SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 0-25317
INVITROGEN CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 33-0373077 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 1600 Faraday Avenue, Carlsbad, CA | 92008 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (760) 603-7200
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨.
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x or No ¨
As of October 31, 2004, there were 51,230,372 shares of the registrant’s Common Stock, par value $.01 per share, outstanding.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INVITROGEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value data)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: |
||||||||
| Cash and cash equivalents |
$ | 363,558 | $ | 588,678 | ||||
| Short-term investments |
558,618 | 403,427 | ||||||
| Restricted cash and investments |
17,589 | 6,632 | ||||||
| Trade accounts receivable, net of allowance for doubtful accounts of $5,661 and $4,129, respectively |
162,588 | 117,095 | ||||||
| Inventories |
117,885 | 126,707 | ||||||
| Deferred income tax assets |
28,141 | 19,310 | ||||||
| Prepaid expenses and other current assets |
42,397 | 25,495 | ||||||
| Total current assets |
1,290,776 | 1,287,344 | ||||||
| Long-term investments |
126,282 | 177,070 | ||||||
| Property and equipment, net |
209,266 | 186,231 | ||||||
| Goodwill |
1,420,655 | 983,407 | ||||||
| Intangible assets, net |
428,969 | 464,659 | ||||||
| Other assets |
70,775 | 66,978 | ||||||
| Total assets |
$ | 3,546,723 | $ | 3,165,689 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: |
||||||||
| Current portion of long-term obligations |
$ | 18,385 | $ | 1,784 | ||||
| Accounts payable |
56,629 | 55,745 | ||||||
| Accrued expenses and other current liabilities |
94,651 | 65,406 | ||||||
| Income taxes |
13,586 | 2,758 | ||||||
| Total current liabilities |
183,251 | 125,693 | ||||||
| Long-term obligations, deferred credits and reserves |
36,098 | 32,069 | ||||||
| Pension liabilities |
17,416 | 17,249 | ||||||
| Deferred income tax liabilities |
159,601 | 161,331 | ||||||
| Convertible debt |
1,300,000 | 1,022,500 | ||||||
| Total liabilities |
1,696,366 | 1,358,842 | ||||||
| Commitments and contingencies |
||||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock; $0.01 par value, 6,405,884 shares authorized; no shares issued or outstanding |
— | — | ||||||
| Common stock; $0.01 par value, 125,000,000 shares authorized; 55,959,334 and 54,595,766 shares issued, respectively |
559 | 546 | ||||||
| Additional paid-in-capital |
2,009,946 | 1,942,756 | ||||||
| Deferred compensation |
(12,267 | ) | (11,265 | ) | ||||
| Accumulated other comprehensive income |
56,444 | 56,158 | ||||||
| Accumulated deficit |
(26,133 | ) | (84,494 | ) | ||||
| Less cost of treasury stock; 4,831,562 and 3,201,451 shares, respectively |
(178,192 | ) | (96,854 | ) | ||||
| Total stockholders’ equity |
1,850,357 | 1,806,847 | ||||||
| Total liabilities and stockholders’ equity |
$ | 3,546,723 | $ | 3,165,689 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
2
INVITROGEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Revenues |
$ | 256,328 | $ | 196,939 | $ | 761,616 | $ | 569,968 | ||||||||
| Cost of revenues |
99,123 | 77,159 | 316,393 | 222,122 | ||||||||||||
| Gross profit |
157,205 | 119,780 | 445,223 | 347,846 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
45,614 | 38,457 | 134,329 | 113,325 | ||||||||||||
| General and administrative |
27,596 | 22,722 | 80,825 | 65,383 | ||||||||||||
| Research and development |
19,214 | 15,354 | 53,116 | 38,543 | ||||||||||||
| Purchased intangibles amortization |
25,004 | 20,736 | 81,539 | 56,243 | ||||||||||||
| Purchased in-process research and development |
— | 1,410 | 728 | 1,410 | ||||||||||||
| Business integration costs |
— | 925 | — | 1,318 | ||||||||||||
| Total operating expenses |
117,428 | 99,604 | 350,537 | 276,222 | ||||||||||||
| Operating income |
39,777 | 20,176 | 94,686 | 71,624 | ||||||||||||
| Other income (expense), net: |
||||||||||||||||
| Interest income |
6,417 | 5,939 | 17,837 | 17,973 | ||||||||||||
| Interest expense |
(7,401 | ) | (7,547 | ) | (24,602 | ) | (20,249 | ) | ||||||||
| Loss on early retirement of debt |
— | — | (6,775 | ) | — | |||||||||||
| Other income (expense), net |
(315 | ) | (103 | ) | (315 | ) | 233 | |||||||||
| Total other income (expense), net |
(1,299 | ) | (1,711 | ) | (13,855 | ) | (2,043 | ) | ||||||||
| Income before provision for income taxes and minority interest |
38,478 | 18,465 | 80,831 | 69,581 | ||||||||||||
| Provision for income taxes |
(10,315 | ) | (4,767 | ) | (22,470 | ) | (21,431 | ) | ||||||||
| Minority interest |
— | — | — | (609 | ) | |||||||||||
| Net income |
$ | 28,163 | $ | 13,698 | $ | 58,361 | $ | 47,541 | ||||||||
| Earnings per common share: |
||||||||||||||||
| Basic |
$ | 0.54 | $ | 0.27 | $ | 1.13 | $ | 0.95 | ||||||||
| Diluted |
$ | 0.52 | $ | 0.26 | $ | 1.09 | $ | 0.94 | ||||||||
| Weighted average shares used in per share calculation: |
||||||||||||||||
| Basic |
51,748 | 50,298 | 51,876 | 50,118 | ||||||||||||
| Diluted |
58,694 | 51,762 | 59,403 | 50,822 | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
INVITROGEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
| For the Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 58,361 | $ | 47,541 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired: |
||||||||
| Depreciation |
27,254 | 19,900 | ||||||
| Amortization of intangible assets |
84,007 | 58,569 | ||||||
| Amortization of deferred debt issue costs |
2,601 | 2,536 | ||||||
| Amortization of premiums on investments, net of accretion of discounts |
6,086 | 8,256 | ||||||
| Amortization of deferred compensation |
3,206 | 632 | ||||||
| Deferred income taxes |
(28,940 | ) | (20,992 | ) | ||||
| Other non-cash adjustments |
10,335 | 7,025 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Trade accounts receivable |
(23,275 | ) | (15,009 | ) | ||||
| Inventories |
11,206 | (1,946 | ) | |||||
| Prepaid expenses and other current assets |
4,771 | (1,764 | ) | |||||
| Other assets |
(204 | ) | 1,748 | |||||
| Accounts payable |
(13,020 | ) | 3,348 | |||||
| Accrued expenses and other current liabilities |
6,666 | 13,053 | ||||||
| Income taxes |
20,408 | 1,818 | ||||||
| Net cash provided by operating activities |
169,462 | 124,715 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Maturities of available-for-sale securities |
764,994 | — | ||||||
| Purchases of available-for-sale securities |
(877,401 | ) | — | |||||
| Maturities of held-to-maturity securities |
— | 235,539 | ||||||
| Purchases of held-to-maturity securities |
— | (263,278 | ) | |||||
| Cash paid for business combinations, net of cash acquired |
(491,380 | ) | (412,943 | ) | ||||
| Purchases of property and equipment |
(19,703 | ) | (19,893 | ) | ||||
| Proceeds from sale of property and equipment |
1,329 | 2,716 | ||||||
| Payments for intangible assets |
(1,599 | ) | (478 | ) | ||||
| Net cash used in investing activities |
(623,760 | ) | (458,337 | ) | ||||