 Presentation to Lenders
July 23, 2013
Exhibit 99.1 |
 Forward-Looking Statements
2
This presentation contains forward-looking information that involves risks and uncertainties,
including statements about the Company’s plans, objectives, expectations and intentions.
Such statements include, without limitation: financial or other information included herein based upon or otherwise incorporating
judgments or estimates relating to future performance, events or expectations; the Company's
positioning, resources, capabilities, and expectations for product sales and/or future
growth; the anticipated timing of any governmental or regulatory approvals or clearances. These forward-looking statements are based upon
assumptions made by the Company as of the date hereof and are subject to known and unknown risks and
uncertainties that could cause actual results to differ materially from those anticipated. Risks and
uncertainties that could adversely affect the Company’s business and prospects, and otherwise cause actual results to differ materially from those
anticipated, include without limitation: the ability of the Company to successfully manage ongoing
organizational changes, including the ability of the Company to attract, motivate and retain
key employees; U.S., European and general worldwide economic conditions and related uncertainties; the Company’s reliance on third-
party reimbursement policies to support the sales and market acceptance of its products, including the
possible adverse impact of government regulation and changes in the availability and amount of
reimbursement and uncertainties for new products or product enhancements; uncertainties regarding the recently enacted
or future healthcare reform legislation, including associated tax provisions, or budget reduction or
other cost containment efforts; changes in guidelines, recommendations and studies published by
various organizations that could affect the use of the Company’s products; uncertainties inherent in the development of
new products and the enhancement of existing products, including FDA approval and/or clearance and
other regulatory risks, technical risks, cost overruns and delays; the risk that products may
contain undetected errors or defects or otherwise not perform as anticipated; risks associated with acquisitions, including without
limitation, the Company’s ability to successfully integrate acquired businesses, the risks that
the acquired businesses may not operate as effectively and efficiently as expected even
if otherwise successfully integrated, the risks that acquisitions may involve unexpected costs or unexpected liabilities, including the risks and
challenges associated with the Company’s recent acquisition of Gen-Probe and operations in
China; the risks of conducting business internationally, including the effect of exchange rate
fluctuations on those operations; manufacturing risks, including the Company’s reliance on a single or limited source of supply for key
components, and the need to comply with especially high standards for the manufacture of many of its
products; the Company’s ability to predict accurately the demand for its products, and
products under development, and to develop strategies to address its markets successfully; the early stage of market development for
certain of the Company’s products; the Company’s leverage risks, including the
Company’s obligation to meet payment obligations and financial covenants associated with
its debt; risks related to the use and protection of intellectual property; expenses, uncertainties and potential liabilities relating to litigation, including,
without limitation, commercial, intellectual property, employment and product liability litigation;
technical innovations that could render products marketed or under development by the Company
obsolete; competition; and the Company’s ability to attract and retain qualified personnel.
The risks included above are not exhaustive. Other factors that could adversely affect the company's
business and prospects are described in the filings made by the Company with the SEC. The
Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements
presented herein to reflect any change in expectations or any change in events, conditions or
circumstances on which any such statements are based. Hologic, Affirm, APTIMA, C-View, Cervista, Dimensions, Gen-Probe, Invader, MyoSure, NovaSure,
PANTHER, PROCLEIX, Prodesse ProGastro SSCS, ThinPrep, TIGRIS and TMA and associated logos, as
may be used throughout this presentation, are trademarks and/or registered trademarks of Hologic, Inc. and/or its
subsidiaries in the United States and/or other countries. |
 Third
Quarter Fiscal 2013 Preliminary Financial Information
The preliminary financial information presented in this presentation represents
estimates only, as the Company has not completed its financial statements
for its third quarter ended June 29, 2013 and its independent auditor has
not completed its review thereof. Actual results, therefore, may differ
materially from those estimated. At this preliminary stage, the Company does not have the
financial data available to estimate its earnings calculated in accordance with
Generally Accepted Accounting Principles (GAAP). GAAP earnings per share
(EPS) may be affected by changes in ongoing assumptions and judgments and
may also be affected by nonrecurring, unusual or unanticipated charges,
expenses or gains, all of which are excluded in the calculation of non-GAAP
adjusted EPS as defined in an addendum to this presentation. A GAAP to non-GAAP
reconciliation will be provided in Hologic’s third quarter fiscal 2013
operating results announcement on August 5, 2013.
3 |
 Hologic, Inc. ("Hologic" or "the Company") (NASDAQ: HOLX) is a
leading developer, manufacturer and supplier of premium diagnostics
products, medical imaging systems and surgical products, with an emphasis on
serving the healthcare needs of women Hologic has continued to demonstrate
strong financial performance Transaction Overview
See Third Quarter Fiscal 2013 Preliminary Financial Information on page 3
See the definition of non-GAAP financial measures and the reconciliation of
GAAP to non-GAAP in the Appendix. 4
Hologic is seeking to reprice its Term Loan B pricing
In conjunction with the repricing, the Company is seeking an amendment to increase
its dividend / share repurchase capacity
—
For the quarter ended June 29, 2013, the Company expects to report revenues of
approximately $626 million
and
non-GAAP
adjusted
earnings
per
share
of
$0.38
—
For the quarter ended March 30, 2013, the Company generated $619.1 million of
non-GAAP revenue, $93.8
million
of
non-GAAP
net
income
and
$211.8
million
of
EBITDA.
The
Company's
GAAP
revenue
and
GAAP
net
loss
for
the
same
period
were
$612.7
million
and
$51.1
million,
respectively
—
As
of
March
30,
2013,
Hologic
had
total
secured
leverage
of
2.5x
and
net
total
leverage
of
4.9x
1
2
1
2 |
 Pro
Forma Capitalization 5
Amounts as of March 30, 2013
($ in millions)
Current
Pro Forma
Amount
Amount
Leverage
Maturity
Put Date
Cash
$ 745
$ 545
Revolver ($300mm)
-
-
0.0 x
Aug-17
Term Loan A
969
969
1.0 x
Aug-17
Extant Term Loan B
1,479
-
1.0 x
Aug-19
New Term Loan B
-
1,279
2.3 x
Aug-19
Total Secured Debt
$ 2,447
$ 2,247
2.3 x
Senior Unsecured Notes
1,000
1,000
3.3 x
Total Guaranteed Debt
$ 3,447
$ 3,247
3.3 x
2.00% Convertible Sr. Notes
1
389
389
3.7 x
Dec-37
Dec-13
2.00% Exchange Convertible Sr. Notes
2
384
384
4.1 x
Dec-37
Dec-16
2.00% Exchange Convertible Sr. Notes
3
462
462
4.6 x
Mar-42
Mar-18
2.00% Exchange Convertible Sr. Notes
4
323
323
4.9 x
Sep-43
Dec-17
Total Debt
$ 5,005
$ 4,805
4.9 x
Net Debt
(5)
$ 4,755
$ 4,555
4.7 x
LTM 03/30/2013 Consolidated Adjusted EBITDA
(6)
$ 975.5
Source: Public filings.
¹
Principal amount is $405 million. Principal amount listed net of the unamortized
discount. Conversion price of approximately $38.59 per share. ²
Principal amount is $450 million. Principal amount listed net of the unamortized
discount. Conversion price of approximately $23.03 per share. ³
Principal amount is $500 million. Principal amount listed net of the unamortized
discount. Conversion price of approximately $31.18 per share. 4
Principal
amount
is
$370
million.
Principal
amount
listed
net
of
the
unamortized
discount.
Conversion
price
of
approximately
$38.59
per
share.
5
Debt net of $250 million of cash as permitted by Credit Agreement for covenant
compliance. 6
As defined in the Credit Agreement. Includes an increase to the Company’s
non-GAAP Adjusted EBITDA of $160.4 million, as calculated pursuant to the terms of
the Credit Agreement, to reflect the Company's acquisition of
Gen-Probe and certain other adjustments. |
 Consolidated
Non-GAAP Q2’13 Revenues of $619.1M (unaudited)*
Consumables/Service ~81%
Capital Equipment ~19%
Total Revenues by Business Segment
*Q2’13 GAAP revenues were as follows: Total: $612.7M; Diagnostics: $296.5M;
Consumables: $402.0M. See the definition of non-GAAP financial measures and
the reconciliation of GAAP to non-GAAP in the Appendix.
Total Diagnostics
$302.9M*
49%
Breast Health
$220.1M
35%
GYN Surgical
$73.7M
12%
Skeletal Health
$22.4M
4%
6
66%
Consumables
15%
Service
19%
Capital
Equipment |
 •
Early stage of a promising replacement cycle with
technology superior to 2D digital
•
Recent peer-reviewed publications further support
adoption
•
Ability to offer class-leading automation to low-
and
medium-volume labs
•
Extends molecular diagnostics into hospital labs, the
fastest-growing market segment
•
Menu expansion on the horizon to further sustain growth
Two Exciting New Product Cycles
are Just Beginning
Dimensions 3D Breast Tomosynthesis
PANTHER System
7 |
 Diagnostics –
Leadership in
Cytology and Molecular Diagnostics
•
Premier automated solutions
•
Proprietary chemistries: TMA (Transcription-mediated
amplification) and Invader
•
Extending leadership from cytology into molecular via
Gen-Probe acquisition
•
Validated by #1 or #2 U.S. market share in key segments*
SHARE
* Hologic Estimates 2012
Cervical
Cytology
CT/NG
Testing
Blood
Screening
HPV
Testing
8 |
 Comprehensive Cervical Cancer
Screening Solution
9
•
The only FDA approved complete
cervical cancer screening solution
to include liquid-based cytology
+ HPV (high-risk and genotyping)
•
All from our ThinPrep vial, the
gold standard in cervical cytology
•
Thoughtfully designed HPV
products designed to detect
disease by focusing on genes that
matter most:
•
Both APTIMA and Cervista
meet the specific needs of our
customers through greater testing
alternatives |
 •
APTIMA Combo 2 assay remains a growth driver
•
< 40% of sexually active women aged 25 and under in the U.S.
are screened for chlamydia and gonorrhea
•
Improved compliance and international expansion opportunities
•
APTIMA Trichomonas experiencing rapid adoption
•
Trichomonas
vaginalis
is
the
most
common
curable
STD
•
First FDA-cleared nucleic acid amplified test
•
Recently cleared for use on PANTHER System
•
Menu expansion on the PANTHER is key
•
HPV and genotyping expected by calendar year-end 2013
10
All APTIMA assays able to test from ThinPrep vial
Flagship Brand in STD Testing |
 Broad
Portfolio of MDx Instrumentation Uniquely Positioned in Molecular
Diagnostics •
Already leading in high-volume setting
•
Ability to capitalize on lab decentralization trend with introduction of
PANTHER •
Proprietary chemistries, TMA and INVADER, offer further differentiation and
flexibility 11
V
o
l
u
m
e
Reference Labs
Reference Labs
Hospital Labs
Hospital Labs |
 Integrated Sales Organization
with a Clear Strategy
Combined Sales Call Point
Drive Test Utilization
Drive Compliance
Communicate Guidelines
Portfolio of Products
Combined Company Menu
HPV
-
APTIMA
-
Cervista
-
Genotyping
CT/NG
Trichomonas
ThinPrep
& Imaging
fFn
12
Molecular Lab
Cytology
Lab Physician
|
 Our
Lab Partners
13
The value of a Hologic partnership to
our Lab Partners:
•
•
•
Grow revenue
Increase operational effectiveness
Provide patients and clinicians with leading
women's health diagnostic solutions |
 Breast Health –
Mammography
Leader in Breast Cancer Screening & Diagnosis
•
Market leadership: ~65% of current
U.S. installed base, ~40% OUS
•
Approximate $4 billion
addressable U.S. market
•
Strong competitive advantages
of 3D Dimensions
Clinical
superiority
to
2D
First-to-market
with
no
U.S.
competition
•
Substantial replacement
cycle expected
Robust Service Offering
•
Recurring revenue stream
driven by system placements
14 |
 15
Advancing Breast Cancer Screening |
 3D
Dimensions Tomosynthesis Tomosynthesis…uptake ahead of
expectations •
U.S. installed base of ~11,000 digital systems –
potential for conversion to Tomo
•
Met
initial
2-year
unit
installation
goal
in
U.S.
and
the
goal
is
to
more
than
double
installed base during FY’13
Superior Next-Generation Digital Mammography
Superiority
over 2D Digital
Mammography
Improved
Tissue
Visualization
and Detection
Lower
Recall Rates
16 |
 Tomosynthesis Clinical Efficacy
17
Oslo Tomosynthesis Screening Trial
reported breast cancer screening
with Hologic Tomosynthesis significantly
improves cancer detection
1.
Skaane
P.
et.
al.
Comparison
of
Digital
Mammography
Alone
and
Digital
Mammography
Plus
Tomosynthesis
in
a
Population-based
Screening
Program.
Radiology.
2013
Jan
7
[Epub
ahead
of
print].
2.
Philpotts
L.
et
al.
Initial
Experience
With
Digital
Breast
Tomosynthesis
in
Screening
Mammography.
Presented
at
the
ARRS
2012,
Scientific
Session
22
-
Breast
Imaging:
Screening/Emerging
Technologies.
3.
Destounis
S.
et
al. Experience with Combination 2D/3D Breast Tomosynthesis vs FFDM in the
Screening Environment. Radiological Society of North America annual meeting. Chicago, Il, 2012.
•
All age groups and breast densities reported to benefit from the
addition of Hologic Tomosynthesis screening
•
Body of clinical evidence continuing to grow
in invasive
cancer detection
40%
overall in
cancer detection
27%
Compared to 2D, U.S. sites report a
significant reduction in recalls with
Hologic Tomosynthesis
20-40% reduction
in recall rates
(based on site practices)
2-3
1
1 |
 Tomosynthesis + C-View 2D:
A superior mammography exam
1
•
Less patient dose
through
reduced x-ray exposures
•
Greater patient comfort
via fast, 4 second scan
time
•
Heightened detail
from
tomosynthesis images
•
Superior performance
compared to traditional
2D alone
1.
Compared to 2D alone. FDA PMA submission P080003/S001.
18 |
 MyoSure a Growth Driver
in GYN Surgical
19
MyoSure Hysteroscopic Tissue Removal System
Complemented by a portfolio of surgical
instruments addressing unmet needs in
women’s health on a
global basis •
Including NovaSure, the market leader in treating
abnormal uterine bleeding with ~60% share in
the U.S. •
Minimally-invasive technology to remove fibroids and polyps
•
Dynamic technology in early stages of adoption
•
Potential $300-400 million annual opportunity in the U.S.
•
Product line extensions offer flexibility to spur further adoption
|
 Q2 FY
2013 Overview Key Performance Metrics
Key Performance Metrics
Q2 FY 2013
Q2 FY 2013
Revenues*
GAAP revenues of $612.7 million and non-GAAP
revenues of $619.1 million
•
Non-GAAP
revenues
up
$147.9
million,
or
31.4%,
vs.
Q2’12
1
•
Non-GAAP revenues down $25.5 million, or 4.0%, vs. Q1’13
Net Income*
GAAP net loss of $51.1 million and
non-GAAP net income of $93.8 million
•
Non-GAAP net income up $7.0 million, or 8.1%, vs. Q2’12
•
Non-GAAP net income down $7.9 million, or 7.8%, vs. Q1’13
Adjusted EBITDA*
$211.8 million
•
Up $54.4 million, or 34.5%, vs. Q2’12
•
Down $15.7 million, or 6.9%, vs. Q1’13
On a constant currency basis, total revenues would have increased to
$613.0M*, or 30.1% (non-GAAP revenues would have increased to $619.5M*, or 31.5%), compared to
Q2’12. The constant currency revenue amount for Q2’13 is a non-GAAP
number that reflects what revenues in that quarter would have been had the Company applied the foreign
currency exchange rates it used for determining its revenues in Q2’12.
20
Quarter Ended March 30, 2013 (unaudited)
Quarter Ended March 30, 2013 (unaudited)
1
* See the definition of the non-GAAP financial measures and the reconciliation of those measures
to the comparable GAAP financial measures in the Appendix. |
 Q2 FY
2013 Summary •
Sale
of
LIFECODES
business
unit
for
approximately
$85
million
in
cash,
adjusted
for
working
capital
items,
with
the
opportunity
to
earn
a
contingent
payment
of
$10
million
•
Successful transaction retiring $370 million, 2.00% Convertible Senior Notes due
2037 in exchange for issuance of $370 million, 2.00% Convertible Senior
Notes due 2043 which, among other things, extended the first put date by
four years to December 2017 •
Successful repricing of the Term Loan A and Revolver under the Credit Agreement
resulting in a 100 basis point reduction in the interest rates on each of
these loans 21
Financing Activities
Financing Activities |
 Breakdown of consolidated Non-GAAP Q2’13 Revenues of $619.1M
(unaudited)* Breakdown of consolidated Non-GAAP Q2’13 Revenues of
$619.1M (unaudited)* U.S. Revenues ~ 75%
U.S. Revenues ~ 75%
International Revenues ~ 25%
International Revenues ~ 25%
19%
Capital Equipment
66%
Consumables
12%
GYN Surgical
49%
Diagnostics
35%
Breast Health
15%
Service
Business Segments
Disposables/Service ~ 81%
Disposables/Service ~ 81%
Capital Equipment ~ 19%
Capital Equipment ~ 19%
22
* Q2’13 GAAP revenues were as follows: Total: $612.7M; Diagnostics: $296.5M;
Consumables: $402.0 See the definition of non-GAAP financial measures and
the reconciliation of GAAP to non-GAAP in the Appendix.
|
 Q2 FY
2013 Diagnostics Summary •
Continued #1 U.S. market share for ThinPrep
•
Continued #1 U.S. market share for APTIMA Combo 2 for CT/GC
•
Continued #1 U.S. market share for PROCLEIX in blood screening
•
Continued competitive wins for ThinPrep, HPV and CT/GC
•
PANTHER launch progressing smoothly with positive early traction
•
Sale of the Company’s LIFECODES business to Immucor, Inc. for approximately
$85 million in cash, with the opportunity to earn a contingent payment of
$10 million •
FDA clearance of APTIMA Trichomonas vaginalis Assay for use on our
fully-automated PANTHER System
•
FDA clearance of Prodesse ProGastro SSCS assay for gastroenteritis
•
Canadian regulatory approval of APTIMA HPV and APTIMA HPV 16 18/45 genotype
assays and Netherland regulatory approval for HPV for cervical cancer
screening 23
Diagnostics
Diagnostics |
 •
Continued #1 U.S. market share for digital mammography placements in the U.S.
•
Successfully met two-year unit tomosynthesis goal by end of Q2’13 and the
goal is to more than double year-over-year placements in Fiscal
2013 •
Record biopsy sales both in the U.S. and internationally with overall
double-digit year- over-year sales growth
•
Double-digit year-over-year service revenue growth
•
FDA clearance of Hologic’s 3D tomosynthesis Affirm breast biopsy guidance
system •
FDA clearance of Hologic’s contrast-enhanced digital mammography
•
Oslo study published in print edition of Radiology, reporting the addition
of the Company’s 3D mammography screening technology to a 2D breast
screening exam significantly increased cancer detection while reducing the
number of false positives •
New study published online by European Radiology,
supporting the use of Hologic’s
3D
mammography
screening
technology
in
combination
with
2D
using
independent
double reading with arbitration
•
Acceptance
in
American
Journal
of
Roentgenology
and
a
second
in
Radiology
of
papers,
both
presented
at
RSNA
in
2012,
reporting
the
results
of
U.S.
studies
using
Hologic’s 3D mammography with positive results
24
Q2 FY 2013 Breast Health Summary
Breast Health
Breast Health |
 •
#1 share for MyoSure in the U.S. hysteroscopic morcellation market
•
Continued #1 market share for NovaSure in the GEA (Global Endometrial Ablation)
market
•
Strong quarter for MyoSure with double-digit sequential and
year-over-year growth •
Growing demand for new MyoSure XL and MyoSure Lite products
•
SFDA approval of MyoSure in China
25
Q2 FY 2013 GYN Surgical Summary
GYN Surgical
GYN Surgical |
 Amendment Overview
Hologic is seeking to reprice its Term Loan B
The amendment would also expand the Company’s general basket for Restricted
Junior Payments to $250mm and increase the total net leverage threshold for
accessing the excess cash flow builder component from 3.5x to 4.0x
In addition, the Company will be making a $200mm permanent pay-down of the
Term Loan B in connection with the repricing
26
—
The Term Loan B will be reduced from $1,478.8mm to $1,278.8mm
|
 |
 Reconciliation of GAAP to Non-GAAP
(unaudited)
In thousands, except earnings per share
In thousands, except earnings per share
In thousands, except earnings per share
Continued on next page
28
Three Months Ended
Three Months Ended
March 30, 2013
March 30, 2013
March 24, 2012
March 24, 2012
December 29, 2012
December 29, 2012
REVENUES
GAAP revenues
$612,663
-
$631,362
Net adjustments primarily related to Novartis
collaboration
6,429
-
13,275
Non-GAAP revenues
$619,092
$619,092
$-
$644,637
$644,637
EARNINGS PER SHARE
GAAP (loss) earnings per share-
Diluted
$(0.19)
$(0.15)
$0.01
Adjustments to net (loss) income (as detailed below)
0.54
0.48
0.37
Non-GAAP earnings per share-
Diluted
$0.35
$0.35
$0.33
$0.38
$0.38
GROSS MARGINS
GAAP gross margins
$279,326
$226,110
$281,673
Adjustments:
Net adjustments to revenues
6,429
-
13,275
Amortization of intangible assets
75,733
44,341
75,287
Fair value write-up of acquired inventory sold
22,521
-
29,876
Fair value adjustment to depreciation expense
1,791
-
1,797
Adiana closure charges
-
17,945
-
Acquisition and integration-related costs
1,466
50
1,141
Non-GAAP gross margins
$387,266
$387,266
$288,446
$403,049
$403,049
GROSS MARGIN PERCENTAGE
GAAP gross margin percentage
45.6%
48.0%
44.6%
Impact of adjustments above
17.0
13.2
17.9
Non-GAAP gross margin percentage
62.6%
62.6%
61.2%
62.5%
62.5%
$- |
 Reconciliation of GAAP to Non-GAAP (unaudited)
29
OPERATING EXPENSES
GAAP operating expenses
$273,784
$215,976
$218,444
Adjustments:
Amortization of intangible assets
(28,667)
(16,629)
(28,526)
Contingent consideration
(30,187)
(61,309)
(39,526)
Acquisition and integration-related costs
(5,965)
(599)
(4,380)
Restructuring and divestiture charges
(12,462)
(783)
(3,933)
Gain on sale of intellectual property, net
-
12,424
53,884
Fair value adjustment to depreciation expense
(1,398)
-
(892)
Other (charges) gains
(122)
(440)
3,200
Non-GAAP operating expenses
INTEREST EXPENSE
GAAP interest expense
$76,049
$28,512
$72,081
Adjustment for certain non-cash interest expense relating
to convertible notes
(13,621)
(17,946)
(15,644)
Debt transaction and other costs
(6,414)
(171)
-
Non
-GAAP interest expense
PRE-TAX INCOME
GAAP pre-tax loss
$(73,748)
$(58,608)
$(7,353)
Adjustments to pre-tax loss as detailed above
206,776
147,789
157,193
Debt extinguishment loss
3,247
42,347
-
Other gains (losses)
1,733
-
(167)
Non
-GAAP pre-tax income
NET INCOME
GAAP net (loss) income
$(51,104)
$(40,273)
$3,118
Adjustments to pre-tax (loss) income as detailed above
211,756
190,136
157,026
Income tax effect of reconciling items
(66,807)
(63,055)
(58,366)
Non-
GAAP adjusted net income
EBITDA
Non
-GAAP net income
$93,845
$86,808
$101,778
Interest expense, net, not adjusted above
55,807
9,805
56,177
Provision for income taxes
44,163
44,720
47,895
Depreciation expense, not adjusted above
17,963
16,071
21,653
EBITDA
$198,271
$148,640
$194,983
$56,014
$10,395
$56,437
$138,008
$131,528
$149,673
$93,845
$86,808
$101,778
$211,778
$157,404
$227,503
In thousands, except earnings per share
In thousands, except earnings per share
March 24, 2012
Three Months Ended
March 30, 2013
December 29, 2012 |
 Use
of Non-GAAP Financial Measures Hologic has presented the following
non-GAAP financial measures in this presentation: revenues; gross margins; operating expenses; operating
income; interest expense; pre-tax income; net income; EPS; and EBITDA. Hologic
defines its non-GAAP revenues to primarily include contingent revenue
earned under the Novartis collaboration post-acquisition which was eliminated under purchase accounting. Hologic defines EBITDA as its
non-GAAP net income plus net interest expense, net, income taxes, and
depreciation and amortization expense included in its non-GAAP net
income. Hologic defines its non-GAAP gross margins, operating expenses,
operating income, interest expense, pre-tax income and EPS to exclude,
as applicable: (i) the amortization of intangible assets; (ii) acquisition-related charges and effects, such as charges for contingent
consideration (comprised of (a) adjustments for changes in the fair value of the
contingent consideration liabilities initially recorded as part of the
purchase price of an acquisition as required by GAAP, and (b) contingent
consideration that is tied to continuing employment of the former
shareholders
and
employees
which
is
recorded
as
compensation
expense),
transaction
costs,
integration
costs
including
retention,
and
credits
and/or
charges
associated
with
the
write-up
of
acquired
inventory
and
fixed
assets
to
fair
value,
and
the
effect
of
a
reduction
in
revenue
related
to
contingent revenue under the Novartis collaboration, described above; (iii)
non-cash interest expense related to amortization of the debt discount
for convertible debt securities; (iv) restructuring and divestiture charges; (v)
non-cash extinguishment losses and debt transaction costs; (vi)
litigation settlement charges (benefits); (vii) other-than-temporary
impairment losses on investments; and (viii) other one-time, nonrecurring,
unusual
or
infrequent
charges,
expenses
or
gains
that
may
not
be
indicative
of
Hologic’s
core
business
results;
and
to
include
income
taxes
related to such adjustments.
Hologic believes the use of non-GAAP net revenues is useful to investors as it
eliminates certain effects of purchase accounting on its recognition
of
revenue.
Hologic
believes
the
use
of
non-GAAP
net
income
is
useful
to
investors
by
eliminating
certain
of
the
more
significant
effects
of
its
acquisitions and related activities, non-cash charges resulting from the
application of GAAP to convertible debt instruments with cash settlement
features, charges related to debt extinguishment losses, investment impairments,
litigation settlements, and restructuring and divestiture initiatives. These
non-GAAP measures also reflect how Hologic manages its businesses internally. In addition to the adjustments set forth in the calculation
of Hologic’s non-GAAP net income and non-GAAP EPS, its non-GAAP
EBITDA eliminates the effects of financing, income taxes and the accounting
effects of capital spending. As with the items eliminated in its calculation of non-GAAP net income, these items may vary for different
companies for reasons unrelated to the overall operating performance of a
company’s business. When analyzing Hologic’s operating performance,
investors should not consider these non-GAAP financial measures as a substitute
for net income prepared in accordance with GAAP. 30
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