.1 0.3 277.6
---------- ---------- ------------ ------------
Gross margin 343.8 31.3 (0.6) 374.5
Selling, general and
administrative 176.4 25.1 201.5
Research and
development 52.5 9.4 (0.6) 61.3
Amortization of
purchased intangible
assets 2.6 2.5 5.1
Employee-related
charges, asset
impairments and other 16.4 2.7 19.1
---------- ---------- ------------ ------------
Operating income
(loss) 95.9 (8.4) 87.5
Gain (loss) on
investments, net 25.0 25.0
Interest income
(expense), net 2.9 2.6 5.5
Other income
(expense), net 0.7 0.7
---------- ---------- ------------ ------------
Income (loss) before
income taxes 124.5 (5.8) 118.7
Provision (benefit)
for income taxes 38.1 90.4 (0.1) 128.4
---------- ---------- ------------ ------------
Net income (loss) $ 86.4 $ (96.2) $ 0.1 $ (9.7)
========== ========== ============ ============
Net income (loss) per
share
Basic $ 0.51 $ (1.20)
Diluted $ 0.50 $ (1.20)
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
APPLERA CORPORATION (1)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 2007
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied
Biosystems Celera
Group Group Eliminations Consolidated
---------- ---------- ------------ ------------
Net revenues $ 557.3 $ 10.2 $ (1.3) $ 566.2
Cost of sales 248.7 3.9 (0.7) 251.9
---------- ---------- ------------ ------------
Gross margin 308.6 6.3 (0.6) 314.3
Selling, general and
administrative 160.2 8.1 (0.1) 168.2
Research and
development 53.5 13.5 (0.3) 66.7
Amortization of
purchased intangible
assets 2.8 2.8
Employee-related
charges, asset
impairments and other 4.3 4.3
Asset dispositions and
legal settlements (3.5) (3.5)
---------- ---------- ------------ ------------
Operating income
(loss) 95.6 (19.6) (0.2) 75.8
Interest income
(expense), net 6.1 6.9 13.0
Other income
(expense), net 1.8 0.2 2.0
---------- ---------- ------------ ------------
Income (loss) before
income taxes 103.5 (12.5) (0.2) 90.8
Provision (benefit)
for income taxes 24.2 (4.7) (0.1) 19.4
---------- ---------- ------------ ------------
Income (loss) from
continuing operations 79.3 (7.8) (0.1) 71.4
Income from
discontinued
operations, net of
income taxes 8.5 8.5
---------- ---------- ------------ ------------
Net income (loss) $ 87.8 $ (7.8) $ (0.1) $ 79.9
========== ========== ============ ============
Income (loss) from
continuing operations
per share
Basic $ 0.43 $ (0.10)
Diluted $ 0.42 $ (0.10)
Income from
discontinued
operations per share
Basic $ 0.05 $ -
Diluted $ 0.04 $ -
Net income (loss) per
share
Basic $ 0.48 $ (0.10)
Diluted $ 0.46 $ (0.10)
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
APPLERA CORPORATION (1)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Twelve Months Ended June 30, 2008
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied
Biosystems Celera
Group Group Eliminations Consolidated
---------- ---------- ------------ ------------
Net revenues $ 2,224.7 $ 139.4 $ (2.6) $ 2,361.5
Cost of sales 960.0 39.8 (0.7) 999.1
---------- ---------- ------------ ------------
Gross margin 1,264.7 99.6 (1.9) 1,362.4
Selling, general and
administrative 639.3 74.6 0.1 714.0
Research and
development 196.1 40.9 (1.7) 235.3
Amortization of
purchased intangible
assets 10.5 7.1 17.6
Employee-related
charges, asset
impairments and other 20.3 7.0 27.3
Asset dispositions and
legal settlements (7.6) (1.1) (8.7)
---------- ---------- ------------ ------------
Operating income
(loss) 406.1 (28.9) (0.3) 376.9
Gain (loss) on
investments, net 27.6 (3.0) (0.1) 24.5
Interest income
(expense), net 8.6 17.7 26.3
Other income
(expense), net 3.3 0.1 3.4
---------- ---------- ------------ ------------
Income (loss) before
income taxes 445.6 (14.2) (0.3) 431.1
Provision (benefit)
for income taxes 129.0 88.4 (0.1) 217.3
---------- ---------- ------------ ------------
Net income (loss) $ 316.6 $ (102.6) $ (0.2) $ 213.8
========== ========== ============ ============
Net income (loss) per
share
Basic $ 1.83 $ (1.29)
Diluted $ 1.78 $ (1.29)
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
APPLERA CORPORATION (1)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
For the Twelve Months Ended June 30, 2007
(Dollar amounts in millions except per share amounts)
(Unaudited)
Applied
Biosystems Celera
Group Group Eliminations Consolidated
---------- ---------- ------------ ------------
Net revenues $ 2,093.5 $ 43.4 $ (4.4) $ 2,132.5
Cost of sales 936.2 17.6 (2.3) 951.5
---------- ---------- ------------ ------------
Gross margin 1,157.3 25.8 (2.1) 1,181.0
Selling, general and
administrative 593.0 29.7 622.7
Research and
development 203.9 51.7 (1.6) 254.0
Amortization of
purchased intangible
assets 11.2 11.2
Employee-related
charges, asset
impairments and other 10.3 10.3
Asset dispositions and
legal settlements (2.2) (2.4) (4.6)
Acquired research and
development 114.3 114.3
---------- ---------- ------------ ------------
Operating income
(loss) 237.1 (63.5) (0.5) 173.1
Gain on investments,
net 0.2 0.2
Interest income
(expense), net 15.4 27.8 43.2
Other income
(expense), net 6.3 0.5 6.8
---------- ---------- ------------ ------------
Income (loss) before
income taxes 259.0 (35.2) (0.5) 223.3
Provision (benefit)
for income taxes 88.1 (15.4) (0.2) 72.5
---------- ---------- ------------ ------------
Income (loss) from
continuing operations 170.9 (19.8) (0.3) 150.8
Income from
discontinued
operations, net of
income taxes 8.5 8.5
---------- ---------- ------------ ------------
Net income (loss) $ 179.4 $ (19.8) $ (0.3) $ 159.3
========== ========== ============ ============
Income (loss) from
continuing operations
per share
Basic $ 0.93 $ (0.25)
Diluted $ 0.90 $ (0.25)
Income from
discontinued
operations per share
Basic $ 0.05 $ -
Diluted $ 0.04 $ -
Net income (loss) per
share
Basic $ 0.98 $ (0.25)
Diluted $ 0.94 $ (0.25)
(1) Effective July 1, 2008, Applera Corporation separated its Celera
Group into an independent publicly-traded company and changed its
name to Applied Biosystems Inc.
SOURCE: Applied Biosystems Group
Applied Biosystems Investors William Craumer, 650-638-6382 craumewc@appliedbiosystems.com or Media Peter Dworkin, 650-554-2479 dworkipg@appliedbiosystems.com
Copyright Business Wire 2008
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