Net revenues for the Group for the third quarter of fiscal 2001 were $439.8 million, a 19 percent increase over the third quarter of fiscal 2000. Net income for the quarter rose 3 percent to $57.7 million compared with $56.1 million in the comparable period last year. Operating income in the third quarter of fiscal 2001 increased 10 percent to $79.6 million from $72.5 million in the prior year.
The strength of the U.S. dollar continued to have a negative effect on operating results. Revenues for the third quarter of fiscal 2001 reflect approximately an $11 million negative effect of foreign currency translation, net of the Company’s currency management program. Results were adversely affected by year-over-year declines in the value of the euro, the British pound, and the Japanese yen against the U.S. dollar. Foreign currency effects, net of hedges, reduced gross profit by approximately $8 million. Excluding currency, revenues increased approximately 23 percent, gross profit increased 18 percent, and operating income rose 17 percent. The approximate total impact of currency translation and transaction adjustments on net income was a negative $4.1 million in the third quarter of fiscal 2001 compared with a positive $3.8 million in the comparable period last year. This currency impact creates a year-to-year earnings swing of four cents a share. Excluding currency, diluted earnings per share would have grown by 19 percent from last year’s third quarter.
For the nine months ended March 31, 2001, earnings per diluted share were $0.74 compared to $0.60 in the same period last year. Net income for the first nine months of fiscal 2001 was $164.8 million, 27 percent higher than in the prior year. Operating income for the first nine months of fiscal 2001 was $213.8 million, 33 percent higher than the comparable period in fiscal 2000.
For the first nine months of fiscal 2001, the Group reported net revenues of $1.2 billion compared to $996 million in the same period in the prior year, a 22 percent increase. Excluding the negative effects of foreign currency, for the nine-month period of fiscal 2001, revenues increased approximately 26 percent, gross profit increased 24 percent, operating income rose 27 percent, and net income grew 32 percent over year-earlier levels, excluding special items from both fiscal years. Foreign currency effects, net of hedges, reduced net income by approximately $15 million in the nine-month period of fiscal 2001 compared with an increase in net income of approximately $1 million in the comparable period last year. This currency impact creates a year-to-year earnings swing of seven cents a share. Excluding currency, diluted earnings per share would have grown by 35 percent in the nine months ended March 31, 2001 over year earlier levels.
Tony L. White, chief executive officer of Applera Corporation, said, These results are consistent with the guidance we gave in our March 21 press release when we revised our near-term business outlook. We believe the Applied Biosystems Group performed well during the third quarter in light of the foreign currency environment and current economic conditions. In this difficult climate, sales and earnings increased while we kept pace with planned investments in our future.
Michael W. Hunkapiller, Ph.D., president, Applied Biosystems Group, said, The timing of the recent decline in the yen was unfortunate since a disproportionate share of our annual shipments to Japan, our largest single-country market outside the United States, occurs during the third quarter each year. Gross profit was negatively affected by a number of factors. The effects of foreign currency reduced gross profit by approximately $8 million. Investments in manufacturing operations supporting expansion of our custom oligo business and investments in other product lines reduced gross profit by a similar amount. Earnings growth was also affected by a 32 percent year-over-year increase in research and development expenditures, while selling, general and administrative expenses increased 11 percent. We believe our investments in manufacturing and R&D will help position us for success in high-growth emerging markets for genotyping and proteomics.
During the third quarter, revenue growth was fairly balanced between instruments and consumables. On the instrument side, the new ABI PRISM(R) 7900HT Sequence Detection System, the ABI PRISM(R) 3100 Genetic Analyzer for mid-throughput applications in sequencing and fragment analysis, and the Q-STAR(TM) Pulsar(R) mass spectrometer for proteomics performed particularly well. In consumables, year-over-year revenue growth was highest in Sequence Detection System reagents (including TaqMan(R) for gene expression and genotyping and Tropix chemiluminescent assay reagents used in a variety of biological experiments.
In November 2000, Applera Corporation announced a major initiative in the field of molecular diagnostics and the appointment of Kathy Ordonez, formerly president of Roche Molecular Systems, to lead this initiative. The initiative continues to develop as its strategy is refined and resources are built. The Company has evaluated the initiative’s anticipated relationships with the Company’s two operating groups, Applied Biosystems and Celera Genomics, and decided that it will be optimally positioned as a joint venture between those two groups. Further details and developments regarding this business, which will be named Celera Diagnostics, will be announced as this initiative continues to evolve.
