LIFE TECHNOLOGIES CORP 
By CARLSBAD, Calif., Nov. 5, 2013 /PRNewswire/ -- Life Technologies Corporation (NASDAQ: LIFE) today announced results for its third quarter ended September 30, 2013. Revenue for the third quarter was $936 million, an increase of 3 percent over the $911 million reported for the third quarter of 2012. Excluding the impact of currency, revenue growth for the quarter was 4 percent compared to the same period of the prior year.
"We are pleased with our mid-single digit revenue and double-digit non-GAAP EPS growth, which was driven by strength across our Research Consumables and Applied Sciences business groups, solid growth in Japan and emerging markets such as China, and continued stability in the U.S. and Europe," said Gregory T. Lucier, chairman and chief executive officer of Life Technologies. "During the quarter, we continued to execute against our strategy of expanding into growth markets by introducing new products in stem cells and next generation sequencing and by opening a state-of-the art forensics lab in India. In addition, we partnered with TriCore Reference Laboratories to establish our first next-generation sequencing Center of Excellence focused on clinical research."
Lucier continued, "On August 21, 2013, our stockholders voted to adopt the Life Technologies and Thermo Fisher merger agreement, representing a significant milestone and bringing us one step closer to the anticipated close of the acquisition in early 2014. Both companies remain excited about creating the unrivaled leader in life sciences that will continue to accelerate innovation and better meet the needs of our customers."
Life Technologies reported results compared to the quarter ended September 30, 2012. Results are non-GAAP unless indicated otherwise. A full reconciliation of non-GAAP to GAAP measures can be found in the tables of today's press release.
Analysis of Third Quarter 2013 Results
-- Third quarter revenue increased by 3 percent over the prior year,
representing an increase of approximately 4 percent excluding the impact
of currency. Revenue growth for the quarter was driven by increases in
the company's Research Consumables and Bioproduction businesses,
partially offset by declines in Genetic Analysis.
-- Gross margin in the third quarter was 65.7 percent, approximately 10
basis points higher than the same period of the prior year. Gross
margin was driven by manufacturing productivity and higher realized
price, partially offset by a decline in royalties.
-- Operating margin was 28.1 percent in the third quarter, approximately 10
basis points higher than in the same period of the prior year, primarily
due to the increase in revenue and gross margin, partially offset by
increases in expenses related to acquisitions and planned investments in
Ion Torrent.
-- The Company's tax rate was 22.9 percent for the third quarter, which was
lower than the third quarter of last year due to the reinstatement of
the U.S. federal research tax credit and tax credits on foreign
repatriation.
-- Third quarter EPS increased 10 percent to $1.02.
-- Diluted weighted shares outstanding were 175.9 million in the third
quarter, a decrease of 1.4 million shares over the prior year. The
decrease was a result of the share repurchase program, partially offset
by shares issued for employee stock plans.
-- Cash flow from operating activities for the third quarter was $250
million. Third quarter capital expenditures were $25 million, resulting
in free cash flow of $225 million. The company ended the quarter with
$368 million in cash and short-term investments.
Business Group and Regional Highlights
-- Research Consumables revenue was $404 million in the third quarter, an
increase of 5 percent compared to the prior year. Excluding the impact
of currency, revenue for the business group increased 6 percent
primarily due to strong sales from the Company's fluorescent imaging,
stem cells, synthetic biology and cell culture products.
-- Genetic Analysis revenue was $338 million in the third quarter, a
decrease of 4 percent over the same period last year. Excluding the
impact of currency, revenue decreased 3 percent. Results for the
quarter were primarily driven by an expected decline in qPCR royalties
and SOLiD sales, offset by continued solid performance in the rest of
the business.
-- Applied Sciences revenue was $194 million in the third quarter, an
increase of 12 percent over the prior year. Excluding the impact of
currency, revenue increased 13 percent primarily as a result of an
increase in Bioproduction sales.
-- Regional revenue growth rates excluding currency for the third quarter,
compared to the same quarter of the prior year, were as follows: the
Americas were flat, Europe grew 2 percent, Asia Pacific grew 18 percent,
and Japan grew 8 percent.
Outlook
Given the announcement in April that Life Technologies and Thermo Fisher have entered into a definitive merger agreement under which Thermo Fisher will acquire all of the outstanding shares of Life Technologies for $76.00 per share in cash, the Company is no longer providing quarterly guidance. The Company will continue to provide commentary regarding the impact that fluctuations in currency rates could have on results.
Based on September 30, 2013 rates, currency is expected to have a negative impact of approximately $57 million on revenue and $0.13 on non-GAAP EPS for the full year. This compares to a negative impact of $75 million on revenue and $0.17 on non-GAAP EPS for the full year at June 30, 2013 rates.
Conference Calls
In light of the announced transaction with Thermo Fisher, the Company will no longer hold conference calls for its quarterly and annual earnings. The transaction, which is expected to close early in 2014, is subject to customary closing conditions, including regulatory approvals.
About Life Technologies
Life Technologies Corporation (NASDAQ: LIFE) is a global biotechnology company that is committed to providing the most innovative products and services to leading customers in the fields of scientific research, genetic analysis and applied sciences. With a presence in more than 180 countries, the company's portfolio of 50,000 end-to-end solutions are secured by more than 5,000 patents and licenses that span the entire biological spectrum -- scientific exploration, molecular diagnostics, 21st century forensics, regenerative medicine and agricultural research. Life Technologies has approximately 10,000 employees and had sales of $3.8 billion in 2012. Visit us at our website: http://www.lifetechnologies.com.
Safe Harbor Statement
Certain statements contained in this press release are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and Life Technologies intends that such forward-looking statements be subject to the safe harbor created thereby. Forward-looking statements may be identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of the company and statements regarding the proposed acquisition of Life Technologies by Thermo Fisher. Such forward-looking statements include, but are not limited to, statements relating to financial projections, including revenue and pro forma EPS projections; success of acquired businesses, including cost and revenue synergies; development and increased flow of new products; leveraging technology and personnel; advanced opportunities and efficiencies; opportunities for growth; expectations of prospective new standards, new delivery platforms, and new selling specialization and effectiveness; plans and prospects for the company; corporate strategy and performance; and the expected timetable for completing the transaction with Thermo Fisher. A number of the matters discussed in this press release and presentation that are not historical or current facts deal with potential future circumstances and developments, including future research and development plans. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: volatility of the financial markets; and the risks that are described from time to time in Life Technologies' reports filed with the SEC. This press release and presentation speaks only as of its date, and the company disclaims any duty to update the information herein.
All products referenced are for Research Use Only and not intended for use in diagnostic procedures, unless otherwise noted.
Non-GAAP Measurements
This discussion includes certain financial information which constitutes "non-GAAP financial measures" as defined by the SEC. The GAAP measures which are most directly comparable to these measures, as well as a reconciliation of these measures with the most directly comparable GAAP measures, can be found at the Investor Relations portion of the company's website at www.lifetechnologies.com.
(Logo: http://photos.prnewswire.com/prnh/20110216/MM49339LOGO)
Investor and Financial Contact:
Carol Cox
Agnes Lee
Investor Relations
(760) 603-7208
ir@lifetech.com
LIFE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months For the three months
(in thousands, except per share data) ended September 30, 2013 ended September 30, 2012
------------------------ ------------------------
(unaudited)
Revenues $935,090 $911,183
Cost of revenues 319,546 361,571
Purchased intangibles amortization 70,641 71,126
------ ------
Gross profit 544,903 478,486
------- -------
Gross margin 58.3% 52.5%
Operating expenses:
Selling, general
and
administrative 268,839 270,565
Research and
development 82,978 84,811
Business
consolidation
costs 26,922 10,571
------
Total
operating
expenses 378,739 365,947
------- -------
Operating income 166,164 112,539
Operating margin 17.8% 12.4%
Interest income 400 436
Interest expense (27,092) (29,291)
Other expense, net (5,182) (2,781)
-------
Total other
expense, net (31,874) (31,636)
------- -------
Income from operations before provision for
income taxes 134,290 80,903
Income tax provision (16,310) (15,301)
------- -------
Net income 117,980 65,602
Net loss attributable to
non-controlling interests 266 255
--- ---
Net income attributable to
controlling interest $118,246 $65,857
Effective tax rate 12.1% 18.9%
Numerator for diluted earnings
per share $118,246 $65,857
======== =======
Earnings per common share:
Basic earnings per
share
attributable to
controlling
interest $0.68 $0.38
=====
Diluted earnings
per share
attributable to
controlling
interest $0.67 $0.37
=====
Weighted average shares used in per share calculation:
Basic 172,892 174,044
Diluted 175,901 177,258
LIFE TECHNOLOGIES CORPORATION
ITEMIZED RECONCILIATION BETWEEN
GAAP AND NON-GAAP NET INCOME
For the three months For the three months
(in thousands, except per share data) ended September 30, 2013 ended September 30, 2012
------------------------ ------------------------
(unaudited)
GAAP net income $117,980 $65,602
Non-GAAP revenue
adjustments
Purchase accounting
related adjustments 516 193
--- ---
Total Non-GAAP
revenue
adjustments 516 (1) 193 (1)
--- ---
Non-GAAP cost of
revenues and
purchased
intangible
adjustments
Purchased intangibles
amortization 70,641 71,126
Purchase accounting
related adjustments (1,103) -
Legal settlement - 48,500
--- ------
Total Non-GAAP
cost of revenues
and purchased
intangible
adjustments 69,538 (2) 119,626 (2)
------ ---
Non-GAAP
operating
expense
adjustments
Purchase accounting
related adjustments 194 1,019
Business consolidation
costs 26,922 10,571
Legal settlement - 11,400
--- ------
Total Non-GAAP
operating
expense
adjustments 27,116 (3) 22,990 (3)
------ ---
Non-GAAP income
tax provision
adjustments
Income tax adjustments (36,682) (45,740)
------- -------
Total Non-GAAP
income tax
provision
adjustments (36,682) (4) (45,740) (4)
-------- ---
Non-GAAP Net Income $178,468 $162,671
Non-GAAP loss
attributable to
non-controlling
interest 266 (5) 255 (5)
--- ---
Non-GAAP Net Income Attributable to Controlling
Interest $178,734 $162,926
-------- --------
Non-GAAP Numerator for diluted earnings per share $178,734 $162,926
======== ========
Non-GAAP Earnings per common share:
Basic earnings
per share
attributable to
controlling
interest $1.03 $0.94
=====
Diluted earnings
per share
attributable to
controlling
interest $1.02 $0.92
=====
Weighted average shares used in per share calculation:
Basic 172,892 174,044
Diluted 175,901 177,258
Summary of Reconciliation between GAAP and Non-GAAP Net
Income
For the three
months ended
September
30, 2013,
Non-GAAP
earnings
resulted in
total
revenue of
$935.6
million,
gross profit
of $615.0
million with
gross margin
of 65.7%,
operating
profit of
$263.3
million with
operating
margin of
28.1%, and
an income
tax
provision of
$53.0
million with
the Non-
GAAP
effective
tax rate of
22.9% with
the above
adjustments.
For the three
months ended
September
30, 2012,
Non-GAAP
earnings
resulted in
total
revenue of
$911.4
million,
gross profit
of $598.3
million with
gross margin
of 65.6%,
operating
profit of
$255.3
million with
operating
margin of
28.0%, and
an income
tax
provision of
$61.0
million with
the Non-
GAAP
effective
tax rate of
27.3% with
the above
adjustments.
Notes
(1) Add back
purchased
deferred
revenue of
$0.5 million
and $0.2
million for
the three
months ended
September
30, 2013 and
2012,
respectively.
(2) Add back
amortization
of purchased
intangibles
of $70.6
million,
offset by
contingent
consideration
revaluation
of $1.1
million for
the three
months ended
September
30, 2013.
Add back
amortization
of purchased
intangibles
of $71.1
million for
the three
months ended
September
30, 2012.
Add back the
legal
judgment of
$48.5
million for
the three
months ended
September
30, 2012.
(3) Add back
depreciation
of purchase
accounting
property,
plant, and
equipment
revaluation
of $0.2
million and
$1.0 million
for the
three months
ended
September
30, 2013 and
2012,
respectively.
Add back
business
consolidation
costs
including
restructuring
and
integrating
acquired
entities,
aligning
acquired and
existing
operations
through
business
transformation
activities
and costs
associated
with
divesting
entities of
$26.9
millionand
$10.6
million for
the three
months ended
September
30, 2013 and
2012,
respectively.
Add back
legal
settlement
of $11.4
million for
the three
months ended
September
30, 2012.
(4) Non-GAAP tax
adjustment
due to the
exclusion of
the
aforementioned
business
combination
related
charges, non
cash
charges, and
one-time
costs which
are not
indicative
of the
profitability
or cash
flows of the
Company's
ongoing or
future
operations.
These
deductions
produce a
GAAP only
tax benefit
which is
added back
for Non-
GAAP
presentation.
(5) Non-GAAP net
loss
attributable
to non-
controlling
interest,
net of tax
benefit.
The Company
reports Non-
GAAP results
which
excludes
costs that
are not
indicative
of the
profitability
or cash
flows of the
Company's
ongoing or
future
operations.
Such costs
are
restructuring
cost,
business
transformation
expenses,
amortization
and
depreciation
of deferred
revenue,
intangibles
assets, and
fixed
assets, and
revaluation
charges for
inventories,
contingent
consideration
liabilities,
asset
impairments,
and in
process
research and
development
expenses,
incurred as
a result of
business
combinations
as well as
the impact
from the
divestiture
and
discontinuance
of product
lines. The
Company also
excludes
noncash
interest
expense
associated
with
convertible
debt
bifurcation
and noncash
charges
associated
with non-
controlling
interests.
In addition,
the Company
excludes
one-time
costs
including
the early
repayment of
debt and the
associated
impacts, and
the impact
of certain
settlements
in order to
provide a
supplemental
comparison
of the
results of
operations.
LIFE TECHNOLOGIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months For the nine months
(in thousands, except per share data) ended September 30, 2013 ended September 30, 2012
------------------------ ------------------------
(unaudited)
Revenues $2,843,410 $2,799,606
Cost of revenues 964,185 1,003,611
Purchased intangibles amortization 213,886 219,192
------- -------
Gross profit 1,665,339 1,576,803
--------- ---------
Gross margin 58.6% 56.3%
Operating expenses:
Selling, general
and
administrative 816,455 790,012
Research and
development 255,083 258,225
Business
consolidation
costs 81,921 34,266
------
Total
operating
expenses 1,153,459 1,082,503
--------- ---------
Operating income 511,880 494,300
Operating margin 18.0% 17.7%
Interest
income 1,617 1,715
Interest
expense (84,106) (94,266)
Other
expense,
net (9,570) (11,097)
Total other
expense,
net (92,059) (103,648)
------- --------
Income from operations before provision for
income taxes 419,821 390,652
Income tax provision (54,316) (70,108)
------- -------
Net income 365,505 320,544
Net loss attributable to
non-controlling interests 577 305
--- ---
Net income attributable to
controlling interest $366,082 $320,849
Effective tax rate 12.9% 17.9%
Add back interest expense for subordinated
debt, net of tax - 12
--- ---
Numerator for diluted earnings
per share $366,082 $320,861
======== ========
Earnings per common share:
Basic earnings per
share
attributable to
controlling
interest $2.13 $1.81
===================
Diluted earnings
per share
attributable to
controlling
interest $2.09 $1.78
=================
Weighted average shares used in per share calculation:
Basic 172,072 177,028
Diluted 175,314 180,559
LIFE TECHNOLOGIES CORPORATION
ITEMIZED RECONCILIAITON BETWEEN
GAAP AND NON-GAAP NET INCOME
For the nine months For the nine months
(in thousands, except per share data) ended September 30, 2013 ended September 30, 2012
------------------------ ------------------------
(unaudited)
GAAP net income $365,505 $320,544
Non-GAAP revenue
adjustments
Purchase
accounting
related
adjustments 1,373 835
Charges on a
discontinued
product - (457)
Historical
portion of
licensing
settlement (2,774) -
Total Non-GAAP
revenue
adjustments (1,401) (1) 378 (1)
------- ---
Non-GAAP cost of
revenues and
purchased
intangible
adjustments
Purchased
intangibles
amortization 213,886 219,192
Purchase
accounting
related
adjustments (3,118) -
Legal
judgement
and
settlement
of
historical
portion of
licensing
dispute - 48,331
Total Non-GAAP
cost of revenues
and purchased
intangible
adjustments 210,768 (2) 267,523 (2)
------- ---
Non-GAAP
operating
expense
adjustments:
Purchase accounting
related adjustments 2,021 2,869
Business consolidation
costs 81,921 34,266
Licensng and legal
settlements - 10,467
Total Non-GAAP
operating
expense
adjustments 83,942 (3) 47,602 (3)
------ ---
Non-GAAP other
expense
adjustments:
Noncash interest expense
charges - 5,382
Other expense - 5,302
Total Non-GAAP
other expense
adjustments - 10,684 (4)
---
Non-GAAP income
tax provision
adjustments:
Income tax adjustments (121,880) (5) (128,868) (5)
Total Non-GAAP
income tax
provision
adjustments (121,880) (128,868)
---------
Non-GAAP Net Income $536,934 $517,863
Non-GAAP loss
attributable to
controlling
interest 577 (6) 305 (6)
--- ---
Non-GAAP Net Income Attributable to Controlling
Interest $537,511 $518,168
Add back interest expense for subordinated debt,
net of tax - 12
Non-GAAP Numerator for diluted earnings per share $537,511 $518,180
======== ========
Non-GAAP Earnings per common share:
Basic earnings
per share
attributable to
controlling
interest $3.12 $2.93
=====
Diluted earnings
per share
attributable to
controlling
interest $3.07 $2.87
=====
Weighted average shares used in per share calculation:
Basic 172,072 177,028
Diluted 175,314 180,559
Summary of Reconciliation between GAAP and Non-GAAP Net Income
For the nine
months
ended
September
30, 2013,
Non-GAAP
earnings
resulted in
total
revenue of
$2.8
billion,
gross
profit of
$1.9
billion
with gross
margin of
66.0%,
operating
profit of
$805.2
million
with
operating
margin of
28.3%, and
an income
tax
provision
of $176.2
million
with the
Non-GAAP
effective
tax rate of
24.7% with
the above
adjustments.
For the nine
months
ended
September
30, 2012,
Non-GAAP
earnings
resulted in
total
revenue of
$2.8
billion,
gross
profit of
$1.8
billion
with gross
margin of
65.9%,
operating
profit of
$809.8
million
with
operating
margin of
28.9%, and
an income
tax
provision
of $199.0
million
with the
Non-GAAP
effective
tax rate of
27.8% with
the above
adjustments.
Notes
(1) Adjust for
historical
portion of
royalty
licensing
settlement
of $2.8
million,
and add
back
purchased
deferred
revenue of
$1.4
million for
the nine
months
ended
September
30, 2013.
Add back
purchased
deferred
revenue of
$0.8
million and
adjust for
revenue
related to
a
discontinued
product of
$0.5
million for
the nine
months
ended
September
30, 2012.
(2) Add back
amortization
of
purchased
intangibles
of $213.9
million and
amortization
of a fair
value
inventory
write-up
of $1.5
million,
offset by
contingent
consideration
revaluation
of $4.6
million for
the nine
months
ended
September
30, 2013.
Add back
amortization
of
purchased
intangibles
of $219.2
million and
a legal
judgment of
$48.5
million
partially
offset by
$0.2
million
related to
the
historical
portion of
the
settlement
of
licensing
disputes
for the
nine months
ended
September
30, 2012.
(3) Add back
contingent
consideration
revaluation
of $1.0
million and
depreciation
of purchase
accounting
property,
plant, and
equipment
revaluation
of $1.0
million for
the nine
months
ended
September
30, 2013.
Add back
depreciation
of purchase
accounting
property,
plant, and
equipment
revaluation
of $2.9
million,
and add
back legal
settlement
of $11.4
million and
adjust for
compensation
cost of
$0.9
million
related to
the
historical
portion of
the
settlement
of a
licensing
dispute for
the nine
months
ended
September
30, 2012.
Add back
business
consolidation
costs
including
restructuring
and
integrating
acquired
entities,
aligning
acquired
and
existing
operations
through
business
transformation
activities
and costs
associated
with
divesting
entities of
$81.9
million and
$34.3
million for
the nine
months
ended
September
30, 2013
and 2012,
respectively.
(4) Add back
charges
associated
with a
divestiture
activity of
$5.3
million,
charges
related to
non-cash
interest
expense for
senior
convertible
debts of
$1.7
million and
the
extinguishment
of a line
of credit
facility of
$3.7
million for
the nine
months
ended
September
30, 2012.
(5) Non-GAAP
tax
adjustment
due to the
exclusion
of the
aforementioned
business
combination
related
charges,
non cash
charges,
and one-
time costs
which are
not
indicative
of the
profitability
or cash
flows of
the
Company's
ongoing or
future
operations.
These
deductions
produce a
GAAP only
tax benefit
which is
added back
for Non-
GAAP
presentation.
(6) Non-GAAP
net loss
attributable
to non-
controlling
interest,
net of tax
benefit.
The Company
reports
Non-GAAP
results
which
excludes
costs that
are not
indicative
of the
profitability
or cash
flows of
the
Company's
ongoing or
future
operations.
Such costs
are
restructuring
cost,
business
transformation
expenses,
amortization
and
depreciation
of deferred
revenue,
intangibles
assets, and
fixed
assets, and
revaluation
charges for
inventories,
contingent
consideration
liabilities,
asset
impairments,
and in
process
research
and
development
expenses,
incurred as
a result of
business
combinations
as well as
the impact
from the
divestiture
and
discontinuance
of product
lines. The
Company
also
excludes
noncash
interest
expense
associated
with
convertible
debt
bifurcation
and noncash
charges
associated
with non-
controlling
interests.
In
addition,
the Company
excludes
one-time
costs
including
the early
repayment
of debt and
the
associated
impacts,
and the
impact of
certain
settlements
in order to
provide a
supplemental
comparison
of the
results of
operations.
LIFE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
(in thousands) 2013 2012
---- ----
ASSETS (unaudited)
Current
assets:
Cash and
short-term
investments $368,252 $276,369
Trade accounts
receivable,
net of
allowance for
doubtful
accounts 653,525 697,228
Inventories 431,089 403,488
Prepaid
expenses and
other current
assets 293,250 248,154
------- -------
Total current
assets 1,746,116 1,625,239
Long-term
assets 6,742,120 7,012,826
--------- ---------
Total assets $8,488,236 $8,638,065
========== ==========
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Current
portion of
long-term
debt $4,157 $253,214
Short-term
borrowings - 100,000
Accounts
payable,
accrued
expenses and
other current
liabilities 797,147 839,137
------- -------
Total current
liabilities 801,304 1,192,351
Long-term debt 2,067,587 2,060,855
Other long-
term
liabilities 642,569 731,396
Stockholders'
equity 4,976,776 4,653,463
--------- ---------
Total
liabilities
and
stockholders'
equity $8,488,236 $8,638,065
========== ==========
LIFE TECHNOLOGIES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine
months
ended September
30,
----------------
(in thousands)(unaudited) 2013 2012
---- ----
Net income $365,505 $320,544
Add back amortization and
share-based compensation 280,867 292,918
Add back depreciation 91,976 93,617
Balance sheet changes (32,962) (42,539)
Other noncash adjustments (100,965) (107,755)
-------- --------
Net cash provided by
operating activities 604,421 556,785
Capital expenditures (71,179) (68,385)
Proceeds from sale of
assets 36,729 -
------ ---
Free cash flow 569,971 488,400
Net cash used in investing
activities (78,949) (72,057)
Net cash used in financing
activities (406,067) (980,524)
Effect of exchange rate
changes on cash (4,113) (420)
------ ----
Net (decrease) increase in
cash and cash equivalents $80,842 $(564,601)
======= =========
SOURCE Life Technologies Corporation
