<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant To Section 13 or 15(d) of The Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported) February 2, 2000
INVITROGEN CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in charter)
DELAWARE 0-25317 33-0373077
-------- ------- ----------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) 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
NOT APPLICABLE
------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition Or Disposition Of Assets
On February 2, 2000, Invitrogen Corporation ("Invitrogen") completed
a merger pursuant to which Research Genetics, Inc., an Alabama corporation,
merged with a wholly owned Delaware subsidiary of Invitrogen. Research
Genetics, now a Delaware corporation, is a supplier of products and services
for functional genomics and gene-based drug discovery research. Upon
completion of the merger, each share of Research Genetics stock was converted
into the right to receive 64 shares of Invitrogen common stock. The exchange
ratio was calculated by dividing 3,200,000 by the total number of shares of
Research Genetics common stock outstanding immediately prior to the effective
time of the merger. The exchange ratio was based on (i) the negotiated value
of Research Genetics, (ii) the number of Research Genetics shares
outstanding, and (iii) the market price of Invitrogen Common Stock.
Invitrogen intends to continue Research Genetics' operations as part of
Invitrogen's business. A total of 3,200,000 shares of Invitrogen Common Stock
were issued to the shareholders of Research Genetics as a result of the
exchange of securities in the merger.
In the merger, Invitrogen also acquired through Research Genetics
four tracts of improved real estate which comprise the facilities used by
Research Genetics. These facilities include approximately 153,000 square
feet of office, production, research and development space, as well as space
for planned expansion. At this time Invitrogen intends to continue to use
these facilities for their current purposes.
ITEM 5. Other Events
On February 17, 2000 Invitrogen Corporation reported earnings
information for its year ending December 31, 1999. The news release is filed as
an exhibit hereto and is incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits
a) Financial Statements of Research Genetics. The audited financial
statements for Research Genetics, Inc. as of December 31, 1999 and
1998 are filed as an exhibit hereto and are incorporated herein by
reference.
b) Pro forma financial information. Pro forma financial statements for
Invitrogen Corporation and Research Genetics for the years ended
December 31, 1999, 1998 and 1997 are filed as an exhibit hereto and
are incorporated herein by reference.
c) Exhibits.
Exhibit Description
------- -----------
2.1 Agreement and Plan of Reorganization dated as of
February 1, 2000 by and among Invitrogen
Corporation, RG merger Corporation and Research
Genetics, Inc. Incorporated by reference to
Invitrogen Corporation's filing on form 8-K dated
February 16, 2000.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants
99.1 Invitrogen Corporation News Release dated February
17, 2000
99.2 Research Genetics audited (i) Balance Sheets as of
December 31, 1999 and 1998; (ii) Statements of
Income for the years ended December 31, 1999 and
1998; (iii) Statements of Stockholders' Equity for
the years ended December 31, 1999 and 1998; (iv)
Statements of Cash Flows for the years ended
December 31, 1999 and 1998; and related Notes to
Financial Statements.
99.3 Research Genetics audited (i) Balance Sheets as of
December 31, 1998 and 1997; (ii) Statements of
Income for the years ended December 31, 1998 and
1997; (iii) Statements of Stockholders' Equity for
the years ended December 31, 1998 and 1997; (iv)
Statements of Cash Flows for the years ended
December 31, 1998 and 1997; and related Notes to
Financial Statements. Incorporated by reference to
Invitrogen Corporation's filing on Form 8-K dated
February 16, 2000.
2
<PAGE>
99.4 Invitrogen Corporation and Research Genetics
Unaudited Pro Forma (i) Combined Balance Sheet as of
December 31, 1999; (ii) Combined Statements of
Income for the years ended December 31, 1999, 1998
and 1997; and (iii) related Notes to Combined
Financial Statements.
27.01 Financial Data Schedule - Invitrogen Corporation
27.02 Financial Data Schedule - Research Genetics
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: February 17, 2000 INVITROGEN CORPORATION
By: /s/ James R. Glynn
--------------------------------
James R. Glynn
Chief Financial Officer
3
<PAGE>
INDEX OF EXHIBITS
Exhibit Description
------- -----------
2.1 Agreement and Plan of Reorganization dated as of
February 1, 2000 by and among Invitrogen
Corporation, RG merger Corporation and Research
Genetics, Inc. Incorporated by reference to
Invitrogen Corporation's filing on form 8-K dated
February 16, 2000.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants
99.1 Invitrogen Corporation News Release dated February
17, 2000
99.2 Research Genetics audited (i) Balance Sheets as of
December 31, 1999 and 1998; (ii) Statements of
Income for the years ended December 31, 1999 and
1998; (iii) Statements of Stockholders' Equity for
the years ended December 31, 1999 and 1998; (iv)
Statements of Cash Flows for the years ended
December 31, 1999 and 1998; and related Notes to
Financial Statements.
99.3 Research Genetics audited (i) Balance Sheets as of
December 31, 1998 and 1997; (ii) Statements of
Income for the years ended December 31, 1998 and
1997; (iii) Statements of Stockholders' Equity for
the years ended December 31, 1998 and 1997; (iv)
Statements of Cash Flows for the years ended
December 31, 1998 and 1997; and related Notes to
Financial Statements. Incorporated by reference to
Invitrogen Corporation's filing on Form 8-K dated
February 16, 2000.
99.4 Invitrogen Corporation and Research Genetics
Unaudited Pro Forma (i) Combined Balance Sheet as of
December 31, 1999; (ii) Combined Statements of
Income for the years ended December 31, 1999, 1998
and 1997; and (iii) related Notes to Combined
Financial Statements.
27.01 Financial Data Schedule - Invitrogen Corporation
27.02 Financial Data Schedule - Research Genetics
4
<PAGE>
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report on Research Genetics, Inc. dated February 3, 2000, included in this Form
8-K, into Invitrogen Corporation's previously filed Registration Statements on
Form S-8 File No.'s 333-86531, 333-74061.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
February 14, 2000
<PAGE>
EXHIBIT 99.1
[LOGO]
Financial and Investor Contacts: Media Contact:
Jim Glynn or Cheri Manis Dan Peoples
Invitrogen Corporation Broadgate Consultants
(760) 603-7200 (858) 552-8146
INVITROGEN CORPORATION REPORTS
1999 FULL YEAR AND FOURTH QUARTER RESULTS
SAN DIEGO, CA, February 17, 2000 -- Invitrogen Corporation (NASDAQ:
IVGN) today announced results for its full year and fourth quarter ended
December 31, 1999.
Net income for the year ended December 31, 1999, excluding
merger-related costs net of tax, was $9.8 million, up 131% compared with $4.2
million for 1998. Income available to common stockholders for 1999, excluding
merger-related costs, was $10.5 million, or $.57 per share, compared with $3.1
million, or $.23 per share, for the same period in 1998. Income available to
common stockholders in 1999 includes a $1.0 million incremental adjustment
reflecting the final redemption price for redeemable preferred stock that was
determinable upon the company's initial public offering in February.
Merger-related costs of $4.4 million on a pre-tax basis were recognized
from the company's acquisition of NOVEX in the third quarter of 1999. Income
available to common stockholders for the year ended December 31, 1999, including
these merger-related costs net of tax, was $7.4 million, or $.40 per share.
Revenues for the year ending in December 1999 were $68.3 million, up
27% from $53.7 million last year.
Lyle C. Turner, Chairman and Chief Executive Officer, said, "Our
continued growth in both revenues and income reflects a combination of demand
growth, technology acquisition, entry into new markets, and new product
development. The results and accomplishments of last year are evidence of
Invitrogen's emerging leadership position in the genomics revolution."
According to Turner, the highlights of 1999 included the company's
initial public offering in February, a secondary offering in November and the
acquisition of NOVEX in August. "NOVEX is a leading supplier of pre-cast
electrophoresis gels," said Turner, "and their product lines dovetail extremely
well with Invitrogen's. The merger establishes us as a leader in protein
electrophoresis and
<PAGE>
Page 2 -- Invitrogen Corporation Reports 1999 Full Year and Fourth Quarter
Results
allows us to cross-sell products to existing customers of both companies and
address new markets utilizing our combined expertise."
Turner added that on February 2, 2000, Invitrogen acquired Research
Genetics, Inc., a leading supplier of products and services for functional
genomics and gene-based drug discovery research. "By extending our product lines
into new areas of genomics, the NOVEX and Research Genetics acquisitions give us
the ability to serve customers from the earliest phases of gene identification
and target validation, and continue through the various stages of cloning,
protein expression and analysis," he said. The 1999 results of Research Genetics
are not included in Invitrogen's year-end results. However, the company today
filed pro forma combined financial information with the Securities and Exchange
Commission on Form 8-K/A.
Turner also noted that during 1999 Invitrogen launched 65 products and
obtained 18 new technology licenses. At the end of last year, the company had
more than 85 technology licensing agreements covering approximately 200 patents.
"Our company has been able to grow rapidly thanks to an aggressive in-licensing
strategy that shortens product development times," added Turner. "The fact that
Invitrogen's products do not require FDA approval in the United States or
equivalent approvals in other countries further accelerates our time-to-market."
Invitrogen's gross margins as a percent of revenues improved by more
than two percentage points during the year, from 64.2% in 1998 to 66.3% in 1999.
The improvement in gross margins resulted from higher absorption of overhead
costs, higher grant revenue, general price increases, lower royalty expenses and
cost reductions in shipping.
Total operating expenses as a percentage of revenues, excluding
merger-related costs, declined from 52.3% in 1998 to 47.5% in 1999, reflecting
the fact that revenue growth continues to outpace spending for operations. At
the same time, the company said that sales and marketing, G&A and R&D categories
increased on an absolute dollar basis as the company expanded its resources to
support revenue growth, developed new products, and incurred additional expenses
in its first year as a public company. The company noted, however, that G&A
decreased in absolute dollars in the fourth quarter, reflecting workforce
reductions in September 1999 following the NOVEX acquisition.
Net income for the quarter was $3.3 million, up 270% from the $.9
million recorded for the fourth quarter in 1998. Income available to common
stockholders for the fourth quarter was also $3.3 million, or $.16 per share, up
from $.6 million, or $.04 per share, reported for the same period in 1998.
Revenues for the fourth quarter were $17 million, up 18% from the $14.4
million recorded for the fourth quarter in 1998. North American revenues grew
25% during the quarter to $11 million
<PAGE>
Page 3 -- Invitrogen Corporation Reports 1999 Full Year and Fourth Quarter
Results
and European revenues grew 8% to $5 million. The company said revenue growth was
below that of recent quarters because of the negative impact of currency
conversion rates in Europe, an effect that was magnified by strong sales in
European countries. Excluding the effects of currency rates and slower growth in
the company's fine chemicals line, which was acquired as part of the NOVEX
acquisition, European revenues in the NOVEX and Invitrogen product lines grew
34% in the quarter.
Invitrogen develops, manufactures and markets research tools in kit
form and provides other research products and services to corporate, academic
and government entities. These research kits simplify and improve gene cloning,
gene expression and gene analysis techniques and are used for genomics and
gene-based drug discovery, among other molecular biology activities. Founded in
1987, Invitrogen is headquartered in San Diego, California and has operations in
Huntsville, Alabama, Groningen, Netherlands, and Heidelberg, Germany.
For more information about Invitrogen, visit the Invitrogen Web site at
www.invitrogen.com.
Invitrogen will be hosting a conference call regarding these results at
11:00 a.m. Eastern Standard Time. To join the conference call, please dial
212-346-6502 after 10:55 a.m.
CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE ARE CONSIDERED
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995, SUCH AS STATEMENTS RELATING TO EMERGING
LEADERSHIP, NEW PRODUCT MARKETS AND SELLING STRATEGIES, AND EXPANDED CUSTOMER
SERVICE OPPORTUNITIES ARE PROSPECTIVE. 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, WHETHER WE CAN MANAGE GROWTH AND SUCCESSFULLY INTEGRATE
RECENTLY ACQUIRED COMPANIES INTO OUR OPERATIONS, WHETHER WE ARE ABLE TO
SUCCESSFULLY DEVELOP AND COMMERCIALIZE NEW PRODUCTS AND SERVICES, AND WHETHER WE
CAN CONTINUE TO IDENTIFY, DEVELOP AND LICENSE NEW TECHNOLOGY, IN ADDITION TO
COMPETITION, AND OTHER RISKS AND UNCERTAINTIES DETAILED FROM TIME TO TIME IN THE
COMPANY'S SECURITIES AND EXCHANGE COMMISSION FILINGS.
<PAGE>
Page 4 -- Invitrogen Corporation Reports 1999 Full Year and Fourth Quarter
Results
INVITROGEN CORPORATION AND SUBSIDIARIES
INTERIM CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues....................................................................$ 17,024 $ 14,448 $ 68,312 $ 53,660
Cost of Revenues............................................................ 5,557 5,484 23,018 19,191
--------- --------- --------- ---------
Gross margin............................................................. 11,467 8,964 45,294 34,469
Operating Expenses:
Sales and marketing....................................................... 3,404 3,036 13,900 11,352
General and administrative................................................ 2,095 2,275 8,837 8,091
Research and development.................................................. 2,252 2,213 9,699 8,603
Merger related costs...................................................... - - 4,379 -
---------- --------- --------- ---------
Total operating expenses............................................... 7,751 7,524 36,815 28,046
---------- --------- --------- ---------
Income from operations............................................... 3,716 1,440 8,479 6,423
---------- --------- --------- ---------
Other Income (Expense):
Gain (loss) on foreign currency transactions.............................. 9 (53) (90) 25
Interest and other expense................................................ (22) (52) (244) (249)
Interest and other income................................................. 1,018 122 2,054 441
---------- --------- --------- ---------
1,005 17 1,720 217
---------- --------- --------- ---------
Income before provision for income taxes.................................... 4,721 1,457 10,199 6,640
Provision for income taxes.................................................. 1,377 552 3,534 2,410
---------- --------- --------- ---------
NET INCOME............................................................... 3,344 905 6,665 4,230
Less: Preferred stock dividends......................................... - (225) (163) (900)
Accretion of non-voting redeemable common stock................. - (54) (74) (204)
Adjustment to beneficial conversion feature related to
convertible preferred stock...................................... - - 985 -
---------- --------- --------- ---------
INCOME AVAILABLE TO COMMON STOCKHOLDERS..............................$ 3,344 $ 626 $ 7,413 $ 3,126
========== ========== ========= =========
EARNINGS PER SHARE:
BASIC.....................................................................$ 0.18 $ 0.05 $ 0.47 $ 0.26
========== ========= ========= =========
DILUTED...................................................................$ 0.16 $ 0.04 $ 0.40 $ 0.23
========== ========= ========= =========
Weighted average shares used in per share calculation:
Basic..................................................................... 18,179 12,144 15,869 12,152
Diluted................................................................... 20,777 14,586 18,429 13,883
PRO FORMA EXCLUDING MERGER RELATED COSTS, NET OF TAX:
Net income..................................................................$ 3,344 $ 905 $ 6,665 $ 4,230
Add back non-recurring merger-related costs............................... - - 4,379 -
Less related tax benefit.................................................. - - (1,255) -
---------- --------- ---------- ---------
PRO FORMA NET INCOME.....................................................$ 3,344 $ 905 $ 9,789 $ 4,230
========== ========== ========= =========
PRO FORMA INCOME AVAILABLE TO COMMON STOCKHOLDERS.......................$ 3,344 $ 626 $ 10,537 $ 3,126
========== ========== ========= =========
PRO FORMA EARNINGS PER SHARE:
BASIC.....................................................................$ 0.18 $ 0.05 $ 0.66 $ 0.26
========== ========= ========= =========
DILUTED...................................................................$ 0.16 $ 0.04 $ 0.57 $ 0.23
========== ========= ========= =========
</TABLE>
<PAGE>
Page 5 -- Invitrogen Corporation Reports 1999 Full Year and Fourth Quarter
Results
INVITROGEN CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
(IN THOUSANDS) 1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash, cash equivalents and investments.............................. $ 102,220 $ 6,530
Accounts and notes receivable, net of allowance..................... 7,027 5,778
Inventories......................................................... 5,344 5,374
Other current assets................................................ 9,004 2,061
----------- -----------
Total current assets.............................................. 123,595 19,743
Property and equipment, net............................................ 8,400 10,036
Intangible assets, net................................................. 3,651 1,708
Other assets........................................................... 346 563
----------- -----------
Total Assets........................................................ $ 135,992 $ 32,050
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable to bank............................................... $ 35 $ 779
Current portion of long term obligations............................ 1,011 995
Accounts payable.................................................... 2,351 3,106
Accrued expenses and other current liabilities...................... 5,172 2,836
Income taxes payable................................................ 1,080 802
----------- -----------
Total current liabilities......................................... 9,649 8,518
Non-current liabilities................................................ 721 1,116
Preferred and redeemable non-voting common stock issues................ - 17,740
Stockholders' equity................................................... 125,622 4,676
----------- -----------
Total Liabilities and Stockholders' Equity.......................... $ 135,992 $ 32,050
=========== ===========
</TABLE>
# # #
<PAGE>
EXHIBIT 99.2
RESEARCH GENETICS, INCORPORATED
Financial Statements
As of December 31, 1999 and 1998
Together with Report of Independent Public Accountants
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Invitrogen Corporation:
We have audited the accompanying balance sheets of Research Genetics,
Incorporated, an Alabama corporation, as of December 31, 1999 and 1998, and the
related statements of income, shareholders' equity and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Research Genetics, Incorporated
as of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
February 3, 2000
<PAGE>
RESEARCH GENETICS, INC.
Balance Sheets - December 31, 1999 and 1998
<TABLE>
<CAPTION>
ASSETS
1999 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash $ 1,443 $ 13,185
Accounts receivable, net of allowance for doubtful accounts of
$400,000 and $350,000, respectively 4,308,776 2,728,952
Inventory 2,146,208 572,941
Prepaid and other assets 207,318 139,202
Deferred income taxes 344,511 289,562
Note receivable 183,000 -
------------ ------------
Total current assets 7,191,256 3,743,842
------------ ------------
Property and equipment, net 12,909,695 8,770,317
------------ ------------
Other assets:
Deposits and other 210,314 604,171
Intangibles, net 820,311 271,943
Note receivable - 183,000
------------ ------------
Total other assets 1,030,625 1,059,114
------------ ------------
Total assets $ 21,131,576 $ 13,573,273
============ ============
</TABLE>
(continued)
<PAGE>
RESEARCH GENETICS, INC.
Balance Sheets - December 31, 1999 and 1998
(continued)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
1999 1998
------------ ------------
<S> <C> <C>
Current liabilities:
Lines of credit $ 1,349,563 $ 190,000
Accounts payable 1,950,164 1,346,279
Accrued expenses 456,854 252,734
Income tax payable 600,468 199,959
Current portion of industrial development bonds 255,000 240,000
Current portion of notes payable 3,975,815 562,347
------------ ------------
Total current liabilities 8,587,864 2,791,319
------------ ------------
Other liabilities:
Deferred income taxes 438,737 322,435
Notes payable, net of current portion 3,909,825 4,037,130
Industrial development bonds, net of current portion 2,625,000 2,880,000
------------ ------------
Total other liabilities 6,973,562 7,239,565
------------ ------------
Total liabilities 15,561,426 10,030,884
------------ ------------
Shareholders' equity:
Common stock, $.10 par, 100,000 shares authorized, 50,000
issued and outstanding 5,000 5,000
Additional paid-in capital 1,800,180 1,719,515
Retained earnings 3,764,970 1,817,874
------------ ------------
Total shareholders' equity 5,570,150 3,542,389
------------ ------------
Total liabilities and shareholders' equity $ 21,131,576 $ 13,573,273
============ ============
</TABLE>
<PAGE>
RESEARCH GENETICS, INC.
Statements of Income
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Sales, net $24,580,843 $17,006,280
Cost of sales 9,674,271 7,282,954
----------- -----------
Gross profit 14,906,572 9,723,326
Selling expenses 2,335,024 1,812,571
Research and development expenses 5,010,812 2,635,309
Operating expenses 3,473,525 3,005,939
----------- -----------
Income from operations 4,087,211 2,269,507
Other (expense) income:
Interest and other income (139) 258,829
Interest expense (446,600) (455,521)
Loss on investment - (205,000)
----------- -----------
Total other expense (446,739) (401,692)
----------- -----------
Income before taxes 3,640,472 1,867,815
Provision for income taxes 1,245,896 578,695
----------- -----------
Net income $ 2,394,576 $ 1,289,120
=========== ===========
</TABLE>
<PAGE>
RESEARCH GENETICS, INC.
Statements of Shareholders' Equity
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
Common Stock Additional
------------------ Paid-in Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 50,000 $5,000 $ 1,514,515 $1,186,084 $2,705,599
Contribution - - 205,000 - 205,000
Dividends paid - - - (657,330) (657,330)
Net income - - - 1,289,120 1,289,120
------ ------ ---------- ---------- ----------
Balance, December 31, 1998 50,000 5,000 1,719,515 1,817,874 3,542,389
Contributions - - 80,665 - 80,665
Dividends paid - - - (447,480) (447,480)
Net income - - - 2,394,576 2,394,576
------ ------ ---------- ---------- ----------
Balance, December 31, 1999 50,000 $5,000 $1,800,180 $3,764,970 $5,570,150
====== ====== ========== ========== ==========
</TABLE>
<PAGE>
RESEARCH GENETICS, INC.
Statements of Cash Flows
For the Years Ended December 31, 1999 and 1998
<TABLE>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,394,576 $ 1,289,120
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,746,499 1,270,459
Gains on sales of property and equipment (3,649) (4,287)
Changes in:
Accounts receivable (1,579,824) (482,130)
Inventory (1,573,267) (265,287)
Prepaid and other assets (68,116) (48,517)
Deferred income taxes (54,949) (149,602)
Deposits and other 393,857 (351,493)
Accounts payable 603,885 784,832
Accrued expenses 204,120 70,887
Income tax payable 400,509 27,221
Deferred tax liability 116,302 76,610
----------- -----------
Net cash provided by operating activities 2,579,943 2,217,813
----------- -----------
Cash flows from investing activities:
Property and equipment purchased (5,669,509) (3,040,827)
Proceeds from sales of property and equipment 44,868 90,718
Purchase of intangibles (805,955) (349,630)
----------- -----------
Net cash used by investing activities (6,430,596) (3,299,739)
----------- -----------
Cash flows from financing activities:
Dividends paid (447,480) (657,330)
Capital contribution 80,665 205,000
Bond payments (240,000) (225,000)
Proceeds from notes payable 3,782,440 3,408,165
Principal payments on notes payable (496,277) (1,267,779)
Proceeds from lines of credit 12,250,663 9,865,556
Payments on lines of credit (11,091,100) (10,249,350)
----------- -----------
Net cash provided by financing activities 3,838,911 1,079,262
----------- -----------
Net decrease in cash balance (11,742) (2,664)
Beginning cash balance 13,185 15,849
----------- -----------
Ending cash balance $ 1,443 $ 13,185
============ ===========
</TABLE>
<PAGE>
RESEARCH GENETICS, INC.
Notes to Financial Statements
December 31, 1999 and 1998
1. BUSINESS ACTIVITY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS ACTIVITY
Research Genetics, Incorporated (the "Company") was incorporated in the
state of Alabama on June 1, 1994. The Company operates in one business
segment which develops, manufactures and sells products designed to
facilitate molecular biology research. The Company sells its products to
researchers at universities, corporations, and research institutions
throughout North America, the Pacific Rim and Europe.
CONCENTRATIONS OF CUSTOMERS RISK
Substantially all of the Company's revenues during the years ended
December 31, 1999 and 1998, were derived from university and research
institutions which management believes are, to some degree, directly or
indirectly supported by the U.S. Government. A change in current research
fundings, particularly with respect to the National Institutes of Health
and the National Cancer Institute, may have an adverse impact on the
Company's future results of operations.
REVENUE RECOGNITION
Revenues from product sales are recognized upon shipment to the customer.
The Company generally does not receive material upfront fees; those that
are received are deferred and recognized when products are shipped to the
customer or when services are rendered. Grant revenue is recorded as
earned, as defined within the specific agreements and is not refundable.
Grant revenue was $8,216 and $58,505 in 1999 and 1998, respectively. Cost
of grant revenue is included in research and development. Royalty revenue
is recognized when earned, generally upon the receipt of cash, and is not
refundable.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. Cash equivalents
at December 31, 1999 and 1998 consist primarily of funds held by an FDIC
insured financial institution.
INVENTORIES
Inventories are stated at lower of cost (first-in, first-out method) or
market. The Company reviews the components of its inventory on a
quarterly basis for excess, obsolete and impaired inventory and makes
appropriate dispositions as obsolete stock is identified.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost and depreciated over the
estimated useful lives of the assets (3 to 39 years) using the
straight-line method. Amortization of leasehold improvements is computed
on the straight-line method over the shorter of the lease term or the
estimated useful lives of the assets. Maintenance and repairs are charged
to operations as incurred. When assets are sold, or otherwise disposed
of, the cost and related accumulated depreciation are removed from the
accounts and any gain or loss is included in operations.
INTANGIBLES
Intangibles consist of genome libraries. The Company amortizes these
genome libraries on a straight line basis over three years.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets". The statement
requires that long-lived assets and certain identifiable intangibles to
be held and used by an entity be reviewed for possible impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be fully recoverable. The Company periodically
re-evaluates the original assumptions and rationale utilized in the
establishment of the carrying value and estimated lives of its long-lived
assets. The criteria used for these evaluations include management's
estimate of the asset's continuing ability to generate income from
operations and positive cash
<PAGE>
flow in future periods as well as the strategic significance of any
intangible asset in the Company's business objectives.
RESEARCH AND DEVELOPMENT COSTS
All research and development costs are charged to operations as incurred.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of all receivables, payables and accrued balances
approximate fair value due to the short-term nature of such instruments.
The carrying amount of the line of credit approximates fair value due to
the floating rate on such instruments. The carrying value of long-term
debt with fixed payment terms approximates fair value.
INCOME TAXES
The Company uses the liability method of accounting for income taxes in
accordance with Statement of Financial Statement Accounting Standards No.
109, "Accounting for Income Taxes". Deferred income taxes reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes, using enacted tax rates in effect for the
year in which the differences are expected to reverse. Valuation
allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
RECENT ACCOUNTING PRONOUNCEMENTS
In December, 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition in
Financial Statements". This SAB summarizes the SEC's view in applying
generally accepted accounting principles to revenue recognition in
financial statements. This SAB is effective for all registrants during
the first quarter of fiscal 2000. Management has reviewed the impact of
SAB 101 on the Company's financial statements, and does not believe that
its adoption will have a material impact on the Company's financial
statements.
2. RELATED PARTY TRANSACTIONS
Related party transactions consist of minor pass-through arrangements
with various start-up biotech companies in which the Company's chief
executive officer and majority shareholder holds a nominal equity
interest.
3. INVENTORIES
Inventories include material, labor and overhead costs, and consist of
the following at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
-------- -------
<S> <C> <C>
Raw materials and components $ 557,097 $177,294
Work in process 225,580 98,547
Finished goods 1,363,531 297,100
---------- --------
$2,146,208 $572,941
========== ========
</TABLE>
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31, 1999 and
1998:
<TABLE>
<CAPTION>
1999 1998
------------ -----------
<S> <C> <C>
Land $ 5,406,865 $ 1,891,350
Building 3,278,264 3,126,655
Machinery and equipment 9,012,866 8,009,733
Leasehold improvements 1,166,805 548,692
------------ -----------
18,864,800 13,576,430
Accumulated depreciation and amortization (5,955,105) (4,806,113)
------------ -----------
$ 12,909,695 $ 8,770,317
============ ===========
</TABLE>
5. NOTES RECEIVABLE
The Company holds two notes receivable totaling $108,000 and $75,000 as
of December 31, 1999 and 1998, respectively. The promissory notes
originated in 1996, are unsecured, bear annual interest of eight percent
and are due in full in September 2000.
6. RETIREMENT PLAN
The Company has a 401(k) profit sharing plan that covers all employees
who meet the minimum participation requirements. For those employees
participating, annual compensation may be deferred up to the maximum
prescribed by the Internal Revenue Code. The Company contributes an
amount equal to 50% of the first 5% of the participating employee's
pre-tax contribution. Matching contributions for the year ended December
31, 1999 and 1998 were $91,010 and $71,217, respectively.
7. LINES OF CREDIT AND NOTES PAYABLE
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
----------- ------------
<S> <C> <C>
SouthTrust Bank, $1,000,000 line of credit available, payable
June 2000, plus interest at a fixed rate of 7.25%. The line of
credit note is collateralized by a Security Agreement covered
by property and equipment. $ 958,785 $ 543,115
SouthTrust Bank, $1,500,000 line of credit available, payable
January 1999, plus interest at the bank's base rate, 7.75%. The
line of credit note is collateralized by a Security Agreement
covered by equipment, inventory and accounts receivable. 380,000 190,000
SouthTrust Bank, $1,000,000 line of credit available, payable February
2000, plus interest at the bank's base rate, 8.1%. The line of credit
note is collateralized by a Security Agreement covered by equipment,
inventory and accounts receivable. 794,979 -
SouthTrust Bank, note payable in monthly installments of $15,800
through June 1999 including interest at 7.75%, collateralized by a
General Security Agreement covered by machinery and equipment. - 121,836
SouthTrust Bank, note payable in monthly installments of $9,282
through October 2008 including interest at 7.75%, collateralized by a
General Security Agreement covered by land. 1,538,637 1,457,488
SouthTrust Bank, note payable in March 2000 including interest at 7.5%,
collateralized by a General Security Agreement covered by land. 3,500,000 -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------ ------------
<S> <C> <C>
SBA & SouthTrust Bank, note payable in monthly installments of $2,250
through May 2002 including interest at 7.75%, collateralized by mortgage on
building, machinery and equipment A life insurance policy of $200,000 is
also pledged as security 92,768 111,665
SouthTrust Bank, note payable in monthly installments of $11,465 through
June 2003 including interest of 8.5%, collateralized by a General Security
Agreement covered by machinery and equipment 418,394 515,341
SouthTrust Bank, note payable in monthly installments of $10,578 through
June 2004 including interest of 8.75%, collateralized by equipment 469,532 550,860
SouthTrust Bank, note payable in monthly installments of $18,929
through October 2005 including interest of 7.0%. The note is collateralized
by a Security Agreement covered by property and equipment 1,082,108 1,226,847
Perkin-Elmer, note payable in monthly installments of $6,511 through
December 1999 including interest at 11.6%, collateralized by equipment - 55,860
IKON Capital Resource, note payable in monthly installments of $503
through March 1999 including interest at 18.2%, collateralized by equipment - 1,465
Note Payable to an individual due January 2002, interest at 9.6% payable
monthly, unsecured - 15,000
----------- -----------
9,235,203 4,789,477
Less Current Portion of Lines of Credit and Notes Payable (5,325,378) (752,347)
----------- -----------
Long-Term Portion of Lines of Credit and Notes Payable $ 3,909,825 $ 4,037,130
=========== ===========
</TABLE>
The long-term portion of the lines of credit and notes payable mature as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------
<S> <C>
2000 $5,325,378
2001 695,825
2002 743,459
2003 729,073
2004 541,752
Thereafter 1,199,716
----------
$9,235,203
==========
</TABLE>
Substantially all of the Company's accounts receivable, inventory,
property and equipment are pledged as security on the above notes.
The above notes contain various financial covenants. As of December 31,
1999 and 1998, the Company was in compliance with its various financial
covenants.
8. BONDS PAYABLE
The Company has an outstanding loan agreement with the State Industrial
Development Authority, a public corporation of the State of Alabama, for
the repayment of certain Variable Rate Industrial Development Revenue
Bonds issued for the benefit of the Company. The note securing the loan
agreement bears interest at a rate which varies weekly with prevailing
market conditions. Interest is payable monthly and principal is due
annually on January 1. The principal amount of the bonds was $2,880,000
at December 31, 1999.
In addition, the Company has a reimbursement agreement with SouthTrust
Bank which provides a letter of credit related to the above mentioned
bonds. The amount of such letter of credit was $2,625,000 at December 31,
<PAGE>
1999. The Company pays an annual fee of 1.25% of the outstanding letter
of credit. The credit agreement provides for certain financial covenants
to be met through the year 2000. This letter of credit is personally
guaranteed by the Company's majority stockholder. The Company also pays
an annual remarketing fee equal to 0.12% of the outstanding bond
principal balance.
Improvements and equipment acquired with the bond proceeds become the
property of the Industrial Development Board of the City of Huntsville.
The Company has entered into a lease arrangement with the Board whereby
the property is leased for one dollar per year through January 1, 2008.
The Company has an option to purchase the property from the Board for one
hundred dollars.
The bonds mature as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------
<S> <C>
2000 $ 255,000
2001 270,000
2002 280,000
2003 295,000
2004 310,000
Thereafter 1,470,000
-----------
$ 2,880,000
===========
</TABLE>
9. INCOME TAXES
Significant components of the Company's deferred tax assets and
liabilities are as follows at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Various accruals $ 93,000 $ 68,000
Bad debt reserve and other reserves 160,000 141,000
Other 92,000 81,000
--------- ---------
Total deferred tax assets 345,000 290,000
Deferred tax liabilities:
Depreciation and amortization (439,000) (322,000)
--------- ---------
Net deferred tax liability $ (94,000) $ (32,000)
========= =========
</TABLE>
The provision for income taxes is based on results of operations, reduced
by the available research and development credit and state tax credit,
and consists of the following for the years ended December 31, 1999 and
1998:
<TABLE>
<CAPTION>
1999 1998
----------- --------
<S> <C> <C>
Current:
Federal $ 1,177,000 $454,000
State 131,000 51,000
----------- --------
Total current provision 1,308,000 505,000
Deferred:
Federal (56,000) 68,000
State (6,000) 6,000
----------- --------
Total deferred provision (62,000) 74,000
----------- --------
Total provision $ 1,246,000 $579,000
=========== ========
</TABLE>
<PAGE>
The provision for income taxes differs from the amount computed by
applying the federal statutory rate to the Company's income before the
provision for income taxes as follows for the years ended December 31,
1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
------------- ------------
<S> <C> <C>
Federal tax provision at statutory rate $ 1,238,000 $ 635,000
State tax, net of federal benefit 120,000 62,000
Research and development and other credits (132,000) (132,000)
Other 20,000 14,000
----------- ----------
Provision for income taxes $ 1,246,000 $ 579,000
=========== ==========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
The Company is at times subject to pending and threatened legal actions
that arise out of the normal course of business. In the opinion of
management, based in part on the advise of legal counsel, the ultimate
disposition of these matters will not have a material adverse effect on
the financial position or results of operations of the Company.
11. SUBSEQUENT EVENT
On February 2, 2000, the Company was acquired by Invitrogen Corporation
in exchange for 3,200,000 shares of Invitrogen common stock.
<PAGE>
EXHIBIT 99.4
INVITROGEN UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet as of December 31,
1999, illustrates the effect of the merger as if it had occurred on December 31,
1999. The following unaudited pro forma combined statements of income for the
three years ended December 31, 1999, illustrate the effect of the merger as if
it had occurred on January 1, 1997. There were no material differences between
the accounting policies of Invitrogen and Research Genetics and, therefore, no
conforming of accounting policy adjustments have been made to the pro forma
financial statements. The unaudited pro forma combined statements of income for
the three years ended December 31, 1999 include both Invitrogen's and Research
Genetics' financial data for these same periods.
The pro forma combined financial statements are presented for comparative
purposes only and are not necessarily indicative of the combined financial
position or results of operations of future periods or the results that actually
would have been realized had Invitrogen and Research Genetics been a single
entity during the periods presented.
Pursuant to the terms of the merger, each share of Research Genetics stock was
converted into the right to receive 64 shares of Invitrogen. The pro forma
combined financial statements have been derived from the respective historical
audited consolidated financial statements of Invitrogen and Research Genetics
and should be read in conjunction with such financial statements and the notes
thereto that are incorporated herein by reference.
<PAGE>
INVITROGEN CORPORATION AND RESEARCH GENETICS
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL RESEARCH PRO FORMA PRO FORMA
INVITROGEN GENETICS ADJUSTMENTS COMBINED
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ....................... $ 102,220 $ 1 $ - $ 102,221
Accounts and notes receivable ................... 7,027 4,309 (1) (2) 11,335
Inventories ..................................... 5,344 2,146 - 7,490
Income taxes receivable ......................... 4,495 - - 4,495
Deferred income taxes ........................... 3,216 345 - 3,561
Prepaid expenses and other current assets ....... 1,293 390 - 1,683
-------------- -------------- -------------- --------------
Total current assets ........................ 123,595 7,191 (1) 130,785
Property, plant and equipment, net .................. 8,400 12,910 21,310
Intangible assets, net .............................. 3,651 820 - 4,471
Other assets ........................................ 346 211 - 557
-------------- -------------- -------------- --------------
Total Assets ........................................ $ 135,992 $ 21,132 $ (1) $ 157,123
============== ============== ============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable to bank ............................ $ 35 $ 1,350 $ - $ 1,385
Current portion of long-term obligations ........ 1,011 4,231 - 5,242
Accounts payable ................................ 2,351 1,950 (1) (2) 4,300
Accrued expenses ................................ 5,172 457 3,920 (4) 9,549
Income taxes payable ............................ 1,080 600 (91) (4) 1,589
-------------- -------------- -------------- --------------
Total current liabilities ................... 9,649 8,588 3,828 22,065
-------------- -------------- -------------- --------------
Long-term obligations, less current maturities ...... 721 6,535 - 7,256
Deferred income taxes ............................... - 439 - 439
Stockholders' Equity:
Common stock, par value.......................... 191 5 27 (3) 223
Other stockholders' equity....................... 125,431 5,565 (3,856) (3)(4) 127,140
-------------- -------------- -------------- --------------
Total stockholders' equity .......................... 125,622 5,570 (3,829) 127,363
-------------- -------------- -------------- --------------
Total Liabilities and Stockholders' Equity .......... $ 135,992 $ 21,132 $ (1) $ 157,123
============== ============== ============== ==============
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE>
INVITROGEN CORPORATION AND RESEARCH GENETICS
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL RESEARCH PRO FORMA PRO FORMA
INVITROGEN GENETICS ADJUSTMENTS COMBINED
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues................................................. $ 68,312 $ 24,581 $ (13) (2) $ 92,880
Cost of Revenues......................................... 23,018 9,674 (2) (2) 32,690
--------- --------- ---------- ---------
Gross margin.......................................... 45,294 14,907 (11) 60,190
Operating Expenses:
Sales and marketing.................................... 13,900 2,335 - 16,235
General and administrative............................. 8,837 3,474 - 12,311
Research and development............................... 9,699 5,011 (11) (2) 14,699
Merger related costs................................... 4,379 - - 4,379
--------- --------- --------- ---------
Total operating expenses............................ 36,815 10,820 (11) 47,624
--------- --------- ---------- ---------
Income from operations............................ 8,479 4,087 - 12,566
--------- --------- --------- ---------
Other Income (Expense):
Gain (loss) on foreign currency transactions........... (90) - - (90)
Interest and other expense............................. (244) (447) - (691)
Interest and other income.............................. 2,054 - - 2,054
--------- ---------- --------- ---------
1,720 (447) - 1,273
--------- ---------- --------- ---------
Income before provision for income taxes................. 10,199 3,640 - 13,839
Provision for income taxes............................... 3,534 1,245 - 4,779
--------- --------- --------- ---------
Net Income............................................. 6,665 2,395 - 9,060
Less: Preferred stock dividends......................... (163) - - (163)
Accretion of non-voting redeemable common stock.... (74) - - (74)
Adjustment to beneficial conversion feature related
to convertible preferred stock................... 985 - - 985
--------- --------- --------- ---------
Income available to common stockholders........... $ 7,413 $ 2,395 $ - $ 9,808
========= ========= ========= =========
Earnings per share:
Basic.................................................. $ 0.47 $ 47.90 $ 0.51
========= ========= ========= =========
Diluted................................................ $ 0.40 $ 47.90 $ 0.45
========= ========= =========
Weighted average shares used in per share calculation:
Basic.................................................. 15,869 50 19,069 (3)
Diluted................................................ 18,429 50 21,629 (3)
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE>
INVITROGEN CORPORATION AND RESEARCH GENETICS
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL RESEARCH PRO FORMA PRO FORMA
INVITROGEN GENETICS ADJUSTMENTS COMBINED
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues................................................. $ 53,660 $ 17,006 $ (99) (2) $ 70,567
Cost of Revenues......................................... 19,191 7,283 (62) (2) 26,412
--------- --------- ---------- ---------
Gross margin.......................................... 34,469 9,723 (37) 44,155
Operating Expenses:
Sales and marketing.................................... 11,352 1,813 - 13,165
General and administrative............................. 8,091 3,006 - 11,097
Research and development............................... 8,603 2,635 (37) (2) 11,201
--------- --------- ---------- ---------
Total operating expenses............................ 28,046 7,454 (37) 35,463
--------- --------- ---------- ---------
Income from operations............................ 6,423 2,269 - 8,692
--------- --------- --------- ---------
Other Income (Expense):
Gain (loss) on foreign currency transactions........... 25 - - 25
Interest and other expense............................. (249) (661) - (910)
Interest and other income.............................. 441 259 - 700
--------- --------- --------- ---------
217 (402) - (185)
--------- ---------- --------- ----------
Income before provision for income taxes................. 6,640 1,867 - 8,507
Provision for income taxes............................... 2,410 578 - 2,988
--------- -------- -------- ---------
Net income............................................. 4,230 1,289 - 5,519
Less: Preferred stock dividends......................... (900) - - (900)
Accretion of non-voting redeemable common stock.... (204) - - (204)
--------- --------- --------- ---------
Income available to common stockholders........... $ 3,126 $ 1,289 $ - $ 4,415
======== ======== ======== ========
Earnings per share:
Basic.................................................. $ 0.26 $ 25.78 $ 0.29
======== ======== ========
Diluted................................................ $ 0.23 $ 25.78 $ 0.26
======== ======== ========
Weighted average shares used in per share calculation:
Basic.................................................. 12,152 50 15,352 (3)
Diluted................................................ 13,883 50 17,083 (3)
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE>
INVITROGEN CORPORATION AND RESEARCH GENETICS
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
HISTORICAL RESEARCH PRO FORMA PRO FORMA
INVITROGEN GENETICS ADJUSTMENTS COMBINED
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues................................................. $ 41,182 $ 14,331 $ (179) (2) $ 55,334
Cost of Revenues......................................... 15,958 6,840 (85) (2) 22,713
--------- --------- ---------- ---------
Gross margin.......................................... 25,224 7,491 (94) 32,621
Operating Expenses:
Sales and marketing.................................... 8,305 1,630 - 9,935
General and administrative............................. 7,312 2,252 - 9,564
Research and development............................... 5,918 1,721 (94) (2) 7,545
--------- --------- ---------- ---------
Total operating expenses............................ 21,535 5,603 (94) 27,044
--------- --------- ---------- ---------
Income from operations............................ 3,689 1,888 - 5,577
--------- --------- ---------- ---------
Other Income (Expense):
Gain (loss) on foreign currency transactions........... 145 - - 145
Interest and other expense............................. (242) (456) - (698)
Interest and other income.............................. 214 25 - 239
--------- --------- ---------- ---------
117 (431) - (314)
--------- --------- ---------- ---------
Income before provision for income taxes................. 3,806 1,457 - 5,263
Provision for income taxes............................... 1,371 475 - 1,846
--------- --------- ---------- ---------
Net income............................................. 2,435 982 - 3,417
Less: Preferred stock dividends......................... (475) - - (475)
Accretion of non-voting redeemable common stock.... (175) - - (175)
Adjustment to beneficial conversion feature related
to convertible preferred stock................... (15,000) - - (15,000)
--------- --------- ---------- ---------
Income available to common stockholders........... $(13,215) $ 982 $ - $ (12,233)
========= ========= ========== =========
Earnings per share:
Basic.................................................. $ (1.15) $ 19.64 $ (0.83)
========= ========= =========
Diluted................................................ $ (1.15) $ 19.64 $ (0.83)
========= ========= =========
Weighted average shares used in per share calculation:
Basic.................................................. 11,461 50 14,661 (3)
Diluted................................................ 11,461 50 14,661 (3)
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements.
<PAGE>
INVITROGEN CORPORATION AND RESEARCH GENETICS
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Merger will be accounted for as a pooling of interests. Under this method of
accounting the unaudited pro forma combined statements of income combine the
historical statements of income for Invitrogen for the three years ended
December 31, 1999 with the historical statements of income for Research Genetics
for the same periods. All unaudited pro forma combined income statements assume
consummation of the Merger on January 1, 1997. The unaudited pro forma combined
balance sheet combines the historical balance sheets of Invitrogen and Research
Genetics at December 31, 1999 and assumes consummation of the Merger on December
31, 1999.
2. INTERCOMPANY TRANSACTIONS
All significant intercompany sales and balances have been eliminated in the
combination.
3. MERGER TRANSACTION
The unaudited pro forma combined financial statements reflects the issuance of
3.2 million shares of Invitrogen common stock for all of the outstanding common
stock for Research Genetics at an exchange ratio of 64.
4. MERGER COSTS
Costs incurred as a result of the Merger are expected to be $6.1 million and are
subject to change. These costs were expensed in February 2000 after the Merger
was completed. Included in these costs are $2.2 million in fees paid by research
Genetics' principal shareholder. These fees are treated as capital contribution
to the company. The unaudited pro forma combined statements of income exclude
expenses related to the Merger as they are nonrecurring in nature.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FNIANCIAL INFORMATION EXTRACTED FROM INVITROGEN
CORPORATION'S NEWS RELEASE DATED FEBRUARY 17, 2000 ATTACHED HERETO AS AN EXHIBIT
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 102,220
<SECURITIES> 0
<RECEIVABLES> 7,462
<ALLOWANCES> 435
<INVENTORY> 5,344
<CURRENT-ASSETS> 123,595
<PP&E> 16,143
<DEPRECIATION> 7,743
<TOTAL-ASSETS> 135,992
<CURRENT-LIABILITIES> 9,649
<BONDS> 721
0
0
<COMMON> 191
<OTHER-SE> 125,431
<TOTAL-LIABILITY-AND-EQUITY> 135,992
<SALES> 66,595
<TOTAL-REVENUES> 68,312
<CGS> 23,018
<TOTAL-COSTS> 23,018
<OTHER-EXPENSES> 36,815
<LOSS-PROVISION> 169
<INTEREST-EXPENSE> 244
<INCOME-PRETAX> 10,199
<INCOME-TAX> 3,534
<INCOME-CONTINUING> 6,665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,665
<EPS-BASIC> 0.47
<EPS-DILUTED> 0.40
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM RESEARCH
GENETICS' FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 4,709
<ALLOWANCES> 400
<INVENTORY> 2,146
<CURRENT-ASSETS> 7,191
<PP&E> 18,865
<DEPRECIATION> 5,955
<TOTAL-ASSETS> 21,132
<CURRENT-LIABILITIES> 8,588
<BONDS> 6,535
0
0
<COMMON> 5
<OTHER-SE> 5,565
<TOTAL-LIABILITY-AND-EQUITY> 21,132
<SALES> 24,573
<TOTAL-REVENUES> 24,581
<CGS> 9,674
<TOTAL-COSTS> 9,674
<OTHER-EXPENSES> 10,820
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 447
<INCOME-PRETAX> 3,640
<INCOME-TAX> 1,245
<INCOME-CONTINUING> 2,395
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,395
<EPS-BASIC> 47.90
<EPS-DILUTED> 47.90
</TABLE>
