Invitrogen Corporation

On August 20, 2003, Invitrogen Corporation (“Invitrogen”) acquired all of the outstanding shares of common stock of Molecular Probes, Inc. (“Molecular Probes”) for cash of $303.9 million. Molecular Probes is an Oregon corporation that is a leader in the fluorescence-based technologies for use in labeling molecules for biological research and drug discovery. In addition, each option to purchase one share of Molecular Probes common stock was assumed by Invitrogen and exchanged for an option to purchase a common share of Invitrogen common stock using an exchange rate of 0.0756037. Invitrogen has continued Molecular Probes’ operations as part of its molecular biology business segment.

The description of the transaction contained in this Item 2 is qualified in its entirety by reference to the full text of the Merger Agreement by and among Invitrogen, Mallard Acquisition Corporation, Molecular Probes and Richard P. Haugland, as the Shareholders’ Agent, dated July 2, 2003, which was filed as Exhibit 2.1 to Invitrogen’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 3, 2003, and incorporated herein by reference.


(a)		Financial statements of business acquired.

		The audited financial statements required by this Item 7 for Molecular Probes, as of and for the year ended September 30, 2002, are filed as an exhibit hereto and are incorporated herein by reference.

		The unaudited interim financial statements required by this Item 7 for Molecular Probes, as of and for the nine months ended June 30, 2003 and 2002, are filed as an exhibit hereto and are incorporated herein by reference.

(b)		Pro forma financial information.

		The pro forma financial information required by this Item 7 for the combined balance sheet of Invitrogen and Molecular Probes, as of June 30, 2003, and for the combined results of operations of Invitrogen, Molecular Probes, and the assets acquired and liabilities assumed from PanVera LLC for the six months ended June 30, 2003, and the year ended December 31, 2002, is filed as an exhibit hereto and is incorporated herein by reference.

(c)		Exhibits.


Exhibit		Description

23.1		Consent of Independent Accountants

99.1		Molecular Probes, Inc., and Subsidiaries audited (i) Consolidated Balance Sheet as of September 30, 2002; (ii) Consolidated Statement of Income for the year ended September 30, 2002; (iii) Consolidated Statement of Changes in Shareholders’ Equity for the year ended September 30, 2002; (iv) Consolidated Statement of Cash Flows for the year ended September 30, 2002; and related Notes to Consolidated Financial Statements.

99.2		Molecular Probes, Inc., and Subsidiaries unaudited (i) Consolidated Balance Sheet as of June 30, 2003; (ii) Consolidated Statements of Income for the nine months ended June 30, 2003 and 2002; and (iii) Consolidated Statements of Cash Flows for the nine months ended June 30, 2003 and 2002; and related Notes to Unaudited Consolidated Financial Statements.

99.3		Invitrogen Corporation and Molecular Probes, Inc., Unaudited Pro Forma (i) Combined Balance Sheet as of June 30, 2003; (ii) Combined Statements of Income for the six months ended June 30, 2003, and for the year ended December 31, 2002; and (iii) related Notes to Combined Financial Statements.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (Nos. 333-84134, 333-37964 and 333-52896), Form S-4 (Nos. 333-4374 and 333-82593), and Form S-8 (Nos. 333-46146, 333-36606, 333-86531, 333-74061 and 333-105730) of Invitrogen Corporation of our report dated November 8, 2002 relating to the financial statements of Molecular Probes, Inc. and Subsidiaries for the year ended September 30, 2002, which appears in the Current Report on Form 8-K/A of Invitrogen Corporation dated August 22, 2003.

In our opinion, the accompanying consolidated balance sheet and the related consolidated statement of income, of changes in shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of Molecular Probes, Inc. and its subsidiaries (the “Company”) at September 30, 2002, and the results of their operations and their cash flows for the year ended September 30, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


Assets
Current assets
	Cash and cash equivalents		$	2,551,180
	Marketable securities			7,797,159
	Accounts receivable			5,262,797
	Inventories			4,195,093
	Current portion of related party note receivable			838,882
	Prepaid expenses and deposits			720,143
	Income taxes receivable			1,085,554

		Total current assets		22,450,808
Property and equipment, net				14,429,915
Deferred income taxes				570,146

		Total assets	$	37,450,869

Liabilities and Shareholders’ Equity
Current liabilities
	Accounts payable		$	3,201,685
	Accrued expenses			2,396,576
	Deferred revenue			64,444
	Current portion of capital lease obligation			226,962
	Deferred income taxes			30,689

		Total current liabilities		5,920,356
Capital lease obligation, net of current portion				9,795,386

		Total liabilities		15,715,742

Commitments and contingencies
Shareholders’ equity
	Preferred stock, $0.001 par value; 40,000,000 shares authorized, 37,234,300 shares issued and outstanding (liquidation preference of $68,883,455)			37,234
	Common stock, $0.001 par value; 100,000,000 shares authorized, 37,234,300 shares issued and outstanding			37,234
	Additional paid-in capital			29,849
	Retained earnings			21,639,315
	Accumulated other comprehensive loss			(8,505	)

		Total shareholders’ equity		21,735,127

		Total liabilities and shareholders’ equity	$	37,450,869

The accompanying notes are an integral part of the consolidated financial statements.


Revenues
Product sales		$	52,738,772
License fees and royalty income			1,330,691
Research grant and contract income			379,747

			54,449,210

Expenses
Cost of revenues			10,668,261
Research and development			7,102,642
General and administrative			9,600,415
Sales and marketing			6,009,829

			33,381,147

	Operating income		21,068,063
Charitable contributions			(1,227,481	)
Gains on marketable securities			(2,481,797	)
Interest income			251,276
Interest expense			(992,557	)
Other income, net			36,689

	Income before income taxes		16,654,193
Provision for income taxes			6,246,996

	Net income	$	10,407,197

The accompanying notes are an integral part of the consolidated financial statements.


																		Accumulated
																		Other
																		Compre-			Total
			Preferred Stock				Common Stock						Additional					hensive			Compre-
													Paid-In		Retained			Income			hensive
			Shares		Amount		Shares			Amount			Capital		Earnings			(Loss)			Income

Balances at September 30, 2001				—	$	—		74,406,120		$	93,844		$	—	$	24,232,118		$	(1,510,049	)
Exercise of stock options				—		—		62,480			10,473			—		—			—
Dividends paid				—		—		—			—			—		(13,000,000	)		—
Recapitalization of common stock to preferred stock				37,234,300		37,234		(37,234,300	)		(67,083	)		29,849		—			—
Comprehensive income
	Net income			—		—		—			—			—		10,407,197			—		$	10,407,197
	Other comprehensive income
	Unrealized loss previously recognized in other comprehensive income (loss) which was recognized in net income, net of tax of $871,138 (Note 3)			—		—		—			—			—		—			1,397,452			1,397,452
		Unrealized loss on available-for-sale securities, net of tax of $134,786		—		—		—			—			—		—			(216,219	)		(216,219	)
		Unrealized gain on foreign currency translation, net of tax of $199,674		—		—		—			—			—		—			320,311			320,311

Balances at September 30, 2002				37,234,300	$	37,234		37,234,300		$	37,234		$	29,849	$	21,639,315		$	(8,505	)	$	11,908,741

The accompanying notes are an integral part of the consolidated financial statements.


Cash flows from operating activities
Net income				$	10,407,197
Adjustments to reconcile net income to net cash provided by operating activities
	Depreciation and amortization				2,192,784
	Impairment loss on available-for-sale securities				2,564,954
	Loss on disposal of assets				48,208
	Realized gain on available-for-sale securities				(80,883	)
	Realized gain on held-to-maturity securities				(80,198	)
	Deferred income taxes				(391,270	)
	Change in operating assets and liabilities
		Accounts receivable			(1,189,662	)
		Inventories			(890,774	)
		Prepaid expenses and deposits			(268,258	)
		Income taxes receivable			(199,214	)
		Accounts payable			2,395,556
		Accrued expenses			1,165,566
		Deferred revenue			(59,796	)

			Net cash provided by operating activities		15,614,210

Cash flows from investing activities
Payments on related party note receivable					1,125,122
Capital expenditures					(2,276,071	)
Proceeds from sale of property and equipment					81,852
Available-for-sale securities
	Purchases				(444,193	)
	Maturities				443,674
Held-to-maturity securities
	Purchases				(6,350,000	)
	Maturities				5,380,198
Other assets					80,415

			Net cash used in investing activities		(1,959,003	)

Cash flows from financing activities
Exercise of stock options					10,473
Payments of dividends					(13,000,000	)
Payments on capital lease obligation					(205,839	)

			Net cash used in financing activities		(13,195,366	)

Effect of exchange rate changes					519,986

			Net increase in cash and cash equivalents		979,827
Cash and cash equivalents at beginning of year					1,571,353

Cash and cash equivalents at end of year				$	2,551,180

Supplemental disclosure of cash flow information
Cash paid for interest				$	944,161

Cash paid for taxes				$	6,755,000

The accompanying notes are an integral part of the consolidated financial statements.

The consolidated financial statements include the accounts of Molecular Probes, Inc. and its wholly owned subsidiary, Molecular Probes Europe (“MPE”). MPE was formed in 1995 to coordinate the Company’s European sales and administrative functions. All intercompany transactions and accounts are eliminated in consolidation. On July 23, 2002, the Company dissolved its wholly owned subsidiary, Molecular Probes Export Corp. (“MPEC”). MPEC was formed in October 1992 to facilitate the Company’s international sales efforts.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management is continually evaluating and updating these estimates and it is reasonably possible that these estimates will change in the near future. Management believes that the estimates are reasonable.

The Company estimates the fair value of its monetary assets and liabilities based upon the existing interest rates related to such assets and liabilities compared to the current market rates of interest for instruments of a similar nature and degree of risk. Cash and cash equivalents approximate fair value as reported in the consolidated balance sheet. The fair value of the Company’s capital lease obligation approximates the carrying value based on floating interest rates. Marketable securities are valued depending on their classification (see below). The Company records all other financial instruments, including accounts receivable, accounts payable and accrued liabilities, at cost, which approximates fair value due to the relatively short maturities of these instruments.

The Company sells its products domestically and internationally to researchers in universities, hospitals, research institutions and private industry. The Company performs ongoing credit evaluations of its customers and does not require collateral. Trade receivables are generally due in 30 days. No provision for uncollectible receivables has been made, as management believes the amount is not significant. No customer represented 10 percent or more of accounts receivable at September 30, 2002.

financial institution, foreign currencies in overseas financial institutions and a money market account with a national brokerage firm.

The cost of all investments sold along with the related gains and losses are determined on the specific identification method. Fair value is determined using quoted market prices at the close of business on the date of the Company’s fiscal year end.

Held-to-maturity securities that are acquired with the intent and ability to hold to maturity are carried at amortized cost, which approximates fair value.

Available-for-sale securities, bought with the intent to hold for indefinite periods of time, may be sold in response to movements in market interest rates, changes in the maturity mix of securities held or demand on liquidity. Such securities are carried at fair value. Unrealized gains and losses are excluded from earnings and are included as a component of the accumulated other comprehensive income in shareholders’ equity, net of applicable income taxes, until realized.

Trading securities, bought with the intent to sell in the near term, are carried at fair value. Unrealized gains and losses are included in earnings. The Company had no trading securities at September 30, 2002.

For individual securities classified as either available-for-sale or held-to-maturity, the Company records an impairment loss when it is determined that a decline in the fair value of the security is other than temporary.

Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect the amounts reported as marketable securities.

Property and equipment, including significant improvements thereto, are recorded at cost. The cost of additions and those improvements that increase the capacity or extend the useful lives of the associated assets are capitalized. Repair and maintenance costs are expensed as incurred. The cost of property and equipment is depreciated using accelerated methods over the estimated useful lives of the assets (31.5 to 39 years for buildings and 3 to 7 years for all other property and equipment). Assets under capital lease and leasehold improvements are amortized over the shorter of their estimated useful lives or the lease term. Upon retirement or disposition of property and equipment, related gains or losses are recorded in income.

The Company accounts for stock-based employee compensation arrangements in accordance with the provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and complies with the disclosure provisions of Statement of Accounting Standards (“SFAS”) No. 123, Accounting for Stock-Based Compensation. Under APB No. 25, compensation expense is based on the difference, if any, on the date of grant, between the fair value of the Company’s stock and the exercise price of the option. The Company accounts for stock options issued to nonemployees in accordance with the provisions of Emerging Issues Task Force Consensus on Issue (“EITF”) No. 96-18, Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring or in Conjunction with Selling, Goods or Services. Compensation expense is recognized over the vesting period of the options or the periods the related services are rendered, as appropriate. There were no stock options issued to nonemployees.

Persuasive evidence of an arrangement exists – The Company’s business practice requires written or electronic documentation or evidence from a customer to support a sales or licensing arrangement or grant contract.

Delivery has occurred or services have been rendered – Revenue from product sales is recognized in the period the product is shipped. Products are shipped Freight on Board shipping point. Once those terms are met the Company has no continuing obligations or performance criteria requirements. The Company has no “bill and hold” arrangements with customers.

Research and development grant and contract revenues are recognized in accordance with the terms of the related agreements, generally as qualified research activities progress. Payments received for future performances are deferred and recorded as revenue when earned.

License fees are recognized when there is no material continuing performance obligation under the agreement. Up-front payments are deferred and recorded as revenue over the term of the agreement.

Fixed or determinable price – Sales of Company products are at fixed or established sales prices determined prior to the time the products are shipped with no customer cancellation, price protection or termination clauses.

Collectibility is reasonably assured – Based on the Company’s credit management policies it believes collectibility is reasonably assured (1) when product is shipped to a customer; (2) as qualified research activities progress and revenues become billable under research and development grants and contracts; and (3) when there are no continuing performance obligations under licensing arrangements. Based on the Company’s historical experience, no provision for uncollectible accounts and return allowances are necessary at the time revenue is recognized.

The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred income taxes are recognized for the tax consequences of “temporary differences” by applying enacted statutory tax rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Income tax expense is the tax payable for the year and the change during the year in net deferred income tax assets and liabilities. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

SFAS No. 130, Reporting Comprehensive Income, establishes standards for reporting and display of comprehensive income and its components. SFAS No. 130 requires companies to report a “comprehensive income” that includes unrealized gains and losses and other items that have been previously excluded from net income or loss and reflected instead in stockholders’ equity. Comprehensive loss for the Company consists of net income and the effect of foreign currency translation adjustments and unrealized loss on marketable securities.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible, long-lived assets and the associated asset retirement costs. This Statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred by capitalizing it as part of the carrying amount of the long-lived assets. As required by SFAS No. 143, the Company will adopt this new accounting standard on October 1, 2002. The

Company does not expect the adoption of SFAS No. 143 to have any material impact on the consolidated financial statements.

In July 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and specifies the criteria intangible assets acquired in a purchase method business combination must meet to be recognized apart from goodwill. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of SFAS No. 142. The adoption of SFAS No. 141 and SFAS No. 142 did not have a material impact on the consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 144 develops one accounting model for long-lived assets that are to be disposed of by sale and impairments of other long-lived assets. SFAS No. 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) can be distinguished from the rest of the entity and (2) will be eliminated from the ongoing operations of the entity in a disposal transaction. The provisions of this Statement were effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years, with early application encouraged. Adoption of SFAS No. 144 will not have a significant impact on the Company’s financial condition or results of operations, as the assessment of impairment is largely unchanged from SFAS No. 121.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical Corrections. SFAS No. 145, which updates, clarifies and simplifies existing accounting pronouncements, addresses the reporting of debt extinguishments and accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. The Company is required to and plans to adopt the provisions of SFAS No. 145 by October 1, 2002. The Company does not expect the adoption of SFAS No. 145 to have any material impact on the consolidated financial statements.

In July 2002, the FASB issued SFAS No. 146, Accounting for Certain Costs Associated with Exit or Disposal Activities. This Standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. This Statement is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Company believes that the adoption of SFAS No. 146 will impact the timing of the recognition of costs associated with an exit activity but is not expected to have a material impact on the consolidated financial statements.

In November 2002, the FASB issued FIN No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, an Interpretation of FASB Statements No. 5, 57 and 107 and Rescission of FASB Interpretation No. 34. FIN No. 45 clarifies the requirements of SFAS No. 5, Accounting for Contingencies, relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees. The disclosure provisions of FIN No. 45 are effective for annual periods ending after December 15, 2002.

However, the provisions for initial recognition and measurement are effective on a prospective basis for guarantees that are issued or modified after December 31, 2002, irrespective of a guarantor’s year end.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, Amendment of SFAS No. 123. This Statement provides additional transition guidance for those entities that elect to voluntarily adopt the provisions of SFAS No. 123. Furthermore, SFAS No. 148 mandates new disclosures in both interim and year-end consolidated financial statements. The Company will not elect to adopt the recognition provisions of SFAS No. 123, as amended by SFAS No. 148, and therefore this pronouncement will not have a material impact on the consolidated financial statements.

In January 2003, the FASB issued FIN No. 46, Consolidation of Variable Interest Entities. FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, to certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities (“VIEs”) created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has not identified any VIEs for which it is the primary beneficiary or has significant involvement.

Emerging Issues Task Force Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables was issued in March 2003. This Issue addresses certain aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. Specifically, this Issue addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting. If there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration should be allocated to the separate units of accounting based on their relative fair values (the relative fair value method). In the case where there is only objective and reliable evidence of the fair value of the undelivered items, the residual method should be used to allocate the arrangement consideration. The guidance in this Issue is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. Early application of this consensus is permitted.

In May 2003, the FASB issued, SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. This Statement requires an issuer to classify the following instruments as liabilities (or assets in some circumstances):

A financial instrument issued in the form of shares that is mandatorily redeemable— that embodies an unconditional obligation requiring the issuer to redeem it by transferring its assets at a specified or determinable date (or dates) or upon an event that is certain to occur;

A financial instrument, other than an outstanding share, that, at inception, embodies an obligation to repurchase the issuer’s equity shares, or is indexed to such an obligation, and that requires or may require the issuer to settle the obligation by transferring assets (for example, a forward purchase contract or written put option on the issuer’s equity shares that is to be physically settled or net cash settled); and

A financial instrument that embodies an unconditional obligation or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares.

This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003, except for mandatorily redeemable financial instruments of nonpublic entities. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of the Statement and still existing at the beginning of the interim period of adoption. Restatement is not permitted. For nonpublic entities, mandatorily redeemable financial instruments are subject to the provisions of this Statement for the first fiscal period beginning after December 15, 2003. The Company does not believe that the adoption of this Statement will have a material impact on its consolidated financial statements.

During the fiscal year ended September 30, 2002, management of the Company made a decision to sell its available-for-sale mutual funds. As the fair value of such available-for-sale mutual funds is less than their cost basis, and management does not believe that the fair value of the securities will recover prior to the expected time of sale, the Company has recognized in earnings for the period ended September 30, 2002 a write-down of $2,564,954 for an other-than-temporary impairment of the value of this investment. As of September 30, 2001, the Company had recorded in other comprehensive income (loss) $1,397,452, net of related income taxes of $871,138, of this amount as an unrealized loss.

The cost of held-to-maturity securities is adjusted for amortization of premiums and accretion of discounts and, thus, represents amortized cost. All of the held-to-maturity securities mature within the ensuing fiscal year. Gross realized gains and losses on the sale of available-for-sale securities were $87,886 and $7,003 in 2002, respectively.

Depreciation and amortization expense was $2,192,784 for the year ended September 30, 2002.

The Company entered into an agreement on September 29, 2000 to lease facilities from RAM, LLC, a related party, under a sale-leaseback transaction. This lease is classified as a capital lease and the assets are recorded at seller’s net book value for property sold then leased back, and at fair market value for property leased. The capital lease obligation is recorded at the fair market value of the assets.

The lease agreement, which expires September 30, 2020, calls for monthly payments of $100,000 and contains provisions for periodic increases based on the consumer price index. Commitments for minimum rentals under this lease are as follows:


2003		$	1,200,000
2004			1,200,000
2005			1,200,000
2006			1,200,000
2007			1,200,000
Thereafter			15,011,315

	Total minimum lease payments		21,011,315
Less amount representing interest			10,988,967

	Net present value of minimum lease payments		10,022,348
Less current portion			226,962

	Capital lease obligation, net of current portion	$	9,795,386

Property and equipment include the following amounts for capitalized leases:
Buildings		$	10,072,430
Less accumulated depreciation			(1,104,820	)

	Net assets under capital lease	$	8,967,610

The components of the net deferred tax assets and liabilities at September 30 are as follows:

The Company’s effective tax rate differs from the federal statutory rate as follows:

The Company leases operating facilities in The Netherlands under operating leases on a month-to-month basis. Lease expense was $12,000 in 2002.

The Company sponsors a 401(k) Savings Plan. The plan covers substantially all employees. Company contributions in excess of employee salary deferrals consist of a standard match based on employee deferrals and a profit sharing component made at the discretion of the Board of Directors. The Company contributed $426,448 in 2002.

The Company contributed $1,200,000 in 2002 to the Haugland Foundation, a private foundation established by the principal stockholders of the Company to support educational, charitable, cultural and scientific activities of various nonprofit organizations.

The Company sold a bioscience building, a storage building and a parcel of land to RAM, LLC, a related entity, on September 29, 2000 for $5,288,000. A promissory note for the purchase price was signed on September 30, 2000, providing for monthly payments of $67,000, including interest at 4.75 percent per annum beginning November 1, 2000. The note is collateralized by all the property owned

by RAM, LLC that is occupied by the Company. The outstanding balance of this note receivable at September 30, 2002 was $838,882.

On May 24, 2002, RAM LLC, a related party, entered into a line of credit agreement for the construction of a new facility. The note is collateralized by the new facility and guaranteed by the Company. The outstanding balance at September 30, 2002 under this line of credit was $200,000. The Company intends to enter into a lease agreement with RAM LLC to lease the new facility; however, the lease terms have not yet been negotiated. In addition, RAM LLC purchased a new facility from a third party. The Company intends to lease this facility from RAM LLC also, although, no lease terms have been negotiated.

At September 30, 2002, 150 options were exercisable at exercise prices between $0.13175 and $0.20350 per share. At September 30, 2002, outstanding options had a weighted-average remaining contractual life of approximately 1.14 years.

In January 2001, the Company adopted the 2001 Stock Incentive Plan (the “2001 Plan”) which authorizes the issuance of up to 10,000,000 shares of common stock as incentive stock options to employees, officers, directors, consultants, agents, advisors or independent contractors who provide services to the Company or a related company. The options are issued at an exercise price that approximates the fair value on the date of grant, with a maximum allowed life of ten years. The options generally vest over a five-year period and expire nine years from date of grant.

A summary of options outstanding and exercisable under the 2001 Plan at September 30, 2002 is as follows:


	Options Outstanding						Options Exercisable

			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average				Average
			Contractual		Exercise				Exercise
Range of Exercise			Life		Price		Number of		Price
Prices Per Share	Options		(In Years)		Per Share		Options		Per Share

$1.12 - $1.12		1,729,665		8.25	$	1.12		288,025	$	1.12
1.42 - 1.42		62,600		4.18		1.42		62,500		1.42

		1,792,265		8.11	$	1.13		350,525	$	1.13

On August 23, 2002, the Company adopted the 2002 Stock Incentive Plan that provides for the granting of incentive stock options to employees, officers, directors, consultants, agents, advisors or independent contractors, who provide services to the Company or a related company. The options are issued at an exercise price that approximates the fair value on the date of grant, with a maximum allowed life of ten years. The options vest over a five-year period. The Company reserved 13,492,000 shares of the common stock for issuance under this Plan. At September 30, 2002, there were no options issued or outstanding under this Plan.

For purposes of the above pro forma information, as outlined in SFAS No. 123, the fair value of each option grant was estimated at the date of grant using the minimum value method and assuming the Company does not intend to pay dividends. The following weighted-average assumptions were used in the calculation of the minimum value method:

On August 23, 2002, the Company authorized 40,000,000 shares of preferred stock, in addition to the existing 100,000,000 shares of common stock authorized. The preferred stock is designated as Series A preferred stock with a par value of one tenth of one cent ($0.001) per share. The Company further assigned a par value of one tenth of one cent ($0.001) per share to common stock.

Under the provisions of the Amended and Restated Articles of Incorporation, the holders of Series A preferred stock, have certain rights and preferences.

In the event of any liquidation or winding up of the Company, the holders of the Series A preferred stock shall be entitled to receive in preference to the holders of the common stock an amount equal to $1.85 per share plus any declared but unpaid dividends (the liquidation preference). After the payment of the liquidation preference to the holders of the Series A preferred stock, the remaining assets shall be distributed ratably to the holders of the common stock. A merger, acquisition, sale of voting control or sale of substantially all of the assets of the Company in which the shareholders of the Company do not own a majority of the outstanding shares of the surviving corporation shall be deemed to be a liquidation.

The Series A preferred stock shall be automatically converted into common stock, at the then applicable conversion price, (i) in the event that the holders of at least 50 percent of the outstanding Series A preferred stock consent to such conversion, or (ii) upon the closing of a firmly underwritten public offering of shares of common stock of the Company for a total offering of not less than $7.5 million (before deduction of underwriters commissions and expenses) (a qualified IPO).

Upon the requisite approval of the respective plan administrators, all holders of outstanding options under the 2001 Stock Incentive Plan and the 1994 Incentive Stock Option Plan shall be entitled to purchase, upon exercise of their options, 0.5 shares of common stock and 0.5 shares of Series A preferred stock for every 1 share of common stock they are entitled to purchase pursuant to their respective stock option agreements (the adjustment). Other than the adjustment, the stock option agreements shall continue to govern the terms of such outstanding options in all respects.

As of the recapitalization, no further grants shall be made pursuant to the 2001 Stock Incentive Plan.

The Company is party to various claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters. The Company has provided reserves for these matters in an amount such that, in the opinion of management, the outcome of these matters should not have a material adverse effect on the consolidated financial condition of the Company.

MOLECULAR PROBES, INC., AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value information)


			June 30,		September 30,
			2003		2002
ASSETS
Current Assets:
	Cash and cash equivalents		$	3,167	$	2,551
	Short-term investments			7,013		7,797
	Restricted cash			179		—
	Accounts receivable			6,525		5,263
	Inventories			5,694		4,195
	Income taxes receivable			—		1,086
	Prepaid expenses and other current assets			637		1,559

		Total current assets		23,215		22,451
Property and equipment, net				21,059		14,430
Goodwill				756		—
Other assets				673		570

Total Assets			$	45,703	$	37,451

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Line of credit		$	45	$	—
	Current portion of long-term obligations			400		227
	Accounts payable			715		3,202
	Accrued expenses and other current liabilities			2,610		2,460
	Income taxes payable			932		31

		Total current liabilities		4,702		5,920

Long-term obligations				11,982		9,796

Commitments and contingencies
Shareholders’ equity:
	Preferred stock, $0.001 par value; 40,000,000 shares authorized, 37,234,300 shares issued and outstanding (liquidation preference of $68,883)			37		37
	Common stock, $0.001 par value; 100,000,000 shares authorized, 37,265,540 and 37,234,300 shares issued and outstanding, respectively			37		37
	Additional paid-in capital			36		30
	Accumulated other comprehensive loss			—		(8	)
	Retained earnings			28,909		21,639

Total shareholders’ equity				29,019		21,735

Total liabilities and shareholders’ equity			$	45,703	$	37,451

MOLECULAR PROBES, INC., AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands)


			Nine months ended
			June 30,

			2003			2002
Revenues:
Product sales			$	44,290		$	39,315
License fees and royalty income				2,630			1,015
Research grant and contract income				431			292

				47,351			40,622
Expenses:
	Cost of revenues			7,110			6,716
	Research and development			7,471			4,919
	General and administrative			6,548			7,003
	Sales and marketing			5,770			3,491

				26,899			22,129

		Operating income		20,452			18,493

	Charitable contributions			(915	)		(920	)
	Net gains on marketable securities			102			88
	Net gains (losses) on foreign currency exchange			1,322			(166	)
	Interest income			136			209
	Interest expense			(775	)		(746	)
	Other income, net			119			26

		Other expense, net		(11	)		(1,509	)

Income before income taxes				20,441			16,984
Provision for income taxes				(7,661	)		(6,462	)

		Net income	$	12,780		$	10,522

MOLECULAR PROBES, INC., AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)


				Nine months ended
				June 30,

				2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income				$	12,780		$	10,522
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization					1,688			1,516
Realized gain (loss) on available-for-sale securities					453			(1,336	)
Other non-cash adjustments					(22	)		1
Changes in operating assets and liabilities, net of effects of business acquired:
	Accounts receivable				(1,158	)		(1,687	)
	Inventories				(1,305	)		(525	)
	Income taxes receivable				1,086			1,638
	Prepaid expenses and other current assets				95			163
	Accounts payable and accrued liabilities				(2,331	)		(492	)
	Income taxes payable				901			3

			Net cash provided by operating activities		12,187			9,803

CASH FLOWS FROM INVESTING ACTIVITIES:
	Payments received on related party note receivable				839			833
	Capital expenditures				(5,820	)		(1,344	)
	Available-for-sale securities:
		Purchases			—			(1,478	)
		Maturities			3,379			151
	Held-to-maturity securities:
		Purchases			(4,085	)		(252	)
		Maturities			1,088			5,127
	Net cash paid for business acquisition				(1,000	)		—
	Change in other assets				(294	)		51

			Net cash provided by (used in) investing activities		(5,893	)		3,088

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the exercise of stock options					6			6
Payments of dividends					(5,511	)		(10,000	)
Payments on capital lease obligation					(173	)		(374	)

			Net cash used in financing activities		(5,678	)		(10,368	)

			Net increase in cash and cash equivalents		616			2,523
Cash and cash equivalents, beginning of period					2,551			1,571

Cash and cash equivalents, end of period				$	3,167		$	4,094

MOLECULAR PROBES, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements include the accounts of Molecular Probes, Inc. (“Molecular Probes”) and its wholly-owned subsidiaries, Molecular Probes Europe (“MPE”) and Interfacial Dynamics Corporation. All significant intercompany accounts and transactions have been eliminated in consolidation. The interim financial statements have been prepared, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations. The accompanying unaudited financial statements contain all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows as of and for the periods indicated. Molecular Probes’ fiscal year ends September 30. The unaudited balance sheet as of September 30, 2002 is derived from the audited balance sheet included in Exhibit 99.1 herein.

These financial statements should be read in conjunction with the audited financial statements and the notes thereto included in Exhibit 99.1 herein.

Molecular Probes records revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed and determinable and collectibility is reasonably assured.

Pursuasive evidence of an arrangement exists – Molecular Probes’ business practice requires written or electronic documentation or evidence from a customer to support a sales or licensing arrangement or grant contract.

Delivery has occurred or services have been rendered – Revenue from product sales is recognized in the period the product is shipped. Products are shipped Freight on Board shipping point. Once those terms are met, Molecular Probes has no continuing obligations or performance criteria requirements. Molecular Probes has no “bill and hold” arrangements with customers.

License fees are recognized when there is no material continuing performance obligation under the agreement. Up-front payments are deferred and recorded as revenue over the term of the agreement.

Fixed or determinable price – Sales of Molecular Probes products are at fixed or established sales prices determined prior to the time the products are shipped with no customer cancellation, price protection or termination clauses.

Collectibility is reasonably assured – Based on Molecular Probes’ credit management policies it believes collectibility is reasonably assured (1) when product is shipped to a customer; (2) as qualified research activities progress and revenues become billable under research and development grants and contracts; and (3) when there is no continuing performance obligations under licensing arrangements. Based on the Molecular Probes’ historical experience, no provision for uncollectible accounts and return allowances are necessary at the time revenue is recognized.

Molecular Probes accounts for its employee stock option plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and has adopted the disclosure only provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123). Accordingly, no compensation cost has been recognized for the fixed stock option plans under the fair value recognition provisions of SFAS No. 123. In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which is effective for fiscal years ending after December 31, 2002. SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to SFAS No. 123’s fair value method of accounting for stock-based employee compensation. SFAS No. 148 also amends the disclosure provisions of SFAS No. 123 and Accounting Principles Board (APB) Opinion No. 28, Interim Financial Reporting, to require disclosure in the summary of significant accounting policies of the effect of an entity’s accounting policy with respect to stock-based employee compensation on reported net income in annual and interim financial statements. Molecular Probes adopted SFAS No. 148 for the nine months ended June 30, 2003. The following table illustrates the effect on net income if Molecular Probes had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

On April 8, 2003, Molecular Probes acquired all of the outstanding common stock of Interfacial Dynamics Corporation for $1.0 million. The transaction has been accounted for as a purchase, and, accordingly, the results of operations have been included in the accompanying consolidated financial statements from the date of acquisition. Molecular Probes incurred approximately $45,000 of closing costs for this acquisition. The excess of purchase price over the acquired net assets was $0.8 million at June 30, 2003, and has been recorded as goodwill in the Unaudited Consolidated Balance Sheet.

Accumulated depreciation of property and equipment was $9.9 million and $8.2 million at June 30, 2003 and September 30, 2002, respectively.

Total dividends paid to common stock holders for the nine months ended June 30, 2003 and 2002 were $5.5 million and $10.0 million, respectively.

On May 24, 2002, RAM LLC, a related party, entered into a line of credit agreement for the construction of a new facility. The $2.0 million note is collateralized by the new facility and guaranteed by Molecular Probes. In conjunction with the acquisition of Molecular Probes, as described in the subsequent event in Note 9 below, this guarantee was terminated.

Molecular Probes is a party to various claims, disputes, legal actions and other proceedings involving contracts, employment and various other matters. The outcome of these matters is not expected to have a material effect on the consolidated financial condition of Molecular Probes.

On August 20, 2003, Invitrogen Corporation (“Invitrogen”) acquired all of the outstanding shares of common stock of Molecular Probes for cash of $303.9 million. Just prior to the acquisition, each outstanding share of preferred stock was converted into one equivalent share of common stock. Stock options of Molecular Probes were also assumed by Invitrogen. Each option to purchase one share of common stock of Molecular Probes was converted into an option to purchase one share of Invitrogen common stock based on an exchange rate of 0.0756037.

On August 20, 2003, Invitrogen Corporation (“Invitrogen”) acquired all of the outstanding shares of common stock of Molecular Probes, Inc. (“Molecular Probes”) for cash of $303.9 million. In addition, each option to purchase one share of Molecular Probes common stock was assumed by Invitrogen and exchanged for an option to purchase a common share of Invitrogen common stock using an exchange rate of 0.0756037. The following unaudited pro forma combined financial statements reflect the acquisition using the purchase method of accounting. The pro forma adjustments are preliminary and have been prepared to illustrate the estimated effect of the acquisition. Consequently, the amounts reflected in the unaudited pro forma combined financial statements are subject to change, and the final amounts may differ substantially.

The unaudited pro forma combined balance sheet as of June 30, 2003, gives effect to the Molecular Probes acquisition as if it was completed on that date.

The unaudited pro forma combined statement of income for the six months ended June 30, 2003, illustrates the effect of the acquisition of Molecular Probes as if it had occurred on January 1, 2003, and includes the historical unaudited statements of income for Molecular Probes for the six months ended June 30, 2003, combined with Invitrogen’s unaudited pro forma combined statements of income for the six months ended June 30, 2003, which also give effect to the acquisition of certain assets and liabilities of PanVera LLC, as if it was completed on January 1, 2003.

The unaudited pro forma combined statement of income for the year ended December 31, 2002, illustrates the effect of the acquisition of Molecular Probes as if it had occurred on January 1, 2002, and includes the historical audited statement of income for Molecular Probes for the year ended September 30, 2002, combined with Invitrogen’s unaudited pro forma combined statement of income for the year ended December 31, 2002, which also gives effect to the March 28, 2003, acquisition of certain assets and liabilities of PanVera LLC, a wholly-owned subsidiary of Vertex, as if it was completed on January 1, 2002.

The pro forma combined financial statements should be read in conjunction with the separate historical and pro forma consolidated financial statements and the notes thereto of Invitrogen contained in the 2002 Annual Report on Form 10-K, the 2003 Quarterly Reports on Form 10-Q, and the Form 8-K/A filed on June 10, 2003, and the audited and unaudited financial statements of Molecular Probes, Inc., and Subsidiaries included in this filing.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the acquisition had occurred as of the date or during the periods presented nor is it necessarily indicative of future operating results or financial positions.

INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 2003
(In thousands)


						Historical		Pro Forma
			Historical			Molecular		Adjustments					Pro Forma
			Invitrogen			Probes		(Note 3)					Combined
ASSETS
Current Assets:
	Cash and cash equivalents		$	541,070		$	3,167	$	(306,016	)	(g)		$	238,221
	Short-term investments			308,107			7,013		—					315,120
	Restricted cash and investments			6,883			179		—					7,062
	Accounts receivable, net			119,021			6,525		(199	)	(h)			125,347
	Inventories			98,045			5,694		28,820		(i)			132,559
	Deferred income tax assets			35,119			—		599		(n)			35,718
	Prepaid expenses and other current assets			29,162			637		—					29,799

		Total current assets		1,137,407			23,215		(276,796	)				883,826
Property and equipment, net				149,000			21,059		—					170,059
Goodwill				764,062			756		208,160		(g)			972,978
Intangible assets, net				383,289			—		113,579		(g),	(j)		496,868
Long-term investments				165,842			—		—					165,842
Other assets				60,504			673		198		(n)			61,375

Total Assets			$	2,660,104		$	45,703	$	45,141				$	2,750,948

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Line of credit		$	—		$	45	$	—				$	45
	Current portion of long-term obligations			165			400		—					565
	Accounts payable			19,341			715		—					20,056
	Accrued expenses and other current liabilities			88,818			2,610		4,415		(l)			95,843
	Income taxes payable			19,226			932		11,398		(n)			31,556

		Total current liabilities		127,550			4,702		15,813					148,065

Long-term obligations, deferred credits and reserves				18,577			11,982		500		(l)			31,059
Pension liabilities				22,648			—		—					22,648
Deferred income tax liabilities				119,382			—		44,921		(n)			164,303
2 1/4% Convertible Subordinated Notes due 2006				500,000			—		—					500,000
5 1/2% Convertible Subordinated Notes due 2007				172,500			—		—					172,500

		Total liabilities		960,657			16,684		61,234					1,038,575

Minority interest				3,987			—		—					3,987

Commitments and contingencies
Stockholders’ equity:
	Preferred stock			—			37		(37	)	(o	)		—
	Common stock			534			37		(37	)	(o	)		534
	Additional paid-in-capital			1,874,916			36		19,486		(k	)		1,894,438
	Deferred compensation			(2,790	)		—		(5,186	)	(g),	(k)		(7,976	)
	Accumulated other comprehensive income			30,919			—		—					30,919
	Retained earnings (accumulated deficit)			(110,781	)		28,909		(30,319	)	(o	)		(112,191	)
	Less cost of treasury stock			(97,338	)		—		—					(97,338	)

Total stockholders’ equity				1,695,460			29,019		(16,093	)				1,708,386

Total liabilities and stockholders’ equity			$	2,660,104		$	45,703	$	45,141				$	2,750,948

INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 2003
(In thousands, except per share data)


							PanVera			Pro Forma							Historical			Pro Forma
				Historical			Acquired			Adjustments				Pro Forma			Molecular			Adjustments				Pro Forma
				Invitrogen			Business			(Note 2)				Combined			Probes			(Note 3)				Combined
Revenues				$	373,029		$	3,945		$	(33	)	(a)	$	376,941		$	33,111		$	660		(q)	$	410,712
Cost of revenues					144,963			1,069			1,226		(b)		147,258			5,150			17,918		(i)		170,326

	Gross margin				228,066			2,876			(1,259	)			229,683			27,961			(17,258	)			240,386
Operating Expenses:
	Sales and marketing				74,868			—			1,109		(c)		75,977			4,336			164		(k)		80,477
	General and administrative				42,661			—			1,635		(c)		44,296			4,362			195		(k)		48,853
	Selling, general and administrative				—			2,744			(2,744	)	(c)		—			—			—				—
	Research and development				23,189			1,495			(24	)	(a)		24,660			5,021			408		(k)		30,089
	Purchased intangibles amortization				35,507			—			2,153		(d)		37,660			—			7,100		(j)		44,760
	Business integration and merger costs				393			—			—				393			—			—				393

		Total operating expenses			176,618			4,239			2,129				182,986			13,719			7,867				204,572

			Income (loss) from operations		51,448			(1,363	)		(3,388	)			46,697			14,242			(25,125	)			35,814

	Interest and other income and expense, net				(332	)		(8	)		(563	)	(e)		(903	)		144			(4,002	)	(m)		(4,761	)

Income (loss) before provision for income taxes and minority interest					51,116			(1,371	)		(3,951	)			45,794			14,386			(29,127	)			31,053
Income tax benefit (provision)					(16,664	)		530			1,659		(f)		(14,475	)		(5,390	)		9,735		(n)		(10,130	)
Minority interest					(609	)		—			—				(609	)		—			—				(609	)

Net income (loss)				$	33,843		$	(841	)	$	(2,292	)		$	30,710		$	8,996		$	(19,392	)		$	20,314

Earnings per share:
	Basic			$	0.68									$	0.61									$	0.41

	Diluted			$	0.67									$	0.61									$	0.40

Weighted average shares used in per share calculation:
	Basic				50,028										50,028										50,028
	Diluted				50,352										50,352						87		(p)		50,439

INVITROGEN CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 2002
(In thousands, except per share data)


								PanVera			Pro Forma							Historical			Pro Forma
					Historical			Acquired			Adjustments				Pro Forma			Molecular			Adjustments				Pro Forma
					Invitrogen			Business			(Note 2)				Combined			Probes			(Note 3)				Combined
Revenues					$	648,597		$	41,446		$	(161	)	(a)	$	689,882		$	54,449		$	(55	)	(q)	$	744,276
Cost of revenues						269,898			6,884			3,131		(b)		279,913			10,668			29,917		(i)		320,498

		Gross margin				378,699			34,562			(3,292	)			409,969			43,781			(29,972	)			423,778
Operating Expenses:
	Sales and marketing					124,859			—			4,137		(c)		128,996			6,010			325		(k)		135,331
	General and administrative					71,105			—			5,320		(c)		76,425			9,600			211		(k)		86,236
	Selling, general and administrative					—			9,457			(9,457	)	(c)		—			—			—				—
	Research and development					33,698			5,275			(116	)	(a)		38,857			7,103			805		(k)		46,765
	Purchased intangibles amortization					64,302			—			8,613		(d)		72,915			—			14,200		(j)		87,115
	Business integration and merger costs					16,207			—			—				16,207			—			—				16,207

			Total operating expenses			310,171			14,732			8,497				333,400			22,713			15,541				371,654

				Income (loss) from operations		68,528			19,830			(11,789	)			76,569			21,068			(45,513	)			52,124

	Interest and other income and expense, net					2,648			(849	)		(2,268	)	(e)		(469	)		(4,414	)		(6,630	)	(m)		(11,513	)

Income (loss) before provision for income taxes						71,176			18,981			(14,057	)			76,100			16,654			(52,143	)			40,611
Income tax benefit (provision)						(22,207	)		(7,341	)		5,733		(f)		(23,815	)		(6,247	)		17,391		(n)		(12,671	)
Minority interest						(1,302	)		—			—				(1,302	)		—			—				(1,302	)

Net income (loss)					$	47,667		$	11,640		$	(8,324	)		$	50,983		$	10,407		$	(34,752	)		$	26,638

Earnings per share:
	Basic				$	0.91									$	0.97									$	0.51

	Diluted				$	0.90									$	0.96									$	0.50

Weighted average shares used in per share calculation:
	Basic					52,643										52,643										52,643
	Diluted					52,963										52,963						84		(p)		53,047

INVITROGEN CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The unaudited pro forma combined financial statements of Invitrogen have been prepared using the purchase method of accounting. The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisitions. The unaudited pro forma combined balance sheet as of June 30, 2003, gives effect to the Molecular Probes acquisition as if it was completed on that date.

The unaudited pro forma combined statement of income for the six months ended June 30, 2003, illustrates the effect of the acquisition of Molecular Probes as if it had occurred on January 1, 2003, and includes the historical unaudited statements of income for Molecular Probes for the six months ended June 30, 2003, combined with Invitrogen’s unaudited pro forma combined statements of income for the six months ended June 30, 2003, which give effect to the acquisition of certain assets and liabilities of PanVera LLC, as if it was completed on January 1, 2003.

The unaudited pro forma combined statement of income for the year ended December 31, 2002, illustrates the effect of the acquisition of Molecular Probes as if it had occurred on January 1, 2002, and includes the historical audited statement of income for Molecular Probes for the year ended September 30, 2002, combined with Invitrogen’s unaudited pro forma combined statement of income for the year ended December 31, 2002, which gives effect to the March 28, 2003, acquisition of certain assets and liabilities of PanVera LLC, a wholly-owned subsidiary of Vertex, as if it was completed on January 1, 2002.

On March 28, 2003, Invitrogen acquired from Vertex certain assets and liabilities of PanVera LLC (“PanVera”), a wholly owned subsidiary of Vertex, for $94.9 million in cash, assumed $6.3 million in debt, paid $1.3 million to acquire equipment under operating leases and paid $1.4 million in closing costs. The products and rights acquired include biochemical and cellular assay capabilities and PanVera’s commercial portfolio of proprietary reagents, probes and proteins (the “PanVera Acquired Business”). The acquisition of assets and liabilities was reflected by Invitrogen using the purchase method of accounting.

Eliminates intercompany sales of $33,000 and $161,000 for the six months ended June 30, 2003, and for the year ended December 31, 2002, respectively. Eliminates intercompany purchases of $24,000 and $116,000 for the six months ended June 30, 2003, and for the year ended December 31, 2002, respectively.

Reclassify selling, general and administrative expenses to sales and marketing expense and general and administrative expense to conform to Invitrogen’s expense classifications.

Adds to the Statement of Income the estimated first-year amortization expense of $2.2 million and $8.6 million for the six months ended June 30, 2003, and for the year ended December 31, 2002, respectively, for purchased intangible assets amortized over an eight-year weighted average life.


		For the Six			For the Year
		Months Ended			Ended
(in thousands)		June 30,			December 31,
		2003			2002
Reduce interest income for estimated lost interest income, calculated at 2.28%, from cash used to purchase the net assets, cash used to acquire the leased equipment, cash used for acquisition expenses and cash used to repay the debt acquired		$	(592	)	$	(2,369	)
Reduce interest expense for estimated saved interest at 1.8% from the repayment of debt acquired			29			101

	Net adjustment to interest and other income and expense, net	$	(563	)	$	(2,268	)

Adjusts the income tax provision to an amount equal to Invitrogen’s marginal US tax rate multiplied by the excess of the pro forma combined income before provision for income taxes and minority interest over that for historical Invitrogen, less tax credits for research and development expenditures.

On August 20, 2003, Invitrogen acquired all of the outstanding common stock of Molecular Probes, Inc. (“Molecular Probes”) for $303.9 million. Invitrogen also incurred $2.1 million in closing costs and acquired cash of $7.3 million from Molecular Probes for a total net purchase price of $298.7 million. The acquisition of Molecular Probes is accounted for by Invitrogen under the purchase method of accounting.

The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the acquisition. Additionally, a final valuation of acquired purchased technology and assessment of useful lives has not yet been completed, which may affect the final allocation of the purchase price to these assets and the related amortization expense. Consequently, the amounts reflected in the unaudited pro forma combined statements of income are subject to change, and the final amounts may differ substantially.

The purchase price of the acquisition was based on the cash paid to the shareholders of Molecular Probes upon consummation of the acquisition and the estimated direct transaction costs incurred by Invitrogen. The estimated direct costs of the acquisition to be incurred by Invitrogen include advisory fees for attorneys and accountants and filing fees. The estimates below are subject to change and the final amounts may differ substantially.

The allocation of the purchase price is preliminary and is pending completion of the independent third-party valuation of the intangible assets acquired.

Increases Molecular Probes reserve for bad debts as of June 30, 2003, by $199,000 to comply with Invitrogen’s accounts receivable reserve policies and methodologies.


		For the Six			For the Year
		Months Ended			Ended
(in thousands)		June 30,			December 31,
		2003			2002
Increase cost of revenues for the estimated sale of inventory written up to fair market value above under purchase accounting rules		$	17,739		$	29,565
Increase cost of revenues for the estimated amortization of deferred compensation on unvested stock options (see note (k))			193			382
Decrease cost of revenues for elimination of intercompany cost of revenues			(14	)		(30	)

	Net adjustment to cost of revenues	$	17,918		$	29,917

Additions to purchased intangible assets, which are preliminary and may change significantly upon completion of the valuation of the intangible assets acquired, as of June 30, 2003, are as follows.

Increases purchase intangibles amortization expense by $7.1 million and $14.2 million for the six months ended June 30, 2003, and the year ended December 31, 2002, respectively, for the acquired purchased intangibles. The amortization of the purchased intangibles, which is preliminary and may change significantly upon completion of the valuation of the intangible assets acquired, is based on a life of 8 years.

(k) ADJUSTMENTS TO ADDITIONAL PAID-IN-CAPITAL, DEFERRED COMPENSATION AND OPERATING EXPENSES

Increases deferred compensation by $5.2 million for the intrinsic value of unvested Molecular Probes stock options assumed by Invitrogen.

Increases cost of revenues and operating expenses for the estimated amortization of deferred compensation. The deferred compensation is amortized over the remaining vesting period of the assumed unvested stock options which ranges from one to three years.


				For the Six Months			For the Year Ended
(in thousands)				Ended June 30,			December 31,
				2003			2002
	Cost of revenues			$	193		$	382
	Sales and marketing				164			325
	General and administrative				195			211
	Research and development				477			942

			Total deferred compensation amortization	$	1,029		$	1,860

	Amortization of deferred compensation related to research and development costs			$	477		$	942
	Elimination of intercompany purchases				(69	)		(137	)

		Net adjustment to research and development expenses		$	408		$	805

(l) ADJUSTMENTS TO ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES AND LONG-TERM OBLIGATIONS

Adjustments to accrued expenses and other current liabilities at June 30, 2003, are as follows:

Increases long-term obligations for the long-term portion of the non-compete agreement of $0.5 million.


		For the Six			For the Year
		Months Ended			Ended
(in thousands)		June 30,			December 31,
		2003			2002
Increase interest expense for estimated interest expense, calculated at 2.130%, which is the effective tax rate of interest on convertible senior debt issued to finance the acquisition		$	(3,259	)	$	(6,518	)
Reclassify net foreign currency gains from net gains (losses) on foreign currency exchange to revenues to conform to Invitrogen’s foreign currency translation methodologies			(743	)		(112	)

	Net adjustment to interest and other income and expense, net	$	(4,002	)	$	(6,630	)

Establishes a deferred income tax liability of $44.9 million for acquired intangibles, which is amortized in conjunction with the amortization of intangibles. Establishes a short-term deferred tax liability of $11.4 million for the increase in Molecular Probes inventory to reflect estimated selling prices less costs to dispose and sell, which is amortized as this inventory turns. Establishes a short-term deferred tax asset of $0.6 million and a long-term deferred tax asset of $0.2 million for accrued expenses and other liabilities incurred as a result of the acquisition.

Adjusts the income tax provision on the pro forma combined pretax income to amounts equal to Invitrogen’s effective tax rates of 32.6% and 31.2% in effect for the six months ended June 30, 2003, and for the year ended December 31, 2002, respectively.

Eliminates preferred stock, common stock, additional paid-in-capital and beginning retained earnings for Molecular Probes. Includes the write-off of purchased in-process research and development costs of $1.4 million since these costs were expensed upon completion of the acquisition and are nonrecurring in nature. The costs allocated to in-process research and development is preliminary and may change significantly upon completion of the valuation of the intangible assets acquired.

Increases weighted average shares used for diluted earnings per share for dilutive common stock equivalents resulting from in-the-money stock options assumed from Molecular Probes.


Delaware	0-25317	33-0373077

(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)


1600 Faraday Avenue, Carlsbad, CA				92008

(Address of principal executive offices)				(Zip Code)


	ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
	ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURES
EXHIBIT 23.1
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3


Date: October 30, 2003	INVITROGEN CORPORATION

	By:	/s/ C. Eric Winzer C. Eric Winzer Chief Financial Officer (Principal Financial Officer and Authorized Signatory)


Demand deposits	$	116,061
Money market		1,378,208
Foreign institutions — demand deposits		1,056,911

	$	2,551,180

Table of Contents

Table of Contents

Table of Contents


				Unrealized
								Fair
		Cost		Gains		Losses		Value
Available-for-sale
	Mutual funds	$	580,542	$	—	$	—	$	580,542
	Equity securities		1,392,976		47,782		574,141		866,617
Held-to-maturity
	Asset-backed securities		6,350,000		—		—		6,350,000

		$	8,323,518	$	47,782	$	574,141	$	7,797,159


Trade accounts
	Domestic	$	3,543,085
	International		1,621,456
Contracts			90,758
Interest			3,166
Other			4,332

		$	5,262,797


Furniture and equipment	$	1,591,436
Computer systems		2,781,689
Laboratory and research equipment		4,977,869
Leasehold improvements		3,219,671
Buildings		10,079,430

		22,650,095
Less accumulated depreciation and amortization		(8,220,180	)

	$	14,429,915


Current deferred income tax asset (liability)
Accrued vacation and bonuses		$	144,240
Unrealized gain on translation adjustment			(199,675	)
Deferred revenue			24,746

	Net current deferred income tax liability	$	(30,689	)

Noncurrent deferred income tax asset (liability)
Catalog		$	113,759
Depreciation			(75,411	)
Contributions carryover			70,998
Accrued liabilities			460,800

	Net noncurrent deferred income tax asset	$	570,146


United States income	$	16,716,632
Foreign loss		(62,439	)

	$	16,654,193


Current tax expense
	Federal		$	5,322,578
	State			1,127,209
	Foreign			188,479

				6,638,266
Deferred tax expense				(391,270	)

		Total provision	$	6,246,996


Federal statutory rate	34.0	%
State taxes, net of federal benefits	4.2	%
Foreign taxes	1.3	%
Extraterritorial income exclusion	-2.0	%

	37.5	%


Net income — as reported	$	10,407,197
Net income — pro forma		10,278,752


Risk-free interest rate		4.98	%
Expected life (in years)		8.70
Weighted-average fair value at date of grant	$	1.15
Weighted-average remaining contractual life (in years)		8.11


	For the Nine Months
(in thousands)	Ended June 30,

	2003			2002
Net income, as reported	$	12,780		$	10,522
Deduct: total stock-based employee compensation expense determined under fair value based method for all stock options, net of related tax effects		(111	)		(60	)

Pro forma net income	$	12,669		$	10,462


(in thousands)
	Cash paid for outstanding common shares	$	303,894
	Estimated direct costs		2,122

	Total estimated cash paid		306,016
	Fair value of stock options assumed		19,522

	Estimated purchase price	$	325,538


(in thousands)
	Fair value of net tangible assets acquired	$	42,124
	Fair value of identifiable intangible assets acquired		113,579
	Long-term deferred tax liability on fair value of identifiable intangible assets acquired		(44,921	)
	Fair value of in-process research and development costs		1,410
	Deferred compensation on unvested stock options assumed		5,186
	Goodwill		208,160

		$	325,538


(in thousands)
	Increase Molecular Probes inventory to reflect estimated selling prices less costs to dispose and sell	$	29,565
	Decreases Molecular Probes inventories to comply with Invitrogen’s inventory costing and reserve policies and methodologies		(745	)

		$	28,820


(in thousands)
	Purchased technology		$	107,505
	Trademarks			6,074

		Total purchased intangibles	$	113,579


(in thousands)
	Increase additional paid-in-capital for the fair value of Molecular Probes stock options assumed by Invitrogen Molecular Probes common stock options were exchanged for Invitrogen stock options at an exchange rate of 0.0756037	$	19,522
	Eliminate Molecular Probes additional paid-in-capital		(36	)

		$	19,486


(in thousands)
	Accrue for severance costs	$	3,324
	Accrue for pending legal and lawsuit settlement fees		900
	Accrue for non-compete agreement, short-term portion		292
	Eliminate Molecular Probes deferred revenue with no further obligations required to recognize the revenue		(101	)

		$	4,415


(in thousands)
	Eliminate Molecular Probes beginning retained earnings		$	(28,909	)
	Immediate write-off of the fair market value of in-process research and development costs			(1,410	)

		Adjustment to retained earnings	$	(30,319	)