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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
Mark One
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
--------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________to ________________
Commission file number 0-14991
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LIFE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 34-0431300
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9800 Medical Center Drive, Rockville, MD 20850
(Address of principal executive offices) (Zip Code)
----------------
Registrant's telephone number, including area code: (301) 610-8000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No_____
-----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 2, 1999
----- --------------------------------
Common Stock, par value $.01 per share 24,957,556 shares
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<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
LIFE TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------- --------------------
1999 1998 1999 1998
---------- -------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Net sales $101,798 $89,084 $301,149 $268,983
Net royalties 509 518 1,453 1,644
-------- ------- -------- --------
102,307 89,602 302,602 270,627
Operating expenses:
Cost of sales 46,472 41,065 135,942 124,699
Marketing and 35,148 30,116 101,859 88,519
administrative
Research and development 5,860 5,334 17,793 16,015
Provision for contract
settlement 3,870 - 3,870 -
-------- ------- -------- --------
Total operating expenses 91,350 76,515 259,464 229,233
-------- ------- -------- --------
Operating income 10,957 13,087 43,138 41,394
Other income, net 343 365 130 478
-------- ------- -------- --------
Income before income taxes 11,300 13,452 43,268 41,872
Income taxes 1,611 4,583 12,800 14,530
-------- ------- -------- --------
Income before minority 9,689 8,869 30,468 27,342
interests
Minority interests (277) (115) (808) (516)
-------- ------- -------- --------
Net income $ 9,412 $ 8,754 $ 29,660 $ 26,826
======== ======= ======== ========
Earnings per share:
Basic $0.38 $0.37 $1.19 $1.14
Diluted $0.38 $0.36 $1.19 $1.11
Average shares outstanding:
Basic 24,948 23,668 24,946 23,564
Diluted 25,041 24,209 25,021 24,118
Dividends declared per share $ - $ 0.05 $ 0.10 $ 0.15
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
Part I - Financial Statements (continued)
LIFE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
(amounts in thousands, except per share data)
September 30, December 31,
1999 1998
- -------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 33,083 $ 56,047
Trade accounts receivable, net 80,331 67,797
Inventories:
Materials and supplies 13,127 12,946
In process and finished 68,626 62,793
LIFO reserve (1,812) (1,420)
-------- --------
Total inventory 79,941 74,319
Prepaid and other current assets 20,203 16,121
Current deferred tax assets 5,884 5,871
-------- --------
Total current assets 219,442 220,155
Property, plant and equipment 188,824 159,540
Less accumulated depreciation (61,187) (52,166)
-------- --------
Total property, plant and equipment 127,637 107,374
Investments and other assets 22,028 15,392
Excess of cost over net assets of
businesses acquired, net 11,041 10,666
-------- --------
Total assets $380,148 $353,587
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 1,651 $ 2,210
Accounts payable 21,083 23,916
Accrued and deferred income taxes 4,503 2,755
Accrued liabilities and expenses 27,038 30,871
-------- --------
Total current liabilities 54,275 59,752
Long-term debt 3,499 -
Pension liabilities 11,526 9,103
Deferred income taxes 5,640 5,173
Minority interests 3,820 3,451
Stockholders' equity:
Common stock 249 249
Additional paid-in capital 94,212 94,067
Retained earnings 215,368 188,202
Accumulated other comprehensive income (loss) (8,441) (6,410)
-------- --------
Total stockholders' equity 301,388 276,108
-------- --------
Total liabilities and stockholders' equity $380,148 $353,587
======== ========
Amounts as of September 30, 1999 are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
Part I - Financial Statements (continued)
LIFE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------
1999 1998
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<S> <C> <C>
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $ 29,660 $ 26,826
Non-cash items:
Depreciation and amortization 12,255 10,805
Other (88) 39
Changes in assets and liabilities (22,841) (8,097)
-------- --------
18,986 29,573
Investments:
Capital expenditures (25,784) (21,098)
Acquisitions, net of cash acquired (12,682) (1,047)
-------- --------
(38,466) (22,145)
Financing:
Dividends paid (3,740) (3,525)
Proceeds from exercise of stock options 1,638 5,230
Short-term debt, net (1,237) (1,865)
Repayment of long-term debt (141) (23)
New long-term debt 702 -
-------- --------
(2,778) (183)
Effect of exchange rate changes on cash (706) 796
-------- --------
Increase (decrease) in cash and cash equivalents (22,964) 8,041
Cash and cash equivalents at beginning of period 56,047 19,076
-------- --------
Cash and cash equivalents at end of period $ 33,083 $ 27,117
======== ========
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
STATEMENT OF COMPREHENSIVE INCOME
(amounts in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
---------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $ 9,412 $ 8,754 $ 29,660 $ 26,826
Other comprehensive income
Currency translation effects 1,843 2,040 (2,031) 890
------- ------- -------- --------
Comprehensive income $11,255 $10,794 $ 27,629 $ 27,716
======= ======= ======== ========
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
Notes To Financial Statements:
- -----------------------------
BASIS OF PRESENTATION
In the opinion of the Company's management, the unaudited financial statements
reflect all adjustments (which consist of normal recurring adjustments)
necessary to present a fair statement of the results for the interim periods.
The results for the three-month and nine-month periods ended September 30, 1999
are not necessarily indicative of the results for the year ending December 31,
1999.
EARNINGS PER SHARE
Basic earnings per common share have been computed by dividing net income by the
weighted-average number of common shares outstanding during the period. Diluted
earnings per common share have been computed by dividing net income by the
weighted-average number of common shares outstanding plus an assumed increase in
common shares outstanding for dilutive securities.
The following table reconciles the weighted average number of common shares
outstanding during each period for basic earnings per share with the comparable
amount for diluted earnings per share.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
- ------------------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average shares outstanding-basic 24,948 23,668 24,946 23,564
Stock options 93 541 75 554
- ------------------------------------------------------------------------------------
Weighted average shares outstanding-diluted 25,041 24,209 25,021 24,118
====================================================================================
</TABLE>
COMPREHENSIVE INCOME
The following are included as components of Accumulated Other Comprehensive
Income (Loss).
<TABLE>
<CAPTION>
(amounts in thousands) Foreign currency translation
- ------------------------------------------------------------------------------------
<S> <C>
Beginning balance (January 1, 1999) $(6,410)
Current period change (2,031)
- ------------------------------------------------------------------------------------
Ending balance (September 30, 1999) $(8,441)
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</TABLE>
U.S. and international withholding taxes have not been provided on undistributed
earnings of foreign subsidiaries. The Company remits only those earnings which
are considered to be in excess of the reasonably anticipated working capital
needs of the foreign subsidiaries, with the balance considered to be permanently
reinvested in the operations of such subsidiaries. It is impractical to estimate
the total tax liability, if any, until such a distribution is made.
5
<PAGE>
Part I - (continued)
INCOME TAXES
The effective tax rate for 1999 is 31.0%. In the third quarter of 1999 the
effective tax rate reflected the effect of a favorable income tax settlement of
$2.3 million, or $0.09 per share, including the reassessment of related
reserves. Apart from this favorable settlement, the third quarter 1999 effective
tax rate would have been 35.0%.
SEGMENT REPORTING AND RELATED INFORMATION
Operating segment revenues for the periods ended September 30, 1999 and 1998
were as follows:
Three months ended Nine months ended
September 30, September 30,
- ----------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1999 1998
- ----------------------------------------------------------------------------
Americas Research $ 36,559 $33,444 $105,234 $ 97,572
U.S. Bioindustrial 21,211 17,542 61,627 52,578
Europe 30,208 27,627 94,756 86,326
Asia Pacific 13,820 10,471 39,532 32,489
Other 509 518 1,453 1,662
- ----------------------------------------------------------------------------
Total revenue $102,307 $89,602 $302,602 $270,627
============================================================================
Operating segment profit and a reconciliation to reported operating income for
the periods ended September 30, 1999 and 1998 were as follows:
Three months ended Nine months ended
September 30, September 30,
- ----------------------------------------------------------------------------
(amounts in thousands) 1999 1998 1999 1998
- ----------------------------------------------------------------------------
Americas Research $ 9,161 $11,470 $ 33,348 $ 33,153
U.S. Bioindustrial 8,327 6,762 22,496 19,738
Europe 7,337 6,361 25,977 21,095
Asia Pacific 2,888 2,297 9,567 8,169
Research and development (5,860) (5,334) (17,793) (16,015)
Other non-segment expenses (10,896) (8,469) (30,457) (24,746)
- ----------------------------------------------------------------------------
Operating income $ 10,957 $13,087 $ 43,138 $ 41,394
============================================================================
6
<PAGE>
Part I - (continued)
BUSINESS ACQUISTIONS
On May 17, 1999, the Company acquired the process chromatography and research
products businesses of BioSepra Inc., in an all cash transaction of $11.5
million,including transaction costs and net of cash acquired. Based upon the net
assets purchased and the net cash paid of $11.5 million, the Company recorded
$2.2 million in goodwill and $2.9 million in other intangibles. The intangibles
will be amortized over a ten year period on a straight-line basis. The purchase
price is subject to final contractual post-closing adjustments. Sales of $1.3
million and $2.1 million and pretax losses of $0.3 million and $0.6 million for
the quarter and year to date ended September 30, 1999 respectively, are included
in the financial statements presented herein. BioSepra Inc. reported revenue of
$2.6 million and a net loss of $1.0 million for the three-month period ended
March 31, 1999.
CONTINGENCIES
In September 1999, the Company submitted a report in connection with a voluntary
disclosure to the Department of Veterans Affairs ("VA") regarding matters
involving the management of the Company's Federal Supply Schedule contract with
the VA that has been in effect since April 1992. As part of the disclosure the
Company offered to provide a refund to the government in the amount of $3.9
million. The Company expensed this amount in September 1999. There can be no
assurance that the government will agree with the Company's assessment of this
matter or accept the Company's offered refund amount. Consequently, it is
possible the final resolution of this matter could materially differ from the
Company's proposal and could have a material adverse effect on the Company's
consolidated financial position, operating results or cash flows when resolved
in a future reporting period.
Apart from the matter above, the Company is subject to other potential
liabilities under government regulations and various claims and legal actions
which are pending or may be asserted. These matters have arisen in the ordinary
course and conduct of the Company's business and some are expected to be
covered, at least partly, by insurance. Estimated amounts for claims that are
probable and can be reasonably estimated are reflected as liabilities of the
Company. The ultimate resolution of these matters is subject to many
uncertainties. It is reasonably possible that some of the matters which are
pending or may be asserted could be decided unfavorably to the Company. Although
the amount of liability at September 30, 1999 with respect to these matters can
not be ascertained with certainty, the Company believes that any resulting
liability should not materially affect the Company's consolidated financial
statements.
ACCOUNTANTS' REPORT
The financial data included herein have been reviewed by the Company's
independent public accountants, PricewaterhouseCoopers LLP, and their report is
attached.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Any statements in this quarterly report concerning the Company's business
outlook or future economic performance; anticipated profitability, revenues,
expenses or other financial items; together with other statements that are not
historical facts, are "forward-looking statements" as that term is defined under
the Federal Securities Laws. Forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, changes in government funding for life
sciences research, changes in pricing or availability of fetal bovine serum,
changes in currency exchange rates, changes and delays in new product
introduction, customer acceptance of new products, changes in government
regulations, the possibility of adverse rulings by, or adverse developments in
negotiations with, the government, changes in pricing or other actions by
competitors and general economic conditions, as well as other risks detailed in
the Company's filings with the Securities and Exchange Commission.
Results of Operations
Third Quarter Results
Revenues were $102.3 million in the third quarter of 1999, an increase of 14%
compared with revenues of $89.6 million in the third quarter of 1998. Net sales
for the third quarter of 1999 were $101.8 million, an increase of $12.7 million,
or 14%, over the third quarter of 1998. Revenues for the Asia Pacific segment
increased 32%, which amount included a 17% increase related to the effect of
changes in currency exchange rates. Revenues for the U.S. Bioindustrial segment
increased 21%. Revenues for the European segment increased 9%, which amount
included a 5% decrease related to the effect of changes in currency exchange
rates. Revenues for the Americas Research segment increased 9%, which amount
included a 1% decrease related to the effect of changes in currency exchange
rates.
In the third quarter of 1999 sales of products other than fetal bovine serum
(FBS) and products related to an acquisition earlier in 1999 increased by $10.5
million, or 13%, when compared with the third quarter of 1998 and excluding the
effect of changes due to different currency exchange rates. FBS net sales
increased $0.9 million on a currency comparable basis when comparing the third
quarter of 1999 with the third quarter for 1998, resulting from unit selling
price and unit volume increases. FBS sales represented 11% of net sales in the
third quarter of both 1999 and 1998. Net sales for a chromatography and research
products business acquired during the second quarter of 1999 were $1.3 million
in the third quarter of 1999. Changes in currency exchange rates did not have an
overall affect on the comparison of net sales in the third quarter of 1999
compared to net sales in the third quarter of 1998.
8
<PAGE>
Gross margins were 54.3% of net sales in the third quarter of 1999 compared with
53.9% of net sales in the third quarter of 1998. Gross margins improved in the
1999 period due to lower unit costs and a favorable change in product mix. FBS
gross margins declined in the third quarter of 1999 compared with the third
quarter of 1998 as unit costs increased at a greater rate than unit selling
prices.
Marketing and administrative expenses were 34.5% of net sales in the third
quarter of 1999 and 33.8% of net sales in the comparable period of 1998. The
increase in marketing and administrative expenses as a percentage of net sales
was principally related to increased legal expenses. Marketing and
administrative expenses as a percentage of net sales also increased as a result
of the inclusion of the Company's newly-acquired chromatography and research
products business in the Company's financial results. Research and development
expenses were $5.9 million in the third quarter of 1999, representing a 10%
increase over the comparable period in 1998.
The Company's third quarter results included a pretax charge of $3.9 million, or
$0.10 per share, representing an expense for a refund that the Company has
offered to the Department of Veterans Affairs (VA) related to the Company's
federal supply schedule contract with the VA. Income taxes were 14.3% of income
before taxes in the third quarter of 1999 compared with 34.1% in the comparable
quarter of 1998. The third quarter 1999 effective tax rate reflected the effect
of a favorable income tax settlement of $2.3 million, or $0.09 per share,
including the reassessment of related reserves. Apart from this favorable
settlement, the third quarter 1999 effective tax rate would have been 35.0%.
Net income of $9.4 million in the third quarter of 1999 represented an 8%
increase over net income of $8.8 million reported in the comparable period of
1998. Diluted earnings per share of $0.38 in the third quarter of 1999 were 6%
greater than diluted earnings per share of $0.36 in the third quarter of 1998.
Nine Months Results
Revenues in the nine-month period ended September 30, 1999 were $302.6 million,
representing an increase of 12% compared with revenues of $270.6 million in the
first nine months of 1998. Revenues for the Asia Pacific segment increased 22%,
which amount included a 10% increase related to the effect of changes in
currency exchange rates. Revenues for the U.S. Bioindustrial segment increased
17%. Revenues for the European segment increased 10%, which amount included a 2%
decrease related to the effect of changes in currency exchange rates. The
Americas Research segment increased 8%, which amount included a 1% decrease
related to the effect of changes in currency exchange rates.
9
<PAGE>
Net sales for the first nine months of 1999 were $301.1 million, an increase of
$32.2 million, or 12%, over the first nine months of 1998. Net sales of products
other than FBS and products related to an acquisition in the second quarter of
1999 increased $29.1 million, or 12%, in the first nine months of 1999 when
excluding the effect of changes due to different currency translation rates. FBS
net sales increased $0.5 million, or 2%, in the first nine months of 1999, on a
currency comparable basis, as unit sales increased 2% and average unit selling
prices decreased 1%. FBS sales represented 10% of net sales in the first nine
months of 1999 compared with 11% of net sales in the comparable period of 1998.
Net sales for a business acquired during the second quarter of 1999 were $2.1
million in the first nine months of 1999. The effect of changes in currency
exchange rates increased net sales in the first nine months of 1999 by $0.5
million when compared with the first nine months of 1998.
Gross margins were 54.9% in the first nine months of 1999 compared with 53.6% in
the comparable 1998 period. Gross margins improved in the 1999 period due to
lower unit costs and a favorable product mix. FBS gross margins decreased
slightly in the first nine months of 1999 compared with the first nine months of
1998 as unit costs increased and unit selling prices decreased.
Marketing and administrative expenses were 33.8% of net sales in the first nine
months of 1999 and 32.9% in the comparable period of 1998. The increase in
marketing and administrative expenses as a percentage of net sales was
principally related to increased legal expenses. The Company reported other non-
operating income of $0.1 million in the first nine months of 1999 compared with
$0.5 million in non-operating income in the comparable period of 1998,
reflecting greater currency exchange losses in the 1999 period.
For the first nine months of 1999, net income was $29.7 million, an increase of
11% over the comparable period of 1998. Diluted earnings per share for the nine-
month period ended September 30, 1999 were $1.19, an increase of 7% compared
with the first nine months of 1998.
10
<PAGE>
Impact of the Year 2000
The Company has recently converted its core financial, order-entry
/distribution, and manufacturing systems at its major locations worldwide to an
integrated software system. While the vendor of the software upon which this
system is based is continuing to test the release/version of the software being
implemented by the Company and is making revisions available to the Company as
necessary, the vendor has advised the Company that the software is generally
Year 2000 compliant. The Company completed internal testing and validation of
Year 2000 compliance with respect to the U.S. system during the third quarter of
1999. The Company engaged an outside consultant with expertise in Year 2000
testing of this software to assist in the testing and validation process. The
Company has virtually completed testing and validation of the software in Europe
and in the Asia/Pacific region. Software currently in use at other sites and not
replaced by the new software systems has been certified for Year 2000
compliance. As previously reported, although the Company decided to replace
these core software systems several years ago for reasons unrelated to Year 2000
concerns, a portion of the overall project relates to an unanticipated upgrade
implemented specifically to address Year 2000 issues. Due to the significant
amount of time and effort expended for overall systems replacement activities,
it is difficult to calculate the actual costs specifically attributable to the
Year 2000 software upgrade portion of the project. However, the Company
estimates that the cost of this upgrade (which represents external costs
incurred to date directly related to Year 2000 remediation efforts for this
system) approximates $0.1 million.
The Company has also implemented a comprehensive project plan to identify other
internal and external information technology and non-information technology
systems which may require modification or upgrade to be made Year 2000
compliant. An inventory and assessment of these systems was complete by the end
of the second quarter of 1999. Remediation and testing of non-Year 2000
compliant systems was nearly complete by the end of the third quarter of 1999,
and is expected to be complete during the fourth quarter of 1999. As part of
this project, the Company has developed and tested contingency plans which
identify workarounds in the event of a malfunction of a system designated as a
priority system at the inventory stage. In addition, the Company has identified
suppliers of key goods and services to all business areas, has requested
information about their Year 2000 readiness, and has audited certain key
suppliers for Year 2000 readiness.
The Company plans to evaluate the information it receives from suppliers on a
continuing basis into Year 2000, and has formulated contingency plans where the
information provided raises significant concerns about a vendor's ability to
supply the Company on an uninterrupted basis during the Year 2000 transition.
11
<PAGE>
The Company believes that the costs necessary to become Year 2000 compliant will
be approximately $2.5 million (principally for capital expenditures), of which
approximately $1.2 million has been spent year to date as of September 30, 1999.
The Company estimates spending approximately $0.5 million in the fourth quarter
of 1999. There can be no assurance, however, that the Company will be able to
identify all aspects of its business that are subject to Year 2000 problems, or
identify Year 2000 problems of customers or suppliers that affect the Company's
business. There also can be no assurance that the Company's software vendors are
correct in their assertions that the software is Year 2000 compliant or that the
Company's estimate of the costs of systems preparation for Year 2000 compliance
will prove ultimately to be accurate.
Liquidity and Capital Resources
Operating activities provided $19.0 million in cash during the first nine months
of 1999. Net income after adjustments for depreciation and amortization was the
principal source of cash from operations in 1999. Working capital increases were
the principal use of cash from operations.
Investment activity for the first nine months included $25.8 million for capital
expenditures. Also included in investment activity during the first nine months
were acquisitions of $12.7 million. The acquisitions included: $11.5 million,
net of cash acquired, for a process chromatography and research products
business and $1.1 million in deferred purchase payments related to the
acquisition of Custom Primers Inc.
Financing activities for the first nine months included cash outflows of $3.7
million for quarterly dividend payments, $0.1 million for long-term debt
repayments and $1.2 million for short-term borrowing repayments. The Board of
Directors of the Company decided at its July 21, 1999 meeting to discontinue
regular quarterly dividends on the Company's common stock. Cash proceeds
included $1.6 million for stock option exercises and $0.7 million for long-term
debt borrowings.
Capital expenditures in 1999 are expected to range from $30-35 million, of which
$15-20 million is for facility upgrades and expansions, with the balance of
expected 1999 capital expenditures for new and replacement machinery, equipment
and management information systems.
The Company is actively evaluating licensing possibilities, as well as
acquisition candidates which complement the Company's core cell and molecular
biology and cell culture product lines. The Company believes it will be able to
generate sufficient cash from its operations and its existing credit facility to
meet all its anticipated cash requirements in 1999 apart from any significant
business acquisition which may occur and which may be financed using cash from
operations, debt, equity, or other sources.
12
<PAGE>
New Accounting Pronouncement
The Financial Accounting Standards Board has issued, SFAS No. 137, Accounting
for Derivative Instruments and Hedging Activities - Deferral of the Effective
Date of FASB Statement No. 133. This statement amends SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities to be effective for all fiscal
quarters of all fiscal years beginning after June 15, 2000. SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, requires that
every derivative instrument be recorded in the balance sheet as either an asset
or liability measured at its fair value. The statement requires that changes in
the derivative's fair value be recognized in earnings unless specific hedge
accounting criteria are met. The Company believes that the effect of adoption of
SFAS No. 133 will not have a material effect on the Company's financial
statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
-----------------------------------------------------------
Life Technologies is exposed to market risk related to changes in foreign
currency exchange rates, commodity prices, and interest rates, and selectively
uses financial instruments to manage these risks. The Company does not enter
into financial instruments for speculation or trading purposes.
PART II - OTHER INFORMATION
------- -----------------
Item 1. Legal Proceedings - Not applicable.
-----------------
Item 2. Changes in Securities and Use of Proceeds - Not applicable.
-----------------------------------------
Item 3. Defaults Upon Senior Securities - Not applicable.
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - None.
---------------------------------------------------
Item 5. Other Information - None.
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
15. Letter re unaudited interim financial statements.
27. Financial data schedule
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed for the three months ended
September 30, 1999.
13
<PAGE>
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 thereunto duly authorized.
LIFE TECHNOLOGIES, INC.
Date: November 5, 1999 By: /s/ C. Eric Winzer
---------------------------------
C. Eric Winzer
Vice President and
Chief Financial Officer
(Principal Financial Officer
and Authorized Signatory)
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Life Technologies, Inc.
We have reviewed the accompanying consolidated balance sheet of Life
Technologies, Inc. and its subsidiaries as of September 30, 1999, and the
related consolidated statements of income and comprehensive income for the
three-month and nine-month periods ended September 30, 1999 and 1998, and the
condensed consolidated statement of cash flows for the nine-month periods ended
September 30, 1999 and 1998. These financial statements are the responsibility
of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with generally accepted accounting principles.
We previously audited, in accordance with generally accepted auditing standards,
the consolidated balance sheet as of December 31, 1998, and the related
consolidated statements of income, comprehensive income, stockholders' equity
and of cash flows for the year then ended (not presented herein), and in our
report, dated January 22, 1999, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth in
the accompanying balance sheet information as of December 31, 1998, is fairly
stated in all material respects in relation to the consolidated balance sheet
from which it has been derived.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
October 12, 1999
15
<PAGE>
EXHIBIT INDEX
-------------
Page
----
Exhibit 15 Letter re unaudited interim financial information 17
Exhibit 27 Financial data schedule 18
16
<PAGE>
Exhibit 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
We are aware that our report dated October 12, 1999 on our review of interim
financial information of Life Technologies, Inc. (the Company) as of and for the
three-month and nine-month periods ended September 30, 1999 and 1998, included
in the Company's quarterly report on Form 10-Q for the quarter then ended, is
incorporated by reference in the Company's Registration Statements on Form S-8,
Registration No. 333-28607, Registration No. 333-03773, Registration No.
33-59741, Registration No. 33-21807 and Registration No. 33-956, and the
Company's Registration Statement on Form S-3, Registration No. 33-29536.
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not
be considered a part of the Registration Statements prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
November 4, 1999
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Balance
Sheet and Income Statement and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 33,083
<SECURITIES> 0
<RECEIVABLES> 83,240
<ALLOWANCES> 2,909
<INVENTORY> 79,941
<CURRENT-ASSETS> 219,442
<PP&E> 188,824
<DEPRECIATION> 61,187
<TOTAL-ASSETS> 380,148
<CURRENT-LIABILITIES> 54,275
<BONDS> 3,499
0
0
<COMMON> 249
<OTHER-SE> 301,139
<TOTAL-LIABILITY-AND-EQUITY> 380,148
<SALES> 301,149
<TOTAL-REVENUES> 302,602
<CGS> 135,942
<TOTAL-COSTS> 135,942
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56
<INCOME-PRETAX> 43,268
<INCOME-TAX> 12,800
<INCOME-CONTINUING> 29,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,660
<EPS-BASIC> 1.19
<EPS-DILUTED> 1.19
</TABLE>
