2014

Life Technologies Announces Third Quarter 2012 Results Revenue of $911 million

GAAP earnings per share (EPS) of $0.37, or $0.92 on a non-GAAP basis

Free Cash Flow of $177 million

Company repurchased $208 million of shares in the third quarter, total of $535 million year-to-date

CARLSBAD, Calif., Nov. 1, 2012 /PRNewswire/ -- Life Technologies Corporation (NASDAQ: LIFE) today announced results for its third quarter ended September 30, 2012. Revenue for the third quarter was $911 million, a decrease of 1.9 percent over the $929 million reported for the third quarter of 2011. Excluding the impact of currency, revenue growth for the quarter was 1.4 percent compared to the same period of the prior year.

(Logo:  http://photos.prnewswire.com/prnh/20110216/MM49339LOGO)

"Our third quarter performance came in stronger than our expectations driven by a significant increase in Ion Torrent platform sales, as well as increased sales in our research consumables and forensics businesses," said Gregory T. Lucier, chairman and chief executive officer of Life Technologies. "During the quarter, we made solid progress in expanding our operations and footprint in high growth and emerging markets, including entering into strategic partnerships for companion diagnostics, building the foundation for our Medical Sciences business and acquiring distributors in China and Chile. We achieved important milestones with several highly anticipated launches including the Ion Proton System, a platform whose speed, ease of use and affordability will democratize genome sequencing, and our Pervenio Lung RS test service, the first of its kind molecular test to identify early-stage lung cancer patients who are at high risk of reoccurrence following surgery."

"We continue to demonstrate our commitment to returning capital to shareholders by repurchasing an additional $208 million worth of shares in the third quarter, bringing our year-to-date total to $535 million. Based on our performance year-to-date and end market assumptions, we are tightening the full year guidance range by increasing the bottom end by $0.05 and are now expecting non-GAAP earnings per share of $3.95 to $4.00."

Life Technologies reported current quarter results compared to the quarter ended September 30, 2011. Results are non-GAAP unless indicated otherwise. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today's press release.

Analysis of Third Quarter 2012 Results

  • Third quarter revenue decreased 1.9 percent over the prior year. Revenue growth without the impact from currency was 1.4 percent.
  • Gross margin in the third quarter was 65.6 percent, approximately 50 basis points lower than the same period of the prior year primarily driven by unfavorable currency rates.
  • Operating margin was 28.0 percent in the third quarter, approximately 140 basis points lower than the same period of the prior year. Operating margin contraction was primarily due to unfavorable currency rates and increased investments in Greater China and Medical Sciences.
  • Third quarter tax rate was 27.3 percent.
  • Third quarter EPS was $0.92.
  • Diluted weighted shares outstanding were 177.3 million in the third quarter, a decrease of 9.6 million shares over the prior year. The decrease was a result of the continuation of the company's share repurchase program, partially offset by shares issued for employee stock plans. The company repurchased $208 million or 4.4 million shares in the third quarter.
  • Cash flow from operating activities for the third quarter was $197 million. Third quarter capital expenditures were $20 million, resulting in free cash flow of $177 million. The company ended the quarter with $299 million in cash and short-term investments.

Business Group Highlights

  • Research Consumables revenue was $384 million, a decrease of 3 percent compared to the prior year. Excluding the impact from currency, revenue for the business group grew 1 percent, primarily as a result of growth in our cell culture products, sample prep products and benchtop instruments.
  • Genetic Analysis revenue was $353 million in the third quarter, a decrease of 1 percent over the same period last year. Excluding the impact from currency, revenue increased 2 percent primarily as a result of increased sales of the Ion Torrent platform, including the Ion Proton System and the Ion PGM benchtop instruments, offset by an expected decline in SOLiD® instrument sales and lower sales of CE instruments, primarily due to one-time orders in the prior year quarter and the timing of sales.
  • Applied Sciences revenue was $174 million in the third quarter, flat compared to the same period last year. Excluding the impact from currency, revenue increased 3 percent, primarily due to forensics and higher sales of qPCR applied sciences instruments, offset by lower sales of CE instruments due to one-time orders in the prior year quarter, and an expected decline in BioProduction sales, which tend to fluctuate quarter to quarter.
  • Regional revenue growth rates excluding currency for the quarter compared to the same quarter of the prior year were as follows: the Americas declined 1 percent, Europe grew 2 percent, Asia Pacific grew 10 percent and Japan grew 4 percent.

Fiscal Year 2012 Outlook

Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company is updating its guidance. The company's updated 2012 guidance is for organic revenue growth of approximately 2 percent over 2011 revenues of $3.7 billion. Additionally, the company is tightening the previously provided range by increasing the bottom by $0.05 and is now expecting non-GAAP earnings per share of $3.95 to $4.00. The company will provide further detail on its business outlook during the webcast today.

The Ion Proton System is for Research Use Only and not intended for use in diagnostic procedures.

Webcast Details

The company will discuss its financial and business results as well as its business outlook on its webcast at 4:30 PM ET today. This webcast will contain forward-looking information. The webcast 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 webcast will be posted at the company's investor relations website at https://ir.lifetechnologies.com. The webcast can be accessed through the investor relations page of the company's website at https://ir.lifetechnologies.com/events.cfm. A replay of the webcast will be available on the company's website through Thursday, November 22, 2012.

About Life Technologies

Life Technologies Corporation (NASDAQ: LIFE) is a global biotechnology company with customers in more than 160 countries using its innovative solutions to solve some of today's most difficult scientific challenges. Quality and innovation are accessible to every lab with its reliable and easy-to-use solutions spanning the biological spectrum with more than 50,000 products for agricultural biotechnology, translational research, molecular medicine and diagnostics, stem cell-based therapies, forensics, food safety and animal health. Its systems, reagents and consumables represent some of the most cited brands in scientific research including: Ion Torrent™, Applied Biosystems®, Invitrogen™, GIBCO®, Ambion®, Molecular Probes®, Novex®, and TaqMan®. Life Technologies employs approximately 10,400 people and upholds its ongoing commitment to innovation with more than 4,000 patents and exclusive licenses. LIFE had sales of $3.7 billion in 2011. 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. 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; and corporate strategy and performance. 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.

Non-GAAP Measurements

This press release 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 on the investor relations portion of the company's website at www.lifetechnologies.com.

Investor and Financial Contact
Carol Cox
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, 2012


ended September 30, 2011

(unaudited)











Revenues


$          911,183


$             928,198

Cost of revenues

361,571


315,062

Purchased intangibles amortization

71,126


73,901



Gross profit

478,486


539,235

Gross margin


52.5%


58.1%

Operating expenses:





Selling, general and administrative

270,565


251,832


Research and development

84,811


103,856


Business consolidation costs

10,571


23,126



Total operating expenses

365,947


378,814




Operating income

112,539


160,421

Operating margin

12.4%


17.3%


Interest income

436


919


Interest expense

(29,291)


(37,992)


Other expense, net

(2,781)


(3,039)



Total other expense, net

(31,636)


(40,112)

Income from operations before provision for 




     income taxes

80,903


120,309

Income tax provision

(15,301)


(24,335)




Net income

65,602


95,974




Net loss attributable to non-controlling interests

255


297




Net income attributable to controlling interest

$          65,857


$             96,271








Effective tax rate 

18.9%


20.2%

Add back interest expense for subordinated




    debt, net of tax

-


650

Numerator for diluted earnings




  per share


$          65,857


$             96,921








Earnings per common share:





Basic earnings per share attributable to controlling interest

$              0.38


$                  0.54









Diluted earnings per share attributable to controlling interest

$              0.37


$                  0.52








Weighted average shares used in per share calculation:





Basic


174,044


179,859


Diluted


177,258


186,812















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, 2012


ended September 30, 2011


(unaudited)















GAAP net income 

$         65,602


$       95,974












Non-GAAP revenue adjustments








Purchase accounting related adjustments 

193


644





Charges on a discontinued product

-


(101)



Total Non-GAAP revenue adjustments

193

(1)

543

(1)











Non-GAAP cost of revenues and purchased intangible adjustments








Purchased intangibles amortization

71,126


73,901





Purchase accounting related adjustments 

-


(183)





Legal judgment

48,500


-



Total Non-GAAP cost of revenues and purchased intangible adjustments

119,626

(2)

73,718

(2)











Non-GAAP Operating Expense Adjustments:








Purchase accounting related adjustments 

1,019


15,367





Business consolidation costs

10,571


23,126





Legal settlement

11,400


-



Total Non-GAAP Operating Expense Adjustments

22,990

(3)

38,493

(3)











Non-GAAP Other Expense Adjustments:








Noncash interest expense charges 

-


6,572



Total Non-GAAP Other Expense Adjustments

-


6,572

(4)











Non-GAAP Income Tax Provision Adjustments:








Income tax adjustments

(45,740)


(40,612)



Total Non-GAAP Income Tax Provision Adjustments

(45,740)

(5)

(40,612)

(5)










Non-GAAP Net Income

$      162,671


$     174,688



Non-GAAP loss attributable to controlling interest

255

(6)

193

(6)

Non-GAAP Net Income Attributable to Controlling Interest

$      162,926


$     174,881











Add back of interest expense for subordinated debt, net of tax

-


32











Non-GAAP Numerator for diluted earnings per share

$      162,926


$     174,913











Non-GAAP Earnings per common share:






Basic earnings per share attributable to controlling interest

$             0.94


$            0.97












Diluted earnings per share attributable to controlling interest

$             0.92


$            0.94











Weighted average shares used in per share calculation:






Basic



174,044


179,859



Diluted


177,258


186,812




















Summary of Reconciliation between GAAP and Non-GAAP Net Income


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.




For the three months ended September 30, 2011, Non-GAAP earnings resulted in total revenue of $928.7 million, gross profit of $613.5 million with gross margin of 66.1%, operating profit of $273.2 million with operating margin of 29.4%, and an income tax provision of $64.9 million with the Non-GAAP effective tax rate of 27.1%  with the above adjustments.



Notes

(1)

Add back purchased deferred revenue of $0.2 million and $0.6 million for the three months ended September 30, 2012 and 2011, respectively, and adjust revenue related to returns of a discontinued product of $0.1 million for the three months ended September 30, 2011.



(2)

Add back amortization of purchased intangibles of $71.1 million and $73.9 million for the three months ended September 30, 2012 and 2011, respectively. Add back the legal judgment of $48.5 million for the three months ended September 30, 2012, and adjust charges for a contingent consideration remeasurement of $0.2 million for the three months ended September 30, 2011.



(3)

Add back depreciation of purchase accounting property, plant, and equipment revaluation of $1.0 million and $1.7 million, and 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 $10.6 million and $23.1 million for the three months ended September 30, 2012 and 2011, respectively. Add back legal settlement of $11.4 million for the three months ended September 30, 2012, and add back purchase accounting contingent consideration fair value adjustment of $13.7 million for the three months ended September 30, 2011.



(4)

Add back charges related to non-cash interest expense for senior convertible debts of $5.1 million and imputed finance charge of $1.5 million associated with contingent consideration on business acquisitions for the three months ended September 30, 2011.



(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, adjusted for noncash charges for purchase accounting property, plant, and equipment revaluation, 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, 2012


ended September 30, 2011

(unaudited)











Revenues


$         2,799,606


$      2,765,227

Cost of revenues

1,003,611


955,840

Purchased intangibles amortization

219,192


226,527




Gross profit

1,576,803


1,582,860

Gross margin

56.3%


57.2%

Operating expenses:





Selling, general and administrative

790,012


759,438


Research and development

258,225


287,723


Business consolidation costs

34,266


56,468



Total operating expenses

1,082,503


1,103,629




Operating income

494,300


479,231

Operating margin

17.7%


17.3%


Interest income

1,715


2,960


Interest expense

(94,266)


(123,911)


Other expense, net

(11,097)


(7,980)



Total other expense, net

(103,648)


(128,931)

Income from operations before provision for 




     income taxes

390,652


350,300

Income tax provision

(70,108)


(65,534)




Net income

320,544


284,766




Net loss attributable to non-controlling interests

305


658




Net income attributable to controlling interest

$         320,849


$       285,424








Effective tax rate 

17.9%


18.7%

Add back interest expense for subordinated




    debt, net of tax

12


716

Numerator for diluted earnings




  per share

$         320,861


$       286,140








Earnings per common share:





Basic earnings per share attributable to controlling interest

$                1.81


$              1.59









Diluted earnings per share attributable to controlling interest

$                1.78


$              1.54








Weighted average shares used in per share calculation:





Basic


177,028


179,751


Diluted

180,559


185,946















LIFE TECHNOLOGIES CORPORATION

ITEMIZED RECONCILIATION BETWEEN

GAAP AND NON-GAAP NET INCOME















For the nine months


For the nine months


(in thousands, except per share data)

ended September 30, 2012


ended September 30, 2011


(unaudited)















GAAP net income 

$      320,544


$        284,766












Non-GAAP revenue adjustments








Purchase accounting related adjustments 

835


2,375





Charges on a discontinued product

(457)


2,736



Total Non-GAAP revenue adjustments

378

(1)

5,111

(1)











Non-GAAP cost of revenues and purchased intangible adjustments








Purchased intangibles amortization

219,192


226,527





Purchase accounting related adjustments 

-


(1,555)





Charges on a discontinued product

-


2,094





Legal judgement and settlement of historical portion of licensing dispute

48,331


-



Total Non-GAAP cost of revenues and purchased intangible adjustments

267,523

(2)

227,066

(2)











Non-GAAP Operating Expense Adjustments:








Purchase accounting related adjustments 

2,869


20,886





Business consolidation costs

34,266


56,468





Licensing and legal settlements

10,467


-



Total Non-GAAP Operating Expense Adjustments

47,602

(3)

77,354

(3)











Non-GAAP Other Expense Adjustments:








Noncash interest expense charges 

5,382


24,130





Other expense

5,302


-



Total Non-GAAP Other Expense Adjustments

10,684

(4)

24,130

(4)











Non-GAAP Income Tax Provision Adjustments:








Income tax adjustments

(128,868)


(122,610)



Total Non-GAAP Income Tax Provision Adjustments

(128,868)

(5)

(122,610)

(5)










Non-GAAP Net Income

$      517,863


$        495,817



Non-GAAP loss attributable to controlling interest

305

(6)

350

(6)

Non-GAAP Net Income Attributable to Controlling Interest

$      518,168


$        496,167











Add back interest expense for subordinated debt, net of tax

12


98











Non-GAAP Numerator for diluted earnings per share

$      518,180


$        496,265











Non-GAAP Earnings per common share:






Basic earnings per share attributable to controlling interest

$             2.93


$               2.76












Diluted earnings per share attributable to controlling interest

$             2.87


$               2.67











Weighted average shares used in per share calculation:






Basic


177,028


179,751



Diluted


180,559


185,946




















Summary of Reconciliation between GAAP and Non-GAAP Net Income


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.




For the nine months ended September 30, 2011, Non-GAAP earnings resulted in total revenue of $2.8 billion, gross profit of $1.8 billion with gross margin of 65.5%, operating profit of $788.8 million with operating margin of 28.5%, and an income tax provision of $188.1 million with the Non-GAAP effective tax rate of 27.5%  with the above adjustments.










Notes


(1)

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.  Add back purchased deferred revenue of $2.4 million and revenue related to returns of a discontinued product of $2.7 million for the nine months ended September 30, 2011.



(2)

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.  Add back amortization of purchased intangibles of $226.5 million, charges for inventory reserves related to a discontinued product of $2.1 million, and purchase accounting related cost of revenue revaluation of $0.5 million which was offset by contingent consideration revaluation of $2.1 million for the nine months ended September 30, 2011. 



(3)

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 depreciation of purchase accounting property, plant, and equipment revaluation of $5.7 million, purchase accounting contingent consideration fair value adjustment of $13.7 million and accelerated compensation expense related to business acquisitions of $1.5 million for the nine months ended September 30, 2011. 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 $34.3 million and $56.5 million for the nine months ended September 30, 2012 and 2011, 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. Add back charges related to non-cash interest expense for senior convertible debts of $19.5 million and charges for imputed finance charge of $4.6 million associated with contingent consideration on business acquisitions for the nine months ended September 30, 2011.



(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, adjusted for noncash charges for purchase accounting property, plant, and equipment revaluation, 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 STATEMENTS OF CASH FLOWS


















For the nine months



ended September 30,

(in thousands)(unaudited)

2012


2011

Net income

$            320,544


$         284,766


Add back amortization and 





    share-based compensation

292,918


289,912


Add back depreciation

93,617


90,988


Balance sheet changes

(42,539)


(153,355)


Other noncash adjustments

(107,755)


(19,104)

Net cash provided by operating activities

556,785


493,207


Capital expenditures

(68,385)


(65,779)

Free cash flow

488,400


427,428

Net cash used in investing activities

(72,057)


(48,645)

Net cash used in financing activities

(980,524)


(601,228)

Effect of exchange rate changes on cash

(420)


3,092

Net decrease in cash and cash equivalents

$           (564,601)


$       (219,353)






LIFE TECHNOLOGIES CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS


















September 30, 


December 31,

(in thousands)

2012


2011

ASSETS

 (unaudited) 



Current assets:





Cash and short-term investments

$               299,270


$             881,994


Trade accounts receivable, net of allowance for doubtful accounts

644,579


636,998


Inventories

400,680


377,866


Prepaid expenses and other current assets

251,160


196,759


     Total current assets

1,595,689


2,093,617






Long-term assets

6,962,346


7,094,346


     Total assets

$            8,558,035


$          9,187,963






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Current portion of long-term debt

$               253,200


$             450,839


Short-term borrowings

140,000


-


Accounts payable, accrued expenses and other current liabilities

728,468


1,045,467


     Total current liabilities

1,121,668


1,496,306











Long-term debt

2,061,280


2,297,653

Other long-term liabilities

760,586


794,778

Stockholders' equity

4,614,501


4,599,226


    Total liabilities and stockholders' equity

$            8,558,035


$          9,187,963








SOURCE Life Technologies Corporation



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