(1) Acquisition, divestiture and integration-related charges are associated with the Codman Neurosurgery, Arkis Biosciences, Rebound Therapeutics and ACell acquisitions and the divestiture of Extremity Orthopedics and includes banking, legal, consulting, systems, and other income and expenses.
(2) Upon adoption of ASU No. 2020-06, the Company will no longer incur non-cash interest expense for the amortization of debt discount.
RECONCILIATION OF NON-GAAP ADJUSTMENTS - GAAP NET INCOME TO MEASURES OF ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended September 30,
------------------------------------------
2021 2020
-------------------- --------------------
GAAP net income 43,229 32,337
Non-GAAP adjustments:
Structural optimization charges 6,696 4,543
Acquisition, divestiture and
integration-related charges(1) 2,637 7,148
COVID-19 related charges -- (193)
EU Medical Device Regulation
charges 7,077 2,399
Discontinued product lines
charges 23 999
Intangible asset amortization
expense 20,248 20,180
Expenses related to debt
refinancing -- 3,428
Convertible debt non-cash
interest (2) -- 4,295
Estimated income tax impact from
adjustments and other items (6,853) (7,433)
---------------- ----------------
Total of non-GAAP
adjustments 29,828 35,366
---------------- ----------------
Adjusted net income $ 73,058 $ 67,703
------------ ------------
Adjusted diluted net income per
share $ 0.86 $ 0.80
Weighted average common shares
outstanding for diluted net
income per share 85,447 84,752
(1) Acquisition, divestiture and integration-related charges are associated with the Codman Neurosurgery, Arkis Biosciences, Rebound Therapeutics and ACell acquisitions and the divestiture of Extremity Orthopedics and includes banking, legal, consulting, systems, and other income and expenses.
(2) Upon adoption of ASU No. 2020-06, the Company will no longer incur non-cash interest expense for the amortization of debt discount.
CONDENSED BALANCE SHEET DATA
(UNAUDITED)
(In thousands)
September 30, December 31,
2021 2020
--------------- ----------------
Cash and cash equivalents $ 470,231 $ 470,166
Trade accounts receivable, net 222,232 225,532
Inventories, net 327,167 310,117
Current and long-term borrowing under
senior credit facility 868,736 967,137
Borrowings under securitization
facility 111,700 112,500
Long-term convertible securities 563,697 474,834
Stockholders' equity $ 1,631,687 $ 1,514,867
----------- ----------
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Nine Months Ended September 30,
2021 2020
--------------------- ----------------
Net cash provided by operating
activities $ 243,150 $ 123,570
Net cash used in investing
activities (133,958) (32,152)
Net cash (used) provided by
financing activities (98,747) 100,403
Effect of exchange rate changes
on cash and cash equivalents (10,380) 5,547
----------------- -------------
Net increase (decrease) in cash
and cash equivalents $ 65 $ 197,368
------------- ------------
RECONCILIATION OF NON-GAAP ADJUSTMENTS - GAAP OPERATING CASH FLOW TO
MEASURES OF FREE CASH FLOW AND ADJUSTED FREE CASH FLOW CONVERSION
(UNAUDITED)
(In thousands)
Three Months Ended September 30,
2021 2020
---------------------- -----------------
Net cash provided by operating
activities $ 82,778 $ 69,643
------------ ---- ----------- ---
Purchases of property and
equipment (7,286) (6,727)
---------------- --- ------------
Free cash flow 75,492 62,916
Adjusted net income(1) $ 73,058 $ 67,703
------------ ---- ----------- ---
Adjusted free cash flow
conversion 103.3% 92.9%
Twelve Months Ended September 30,
2021 2020
---------------------- -----------------
Net cash provided by operating
activities $ 323,414 $ 212,757
Purchases of property and
equipment (29,023) (52,656)
Adjusted free cash flow 294,391 160,101
Adjusted net income(1) $ 270,780 $ 196,266
------------ ---- ----------- ---
Adjusted free cash flow
conversion 108.7% 81.6%
(1) Adjusted net income for quarters ended September 30, 2020 and 2021 are reconciled above. Adjusted net income for remaining quarters in the trailing twelve months calculation have been previously reconciled and are publicly available in the Quarterly Earnings Call Presentations on our website at investor.integralife.com under Events & Presentations.
The Company calculates adjusted free cash flow conversion by dividing its free cash flow by adjusted net income. The Company believes this measure is useful in evaluating the significance of the cash special charges in its adjusted earnings measures.