FALCONSTOR SOFTWARE, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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0-23970
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77-0216135
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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2 Huntington Quadrangle, Melville, New York
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11747
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(Address of principal executive offices)
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(Zip Code)
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(Former name or former address, if changed since last report.)
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Item 2.02.
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Results of Operations and Financial Condition
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Item 9.01.
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Financial Statements and Exhibits
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Exhibit Number
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Description
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99.1
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Press release of the Company dated November 8, 2011.
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FALCONSTOR SOFTWARE, INC.
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Dated: November 8, 2011
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By:
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/s/ James Weber
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Name:
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James Weber
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Title:
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Vice President
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Contact:
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Joanne Ferrara, Investor Relations
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631-773-5813
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joanne.ferrara@falconstor.com
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September 30,
2011
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December 31,
2010
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Assets
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(unaudited)
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Current assets:
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Cash and cash equivalents
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$ | 16,361,604 | $ | 17,842,555 | ||||
Marketable securities
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20,230,823 | 18,903,635 | ||||||
Accounts receivable, net
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13,392,589 | 23,286,660 | ||||||
Prepaid expenses and other current assets
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1,381,887 | 1,190,531 | ||||||
Inventory
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1,413,953 | 1,409,659 | ||||||
Income tax receivable
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431,572 | 385,682 | ||||||
Total current assets
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53,212,428 | 63,018,722 | ||||||
Property and equipment, net
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4,499,934 | 5,796,013 | ||||||
Long-term marketable securities
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619,834 | 578,643 | ||||||
Deferred tax assets, net
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220,285 | 235,197 | ||||||
Other assets, net
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3,160,041 | 2,379,225 | ||||||
Goodwill
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4,150,339 | 4,150,339 | ||||||
Other intangible assets, net
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200,980 | 387,222 | ||||||
Total assets
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$ | 66,063,841 | $ | 76,545,361 | ||||
Liabilities and Stockholders' Equity
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Current liabilities:
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Accounts payable
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$ | 1,724,583 | $ | 1,455,013 | ||||
Accrued expenses
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9,358,981 | 9,109,424 | ||||||
Deferred revenue, net
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17,748,411 | 16,979,455 | ||||||
Total current liabilities
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28,831,975 | 27,543,892 | ||||||
Other long-term liabilities
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2,599,108 | 2,507,169 | ||||||
Deferred revenue, net
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7,240,071 | 6,555,437 | ||||||
Total liabilities
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38,671,154 | 36,606,498 | ||||||
Commitments and contingencies
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Total stockholders' equity
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27,392,687 | 39,938,863 | ||||||
Total liabilities and stockholders' equity
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$ | 66,063,841 | $ | 76,545,361 |
Three Months Ended
September 30,
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Nine Months Ended
September 30,
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2011
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2010
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2011
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2010
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Revenues:
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Product revenues
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$ | 10,176,275 | $ | 11,366,493 | $ | 33,045,050 | $ | 33,382,701 | ||||||||
Support and services revenues
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8,680,115 | 7,609,339 | 24,398,610 | 22,983,495 | ||||||||||||
18,856,390 | 18,975,832 | 57,443,660 | 56,366,196 | |||||||||||||
Cost of revenues:
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Product
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1,467,141 | 2,120,727 | 5,456,186 | 6,179,952 | ||||||||||||
Support and service
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3,585,550 | 3,104,108 | 10,688,347 | 10,020,153 | ||||||||||||
Total cost of revenues
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5,052,691 | 5,224,835 | 16,144,533 | 16,200,105 | ||||||||||||
Gross profit
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$ | 13,803,699 | $ | 13,750,997 | $ | 41,299,127 | $ | 40,166,091 | ||||||||
Operating expenses:
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Research and development costs
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4,787,109 | 6,445,992 | 15,572,227 | 20,211,811 | ||||||||||||
Selling and marketing
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9,878,069 | 9,724,007 | 28,873,468 | 31,165,975 | ||||||||||||
General and administrative
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2,904,767 | 2,403,954 | 8,463,762 | 7,217,428 | ||||||||||||
Investigation costs
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531,507 | - | 4,331,298 | - | ||||||||||||
Restructuring costs
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822,320 | - | 822,320 | - | ||||||||||||
Total operating expenses
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18,923,772 | 18,573,953 | 58,063,075 | 58,595,214 | ||||||||||||
Operating loss
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(5,120,073 | ) | (4,822,956 | ) | (16,763,948 | ) | (18,429,123 | ) | ||||||||
Interest and other income (loss), net
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(71,266 | ) | 205,518 | 379,690 | 103,077 | |||||||||||
Loss before income taxes
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(5,191,339 | ) | (4,617,438 | ) | (16,384,258 | ) | (18,326,046 | ) | ||||||||
Provision for income taxes
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206,837 | 21,799,389 | 869,221 | 16,996,344 | ||||||||||||
Net loss
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$ | (5,398,176 | ) | $ | (26,416,827 | ) | $ | (17,253,479 | ) | $ | (35,322,390 | ) | ||||
Basic net loss per share
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$ | (0.12 | ) | $ | (0.58 | ) | $ | (0.37 | ) | $ | (0.78 | ) | ||||
Diluted net loss per share
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$ | (0.12 | ) | $ | (0.58 | ) | $ | (0.37 | ) | $ | (0.78 | ) | ||||
Weighted average basic shares outstanding
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46,779,040 | 45,836,621 | 46,563,004 | 45,367,998 | ||||||||||||
Weighted average diluted shares outstanding
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46,779,040 | 45,836,621 | 46,563,004 | 45,367,998 |
Three Months Ended September 30, |
Nine Months Ended
September 30,
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2011
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2010
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2011
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2010
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GAAP loss from operations
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$ | (5,120,073 | ) | $ | (4,822,956 | ) | $ | (16,763,948 | ) | $ | (18,429,123 | ) | ||||
Add: Non-cash stock option expense (1)
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1,436,578 | 2,197,947 | 4,091,878 | 7,170,617 | ||||||||||||
Investigation related costs (3)
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531,507 | - | 4,331,298 | - | ||||||||||||
Restructuring costs (4)
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822,320 | - | 822,320 | - | ||||||||||||
Non-GAAP loss from operations
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(2,329,668 | ) | (2,625,009 | ) | (7,518,452 | ) | (11,258,506 | ) | ||||||||
GAAP net loss
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$ | (5,398,176 | ) | $ | (26,416,827 | ) | $ | (17,253,479 | ) | $ | (35,322,390 | ) | ||||
Add: Non-cash stock option expense,
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net of income taxes (2)
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1,436,578 | 3,754,900 | 4,091,878 | 7,161,896 | ||||||||||||
Investigation related costs (3)
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531,507 | - | 4,331,298 | - | ||||||||||||
Restructuring costs (4)
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822,320 | - | 822,320 | - | ||||||||||||
Non-GAAP net loss
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(2,607,771 | ) | (22,661,927 | ) | (8,007,983 | ) | (28,160,494 | ) | ||||||||
GAAP gross margin – Product
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86 | % | 81 | % | 84 | % | 82 | % | ||||||||
Add: Non-cash stock option expense (1)
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0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Non-GAAP gross margin - Product
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86 | % | 81 | % | 84 | % | 82 | % | ||||||||
GAAP gross margin – Support and Service
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59 | % | 59 | % | 56 | % | 56 | % | ||||||||
Add: Non-cash stock option expense (1)
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1 | % | 4 | % | 2 | % | 4 | % | ||||||||
Non-GAAP gross margin – Support and Service
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60 | % | 63 | % | 58 | % | 60 | % | ||||||||
GAAP operating margin
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(27 | %) | (25 | %) | (29 | %) | (33 | %) | ||||||||
Add: Non-cash stock option expense (1)
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8 | % | 12 | % | 7 | % | 13 | % | ||||||||
Investigation related costs (3)
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3 | % | - | 8 | % | - | ||||||||||
Restructuring costs (4)
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4 | % | - | 1 | % | - | ||||||||||
Non-GAAP operating margin
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(12 | %) | (14 | %) | (13 | %) | (20 | %) | ||||||||
GAAP Basic EPS
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$ | (0.12 | ) | $ | (0.58 | ) | $ | (0.37 | ) | $ | (0.78 | ) | ||||
Add: Non-cash stock option expense,
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net of income taxes (2)
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0.03 | 0.08 | 0.09 | 0.16 | ||||||||||||
Investigation related costs (3)
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0.01 | - | 0.09 | - | ||||||||||||
Restructuring costs (4)
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0.02 | - | 0.02 | - | ||||||||||||
Non-GAAP Basic EPS
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(0.06 | ) | (0.49 | ) | (0.17 | ) | (0.62 | ) | ||||||||
GAAP Diluted EPS
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$ | (0.12 | ) | $ | (0.58 | ) | $ | (0.37 | ) | $ | (0.78 | ) | ||||
Add: Non-cash stock option expense,
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net of income taxes (2)
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0.03 | 0.08 | 0.09 | 0.16 | ||||||||||||
Investigation related costs (3)
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0.01 | - | 0.09 | - | ||||||||||||
Restructuring costs (4)
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0.02 | - | 0.02 | - | ||||||||||||
Non-GAAP Diluted EPS
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(0.06 | ) | (0.49 | ) | (0.17 | ) | (0.62 | ) | ||||||||
Weighted average basic shares Outstanding (GAAP and as adjusted)
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46,779,040 | 45,836,621 | 46,563,004 | 45,367,998 | ||||||||||||
Weighted average diluted shares Outstanding (GAAP and as adjusted)
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46,779,040 | 45,836,621 | 46,563,004 | 45,367,998 |
(1)
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Represents non-cash, stock-based compensation charges as follows:
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Three Months Ended
September 30,
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Nine Months Ended Septebmer 30, |
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2011
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2010
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2011
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2010
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Cost of revenues - Product
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$ | 1,169 | $ | 9,755 | $ | 2,641 | $ | 23,696 | ||||||||
Cost of revenues – Support and Service
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111,830 | 277,839 | 385,032 | 887,930 | ||||||||||||
Research and development costs
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235,782 | 680,179 | 1,044,193 | 2,480,509 | ||||||||||||
Selling and marketing
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585,814 | 978,559 | 1,471,093 | 2,875,275 | ||||||||||||
General and administrative
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501,983 | 251,615 | 1,188,919 | 903,207 | ||||||||||||
Total non-cash stock-based compensation expense
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$ | 1,436,578 | $ | 2,197,947 | $ | 4,091,878 | $ | 7,170,617 |
(2)
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Represents the effects of non-cash stock-based compensation expense recognized in accordance with the FASB Accounting Standards Codification, Topic 718, for the three and nine months ended September 30, 2010, net of related income tax effects. For the three and nine months ended September 30, 2011, the full year forecasted tax expense for both GAAP and Non-GAAP basis approximate the same amount.
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(3)
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Represents investigation related costs totaling $531,507 and $4,331,298 for the three and nine months ended September 30, 2011, respectively.
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(4)
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Represents restructuring costs totaling $822,320 which were incurred during the three months ended September 30, 2011.
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