EX-99.1 2 dex991.htm PRESS RELEASE Press release

Exhibit 99.1

 

LOGO

 

Investor and Financial Contacts:

Adam S. Taich Vice President, Investor Relations

(760) 603-7208

 

Invitrogen Announces First Quarter 2005 Results

Record Sales and Pro Forma Earnings Achieved

 

CARLSBAD, CA, April 28, 2005 — Invitrogen Corporation (Nasdaq: IVGN) today announced results for its first quarter ended March 31, 2005. Revenues for the first quarter were $277.1 million, an increase of 10% over the $251.3 million reported for the first quarter of 2004. Net income for the first quarter was $47.1 million versus $10.5 million for the same quarter in 2004, an increase of 349%. Earnings per share for the first quarter of 2005 increased 332% to $0.82 per share, as compared to $0.19 per share reported in the first quarter of 2004.

 

Invitrogen has regularly reported pro forma results which exclude acquisition related amortization and other costs. First quarter pro forma net income was $50.9 million, or $0.88 per share, compared with pro forma net income in the first quarter of 2004 of $35.7 million, or $0.62 per share. Pro forma net income and pro forma earnings per share increased 43% and 42%, respectively.

 

Reconciliations between Invitrogen’s results and pro forma results for the periods reported are presented in the attached tables with information also presented on the Company’s Investor Relations web page at www.invitrogen.com.

 

Performance Highlights

 

  •   Record revenues in both BioDiscovery and BioProduction

 

  •   Generated $63.0 million in cash from operating activities for the quarter

 

  •   Closed the acquisitions of Dynal Biotech ASA and Zymed Laboratories, Inc.

 

  •   Increased guidance for the year

 

Conference Call and Webcast Today at 5:00 PM Eastern

 

The Company will discuss its first quarter 2005 results, as well as updated 2005 guidance on its conference call at 5:00 pm Eastern Time today. Additional details regarding the call and webcast are included later in this release.

First Quarter Review

 

Greg Lucier, Invitrogen’s Chairman and CEO, commented: “We are pleased with the Company’s performance during the first quarter. We exceeded our targets for both revenues and pro forma earnings per share, and have raised our annual guidance as a result. In addition, we are still on track to meet our organic growth rate projection of 6-8% for the full year. More than 200,000 catalogs, which include thousands of new, innovative products, have been shipped to our customers worldwide. We believe this will have a meaningful impact on growth for the balance of the year. We remain enthusiastic about our ability to execute in 2005 and are confident that Invitrogen will continue to deliver consistent value and returns to our customers and shareholders.”

 

First quarter 2005 revenue growth of 10% included approximately 2% from favorable changes in foreign currency exchange rates and 4% from acquisitions. Revenue growth of 6% in BioDiscovery includes a 2% contribution from favorable foreign currency exchange rates and a 1% contribution from acquisitions. BioProduction revenues increased approximately 16% in the first quarter principally related to the acquired BioReliance business and continuing demand for cell culture products. The effects of currency and the acquisition of BioReliance, contributed 2% and 9%, respectively to the growth of the BioProduction segment.

 

First quarter 2005 gross margin was 62%, compared to 56% in the first quarter of 2004. BioDiscovery gross margin increased to 72% in the first quarter of 2005 from 70% in the first quarter of 2004, as product mix has migrated toward higher value, proprietary product offerings. BioProduction gross margin increased to 48% from 46% in the comparable quarter of 2004, as a result of a migration toward higher value cell culture products and the improvement in margins at BioReliance.

 

Operating income was 16% of revenues in the first quarter of 2005 versus 10% in the first quarter of 2004. Operating income before acquisition related amortization and other costs was 26% of revenues in the first quarter of 2005, consistent with the first quarter of 2004.

 

Cash flows from operating activities were $63.0 million and capital expenditures were $11.9 million during the first quarter of 2005. Free cash flow, defined as cash from operating activities less capital expenditures, was $51.1 million for the first quarter.

 

Included in other income for both GAAP and Pro Forma results is a gain of $2.7 million related to the sale of an equity investment and a gain of $2.2 million associated with the revaluation of a short-term foreign currency denominated intercompany loan. In addition, included in the GAAP results is a gain of $21.0 million, related to the hedging activity associated with the acquisition of Dynal.

 

Subsequent to the end of the quarter, Invitrogen purchased approximately $125 million of its 2 1/4% Convertible Subordinated Notes Due 2006. This transaction reduces the Company’s fully-diluted shares outstanding by approximately 1 million shares for fiscal 2005. This transaction was financed with a short term bridge loan, which is secured by the Company’s short-term marketable securities. The bridge loan facility provides up to $250 million, approximately half of which was drawn to finance the repurchase.

2005 Outlook

 

Guidance is revised upward to reflect the fact that the Company exceeded it’s guidance during the first quarter and to incorporate the effect of the bond repurchase detailed earlier in the release. The Company projects that revenue for fiscal 2005 will be in a range of approximately $1,179 million to $1,195 million. Pro forma earnings per share are expected to range from $3.50 to $3.53. The Company will provide further detail on its business outlook on the conference call today.

 

Investor Day

 

Invitrogen will be hosting an investor day on June 16, 2005 in Carlsbad, CA at the Company’s headquarters. The meeting will begin at 8AM and will conclude at noon. Further details will be provided in a future press release.

 

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 5 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 at www.invitrogen.com.

 

The conference call will be webcast live over the Company’s investor relations website at www.invitrogen.com and will be archived at the site for one month.

 

To listen to the live conference call, please dial (888) 396-2298 (domestic) or (617) 847-8708 (international) and use passcode 82774482. A replay of the call will be available for one week by dialing (888) 286-8010 (domestic) and (617) 801-6888 (international). The passcode for the replay is 80637794.

 

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 globally employs approximately 4,500 scientists and other professionals and had revenues of more than $1 billion in 2004. For more information about Invitrogen, visit the company’s web site at www.invitrogen.com.

Statement Regarding Use of Non-GAAP Measures

 

We regularly have reported pro forma results for net income and earnings per share in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

 

Our financial results under GAAP include substantial non-cash charges and tax benefits related to acquired businesses. Our pro forma calculations of net income and earnings per share, excluding acquisition related amortization and other similar costs, are limited because they do not reflect the entirety of our business costs. However, management believes that the pro forma presentation is a useful supplemental disclosure to investors as it provides an indication of the profitability and cash flows of the combined businesses apart from the initial, sunk cost of the acquisition. Management believes that this information is therefore useful to investors in analyzing and assessing our past and future operating performance.

 

In addition to the non-cash charges above, we exclude from our pro forma results the costs to integrate our acquired businesses or significant costs to restructure existing businesses as well as related tax benefits. Management views these costs as not indicative of the profitability or cash flows of its ongoing or future operations and excludes these costs as a supplemental disclosure to assist investors in evaluating and assessing our past and future operational performance.

 

We encourage investors to carefully consider our results under GAAP, as well as our pro forma disclosures and the reconciliation between these presentations to more fully understand our business. Reconciliations between GAAP results and pro forma 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 pro forma earnings per share; 2) momentum in 2005; 3) ability to generate new products that will accelerate scientific research and our future growth; 4) integration of acquired businesses; and 5) ability to combine technologies of acquired businesses. 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 ability to identify and implement measures to effect cost savings and efficiency improvements; 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.

 

 

INVITROGEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 

(in thousands, except per share data)(unaudited)

 

   

For the Three Months

Ended March 31,

  
     2005
     2004
  

Revenues

    $ 277,081     $ 251,324  

Cost of revenues

      106,422       109,339  
    
 

Gross profit

      170,659       141,985  
    
 

Operating expenses:

                 

Sales and marketing

      48,480       45,454  

General and administrative

      30,004       27,023  

Research and development

      21,241       15,748  

Purchased intangibles amortization

      25,901       28,228  

Purchased in-process research and development

      1,200       —    
    
 

Total operating expenses

      126,826       116,453  
    
 

Operating income

      43,833       25,532  
    
 

Other income (expense):

                 

Interest income

      5,876       5,854  

Interest expense

      (7,258 )     (9,481 )

Loss on early retirement of debt

      —         (6,775 )

Other income (expense), net

      25,673       32  
    
 

Total other income and expense, net

      24,291       (10,370 )
    
 

Income before provision for income taxes

      68,124       15,162  

Income tax provision

      (21,050 )     (4,653 )
    
 

Net income

    $ 47,074     $ 10,509  
    
 

Earnings per common share:

                 

Basic

    $ 0.91     $ 0.20  
    
 

Diluted

    $ 0.82     $ 0.19  
    
 

Weighted average shares used in per share calculation:

                 

Basic

      51,455       51,697  

Diluted

      60,229       55,005  

 

 

INVITROGEN CORPORATION

RECONCILATION OF GAAP TO PRO FORMA STATEMENTS OF INCOME(1)

 

(in thousands, except per share data)

 

   

For the Three Months

Ended March 31, 2005

    

For the Three Months

Ended March 31, 2004

  

(unaudited)

 

    GAAP
     Adjustments
     Pro Forma
     GAAP
     Adjustments
     Pro Forma
  

Revenues

    $ 277,081     $ —       $ 277,081     $ 251,324     $ —       $ 251,324  

Cost of revenues

      106,422       (692 )(2)(3)     105,730       109,339       (10,382 )(2)(3)     98,957  
    
 
 
 
 
 

Gross profit

      170,659       692       171,351       141,985       10,382       152,367  
    
 
 
 
 
 

Gross margin

      62 %             62 %     56 %             61 %

Operating expenses:

                                                 

Sales and marketing

      48,480       (60 )(3)     48,420       45,454       (62 )(3)     45,392  

General and administrative

      30,004       (12 )(3)     29,992       27,023       (6 )(3)     27,017  

Research and development

      21,241       (216 )(3)     21,025       15,748       (211 )(3)     15,537  

Purchased intangibles amortization

      25,901       (25,901 )(4)     —         28,228       (28,228 )(4)     —    

Purchased in-process research and development

      1,200       (1,200 )(5)     —         —         —         —    
    
 
 
 
 
 

Total operating expenses

      126,826       (27,389 )     99,437       116,453       (28,507 )     87,946  
    
 
 
 
 
 

Operating income

      43,833       28,081       71,914       25,532       38,889       64,421  

Operating margin

      16 %             26 %     10 %             26 %

Total other income and expense, net

      24,291       (20,123 )(6)     4,168       (10,370 )     —         (10,370 )
    
 
 
 
 
 

Income before provision for income taxes

      68,124       7,958       76,082       15,162       38,889       54,051  

Income tax provision

      (21,050 )     (4,133 )(7)     (25,183 )     (4,653 )     (13,725 )(7)     (18,378 )
    
 
 
 
 
 

Net income

    $ 47,074     $ 3,825     $ 50,899     $ 10,509     $ 25,164     $ 35,673  

Add back interest expense subordinated debt, net of tax

      2,382       —         2,382       189       2,134 (8)     2,323  
    
 
 
 
 
 

Numerator for diluted earnings per share

    $ 49,456     $ 3,825     $ 53,281     $ 10,698     $ 27,298     $ 37,996  
    
 
 
 
 
 

Earnings per common share:

                                                 

Basic

    $ 0.91             $ 0.99     $ 0.20             $ 0.69  
    
         
 
         

Diluted

    $ 0.82             $ 0.88     $ 0.19 (9)           $ 0.62  
    
         
 
         

Weighted average shares used in per share calculation:

                                                 

Basic

      51,455       —         51,455       51,697       —         51,697  

Diluted

      60,229       —         60,229       55,005 (9)     6,006 (8)     61,011  
(1) The Company has regularly reported pro forma results which exclude the amortization of purchased intangibles, amortization of inventory revaluation costs on products sold that were previously written-up under purchase accounting rules and in-process research and development to provide a supplemental comparison of results of operations.
(2) Add back costs for purchase accounting inventory revaluations of $0.6 million and $10.3 million for the three months ended March 31, 2005 and 2004, respectively.
(3) Add back deferred compensation amortization totaling $0.4 million and $0.4 million for the three months ended March 31, 2005 and 2004, respectively, related to stock option plans assumed in business combinations.
(4) Add back amortization of purchased intangibles.
(5) Add back in-process research and development.
(6) Add back gain on foreign currency transaction, net of loss on sale of investments, used for business acquisitions.
(7) The Company’s effective income tax rate used in the calculation of pro forma net income differs from the effective income tax rate applied for GAAP purposes. The effective income tax rate on GAAP pre-tax income is lower because the expenses included in GAAP pre-tax income, but excluded from pro forma pre-tax income, produce a tax benefit in a taxing jurisdiction having a higher tax rate than the Company’s overall average income tax rate.
(8) Pro forma diluted earnings per share includes the potential dilution from the 2006 and 2024 Convertible Subordinate Debt, and, using the as-if-converted method, which assumes that the debt was converted at the beginning of the period presented with related interest expense, net of tax, added back to the numerator and shares from the assumed conversion of the debt added to the denominator.
(9) The Company has restated 2004 diluted weighted average shares and earnings per share to reflect the impact of Emerging Issues Task Force (EITF) Issue No. 04-8, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share,” on its 1 ½% Convertible Senior Notes due 2024 and 2% Convertible Senior Notes due 2023.

 

 

INVITROGEN CORPORATION

EBITDA INFORMATION

 

    

For the Three Months

Ended March 31,

(in thousands)(unaudited)

 

    2005
    2004

Operating income reported under GAAP

    $ 43,833    $ 25,532

Add back in-process research and development and merger-related amortization

      28,081      38,889

Add back depreciation

      9,247      8,866

Add back amortization of non merger-related deferred compensation

      1,174      522

Add back amortization of all other intangible assets

      996      679
    
  

EBITDA

    $ 83,331    $ 74,488
    
  

INVITROGEN CORPORATION

BUSINESS SEGMENT HIGHLIGHTS

FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004

 

(in thousands)(unaudited)

 

   

Bio-

Discovery

    

Bio-

Production

     Unallocated(1)
     Total
  

Segment Results for the Three Months Ended March 31, 2005

                                 

Revenues from external customers

    $ 162,351     $ 114,730     $ —       $ 277,081  
    
 
 
 

Gross profit

      116,155       55,198       (694 )     170,659  
    
 
 
 

Gross margin

      72 %     48 %             62 %

Selling, administrative and R&D

      71,132       28,304       289       99,725  

Merger-related amortization and in-process research and development

      —         —         27,101       27,101  
    
 
 
 

Operating income

      45,023       26,894       (28,084 )     43,833  

Operating margin

      28 %     23 %             16 %

Segment Results for the Three Months Ended March 31, 2004

                                 

Revenues from external customers

    $ 152,673     $ 98,651     $ —       $ 251,324  
    
 
 
 

Gross profit

      107,283       45,084       (10,382 )     141,985  
    
 
 
 

Gross margin

      70 %     46 %             56 %

Selling, administrative and R&D

      63,856       24,090       279       88,225  

Merger-related amortization

      —         —         28,228       28,228  
    
 
 
 

Operating income

      43,427       20,994       (38,889 )     25,532  

Operating margin

      28 %     21 %             10 %
(1) Unallocated items for the three months ended March 31, 2005 and 2004 include costs for purchase accounting inventory revaluations of $0.6 million and $10.3 million, amortization of purchased intangibles of $25.9 million and $28.2 million, amortization of deferred compensation of $0.4 million and $0.4 million, and in-process research and development of $1.2 million and $0, respectively, which 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 BALANCE SHEETS

 

(in thousands)

 

   

March 31,

2005

   

December 31,

2004

     (unaudited)     
ASSETS              

Current assets:

              

Cash and investments

    $ 1,025,043    $ 983,381

Trade accounts receivable, net of allowance for doubtful accounts

      182,295      165,754

Inventories

      127,293      122,787

Deferred income taxes

      27,971      31,866

Prepaid expenses and other current assets

      33,696      28,440
    
  

Total current assets

      1,396,298      1,332,228

Property and equipment, net

      225,541      222,193

Goodwill

      1,466,117      1,424,671

Intangible assets, net

      437,384      440,182

Long-term investments

      40,925      109,088

Other assets

      87,368      85,973
    
  

Total assets

    $ 3,653,633    $ 3,614,335
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY              

Current liabilities:

              

Current portion of long-term obligations

    $ 1,803    $ 12,390

Accounts payable, accrued expenses and other current liabilities

      164,533      183,285

Income taxes

      19,081      510
    
  

Total current liabilities

      185,417      196,185

Long-term debt

      1,319,561      1,319,315

Pension liabilities

      15,086      15,307

Deferred income tax liability

      156,055      153,716

Other long-term liabilities

      12,947      16,561

Stockholders’ equity

      1,964,567      1,913,251
    
  

Total liabilities and stockholders’ equity

    $ 3,653,633    $ 3,614,335
    
  

 

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