GAAP operating income for the third quarter 2013 was $17.0 million compared to $2.1 million for the comparable 2012 period. This increase was primarily due to gross profit improvements and lower consolidation and optimization costs ($11.2 million), partially offset by higher SG&A and RD&E expenses. Adjusted operating income, which excludes other operating and DVT expenses, increased 18% to $22.0 million compared to $18.7 million in third quarter 2012. Refer to Table A at the end of this release for a reconciliation of GAAP operating income to adjusted operating income and the “Use of Non-GAAP Financial Information” section below.
The GAAP effective tax rate for the first nine months of 2013 was 29.6% compared to 93.0% for the same period of 2012. This decrease was primarily attributable to $5.0 million of tax charges recorded during the third quarter of 2012 in connection with our Swiss Orthopaedic consolidation. These charges relate to the loss of our Swiss tax holiday, due to our third quarter 2012 decision to discontinue manufacturing in Switzerland and the valuation allowance established on our Swiss deferred tax assets, as it was more likely than not that they will not be fully realized. The reinstatement of the R&D tax credit in 2013, as well as higher income in lower tax rate jurisdictions also contributed to the more favorable tax rate in 2013.
GAAP and adjusted diluted EPS for the third quarter of 2013 were $0.44 and $0.57, respectively, compared to a loss of $0.32 and income of $0.46, respectively, for the third quarter 2012. Refer to Table B at the end of this release for a reconciliation of GAAP net income (loss) to adjusted net income and the “Use of Non-GAAP Financial Information” section below.
Cash flow from operating activities for the third quarter of 2013 was $24.7 million compared to $16.0 million in the 2012 period. This increase was primarily due to a higher level of cash operating income. During the third quarter of 2013, we made an $8.0 million estimated tax payment related to the retirement of our convertible subordinated notes in the first quarter of 2013. Excluding this tax payment, cash flow from operations totaled $32.7 million for the third quarter of 2013. This excess cash flow from operations was used to pay down $27.0 million of long-term debt during the quarter. Additionally, during the third quarter of 2013, we amended and extended our revolving credit facility in order to extend the maturity date of this facility to 2018, take advantage of favorable pricing and increase the total capacity of our credit facility by $100 million.
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