EXHIBIT 99.4
INVITROGEN UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENT
On February 6, 2004, Invitrogen Corporation (Invitrogen) acquired all of the outstanding shares of common stock and stock options of BioReliance Corporation (BioReliance) for a cash purchase price of $433.3 million, plus assumed outstanding debt of $70.4 million and transaction costs of $4.9 million. The pro forma adjustments on the following unaudited pro forma combined financial statement are preliminary and have been prepared to illustrate the estimated effect of the acquisition. Consequently, the amounts reflected in the unaudited pro forma combined financial statement are subject to change, and the final amounts may differ substantially.
The unaudited pro forma combined statement of income for the six months ended June 30, 2004, illustrates the effect of the acquisition of BioReliance as if it had occurred on January 1, 2004, and includes the historical unaudited results of operations for BioReliance for the period from January 1, 2004, through February 6, 2004, combined with Invitrogen’s unaudited combined statement of income for the six months ended June 30, 2004, which gives effect to the acquisition of BioReliance Corporation (BioReliance) as of February 6, 2004.
The pro forma combined financial statement should be read in conjunction with the separate historical and pro forma consolidated financial statements and the notes thereto of Invitrogen contained in the 2003 Annual Report on Form 10-K filed on March 3, 2004, the Quarterly Report on Form 10-Q for the three month period ended March 31, 2004, filed on May 10, 2004, the Quarterly Report on Form 10-Q for the six month period ended June 30, 2004, filed on August 9, 2004, and the Forms 8-K/A filed on October 31, 2003, June 10, 2003, April 21, 2004, and May 25, 2004, and the audited financial statements of BioReliance included as an exhibit to the Form 8-K/A filed on April 21, 2004.
The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had occurred as of the date or during the period presented nor is it necessarily indicative of future operating results or financial positions.
INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 2004
(In thousands, except per share data)
| Historical Invitrogen | Historical (January 1, | Pro Forma Adjustments (Note 2) | Pro Forma Combined | |||||||||||||
Revenues | $ | 505,288 | $ | 7,500 | $ | (58 | )(a) | $ | 512,730 | |||||||
Cost of revenues | 217,270 | 6,112 | (24 | )(a) | 223,358 | |||||||||||
Gross margin | 288,018 | 1,388 | (34 | ) | 289,372 | |||||||||||
Operating Expenses: | ||||||||||||||||
Sales and marketing | 88,715 | — | 327 | (b) | 89,042 | |||||||||||
General and administrative | 53,229 | — | 1,842 | (b) | 55,071 | |||||||||||
Selling, general and administrative | — | 2,169 | (2,169 | )(b) | — | |||||||||||
Research and development | 33,902 | 104 | (34 | )(a) | 33,972 | |||||||||||
Purchased intangibles amortization | 56,535 | — | 410 | (c) | 56,945 | |||||||||||
Purchased in-process research and development | 728 | — | — | 728 | ||||||||||||
Business integration and merger costs | — | 37,744 | (37,744 | )(d) | — | |||||||||||
Total operating expenses | 233,109 | 40,017 | (37,368 | ) | 235,758 | |||||||||||
Income (loss) from operations | 54,909 | (38,629 | ) | 37,334 | 53,614 | |||||||||||
Interest and other income (expense), net | (12,556 | ) | (2,515 | ) | (630 | )(e) | (15,701 | ) | ||||||||
Income (loss) before provision for income taxes and minority interest | 42,353 | (41,144 | ) | 36,704 | 37,913 | |||||||||||
Income tax benefit (provision) | (12,155 | ) | 780 | 304 | (f) | (11,071 | ) | |||||||||
Net income (loss) | $ | 30,198 | $ | (40,364 | ) | $ | 37,008 | $ | 26,842 | |||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.58 | $ | 0.52 | ||||||||||||
Diluted | $ | 0.56 | $ | 0.50 | ||||||||||||
Weighted average shares used: | ||||||||||||||||
Basic | 51,940 | 51,940 | ||||||||||||||
Diluted | 53,950 | 53,950 | ||||||||||||||
See Notes to Unaudited Pro Forma Combined Financial Statement.
INVITROGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENT
1. Basis of Presentation
The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisition.
The unaudited pro forma combined statement of income for the six months ended June 30, 2004, illustrates the effect of the acquisition of BioReliance as if it had occurred on January 1, 2004, and includes the historical unaudited results of operations for BioReliance for the period from January 1, 2004, through February 6, 2004, combined with Invitrogen’s unaudited pro forma combined statement of income for the six months ended June 30, 2004, which give effect to the acquisition of BioReliance Corporation as of February 6, 2004.
2. Pro Forma Adjustments and Assumptions for BioReliance
On February 6, 2004, Invitrogen acquired all of the outstanding shares of common stock and stock options of BioReliance Corporation (BioReliance) for a cash purchase price of $433.3 million, plus assumed outstanding debt of $70.4 million and transaction costs of $4.9 million.
The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisition. Additionally, a final valuation of acquired purchased technology and assessment of useful lives has not yet been completed, which may affect the final allocation of the purchase price to these assets and the related amortization expense. Consequently, the amounts reflected in the unaudited pro forma combined statements of income are subject to change, and the final amounts may differ substantially.
(a) ADJUSTMENTS TO REVENUES, COST OF SALES AND RESEARCH AND DEVELOPMENT EXPENSES
Eliminates intercompany sales of $58,000, intercompany cost of sales of $24,000, and intercompany purchases used in research and development of $34,000.
(b) EXPENSE RECLASSIFICATION
Reclassify selling, general and administrative expenses to sales and marketing expense and general and administrative expense to conform to Invitrogen’s expense classifications.
| (in thousands) | |||
Combined selling, general and administrative as reported by BioReliance | $ | 2,169 | |
Reallocate to conform to Invitrogen’s expense classifications: | |||
Sales and marketing expenses | 327 | ||
General and administrative expenses | 1,842 | ||
| $ | 2,169 | ||
(c) ADJUSTMENTS TO INTANGIBLE ASSET AMORTIZATION
Increases purchase intangibles amortization expense by $0.4 million for the acquired purchased intangibles. The amortization of the purchased intangibles, which is preliminary and may change significantly upon completion of the valuation of the intangible assets acquired, is based on a weighted average life of 4 years.
(d) ADJUSTMENTS TO BUSINESS INTEGRATION AND MERGER COSTS
Decreases business integration and merger costs for non-recurring expenses directly attributable to the purchase transaction.
(e) ADJUSTMENTS TO INTEREST AND OTHER INCOME AND EXPENSE, NET
Adjustments to interest and other income, net, are as follows:
| (in thousands) | ||||
Reduce interest income for estimated lost interest income, calculated at 1.95%, from cash used to pay for BioReliance common shares and stock options, cash used to pay for direct acquisition costs and cash used to repay the debt acquired | $ | (712 | ) | |
Increase interest expense for amortization of unfavorable lease liability | 97 | |||
Reduce interest expense for estimated saved interest at interest rates ranging from 0% to 9.49% from the repayment of debt acquired | (15 | ) | ||
Net adjustment to interest and other income and expense, net | $ | (630 | ) | |
(f) ADJUSTMENTS TO DEFERRED INCOME TAXES AND INCOME TAX PROVISION
Adjust the income tax provision on the pro forma combined pretax income by $0.3 million to amounts equal to the weighted average of Invitrogen’s pro forma effective tax rate for the six months ended June 30, 2004 and BioReliance’s historical effective tax rate for the period from January 1, 2004 through February 6, 2004.