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Machine Buyers Buoy ABI as Revenues Climb in Second Quarter

NEW YORK, Jan. 23-Double-digit growth in instrument sales boosted Applied Biosystems' revenues for the second quarter of fiscal 2003, but charges related to an asset write-off and layoff costs pulled net earnings well below the previous quarter, the company said today.


Income for the quarter ended Dec. 31, 2002 was $33.9 million, down sharply from the $65.9 million reported in the same period last year. Income was reduced by special charges: a $9.5 million asset write-off charge and a $24.3 million office closure and severance cost. The charges reduced net income by $23.4 million in the second quarter.


Earnings per share for the quarter were $0.14 versus $0.23 for the previous year's second quarter.


Net revenues for the quarter were $444.7 million, up 8 percent from the second quarter of last year. The increase was driven primarily by machine sales, which grew by 13 percent to $225.9 million from the previous year's second quarter. Strong performers included the 3730 DNA Analyzer, the QSTAR XL LC/MS/MS mass spectrometry system, the Q TRAP LC/MS/MS mass spectrometry system, and the 4700 Proteomics Analyzer.


Sales of the company's second-generation 3730 DNA sequencer are strong, ABI management said, and many buyers are adding capacity rather than replacing older machines.


The company's mass spectrometry product line grew the most quickly, increasing by 20 percent over the previous year, said company president Mike Hunkapiller. "We see healthy growth in the mass spectrometry market, and we also think we've taken market share," he said in a conference call today.


Revenues from consumables declined by 4 percent year over year to $144 million. ABI management blamed a decline in DNA sequencing reagents and consumables.


Higher service revenues and license fees lifted revenues from other sources by 22 percent over the second quarter of fiscal year 2002.


Despite stronger performance in instrument sales in the quarter, "forecasting remains challenging," said chief financial officer Dennis Winger. He blamed Congressional delays in approving the National Institutes of Health budget, which accounts for roughly 15 to 20 percent of ABI's instrument sales; similar budgetary holdups in Japan; and unpredictable demand for sequencing reagents.


R&D expenditures were up 12 percent from the second quarter of last year to $59.2 million, primarily due to support of the company's knowledge business.


For further information, see the company statement.

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