Discussion of Adjusted Financial Measures

In addition to our GAAP results, we provide adjusted revenues, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted EBITDA excluding stock-based compensation, adjusted net income and adjusted earnings per diluted share. Adjusted revenues consist of growth in total revenues excluding the effects of currency exchange rates on the current period's revenues. The various measures of adjusted EBITDA consist of GAAP net income, excluding: (i) depreciation and amortization, (ii) other income (expense), net, (iii) interest income and expense, (iv) income taxes, (v) those operating expenses also excluded from adjusted net income and, as appropriate (vi) stock-based compensation expense. The measure of adjusted net income consists of GAAP net income, excluding: (i) Plainsboro, New Jersey manufacturing facility remediation costs; (ii) global ERP implementation charges; (iii) facility optimization charges; (iv) certain employee termination charges; (v) discontinued product lines charges; (vi) acquisition-related charges; (vii) impairment charges; (viii) European entity restructuring charges; (ix) certain executive compensation charges; (x) financing charges; (xi) convertible debt non-cash interest; (xii) intangible asset amortization expense; and (xiii) income tax impact from adjustments and other items. The adjusted earnings per diluted share measure is calculated by dividing adjusted net income attributable to diluted shares by diluted weighted average shares outstanding. Reconciliations of GAAP revenues to adjusted revenues for the quarter and year ended December 31, 2012 and GAAP net income to adjusted EBITDA, adjusted EBITDA excluding stock-based compensation and adjusted net income, and GAAP earnings per diluted share to adjusted earnings per diluted share for the quarters and years ended December 31, 2012 and 2011 appear in the financial tables in this release.

Integra believes that the presentation of adjusted revenues and the various adjusted EBITDA, adjusted net income, and adjusted earnings per diluted share measures provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations. For further information regarding why Integra believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to the Company's Current Report on Form 8-K regarding this earnings press release filed today with the Securities and Exchange Commission. This Current Report on Form 8-K is available on the SEC's website at www.sec.gov or on our website at www.integralife.com .
(In thousands, except per share amounts)
  Three Months Ended December 31, Twelve Months Ended December 31,
  2012 2011 2012 2011
Total revenues $214,432 $203,523 $830,871 $780,078
Costs and expenses:        
Cost of goods sold 81,930 82,740 314,427 299,150
Research and development 12,864 13,402 51,012 51,451
Selling, general and administrative 96,529 94,808 373,114 358,132
Intangible asset amortization 4,551 4,824 18,536 16,433
Total costs and expenses 195,874 195,774 757,089 725,166
Operating income 18,558 7,749 73,782 54,912
Interest income 312 111 1,205 465
Interest expense (1,656) (7,862) (22,237) (27,640)
Other income (expense), net (603) 378 (721) 757
Income before income taxes 16,611 376 52,029 28,494
Income tax expense (benefit) 3,825 (4,184) 10,825 505
Net income 12,786 4,560 41,204 27,989
Diluted net income per share $0.46 $0.16 $1.44 $0.95
Weighted average common shares outstanding for diluted net income per share 28,064 28,434 28,516 29,495

Segment revenues and growth in total revenues excluding the effects of currency exchange rates are as follows:

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