Exhibit 99.1
Investor and Financial Contacts:
Amanda Clardy Vice President, Investor Relations
(760) 603-7200
NOT FOR IMMEDIATE RELEASE
Invitrogen Announces Fourth Quarter and Full Year 2007 Results
Fourth quarter revenue of $336 million, 12 percent increase
Full year 2007 GAAP EPS from continuing operations $2.69
Fourth quarter and full year 2007 Non-GAAP EPS $1.15 and $4.57, respectively
Free cash flow $56 million in the quarter, $245 million full year
CARLSBAD, Calif.—(BUSINESS WIRE)—Feb. 5, 2008—Invitrogen Corporation (Nasdaq:IVGN) today announced results for its fourth quarter and full year ended December 31, 2007. Revenues for the fourth quarter were $336 million, resulting in full year sales of $1,282 million, an increase of 11 percent over the $1,151 million reported for 2006.
“Our strong fourth quarter and full year results demonstrate solid execution and our ability to deliver sustainable, consistent results,” said Greg Lucier, Chairman and Chief Executive Officer of Invitrogen. “Going forward, we are well-poised to execute on our two-pronged strategy of optimizing our core business while investing in high-growth areas such as cell biology and specialty cell systems.”
Fourth quarter diluted earnings per share from continuing operations were $0.82, which includes $0.10 per share of stock option expensing and $0.23 per share for amortization and other items. On a non-GAAP basis, which excludes these items, diluted earnings per share was $1.15, an increase of 16 percent over the same period last year. For the full year, diluted earnings per share from continuing operations was $2.69, which includes $0.51 per share of stock option expensing and $1.37 of other items noted in the table below. On a non-GAAP basis, full year earnings per share were $4.57, an increase of 30 percent over the prior year. The following analysis of diluted earnings per share identifies specific items that affect the comparability of results between periods.
Three Months Ending December 31, | Twelve Months Ending December 31, | |||||||||||||||||||||
2007 | 2006 | % | 2007 | 2006 | % | |||||||||||||||||
GAAP earnings per share as reported | $ | 0.83 | ($ | 2.08 | ) | n/m | $ | 2.95 | ($ | 3.72 | ) | n/m | ||||||||||
Discontinued operations | ($ | 0.01 | ) | $ | 2.54 | n/m | ($ | 0.26 | ) | $ | 5.16 | n/m | ||||||||||
GAAP earnings per share from continuing operations | $ | 0.82 | $ | 0.46 | 78 | % | $ | 2.69 | $ | 1.44 | 87 | % | ||||||||||
Amortization of acquisition related expenses | $ | 0.22 | $ | 0.36 | (39 | %) | $ | 1.31 | $ | 1.46 | (10 | %) | ||||||||||
Stock option expense (FAS123R) | $ | 0.10 | $ | 0.13 | (23 | %) | $ | 0.51 | $ | 0.57 | (11 | %) | ||||||||||
Business integration and other expense | $ | 0.01 | $ | 0.04 | n/m | $ | 0.06 | $ | 0.04 | n/m | ||||||||||||
Non-GAAP earnings per share | $ | 1.15 | $ | 0.99 | 16 | % | $ | 4.57 | $ | 3.51 | 30 | % |
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Reconciliations between Invitrogen’s results and non-GAAP results for the periods reported are presented in the attached tables and on the company’s Investor Relations page atwww.invitrogen.com.
Analysis of Fourth Quarter and Fiscal Year 2007 Results
• | Fourth quarter 2007 revenues increased 12 percent over the previous year, driven by solid growth in all businesses and positive currency benefits. |
• | The net effect of foreign currency on fourth quarter 2007 revenues was a favorable impact of 5 percent. |
• | Gross margin, on a non-GAAP basis, was 63.1 percent in the fourth quarter. This represents an increase of 110 basis points from the same period in the prior year, due to fixed cost leverage, operational cost efficiencies and positive pricing. Full year non-GAAP gross margin was 64 percent, an increase of approximately 100 basis points over prior year levels. |
• | Non-GAAP operating margin was 24.1 percent in the fourth quarter, representing a 30 basis point increase over the same period in 2006. Full year operating margin increased by 100 basis points due to the company’s focus on improving margins through mix, price and operational efficiencies. |
• | Fourth quarter non-GAAP tax rate was 30.1 percent and full year non-GAAP tax rate was 30.4 percent. |
• | Weighted shares outstanding were 49.5 million in the fourth quarter as a result of the dilution from convertible bonds and employee stock options, partially offset by the continuation of the company’s share repurchase program. The company repurchased 1.1 million shares for $100 million in the fourth quarter. |
• | Cash flow from operating activities for the fourth quarter was $99 million. Fourth quarter capital expenditures were $42 million and free cash flow was $56 million. Full year cash flow from operating activities was $324 million, capital expenditures were $78 million and free cash flow was $245 million. The company ended the year with $671 million in cash & short-term investments. |
Segment and Geographic Highlights
• | BioDiscovery revenue was $239 million in the fourth quarter, an increase of 13.5 percent over the same period the previous year. Currency contributed 5.5 percent growth. Revenue growth was as a result of increased price and volume in a number of areas across the molecular biology and cellular analysis business units. A few highlights are as follows: |
¡ | Acceleration in the drug discovery sciences business, driven by increased outsourcing of screening services by pharmaceutical companies, resulted in double-digit year-over-year growth. Investments made in GPCR target through the Sentigen acquisition, strengthened Invitrogen’s broad portfolio of offerings in kinases and nuclear receptors. |
¡ | Gene Expression products, such as RNAi and real time PCR consumables, delivered another quarter of strong growth. Invitrogen now provides the most comprehensive human and mouse microRNA arrays on the market. |
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¡ | Double digit growth in Nucleic Acid Purification resulted from customers’ adoption of the company’s technology offerings which provide significant end-user benefits. |
¡ | The cellular analysis portfolio, including human antibodies for flow cytometry, growth factors, cytokines and cell signaling assays, as well as labeling and detection technologies from Molecular Probes, all had solid growth. |
¡ | BioDiscovery gross margins increased 170 basis points year over year due to positive price and mix, as well as continued operational efficiencies. |
• | Cell Systems revenue was $97 million in fourth quarter 2007, an increase of 7 percent over the same period the previous year. Currency contributed 5 percent growth. This level of sales growth was as expected due to order timing from production customers. |
¡ | Research media and reagents had another quarter of double digit growth driven by improved sales execution and new product launches for specialty and stem cell media. |
¡ | Production media and reagents grew in low double digits in the quarter. This growth was offset by expected declines in production sera. For the full year 2007, sales of production media and sera grew 11 percent, with mid-teen growth for production media and flat sales growth of production sera. |
¡ | Cell Systems gross margins declined by 110 basis points year over year due to investments in operations and quality personnel, as well as lower sera pricing. |
• | Revenue growth by region for the fourth quarter was 7 percent in the Americas, 19 percent in Europe and 14 percent in Asia Pacific. The emerging markets of India, China and Korea all had strong double-digit growth, while the Japan market remained steady. |
• | Orders transacted through e-commerce channels reached a record high of 58 percent in the Americas during the fourth quarter, and more than 45 percent globally. |
New Product Highlights
• | More than 1400 new products launched in 2007, demonstrating continued payoff of investments in R&D. |
• | Launch of the GIBCO(R) AlgiMatrix(TM) 3D culture system, an animal-origin free bioscaffold that more closely mimics the conditions of a cell in the human body. |
• | Introduction of STEMPRO(R) hESC SFM, a new fully-defined, serum- and feeder-free media specifically formulated for the growth and expansion of human embryonic stem cells (hESCs). |
• | Launch of PlateSelect™ RNAi duplexes, which offers customers the ability to customize 96 well-plates with Invitrogen’s chemically modified Stealth™ or standard BLOCK-iT™ RNAi duplexes |
Fiscal Year 2008 Outlook
Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company provided its expectations for fiscal year 2008 financial performance. Revenues are expected to increase in the mid single digits. Non-GAAP earnings per share are expected to grow in the high single to low double digits. The company will provide further detail on its business outlook during the conference call today.
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Conference Call and Webcast Details
The company will discuss its financial and business results as well as its business outlook on its conference call at 4:30 pm Eastern Time today. This conference call will contain forward-looking information. The conference call will include a discussion of “non-GAAP financial measures” as that term is defined in Regulation G. For actual results, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the company’s financial results determined in accordance with GAAP, as well as other material financial and statistical information to be discussed on the conference call will be posted at the company’s Investor Relations website atwww.invitrogen.com.
The webcast can be accessed on Invitrogen’s website atwww.invitrogen.com on the Investor Relations home page. Alternatively, callers may listen to the live conference call by dialing 866.800.8649 (domestic) or 617.614.2703 (international) and use passcode 16353136. A replay of the webcast will be available on the Company’s website through Tuesday, February 26, 2008.
About Invitrogen
Invitrogen Corporation (Nasdaq:IVGN) provides products and services that support academic and government research institutions and pharmaceutical and biotech companies worldwide in their efforts to improve the human condition. The company provides essential life science technologies for disease research, drug discovery, and commercial bioproduction. Invitrogen’s own research and development efforts are focused on breakthrough innovation in all major areas of biological discovery including functional genomics, proteomics, bioinformatics and cell biology — placing Invitrogen’s products in nearly every major laboratory in the world. Founded in 1987, Invitrogen is headquartered in Carlsbad, California, and conducts business in more than 70 countries around the world. The company employs approximately 4,700 scientists and other professionals and had revenues of approximately $1.3 billion in 2007. For more information, visit www.invitrogen.com.
Statement Regarding Use of Non-GAAP Measures
We regularly have reported non-GAAP measures for net income and earnings per share as non-GAAP results. These measures are provided as supplementary information and are not a substitute for, or superior to, financial measures calculated in accordance with GAAP. These non-GAAP measures are limited because they do not reflect the entirety of our business results.
We define our non-GAAP results as our GAAP results excluding the after tax impact of the following:
• | Acquisition related amortization |
• | In process research and development expenses |
• | Acquisition related gains and losses |
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• | Asset impairment charges related to a portfolio review |
• | Business consolidation costs required to realize cost synergies from combining our acquired entities with our existing operations |
• | Certain significant one time events that are unlikely to recur |
• | Share based payment expenses as a result of adoption of FAS123R |
• | Effect of 2006 convertible subordinated notes |
Management views these excluded items as not indicative of the operating results or cash flows of its operations and excludes these items as a supplemental disclosure to assist investors in evaluating and assessing our past and future operational performance. This presentation of our non-GAAP results is consistent with how management internally evaluates the performance of its operations.
We encourage investors to carefully consider our results under GAAP, as well as our non-GAAP disclosures and the reconciliation between these presentations to more fully understand our business. Reconciliations between GAAP results and non-GAAP results are presented on the following pages.
Safe Harbor Statement
Certain statements contained in this press release and in today’s conference call are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and it is Invitrogen’s intent that such statements be protected by the safe harbor created thereby. Such statements include, but are not limited to statements regarding Invitrogen’s: 1) financial projections, including revenue and non-GAAP earnings per share; 2) plans regarding our share repurchase program; 3) momentum in 2008; and 4) plans to sustain and expand organic growth and increase operating margins. Such forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to a) the Company’s ability to identify promising technology and new product development opportunities; b) the Company’s repurchase shares of its common stock at prices that are acceptable to its Board of Directors and management; and c) the Company’s ability to identify acquisitions and organic growth opportunities that will position it to serve growing markets, as well as other risks and uncertainties detailed from time to time in Invitrogen’s Securities and Exchange Commission filings.
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INVITROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RECONCILIATION OF NON-GAAP ADJUSTMENTS(1)
(in thousands, except per share data) | For the three monthsended December 31, 2007 | For the three months ended December 31, 2006 | ||||||||||||||||||||||
(unaudited) | GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
Revenues | $ | 336,445 | $ | — | $ | 336,445 | $ | 301,583 | $ | — | $ | 301,583 | ||||||||||||
Cost of revenues | 125,340 | (1,307 | )(2)(3) | 124,033 | 115,887 | (1,367 | )(2)(3) | $ | 114,520 | |||||||||||||||
Purchased intangibles amortization | 16,884 | (16,884 | )(4) | — | 27,149 | (27,149 | )(4) | $ | — | |||||||||||||||
Gross profit | 194,221 | 18,191 | 212,412 | 158,547 | 28,516 | 187,063 | ||||||||||||||||||
Gross margin | 57.7 | % | 63.1 | % | 52.6 | % | 62.0 | % | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 68,542 | (1,398 | )(2)(3) | 67,144 | 57,915 | (1,423 | )(2)(3) | 56,492 | ||||||||||||||||
General and administrative | 38,300 | (4,522 | )(2)(3) | 33,778 | 39,691 | (4,604 | )(2)(3) | 35,087 | ||||||||||||||||
Research and development | 31,213 | (940 | )(2)(3) | 30,273 | 24,605 | (1,016 | )(2)(3) | 23,589 | ||||||||||||||||
Business consolidation costs | 846 | (846 | )(5) | — | 4,497 | (4,497 | )(5) | — | ||||||||||||||||
Total operating expenses | 138,901 | (7,706 | ) | 131,195 | 126,708 | (11,540 | ) | 115,168 | ||||||||||||||||
Operating income | 55,320 | 25,897 | 81,217 | 31,839 | 40,056 | 71,895 | ||||||||||||||||||
Operating margin | 16.4 | % | 24.1 | % | 10.6 | % | 23.8 | % | ||||||||||||||||
Interest income | 8,348 | — | 8,348 | 5,271 | — | 5,271 | ||||||||||||||||||
Interest expense | (6,906 | ) | — | (6,906 | ) | (7,782 | ) | — | (7,782 | ) | ||||||||||||||
Other income (expense), net | (1,280 | ) | — | (1,280 | ) | 97 | — | 97 | ||||||||||||||||
Total other income (expense), net | 162 | — | 162 | (2,414 | ) | — | (2,414 | ) | ||||||||||||||||
Income from continuing operations before provision for income taxes | 55,482 | 25,897 | 81,379 | 29,425 | 40,056 | 69,481 | ||||||||||||||||||
Income tax provision | (14,981 | ) | (9,547 | )(6) | (24,528 | ) | (6,811 | ) | (14,184 | )(6) | (20,995 | ) | ||||||||||||
Income from continuing operations | $ | 40,501 | $ | 16,350 | $ | 56,851 | $ | 22,614 | $ | 25,872 | $ | 48,486 | ||||||||||||
Income (loss) from discontinued operations, net of tax | $ | 550 | $ | (550 | ) | $ | — | $ | (122,768 | ) | $ | 122,768 | $ | — | ||||||||||
Net income (loss) | $ | 41,051 | $ | 15,800 | $ | 56,851 | $ | (100,154 | ) | $ | 148,640 | $ | 48,486 | |||||||||||
Effective tax rate for continuing operations | 27.0 | % | 30.1 | % | 23.1 | % | 30.2 | % | ||||||||||||||||
Add back interest expense for subordinated debt, net of tax | 34 | — | 34 | 89 | — | 89 | ||||||||||||||||||
Numerator for diluted earnings per share for continuing operations | $ | 40,535 | $ | 16,350 | $ | 56,885 | $ | 22,703 | $ | 25,872 | $ | 48,575 | ||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||
Basic earnings per share from continuing operations | $ | 0.87 | $ | 1.22 | $ | 0.47 | $ | 1.01 | ||||||||||||||||
Basic earnings (loss) per share from discontinued operations | $ | 0.01 | $ | — | $ | (2.55 | ) | $ | — | |||||||||||||||
Basic earnings (loss) per share | $ | 0.88 | $ | 1.22 | $ | (2.08 | ) | $ | 1.01 | |||||||||||||||
Diluted earnings per share from continuing operations | $ | 0.82 | $ | 1.15 | $ | 0.46 | $ | 0.99 | ||||||||||||||||
Diluted earnings (loss) per share from discontinued operations | $ | 0.01 | $ | — | $ | (2.49 | ) | $ | — | |||||||||||||||
Diluted earnings (loss) per share | $ | 0.83 | $ | 1.15 | $ | (2.03 | ) | $ | 0.99 | |||||||||||||||
Weighted average shares used in per share calculation: | ||||||||||||||||||||||||
Basic | 46,617 | 46,617 | 48,076 | — | 48,076 | |||||||||||||||||||
Diluted | 49,542 | 49,542 | 49,219 | 49,219 |
(1) | The Company has regularly reported Non-GAAP results which exclude the amortization of purchased intangibles, charges for inventory revaluation on products sold that were previously written-up under purchase accounting rules, and acquisition related deferred compensation to provide a supplemental comparison of results of operations. In addition, expenses related to share-based payments as a result of the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” have been excluded from Non-GAAP results. |
(2) | Add back amortization of deferred compensation of zero and $0.1 million for the three months ended December 31, 2007 and 2006, respectively, related to stock option plans assumed in business combinations. |
(3) | Add back stock option expense related to Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” of $8.2 million and $8.3 million for the three months ended December 31, 2007 and 2006, respectively. |
(4) | Add back amortization of purchased intangibles. |
(5) | Add back business consolidation costs. |
(6) | Non-GAAP tax expense is higher than GAAP tax expense primarily because certain acquisition related costs such as charges for inventory revaluation, amortization of acquired intangibles and deferred compensation are deducted for GAAP purposes but excluded for Non-GAAP purposes. In addition, 2007 GAAP net income includes expenses related to share-based payments as a result of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” which are deducted for GAAP purposes but excluded for Non-GAAP purposes. These deductions produce a GAAP only tax benefit which is added back for Non-GAAP presentation. |
INVITROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND RECONCILIATION OF NON-GAAP ADJUSTMENTS(1)
(in thousands, except per share data) | For the yearended December 31, 2007 | For the year ended December 31, 2006 | ||||||||||||||||||||||
(unaudited) | GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | ||||||||||||||||||
Revenues | $ | 1,281,747 | $ | 1,281,747 | $ | 1,151,175 | $ | 1,151,175 | ||||||||||||||||
Cost of revenues | 467,139 | (6,153 | )(2)(3)(4) | 460,986 | 432,176 | (6,698 | )(2)(3)(4) | 425,478 | ||||||||||||||||
Purchased intangibles amortization | 98,721 | (98,721 | )(5) | — | 110,668 | (110,668 | )(5) | — | ||||||||||||||||
Gross profit | 715,887 | 104,874 | 820,761 | 608,331 | 117,366 | 725,697 | ||||||||||||||||||
Gross margin | 55.9 | % | 64.0 | % | 52.8 | % | 63.0 | % | ||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Sales and marketing | 252,057 | (6,059 | )(3)(4) | 245,998 | 232,388 | (5,081 | )(3)(4) | 227,307 | ||||||||||||||||
General and administrative | 164,042 | (19,685 | )(3)(4) | 144,357 | 150,068 | (26,687 | )(3)(4) | 123,381 | ||||||||||||||||
Research and development | 115,833 | (4,090 | )(3)(4) | 111,743 | 104,343 | (4,161 | )(3)(4) | 100,182 | ||||||||||||||||
Business consolidation costs | 5,635 | (5,635 | )(6) | — | 12,540 | (12,540 | )(6) | — | ||||||||||||||||
Total operating expenses | 537,567 | (35,469 | ) | 502,098 | 499,339 | (48,469 | ) | 450,870 | ||||||||||||||||
Operating income | 178,320 | 140,343 | 318,663 | 108,992 | 165,835 | 274,827 | ||||||||||||||||||
Operating margin | 13.9 | % | 24.9 | % | 9.5 | % | 23.9 | % | ||||||||||||||||
Interest Income | 27,961 | — | 27,961 | 26,687 | — | 26,687 | ||||||||||||||||||
Interest Expense | (27,967 | ) | — | (27,967 | ) | (32,156 | ) | — | (32,156 | ) | ||||||||||||||
Other income (expense), net | 332 | — | 332 | 540 | (1,344 | )(7) | (804 | ) | ||||||||||||||||
Total other expense, net | 326 | — | 326 | (4,929 | ) | (1,344 | ) | (6,273 | ) | |||||||||||||||
Income from continuing operations before provision for income taxes | 178,646 | 140,343 | 318,989 | 104,063 | 164,491 | 268,554 | ||||||||||||||||||
Income tax provision | (48,367 | ) | (48,656 | )(8) | (97,023 | ) | (28,304 | ) | (55,195 | )(8) | (83,499 | ) | ||||||||||||
Income from continuing operations | $ | 130,279 | $ | 91,687 | $ | 221,966 | $ | 75,759 | $ | 109,296 | $ | 185,055 | ||||||||||||
Income (loss) from discontinued operations, net of tax | $ | 12,911 | $ | (12,911 | ) | $ | — | $ | (266,808 | ) | $ | 266,808 | $ | — | ||||||||||
Net income (loss) | $ | 143,190 | $ | 78,776 | $ | 221,966 | $ | (191,049 | ) | $ | 376,104 | $ | 185,055 | |||||||||||
Effective tax rate | 27.1 | % | 30.4 | % | 27.2 | % | 31.1 | % | ||||||||||||||||
Add back interest expense for subordinated debt, net of tax | 147 | — | 147 | 574 | — | 574 | ||||||||||||||||||
Numerator for diluted earningsper share for continuing operations | $ | 130,426 | $ | 91,687 | $ | 222,113 | $ | 76,333 | $ | 109,296 | $ | 185,629 | ||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||
Basic earnings per share from continuing operations | $ | 2.79 | $ | 4.75 | $ | 1.47 | $ | 3.60 | ||||||||||||||||
Basic earnings (loss) per share from discontinued operations | $ | 0.28 | $ | — | $ | (5.19 | ) | $ | — | |||||||||||||||
Basic earnings (loss) per share | $ | 3.07 | $ | 4.75 | $ | (3.72 | ) | $ | 3.60 | |||||||||||||||
Diluted earnings per share from continuing operations | $ | 2.69 | $ | 4.57 | $ | 1.44 | $ | 3.51 | ||||||||||||||||
Diluted earnings (loss) per share from discontinued operations | $ | 0.26 | $ | — | $ | (5.04 | ) | $ | — | |||||||||||||||
Diluted earnings (loss) per share | $ | 2.95 | $ | 4.57 | $ | (3.60 | ) | $ | 3.51 | |||||||||||||||
Weighted average shares used in per share calculation: | ||||||||||||||||||||||||
Basic | 46,686 | 46,686 | 51,393 | 51,393 | ||||||||||||||||||||
Diluted | 48,574 | 48,574 | 52,862 | 52,862 |
(1) | The Company has regularly reported Non-GAAP results which exclude the amortization of purchased intangibles, charges for inventory revaluation on products sold that were previously written-up under purchase accounting rules, and acquisition related deferred compensation to provide a supplemental comparison of results of operations. In addition, expenses related to share-based payments as a result of the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” have been excluded from Non-GAAP results. |
(2) | Add back noncash charges for purchase accounting inventory revaluations of $0.5 million and $3.1 million for the year ended December 31, 2007 and 2006, respectively. |
(3) | Add back amortization of deferred compensation was immaterial and $0.5 million for the year ended December 31, 2007 and 2006, respectively, related to stock option plans assumed in business combinations. |
(4) | Add back expenses related to share-based payments as a result of the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” of $35.5 million and $38.9 million for the year ended December 31, 2007 and 2006, respectively. |
(5) | Add back amortization of purchased intangibles. |
(6) | Add back business consolidation costs. |
(7) | Deduct gain on the sale of a business operation. |
(8) | Non-GAAP tax expense is higher than GAAP tax expense primarily because certain acquisition related costs such as charges for inventory revaluation, amortization of acquired intangibles and deferred compensation are deducted for GAAP purposes but excluded for Non-GAAP purposes. In addition, 2007 GAAP net income includes expenses related to share-based payments as a result of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” which are deducted for GAAP purposes but excluded for Non-GAAP purposes. These deductions produce a GAAP only tax benefit which is added back for Non-GAAP presentation. |
INVITROGEN CORPORATION
BUSINESS SEGMENT HIGHLIGHTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006
(in thousands) (unaudited) | Bio-Discovery | Cell Systems | Unallocated(1) | Total | ||||||||||||
Segment results for the three months ended December 31, 2007 | ||||||||||||||||
Revenues | $ | 239,031 | $ | 97,414 | $ | — | $ | 336,445 | ||||||||
Gross profit | 164,183 | 48,229 | (18,191 | ) | 194,221 | |||||||||||
Gross margin | 68.7 | % | 49.5 | % | 57.7 | % | ||||||||||
Selling and administrative | 75,000 | 25,922 | 5,920 | 106,842 | ||||||||||||
Research and development | 25,858 | 4,415 | 940 | 31,213 | ||||||||||||
Business consolidation costs | — | — | 846 | 846 | ||||||||||||
Operating income (loss) | $ | 63,325 | $ | 17,892 | $ | (25,897 | ) | $ | 55,320 | |||||||
Operating margin | 26.5 | % | 18.4 | % | 16.4 | % | ||||||||||
Segment results for the three months ended December 31, 2006 | ||||||||||||||||
Revenues | $ | 210,606 | $ | 90,977 | $ | — | $ | 301,583 | ||||||||
Gross profit | 141,047 | 46,016 | (28,516 | ) | 158,547 | |||||||||||
Gross margin | 67.0 | % | 50.6 | % | 52.6 | % | ||||||||||
Selling and administrative | 68,526 | 23,053 | 6,027 | 97,606 | ||||||||||||
Research and development | 21,143 | 2,446 | 1,016 | 24,605 | ||||||||||||
Business consolidation costs | — | — | 4,497 | 4,497 | ||||||||||||
Operating income (loss) | $ | 51,378 | $ | 20,517 | $ | (40,056 | ) | $ | 31,839 | |||||||
Operating margin | 24.4 | % | 22.6 | % | 10.6 | % |
(1) | Unallocated items for the three months ended December 31, 2007 and 2006 include amortization of purchased intangibles of $16.9 million and $27.1 million, amortization of deferred compensation of zero and $0.1 million, business consolidation costs of $0.8 million and $4.5 million, and expenses related to share-based payments as a result of the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” of $8.2 million and $8.3 million, respectively. These items are not allocated by management for purposes of analyzing the operations since they are principally non-cash or other costs resulting primarily from business restructuring or purchase accounting that are separate from ongoing operations. |
INVITROGEN CORPORATION
BUSINESS SEGMENT HIGHLIGHTS
FOR THE YEAR ENDED DECEMBER 31, 2007 AND 2006
(in thousands) (unaudited) | Bio-Discovery | Cell Systems | Unallocated(1) | Total | ||||||||||||
Segment results for the year ended December 31, 2007 | ||||||||||||||||
Revenues | $ | 902,224 | $ | 379,523 | $ | — | $ | 1,281,747 | ||||||||
Gross profit | 633,060 | 187,701 | (104,874 | ) | 715,887 | |||||||||||
Gross margin | 70.2 | % | 49.5 | % | 55.9 | % | ||||||||||
Selling and administrative | 290,255 | 100,100 | 25,744 | 416,099 | ||||||||||||
Research and development | 97,219 | 14,524 | 4,090 | 115,833 | ||||||||||||
Business consolidation costs | — | — | 5,635 | 5,635 | ||||||||||||
Operating income (loss) | $ | 245,586 | $ | 73,077 | $ | (140,343 | ) | $ | 178,320 | |||||||
Operating margin | 27.2 | % | 19.3 | % | 13.9 | % | ||||||||||
Segment results for the year ended December 31, 2006 | ||||||||||||||||
Revenues | $ | 814,650 | $ | 336,525 | $ | — | $ | 1,151,175 | ||||||||
Gross profit | 552,411 | 173,286 | (117,366 | ) | 608,331 | |||||||||||
Gross margin | 67.8 | % | 51.5 | % | 52.8 | % | ||||||||||
Selling and administrative | 265,940 | 84,748 | 31,768 | 382,456 | ||||||||||||
Research and development | 89,743 | 10,439 | 4,161 | 104,343 | ||||||||||||
Business consolidation costs | — | — | 12,540 | 12,540 | ||||||||||||
Operating income (loss) | $ | 196,728 | $ | 78,099 | $ | (165,835 | ) | $ | 108,992 | |||||||
Operating margin | 24.1 | % | 23.2 | % | 9.5 | % |
(1) | Unallocated items for the year ended December 31, 2007 and 2006 include noncash charges for purchase accounting inventory revaluations of $0.5 million and $3.1 million, amortization of purchased intangibles of $98.7 million and $110.7 million, amortization of deferred compensation of immaterial and $0.5 million, business consolidation costs of $5.6 million and $12.6 million, and expenses related to share-based payments as a result of the adoption of Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payments,” of $35.5 million and $38.9 million, respectively. These items are not allocated by management for purposes of analyzing the operations since they are principally non-cash or other costs resulting primarily from business restructuring or purchase accounting that are separate from ongoing operations. |
INVITROGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31, | ||||||||
(in thousands)(unaudited) | 2007 | 2006 | ||||||
Net income | $ | 143,190 | $ | (191,049 | ) | |||
Add back amortization and stock-based compensation | 141,072 | 167,319 | ||||||
Add back impairment of goodwill | — | 270,384 | ||||||
Add back depreciation | 37,357 | 41,219 | ||||||
Balance sheet changes | 6,173 | (14,308 | ) | |||||
Other noncash adjustments | (4,228 | ) | (38,505 | ) | ||||
Net cash provided by operating activities | 323,564 | 235,060 | ||||||
Capital expenditures | (78,333 | ) | (61,085 | ) | ||||
Free cash flow | 245,231 | 173,975 | ||||||
Net cash provided by investing activities (excluding capital expenditures above) | 126,788 | 290,903 | ||||||
Net cash used in financing activities | (143,245 | ) | (549,151 | ) | ||||
Effect of exchange rate changes on cash | 10,478 | 15,936 | ||||||
Net increase (decrease) in cash and cash equivalents | $ | 239,252 | $ | (68,337 | ) | |||
INVITROGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) (unaudited) | December 31, 2007 | December 31, 2006 | ||||
ASSETS | ||||||
Current assets: | ||||||
Cash and investments | $ | 671,293 | $ | 356,488 | ||
Trade accounts receivable, net of allowance for doubtful accounts | 192,137 | 177,510 | ||||
Inventories | 172,692 | 146,400 | ||||
Deferred income taxes | 20,699 | 35,184 | ||||
Prepaid expenses and other current assets | 33,663 | 25,022 | ||||
Total current assets | 1,090,484 | 740,604 | ||||
Assets of discontinued operations | — | 262,575 | ||||
Property and equipment, net | 319,653 | 275,419 | ||||
Goodwill | 1,528,779 | 1,480,008 | ||||
Intangible assets, net | 286,521 | 371,705 | ||||
Long-term investments | 753 | 2,850 | ||||
Other assets | 103,557 | 49,714 | ||||
Total assets | $ | 3,329,747 | $ | 3,182,875 | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
Current liabilities: | ||||||
Current portion of long-term debt | $ | 124 | $ | 1,961 | ||
Accounts payable, accrued expenses and other current liabilities | 225,218 | 205,421 | ||||
Income taxes | 9,071 | 20,704 | ||||
Total current liabilities | 234,413 | 228,086 | ||||
Liabilities of discontinued operations | 2,506 | 28,171 | ||||
Long-term debt | 1,150,700 | 1,150,824 | ||||
Pension liabilities | 28,428 | 38,444 | ||||
Deferred income tax liabilities | 102,373 | 92,942 | ||||
Income taxes payables | 27,093 | — | ||||
Other long-term liabilities | 18,787 | 13,981 | ||||
Stockholders’ equity | 1,765,447 | 1,630,427 | ||||
Total liabilities and stockholders’ equity | $ | 3,329,747 | $ | 3,182,875 | ||