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Last updated on April 19, 2014 at 21:20 EDT

Life Technologies Announces Fourth Quarter and Fiscal 2012 Results

February 4, 2013

CARLSBAD, Calif., Feb. 4, 2013 /PRNewswire/ — Life Technologies Corporation (NASDAQ: LIFE) today announced results for its fourth quarter for the year ended Dec. 31, 2012. Non-GAAP revenue for the fourth quarter was $999 million, an increase of 3 percent over the $970 million reported for the fourth quarter of 2011. Excluding the impact of currency, revenue growth for the quarter was 4.5 percent compared to the same period of the prior year. Full year 2012 revenue was $3.8 billion, an increase of 2 percent over 2011. Excluding currency, revenue growth was also about 2.2 percent over the prior year.

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

“We started the year with a promise to our shareholders to grow our underlying business, invest in growth markets and regions, deliver on a balanced capital deployment strategy and introduce innovative new products to serve our customers even better. I am extremely pleased that our team remained focused and delivered against this promise, growing revenue and earnings for the thirteenth year in a row,” said Gregory T. Lucier, chairman and chief executive officer of Life Technologies.

“We finished the year strong with fourth quarter revenue growth ahead of our expectations at 4.5 percent driven by strength in our Ion Torrent business, which recorded its highest revenue quarter ever. We also achieved a solid return to growth in our Research Consumables business and continued strong performance in our Bioproduction business. We expect the strength we saw across all regions and end markets as we exited 2012, including continued double digit growth in emerging markets, to provide momentum in 2013.”

“With $662 million in free cash flow, we were able to return a significant amount of capital to shareholders. We ended the year having repurchased $635 million, or 13.8 million shares in total, well above our 50 percent target. Additionally, we have already repurchased $105 million, or 2 million shares, year-to-date in 2013.”

“Looking ahead to 2013, we expect another significant increase in our Ion Torrent business sales for the third consecutive year and expansion in our applied and emerging markets to drive revenue growth of 3 to 5 percent over 2012 results of $3.8 billion. If sequestration is implemented, we estimate it would reduce our revenue by approximately 1 percent and we would expect to be at the low end of our guidance range, at 3 percent growth for 2013. We are guiding to non-GAAP EPS in a range of $4.30 to $4.45, which would result in 8 to 12 percent growth over 2012 results.”

Life Technologies reported results compared to the quarter and fiscal year ended Dec. 31, 2011. Results are non-GAAP unless indicated otherwise. A full reconciliation of the non-GAAP measures to GAAP can be found in the tables of today’s press release.

Analysis of Fourth Quarter and Fiscal 2012 Results

  • Fourth quarter revenue increased 3 percent over the prior year, or 4.5 percent excluding the impact of currency. Full year 2012 revenue increased 2 percent to $3.8 billion. Revenue growth for the quarter and the full year were driven by strong sales from the Ion Torrent business and growth in the company’s Research Consumables and Bioproduction businesses, partially offset by expected declines in SOLiD(®) sales and qPCR royalty revenue.
  • Gross margin in the fourth quarter was 64.6 percent, a 20 basis point increase compared to the same period of the prior year primarily driven by manufacturing productivity, partially offset by a higher mix of instrument sales and unfavorable currency rates. Full year gross margin was 65.6 percent, an increase of 40 basis points, primarily due to improved product mix and higher realized price, offset by the decrease in qPCR royalties and unfavorable currency rates.
  • Operating margin was 29.9 percent in the fourth quarter, approximately 70 basis points lower than the same period of the prior year. Operating margin was primarily impacted by unfavorable currency rates and expenses related to our acquisitions in molecular diagnostics. Full year operating margin increased 20 basis points to 29.2 percent. The increase was driven primarily by an increase in gross margins and improvement in currency, partially offset by higher expenses related to our acquisitions in molecular diagnostics.
  • The tax rate was 27.2 percent for the fourth quarter and 27.6 percent for the full year.
  • Fourth quarter EPS increased 6 percent to $1.11. Full year EPS increased 7 percent to $3.98. Fourth quarter and the full year were negatively impacted by $(0.03) due to the timing of the 2012 federal R&D tax credit benefit being moved from the fourth quarter of 2012 to 2013. The company’s fourth quarter and full year 2012 guidance had assumed the reinstatement and benefit of the federal R&D tax credit by the end of 2012.
  • Diluted weighted shares outstanding were 175.8 million in the fourth quarter, a decrease of 8.8 million shares over the prior year. The decrease was a result of the continuation of the company’s share repurchase program, partially offset by shares issued for employee stock plans. The company repurchased $100 million or 2.0 million shares in the fourth quarter.
  • Cash flow from operating activities for the fourth quarter was $221 million. Fourth quarter capital expenditures were $48 million, resulting in free cash flow of $173 million. The company ended the quarter with $276 million in cash and short-term investments.

Business Group Highlights

  • Research Consumables revenue was $409 million in the fourth quarter, an increase of 2 percent compared to the prior year. Excluding the impact from currency, revenue for the business group grew 4 percent. Full year revenue increased 1 percent to $1.6 billion, or 2 percent excluding the impact from currency. Growth for the quarter and full year was mainly driven by strong performance in our cell culture, sample prep and benchtop products.
  • Genetic Analysis revenue was $401 million in the fourth quarter, an increase of 2 percent over the same period last year. Excluding the impact from currency, revenue increased 4 percent. Full year revenue was flat at approximately $1.5 billion, or up 1 percent excluding the impact from currency. Growth for the quarter and the full year was primarily driven by a substantial increase in our Ion Torrent business, including sales of the Ion PGM((TM)) instruments and Ion Proton((TM)) System, partially offset by an expected decline in SOLiD instrument sales and in qPCR royalty revenue.
  • Applied Sciences revenue was $190 million in the fourth quarter, an increase of 8 percent over the same period last year. Excluding the impact from currency, revenue increased 10 percent. Full year revenue increased 7 percent to $719 million, or 8 percent excluding the impact from currency. Growth for the quarter was primarily driven by increased sales in Bioproduction and Forensics products. Growth for the full year was primarily driven by increased sales in Bioproduction.
  • Regional revenue growth rates excluding currency for the fourth quarter compared to the same quarter of the prior year were as follows: the Americas were flat, Europe grew 5 percent, Asia Pacific grew 18 percent and Japan grew 6 percent. Full year growth rates excluding currency were as follows: the Americas declined 1 percent, Europe grew 2 percent, Asia Pacific grew 13 percent and Japan grew 3 percent.

Fiscal Year 2013 Outlook
Subject to the risk factors detailed in the Safe Harbor Statement section of this release, the company provided its expectations for fiscal year 2013 financial performance. The company expects revenue growth, excluding currency, of 3 to 5 percent over 2012 revenues of $3.8 billion. If sequestration is implemented, it would reduce revenue by approximately 1 percent and the company would expect be at the low end of the guidance range, at 3 percent growth for 2013. The company expects non-GAAP EPS to be in a range of $4.30 to $4.45. At December month end rates, currency negatively impacts revenue by $(2) million and non-GAAP EPS by about $(0.01). The company will provide further detail on its business outlook during the webcast today.

Webcast Details
The company will discuss its financial and business results as well as its business outlook on a webcast at 4:30 p.m. ET today. This webcast will contain forward-looking information that includes a discussion of “non-GAAP financial measures” as that term is defined in Regulation G. For actual results, the most directly comparable GAAP financial measures and information reconciling these non-GAAP financial measures to the company’s financial results determined in accordance with GAAP, as well as other material financial and statistical information to be discussed on the webcast will be posted on the company’s investor relations website at https://ir.lifetechnologies.com. The webcast can be accessed through the investor relations page of the company’s website at https://ir.lifetechnologies.com/events.cfm. A replay of the webcast will be available on the company’s website through Monday, Feb. 25.

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

Safe Harbor Statement
Certain statements contained in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and Life Technologies intends that such forward-looking statements be subject to the safe harbor created thereby. Forward-looking statements may be identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “will,” or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of the company. Such forward-looking statements include, but are not limited to, statements relating to financial projections, including revenue and pro forma EPS projections; success of acquired businesses, including cost and revenue synergies; development and increased flow of new products; leveraging technology and personnel; advanced opportunities and efficiencies; opportunities for growth; expectations of prospective new standards, new delivery platforms, and new selling specialization and effectiveness; plans and prospects for the company; and corporate strategy and performance. A number of the matters discussed in this press release and presentation that are not historical or current facts deal with potential future circumstances and developments, including future research and development plans. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to: volatility of the financial markets; and the risks that are described from time to time in Life Technologies’ reports filed with the SEC. This press release and presentation speaks only as of its date, and the company disclaims any duty to update the information herein.

All products referenced are for Research Use Only and not intended for use in diagnostic procedures, unless otherwise noted.

Non-GAAP Measurements
This presentation and discussion includes certain financial information which constitute “non-GAAP financial measures” as defined by the SEC. The GAAP measures which are most directly comparable to these measures, as well as a reconciliation of these measures with the most directly comparable GAAP measures, can be found at on the Investor Relations portion of the company’s website at www.lifetechnologies.com.

Investor and Financial Contact

Carol Cox
Investor Relations
(760) 603-7208
ir@lifetech.com

                                                                                            LIFE TECHNOLOGIES CORPORATION
                                                                                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                             For the three months                                                For the three months
    (in thousands, except per share data)                                                                  ended December 31, 2012                                             ended December 31, 2011
                                                                                                           -----------------------                                             -----------------------
    (unaudited)

    Revenues                                                                                                                             $998,904                                                          $1,010,445
    Cost of revenues                                                                                                                      368,665                                                             401,127
    Purchased intangibles amortization                                                                                                     72,564                                                              82,201
                                                                                                                                           ------                                                              ------
                                                          Gross profit                                                                    557,675                                                             527,117
                                                                                                                                          -------                                                             -------
    Gross margin                                                                                                                             55.8%                                                               52.2%
    Operating expenses:
                                  Selling, general and
                                  administrative                                   264,604                                                             249,535
                                  Research and
                                  development                                       83,667                                                              90,201
                                  Business consolidation
                                  costs                                             38,467                                                              18,856
                                 ---------------------
                                  Total operating
                                  expenses                                         386,738                                                             358,592
                                                                                   -------                                                             -------
                                                          Operating income                                                                170,937                                                             168,525
    Operating margin                                                                                                                         17.1%                                                               16.7%
                                 Interest income                                       686                                                                 972
                                 Interest expense                                  (29,649)                                                            (38,162)
                                 Other expense, net                                   (800)                                                             (2,933)
                                 ------------------
                                  Total other
                                  expense, net                                     (29,763)                                                            (40,123)
                                                                                   -------                                                             -------
    Income from operations before provision for income taxes                                                                              141,174                                                             128,402
    Income tax provision                                                                                                                  (31,269)                                                            (35,334)
                                                                                                                                          -------                                                             -------
                                                          Net income                                                                      109,905                                                              93,068
                                                           Net loss attributable to non-
                                                           controlling interests                                                              101                                                                   -
                                                                                                                                              ---                                                                 ---
                                                           Net income attributable to
                                                           controlling interest                                                          $110,006                                                             $93,068

    Effective tax rate                                                                                                                       22.1%                                                               27.5%
    Add back interest expense for subordinated debt, net of tax                                                                                 -                                                                 584
                                                                                                                                              ---                                                                 ---
    Numerator for diluted earnings per share                                                                                             $110,006                                                             $93,652
                                                                                                                                         ========                                                             =======

    Earnings per common share:
                                  Basic earnings per
                                  share attributable to
                                  controlling interest                               $0.64                                                               $0.52
                                 ======================

                                  Diluted earnings per
                                  share attributable to
                                  controlling interest                               $0.63                                                               $0.51
                                 =====================

    Weighted average shares used in per share calculation:
                                 Basic                                                                                                    172,238                                                             178,304
                                 Diluted                                                                                                  175,783                                                             184,544

                                                                                          LIFE TECHNOLOGIES CORPORATION
                                                                                         ITEMIZED RECONCILIATION BETWEEN
                                                                                           GAAP AND NON-GAAP NET INCOME

                                                                                                       For the three months                                                  For the three months
    (in thousands, except per share data)                                                            ended December 31, 2012                                               ended December 31, 2011
                                                                                                     -----------------------                                               -----------------------
    (unaudited)

    GAAP net income                                                                                                                 $109,905                                                               $93,068

                           Non-GAAP revenue
                           adjustments
                                                  Licensing
                                                  settlement                      -                                                               (38,800)
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                   460                                                                   506
                                                  Charges on a
                                                  discontinued
                                                  product                         -                                                                (1,812)
                           Total Non-GAAP
                           revenue adjustments                460                (1)                                                 (40,106)
                                                              ---                                                                        ---

                           Non-GAAP cost of
                           revenues and
                           purchased intangible
                           adjustments
                                                  Purchased
                                                  intangibles
                                                  amortization               72,564                                                                82,201
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                 2,914                                                                  (590)
                            Legal
                                                  adjustments
                                                  and
                                                  licensing
                                                  settlement                 12,397                                                                56,455
                           Total Non-GAAP cost
                           of revenues and
                           purchased intangible
                           adjustments                     87,875                (2)                                                 138,066
                                                           ------                                                                        ---

                           Non-GAAP Operating
                           Expense Adjustments:
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                   869                                                                 1,491
                                                  Business
                                                  consolidation
                                                  costs                      38,467                                                                18,856
                            Legal
                                                  adjustments
                                                  and
                                                  licensing
                                                  settlement                      -                                                                 9,960
                           Total Non-GAAP
                           Operating Expense
                           Adjustments                     39,336                (3)                                                  30,307
                                                           ------                                                                        ---

                           Non-GAAP Other
                           Expense Adjustments:
                                                  Noncash
                                                  interest
                                                  expense
                                                  charges                         -                                                                 6,649
                           Total Non-GAAP Other
                           Expense Adjustments   -                                                                                                 6,649
                                                 ---

                           Non-GAAP Income Tax
                           Provision
                           Adjustments:
                                                  Income tax
                                                  adjustments               (41,813)                                                              (34,880)
                           Total Non-GAAP
                           Income Tax Provision
                           Adjustments                    (41,813)               (5)                                                 (34,880)
                                                         --------                                                                        ---

    Non-GAAP Net Income                                                                                                             $195,763                                                              $193,104
                           Non-GAAP loss
                           attributable to non-
                           controlling interest               101                (6)                                                       -
                                                              ---                                                                        ---
    Non-GAAP Net Income Attributable to Controlling Interest                                                                        $195,864                                                              $193,104

    Add back of interest expense for subordinated debt, net of tax                                                                         -                                                                    33

    Non-GAAP Numerator for diluted earnings per share                                                                               $195,864                                                              $193,137
                                                                                                                                    ========                                                              ========

    Non-GAAP Earnings per common share:
                           Basic earnings per
                           share attributable
                           to controlling
                           interest                                           $1.14                                                                 $1.08
                                                                              =====

                           Diluted earnings per
                           share attributable
                           to controlling
                           interest                                           $1.11                                                                 $1.05
                                                                              =====

    Weighted average shares used in per share calculation:
                          Basic                                                                                                      172,238                                                               178,304
                          Diluted                                                                                                    175,783                                                               184,544
    Summary of Reconciliation between GAAP and Non-GAAP Net
     Income
                           For the three months ended
                           December 31, 2012, Non-GAAP
                           earnings resulted in total
                           revenue of $999.4 million,
                           gross profit of $646.0
                           million with gross margin of
                           64.6%, operating profit of
                           $298.6 million with
                           operating margin of 29.9%,
                           and an income tax provision
                           of $73.1 million with the
                           Non-GAAP effective tax rate
                           of 27.2%  with the above
                           adjustments.

                           For the three months ended
                           December 31, 2011, Non-GAAP
                           earnings resulted in total
                           revenue of $970.3 million,
                           gross profit of $625.1
                           million with gross margin of
                           64.4%, operating profit of
                           $296.8 million with
                           operating margin of 30.6%,
                           and an income tax provision
                           of $70.2 million with the
                           Non-GAAP effective tax rate
                           of 26.7%  with the above
                           adjustments.
    Notes
    (1)                    Add back purchased deferred
                           revenue of $0.5 million for
                           each of the three months
                           ended December 31, 2012 and
                           2011. Adjust for revenue
                           related to credit usage on
                           returns of a discontinued
                           product of $1.8 million for
                           the three months ended
                           December 31, 2011.  Adjust
                           for $38.8 million of revenue
                           recognized upon a licensing
                           settlement for the three
                           months ended December 31,
                             2011.

    (2)                    Add back amortization of
                           purchased intangibles of
                           $72.6 million and $82.2
                           million for the three months
                           ended December 31, 2012 and
                           2011, respectively. Add back
                           amortization of a fair value
                           inventory write-up of $1.5
                           million and charges for
                           contingent consideration
                           remeasurement of $1.4
                           million for the three months
                           ended December 31, 2012 and
                           adjust charges for
                           contingent consideration
                           remeasurement of $0.6
                           million for the three months
                           ended December 31, 2011.
                           Add back $12.4 million and
                           $52.0 million of legal
                           adjustments for the three
                           months ended December 31,
                           2012 and 2011, respectively,
                            and add back royalty fees
                            and compensation costs of
                           $4.5 million as a result of
                           a licensing settlement for
                           the three months ended
                           December 31, 2011.

    (3)                    Add back depreciation of
                           purchase accounting
                           property, plant, and
                           equipment revaluation of
                           $0.9 million and $1.5
                           million, and business
                           consolidation costs
                           including restructuring and
                           integrating acquired
                           entities, aligning acquired
                           and existing operations
                           through business
                           transformation activities
                           and costs associated with
                           divesting entities of $38.5
                           million and $18.9 million
                           for the three months ended
                           December 31, 2012 and 2011,
                           respectively.  Add back
                           $10.0 million for the
                           compensation cost and asset
                           impairment partially offset
                           by recovery of expenses
                           related to the settlement of
                           a licensing settlement for
                           the three months ended
                           December 31, 2011.

    (4)                    Add back charges related to
                           non-cash interest expense
                           for senior convertible debts
                           of $5.1 million and imputed
                           finance charge of $1.5
                           million associated with
                           contingent consideration on
                           business acquisitions for
                           the three months ended
                           December 31, 2011.

    (5)                    Non-GAAP tax adjustment due
                           to the exclusion of the
                           aforementioned business
                           combination related charges,
                           non cash charges, and one-
                           time costs which are not
                           indicative of the
                           profitability or cash flows
                           of the Company's ongoing or
                           future operations. These
                           deductions produce a GAAP
                           only tax benefit which is
                           added back for Non-GAAP
                           presentation.

    (6)                    Non-GAAP net loss
                           attributable to non-
                           controlling interest, net of
                           tax benefit, adjusted for
                           noncash charges for purchase
                           accounting property, plant,
                           and equipment revaluation.

                           The Company reports Non-GAAP
                           results which excludes costs
                           that are not indicative of
                           the profitability or cash
                           flows of the Company's
                           ongoing or future
                           operations.  Such costs are
                           restructuring cost, business
                           transformation expenses,
                           amortization and
                           depreciation of deferred
                           revenue, intangibles assets,
                           and fixed assets, and
                           revaluation charges for
                           inventories, contingent
                           consideration liabilities,
                           asset impairments, and in
                           process research and
                           development expenses,
                           incurred as a result of
                           business combinations as
                           well as the impact from the
                           divestiture and
                           discontinuance of product
                           lines.  The Company also
                           excludes noncash interest
                           expense associated with
                           convertible debt bifurcation
                           and noncash charges
                           associated with non-
                           controlling interests. In
                           addition, the Company
                           excludes one-time costs
                           including the early
                           repayment of debt and the
                           associated impacts, and the
                           impact of certain
                           settlements in order to
                           provide a supplemental
                           comparison of the results of
                           operations.

                                                                                            LIFE TECHNOLOGIES CORPORATION
                                                                                        CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                                                 For the year                                                        For the year
    (in thousands, except per share data)                                                                  ended December 31, 2012                                             ended December 31, 2011
                                                                                                           -----------------------                                             -----------------------
    (unaudited)

    Revenues                                                                                                                           $3,798,510                                                          $3,775,672
    Cost of revenues                                                                                                                    1,372,277                                                           1,356,967
    Purchased intangibles amortization                                                                                                    291,756                                                             308,728
                                                                                                                                          -------                                                             -------
                                                          Gross profit                                                                  2,134,477                                                           2,109,977
                                                                                                                                        ---------                                                           ---------
    Gross margin                                                                                                                             56.2%                                                               55.9%
    Operating expenses:
                                  Selling, general and
                                  administrative                                 1,054,616                                                           1,008,973
                                  Research and
                                  development                                      341,892                                                             377,924
                                  Business consolidation
                                  costs                                             72,732                                                              75,324
                                 ---------------------
                                  Total operating
                                  expenses                                       1,469,240                                                           1,462,221
                                                                                 ---------                                                           ---------
                                                          Operating income                                                                665,237                                                             647,756
    Operating margin                                                                                                                         17.5%                                                               17.2%
                                 Interest income                                     2,401                                                               3,932
                                 Interest expense                                 (123,915)                                                           (162,073)
                                 Other expense, net                                (11,898)                                                            (10,913)
                                 ------------------
                                  Total other
                                  expense, net                                    (133,412)                                                           (169,054)
                                                                                  --------                                                            --------
    Income from operations before provision for income taxes                                                                              531,825                                                             478,702
    Income tax provision                                                                                                                 (101,376)                                                           (100,868)
                                                                                                                                         --------                                                            --------
                                                          Net income                                                                      430,449                                                             377,834
                                                           Net loss attributable to non-
                                                           controlling interests                                                              406                                                                 658
                                                                                                                                              ---                                                                 ---
                                                           Net income attributable to
                                                           controlling interest                                                          $430,855                                                            $378,492

    Effective tax rate                                                                                                                       19.1%                                                               21.1%
    Add back interest expense for subordinated debt, net of tax                                                                                12                                                               1,300
                                                                                                                                              ---                                                               -----
    Numerator for diluted earnings
    per share                                                                                                                            $430,867                                                            $379,792
                                                                                                                                         ========                                                            ========

    Earnings per common share:
                                  Basic earnings per
                                  share attributable to
                                  controlling interest                               $2.45                                                               $2.11
                                 ======================

                                  Diluted earnings per
                                  share attributable to
                                  controlling interest                               $2.40                                                               $2.05
                                 =====================

    Weighted average shares used in per share calculation:
                                 Basic                                                                                                    175,831                                                             179,390
                                 Diluted                                                                                                  179,365                                                             185,595

                                                                 LIFE TECHNOLOGIES CORPORATION
                                                                ITEMIZED RECONCILIATION BETWEEN
                                                                  GAAP AND NON-GAAP NET INCOME

                                                                                              For the year                                 For the year
    (in thousands, except per share data)                                                ended December 31, 2012                      ended December 31, 2011
                                                                                         -----------------------                      -----------------------
    (unaudited)

    GAAP net income                                                                                        $430,449                                     $377,834

                           Non-GAAP revenue
                           adjustments
                                                  Licensing
                                                  settlement                      -                                      (38,800)
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                 1,295                                        2,881
                                                  Charges on a
                                                  discontinued
                                                  product                      (457)                                         924
                           Total Non-GAAP
                           revenue adjustments                838                (1)                        (34,995)
                                                              ---                                               ---

                           Non-GAAP cost of
                           revenues and
                           purchased intangible
                           adjustments
                                                  Purchased
                                                  intangibles
                                                  amortization              291,756                                      308,728
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                 2,914                                       (2,145)
                                                  Charges on a
                                                  discontinued
                                                  product                         -                                        2,094
                            Legal
                                                  adjustments
                                                  and
                                                  licensing
                                                  settlement                 60,728                                       56,455
                           Total Non-GAAP cost
                           of revenues and
                           purchased intangible
                           adjustments                    355,398                (2)                        365,132
                                                          -------                                               ---

                           Non-GAAP Operating
                           Expense Adjustments:
                                                  Purchase
                                                  accounting
                                                  related
                                                  adjustments                 3,738                                       22,377
                                                  Business
                                                  consolidation
                                                  costs                      72,732                                       75,324
                            Legal
                                                  adjustments
                                                  and
                                                  licensing
                                                  settlement                 10,467                                        9,960
                           Total Non-GAAP
                           Operating Expense
                           Adjustments                     86,937                (3)                        107,661
                                                           ------                                               ---

                           Non-GAAP Other
                           Expense Adjustments:
                                                  Noncash
                                                  interest
                                                  expense
                                                  charges                     5,382                                       30,779
                                                 Other expense                5,302                                            -
                           Total Non-GAAP Other
                           Expense Adjustments             10,684                (4)                         30,779
                                                           ------                                               ---

                           Non-GAAP Income Tax
                           Provision
                           Adjustments:
                                                  Income tax
                                                  adjustments              (170,681)                                    (157,490)
                           Total Non-GAAP
                           Income Tax Provision
                           Adjustments                   (170,681)               (5)                       (157,490)
                                                        ---------                                               ---

    Non-GAAP Net Income                                                                                    $713,625                                     $688,921
                           Non-GAAP loss
                           attributable to non-
                           controlling interest               406                (6)                            350
                                                              ---                                               ---
    Non-GAAP Net Income Attributable to Controlling Interest                                               $714,031                                     $689,271

    Add back interest expense for subordinated debt, net of tax                                                  12                                          131

    Non-GAAP Numerator for diluted earnings per share                                                      $714,043                                     $689,402
                                                                                                           ========                                     ========

    Non-GAAP Earnings per common share:
                           Basic earnings per
                           share attributable
                           to controlling
                           interest                         $4.06                                             $3.84
                                                            =====

                           Diluted earnings per
                           share attributable
                           to controlling
                           interest                         $3.98                                             $3.71
                                                            =====

    Weighted average shares used in per share calculation:
                          Basic                                                                             175,831                                      179,390
                          Diluted                                                                           179,365                                      185,595
    Summary of Reconciliation between GAAP and Non-GAAP Net
     Income
                           For the year ended December
                           31, 2012, Non-GAAP earnings
                           resulted in total revenue of
                           $3.8 billion, gross profit
                           of $2.5 billion with gross
                           margin of 65.6%, operating
                           profit of $1.1 billion with
                           operating margin of 29.2%,
                           and an income tax provision
                           of $272.1 million with the
                           Non-GAAP effective tax rate
                           of 27.6% with the above
                           adjustments.

                           For the year ended December
                           31, 2011, Non-GAAP earnings
                           resulted in total revenue of
                           $3.7 billion, gross profit
                           of $2.4 billion with gross
                           margin of 65.2%, operating
                           profit of $1.1 billion with
                           operating margin of 29.0%,
                           and an income tax provision
                           of $258.4 million with the
                           Non-GAAP effective tax rate
                           of 27.3%  with the above
                           adjustments.

    Notes
    (1)                    Add back purchased deferred
                           revenue of $1.3 million and
                           adjust for revenue related
                           to a discontinued product of
                           $0.5 million for the year
                           ended December 31, 2012.
                           Add back purchased deferred
                           revenue of $2.9 million and
                           revenue related to returns
                           of a discontinued product of
                           $0.9 million, offset by
                           $38.8 million of revenue
                           recognized upon a licensing
                           settlement for the year
                           ended December 31, 2011.

    (2)                    Add back amortization of
                           purchased intangibles of
                           $291.8 million, amortization
                           of a fair value inventory
                           write-up of $1.5 million,
                           and charges for contingent
                           consideration remeasurement
                           of $1.4 million for the year
                           ended December 31, 2012.
                           Add back amortization of
                           purchased intangibles of
                           $308.7 million, charges for
                           inventory reserves related
                           to a discontinued product of
                           $2.1 million, and purchase
                           accounting related cost of
                           revenue revaluation of $0.5
                           million which was offset by
                           contingent consideration
                           remeasurement of $2.7
                           million for the year ended
                           December 31, 2011.  Add back
                           $60.9 million and $52.0
                           million of legal
                           adjustments, and royalty
                           fees and compensation costs
                           of ($0.2) million and $4.5
                           million as a result of a
                           licensing settlement for the
                           year ended December 31, 2012
                           and 2011, respectively.

    (3)                    Add back depreciation of
                           purchase accounting
                           property, plant, and
                           equipment revaluation of
                           $3.7 million for the year
                           ended December 31, 2012.
                           Add back depreciation of
                           purchase accounting
                           property, plant, and
                           equipment revaluation of
                           $7.1 million, charges for
                           contingent consideration
                           remeasurement of $13.7
                           million, accelerated
                           compensation expense related
                           to business acquisitions of
                           $1.5 million for year ended
                           December 31, 2011.  Add back
                           $11.4 million of legal
                           adjustments offset by
                           compensation costs of $0.9
                           million as a result of
                           licensing settlement for the
                           year ended December 31,
                           2012.  Add back compensation
                           costs, impairment charges,
                           offset with expense recovery
                           of $10.0 million  as a
                           result of a licensing
                           settlement for the year
                           ended December 31, 2011.
                           Add back business
                           consolidation costs
                           including restructuring and
                           integrating acquired
                           entities, aligning acquired
                           and existing operations
                           through business
                           transformation activities
                           and costs associated with
                           divesting entities of $72.7
                           million and $75.3 million
                           for the year ended December
                           31, 2012 and 2011,
                           respectively.

    (4)                    Add back charges associated
                           with a divestiture activity
                           of $5.3 million, charges
                           related to non-cash
                           interest expense for senior
                           convertible debts of $1.7
                           million and the
                           extinguishment of a line of
                           credit facility of $3.7
                           million for the year ended
                           December 31, 2012. Add back
                           charges related to non-cash
                           interest expense for senior
                           convertible debts of $24.6
                           million and imputed finances
                           charge of $6.2 million
                           associated with contingent
                           consideration on business
                           acquisitions for the year
                           ended December 31, 2011.

    (5)                    Non-GAAP tax adjustment due
                           to the exclusion of the
                           aforementioned business
                           combination related charges,
                           non cash charges, and one-
                           time costs which are not
                           indicative of the
                           profitability or cash flows
                           of the Company's ongoing or
                           future operations. These
                           deductions produce a GAAP
                           only tax benefit which is
                           added back for Non-GAAP
                           presentation.

    (6)                    Non-GAAP net loss
                           attributable to non-
                           controlling interest, net of
                           tax benefit, adjusted for
                           noncash charges for purchase
                           accounting property, plant,
                           and equipment revaluation.

                           The Company reports Non-GAAP
                           results which excludes costs
                           that are not indicative of
                           the profitability or cash
                           flows of the Company's
                           ongoing or future
                           operations.  Such costs are
                           restructuring cost, business
                           transformation expenses,
                           amortization and
                           depreciation of deferred
                           revenue, intangibles assets,
                           and fixed assets, and
                           revaluation charges for
                           inventories, contingent
                           consideration liabilities,
                           asset impairments, and in
                           process research and
                           development expenses,
                           incurred as a result of
                           business combinations as
                           well as the impact from the
                           divestiture and
                           discontinuance of product
                           lines.  The Company also
                           excludes noncash interest
                           expense associated with
                           convertible debt bifurcation
                           and noncash charges
                           associated with non-
                           controlling interests. In
                           addition, the Company
                           excludes one-time costs
                           including the early
                           repayment of debt and the
                           associated impacts, and the
                           impact of certain
                           settlements in order to
                           provide a supplemental
                           comparison of the results of
                           operations.

                                                  LIFE TECHNOLOGIES CORPORATION
                                         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                            For the year
                                         ended December 31,
                                         ------------------
    (in
     thousands)(unaudited)                                                      2012           2011
                                                                                ----           ----
    Net income                                                            $430,449       $377,834
               Add back amortization and
               share-based compensation                                    390,164        394,326
               Add back depreciation                                       126,005        123,578
               Balance sheet changes                                         3,366        (26,959)
               Other noncash adjustments                                  (171,992)       (59,644)
                                                                         ---------
    Net cash
     provided by
     operating
     activities                                                            777,992        809,135
               Capital expenditures                                       (116,408)       (99,293)
                                                                         ---------
    Free cash
     flow                                                                  661,584        709,842
    Net cash
     used in
     investing
     activities                                                           (163,065)       (52,591)
    Net cash
     used in
     financing
     activities                                                         (1,082,414)      (627,268)
    Effect of
     exchange
     rate
     changes on
     cash                                                                      680         (4,790)
                                                                               ---         ------
    Net
     (decrease)
     increase in
     cash and
     cash
     equivalents                                                         $(583,215)       $25,193
                                                                         =========        =======

                                                                                   LIFE TECHNOLOGIES CORPORATION
                                                                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                                                                                   December 31,                   December 31,
    (in thousands)                                                                                                           2012                      2011
                                                                                                                             ----                      ----
                                             ASSETS                                                 (unaudited)
    Current assets:
             Cash and short-term investments                                                                           $276,369                  $881,994
             Trade accounts receivable, net of allowance for doubtful accounts                                          697,228                   636,998
             Inventories                                                                                                403,488                   377,866
             Prepaid expenses and other current assets                                                                  248,154                   196,759
                                                                                                                        -------
                  Total current assets                                                                                1,625,239                 2,093,617

    Long-term assets                                                                                                  7,012,826                 7,094,346
                                                                                                                      ---------                 ---------
                  Total assets                                                                                       $8,638,065                $9,187,963
                                                                                                                     ==========

                            LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
             Current portion of long-term debt                                                                         $253,214                  $450,839
             Short-term borrowings                                                                                      100,000                         -
             Accounts payable, accrued expenses and other current liabilities                                           839,137                 1,045,467
                                                                                                                        -------
                  Total current liabilities                                                                           1,192,351                 1,496,306

    Long-term debt                                                                                                    2,060,855                 2,297,653
    Other long-term liabilities                                                                                         731,396                   794,778
    Stockholders' equity                                                                                              4,653,463                 4,599,226
                                                                                                                      ---------                 ---------
                 Total liabilities and stockholders'                                                                 $8,638,065                $9,187,963
                 equity
                                                                                                                            ===

SOURCE Life Technologies Corporation


Source: PR Newswire