<PAGE>
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------
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 June 30, 2000
-------------------
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 August 2, 2000
----- -----------------------------
Common Stock, par value $.01 per share 25,067,690 shares
--------------------------------------------------------------------------------
<PAGE>
PART I
------
FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
--------------------
CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------------- --------------------------
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $110,143 $99,814 $218,907 $199,351
Net royalties 489 497 1,014 944
-------- ------- --------- -------
110,632 100,311 219,921 200,295
Operating expenses:
Cost of sales 50,891 45,187 100,476 89,470
Marketing and 36,105 34,137 72,379 66,711
administrative
Research and development 7,002 6,096 13,150 11,933
Merger related expenses 889 - 889 -
------- ------- ------- -------
Total operating expenses 94,887 85,420 186,894 168,114
------- ------- ------- -------
Operating income 15,745 14,891 33,027 32,181
Other income (expense), net 866 480 1,362 (213)
------- ------- ------- --------
Income before income taxes 16,611 15,371 34,389 31,968
Income taxes 5,980 5,381 12,380 11,189
------- ------- ------- -------
Income before minority 10,631 9,990 22,009 20,779
interests
Minority interests (468) (234) (863) (531)
------- ------- -------- -------
Net income $10,163 $9,756 $21,146 $20,248
======= ======= ======== =======
Earnings per share:
Basic $0.41 $0.39 $0.84 $0.81
Diluted $0.40 $0.39 $0.84 $0.81
Average shares outstanding:
Basic 25,058 24,947 25,037 24,946
Diluted 25,282 25,016 25,257 25,014
Dividends declared per share $ - $0.05 $ - $0.10
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
Part I - Financial Statements (continued)
LIFE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
(amounts in thousands)
June 30, December 31,
2000 1999
--------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 67,072 $ 51,489
Trade accounts receivable, net 79,412 79,301
Inventories:
Materials and supplies 14,662 16,519
In process and finished 69,918 67,653
LIFO reserve (1,658) (1,226)
-------- --------
Total inventory 82,922 82,946
Prepaid and other current assets 16,678 17,384
Current deferred tax assets 9,107 8,491
-------- --------
Total current assets 255,191 239,611
Property, plant and equipment 195,172 192,162
Less accumulated depreciation (67,457) (63,335)
-------- --------
Total property, plant and equipment 127,715 128,827
Investments and other assets 23,008 22,973
Excess of cost over net assets of
businesses acquired, net 10,771 11,560
-------- --------
Total assets $416,685 $402,971
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 4,181 $ 848
Accounts payable 20,837 28,364
Accrued and deferred income tax liabilities 8,945 11,145
Accrued liabilities and expenses 29,568 27,494
-------- --------
Total current liabilities 63,531 67,851
Long-term debt 2,855 3,259
Pension liabilities 12,162 11,471
Deferred income tax liabilities 6,561 6,164
Minority interests 4,556 4,131
Stockholders' equity:
Common stock 251 250
Additional paid-in capital 101,304 96,362
Retained earnings 245,131 223,986
Unearned compensation expense (2,553) -
Accumulated other comprehensive income (loss) (17,113) (10,503)
-------- --------
Total stockholders' equity 327,020 310,095
-------- --------
Total liabilities and stockholders' equity $416,685 $402,971
======== ========
Amounts as of June 30, 2000 are unaudited.
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
Part I - Financial Statements (continued)
LIFE TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands)
Six months ended
June 30,
------------------------
2000 1999
-----------------------------------------------------------------------------
CASH INFLOWS (OUTFLOWS)
Operations:
Net income $21,146 $20,248
Non-cash items:
Depreciation and amortization 8,640 8,002
Other (279) 600
Changes in assets and liabilities (9,547) (9,304)
------- --------
19,960 19,546
Investments:
Capital expenditures (8,124) (19,426)
Acquisitions, net of cash acquired (1,667) (12,578)
------- --------
(9,791) (32,004)
Financing:
Dividends paid - (2,493)
Proceeds from exercise of stock options 1,768 1,625
Short-term debt, net 3,357 (1,272)
Long-term debt, net (244) 419
------- --------
4,881 (1,721)
Effect of exchange rate changes on cash 533 626
------- --------
Increase (decrease) in cash and cash equivalents 15,583 (13,553)
Cash and cash equivalents at beginning of period 51,489 56,047
------- --------
Cash and cash equivalents at end of period $67,072 $42,494
======= ========
Amounts are unaudited.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
LIFE TECHNOLOGIES, INC.
STATEMENT OF COMPREHENSIVE INCOME
(amounts in thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ----------------------
2000 1999 2000 1999
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $10,163 $9,756 $21,146 $20,248
Other comprehensive income (loss)
Currency translation effects (3,613) (1,775) (6,610) (3,874)
------ ------ ------- -------
Comprehensive income $6,550 $7,981 $14,536 $16,374
====== ====== ======= =======
</TABLE>
Amounts are unaudited.
The accompanying notes are an integral part of these 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 six-month period ended June 30, 2000 are not necessarily
indicative of the results for the year ending December 31, 2000.
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 Six months ended
June 30, June 30,
-----------------------------------------------------------------------------------------------------
(amounts in thousands) 2000 1999 2000 1999
=====================================================================================================
<S> <C> <C> <C> <C>
Weighted average shares outstanding-basic 25,058 24,947 25,037 24,946
Stock options 224 69 220 68
-----------------------------------------------------------------------------------------------------
Weighted average shares outstanding-diluted 25,282 25,016 25,257 25,014
=====================================================================================================
</TABLE>
COMPREHENSIVE INCOME
The following are included as components of accumulated other comprehensive
income (loss).
<TABLE>
<CAPTION>
Accumulated
Foreign other
Pension currency comprehensive
liability translation income (loss)
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(amounts in thousands)
==============================================================================================
Beginning balance (January 1, 2000) (11) (10,492) (10,503)
Current period change - (6,610) (6,610)
----------------------------------------------------------------------------------------------
Ending balance (June 30, 2000) (11) (17,102) (17,113)
==============================================================================================
</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)
SEGMENT REPORTING AND RELATED INFORMATION
Operating segment revenues for the periods ended June 30, 2000 and 1999 were as
follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
--------------------------------------------------------------------------------------------
(amounts in thousands) 2000 1999 2000 1999
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Americas Research $38,981 $35,030 $76,607 $68,675
U.S. Bioindustrial 23,516 20,443 46,204 40,416
Europe 31,566 32,063 63,932 64,548
Asia Pacific 16,080 12,278 32,164 25,712
Other 489 497 1,014 944
--------------------------------------------------------------------------------------------
Total Revenue $110,632 $100,311 $219,921 $200,295
============================================================================================
</TABLE>
Operating segment profit and a reconciliation to reported operating income for
the periods ended June 30, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
-----------------------------------------------------------------------------------------------
(amounts in thousands) 2000 1999 2000 1999
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Americas Research $14,849 $12,873 $29,003 $25,412
U.S. Bioindustrial 9,594 7,516 18,375 14,972
Europe 6,005 8,923 12,509 18,865
Asia Pacific 4,268 2,627 8,921 6,679
Research and development (7,002) (6,096) (13,150) (11,933)
Other non-segment expenses (11,080) (10,952) (21,742) (21,814)
Merger related expenses (889) - (889) -
------------------------------------------------------------------------------------------------
Operating income $15,745 $14,891 $33,027 $32,181
================================================================================================
</TABLE>
MERGER RELATED EXPENSES
On February 25, 2000, Dexter Corporation, the Company's majority shareholder,
announced an effort to explore all strategic alternatives available to maximize
shareholder value in the short term. In conjunction with this effort, the
Company entered into retention agreements with certain employees, which provide
for payments by the Company totaling up to a maximum of $3.3 million. The
Company has expensed $0.9 million related to these agreements in the second
quarter of 2000.
UNEARNED COMPENSATION
In May 2000, the Dexter Corporation issued to certain LTI employees common stock
of Dexter Corporation subject to the following restrictions: (1) seventy-five
percent of the stock award is based on achievement by LTI of specified financial
performance during the three year period commencing on January 1, 2000 and
ending December 31, 2002 and (2) one hundred percent of the stock is subject to
time-lapse restrictions. The employee must be continuously employed by the
Dexter Corporation or one of its subsidiaries
6
<PAGE>
from the date of the agreement through May 8, 2003. The Company recorded
unearned compensation and additional paid in capital on the date of grant. The
awards, which are subject to performance restrictions, are treated as variable
awards, and adjustments are made to unearned compensation for changes in the
stock value at each reporting period. The remaining 25% of the awards, which are
subject only to passage of time restrictions, are treated as fixed stock awards
the value of which was determined on the grant date. Dividends when declared are
charged to compensation expense and a payable to Dexter Corporation. The
compensation cost that has been charged against income for these restricted
stock agreements is $0.2 million for the second quarter and year to date 2000.
Unearned compensation of $2.6 million representing the unearned portion of the
restricted stock is shown as a component of stockholders' equity.
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. The Company has
made a cash payment of $1.1 million to the VA and had an accrued liability of
$2.8 million at June 30, 2000. 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.
On December 31, 1996, the Company sued Clontech Laboratories, Inc. in the U.S.
District Court for the District of Maryland, Civil Action No. AW-96-4080,
alleging patent infringement of the Company's patents covering H minus reverse
transcriptase. The court issued a decision on July 16, 1999, that two of the
Company's patents are unenforceable and followed this decision on May 24, 2000,
with a ruling that would require the Company to pay $1.64 million in legal fees,
plus costs, to Clontech. The Company has appealed both the District Court's
decision of July 16, 1999 and the May 24, 2000 ruling to the Court of Appeals
for the Federal Circuit.
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 pending 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 June 30, 2000 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.
SUBSEQUENT EVENT
On July 9, 2000, Life Technologies, Inc. (the "Company") announced that it
signed a definitive agreement with Invitrogen Corporation ("Invitrogen")
providing for a merger of the Company into Invitrogen in which all of the
Company's outstanding shares of common stock will be converted into cash and/or
Invitrogen stock.
7
<PAGE>
ACCOUNTANTS' REPORT
The unaudited financial data included herein as of June 30, 2000 and 1999, and
for the three-month and six-month periods then ended, have been reviewed by the
registrant's independent accountants, PricewaterhouseCoopers LLP, and their
report is attached. This report is not a report within the meaning of Section 7
and 11 of the Securities Act of 1933 and the independent accountants' liability
under Section 11 does not extend to it.
Item 2. Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
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, litigation risks, 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.
The Company does not undertake any obligations to release publicly any revisions
to such forward-looking statements to reflect events or uncertainties after the
date hereof or to reflect the occurrence of unanticipated events.
Results of Operations
Second Quarter Results
Revenues were $110.6 million in the second quarter of 2000, an increase of 10%
compared with revenues of $100.3 million in the second quarter of 1999. Net
sales for the second quarter of 2000 were $110.1 million, an increase of $10.3
million, or 10%, over the second quarter of 1999. Revenues for the Asia Pacific
segment increased 31%, which amount included a 7% increase related to the effect
of changes in currency exchange rates. Revenues for the U.S. Bioindustrial
segment increased 15%. Revenues for the Americas Research segment increased 11%,
which amount included a less than one percent decrease related to the effect of
changes in currency exchange rates. Revenues for the European segment decreased
2%, which included a 10% decrease related to the effect of changes in currency
exchange rates.
In the second quarter of 2000, sales of products other than fetal bovine serum
(FBS) increased by $11.5 million, or 13%, when compared with the second quarter
of 1999 and excluding the effect of changes due to different currency exchange
rates and an acquired business. FBS net sales increased $0.4 million on a
currency comparable basis when comparing the second quarter of 2000 with
8
<PAGE>
the second quarter of 1999 as unit sales increased 5% and average unit selling
prices decreased 2%. FBS sales represented 10% of net sales in the second
quarter of 2000 compared with 11% of net sales in the comparable period of 1999.
Sales for a business acquired last year increased $0.9 million when comparing
the second quarter of 2000 with the same period last year and excluding the
effect of currency exchange rates. The effect of changes in currency exchange
rates decreased net sales in the second quarter of 2000 by $2.5 million, or
2.5%, when compared with the second quarter of 1999.
Gross margins were 53.8% of net sales in the second quarter of 2000 compared
with 54.7% of net sales in the second quarter of 1999. Gross margins decreased
in the 2000 period principally due to unfavorable currency comparisons.
Marketing and administrative expenses were 32.8% of net sales in the second
quarter of 2000 and 34.2% of net sales in the comparable period of 1999. The
decrease in marketing and administrative expenses as a percentage of net sales
is principally related to decreased legal expenses. Research and development
expenses were $7.0 million in the second quarter of 2000, representing a 15%
increase over the comparable period in 1999. The Company recorded $0.9 million
in costs in the second quarter of 2000 related to an effort by the Company and
the Dexter Corporation, the Company's majority shareholder, to maximize
shareholder value in the short-term. Dexter and the Company announced on July 9,
2000 that they had signed definitive agreements to merge into Invitrogen
Corporation, subject to certain conditions.
Operating income of $15.7 million in the second quarter of 2000 represented a 6%
increase over operating income of $14.9 million in the comparable period in
1999. Excluding the merger related costs from second quarter 2000 results,
operating income increased 12% compared with the second quarter of 1999. Further
excluding unfavorable currency effects of $1.2 million, second quarter 2000
operating income increased 20%. Other income (expense), net was income of $0.9
million in the second quarter of 2000 compared with $0.5 million of income in
the second quarter of 1999. The increase in other income (expense), net was
principally due to higher investment income in the 2000 period. The effective
tax rate was 36% in the second quarter of 2000 compared with 35% in the second
quarter of 1999.
Net income of $10.2 million in the second quarter of 2000 increased 4% over net
income of $9.8 million in the comparable period of 1999. Diluted earnings per
share of $0.40 in the second quarter of 2000 were 3% greater than diluted
earnings per share of $0.39 in the second quarter of 1999.
Six Month Results
Revenues in the first half of 2000 were $219.9 million, representing an increase
of 10% compared with revenues of $200.3 million in the first six months of 1999.
Net sales for the first half of 2000 were $218.9 million, an increase of $19.6
million, or 10%, over the first half of 1999. Revenues for the Asia Pacific
segment increased 25%, which amount included a 6% increase related to the effect
of changes in currency exchange rates. Revenues for the U.S. Bioindustrial
segment increased 14%. Revenues for the Americas Research segment increased 12%,
which amount included a less than one percent increase
9
<PAGE>
related to the effect of changes in currency exchange rates. Revenues for the
European segment decreased 1%, which included a 10% decrease related to the
effect of changes in currency exchange rates.
Net sales of products other than FBS in the first half of 2000 increased $21.8
million, or 12%, compared with the first half of 1999 and excluding the effect
of changes due to different currency translation rates and an acquired business.
FBS net sales increased $0.8 million, or 4%, on a currency comparable basis as
unit sales increased 2% and average unit selling prices increased 2%. FBS sales
represented 10% of net sales in the first six months of 2000 and 1999. Sales for
a business acquired last year increased $1.7 million, excluding the effect of
changes in currency exchange rates. The effect of changes in currency exchange
rates decreased net sales in the first half of 2000 by $4.7 million, or 2.4%,
when compared with the first half of 1999.
Gross margins were 54.1% in the first half of 2000 compared with 55.1% in the
comparable 1999 period. Gross margins decreased in the 2000 period principally
due to unfavorable currency comparisons. Marketing and administrative expenses
were 33.1% of net sales in the first six months of 2000 and 33.5% in the
comparable period of 1999.
Operating income for the first half of 2000 was $33.0 million, representing a 3%
increase when compared with operating income of $32.2 million in the comparable
period in 1999. Excluding the merger related costs from the first half 2000
results, operating income increased 5% over the comparable period of 1999.
Further excluding unfavorable currency effects of $2.5 million, operating income
for the first six months of 2000 increased 13%.
Other income (expense), net was income of $1.4 million in the first half of 2000
compared with expense of $0.2 million in the comparable period of 1999,
reflecting greater currency exchange losses in the 1999 period and higher
investment income in the 2000 period.
For the first six months of 2000, net income of $21.1 million increased 4% over
the comparable period of 1999. Diluted earnings per share for the first half of
2000 were $0.84, an increase of 4% compared with the first half of 1999.
Liquidity and Capital Resources
Operating activities provided $20.0 million in cash during the first six months
of 2000. Net income after adjustments for depreciation and amortization was the
principal source of cash from operations in 2000. Increases in income tax
payments were the principal use of cash from operations.
Investing activities for the first six months of 2000 included $8.1 million for
capital expenditures. Also included in investing activities during the first six
months was $1.1 million in deferred purchase payments related to the 1996
acquisition of Custom Primers Inc. and $0.5 million related to the 1999
acquisition of BioSepra SA.
10
<PAGE>
Financing activities for the first six months of 2000 include cash proceeds of
$1.8 million for stock option exercises and $3.4 million in short-term
borrowings. Cash outflows consisted of $0.2 million for long-term debt
repayments.
Capital expenditures in 2000 are expected to range from $28 to $33 million. The
Company is contemplating facility upgrades and expansions of $20 to $25 million
with the balance of expected 2000 capital expenditures for new and replacement
machinery, equipment and management information systems including e-commerce
initiatives. The Company paid approximately $7.3 million in cash in the third
quarter to buy a manufacturing facility in Frederick, Maryland that had been
leased.
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 may fund these transactions
using cash from operations, debt, equity, or other sources.
New Accounting Pronouncements
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.
The Financial Accounting Standards Board has issued, FIN No. 44, Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25. The interpretation clarifies the application of Opinion 25 for
certain issues. FIN No. 44 is effective July 1, 2000, but certain conclusions
may be applied earlier. The Company believes that the effect of adoption of FIN
No. 44 will not have a material effect on the Company's financial statements.
The Financial Accounting Standards Board has issued, SFAS No. 138, Accounting
for Certain Derivative Instruments and Certain Hedging Activities - an Amendment
of FASB Statement No. 133. This statement amends SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities for specified transactions. SFAS
No. 138 is effective concurrently with SFAS No. 133 if SFAS No. 133 is not
adopted prior to June 15, 2000. If SFAS No. 133 is adopted prior to June 15,
2000, SFAS No. 138 is effective for quarters beginning after June 15, 2000. The
Company believes that the effect of adoption of SFAS No. 138 will not have a
material effect on the Company's financial statements.
11
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risks -
-----------------------------------------------------------
Not applicable.
PART II - OTHER INFORMATION
------- -----------------
Item 1. Legal Proceedings
-----------------
On December 31, 1996, the Company sued Clontech Laboratories,
Inc. in the U.S. District Court for the District of Maryland,
Civil Action No. AW-96-4080, alleging patent infringement of the
Company's patents covering H minus reverse transcriptase. The
court issued a decision on July 16, 1999, that two of the
Company's patents are unenforceable and followed this decision on
May 24, 2000, with a ruling that would require the Company to pay
$1.64 million in legal fees, plus costs, to Clontech. The Company
has appealed both the District Court's decision of July 16, 1999
and the May 24, 2000 ruling to the Court of Appeals for the
Federal Circuit.
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
---------------------------------------------------
The Annual Meeting of Stockholders of the Company was held on May 2,
2000, where the following actions were taken:
(1) Bruce H. Beatt, Peter G. Kelly and K. Grahame Walker were elected
as directors in the class whose term will expire at the 2003
annual meeting of stockholders, pursuant to the following vote
tabulation:
Votes
-----
Name Votes For Withheld
---- --------- --------
Bruce H. Beatt 24,493,035 415,963
Peter G. Kelly 24,496,734 412,264
K. Grahame Walker 24,492,793 416,205
In addition, the following directors continue in office for terms
expiring as indicated: Thomas H. Adams, Ph.D. (2002),
R. Barry Gettins, Ph.D. (2002), Joseph C. Stokes, Jr. (2002), Kathleen
Burdett (2001), George M. Whitesides, Ph.D. (2001) and J. Stark
Thompson, Ph.D. (2001).
(2) The selection of PricewaterhouseCoopers LLP as auditors of the
Company for the year 2000 was ratified with 24,904,754 shares
voted in favor, 2,181 shares voted against, 2,064 shares
abstaining and zero broker non-votes.
Item 5. Other Information
-----------------
On July 9, 2000, Life Technologies, Inc. (the "Company") announced
that it signed a definitive agreement with Invitrogen Corporation
("Invitrogen") providing for a merger of the Company into Invitrogen
12
<PAGE>
in which all of the Company's outstanding shares of common stock
will be converted into cash and/or Invitrogen stock.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
10. Form of Letter Agreement and related Release Agreement dated
As of March 24, 2000, between Life Technologies, Inc. and,
respectively, Thomas M. Coutts, John V. Cooper, Derek E.
Woods, Ph.D., Brian D. Graves, and other executive officers
other than J. Stark Thompson.
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
June 30, 2000.
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: August 7, 2000 By: /s/ C. Eric Winzer
---------------------------------
C. Eric Winzer
Vice President and
Chief Financial Officer
(Principal Financial Officer
and Authorized Signatory)
By: /s/ Gloria Zak
---------------------------------
Gloria Zak
Controller
(Principal Accounting Officer)
14
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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 June 30, 2000, and the related
consolidated statements of income and comprehensive income for the three-month
and six-month periods ended June 30, 2000 and 1999, and the related condensed
consolidated statement of cash flows for the six-month periods ended June 30,
2000 and 1999. 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 auditing standards generally accepted in the United States, 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 consolidated financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the United
States.
We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet as of December 31,
1999, and the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for the year then ended (not presented
herein), and in our report, dated January 24, 2000, we expressed an unqualified
opinion on those consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
July 12, 2000
15
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EXHIBIT INDEX
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Page
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Exhibit 10 Form of Letter Agreement and related Release 17
Agreement dated as of March 24, 2000, between
Life Technologies, Inc. and , respectively,
Thomas M. Coutts, John V. Cooper, Derek E.
Woods, Ph.D., Brian D. Graves, and other executive
officers other than J. Stark Thompson.
Exhibit 15 Letter re unaudited interim financial information 23
Exhibit 27 Financial data schedule 24
16
