To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles (“GAAP”), the company uses non-GAAP financial measures that exclude certain items, such as in-process research and development expenses, special charges and gains, results of discontinued products, and fluctuations in exchange rates. Management does not consider the excluded items part of day-to-day business or reflective of the core operational activities of the company as they result from transactions outside the ordinary course of business. Management has also reflected the impact of Financial Accounting Standards Board Statement No. 123(R) (“FAS 123(R)”), Share Based Compensation, as if these provisions had been applied in prior years for year-over-year comparison purposes.
Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Certain guidance is provided only on a non-GAAP basis that excludes special items and foreign exchange fluctuations due to the inherent difficulty in forecasting such items. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the company’s core operating results and trends for the periods presented.
Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, nor superior to, the corresponding measures calculated in accordance with GAAP.
| 2007 | 2006 | 2005 | 2004 | 2003 | |
| Twelve months ended December 31, (in millions, except per share data) | |||||
| GAAP Net Income | $ 113.0 | $ 130.5 | $ 79.3 | $ 1.7 | $ 79.0 |
| Reconciling items: | |||||
| Cost of goods sold - discontinued products | — | 2.0 | — | — | — |
| Purchased in-process research & development expenses | — | — | 1.2 | 93.3 | 13.6 |
| Special charges (gains): | |||||
| Realignment expenses | 13.9 | 9.4 | 3.9 | — | 13.0 |
| Pension settlement and adjustments | 11.2 | — | — | — | 1.9 |
| Settlements and litigations gains (losses), net | — | (20.2) | 2.9 | — | 5.3 |
| (Gain) loss on sale of assets, net | (1.8) | (13.7) | (14.1) | (7.4) | 3.3 |
| PVT milestone payment | — | 10.0 | — | — | — |
| Discontinued products | — | 6.8 | 1.4 | 10.6 | — |
| Restructure 3F Therapeutics agreements | — | 2.0 | 22.8 | — | — |
| Litigation reserves | — | 1.2 | — | — | — |
| Investment impairments | — | — | 16.3 | 9.0 | — |
| Charitable fund contribution | — | — | 15.0 | 5.0 | — |
| Stock option expense under FAS 123(R), net of tax | (14.3) | (15.7) | (16.0) | ||
| Provision (benefit) for income taxes: | |||||
| Tax effect on non-GAAP adjustments | (6.9) | 6.6 | (11.5) | (8.1) | (6.3) |
| Tax benefit from audit settlements and reversal of valuation allowances | — | (6.9) | (8.0) | — | (13.2) |
| Repatriation taxes | — | — | 15.8 | — | — |
| Non-GAAP Net Income | $ 129.4 | $ 127.7 | $ 110.7 | $ 88.4 | $ 80.6 |
| Non-GAAP earnings per share: | |||||
| Basic non-GAAP earnings per share | $ 2.26 | $ 2.18 | $ 1.86 | $ 1.48 | $ 1.36 |
| Diluted non-GAAP earnings per share | $ 2.13 | $ 2.06 | $ 1.76 | $ 1.43 | $ 1.32 |
| Weighted average shares outstanding: | |||||
| Basic | 57.3 | 58.5 | 59.6 | 59.6 | 59.1 |
| Diluted | 62.7 | 63.9 | 65.0 | 64.7 | 62.9 |
| NON-GAAP FREE CASH FLOW 2003-2007 | 2007 | 2006 | 2005 | 2004 | 2003 |
| Twelve months ended December 31, (in millions) | |||||
| Net cash provided by operating activities | $ 210.2 | $ 230.8 | $ 136.8 | $ 180.6 | $ 142.1 |
| Capital expenditures | (57.0) | (57.4) | (48.5) | (42.5) | (37.9) |
| Reconciling items: | |||||
| Litigation settlement | — | (23.8) | — | — | — |
| Charitable fund contribution | — | — | 15.0 | — | — |
| Restructure 3F agreements | — | — | 22.8 | — | — |
| Non-GAAP Free Cash Flow | $ 153.2 | $ 149.6 | $ 126.1 | $ 138.1 | $ 104.2 |