Corrected Press Release Bio-Rad Reports Second-Quarter 2019 Financial Results

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Date: 08/01/2019

HERCULES, Calif. –August 27, 2019–This press release corrects a prior version published on August 1, 2019. The prior press release contained a $3.37 million error with respect to Legal Matters used in the non-GAAP financial presentation. This corrected press release does not change the GAAP results or the guidance provided on August 1, 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 second quarter ended June 30, 2019. This release includes immaterial changes, in the company’s view, to the non-GAAP results provided in the August 1, 2019 release for the three and six months ended June 30, 2019 that resulted from a $3.37 million error with respect to Legal Matters used in the non-GAAP financial presentation in the prior release.

Second-quarter 2019 net sales were $572.6 million, a decrease of 0.6 percent compared to $575.9 million reported for the second quarter of 2018. On a currency-neutral basis, quarterly sales increased 2.7 percent compared to the same period in 2018. Second-quarter gross margin was 53.7 percent compared to 52.4 percent during the second quarter in 2018.

Life Science segment net sales for the second quarter were $212.4 million, down 2.5 percent compared to the same period in 2018. On a currency-neutral basis, Life Science segment sales decreased by 0.1 percent compared to the same quarter in 2018. Sales were strong in the Droplet Digital PCR, Antibody, and Food Safety product lines, moderated by the Process Media product line, in which sales vary from quarter to quarter. Excluding Process Media sales, the Life Science business grew about 7.5 percent, year-over-year on a currency neutral basis.

Clinical Diagnostics segment net sales for the second quarter were $357.1 million, an increase of 0.9 percent compared to the same period in 2018. On a currency-neutral basis, net sales increased 4.8 percent compared to the same quarter last year. The currency-neutral sales increase was primarily due to solid growth of Quality Controls, Immunology, and Diabetes product lines. Sales during the second quarter of 2019 increased across all three regions.

Net income for the second quarter of 2019 was $598.8 million, or $19.86 per share on a diluted basis versus the second quarter in 2018 in which net income was $268.0 million, or $8.87 per share on a diluted basis. Net income for the second quarters of both 2019 and 2018 were significantly and favorably impacted by recognition, on the income statement, of changes in the fair market value of equity securities of $716.4 million and $286.4 million, respectively, primarily related to the holdings of our investment in Sartorius AG. Other income for the second quarter of 2019 was $3.9 million, compared to $15.9 million for the second quarter of 2018. The decrease was primarily due to dividends from our investment in Sartorius AG, which were declared in the first quarter of 2019 compared to the second quarter of 2018.

The effective tax rate for the second quarter of 2019 was 22.2 percent compared to 21.2 percent during the second quarter of 2018. The effective tax rate in both periods was primarily driven by changes in the fair market value of equity securities and a tax reform-related benefit in the second quarter of 2018.

"Performance in the second quarter reflects strength in many of our key product lines across our major geographies," said Norman Schwartz, Bio Rad President and Chief Executive Officer. "We are encouraged by continued improvements of our core operating performance during the quarter as well as the first half of the year, which is helping us to make progress toward reaching our long term goals," he added.

The following table provides highlights of Bio-Rad’s GAAP and non-GAAP results for the three months ended June 30, 2019 and 2018:

GAAP Results

 

                 Q2 2019

Q2 2018

Revenue (Millions)

$572.6

  $575.9

Gross Margin

53.7%

52.4%

Operating Margin

9.8%

7.6%

Net Income (Millions)

 $598.8

     $268.0

Income per Diluted Share

    $19.86

        $8.87

 

Non-GAAP Results

 

Q2 2019

Q2 2018

Gross Margin

54.4%

53.4%

Operating Margin

        11.7%

10.0%

Net Income (Millions)

$44.8

$49.5

Income per Diluted Share

$1.49

$1.64

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 second quarter of 2019 was $44.8 million, or $1.49 per share on a diluted basis, compared to $49.5 million, or $1.64 per share on a diluted basis, during the same period in 2018. The non-GAAP effective tax rate for the second quarter of 2019 was 26.5 percent compared to 27.1 percent for the same period in 2018.

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

 

 

Three Months Ended

June 30,

Six Months Ended

June 30,

 

 

2019

 

2018

 

2019

 

2018

 

GAAP net income

$598,810

 

$268,043

 

$1,464,005

 

$924,817

 

Amortization of purchased intangibles

5,354

 

6,771

 

10,681

 

13,650

 

Legal matters

2,053

 

5,110

 

6,493

 

8,789

 

Acquisition related (benefits) costs

(10)

 

1,512

 

(7,768)

 

(106)

 

Restructuring costs (benefits)

45

 

450

 

(179)

 

1,488

 

Valuation change in equity-owned securities

(716,389)

 

(286,398)

 

(1,775,619)

 

(1,102,332)

 

Loss on equity-method investments

344

 

405

 

661

 

403

 

Other non-recurring items

-

 

-

 

(759)

 

(9,208)

 

Income tax effect on non-GAAP adjustments

154,598

 

53,647

 

396,930

 

247,398

Non-GAAP net income

$44,805

 

$49,540

 

$94,445

 

84,899

 

 

 

 

 

 

 

 

 

 

GAAP diluted income per share

$19.86

 

$8.87

 

$48.60

 

$30.63

 

Non-GAAP diluted income per share

$1.49

 

$1.64

 

$3.14

 

$2.81

On a reported basis, net sales for the first half of 2019 decreased 0.1 percent to $1,126.6 million compared to $1,127.4 million for the same period in 2018. On a currency-neutral basis, net sales grew 3.4 percent.

Year-to-date net income for 2019 was $1,464.0 million, or $48.60 per share on a fully diluted basis, compared to $924.8 million, or $30.63 per share, respectively, during the same period in 2018.

2019 Financial Outlook
For the full year 2019, the company continues to anticipate 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.

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 second quarter ended June 30, 2019 results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) August 1, 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: 9299345. 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
June 30,
  Six Months Ended
June 30,
      2019   2018   2019   2018
Net sales   $572,619   $575,911   $1,126,598   $1,127,430
  Cost of goods sold   264,850   274,244   507,067   523,560
Gross profit   307,769   301,667   619,531   603,870
                   
  Selling, general and administrative expense   201,257   210,425   408,838   419,555
  Research and development expense   50,122   47,450   97,697   96,877
Income from operations   56,390   43,792   112,996   87,438
                   
  Interest expense   5,841   5,977   11,827   11,759
  Foreign currency exchange losses, net   1,233   (15)   2,513   1,239
  Change in fair market value of equity securities   (716,389)   (286,398)   (1,775,619)   (1,102,332)
  Other (income) expense, net   (3,896)   (15,858)   (22,592)   (27,003)
Income before income taxes   769,601   340,086   1,896,867   1,203,775
                   
  Provision for income taxes   (170,791)   (72,043)   (432,862)   (278,958)
Net income   $598,810   $268,043   $1,464,005   $924,817
                   
Basic earnings per share:                
  Net income per basic share   $20.08   $8.99   $49.12   $31.03
       
  Weighted average common shares - basic   29,814 29,814   29,807 29,801
                   
Diluted earnings per share:                
  Net income per diluted share   $19.86   $8.87   $48.60   $30.63
                   
  Weighted average common shares - diluted   30,154   30,219   30,125   30,197
                   

 


 

Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets

(In thousands)
      June 30,
2019
  December 31,
2018
      (UNAUDITED)    
Current assets:    
  Cash and cash equivalents $580,684   $431,526
  Short-term investments 406,732   418,830
  Accounts receivable, net 377,904   392,443
  Inventories, net 589,897   583,815
  Other current assets 132,723   196,864
  Total current assets 2,087,940   2,023,478
           
Property, plant and equipment, net 499,180   508,690
Operating lease right-of-use assets 215,507   -
Goodwill, net   235,401   219,770
Purchased intangibles, net 127,476   133,123
Other investments 4,417,240   2,655,709
Other assets   64,201   70,298
    Total assets $7,646,945 $5,611,068
         
Current liabilities:      
  Accounts payable, accrued payroll and employee benefits $246,809   $265,960
  Current maturities of long-term debt 1,767   493
  Income and other taxes payable 37,516   56,188
  Other current liabilities 159,885   128,154
  Total current liabilities 445,977   450,795
           
Long-term debt, net of current maturities 437,680   438,937
Other long-term liabilities 1,276,478   701,005
    Total liabilities 2,160,135   1,590,737
         
    Total stockholders' equity 5,486,810   4,020,331
    Total liabilities and stockholders' equity $7,646,945 $5,611,068

 


 

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

(In thousands)
(UNAUDITED)
      Six Months
Ended June 30,
      2019 2018
           
Cash flows from operating activities:      
  Cash received from customers $1,143,222   $1,160,904
  Cash paid to suppliers and employees (932,009)   (1,007,565)
  Interest paid, net (11,085)   (11,277)
  Income tax payments, net (24,016)   (47,620)
  Other operating activities 22,233   23,766
  Net cash provided by operating activities 198,345   118,208
           
Cash flows from investing activities:      
  Proceeds from (payments for) acquisitions (16,083)   266
  Other investing activities (21,701)   (102,924)
  Net cash used in investing activities (37,784)   (102,658)
           
Cash flows from financing activities:      
  Payments on long-term borrowings (359)   (1,505)
  Other financing activities (13,125)   2,004
  Net cash (used in) provided financing activities (13,484)   499
           
Effect of foreign exchange rate changes on cash 2,127   3,053
           
Net increase in cash, cash equivalents, and restricted cash 149,204   19,102
Cash, cash equivalents, and restricted cash at beginning of period 434,164   384,983
Cash, cash equivalents, and restricted cash at end of period $583,368   $404,085
           
Reconciliation of net income to net cash      
provided by operating activities:      
Net income   $1,464,005   $924,817
Adjustments to reconcile net income to net cash      
provided by operating activities:    
  Depreciation and amortization 66,148   68,669
  Right-of-use asset amortization 19,764   -
  Changes in working capital 11,378   (29,857)
  Other (1,362,950)   845,421
Net cash provided by operating activities $198,345   $118,208

 


 

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
Six Months
Ended
Six Months
Ended

June 30,

% of revenue June 30, % of revenue June 30, % of revenue June 30, % of revenue

2019

revenue

2018

revenue

2019

revenue

2018

revenue
 
GAAP cost of goods sold

$

264,850

 

$

274,244

 

$

507,067

 

$

523,560

 

Amortization of purchased intangibles

 

(3,759

)

 

(4,717

)

 

(7,422

)

 

(9,526

)

Acquisition related benefits (costs) (1)

 

-

 

 

-

 

 

7,403

 

 

-

 

Restructuring benefits (costs)

 

2

 

 

(1,286

)

 

192

 

 

(1,474

)

Non-GAAP cost of goods sold

$

261,093

 

$

268,241

 

$

507,240

 

$

512,560

 

 
GAAP gross profit

$

307,769

 

53.7

%

$

301,667

 

52.4

%

$

619,531

 

55.0

%

$

603,870

 

53.6

%

Amortization of purchased intangibles

 

3,759

 

 

4,717

 

 

7,422

 

 

9,526

 

Acquisition related (benefits) costs (1)

 

-

 

 

-

 

 

(7,403

)

 

-

 

Restructuring (benefits) costs

 

(2

)

 

1,286

 

 

(192

)

 

1,474

 

Non-GAAP gross profit

$

311,526

 

54.4

%

$

307,670

 

53.4

%

$

619,358

 

55.0

%

$

614,870

 

54.5

%

 
GAAP selling, general and administrative expense

$

201,257

 

$

210,425

 

$

408,838

 

$

419,555

 

Amortization of purchased intangibles

 

(1,595

)

 

(2,054

)

 

(3,259

)

 

(4,124

)

Legal matters

 

(5,422

)

 

(5,110

)

 

(9,862

)

 

(8,789

)

Acquisition related benefits (costs) (1)

 

10

 

 

(1,512

)

 

365

 

 

618

 

Restructuring benefits (costs)

 

(142

)

 

492

 

 

(140

)

 

(358

)

Non-GAAP selling, general and administrative expense

$

194,108

 

$

202,241

 

$

395,942

 

$

406,902

 

 
GAAP research and development expense

$

50,122

 

$

47,450

 

$

97,697

 

$

96,877

 

Acquisition related benefits (costs) (1)

 

-

 

 

-

 

 

-

 

 

(512

)

Restructuring benefits (costs)

 

95

 

 

344

 

 

127

 

 

344

 

Non-GAAP research and development expense

$

50,217

 

$

47,794

 

$

97,824

 

$

96,709

 

 
GAAP income from operations

$

56,390

 

9.8

%

$

43,792

 

7.6

%

$

112,996

 

10.0

%

$

87,438

 

7.8

%

Amortization of purchased intangibles

 

5,354

 

 

6,771

 

 

10,681

 

 

13,650

 

Legal matters

 

5,422

 

 

5,110

 

 

9,862

 

 

8,789

 

Acquisition related (benefits) costs (1)

 

(10

)

 

1,512

 

 

(7,768

)

 

(106

)

Restructuring (benefits) costs

 

45

 

 

450

 

 

(179

)

 

1,488

 

Non-GAAP income from operations

$

67,201

 

11.7

%

$

57,635

 

10.0

%

$

125,592

 

11.1

%

$

111,259

 

9.9

%

 
GAAP change in fair market value of equity securities

$

(716,389

)

$

(286,398

)

$

(1,775,619

)

$

(1,102,332

)

Valuation change in equity-owned securities (2)

 

716,389

 

 

286,398

 

 

1,775,619

 

 

1,102,332

 

Non-GAAP change in fair market value of equity securities

$

-

 

$

-

 

$

-

 

$

-

 

 
GAAP other (income) expense, net

$

(3,896

)

$

(15,858

)

$

(22,592

)

$

(27,003

)

(Loss) gain on equity-method investments

 

(344

)

 

(405

)

 

(661

)

 

(403

)

Other non-recurring items (3)

 

-

 

 

-

 

 

759

 

 

9,208

 

Non-GAAP other (income) expense, net

$

(4,240

)

$

(16,263

)

$

(22,494

)

$

(18,198

)

 
GAAP income before income taxes

$

769,601

 

$

340,086

 

$

1,896,867

 

$

1,203,775

 

Amortization of purchased intangibles

 

5,354

 

 

6,771

 

 

10,681

 

 

13,650

 

Legal matters

 

5,422

 

 

5,110

 

 

9,862

 

 

8,789

 

Acquisition related (benefits) costs (1)

 

(10

)

 

1,512

 

 

(7,768

)

 

(106

)

Restructuring (benefits) costs

 

45

 

 

450

 

 

(179

)

 

1,488

 

Valuation change in equity-owned securities (2)

 

(716,389

)

 

(286,398

)

 

(1,775,619

)

 

(1,102,332

)

Loss (gain) on equity-method investments

 

344

 

 

405

 

 

661

 

 

403

 

Other non-recurring items (3)

 

-

 

 

-

 

 

(759

)

 

(9,208

)

Non-GAAP income before income taxes

$

64,367

 

$

67,936

 

$

133,746

 

$

116,459

 

 
GAAP provision for income taxes

$

(170,791

)

$

(72,043

)

$

(432,862

)

$

(278,958

)

Income tax effect of non-GAAP adjustments (4)

 

153,798

 

 

53,647

 

 

396,130

 

 

247,398

 

Non-GAAP provision for income taxes

$

(16,993

)

$

(18,396

)

$

(36,732

)

$

(31,560

)

 
GAAP net income

$

598,810

 

104.6

%

$

268,043

 

46.5

%

$

1,464,005

 

129.9

%

$

924,817

 

82.0

%

Amortization of purchased intangibles

 

5,354

 

 

6,771

 

 

10,681

 

 

13,650

 

Legal matters

 

5,422

 

 

5,110

 

 

9,862

 

 

8,789

 

Acquisition related (benefits) costs (1)

 

(10

)

 

1,512

 

 

(7,768

)

 

(106

)

Restructuring (benefits) costs

 

45

 

 

450

 

 

(179

)

 

1,488

 

Valuation change in equity-owned securities (2)

 

(716,389

)

 

(286,398

)

 

(1,775,619

)

 

(1,102,332

)

Loss (gain) on equity-method investments

 

344

 

 

405

 

 

661

 

 

403

 

Other non-recurring items (3)

 

-

 

 

-

 

 

(759

)

 

(9,208

)

Income tax effect of non-GAAP adjustments (4)

 

153,798

 

 

53,647

 

 

396,130

 

 

247,398

 

Non-GAAP net income

$

47,374

 

8.3

%

$

49,540

 

8.6

%

$

97,014

 

8.6

%

$

84,899

 

7.5

%

 
GAAP diluted income per share

$

19.86

 

$

8.87

 

$

48.60

 

$

30.63

 

Amortization of purchased intangibles

 

0.18

 

 

0.22

 

 

0.35

 

 

0.45

 

Legal matters

 

0.18

 

 

0.17

 

 

0.33

 

 

0.29

 

Acquisition related (benefits) costs (1)

 

-

 

 

0.05

 

 

(0.26

)

 

-

 

Restructuring (benefits) costs

 

-

 

 

0.01

 

 

(0.01

)

 

0.05

 

Valuation change in equity-owned securities (2)

 

(23.76

)

 

(9.48

)

 

(58.94

)

 

(36.50

)

Loss (gain) on equity-method investments

 

0.01

 

 

0.01

 

 

0.02

 

 

0.01

 

Other non-recurring items (3)

 

-

 

 

-

 

 

(0.03

)

 

(0.30

)

Income tax effect of non-GAAP adjustments (4)

 

5.13

 

 

1.79

 

 

13.19

 

 

8.18

 

Non-GAAP diluted income per share

$

1.49

 

$

1.64

 

$

3.14

 

$

2.81

 

 
GAAP diluted weighted average shares used in per share calculation

 

30,154

 

 

30,219

 

 

30,125

 

 

30,197

 

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

 

-

 

 

-

 

 

-

 

 

-

 

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

 

30,154

 

 

30,219

 

 

30,125

 

 

30,197

 

  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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