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ALERE INC
Symbol U : ALR
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Alere Inc. Announces Tax Correction to Fourth Quarter 2011 Results

2012-02-27 21:00 ET - News Release

WALTHAM, Mass., Feb. 27, 2012 /PRNewswire/ -- Alere Inc. (NYSE: ALR) today announced a correction to the benefit for income taxes included in its financial results for the quarter and year ended December 31, 2011, which were previously announced on February 8, 2012.

Specifically, an error in calculating our benefit for income taxes resulted in the overstatement of our benefit for income taxes by $4.1 million for the quarter.  Our benefit for income taxes for the quarter was reduced to $19.8 million from the previously disclosed amount of $23.9 million.  Consequently, our GAAP net loss available to common stockholders for the fourth quarter of 2011 increased to $369.3 million, or a loss per common share of $4.67, from $365.2 million, or a loss per common share of $4.62.  Our benefit for income taxes for 2011 was reduced to $24.2 from the previously disclosed amount of $28.3 million.  Consequently, our GAAP net loss available to common stockholders for 2011 increased to $131.7 million, or a loss per common share of $1.58, from $127.5 million, or a loss per common share of $1.53.

The effect of this correction increased our adjusted cash-basis provision for income taxes for the quarter from $30.2 million to $34.4 million, which resulted in a reduction of our adjusted cash-basis net income per diluted common share for the fourth quarter of 2011 from $0.74 to $0.70.  The effect of this correction increased our adjusted cash-basis provision for income taxes for 2011 from $108.0 million to $112.1 million, which resulted in a reduction of our adjusted cash-basis net income per diluted common share for 2011 from $2.48 to $2.44.

We have included in the schedules to this press release a corrected version of the condensed consolidated statements of operations and condensed consolidated balance sheets that we provided on February 8, 2012.  We have also included in the schedules to this press release a corrected version of the detailed reconciliation that we provided on February 8, 2012 of our adjusted cash-basis net income, which is a non-GAAP financial measure, to net loss under GAAP, as well as a discussion regarding this non-GAAP financial measure.  

For more information about Alere, please visit our website at http://www.alere.com.

By developing new capabilities in near-patient diagnosis, monitoring and health management, Alere enables individuals to take charge of improving their health and quality of life at home. Alere's global leading products and services, as well as its new product development efforts, focus on cardiology, infectious disease, toxicology, diabetes, oncology and women's health. Alere is headquartered in Waltham, Massachusetts.

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and

Reconciliation to Non-GAAP Adjusted Cash Basis Amounts

(in $000s, except per share amounts)



















Three Months Ended December 31, 2011


Three Months Ended December 31, 2010









Non-GAAP






Non-GAAP









Adjusted






Adjusted







Non-GAAP


Cash




Non-GAAP


Cash





GAAP


Adjustments


Basis (a)


GAAP


Adjustments


Basis (a)

















Net product sales and services revenue


$         645,359


$                  1,452

(b)

$            646,811


$            573,747


$                          -


$            573,747


License and royalty revenue


5,750


-


5,750


4,707


-


4,707



Net revenue


651,109


1,452


652,561


578,454




578,454


Cost of net revenue


310,171


(21,967)

(c) (d) (e) (g)

288,204


275,368


(17,077)

(c) (d) (e) (f)

258,291



     Gross profit


340,938


23,419


364,357


303,086


17,077


320,163



     Gross margin


52%




56%


52%




55%

















Operating expenses:















Research and development


37,503


(2,329)

(c) (e)

35,174


37,091


(2,973)

(c) (e)

34,118



Selling, general and administrative


264,656


(76,830)

 (c) (d) (e) (h) (i) 

187,826


292,870


(133,250)

 (c) (d) (e) (h) (i) (n) (p) 

159,620



Goodwill impairment charge


383,612


(383,612)

(m)



1,006,357


(1,006,357)

(m)

-



  Total operating expenses


685,771


(462,771)


223,000


1,336,318


(1,142,580)


193,738



     Operating income (loss)


(344,833)


486,190


141,357


(1,033,232)


1,159,657


126,425


Interest and other income (expense), net


(42,417)


(4,478)

(d) (j) (k) (l)

(46,895)


(30,457)


(87)

(d)

(30,544)



Income (loss) from continuing operations before provision (benefit) for income taxes


(387,250)


481,712


94,462


(1,063,689)


1,159,570


95,881


Provision (benefit) for income taxes


(19,800)


54,168

(s)

34,368


(28,967)


55,064

(s)

26,097



 Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax     


(367,450)


427,544


60,094


(1,034,722)


1,104,506


69,784


Equity earnings (losses) of unconsolidated entities, net of tax


3,602


304

(c)

3,906


2,371


38

(c) (d)

2,409



Income (loss) from continuing operations


(363,848)


427,848


64,000


(1,032,351)


1,104,544


72,193



Income (loss) from discontinued operations, net of tax


-


-


-


(516)


11

(q)

(505)


Net income (loss)


(363,848)


427,848


64,000


(1,032,867)


1,104,555


71,688



Less: Net income attributable to non-controlling interests, net of tax


73


21

(o)

94


251


251

(o)

502


Net income (loss) attributable to Alere Inc. and Subsidiaries


$        (363,921)


$              427,827


$              63,906


$        (1,033,118)


$             1,104,304


$              71,186


















Preferred stock dividends


$            (5,367)




$              (5,367)


$               (6,234)




$               (6,234)

















Net income (loss) available to common stockholders


$        (369,288)




$              58,539


$        (1,039,352)




$              64,952

















Basic net income (loss) per common share attributable to Alere Inc. and Subsidiaries:















Basic income (loss) per common share from continuing operations


$              (4.67)




$                  0.74


$               (12.23)




$                  0.77



Basic income (loss) per common share from discontinued operations


$                   -




$                     -


$                 (0.01)




$                 (0.01)



Basic net income (loss) per common share


$              (4.67)




$                  0.74


$               (12.24)




$                  0.76

















Diluted net income (loss) per common share attributable to Alere Inc. and Subsidiaries:















Diluted income (loss) per common share from continuing operations


$              (4.67)

(t)



$                  0.70

(u)

$               (12.23)

(t)



$                  0.71

(v)


Diluted income (loss) per common share from discontinued operations


$                   -

(t)



$                     -

(u)

$                 (0.01)

(t)



$                 (0.01)

(v)


Diluted net income (loss) per common share


$              (4.67)

(t)



$                  0.70

(u)

$               (12.24)

(t)



$                  0.71

(v)
















Weighted average common shares - basic


79,034




79,034


84,924




84,924


Weighted average common shares - diluted


79,034

(t)



92,952

(u)

84,924

(t)



101,670

(v)



(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.

(b)  Approximately $1.5 million in estimated revenue related to acquired software license contracts will not be recognized for the fourth quarter of 2011 due to business combination accounting rules.

(c) Amortization expense of $80.9 million and $78.7 million in the fourth quarter of 2011 and 2010 GAAP results, respectively, including $15.0 million and $16.3 million charged to cost of sales, $1.5 million and $1.3 million charged to research and development, $64.2 million and $60.9 million charged to selling, general and administrative, with $0.2 million and $0.2 million charged through equity earnings of unconsolidated entities, net of tax, during each of the respective quarters.

(d) Restructuring associated with the decision to close facilities resulted in a charge of $8.8 million and $1.6 million for the fourth quarter of 2011 and 2010 GAAP results, respectively. The $8.8 million charge for the fourth quarter of 2011 included $0.6 million charged to cost of sales, $8.1 million charged to selling, general and administrative expense and $0.1 million charged to interest expense. The $1.6 million charge for the fourth quarter of 2010 included $0.6 million charged to cost of sales, $1.3 million charged to selling, general and administrative expense, a net recovery of $0.1 million recorded to interest and other income (expense), net and a net recovery of $0.2 million recorded through equity earnings of unconsolidated entities, net of tax

(e) Compensation costs of $4.9 million and $6.9 million associated with stock-based compensation expense for the fourth quarter of 2011 and 2010 GAAP results, respectively, including $0.4 million and $0.5 million charged to cost of sales, $0.8 million and $1.7 million charged to research and development and $3.7 million and $4.7 million charged to selling, general and administrative, in the respective periods.

(f) A net recovery in the amount of $0.3 million during the fourth quarter of 2010, relating to inventory write-ups recorded in connection with acquisitions. (See also footnote o below.)

(g) A write-off in the amount of $6.0 million during the fourth quarter of 2011, relating to inventory write-ups recorded in connection with acquisitions.

(h) Acquisition-related costs in the amount of $5.3 million and $1.4 million in the fourth quarter of 2011 and 2010 GAAP results, respectively, recorded in connection with ASC 805, Business Combinations.  

(i) $4.4 million of income and $4.1 million of expense in the fourth quarter of 2011 and 2010 GAAP results, respectively, recorded in connection with fair value adjustments to acquisition-related contingent consideration obligations in accordance with ASC 805, Business Combinations.

(j) Interest expense of $1.3 million recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility.

(k) A $5.4 million realized foreign currency gain in the fourth quarter of 2011 GAAP results associated with a bank account funded for the acquisition of Axis-Shield plc.

(l) A $0.5 million gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

(m) A goodwill impairment charge of $383.6 million and $1.0 billion during the fourth quarter of 2011 and 2010 GAAP results, respectively, related to our health management reporting unit and business segment.

(n) A $60.1 million compensation charge associated with our acquisition of minority shares of Standard Diagnostics, Inc. during the fourth quarter of 2010.

(o) Amortization expense of $28.0 thousand ($21.0 thousand, net of tax) and $0.3 million ($0.3 million, net of tax) in the fourth quarter of 2011 and 2010 GAAP results.

(p) A $0.7 million fair value write-down in the fourth quarter of 2010 recorded in connection with an idle facility.

(q) Expenses of $18.0 thousand ($11.0 thousand, net of tax) in the fourth quarter of 2010 incurred in connection with the sale of our vitamins and nutritional supplements business.

(s) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n) and (p).

(t) For the three months ended December 31, 2011 and 2010, potential dilutive shares were not used in the calculation of diluted net loss per common share under GAAP because inclusion thereof would be antidilutive.

(u) Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended December 31, 2011, on an adjusted cash basis, are dilutive shares consisting of 241,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities and 10,239,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock. The diluted net income per common share calculation for the three months ended December 31, 2011, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $0.7 million and the add back of $5.4 million of preferred stock dividends related to the Series B convertible preferred stock, resulting in net income available to common stockholders of $68.7 million for the three months ended December 31, 2011.

(v) Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended December 31, 2010, on an adjusted cash basis, were dilutive shares consisting of 1,188,000 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, 11,893,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock, 115,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business and 112,000 potentially issuable shares of common stock associated with contingent consideration arrangements. The diluted net income per common share calculation for the three months ended December 31, 2010, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $0.7 million, the add back of $6.2 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 $24.0 thousand resulting in net income available to common stockholders of $71.8 million for the three months ended December 31, 2010.

Alere Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and

Reconciliation to Non-GAAP Adjusted Cash Basis Amounts

(in $000s, except per share amounts)



















Year Ended December 31, 2011


Year Ended December 31, 2010









Non-GAAP






Non-GAAP









Adjusted






Adjusted







Non-GAAP


Cash




Non-GAAP


Cash





GAAP


Adjustments


Basis (a)


GAAP


Adjustments


Basis (a)

















Net product sales and services revenue


$     2,363,054


$                  1,452

(b)

$         2,364,506


$      2,134,588


$                          -


$         2,134,588


License and royalty revenue


23,473


-


23,473


20,759


-


20,759



Net revenue


2,386,527


1,452


2,387,979


2,155,347


-


2,155,347


Cost of net revenue


1,140,692


(73,634)

(c) (d) (e) (g)

1,067,058


1,020,760


(75,404)

(c) (d) (e) (f)

945,356



     Gross profit


1,245,835


75,086


1,320,921


1,134,587


75,404


1,209,991



     Gross margin


52%




55%


53%




56%

















Operating expenses:















Research and development


150,165


(16,915)

(c) (d) (e)

133,250


133,278


(12,370)

(c) (d) (e)

120,908



Selling, general and administrative


964,913


(270,810)

(c) (d) (e) (h) (i) (l)

694,103


946,041


(333,265)

 (c) (d) (e) (h) (i) (o) 

612,776



Goodwill impairment charge


383,612


(383,612)

(n)



1,006,357


(1,006,357)

(n)

-



  Total operating expenses


1,498,690


(671,337)


827,353


2,085,676


(1,351,992)


733,684



     Operating income (loss)


(252,855)


746,423


493,568


(951,089)


1,427,396


476,307


Interest and other income (expense), net


86,808


(241,986)

 (d) (j) (k) (l) (m) (p) (q) 

(155,178)


(116,697)


(3,042)

(d) (h) (q)

(119,739)



Income (loss) from continuing operations before provision (benefit) for income taxes


(166,047)


504,437


338,390


(1,067,786)


1,424,354


356,568


Provision (benefit) for income taxes


(24,214)


136,356

(u)

112,142


(29,931)


144,214

(u)

114,283



 Income (loss) from continuing operations before equity earnings of unconsolidated entities, net of tax     


(141,833)


368,081


226,248


(1,037,855)


1,280,140


242,285


Equity earnings of unconsolidated entities, net of tax


8,524


1,489

(c) (d)

10,013


10,566


3,750

(c) (d)

14,316



Income (loss) from continuing operations


(133,309)


369,570


236,261


(1,027,289)


1,283,890


256,601



Income from discontinued operations, net of tax


-


-


-


11,397


191

(r)

11,588


Net income (loss)


(133,309)


369,570


236,261


(1,015,892)


1,284,081


268,189



Less: Net income attributable to non-controlling interests, net of tax


233


75

(s)

308


1,418


3,714

(s) (t)

5,132


Net income (loss) attributable to Alere Inc. and Subsidiaries


$      (133,542)


$              369,495


$            235,953


$    (1,017,310)


$             1,280,367


$            263,057


















Preferred stock dividends


$        (22,049)




$            (22,049)


$         (24,235)




$             (24,235)



Preferred stock repurchase


$          23,936


$               (23,936)

(y)

$                     -


$                   -




$                      -

















Net income available to common stockholders


$      (131,655)




$            213,904


$    (1,041,545)




$            238,822

















Basic net income (loss) per common share attributable to Alere Inc. and Subsidiaries:















Basic income (loss) per common share from continuing operations


$            (1.58)




$                  2.57


$           (12.47)




$                  2.69



Basic income per common share from discontinued operations


$                 -




$                     -


$               0.14




$                  0.14



Basic net income (loss) per common share


$            (1.58)




$                  2.57


$           (12.33)




$                  2.83

















Diluted net income (loss) per common share attributable to Alere Inc. and Subsidiaries:















Diluted income (loss) per common share from continuing operations


$            (1.58)

(v)



$                  2.44

(w)

$           (12.47)

(v)



$                  2.51

(x)


Diluted income per common share from discontinued operations


$                 -

(v)



$                     -

(w)

$               0.14

(v)



$                  0.11

(x)


Diluted net income (loss) per common share


$            (1.58)

(v)



$                  2.44

(w)

$           (12.33)

(v)



$                  2.63

(x)
















Weighted average common shares - basic


83,128




83,128


84,445




84,445


Weighted average common shares - diluted


83,128

(v)



98,079

(w)

84,445

(v)



101,284

(x)



(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.

(b)  As of December 31, 2011, approximately $1.5 million, $4.1 million, $2.2 million, $1.4 million, $0.7 million and $0.2 million in estimated revenue related to acquired software license contracts will not be recognized in fiscal 2011, fiscal 2012 , fiscal 2013, fiscal 2014, fiscal 2015 and fiscal 2016, respectively, due to business combination accounting rules.

(c) Amortization expense of $308.8 million and $299.4 million for the year 2011 and 2010 GAAP results, respectively, including $63.2 million and $63.0 million charged to cost of sales, $12.7 million and $4.8 million charged to research and development, $232.0 million and $209.6 million charged to selling, general and administrative, with $0.9 million and $0.9 million charged through equity earnings of unconsolidated entities, net of tax, during each of the respective periods.

(d) Restructuring charges associated with the decision to close facilities of $29.1 million and $15.1 million for the year 2011 and 2010 GAAP results, respectively.  The $29.1 million charge for the year ended December 31, 2011 included $2.9 million charged to cost of sales, $0.4 million charged to research and development, $24.9 million charged to selling, general and administrative expense, $0.3 million charged to interest expense and $0.6 million charged through equity earnings of unconsolidated entities, net of tax. The $15.1 million charge for the year ended December 31, 2010 included $3.9 million charged to cost of sales, $0.5 million charged to research and development, $10.9 million charged to selling, general and administrative expense, a net recovery of $3.1 million recorded to interest and other income (expense), net and $3.0 million charged through equity earnings of unconsolidated entities, net of tax

(e) Compensation costs of $21.2 million and $29.9 million associated with stock-based compensation expense for the year 2011 and 2010 GAAP results, respectively, including $1.5 million and $1.9 million charged to cost of sales, $3.9 million and $7.1 million charged to research and development and $15.8 million and $20.9 million charged to selling, general and administrative, in the respective periods.

(f) A write-off in the amount of $6.6 million during the year ended December 31, 2010, relating to inventory write-ups recorded in connection with acquisitions.  (See also footnote s below.)

(g) A write-off in the amount of $6.0 million during the year ended December 31, 2011, relating to inventory write-ups recorded in connection with acquisitions.  

(h) Acquisition-related costs in the amount of $11.5 million and $8.3 million for the year 2011 and 2010 GAAP results, respectively, recorded in connection with ASC 805, Business Combinations. The $8.3 million of acquisition-related costs recorded during 2010 included $8.2 million charged to selling, general and administrative and $0.1 million charged to interest expense.

(i) $14.1 million of income and $1.8 million of expense for the year 2011 and 2010 GAAP results, respectively, recorded in connection with fair value adjustments to acquisition-related contingent consideration obligations in accordance with ASC 805, Business Combinations.

(j) A $1.9 million realized foreign currency loss associated with the settlement of an acquisition-related contingent consideration obligation for the year 2011.

(k) Interest expense of $32.5 million recorded in connection with fees paid for certain debt modifications and the termination of our senior secured credit facility and related interest rate swap agreement for the year 2011.

(l) A $12.7 million realized foreign currency loss for the year 2011 GAAP results associated with a bank account funded for the acquisition of Axis-Shield plc.

(m) A $0.5 million gain related to previously-owned shares of Axis-Shield plc recorded in connection with the completion of the acquisition during the fourth quarter of 2011.

(n) A goodwill impairment charge in the amount of $383.6 million and $1.0 billion for the year 2011 and 2010 GAAP results, respectively, related to our health management reporting unit and business segment.

(o) A $60.1 million compensation charge associated with our acquisition of minority shares of Standard Diagnostics, Inc. during the fourth quarter of 2010.

(p) Recognition of a $288.9 million gain originally recorded in connection with the formation of SPD, our 50/50 joint venture with the Procter & Gamble Company.

(q) A $0.6 million and $0.7 million fair value write-down for the year 2011 and 2010, respectively, recorded in connection with an idle facility.

(r) Expenses of $0.3 million ($0.2 million, net of tax) incurred in connection with the sale of our vitamins and nutritional supplements business for the year 2010 GAAP results.

(s) Amortization expense of $0.1 million ($0.1 million, net of tax) and $3.2 million ($2.4 million, net of tax) for the year 2011 and 2010 GAAP results, respectively.

(t) A write-off in the amount of $1.7 million ($1.3 million, net of tax) in the first nine months of 2010 relating to inventory write-ups attributable to operating results of non-controlling interests.

(u) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (p), and (q).

(v) For the year ended December 31, 2011 and 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.

(w) Included in the weighted average diluted common shares for the calculation of net income per common share for the year ended December 31, 2011, on an adjusted cash basis, are dilutive shares consisting of 768,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were dilutive shares consisting of 3,438,000 common stock equivalent shares from the potential conversion of convertible debt securities, 142,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business and 10,602,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock. The diluted net income per common share calculation for the year ended December 31, 2011, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $2.8 million, the add back of $22.0 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 $0.1 million, resulting in net income available to common stockholders of $243.0 million for the year ended December 31, 2011.

(x) Included in the weighted average diluted common shares for the calculation of net income per common share for the year ended December 31, 2010, on an adjusted cash basis, were dilutive shares consisting of 1,412,000 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, 11,654,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock, 306,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business and 28,000 potentially issuable shares of common stock associated with contingent consideration arrangements. The diluted net income per common share calculation for the year ended December 31, 2010, on an adjusted cash basis, included the add back of interest expense related to the convertible debt of $2.8 million, the add back of $24.2 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 $266.0 million for the year ended December 31, 2010.

(y)  Non-cash income allocated to net income available to common stockholders as a result of repurchases of preferred shares during the year ended December 31, 2011.

Alere Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in $000s)






December 31,


December 31,


2011


2010

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$              299,173


$               401,306

Restricted cash

8,987


2,581

Marketable securities

1,086


2,094

Accounts receivable, net

475,824


397,148

Inventories, net

320,269


257,720

Prepaid expenses and other current assets

188,388


133,408

Total current assets

1,293,727


1,194,257





PROPERTY, PLANT AND EQUIPMENT, NET

491,205


390,510

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

4,676,742


4,567,064

DEFERRED FINANCING COSTS AND OTHER ASSETS, NET

211,027


178,543

Total assets

$           6,672,701


$            6,330,374





LIABILITIES AND STOCKHOLDERS' EQUITY




CURRENT LIABILITIES:




Current portion of notes payable and short-term debt

$                73,415


$                 19,017

Current portion of deferred gain on joint venture

-


288,378

Other current liabilities

551,037


475,463

Total current liabilities

624,452


782,858





LONG-TERM LIABILITIES:




Notes payable, net of current portion

3,280,080


2,379,968

Deferred tax liability

380,700


420,166

Other long-term liabilities

153,398


169,656

Total long-term liabilities

3,814,178


2,969,790





Redeemable non-controlling interest

2,497


-





TOTAL EQUITY

2,231,574


2,577,726

Total liabilities and equity

$           6,672,701


$            6,330,374



SOURCE Alere Inc.

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