Itron Announces Fourth Quarter And Fiscal 2013 Financial Results

Itron, Inc. (NASDAQ:ITRI) announced today financial results for its fourth quarter and full year ended December 31, 2013. Highlights include:
  • Quarterly and full year revenues of $524 million and $1.9 billion;
  • Quarterly and full year GAAP net loss per share of $3.93 and $3.74, inclusive of a $173 million non-cash goodwill impairment charge recorded during the quarter resulting in $4.12 per share impact, net of tax;
  • Quarterly and full year non-GAAP diluted earnings per share of 36 cents and $1.90, inclusive of a 36 cent impact to the quarter for a discrete tax item;
  • Quarterly and full year adjusted EBITDA of $50 million and $168 million;
  • Twelve-month backlog of $549 million and total backlog of $1.1 billion;
  • Quarterly bookings of $527 million; and
  • Implemented new segment reporting for Electricity, Gas and Water.

“Our fourth quarter revenue and non-GAAP operating income results reflect continued improvement in our performance,” said Philip Mezey, Itron’s president and chief executive officer. “I was pleased with the increase in smart volumes, 13 percent growth in bookings, our execution on our restructuring plans and our efforts to lower costs and expenses. While fourth quarter results were impacted by a goodwill impairment charge in our Electricity segment and a discrete tax charge, the steps we have taken in 2013 position Itron to be more competitive in a tough economy and global marketplace. Despite a more conservative outlook, I am encouraged by the progress of our ongoing efforts to improve financial performance and build a solid foundation for future growth and profitability.”

Financial Results

Revenues were $524 million for the quarter and $1.9 billion for the full year, compared with $523 million and $2.2 billion in the same periods in 2012. Changes in foreign currency exchange rates unfavorably impacted revenue by approximately $3 million for the quarter and $15 million for the year. Excluding the impact from foreign currency, revenues for the quarter increased $3 million and decreased $215 million for the full year compared with the same periods in 2012. For the quarter, increased revenues in both the Electricity and Water segments were partially offset by a decrease in the Gas segment revenues. The decrease for the full year period was driven by lower Electricity segment revenues primarily related to the completion of several OpenWay smart meter projects in North America and lower Gas segment revenues, partially offset by an increase in Water segment revenues.

Gross margin for the quarter and full year was 31.5 percent compared with 31.2 percent and 32.8 percent in the respective prior year periods. Gross margin improved in the quarter primarily due to a favorable impact from product mix. Gross margin decreased for the year due to the impact of lower volumes, increased cost for an OpenWay project and product mix.

GAAP operating expenses were $314 million in the quarter and $750 million for the full year of 2013 compared with $144 million and $564 million in the same periods of 2012. A non-cash goodwill impairment charge of $173 million was recognized during the quarter resulting from the annual goodwill impairment assessment. The impairment was in the Electricity segment and was driven primarily by delays in global smart grid projects, and lower volumes and pricing pressures in certain regions in Europe and Asia Pacific. The revised forecast reduced the estimated fair value of the segment. This non-cash charge does not impact the company’s normal business operations or debt covenants. The Water and Gas segments did not incur impairments. The remaining operating expenses decreased $4 million for the quarter over the prior year period driven primarily by lower sales and marketing expenses. For the full year, the remaining operating expenses increased $12 million compared with 2012 primarily due to restructuring expense.

GAAP operating loss for the quarter was $149 million compared with operating income of $19 million in the same period of 2012. GAAP net loss for the quarter was $154 million, or $3.93 per share, compared with net income of $16 million, or 40 cents per diluted share. The operating and net loss for the quarter was attributable to the goodwill impairment charge. In addition, an increase in tax expense was driven by a discrete tax item recognized in the quarter related to the write down of a deferred tax asset.

GAAP operating loss for the full year was $135 million compared with operating income of $151 million in 2012. GAAP net loss for the full year was $147 million, or $3.74 per share, compared with net income of $108 million, or $2.71 per diluted share, in 2012. The GAAP operating and net loss for the year was primarily attributable to the goodwill impairment, lower gross profit and restructuring expense.

Non-GAAP operating expenses, which exclude amortization of intangibles, restructuring charges, acquisition related expenses and the goodwill impairment, were $127 million for the quarter compared with $133 million in the prior year quarter. The decrease in expenses was due to lower global sales and marketing expenses. For the full year, non-GAAP operating expenses were $497 million compared with $509 million in 2012. The decrease in expenses for the year was due to lower global sales and marketing and product development expenses, partially offset by an increase in general and administrative expenses primarily related to legal reserves.

Non-GAAP operating income was $38 million for the quarter compared with $30 million in the same period in 2012. The increase in non-GAAP operating income was primarily due to higher gross profit and lower operating expenses. Non-GAAP net income and diluted earnings for the quarter were $14 million, or 36 cents per share, compared with $23 million, or 58 cents per share in the prior year quarter. Non-GAAP earnings were impacted by 36 cents per share due to an increase in tax expense driven by a discrete tax item related to the write down of a deferred tax asset.

Non-GAAP operating income for the full year was $118 million compared with $206 million in 2012. Non-GAAP net income and diluted earnings for the year were $75 million, or $1.90 per share, compared with $145 million, or $3.62 per share, in 2012. The decrease in non-GAAP operating income for the full year was attributable to lower gross profit, primarily due to lower revenues, partially offset by decreased operating expenses. Net income for the year was negatively impacted by the discrete tax item recognized in the fourth quarter, which had a 35 cent per share impact.

Free cash flow was $24 million for the quarter compared with $52 million in the prior year quarter. The decrease was driven by changes in working capital. Free cash flow for the full year was $45 million compared with $155 million in 2012. The decrease over the prior year was due primarily to lower earnings.

During the quarter, the company repurchased 86,392 shares of Itron common stock at an average price of $39.48 per share pursuant to Board authorization to repurchase up to $50 million of Itron common stock during a 12-month period beginning March 2013. As of December 31, 2013, the company had repurchased 645,392 shares of Itron common stock at an average price of $41.80 per share, representing approximately 1.6 percent of total shares outstanding as of March 2013.

Share Repurchase Program

The company also announced today that its Board of Directors authorized a new share repurchase program of up to $50 million of the company’s common stock over a 12 month period to commence upon the completion of the current repurchase program in March 2014. See the press release issued today and Form 8-K for further details on the repurchase plan.

Financial Guidance

Itron’s guidance for the full year 2014 is as follows:
  • Revenue between $1.825 and $1.925 billion
  • Non-GAAP diluted EPS between $1.30 and $1.80

The company’s guidance assumes a gross margin between 31 and 32 percent, a Euro to U.S. dollar average exchange rate of $1.33, average shares outstanding of approximately 39.8 million for the year and a non-GAAP effective tax rate for the year between 30 and 32 percent.

Earnings Conference Call:

Itron will host a conference call to discuss the financial results and guidance contained in this release at 5:00 p.m. Eastern Standard Time (EST) on Feb. 12, 2014. The call will be webcast in a listen-only mode. Webcast information and conference call materials will be made available 10 minutes before the start of the call and are accessible on Itron’s website at http://investors.itron.com/events.cfm. The webcast replay will be available within 90 minutes of the conclusion of the live call and will be available for two weeks. A telephone replay of the conference call will be available at 10:00 p.m. EST on Feb. 12, 2014 through 10:00 p.m. EST on Feb. 14, 2014. To access the telephone replay, dial (888) 203-1112 (Domestic) or (719) 457-0820 (International) and enter passcode 5975912.

About Itron

Itron is a world-leading technology and services company dedicated to the resourceful use of energy and water. We provide comprehensive solutions that measure, manage and analyze energy and water. Our broad product portfolio includes electricity, gas, water and thermal energy measurement devices and control technology; communications systems; software; as well as managed and consulting services. With thousands of employees supporting nearly 8,000 customers in more than 100 countries, Itron applies knowledge and technology to better manage energy and water resources. Together, we can create a more resourceful world. Join us: www.itron.com.

Forward Looking Statements:

This release contains forward-looking statements concerning our expectations about operations, financial performance, sales, earnings and cash flows. These statements reflect our current plans and expectations and are based on information currently available. The statements rely on a number of assumptions and estimates, which could be inaccurate, and which are subject to risks and uncertainties that could cause our actual results to vary materially from those anticipated. Risks and uncertainties include the rate and timing of customer demand for our products, rescheduling of current customer orders, changes in estimated liabilities for product warranties, changes in laws and regulations, our dependence on new product development and intellectual property, future acquisitions, changes in estimates for stock-based and bonus compensation, increasing volatility in foreign exchange rates, international business risks and other factors that are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2012 and other reports on file with the Securities and Exchange Commission. Itron undertakes no obligation to update publicly or revise any forward-looking statements, including our business outlook.

Non-GAAP Financial Information:

To supplement our consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA and free cash flow. We provide these non-GAAP financial measures because we believe they provide greater transparency and represent supplemental information used by management in its financial and operational decision making. Specifically, these non-GAAP financial measures are provided to enhance investors’ overall understanding of our current financial performance and our future anticipated performance by excluding infrequent or non-cash costs, particularly those associated with acquisitions. We exclude certain costs in our non-GAAP financial measures as we believe the net result is a measure of our core business. Non-GAAP performance measures should be considered in addition to, and not as a substitute for, results prepared in accordance with GAAP. Our non-GAAP financial measures may be different from those reported by other companies. A more detailed discussion of why we use non-GAAP financial measures, the limitations of using such measures, and reconciliations between non-GAAP and the nearest GAAP financial measures are included in this press release.

Statements of operations, segment information, balance sheets, cash flow statements and reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures follow.
ITRON, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
       
(Unaudited, in thousands, except per share data)
 
Three Months Ended December 31, Twelve Months Ended December 31,
  2013     2012     2013     2012  
Revenues $ 523,526 $ 523,335 $ 1,948,728 $ 2,178,178
Cost of revenues   358,788     359,835     1,334,195     1,463,031  
Gross profit 164,738 163,500 614,533 715,147
 
Operating expenses
Sales and marketing 41,923 51,987 180,371 197,603
Product development 46,835 44,358 176,019 178,653
General and administrative 38,387 37,527 142,559 138,290
Amortization of intangible assets 10,640 11,943 42,019 47,810
Restructuring expense 2,720 (1,790 ) 35,497 1,665
Goodwill impairment   173,249     -     173,249     -  
Total operating expenses   313,754     144,025     749,714     564,021  
 
Operating income (loss) (149,016 ) 19,475 (135,181 ) 151,126
Other income (expense)
Interest income 219 285 1,620 952
Interest expense (3,165 ) (2,521 ) (10,686 ) (10,115 )
Other income (expense), net   (1,290 )   (1,520 )   (4,007 )   (5,744 )
Total other income (expense)   (4,236 )   (3,756 )   (13,073 )   (14,907 )
 
Income (loss) before income taxes (153,252 ) 15,719 (148,254 ) 136,219
Income tax benefit (provision)   (272 )   745     3,664     (25,995 )
Net income (loss) (153,524 ) 16,464 (144,590 ) 110,224
Net income attributable to non-controlling interests   906     504     2,219     1,949  
Net income (loss) attributable to Itron, Inc. $ (154,430 ) $ 15,960   $ (146,809 ) $ 108,275  
 
 
Earnings (loss) per common share - Basic $ (3.93 ) $ 0.41   $ (3.74 ) $ 2.73  
Earnings (loss) per common share - Diluted $ (3.93 ) $ 0.40   $ (3.74 ) $ 2.71  
 
 
Weighted average common shares outstanding - Basic 39,148 39,233 39,281 39,625
Weighted average common shares outstanding - Diluted 39,148 39,619 39,281 39,934

 
ITRON, INC.
SEGMENT INFORMATION(1)
 
(Unaudited, in thousands)
 
  Three Months Ended December 31,   Twelve Months Ended December 31,
  2013       2012     2013       2012  
Revenues
Electricity $ 230,563 $ 229,844 $ 836,553 $ 1,024,340
Gas 154,131 161,855 570,297 627,193
Water   138,832     131,636     541,878     526,645  
Total Company $ 523,526   $ 523,335   $ 1,948,728   $ 2,178,178  
 
Gross profit
Electricity $ 63,818 $ 63,459 $ 218,913 $ 295,005
Gas 51,843 57,880 207,915 235,391
Water   49,077     42,161     187,705     184,751  
Total Company $ 164,738   $ 163,500   $ 614,533   $ 715,147  
 
Operating income (loss)
Electricity $ (178,987 ) $ (7,353 ) $ (235,908 ) $ 24,812
Gas 21,001 26,511 83,882 110,557
Water 18,063 9,314 63,252 59,210
Corporate unallocated   (9,093 )   (8,997 )   (46,407 )   (43,453 )
Total Company $ (149,016 ) $ 19,475   $ (135,181 ) $ 151,126  
 
 
METER AND MODULE SUMMARY
 
(Units in thousands)
Three Months Ended December 31, Twelve Months Ended December 31,
  2013     2012    

2013(2)

 
  2012  
Meters
Standard 4,150 4,310 17,850 17,920
Advanced and Smart   1,750     1,920     5,930     8,030  
Total meters   5,900     6,230     23,780     25,950  
 
Stand-alone communication modules
Advanced and Smart   1,400     1,410     5,550     6,460  
 
 

(1) Reflects new segment reporting effective fourth quarter of 2013
 

(2) Unit shipments for the twelve months ended December 31, 2013 include 1.16 million meters (1.05 million Standard and 110,000 Advanced and Smart) and 40,000 stand-alone modules that should have been included in the three months ended September 30, 2013.

 
ITRON, INC.
CONSOLIDATED BALANCE SHEETS
   
(Unaudited, in thousands)
 
December 31, 2013 December 31, 2012
ASSETS
Current assets
Cash and cash equivalents $ 124,805 $ 136,411
Accounts receivable, net 356,709 375,326
Inventories 177,467 170,719
Deferred tax assets current, net 37,110 33,536
Other current assets   103,275     104,958  
Total current assets 799,366 820,950
 
Property, plant, and equipment, net 246,820 255,212
Deferred tax assets noncurrent, net 58,880 44,584
Other long-term assets 33,027 28,908
Intangible assets, net 195,840 238,771
Goodwill   548,578     701,016  
Total assets $ 1,882,511   $ 2,089,441  
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 199,769 $ 227,739
Other current liabilities 70,768 49,950
Wages and benefits payable 89,314 91,802
Taxes payable 10,700 9,305
Current portion of debt 26,250 18,750
Current portion of warranty 21,048 27,115
Unearned revenue   37,163     42,712  
Total current liabilities 455,012 467,373
 
Long-term debt 352,500 398,750
Long-term warranty 24,098 26,490
Pension plan benefit liability 88,687 90,533
Deferred tax liabilities noncurrent, net 7,326 16,682
Other long-term obligations   81,917     80,100  
Total liabilities 1,009,540 1,079,928
 
Commitments and contingencies
 
Equity
Preferred stock - -
Common stock 1,290,629 1,294,213
Accumulated other comprehensive loss, net (21,722 ) (34,384 )
Accumulated deficit   (413,671 )   (266,862 )
Total Itron, Inc. shareholders' equity 855,236 992,967
Non-controlling interests   17,735     16,546  
Total equity   872,971     1,009,513  
Total liabilities and equity $ 1,882,511   $ 2,089,441  

 
ITRON, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
   
(Unaudited, in thousands)
Twelve Months Ended December 31,
  2013     2012  
Operating activities
Net income (loss) $ (144,590 ) $ 110,224
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 98,845 109,471
Stock-based compensation 18,850 19,512
Amortization of prepaid debt fees 1,657 1,597
Deferred taxes, net (26,757 ) (6,775 )
Goodwill impairment 173,249 -
Restructuring expense (recovery), non-cash 1,259 (4,839 )
Other adjustments, net 551 (189 )
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable 13,652 36,300
Inventories (10,861 ) 28,253
Other current assets (4,143 ) (20,052 )
Other long-term assets 1,093 10,578
Accounts payables, other current liabilities, and taxes payable (7,702 ) (47,367 )
Wages and benefits payable (1,995 ) (8,967 )
Unearned revenue (3,274 ) 12,009
Warranty (7,552 ) (25,919 )
Other operating, net   3,139     (8,746 )
Net cash provided by operating activities 105,421 205,090
 
Investing activities
Acquisitions of property, plant, and equipment (60,020 ) (50,543 )
Business acquisitions, net of cash equivalents acquired (860 ) (79,017 )
Other investing, net   4,109     4,115  
Net cash used in investing activities (56,771 ) (125,445 )
 
Financing activities
Proceeds from borrowings 35,000 80,000
Payments on debt (73,750 ) (115,002 )
Issuance of common stock 5,299 4,781
Repurchase of common stock (26,977 ) (47,441 )
Other financing, net   2,990     134  
Net cash used in financing activities (57,438 ) (77,528 )
 
Effect of foreign exchange rate changes on cash and cash equivalents   (2,818 )   1,208  
Increase (decrease) in cash and cash equivalents (11,606 ) 3,325
Cash and cash equivalents at beginning of period   136,411     133,086  
Cash and cash equivalents at end of period $ 124,805   $ 136,411  
 

Itron, Inc.

About Non-GAAP Financial Measures

The accompanying press release contains non-GAAP financial measures. To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, including non-GAAP operating expense, non-GAAP operating income, non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA and free cash flow. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures please see the table captioned “Reconciliations of Non-GAAP Financial Measures to Most Directly Comparable GAAP Financial Measures.”

We use these non-GAAP financial measures for financial and operational decision making and as a means for determining executive compensation. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and ability to service debt by excluding certain expenses that may not be indicative of our recurring core operating results. These non-GAAP financial measures facilitate management’s internal comparisons to our historical performance as well as comparisons to our competitors’ operating results. Our executive compensation plans exclude non-cash charges related to amortization of intangibles and non-recurring discrete cash and non-cash charges that are infrequent in nature such as purchase accounting adjustments, restructuring charges or goodwill impairment charges. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors because they provide greater transparency with respect to key metrics used by management in its financial and operational decision making and because they are used by our institutional investors and the analyst community to help them analyze the health of our business.

Non-GAAP operating expense and non-GAAP operating income – We define non-GAAP operating expense as operating expense excluding certain expenses related to the amortization of intangible assets, restructuring, acquisitions and goodwill impairment. We define non-GAAP operating income as operating income excluding the expenses related to the amortization of intangible assets, restructuring, acquisitions and goodwill impairment. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of expenses that are related to previous acquisitions and restructurings. By excluding these expenses, we believe that it is easier for management and investors to compare our financial results over multiple periods and analyze trends in our operations. For example, expenses related to amortization of intangible assets are now decreasing, which is improving GAAP operating margins, yet the improvement in GAAP operating margins due to this lower expense is not necessarily reflective of an improvement in our core business. There are some limitations related to the use of non-GAAP operating expense and non-GAAP operating income versus operating expense and operating income calculated in accordance with GAAP. Non-GAAP operating expense and non-GAAP operating income exclude some costs that are recurring. Additionally, the expenses that we exclude in our calculation of non-GAAP operating expense and non-GAAP operating income may differ from the expenses that our peer companies exclude when they report the results of their operations. We compensate for these limitations by providing specific information about the GAAP amounts we have excluded from our non-GAAP operating expense and non-GAAP operating income and evaluating non-GAAP operating expense and non-GAAP operating income together with GAAP operating expense and GAAP operating income.

Non-GAAP net income and non-GAAP diluted EPS – We define non-GAAP net income as net income excluding the expenses associated with amortization of intangible assets, restructuring, acquisitions, goodwill impairment and amortization of debt placement fees. We define non-GAAP diluted EPS as non-GAAP net income divided by the weighted average shares, on a diluted basis, outstanding during each period. We consider these financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income. The same limitations described above regarding our use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP diluted EPS. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP measures and evaluating non-GAAP net income and non-GAAP diluted EPS together with GAAP net income and GAAP diluted EPS.

Adjusted EBITDA – We define adjusted EBITDA as net income (a) minus interest income, (b) plus interest expense, depreciation and amortization of intangible asset expenses, restructuring expense, acquisition related expense, goodwill impairment and (c) exclude the tax expense or benefit. We believe that providing this financial measure is important for management and investors to understand our ability to service our debt as it is a measure of the cash generated by our core business. Management uses adjusted EBITDA as a performance measure for executive compensation. A limitation to using adjusted EBITDA is that it does not represent the total increase or decrease in the cash balance for the period and the measure includes some non-cash items and excludes other non-cash items. Additionally, the items that we exclude in our calculation of adjusted EBITDA may differ from the items that our peer companies exclude when they report their results. Management compensates for this limitation by providing a reconciliation of this measure to GAAP net income.

Free cash flow – We define free cash flow as net cash provided by operating activities less cash used for acquisitions of property, plant and equipment. We believe free cash flow provides investors with a relevant measure of liquidity and a useful basis for assessing our ability to fund our operations and repay our debt. The same limitations described above regarding our use of non-GAAP operating income apply to our use of free cash flow. We compensate for these limitations by providing specific information regarding the GAAP amounts and reconciling to free cash flow.

The accompanying tables have more detail on the GAAP financial measures that are most directly comparable to the non-GAAP financial measures and the related reconciliations between these financial measures.
 
ITRON, INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES(1)
       
(Unaudited, in thousands, except per share data)
 
Three Months Ended December 31, Twelve Months Ended December 31,
  2013     2012     2013     2012  
NON-GAAP OPERATING INCOME - ELECTRICITY
Electricity - GAAP operating income $ (178,987 ) $ (7,353 ) $ (235,908 ) $ 24,812
Amortization of intangible assets 4,764 5,144 18,835 20,644
Restructuring expense 1,779 (1,017 ) 25,149 1,274
Acquisition related expenses 479 667 2,287 2,495
Goodwill impairment   173,249     -     173,249     -  
Electricity - Non-GAAP operating income $ 1,284   $ (2,559 ) $ (16,388 ) $ 49,225  
 
NON-GAAP OPERATING INCOME - GAS
Gas - GAAP operating income $ 21,001 $ 26,511 $ 83,882 $ 110,557
Amortization of intangible assets 3,115 3,544 12,264 14,121
Restructuring expense   2,403     (1,202 )   3,471     43  
Gas - Non-GAAP operating income $ 26,519   $ 28,853   $ 99,617   $ 124,721  
 
NON-GAAP OPERATING INCOME - WATER
Water - GAAP operating income $ 18,063 $ 9,314 $ 63,252 $ 59,210
Amortization of intangible assets 2,761 3,255 10,920 13,045
Restructuring expense   (380 )   106     3,076     (765 )
Water - Non-GAAP operating income $ 20,444   $ 12,675   $ 77,248   $ 71,490  
 
NON-GAAP OPERATING LOSS - CORPORATE UNALLOCATED
Corporate unallocated - GAAP operating loss $ (9,093 ) $ (8,997 ) $ (46,407 ) $ (43,453 )
Restructuring expense (1,082 ) 323 3,801 1,113
Acquisition related expenses   -     -     3     2,962  
Corporate unallocated - Non-GAAP operating loss $ (10,175 ) $ (8,674 ) $ (42,603 ) $ (39,378 )
 
NON-GAAP OPERATING INCOME
GAAP operating income $ (149,016 ) $ 19,475 $ (135,181 ) $ 151,126
Amortization of intangible assets 10,640 11,943 42,019 47,810
Restructuring expense 2,720 (1,790 ) 35,497 1,665
Acquisition related expenses 479 667 2,290 5,457
Goodwill impairment   173,249     -     173,249     -  
Non-GAAP operating income $ 38,072   $ 30,295   $ 117,874   $ 206,058  
 
NON-GAAP OPERATING EXPENSE
Total Company - GAAP operating expense $ 313,754 $ 144,025 $ 749,714 $ 564,021
Amortization of intangible assets (10,640 ) (11,943 ) (42,019 ) (47,810 )
Restructuring expense (2,720 ) 1,790 (35,497 ) (1,665 )
Acquisition related expenses (479 ) (667 ) (2,290 ) (5,457 )
Goodwill impairment   (173,249 )   -     (173,249 )   -  
Total Company - Non-GAAP operating expense $ 126,666   $ 133,205   $ 496,659   $ 509,089  
 
NON-GAAP NET INCOME & DILUTED EPS
GAAP net income $ (154,430 ) $ 15,960 $ (146,809 ) $ 108,275
Amortization of intangible assets 10,640 11,943 42,019 47,810
Amortization of debt placement fees 387 397 1,556 1,558
Restructuring expense 2,720 (1,790 ) 35,497 1,665
Acquisition related expenses 479 667 2,290 5,457
Goodwill impairment 173,249 - 173,249 -
Income tax effect of non-GAAP adjustments   (18,760 )   (4,238 )   (32,666 )   (20,185 )
Non-GAAP net income $ 14,285   $ 22,939   $ 75,136   $ 144,580  
       
Non-GAAP diluted EPS $ 0.36   $ 0.58   $ 1.90   $ 3.62  
 
Weighted average common shares outstanding - Diluted   39,538     39,619     39,602     39,934  
 
ADJUSTED EBITDA
GAAP net income (loss) $ (154,430 ) $ 15,960 $ (146,809 ) $ 108,275
Interest income (219 ) (285 ) (1,620 ) (952 )
Interest expense 3,165 2,521 10,686 10,115
Income tax (benefit) provision 272 (745 ) (3,664 ) 25,995
Depreciation and amortization 25,096 27,615 98,845 109,471
Restructuring expense 2,720 (1,790 ) 35,497 1,665
Acquisition related expenses 479 667 2,290 5,457
Goodwill impairment   173,249     -     173,249     -  
Adjusted EBITDA $ 50,332   $ 43,943   $ 168,474   $ 260,026  
 
FREE CASH FLOW
Net cash provided by operating activities $ 39,544 $ 68,087 $ 105,421 $ 205,090
Acquisitions of property, plant, and equipment   (15,472 )   (16,265 )   (60,020 )   (50,543 )
Free Cash Flow $ 24,072   $ 51,822   $ 45,401   $ 154,547  
 

(1) Reflects new segment reporting effective fourth quarter of 2013

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