At this time, we are reaffirming our sales guidance provided at the beginning of the year. However, based upon our results for the first two quarters and projections for the remainder of the year, we now expect our adjusted operating income as a percentage of sales and adjusted diluted EPS to be at the lower end of the ranges provided. The guidance provided at the beginning of the year was as follows:
|Sales||$645 million - $665 million|
|Adjusted Operating Income as a % of Sales||11.5% - 12.5%|
|Adjusted Diluted EPS||$1.75 - $1.85|
Given the softness that we are seeing in our Orthopaedic product line, we will not achieve the revenue growth assumptions previously provided for that product line. With that said, we still expect to achieve our 13% to 17% growth guidance for total sales set at the beginning of the year given stronger than expected performance from our CRM and Portable Medical product lines. Additionally, we expect to see operating income improvements as the year progresses, which will come from the consolidation of our Orthopaedic operations and optimization of RD&E investment, as well as from various other measures management has initiated to manage our cost structure.
Adjusted operating income for 2012 is expected to consist of GAAP operating income minus non-recurring, unusual or infrequently occurring items such as acquisition, consolidation and integration charges, certain RD&E expenditures and asset disposition/write-down charges, totaling approximately $20 million to $30 million, of which approximately $5 million to $10 million will be non-cash expenses. This range has been revised upward from our previous expectations of $15 million to $20 million to reflect the additional costs associated with the announced closure of manufacturing operations in Switzerland.