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| LIFE > SEC Filings for LIFE > Form 8-K/A on 22-Jan-2009 | All Recent SEC Filings |
22-Jan-2009
Financial Statements and Exhibits
(b) Pro forma financial information
The pro forma financial information required, pursuant to Article 11 of Regulation S-X, is filed on the pages listed below:
Unaudited Pro Forma Combined Condensed Statement of Earnings for Life Technologies Corporation for the nine months ended September 30, 2008 F-2 Unaudited Pro Forma Combined Condensed Statement of Earnings for the year
ended December 31, 2007 F-3 Unaudited Pro Forma Balance Sheet as of September 30, 2008 F-4 Notes to Unaudited Pro Forma Combined Financial Statements F-5 |
The following unaudited pro forma combined condensed statements of earnings combine the historical consolidated statements of earnings of Life Technologies Corporation (formerly known as Invitrogen Corporation) (the "Company") and Applied Biosystems, Inc. ("ABI") giving effect to the merger and related events, including the separation effective July 1, 2008, of all of the businesses, assets and liabilities of the Celera Group from ABI's remaining business, as if they had been consummated on January 1, 2007. The unaudited pro forma combined condensed balance sheet combines the historical unaudited consolidated balance sheet of the Company as of September 30, 2008 and the historical unaudited consolidated balance sheet of ABI as of September 30, 2008, giving effect to the merger and related events, including the Celera separation, as if they had been consummated on September 30, 2008. The historical consolidated statements of earnings of ABI have been adjusted from a fiscal year end of June 30 to a fiscal year end of December 31 to conform to the Company's year end.
The pro forma information is being furnished solely for informational purposes and is not necessarily indicative of the combined financial position or results of operations that might have been achieved for the periods or dates indicated, nor is it necessarily indicative of the future results of the combined company. The pro forma information is based on preliminary estimates and assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements. The pro forma information does not reflect cost savings expected to be realized from the elimination of certain expenses and from synergies expected to be created or the costs to achieve such cost savings or synergies. No assurance can be given that cost savings or synergies will be realized. Income taxes do not reflect the amounts that would have resulted had the Company and ABI filed consolidated income tax returns during the periods presented.
Pro forma adjustments are necessary to reflect the purchase price, including the new debt and equity structure, and to adjust ABI's net tangible and intangible assets and liabilities to preliminary estimated fair values. Pro forma adjustments are also necessary to reflect the amortization expense related to amortizable intangible assets, changes in depreciation and amortization expense resulting from fair value adjustments to net tangible assets, costs to finance the merger and the income tax effects related to the pro forma adjustments.
The pro forma adjustments to ABI's assets and liabilities and allocation of purchase price are preliminary and are based on Company management's estimates of the fair value of the assets acquired and liabilities assumed. Work performed by independent valuation specialists has been considered in Company management's estimates of the fair values reflected in the unaudited pro forma condensed combined financial statements.
The final purchase price allocation will be completed after asset and liability valuations are finalized. A final determination of these fair values will include Company management's consideration of a final valuation that will be prepared with the assistance of independent valuation specialists. This final valuation will be based on the actual net tangible and intangible assets of ABI that existed as of the consummation of the merger. Any final adjustments may change the allocation of the purchase price, which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma condensed combined financial statements presented herein. Amounts preliminarily allocated to assets and liabilities, and the estimated useful lives of intangible assets with indefinite and definite lives, may change significantly, which could result in a material increase or decrease in amortization of definite lived intangible assets. Estimates related to the determination of the lives of assets acquired may also change, which could result in a material increase or decrease in depreciation or amortization expense.
Certain reclassifications have been made to conform ABI's historical amounts to the Company's presentation.
Unaudited Pro Forma Combined Condensed Statement of Earnings
For the nine months ended September 30, 2008
(in millions, except per share amounts)
Life Applied Pro Forma Pro Forma
Technologies Biosystems Adjustments Note 2 Combined
Revenue $ 1,079.7 $ 1,694.6 $ (12.0 ) (a ) $ 2,762.3
Cost of revenues 365.7 714.1 (12.0 ) (a ) 1,067.8
Purchased intangibles
amortization 52.0 7.8 (7.8 ) (b ) 270.2
218.2 (b )
Gross profit 662.0 972.7 (210.4 ) 1,424.3
Operating expenses:
Sales and marketing 215.3 324.0 - 539.3
General and administrative 132.3 177.5 3.1 (c ) 312.9
Research and development 95.2 150.4 - 245.6
Business consolidation costs,
employee-related charges, asset
impairments and other 18.9 13.7 - 32.6
Asset dispositions and legal
settlements 16.1 4.7 - 20.8
Total operating expenses 477.8 670.3 3.1 1,151.2
Operating income 184.2 302.4 (213.5 ) 273.1
Other income (expense):
Interest income 20.5 13.0 (15.7 ) (d ) 17.8
Interest expense (20.6 ) (3.8 ) (125.7 ) (e ) (150.1 )
Other income, net 0.8 23.3 - 24.1
Total other income (expense),
net 0.7 32.5 (141.4 ) (108.2 )
Income before provision for
income taxes 184.9 334.9 (354.9 ) 164.9
Income tax provision (48.1 ) (180.4 ) 136.7 (f ) (1.2 )
90.6 (f )
Net Earnings $ 136.8 $ 154.5 $ (127.6 ) $ 163.7
Basic earnings per share (g ) $ 0.95
Diluted earnings per share (g ) $ 0.92
Basic shares (g ) 173.2
Diluted shares (g ) 178.1
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Unaudited Pro Forma Combined Condensed Statement of Earnings
For the year ended December 31, 2007
(in millions, except per share amounts)
Pro
Life Applied Pro Forma Forma
Technologies Biosystems Adjustments Note 2 Combined
Revenue $ 1,281.7 $ 2,150.3 $ (12.2 ) (a ) $ 3,419.8
Cost of revenues 467.1 936.5 (12.2 ) (a ) 1,391.4
Purchased intangibles
amortization 98.7 10.9 (10.9 ) (b ) 389.7
291.0 (b )
Gross profit 715.9 1,202.9 (280.1 ) 1,638.7
Operating expenses:
Sales and marketing 252.1 391.5 - 643.6
General and administrative 164.0 230.8 4.1 (c ) 398.9
Research and development 115.8 202.8 - 318.6
Business consolidation costs,
employee-related charges, asset
impairments and other 5.7 2.8 - 8.5
Asset dispositions and legal
settlements - (11.1 ) - (11.1 )
Total operating expenses 537.6 816.8 4.1 1,358.5
Operating income 178.3 386.1 (284.2 ) 280.2
Other income (expense):
Interest income 28.0 18.5 (41.1 ) (d ) 5.4
Interest expense (28.0 ) (5.7 ) (167.6 ) (e ) (201.3 )
Other income, net 0.3 9.0 - 9.3
Total other income (expense), net 0.3 21.8 (208.7 ) (186.6 )
Income before provision for
income taxes 178.6 407.9 (492.9 ) 93.6
Income tax provision (48.3 ) (110.9 ) 189.5 (f ) 30.3
Net income from continuing
operations $ 130.3 $ 297.0 $ (303.4 ) $ 123.9
Basic earnings per share (g ) $ 0.71
Diluted earnings per share (g ) $ 0.70
Basic shares (g ) 174.2
Diluted shares (g ) 178.0
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Unaudited Pro Forma Combined Condensed Balance Sheet
As of September 30, 2008
(in millions)
Life Applied Pro Forma Pro Forma
Technologies Biosystems Adjustments Note 2 Combined
ASSETS
Current Assets
Cash and cash equivalents $ 673.1 $ 418.7 $ (868.8 ) (h ) $ 223.0
2,400.0 (i )
(2,400.0 ) (h )
Restricted cash and investments 2.8 - - 2.8
Trade accounts receivable, net of
allowance for doubtful accounts 198.0 384.2 - 582.2
Inventories, net 206.6 175.8 88.2 (j ) 470.6
Deferred income tax assets 30.3 31.4 - 61.7
Prepaid expenses and other current
assets 37.4 153.2 - 190.6
Total current assets 1,148.2 1,163.3 (780.6 ) 1,530.9
Long term investments 36.6 17.9 - 54.5
Property and equipment, net 344.1 357.2 77.1 (k ) 778.4
Goodwill 1,543.1 243.2 (243.2 ) (l ) 3,685.5
2,102.1 (l )
24.6 (t )
15.7 (u )
Intangible assets, net 262.1 38.8 (38.8 ) (m ) 2,814.6
2,552.5 (m )
100.0 (n )
(100.0 ) (n )
Deferred income tax assets 6.7 304.6 (24.6 ) (t ) 286.7
Other assets 55.3 99.8 - 155.1
Total assets $ 3,396.1 $ 2,224.8 $ 3,664.8 $ 9,305.7
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long term debt - - - -
Accounts payable 110.1 131.0 - 241.1
Shut down accrual 12.2 - - 12.2
Current deferred tax liability - 13.4 - 13.4
Accrued expenses and other current
liabilities 121.4 322.9 (77.2 ) (o ) 432.5
65.4 (r )
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Life Applied Pro Forma Pro Forma
Technologies Biosystems Adjustments Note 2 Combined
Income taxes-accrued - 24.9 27.9 (u ) 52.8
Total current liabilities 243.7 492.2 16.1 752
Long term debt 1,151.0 - 2,400.0 (i ) 3,551.0
Pension liabilities 21.6 65.6 - 87.2
Deferred income tax liabilities 84.6 1.8 1,040.0 (r ) 1,126.4
Other long term obligations,
deferred credits and reserves 53.7 157.4 50.0 (s ) 261.1
Total liabilities 1,554.6 717.0 3,506.1 5,777.7
Stockholders' equity
Common stock; 1.1 2.1 (2.1 ) (p ) 1.9
0.8 (q )
Additional paid in capital 2,503.1 717.2 (717.2 ) (p ) 4,301.0
1,797.9 (q )
Accumulated other comprehensive
income 75.5 (5.9 ) 5.9 (p ) 75.5
Retained earnings (accumulated
deficit) 225.2 2,093.5 (2,093.5 ) (p ) 113.0
(12.2 ) (u )
(100.0 ) (n )
Less cost of treasury stock; (963.4 ) (1,299.1 ) 1,299.1 (p ) (963.4 )
Total stockholders' equity $ 1,841.5 $ 1,507.8 $ 178.7 $ 3,528.0
Total liabilities and stockholders'
equity $ 3,396.1 $ 2,224.8 $ 3,684.8 $ 9,305.7
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Note 1 Basis of Presentation
On November 21, 2008, Life Technologies Corporation (formerly known as Invitrogen Corporation), a Delaware company, or the Company, completed the merger, or the Merger, with Applied Biosystems, Inc., a Delaware company, or ABI, pursuant to the Agreement and Plan of Merger, dated June 11, 2008, as amended by Amendment No. 1 thereto, dated as of September 9, 2008, and as amended by Amendment No. 2 thereto, dated as of October 15, 2008, or, as amended, the Merger Agreement, the Company completed the merger with ABI whereby, among other things, ABI merged with and into Atom LLC (now known as Applied Biosystems, LLC) and became a wholly-owned subsidiary of the Company.
At the effective time of the merger, in accordance with the election and allocation procedures set forth in the merger agreement, each outstanding share of Applied Biosystems stock was converted into the right to receive a combination of cash and shares of the Company's common stock, subject to adjustment in the case of cash or stock elections as a result of the pro-ration procedures contained in the merger agreement.
At the effective time of the merger, 177.9 million shares of Applied Biosystems common stock were exchanged under the merger agreement. Applied Biosystems stockholders received a total of approximately 80.8 million shares of the Company's common stock and $3.2 billion in cash in consideration for the merger for an aggregate transaction value of approximately $5.1 billion.
Value of Life Technologies shares issued $ 1,799
Cash consideration 3,229
Transaction costs 40
Total $ 5,068
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The allocation of purchase price as of September 30, 2008 is summarized below (in millions):
Current assets $ 1,251 Property, plant and equipment 434 In-process research and development 100 Identifiable intangible assets (including customer relationships of $1,400.0, developed technology of $625.0, trademarks of $300.0 and other intangibles of $227.5) 2,553 Goodwill 2,127 Other assets 398 Current liabilities (415 ) Deferred income tax liability (1,107 ) Other long-term liabilities (273 ) Net Assets $ 5,068 |
The value of the shares of the Company's common stock used in determining the purchase price was $22.25 per share based on the actual price per share valuation two days before the merger. For details on the merger consideration, refer to the "The Merger Agreement-Merger Consideration" section of the joint proxy statement/prospectus (Reg. No. 33-15274) filed with the Securities and Exchange Commission on September 11, 2008 and the supplement thereto filed with the Securities and Exchange Commission on October 15, 2008.
The amount allocated to acquired in-process research and development represents an estimate of the fair value of purchased in-process technology for research projects that, as of the date of the consummation of the merger, have not reached technological feasibility and do not have a future alternative use. The values of the research projects will be determined based on analyses using estimated cash flows to be generated by the products that results from the in-process projects. These cash flows will be estimated by forecasting total revenues expected from these products and then deducting appropriate operating expenses, cash flow adjustments and contributory asset returns to establish a forecast of net cash flows arising from the in-process technology. These cash flows will be substantially reduced to take into account the time value of money and the risk associated with the inherent difficulties and uncertainties given the projected stage of development of these projects at closing. For purposes of the unaudited pro forma combined condensed balance sheet as of September 30, 2008, $100.0 million of the total purchase price has been allocated to acquired in-process research and development which is not expected to have reached technological feasibility at the consummation date of the merger and have no future alternative use. The amounts allocated to in-process research and development will be charged to expense in the statement of earnings in the period the acquisition is consummated.
The Company needed approximately $869 million of cash in the U.S. to complete the purchase of shares from the ABI shareholders. A portion of this cash came from sources outside the U.S. The estimated tax cost associated with repatriating these funds is $27.9 million. This potential tax cash cost is reflected in the unaudited pro forma condensed combined balance sheet as of September 30, 2008 as an increase of income tax liability of $27.9 million, with offsets to historical ABI goodwill of $15.7 million and to the Company's retained earnings of $12.2 million.
The ABI pro forma financial data has been adjusted from a fiscal year end of June 30 to a calendar year end of December 31 to conform with the Company's fiscal year end.
Note 2 Pro Forma Adjustments
Pro Forma Statement of Earnings Adjustments
(a) Reflects the elimination of revenue and cost of goods sold between the Company and Applied Biosystems.
(b) Reflects amortization of $218.2 million and $291.0 million for the nine month period ended September 30, 2008 and the year ended December 31, 2007, respectively, for identified intangible assets based on the estimated fair values assigned to these assets at the date of acquisition and estimated useful lives of 12 years, 10 years, 7 years, 5 years and 4 years for customer relationships, trademarks, developed technology, other identifiable intangibles and PCR patents, respectively, and the elimination of historical ABI intangible amortization of $7.8 million and $10.9 million for the nine month period ending September 30, 2008 and the year ended December 31, 2007, respectively. Assuming an aggregate average useful life of seven years, straight-line amortization, and a tax rate of 39.6%, for every additional $50 million allocated to identified intangible assets, net earnings will decrease by $3.2 million and $4.3 million for the nine-month period ended September 30, 2008 and the year ended December 31, 2007, respectively.
(d) Reflects lower interest income due to the assumed use of $868.8 million of the Company's cash and equivalents to finance a part of the cash portion of the merger consideration and transaction costs and assumes interest rates based on the Company's historical average interest rate earned on cash equivalents of 2.41% and 4.73% for the nine months ended September 30, 2008 and the year ended December 31, 2007, respectively.
(e) Reflects higher incremental interest expense of $118.6 million and $158.2 million for the nine month period ended September 30, 2008 and the year ended December 31, 2007, respectively, and amortization of debt issuance costs of $7.1 million and $9.4 million for the nine month period ended September 30, 2008 and the year ended December 31, 2007, respectively, due to additional borrowings of $2.4 billion at estimated interest rates from 6.1% to 6.7% to finance a part of the cash portion of the merger consideration and transaction costs.
(f) Represents the tax effect of unaudited pro forma combined condensed . . .
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