Bio-Rad Reports Third-Quarter 2019 Financial Results

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Date: 10/31/2019

HERCULES, Calif. –October 31, 2019–Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader of life science research and clinical diagnostic products, today announced financial results for the third quarter ended September 30, 2019.

Third-quarter 2019 net sales were $560.6 million, an increase of 2.8 percent compared to $545.1 million reported for the third quarter of 2018. On a currency-neutral basis, quarterly sales increased 4.5 percent compared to the same period in 2018, reflecting growth across the business. Third-quarter gross margin was 54.8 percent compared to 52.6 percent during the third quarter in 2018.

Life Science segment net sales for the third quarter were $215.7 million, an increase of 4.5 percent compared to the same period in 2018. On a currency-neutral basis, Life Science segment sales increased by 5.7 percent compared to the same quarter in 2018. Currency-neutral sales reflect growth of multiple product lines in the segment, driven by double-digit growth in Droplet Digital PCR and Food Safety products as well as good demand within Gene Expression and Western Blotting product lines. Sales during the third quarter of 2019 increased across all regions: the Americas, Europe and Asia.

Clinical Diagnostics segment net sales for the third quarter were $341.8 million, an increase of 2.4 percent compared to the same period in 2018. On a currency-neutral basis, net sales were up 4.3 percent compared to the same quarter last year. Currency-neutral sales from the third quarter reflected growth in Quality Control, Blood Typing, and Immunology product lines. On a geographic view, sales increased mainly in Asia and the Americas.

Third-quarter 2019 operating income was $57.5 million versus 2018 third-quarter operating income of $36.3 million.

Reported net income for the third quarter of 2019 was a net loss of $258.8 million, or ($8.68) per share on a diluted basis. This loss was negatively impacted by a decline of $390.6 million in the market value of equity securities that we hold, primarily related to our investment in Sartorius AG. Net income for the third quarter of 2018 was a net gain of $269.3 million, or $8.89 per share on a diluted basis, which included a gain of $318.0 million related to our investment holdings.

The effective tax rate for the third quarter of 2019 was 22.8 percent compared to 23.1 percent during the same quarter in 2018.

"We are pleased with our operating results for the third quarter, which show continued strength in many of our key life science and diagnostic product lines across most of our major geographies," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "Our operating performance reflects continued improvement compared to 2018, providing us with good momentum as we head into the rest of the year."

GAAP Results

 

                 Q3 2019

Q3 2018

Revenue (Millions)

$560.6

  $545.1

Gross Margin

54.8%

52.6%

Operating Margin

10.2%

6.7%

Net(Loss) Income (Millions)

 ($258.8)

     $269.3

(Loss)Income per Diluted Share

    ($8.68)

        $8.89

 

Non-GAAP Results

 

Q3 2019

Q3 2018

Gross Margin

56.0%

53.5%

Operating Margin

        12.0%

8.2%

Net Income (Millions)

$48.6

$27.6

Income per Diluted Share

$1.61

$0.91

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this press release. Non-GAAP adjustments include amortization of purchased intangibles; acquisition-related expenses and benefits; restructuring, impairment charges and valuation changes in equity-owned investments; gains and losses on equity-method investments; significant litigation charges or benefits and legal costs; and discrete income tax events and the income tax effect on these non-GAAP adjustments.

Non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS) are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Non-GAAP Reporting."

Non-GAAP net income for the third quarter of 2019 was $48.6 million, or $1.61 per share on a diluted basis, compared to $27.6 million, or $0.91 per share on a diluted basis, during the same period in 2018. The non-GAAP effective tax rate for the third quarter of 2019 was 25.5 percent compared to 31.9 percent for the same period in 2018.

The following table represents a reconciliation of Bio-Rad’s reported net (loss) income and diluted (loss) income per share to non-GAAP net income and non-GAAP diluted income per share for the three and nine months ended September 30, 2019 and 2018:

 

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands, except per share data)

2019

 

2018

 

2019

 

2018

 

GAAP net (loss) income

$(258,816)

 

$269,326

 

$1,205,189

 

$1,194,143

 

Amortization of purchased intangibles

5,809

 

6,529

 

16,490

 

20,179

 

Legal matters

(1,900)

 

4,420

 

4,593

 

13,209

 

Acquisition related (benefits) costs

6

 

(2,756)

 

(7,762)

 

(2,862)

 

Restructuring costs (benefits)

5,928

 

(10)

 

5,749

 

1,478

 

Valuation loss(gain) on equity-owned securities

390,620

 

(318,007)

 

(1,384,999)

 

(1,420,339)

 

Loss on equity-method investments

37

 

222

 

698

 

625

 

Other non-recurring items

-

 

-

 

(759)

 

(9,208)

 

Income tax effect on non-GAAP adjustments

(93,040)

 

67,878

 

303,890

 

315,276

Non-GAAP net income

$48,644

 

$27,602

 

$143,089

 

$112,501

 

 

 

 

 

 

 

 

 

 

GAAP diluted income per share

$(8.68)

 

$8.89

 

$39.97

 

$39.50

 

Non-GAAP diluted income per share

$1.61

 

$0.91

 

$4.75

 

$3.72

On a reported basis, net sales for the first three quarters of 2019 increased 0.9 percent to $1,687.2 million compared to $1,672.6 million for the same period in 2018. On a currency-neutral basis, net sales grew 3.7 percent.

Year-to-date net income for 2019 was $1,205.2 million, or $39.97 per share on a fully diluted basis, compared to $1,194.1 million, or $39.50 per share, respectively, during the same period in 2018.

2019 Financial Outlook
For the full year 2019, the company is projecting currency-neutral revenue growth outlook of 4.0 to 4.5 percent with an estimated non-GAAP operating margin of 12.5 to 13.0 percent.

"As we head into the end of the year, we anticipate 2019 will be another year of growth in many of our key product areas, with broad contribution from most of our major geographies,” Mr. Schwartz said. “Our operating performance has rebounded nicely so far in 2019 and we expect more of the same for the remainder of the year, reflecting substantial improvement in operating profit over 2018."

Non-GAAP Reporting
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP EPS, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, restructuring charges, asset impairment charges, valuation changes of equity owned investments, and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Acquisition-related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our acquisitions, such as transaction costs, changes in the fair value of contingent consideration liabilities, gain or expense on settlement of pre-existing relationships, etc. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.

Restructuring, impairment charges and valuation changes in equity owned investments: we incur restructuring and impairment charges on individual or groups of employed assets and charges and benefits arising from valuation changes in equity owned investments, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.

Income tax expense: we estimate the tax effect of the items identified to determine a non-GAAP annual effective tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Conference Call and Webcast
Management will discuss third quarter ended September 30, 2019 results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) October 31, 2019. Interested parties may access the call at 855-779-9068 within the U.S. or 631-485-4862 outside the U.S., Conference ID: 1469320. You may also listen to the conference call via a webcast that is available in the "Investor Relations" section of our website under "Quarterly Results" at www.bio-rad.com. The webcast will be available for up to a year.

About Bio-Rad
Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb) is a global leader in developing, manufacturing, and marketing a broad range of innovative products for the life science research and clinical diagnostic markets. With a focus on quality and customer service for over 65 years, our products advance the discovery process and improve healthcare. Our customers are university and research institutions, hospitals, public health and commercial laboratories, biotechnology, pharmaceutical, as well as applied laboratories that include food safety and environmental quality. Founded in 1952, Bio-Rad is based in Hercules, California, and has a global network of operations with more than 8,000 employees worldwide. Bio-Rad had revenues exceeding $2.2 billion in 2018. For more information, please visit www.bio-rad.com.

This release may be deemed to contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements we make regarding estimated future financial performance or results, our performance in the second quarter reflecting strength in many of our key product lines across our major geographies, continued improvements of our core operating performance during the quarter as well as the first half of the year helping us to make progress toward reaching our long term goals, and for the full year 2019 anticipating currency-neutral revenue growth of approximately 4.0 to 4.5 percent and improved profitability with an estimated non-GAAP operating margin of 12.5 to 13.0 percent. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "anticipate," "estimate," "expect," "continue," "believe," "will," "project," "assume," "may," "intend," or similar expressions or the negative of those terms or expressions, although not all forward-looking statements contain these words. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. These risks and uncertainties include our ability to develop and market new or improved products, our ability to compete effectively, foreign currency exchange fluctuations, international legal and regulatory risks, global economic conditions, recent and planned changes to our global organizational structure and executive management team, product quality and liability issues, reductions in government funding or capital spending of our customers, our ability to integrate acquired companies, products or technologies into our company successfully, supply chain issues, changes in the healthcare industry, difficulties in implementing our global enterprise resource planning system, and natural disasters and other catastrophic events beyond our control. For further information regarding the Company's risks and uncertainties, please refer to the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s public reports filed with the Securities and Exchange Commission (the "SEC"), including the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 to be filed with the SEC. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. Bio-Rad Laboratories, Inc. disclaims any obligation to update these forward-looking statements.

Investor Contact:
Bio-Rad Laboratories, Inc.
Ilan Daskal
Executive Vice President and Chief Financial Officer
510-724-7000
investor_relations@bio-rad.com

Press Contact:
Bio-Rad Laboratories, Inc.
Tina Cuccia, Corporate Communications
510-724-7000
tina_cuccia@bio-rad.com

Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Income

(in thousands, except per share data)
(UNAUDITED)
      Three Months Ended
September 30,
  Nine Months Ended
September 30,
      2019   2018   2019   2018
Net sales   $560,633   $545,138   $1,687,231   $1,672,568
  Cost of goods sold   253,607   258,422   760,674   781,982
Gross profit   307,026   286,716   926,557   890,586
                   
  Selling, general and administrative expense   201,622   201,196   610,460   620,751
  Research and development expense   47,944   49,245   145,641   146,122
Income from operations   57,460   36,275   170,456   123,713
                   
  Interest expense   5,525   6,064   17,352   17,823
  Foreign currency exchange losses, net   898   672   3,411   1,911
  Change in fair market value of equity securities   390,620   (318,007))   (1,384,999))   (1,420,339))
  Other (income) expense, net   (4,367))   (2,585))   (26,959))   (29,588))
(Loss) income before income taxes   (335,216)   350,131   1,561,651   1,553,906
                   
  Benefit from (provision for) income taxes   76,400   (80,805)   (356,462)   (359,763)
Net income   $(258,816)   $269,326   $1,205,189   $1,194,143
                   
Basic (loss) earnings per share:                
  Net (loss) income per basic share   $(8.68)   $9.02   $40.42   $40.04
       
  Weighted average common shares - basic   29,831 29,863   29,815 29,822
                   
Diluted earnings per share:                
  Net income per diluted share   $(8.68)   $8.89   $39.97   $39.50
                   
  Weighted average common shares - diluted   29,831   30,292   30,149   30,234
                   

Note: As a result of the net loss for the three months ended September 30, 2019, all potentially issuable common shares have been excluded from the diluted shares used in the computation of earnings per share as their effect was anti-dilutive.


 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets

(In thousands)
      September 30,
2019
  December 31,
2018
      (UNAUDITED)    
Current assets:    
  Cash and cash equivalents $561,071   $431,526
  Short-term investments 423,737   418,830
  Accounts receivable, net 356,025   392,443
  Inventories, net 587,987   583,815
  Other current assets 118,812   196,864
  Total current assets 2,047,632   2,023,478
           
Property, plant and equipment, net 495,876   508,690
Operating lease right-of-use assets 217,516   -
Goodwill, net   264,084   219,770
Purchased intangibles, net 146,965   133,123
Other investments 3,931,715   2,655,709
Other assets   73,328   70,298
    Total assets $7,177,116 $5,611,068
         
Current liabilities:      
  Accounts payable, accrued payroll and employee benefits $249,835   $265,960
  Current maturities of long-term debt 1,769   493
  Income and other taxes payable 35,252   56,188
  Other current liabilities 147,184   128,154
  Total current liabilities 434,040   450,795
           
Long-term debt, net of current maturities 437,808   438,937
Other long-term liabilities 1,174,076   701,005
    Total liabilities 2,045,924   1,590,737
         
    Total stockholders' equity 5,131,192   4,020,331
    Total liabilities and stockholders' equity $7,177,116 $5,611,068

 


 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Cash Flows

(In thousands)
(UNAUDITED)
      Nine Months
Ended September 30,
      2019 2018
           
Cash flows from operating activities:      
  Cash received from customers $1,716,486   $1,715,960
  Cash paid to suppliers and employees (1,392,653))   (1,494,794))
  Interest paid, net (11,381)   (11,721)
  Income tax payments, net (42,634)   (57,840)
  Other operating activities 28,277   28,880
  Net cash provided by operating activities 298,095   180,485
           
Cash flows from investing activities:      
  Proceeds from (payments for) acquisitions (75,811)   266
  Other investing activities (71,882)   (132,433)
  Net cash used in investing activities (147,693)   (132,167)
           
Cash flows from financing activities:      
  Payments on long-term borrowings (487)   (1,595)
  Other financing activities (17,488)   (82)
  Net cash (used in) provided financing activities (17,975)   (1,677)
           
Effect of foreign exchange rate changes on cash (3,239)   3,965
           
Net increase in cash, cash equivalents, and restricted cash 129,188   50,606
Cash, cash equivalents, and restricted cash at beginning of period 434,164   384,983
Cash, cash equivalents, and restricted cash at end of period $563,352   $435,589
           
Reconciliation of net income to net cash      
provided by operating activities:      
Net income   $1,205,189   $1,194,143
Adjustments to reconcile net income to net cash      
provided by operating activities:    
  Depreciation and amortization 99,757   103,509
  Right-of-use asset amortization 31,108   -
  Changes in working capital 8,861   (28,087)
  Other (1,046,820)   (1,089,080)
Net cash provided by operating activities $298,095   $180,485

 


 

Bio-Rad Laboratories, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In thousands, except per share data)
(Unaudited)
 
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS), which exclude amortization of acquisition-related intangible assets; certain acquisition-related expenses and benefits; restructuring charges; asset impairment charges; valuation changes of equity owned investments; gains and losses on equity-method investments; and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.
 
We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
 
 

Three Months
Ended

Three Months
Ended
Nine Months
Ended
Nine Months
Ended

September 30,

% of revenue September 30, % of revenue September 30, % of revenue September 30, % of revenue

2019

revenue

2018

revenue

2019

revenue

2018

revenue
 
GAAP cost of goods sold

$

253,607

 

$

258,422

 

$

760,674

 

$

781,982

 

Amortization of purchased intangibles

 

(3,944)

 

(4,726)

 

(11,366)

 

(14,252)

Acquisition related benefits (costs) (1)

 

-

 

 

-

 

 

7,403

 

 

-

 

Restructuring benefits (costs)

 

(3,243)

 

 

(410)

 

(3,051)

 

 

(1,884)

Non-GAAP cost of goods sold

$

246,420

 

$

253,286

 

$

753,660

 

$

765,846

 

 
GAAP gross profit

$

307,026

 

54.8%

$

286,716

 

52.6%

$

926,557

 

54.9%

$

890,586

 

53.2%

Amortization of purchased intangibles

 

3,944

 

 

4,726

 

 

11,366

 

 

14,252

 

Acquisition related (benefits) costs (1)

 

-

 

 

-

 

 

(7,403)

 

-

 

Restructuring (benefits) costs

 

3,243

 

410

 

 

3,051

 

1,884

 

Non-GAAP gross profit

$

314,213

 

56

%

$

291,852

 

53.5

%

$

933,571

 

55.3

%

$

906,722

 

54.2

%

 
GAAP selling, general and administrative expense

$

201,622

 

$

201,196

 

$

610,460

 

$

620,751

 

Amortization of purchased intangibles

 

(1,865)

 

(1,803)

 

(5,124)

 

(5,927)

Legal matters

 

1,900

 

(4,420)

 

(4,593)

 

(13,209)

Acquisition related benefits (costs) (1)

 

(6)

 

 

2,756

 

359

 

 

3,374

 

Restructuring benefits (costs)

 

(2,662)

 

(76)

 

 

(2,802)

 

(434)

Non-GAAP selling, general and administrative expense

$

198,989

 

$

197,653

 

$

598,300

 

$

604,555

 

 
GAAP research and development expense

$

47,944

 

$

49,245

 

$

145,641

 

$

146,122

 

Acquisition related benefits (costs) (1)

 

-

 

 

-

 

 

-

 

 

(512)

Restructuring benefits (costs)

 

(23)

 

 

496

 

 

104

 

 

840

 

Non-GAAP research and development expense

$

47,921

 

$

49,741

 

$

145,745

 

$

146,450

 

 
GAAP income from operations

$

57,460

 

10.2%

$

36,275

 

6.7%

$

170,456

 

10.1%

$

123,713

 

7.4%

Amortization of purchased intangibles

 

5,809

 

 

6,529

 

 

16,490

 

 

20,179

 

Legal matters

 

(1,900)

 

 

4,420

 

 

4,593

 

 

13,209

 

Acquisition related (benefits) costs (1)

 

6

 

(2,756)

 

 

(7,762)

 

(2,862)

Restructuring (benefits) costs

 

5,928

 

 

(10)

 

 

5,749

 

1,478

 

Non-GAAP income from operations

$

67,303

 

12%

$

44,458

 

8.2%

$

189,526

 

11.2%

$

155,717

 

9.3%

 
GAAP change in fair market value of equity securities

$

390,620

$

(318,007)

$

(1,384,999)

$

(1,420,339)

Valuation change in equity-owned securities (2)

 

(390,620)

 

 

318,007

 

 

1,384,999

 

 

1,420,339

 

Non-GAAP change in fair market value of equity securities

$

-

 

$

-

 

$

-

 

$

-

 

 
GAAP other (income) expense, net

$

(4,367)

$

(2,585)

$

(26,959)

$

(29,588)

(Loss) gain on equity-method investments

 

(37)

 

(222)

 

(698)

 

(625)

Other non-recurring items (3)

 

-

 

 

-

 

 

759

 

 

9,208

 

Non-GAAP other (income) expense, net

$

(4,404)

$

(2,807)

$

(26,898)

$

(21,005)

 
GAAP income before income taxes

$

(335,216)

 

$

350,131

 

$

1,561,651

 

$

1,553,906

 

Amortization of purchased intangibles

 

5,809

 

 

6,529

 

 

16,490

 

 

20,179

 

Legal matters

 

(1,900)

 

 

4,420

 

 

4,593

 

 

13,209

 

Acquisition related (benefits) costs (1)

 

6

 

(2,756)

 

 

(7,762)

 

(2,862)

Restructuring (benefits) costs

 

5,928

 

 

(10)

 

 

5,749

 

1,478

 

Valuation loss (gain) on equity-owned securities (2)

 

390,620

 

(318,007)

 

(1,384,999)

 

(1,420,339)

Loss (gain) on equity-method investments

 

37

 

 

222

 

 

698

 

 

625

 

Other non-recurring items (2)

 

-

 

 

-

 

 

(759)

 

(9,208)

Non-GAAP income before income taxes

$

65,284

 

$

40,529

 

$

195,661

 

$

156,988

 

 
GAAP benefit from (provision for) income taxes

$

76,400

$

(80,805)

$

(356,462)

$

(359,763)

Income tax effect of non-GAAP adjustments (3)

 

(93,040)

 

 

67,878

 

 

303,890

 

 

315,276

 

Non-GAAP provision for income taxes

$

(16,640)

$

(12,927)

$

(52,572)

$

(44,487)

 
GAAP net (loss) income

$

(258,816)

 

-46.2%

$

269,326

 

49.4%

$

1,205,189

 

71.4%

$

1,194,143

 

71.4%

Amortization of purchased intangibles

 

5,809

 

 

6,529

 

 

16,490

 

 

20,179

 

Legal matters

 

(1,900)

 

 

4,420

 

 

4,593

 

 

13,209

 

Acquisition related (benefits) costs (1)

 

6

 

(2,756)

 

 

(7,762)

 

(2,862)

Restructuring (benefits) costs

 

5,928

 

 

(10)

 

 

5,749

 

1,478

 

Valuation loss (gain) on equity-owned securities (2)

 

390,620

 

(318,007)

 

(1,384,999)

 

(1,420,339)

Loss (gain) on equity-method investments

 

37

 

 

222

 

 

698

 

 

625

 

Other non-recurring items (2)

 

-

 

 

-

 

 

(759)

 

(9,208)

Income tax effect of non-GAAP adjustments (3)

 

(93,040)

 

 

67,878

 

 

303,890

 

 

315,276

 

Non-GAAP net income

$

48,644

 

8.7%

$

27,602

 

5.1%

$

143,089

 

8.5%

$

112,501

 

6.7%

 
GAAP diluted income per share

$

(8.68)

 

$

8.89

 

$

39.97

 

$

39.50

 

Amortization of purchased intangibles

 

0.19

 

 

0.22

 

 

0.55

 

 

0.67

 

Legal matters

 

(0.06)

 

 

0.15

 

 

0.15

 

 

0.44

 

Acquisition related (benefits) costs (1)

 

-

 

 

(0.09)

 

 

(0.26)

 

(0.09)

 

Restructuring (benefits) costs

 

0.20

 

 

-

 

 

0.19

 

0.05

 

Valuation loss (gain) on equity-owned securities

 

12.94

 

(10.50)

 

(45.94)

 

(46.98)

Loss (gain) on equity-method investments

 

-

 

 

0.01

 

 

0.02

 

 

0.02

 

Other non-recurring items (2)

 

-

 

 

-

 

 

(0.03)

 

(0.30)

Income tax effect of non-GAAP adjustments (3)

 

(3.09)

 

 

2.23

 

 

10.10

 

 

10.41

 

Add back anti-dilutive shares

 

0.11

 

 

-

 

 

-

 

 

-

 

Non-GAAP diluted income per share

$

1.61

 

$

0.91

 

$

4.75

 

$

3.72

 

 
GAAP diluted weighted average shares used in per share calculation

 

29,831

 

 

30,292

 

 

30,149

 

 

30,234

 

Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive

 

358

 

 

-

 

 

-

 

 

-

 

Non-GAAP diluted weighted average shares used in per share calculation

 

30,189

 

 

30,292

 

 

30,149

 

 

30,234

 

  1. Release of contingent consideration and other acquisition-related expense.
  2. Mark-to-market gain on equity-owned securities.
  3. Gain on the sale of a product line (2018 and 2019), and gain on the sale of land (2018).
  4. Excluded items identified in the reconciliation schedule are tax effected by application of a non-GAAP effective tax rate. The non-GAAP tax provision is adjusted for items, the nature of which and/or tax jurisdiction requires the application of a specific tax rate or treatment.

2019 Financial Outlook
Forecasted non-GAAP operating margin excludes 100 basis points primarily related to amortization of purchased intangibles. Forecasted non-GAAP operating margin does not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance, such as foreign currency fluctuations, future gains or losses associated with certain legal matters, acquisitions and restructuring activities.

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