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| (a) | | In calculating net income or loss on an adjusted cash basis, the Company excludes from net income or loss (i) certain non-cash charges, including amortization expense and stock-based compensation expense, (ii) non-recurring charges and income, and (iii) certain other charges and income that have a significant positive or negative impact on results yet do not occur on a consistent or regular basis in its business. In determining whether a particular item meets one of these criteria, management considers facts and circumstances that it believes are relevant. Management believes that excluding such charges and income from net income or loss allows investors and management to evaluate and compare the Company’s operating results from continuing operations from period to period in a meaningful and consistent manner. Due to the frequency of their occurrence in its business, the Company does not adjust net income or loss for the costs associated with litigation, including payments made or received through settlements. It should be noted that “net income or loss on an adjusted cash basis” is not a standard financial measurement under accounting principles generally accepted in the United States of America (“GAAP”) and should not be considered as an alternative to net income or loss or cash flow from operating activities, as a measure of liquidity or as an indicator of operating performance or any measure of performance derived in accordance with GAAP. In addition, all companies do not calculate non-GAAP financial measures in the same manner and, accordingly, “net income or loss on an adjusted cash basis” presented in this press release may not be comparable to similar measures used by other companies. |
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| (b) | | Amortization expense of $146.3 million and $119.8 million in the first six months of 2010 and 2009 GAAP results, respectively, including $30.6 million and $20.2 million charged to cost of sales, $2.4 million and $2.3 million charged to research and development, $112.9 million and $96.8 million charged to selling, general and administrative, with $0.4 million and $0.4 million charged through equity earnings of unconsolidated entities, net of tax during each of the respective periods. Amortization associated with discontinued operations amounted to $0.1 million during the first six months of 2009. (See also footnote i below.) |
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| (c) | | Restructuring charges associated with the decision to close facilities of $15.0 million and $10.3 million in the first six months of 2010 and 2009 GAAP results, respectively. The $15.0 million charge for the six months ended June 30, 2010 included $4.0 million charged to cost of sales, $0.2 million charged to research and development, $9.0 million charged to selling, general and administrative expense, $0.4 million charged to interest expense and $1.5 million charged through equity earnings of unconsolidated entities, net of tax. The $10.3 million charge for the six months ended June 30, 2009 included $3.5 million charged to cost of sales, $0.8 million charged to research and development, $2.7 million charged to selling, general and administrative, $0.3 million charged to interest expense and $3.0 million charged through equity earnings of unconsolidated entities, net of tax. |
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| (d) | | Compensation costs of $15.7 million and $12.5 million associated with stock-based compensation expense for the first six months of 2010 and 2009 GAAP results, respectively, including $0.8 million and $0.9 million charged to cost of sales, $3.9 million and $2.3 million charged to research and development and $11.0 million and $9.3 million charged to selling, general and administrative, in the respective periods. |
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| (e) | | A write-off in the amount of $5.6 million during the first six months of 2010, relating to inventory write-ups recorded in connection with the acquisition of Standard Diagnostics, Inc. during the first quarter of 2010. (See also footnote i below.) |
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| (f) | | Acquisition-related costs in the amount of $5.9 million and $6.4 million in the first six months of 2010 and 2009 GAAP results, respectively, recorded in connection with the adoption of ASC 805, Business Combinations, on January 1, 2009. The $5.9 million of acquisition-related costs recorded during the six months ended June 30, 2010 included $5.8 million charged to selling, general and administrative and $0.1 million charged to interest expense. |
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| (g) | | $6.9 million of income recorded in connection with fair value adjustments to acquisition-related contingent consideration obligations in accordance with ASC 805, Business Combinations. |
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| (h) | | Expenses of $0.3 million ($0.2 million, net of tax) incurred in connection with the sale of our vitamins and nutritional supplements business. |
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| (i) | | Amortization expense of $1.9 million ($1.5 million, net of tax) and a write-off in the amount of $1.7 million ($1.3 million, net of tax) relating to inventory write-ups attributable to operating results of non-controlling interests. |
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| (j) | | Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f) and (g). |
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| (k) | | For the six months ended June 30, 2010, potential dilutive shares were not used in the calculation of diluted net income per common share under GAAP because inclusion thereof would be antidilutive. |
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| (l) | | Included in the weighted average diluted common shares for the calculation of net income per common share on a GAAP basis for the six months ended June 30, 2009, were dilutive shares consisting of 1,184,000 common stock equivalent shares from the potential exercise of stock options and warrants. Potential dilutive shares consisting of 3,413,000 common stock equivalent shares from the potential conversion of convertible debt securities, 632,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business and potential dilutive shares consisting of 10,891,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock were not included in the calculation of net income per common share on a GAAP basis for the six months ended June 30, 2009, because inclusion thereof would be antidilutive for continuing operations. |
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| (m) | | Included in the weighted average diluted common shares for the calculation of net income per common share for the six months ended June 30, 2010, on an adjusted cash basis, were dilutive shares consisting of 1,706,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities, 11,487,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 679,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the six months ended June 30, 2010, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $1.4 million, the add back of $11.8 million of preferred stock dividends related to the Series B convertible preferred stock and the add back of interest expense related to the ACON Second Territory Business of $0.3 million resulting in net income available to common stockholders of $134.4 million for the six months ended June 30, 2010. |
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| (n) | | Included in the weighted average diluted common shares for the calculation of net income per common share for the six months ended June 30, 2009, on an adjusted cash basis, were dilutive shares consisting of 1,184,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,413,000 common stock equivalent shares from the potential conversion of convertible debt securities, 10,891,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 632,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the six months ended June 30, 2009, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $1.4 million, the add back of $11.2 million of preferred stock dividends related to the Series B convertible preferred stock and the add back of interest expense related to the ACON Second Territory Business of $0.3 million resulting in net income available to common stockholders of $111.1 million for the six months ended June 30, 2009. |
