Inverness Medical Innovations Announces Fourth Quarter 2009 Results
WALTHAM, Mass., Feb. 17 /PRNewswire-FirstCall/ -- Inverness Medical Innovations, Inc. (NYSE: IMA), a global leader in enabling individuals to take charge of their health at home through the merger of rapid diagnostics and health management, today announced its financial results for the quarter ended December 31, 2009.
Financial results for the fourth quarter of 2009:
- Net revenue of $546.2 million for the fourth quarter of 2009, compared to $432.5 million for the fourth quarter of 2008.
- Reported revenues exclude revenues of $35.9 million for the fourth quarter of 2009 and $26.8 million for the fourth quarter of 2008 related to our Nutritionals business. As a result of our decision to sell the Nutritionals business, we have classified the business as a discontinued operation for financial reporting purposes.
- North American influenza sales totaled $39.7 million for the fourth quarter of 2009, compared to $8.4 million for the fourth quarter of 2008.
- Recent acquisitions contributed $66.1 million of incremental net revenue, compared to the fourth quarter of 2008.
- GAAP net loss available to common stockholders and loss per share of $3.1 million and $0.04 per common share, compared to GAAP net income available to common stockholders and earnings per share of $10.9 million and $0.14 per diluted common share, for the fourth quarter of 2008.
- Adjusted cash basis net income available to common stockholders and earnings per share of $64.2 million and $0.71 per diluted common share, compared to $54.7 million and $0.66 per diluted common share, for the fourth quarter of 2008.
The Company's GAAP results for the fourth quarter of 2009 include amortization of $71.9 million, $6.9 million of restructuring charges, $7.9 million of stock-based compensation expense, a $1.4 million charge associated with the write-up to fair market value of inventory acquired in connection with the acquisition of Concateno plc, $4.3 million of acquisition-related costs recorded in accordance with our adoption of ASC 805, Business Combinations, $1.8 million of expense incurred in connection with the disposal of our Nutritionals business, $1.8 million of expense recorded for fair value adjustments to acquisition-related contingent consideration obligations and a $3.2 million write-down in the carrying value of a facility. GAAP results for the fourth quarter of 2008 include amortization of $60.3 million, $5.0 million of restructuring charges and $6.7 million of stock-based compensation expense. These amounts, net of tax, have been excluded from the adjusted cash basis net income per common share for the respective quarters.
A detailed reconciliation of the Company's adjusted cash basis net income, which is a non-GAAP financial measure, to net income (loss) under GAAP, as well as a discussion regarding this non-GAAP financial measure, is included in the schedules to this press release. Additionally, we have posted on the Inverness website at www.invmed.com a reconciliation on a GAAP and non-GAAP basis of the impacts of the treatment of our Nutritionals business as a discontinued operation for the quarters and the years ended December 31, 2009 and 2008.
The Company will host a conference call beginning at 10:00 a.m. (Eastern Time) today, February 17, 2010, to discuss these results as well as other corporate matters. During the conference call, the Company may answer questions concerning business and financial developments and trends and other business and financial matters. The Company's responses to these questions, as well as other matters discussed during the conference call, may contain or constitute information that has not been previously disclosed.
The conference call may be accessed by dialing 706-679-1656 (domestic and international), an access code is not required, or via a link on the Inverness website at www.invmed.com. It is also available via link at http://event.meetingstream.com/r.htm?e=184461&s=1&k=1A14C774F5FD857C8CEABC667F76C662. An archive of the call will be available from the same link approximately two hours after the conclusion of the live call and will be accessible for 60 days. Additionally, reconciliations to non-GAAP financial measures not included in this press release that may be discussed during the call will also be available at the Inverness website (www.invmed.com/News.cfm) shortly before the conference call begins and will continue to be available on this website.
For more information about Inverness Medical Innovations, please visit our website at http://www.invernessmedical.com.
By developing new capabilities in near-patient diagnosis, monitoring and health management, Inverness Medical Innovations enables individuals to take charge of improving their health and quality of life at home. Inverness' global leading products and services, as well as its new product development efforts, focus on infectious disease, cardiology, oncology, drugs of abuse and women's health. Inverness is headquartered in Waltham, Massachusetts.
Inverness Medical Innovations, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in $000s)
December 31, December 31,
2009 2008
---- ----
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $492,773 $141,324
Restricted cash 2,424 2,748
Marketable securities 947 1,763
Accounts receivable, net 354,453 261,369
Inventories, net 221,539 173,585
Prepaid expenses and other current assets 140,674 196,768
Assets held for sale 54,148 58,166
------ ------
Total current assets 1,266,958 835,723
PROPERTY, PLANT AND EQUIPMENT, NET 324,388 274,478
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 5,193,429 4,714,635
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET 159,217 130,524
------- -------
Total assets $6,943,992 $5,955,360
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current portion of notes payable $19,869 $19,509
Liabilities related to assets held for sale 11,558 19,193
Other current liabilities 406,587 326,672
------- -------
Total current liabilities 438,014 365,374
------- -------
LONG-TERM LIABILITIES:
Notes payable, net of current portion 2,129,455 1,501,025
Deferred tax liability 442,049 462,787
Other long-term liabilities 405,585 346,467
------- -------
Total long-term liabilities 2,977,089 2,310,279
--------- ---------
TOTAL EQUITY 3,528,889 3,279,707
--------- ---------
Total liabilities and equity $6,943,992 $5,955,360
========== ==========
Inverness Medical Innovations, 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, 2009
----------------------------
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
---- ----------- ---------
Net product sales
and services
revenue $1,893,566 $- $1,893,566
License and
royalty revenue 29,075 - 29,075
------ --- ------
Net revenue 1,922,641 - 1,922,641
Cost of net revenue 868,419 (55,605)(b)(c)(d)(e) 812,814
------- ------- -------
Gross profit 1,054,222 55,605 1,109,827
Gross margin 55% 58%
Operating expenses:
Research and
development 112,848 (10,680)(b)(c)(d) 102,168
Selling, general and
administrative 798,679 (258,302)(b)(c)(d)(f)(k)(l) 540,377
Gain on disposition (3,355) 3,355 (g)
------ -----
Operating income
from continuing
operations 146,050 321,232 467,282
Interest and other
income (expense),
net (106,267) (35)(c)(h)(i)(j) (106,302)
-------- --------
Income (loss)
from continuing
operations before
provision
(benefit) for
income taxes 39,783 321,197 360,980
Provision (benefit)
for income taxes 15,627 110,398 (n) 126,025
------ ------- -------
Income (loss)
from continuing
operations before
equity earnings
of unconsolidated
entities, net of tax 24,156 210,799 234,955
Equity earnings
of unconsolidated
entities, net of
tax 7,626 6,226 (b)(c) 13,852
----- ----- ------
Income (loss)
from continuing
operations 31,782 217,025 248,807
Income (loss)
from discontinued
operations, net of
tax 1,934 1,226 (b)(m) 3,160
----- ----- -----
Net income (loss) $33,716 $218,251 $251,967
======= ======== ========
Preferred stock
dividends $(22,972) (22,972)
Net income (loss)
available to common
stockholders $10,744 $228,995
======= ========
Net income (loss)
from continuing
operations per
common share:
Basic $0.11 $2.80
===== =====
Diluted $0.11(o) $2.60(q)
===== =====
Net income (loss)
from discontinued
operations per
common share:
Basic $0.02 $0.04
===== =====
Diluted $0.02(o) $0.03(q)
===== =====
Net income (loss)
per common
share:
Basic $0.13 $2.84
===== =====
Diluted $0.13(o) $2.63(q)
===== =====
Weighted average
common shares -
basic 80,572 80,572
====== ======
Weighted average
common shares -
diluted 81,967(o) 96,845(q)
====== ======
Year Ended December 31, 2008
----------------------------
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
---- ----------- ---------
Net product sales
and services
revenue $1,556,727 $- $1,556,727
License and royalty
revenue 25,826 - 25,826
------ --- ------
Net revenue 1,582,553 - 1,582,553
Cost of net revenue 729,035 (64,780)(b)(c)(d)(e) 664,255
------- ------- -------
Gross profit 853,518 64,780 918,298
Gross margin 54% 58%
Operating expenses:
Research and
development 111,828 (15,586)(b)(c)(d) 96,242
Selling, general and
administrative 676,998 (198,652)(b)(c)(d) 478,346
Gain on disposition - - -
--- --- ---
Operating income
from continuing
operations 64,692 279,018 343,710
Interest and other
income (expense),
net (103,106) 8,762 (c)(j) (94,344)
-------- ----- -------
Income (loss) from
continuing operations
before provision
(benefit) for
income taxes (38,414) 287,780 249,366
Provision (benefit)
for income taxes (16,644) 99,159 (n) 82,515
------- ------ ------
Income (loss)
from continuing
operations before
equity earnings
of unconsolidated
entities, net of
tax (21,770) 188,621 166,851
Equity earnings
of unconsolidated
entities, net of tax 1,050 8,183 (b)(c) 9,233
----- ----- -----
Income (loss)
from continuing
operations (20,720) 196,804 176,084
Income (loss)
from discontinued
operations, net of
tax (1,048) 130 (b) (918)
------ --- ----
Net income (loss) $(21,768) $196,934 $175,166
======== ======== ========
Preferred stock
dividends $(13,989) (13,989)
Net income (loss)
available to common
stockholders $(35,757) $161,177
======== ========
Net income (loss)
from continuing
operations per
common share:
Basic $(0.45) $2.08
====== =====
Diluted $(0.45)(p) $1.98 (r)
====== =====
Net income (loss)
from discontinued
operations per
common share:
Basic $(0.01) $(0.01)
====== ======
Diluted $(0.01)(p) $(0.01)(r)
====== ======
Net income (loss)
per common share:
Basic $(0.46) $2.07
====== =====
Diluted $(0.46)(p) $1.97 (r)
====== =====
Weighted average
common shares -
basic 77,778 77,778
====== ======
Weighted average
common shares -
diluted 77,778 (p) 83,376 (r)
====== ======
(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) Amortization expense of $257.2 million and $215.3 million for the year 2009 and 2008 GAAP results, respectively, including $42.1 million and $43.4 million charged to cost of sales, $4.4 million and $3.7 million charged to research and development, $209.6 million and $167.1 million charged to selling, general and administrative expense, in the respective periods, with $0.2 million charged through income (loss) from discontinued operations, net of tax, and $0.9 charged through equity earnings of unconsolidated entities, net of tax, during each of the respective periods.
(c) Restructuring charge associated with the decision to close facilities of $23.4 million and $50.7 million for the year 2009 and 2008 GAAP results, respectively. The $23.4 million charge for the year ended December 31, 2009 included $9.5 million charged to cost of sales, $1.1 million charged to research and development, $6.8 million charged to selling, general and administrative expense, $0.7 million charged to interest expense and $5.3 million charged through equity earnings of unconsolidated entities, net of tax. The $50.7 million charge for the year ended December 31, 2008 included $17.9 million charged to cost of sales, $7.2 million charged to research and development, $11.3 million charged to selling, general and administrative expense, $7.1 million charged to interest expense and $7.2 million charged through equity earnings of unconsolidated entities, net of tax.
(d) Compensation costs of $28.2 million and $26.4 million associated with stock-based compensation expense for the year 2009 and 2008 GAAP results, respectively, including $2.0 million and $1.5 million charged to cost of sales, $5.2 million and $4.6 million charged to research and development and $21.0 million and $20.3 million charged to selling, general and administrative.
(e) A write-off in the amount of $2.0 million during the each of the years ended December 31, 2009 and 2008, respectively, relating to inventory write-ups recorded in connection with the acquisitions of Concateno plc during the third quarter of 2009 and Panbio Limited and BBI Holdings Plc. during the first quarter of 2008, respectively.
(f) Acquisition-related costs in the amount of $15.9 million recorded in connection with the adoption of ASC 805, Business Combinations, on January 1, 2009.
(g) A $3.4 million gain associated with management's decision to dispose of our Diamics, Inc. operations.
(h) A $1.9 million compensation-related charge recorded in connection with the acquisition of Concateno plc.
(i) A $0.3 million loss recorded in connection with the deferred payment of a portion of the ACON Second Territory Business purchase price consideration to be paid with our common stock.
(j) A $2.9 million net realized foreign currency gain and a $1.7 million net realized foreign currency loss during the year ended December 31, 2009 and 2008, respectively, associated with restricted cash established in connection with the acquisitions of Concateno plc during the third quarter of 2009 and BBI Holdings Plc during the first quarter of 2008, respectively.
(k) $1.8 million of expense recorded in connection with fair value adjustments to acquisition-related contingent consideration obligations in accordance with ASC 805, Business Combinations.
(l) A $3.2 million fair value write-down recorded in connection with an idle facility.
(m) Expenses of $1.8 million ($1.1 million, net of tax) incurred in connection with the sale of our vitamins and nutritional supplements business.
(n) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) and (l).
(o) Included in the weighted average diluted common shares for the calculation of net income per common share on a GAAP basis for the year ended December 31, 2009, are dilutive shares consisting of 1,395,000 common stock equivalent shares from the potential exercise of stock options and warrants. Potential dilutive shares consisting of 3,426,000 common stock equivalent shares from the potential conversion of convertible debt securities, 386,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business and potential dilutive shares consisting of 11,066,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock were not included in the calculation of net income per common share on a GAAP basis for the year ended December 31, 2009 because inclusion thereof would be antidilutive.
(p) For the year ended December 31, 2008, potential dilutive shares were not used in the calculation of diluted net loss per common share under GAAP because inclusion thereof would be antidilutive.
(q) Included in the weighted average diluted common shares for the calculation of net income per common share for the year ended December 31, 2009, on an adjusted cash basis, are dilutive shares consisting of 1,395,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,426,000 common stock equivalent shares from the potential conversion of convertible debt securities, 11,066,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 386,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the year ended December 31, 2009, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $2.8 million, the add back of $23.0 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 $0.4 million resulting in net income available to common stockholders of $255.1 million for the year ended December 31, 2009.
(r) Included in the weighted average diluted common shares for the calculation of net income per common share for the year ended December 31, 2008, on an adjusted cash basis, are dilutive shares consisting of 2,188,000 common stock equivalent shares from the potential exercise of stock options and warrants and potential dilutive shares consisting of 3,411,000 common stock equivalent shares from the potential conversion of convertible debt securities. The diluted net income per common share calculation for the year ended December 31, 2008, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $2.8 million resulting in net income available to common stockholders of $164.0 million. Potential dilutive shares consisting of 6,681,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock for the year ended December 31, 2008 were not used in the calculation of diluted net income per common share, on an adjusted cash basis, because inclusion thereof would be antidilutive.
Inverness Medical Innovations, 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, 2009
------------------------------------
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
---- ----------- ---------
Net product sales and services
revenue $537,684 $- $537,684
License and royalty revenue 8,487 - 8,487
----- --- -----
Net revenue 546,171 - 546,171
Cost of net revenue 244,592 (16,876)(b)(c)(d)(e)227,716
------- ------- -------
Gross profit 301,579 16,876 318,455
------- ------ -------
Gross margin 55% 58%
Operating expenses:
Research and development 32,037 (2,887)(b)(c)(d) 29,150
Selling, general and
administrative 234,422 (75,845)(b)(c)(d) 158,577
(f)(g)(h)
------- ------- -------
Total operating expenses 266,459 (78,732) 187,727
Operating income from
continuing operations 35,120 95,608 130,728
Interest and other income
(expense), net (34,728) 196(c) (34,532)
------- --- -------
Income from continuing
operations before provision
(benefit) for income taxes 392 95,804 96,196
Provision (benefit) for income
taxes 2,726 31,271(j) 33,997
----- ------ ------
(Loss) income from continuing
operations before equity
earnings of unconsolidated
entities, net of tax (2,334) 64,533 62,199
Equity earnings of unconsolidated
entities, net of tax 2,087 1,629(b)(c) 3,716
----- ----- -----
(Loss) income from continuing
operations (247) 66,162 65,915
Income (loss) from discontinued
operations, net of tax 3,034 1,129(b)(i) 4,163
----- ----- -----
Net income $2,787 $67,291 $70,078
====== ======= =======
Preferred stock dividends $(5,916) $(5,916)
Net (loss) income available to
common stockholders $(3,129) $64,162
======= =======
Net (loss) income from
continuing operations per
common share:
Basic $(0.08) $0.72
====== =====
Diluted $(0.08)(k) $0.67(m)
====== =====
Net income (loss) from
discontinued operations per
common share:
Basic $0.04 $0.05
===== =====
Diluted $0.04 (k) $0.04(m)
===== =====
Net (loss) income per common
share:
Basic $(0.04) $0.77
====== =====
Diluted $(0.04)(k) $0.71(m)
====== =====
Weighted average common shares -
basic 83,211 83,211
====== ======
Weighted average common shares -
diluted 83,211 (k) 100,431(m)
====== =======
Three Months Ended December 31, 2008
------------------------------------
Non-GAAP
Adjusted
Non-GAAP Cash
GAAP Adjustments Basis (a)
---- ----------- ---------
Net product sales and services
revenue $428,110 $- $428,110
License and royalty revenue 4,350 - 4,350
----- --- -----
Net revenue 432,460 - 432,460
Cost of net revenue 187,077 (11,220)(b)(c)(d) 175,857
------- ------- -------
Gross profit 245,383 11,220 256,603
Gross margin 57% 59%
Operating expenses:
Research and development 25,402 (2,506)(b)(c)(d) 22,896
Selling, general and
administrative 186,303 (56,525)(b)(c)(d) 129,778
------- ------- -------
Total operating expenses 211,705 (59,031) 52,674
Operating income from
Continuing operations 33,678 70,251 103,929
Interest and other income
(expense), net (18,754) 147 (c) (18,607)
------- --- -------
Income from continuing
operations before provision
(benefit) for income taxes 14,924 70,398 85,322
Provision (benefit) for income
taxes (2,924) 28,171 (j) 25,247
------ ------ ------
(Loss) income from continuing
operations before equity
earnings of unconsolidated
entities, net of tax 17,848 42,227 60,075
Equity earnings of unconsolidated
entities, net of tax (119) 1,505 (b)(c) 1,386
---- ----- -----
(Loss) income from continuing
operations 17,729 43,732 61,461
Income (loss) from discontinued
operations, net of tax (1,316) 33 (b) (1,283)
------ --- ------
Net income $16,413 $43,765 $60,178
======= ======= =======
Preferred stock dividends $(5,490) $(5,490)
Net (loss) income available to
common stockholders $10,923 $54,688
======= =======
Net (loss) income from continuing
operations per common share:
Basic $0.16 $0.72
===== =====
Diluted $0.16 (l) $0.67 (n)
===== =====
Net income (loss) from discontinued
operations per common share:
Basic $(0.02) $(0.02)
====== ======
Diluted $(0.02)(l) $(0.02)(n)
====== ======
Net (loss) income per
common share:
Basic $0.14 $0.70
===== =====
Diluted $0.14 (l) $0.66 (n)
===== =====
Weighted average common shares -
basic 78,217 78,217
====== ======
Weighted average common shares -
diluted 78,941 (l) 92,853 (n)
====== ======
(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) Amortization expense of $71.9 million and $60.3 million in the fourth quarter of 2009 and 2008 GAAP results, respectively, including $11.6 million and $9.2 million charged to cost of sales, $1.2 million and $1.0 million charged to research and development, $58.8 million and $49.9 million charged to selling, general and administrative expense, in the respective quarters, with $0.3 million and $0.2 million charged through equity earnings of unconsolidated entities, net of tax, during the respective quarters. Amortization associated with discontinued operations amounted to $54,000 during the fourth quarter of 2009 and 2008.
(c) Restructuring charge associated with the decision to close facilities of $6.9 million and $5.0 million in the fourth quarter of 2009 and 2008 GAAP results, respectively. The $6.8 million charge for the three months ended December 31, 2009 included $3.3 million charged to cost of sales, $0.2 million charged to research and development, $1.8 million charged to selling, general and administrative expense, $0.2 million charged to interest expense and $1.3 million charged through equity earnings of unconsolidated entities, net of tax. The $5.0 million charge for the three months ended December 31, 2008 included $1.5 million charged to cost of sales, $0.4 million charged to research and development, $1.7 million charged to selling, general and administrative expense, $0.1 million charged to interest expense and $1.3 million charged through equity earnings of unconsolidated entities, net of tax.
(d) Compensation costs of $7.9 million and $6.7 million associated with stock-based compensation expense in the fourth quarter of 2009 and 2008 GAAP results, respectively, including $0.5 million and $0.5 million charged to cost of sales, $1.5 million and $1.2 million charged to research and development and $5.9 million and $5.0 million charged to selling, general and administrative, in the respective quarters.
(e) A write-off in the amount of $1.4 million during the fourth quarter of 2009, relating to inventory write-ups recorded in connection with the acquisition of Concateno plc during the third quarter of 2009.
(f) Acquisition-related costs in the amount of $4.3 million recorded in connection with the adoption of ASC 805, Business Combinations, on January 1, 2009.
(g) $1.8 million of expense recorded in connection with fair value adjustments to acquisition-related contingent consideration obligations in accordance with ASC 805, Business Combinations.
(h) A $3.2 million fair value write-down recorded in connection with an idle facility.
(i) Expenses of $1.8 million ($1.1 million, net of tax) incurred in connection with the sale of our vitamins and nutritional supplements business.
(j) Tax effect on adjustments as discussed above in notes (b), (c), (d), (e), (f), (g) and (h).
(k) For the three months ended December 31, 2009, potential dilutive shares were not used in the calculation of diluted net loss per common share under GAAP because inclusion thereof would be antidilutive.
(l) Included in the weighted average diluted common shares for the calculation of net income per common share on a GAAP basis for the three months ended December 31, 2008, are dilutive shares consisting of 724,000 common stock equivalent shares from the potential exercise of stock options and warrants. Potential dilutive shares consisting of 3,411,000 common stock equivalent shares from the potential conversion of convertible debt securities and potential dilutive shares consisting of 10,502,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock were not included in the calculation of net income per common share on a GAAP basis for the three months ended December 31, 2008 because inclusion thereof would be antidilutive.
(m) Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended December 31, 2009, on an adjusted cash basis, are dilutive shares consisting of 1,922,000 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, 11,286,000 common stock equivalent shares from the potential conversion of Series B convertible preferred stock and 573,000 common stock equivalents from the potential settlement of a portion of the deferred purchase price consideration related to the ACON Second Territory Business. The diluted net income per common share calculation for the three months ended December 31, 2009, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $0.7 million, the add back of $5.9 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 $70.9 million for the three months ended December 31, 2009.
(n) Included in the weighted average diluted common shares for the calculation of net income per common share for the three months ended December 31, 2008, on an adjusted cash basis, are dilutive shares consisting of 724,000 common stock equivalent shares from the potential exercise of stock options and warrants. Also included were potential dilutive shares consisting of 3,411,000 common stock equivalent shares from the potential conversion of convertible debt securities and 10,502,000 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, 2008, on an adjusted cash basis, includes the add back of interest expense related to the convertible debt of $0.7 million and the add back of preferred stock dividends related to the Series B convertible preferred stock resulting in net income available to common stockholders of $60.9 million for the three months ended December 31, 2008.
SOURCE Inverness Medical Innovations, Inc.
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