Edgar Filing: ALERE INC.

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-16789

LOGO

ALERE INC.

(Exact name of registrant as specified in its charter)

DELAWARE

04-3565120

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

51 SAWYER ROAD, SUITE 200

WALTHAM, MASSACHUSETTS 02453

(Address of principal executive offices)(Zip code)

(781) 647-3900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares outstanding of the registrant’s common stock, par value of $0.001 per share, as of May 7, 2012 was 80,369,516.

ALERE INC.

REPORT ON FORM 10-Q

For the Quarterly Period Ended March 31, 2012

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Readers can identify these statements by forward-looking words such as “may,” “could,” “should,” “would,” “intend,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “continue” or similar words. A number of important factors could cause actual results of Alere Inc. and its subsidiaries to differ materially from those indicated by such forward-looking statements. These factors include, but are not limited to, the risk factors detailed in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and other risk factors identified herein or from time to time in our periodic filings with the Securities and Exchange Commission. Readers should carefully review these risk factors, and should not place undue reliance on our forward-looking statements. These forward-looking statements are based on information, plans and estimates at the date of this report. We undertake no obligation to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us” and “our” refer to Alere Inc. and its subsidiaries.

TABLE OF CONTENTS


	PAGE
PART I. FINANCIAL INFORMATION		3
Item 1. Unaudited Financial Statements		3
a) Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011		3
b) Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2012 and 2011		4
c) Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011		5
d) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011		6
e) Notes to Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
Item 3. Quantitative and Qualitative Disclosures About Market Risk		38
Item 4. Controls and Procedures		40
PART II. OTHER INFORMATION		40
Item 1. Legal Proceedings		40
Item 1A. Risk Factors		40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		40
Item 6. Exhibits		41
SIGNATURES		42

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ALERE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share amounts)


	Three Months Ended March 31,
	2012			2011
Net product sales	$	475,787		$	407,243
Services revenue		192,434			167,552

Net product sales and services revenue		668,221			574,795
License and royalty revenue		2,908			7,669

Net revenue		671,129			582,464

Cost of net product sales		225,554			189,687
Cost of services revenue		90,860			84,716

Cost of net product sales and services revenue		316,414			274,403
Cost of license and royalty revenue		1,644			1,854

Cost of net revenue		318,058			276,257

Gross profit		353,071			306,207
Operating expenses:
Research and development		39,000			36,542
Sales and marketing		158,578			133,209
General and administrative		120,435			105,551

Total operating expenses		318,013			275,302

Operating income		35,058			30,905
Interest expense, including amortization of original issue discounts and deferred financing costs		(50,727	)		(38,305	)
Other income (expense), net		11,831			2,336

Loss before benefit for income taxes		(3,838	)		(5,064	)
Benefit for income taxes		(1,455	)		(4,330	)

Loss before equity earnings of unconsolidated entities, net of tax		(2,383	)		(734	)
Equity earnings of unconsolidated entities, net of tax		3,412			1,011

Net income		1,029			277
Less: Net income (loss) attributable to non-controlling interests		(185	)		62

Net income attributable to Alere Inc. and Subsidiaries		1,214			215
Preferred stock dividends		(5,309	)		(5,809	)
Preferred stock repurchase		—			13,688

Net income (loss) available to common stockholders	$	(4,095	)	$	8,094

Basic net income (loss) per common share attributable to Alere Inc. and Subsidiaries:	$	(0.05	)	$	0.09

Diluted net income (loss) per common share attributable to Alere Inc. and Subsidiaries:	$	(0.05	)	$	0.09

Weighted-average shares-basic		80,240			85,362

Weighted-average shares-diluted		80,240			86,953

The accompanying notes are an integral part of these consolidated financial statements.

ALERE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands)


	Three Months Ended March 31,
	2012			2011
Net income	$	1,029		$	277

Other comprehensive income, before tax:
Changes in cumulative translation adjustment		35,939			21,515
Unrealized gains (losses) on available for sale securities		431			(215	)
Unrealized gains on hedging instruments		1,107			1,617
Minimum pension liability adjustment		(165	)		(38	)

Other comprehensive income, before tax		37,312			22,879
Income tax provision (benefit) related to items of other comprehensive income		(41	)		619

Other comprehensive income, net of tax		37,353			22,260

Comprehensive income		38,382			22,537
Less: Comprehensive income (loss) attributable to non-controlling interests		(185	)		62

Comprehensive income attributable to Alere Inc. and Subsidiaries	$	38,567		$	22,475

The accompanying notes are an integral part of these consolidated financial statements.

ALERE INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in thousands, except par value)


	March 31, 2012			December 31, 2011
ASSETS
Current assets:
Cash and cash equivalents	$	514,097		$	299,173
Restricted cash		2,684			8,987
Marketable securities		1,092			1,086
Accounts receivable, net of allowances of $29,021 and $24,577 at March 31, 2012 and December 31, 2011, respectively		489,262			475,824
Inventories, net		309,921			320,269
Deferred tax assets		40,790			42,975
Receivable from joint venture, net		2,137			2,503
Prepaid expenses and other current assets		136,572			142,910

Total current assets		1,496,555			1,293,727
Property, plant and equipment, net		506,507			491,205
Goodwill		2,835,171			2,821,271
Other intangible assets with indefinite lives		72,434			69,546
Finite-lived intangible assets, net		1,756,233			1,785,925
Deferred financing costs, net, and other non-current assets		107,148			97,786
Receivable from joint venture, net of current portion		15,977			15,455
Investments in unconsolidated entities		85,392			85,138
Marketable securities		2,684			2,254
Deferred tax assets		11,180			10,394

Total assets	$	6,889,281		$	6,672,701

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	62,932		$	61,092
Current portion of capital lease obligations		5,796			6,083
Short-term debt		—			6,240
Accounts payable		139,523			155,464
Accrued expenses and other current liabilities		397,449			395,573

Total current liabilities		605,700			624,452

Long-term liabilities:
Long-term debt, net of current portion		3,453,583			3,267,451
Capital lease obligations, net of current portion		11,726			12,629
Deferred tax liabilities		371,190			380,700
Other long-term liabilities		168,301			153,398

Total long-term liabilities		4,004,800			3,814,178

Commitments and contingencies (Note 16)
Redeemable non-controlling interest		2,448			2,497

Stockholders’ equity:
Series B preferred stock, $0.001 par value (liquidation preference: $709,763 at March 31, 2012 and December 31, 2011); Authorized: 2,300 shares; Issued: 2,065 shares at March 31, 2012 and December 31, 2011; Outstanding: 1,774 shares at March 31, 2012 and December 31, 2011		606,468			606,468
Common stock, $0.001 par value; Authorized: 200,000 shares; Issued: 88,025 shares at March 31, 2012 and 87,647 shares at December 31, 2011; Outstanding: 80,346 shares at March 31, 2012 and 79,968 shares at December 31, 2011		88			88
Additional paid-in capital		3,331,039			3,324,710
Accumulated deficit		(1,485,577	)		(1,486,791	)
Treasury stock, at cost, 7,679 shares at March 31, 2012 and December 31, 2011		(184,971	)		(184,971	)
Accumulated other comprehensive income (loss)		7,083			(30,270	)

Total stockholders’ equity		2,274,130			2,229,234
Non-controlling interests		2,203			2,340

Total equity		2,276,333			2,231,574

Total liabilities and equity	$	6,889,281		$	6,672,701

The accompanying notes are an integral part of these consolidated financial statements.

ALERE INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)


	Three Months Ended March31,
	2012			2011
Cash Flows from Operating Activities:
Net income	$	1,029		$	277
Adjustments to reconcile net income to net cash provided by operating activities:
Non-cash interest expense, including amortization of original issue discounts and write-off of deferred financing costs		5,278			3,603
Depreciation and amortization		107,402			94,975
Non-cash stock-based compensation expense		3,874			5,808
Impairment of inventory		5			294
Impairment of long-lived assets		134			230
Impairment of intangible assets		—			2,935
Loss on sale of fixed assets		566			479
Gain on sales of marketable securities		—			(333	)
Equity earnings of unconsolidated entities, net of tax		(3,412	)		(1,011	)
Deferred income taxes		(13,752	)		(13,238	)
Other non-cash items		—			1,606
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net		(12,942	)		(5,339	)
Inventories, net		9,351			11,063
Prepaid expenses and other current assets		3,521			(24,473	)
Accounts payable		(17,806	)		(5,935	)
Accrued expenses and other current liabilities		3,985			14,795
Other non-current liabilities		14,697			1,424

Net cash provided by operating activities		101,930			87,160

Cash Flows from Investing Activities:
Decrease in restricted cash		6,302			3
Purchases of property, plant and equipment		(30,385	)		(28,944	)
Proceeds from sale of property, plant and equipment		527			204
Proceeds from disposition of business		—			11,490
Cash paid for acquisitions, net of cash acquired		(38,008	)		(94,899	)
Cash received from equity method investment		6,066			—
Cash received (paid) for marketable securities		(2	)		6,982
Increase in other assets		(8,554	)		(12,102	)

Net cash used in investing activities		(64,054	)		(117,266	)

Cash Flows from Financing Activities:
Cash paid for financing costs		(1,876	)		(80	)
Cash paid for contingent purchase price consideration		(48	)		(13,222	)
Proceeds from issuance of common stock, net of issuance costs		7,674			11,824
Repurchase of preferred stock		—			(49,380	)
Proceeds from long-term debt		199,141			937
Payments on long-term debt		(16,911	)		(3,600	)
Net proceeds under revolving credit facilities		1,339			133
Payments on short-term debt		(6,240	)		—
Repurchase of common stock		—			(618	)
Cash paid for dividends		(5,323	)		—
Excess tax benefits on exercised stock options		148			1,169
Principal payments on capital lease obligations		(1,720	)		(653	)
Other		—			(244	)

Net cash provided by (used in) financing activities		176,184			(53,734	)

Foreign exchange effect on cash and cash equivalents		864			1,200

Net increase (decrease) in cash and cash equivalents		214,924			(82,640	)
Cash and cash equivalents, beginning of period		299,173			401,306

Cash and cash equivalents, end of period	$	514,097		$	318,666

The accompanying notes are an integral part of these consolidated financial statements.

ALERE INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(1) Basis of Presentation of Financial Information

The accompanying consolidated financial statements of Alere Inc. are unaudited. In the opinion of management, the unaudited consolidated financial statements contain all adjustments considered normal and recurring and necessary for their fair statement. Interim results are not necessarily indicative of results to be expected for the year. These interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these consolidated financial statements do not include all of the information and footnotes necessary for a complete presentation of financial position, results of operations, comprehensive income and cash flows. Our audited consolidated financial statements for the year ended December 31, 2011 included information and footnotes necessary for such presentation and were included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on February 29, 2012. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2011.

Certain reclassifications of prior period amounts have been made to conform to current period presentation. These reclassifications had no effect on net income or equity.

Certain amounts presented may not recalculate directly, due to rounding.

(2) Cash and Cash Equivalents

We consider all highly-liquid cash investments with original maturities of three months or less at the date of acquisition to be cash equivalents. At March 31, 2012, our cash equivalents consisted of money market funds.

(3) Inventories

Inventories are stated at the lower of cost (first in, first out) or market and are comprised of the following (in thousands):


	March 31, 2012		December 31, 2011
Raw materials	$	97,263	$	92,844
Work-in-process		68,847		72,939
Finished goods		143,811		154,486

	$	309,921	$	320,269

(4) Stock-based Compensation

We recorded stock-based compensation expense in our consolidated statements of operations for the three months ended March 31, 2012 and 2011, respectively, as follows (in thousands):


	Three Months Ended March 31,
	2012			2011
Cost of net revenue	$	269		$	350
Research and development		771			945
Sales and marketing		917			959
General and administrative		1,917			3,554

		3,874			5,808
Benefit for income taxes		(541	)		(1,286	)

	$	3,333		$	4,522

(5) Net Income (Loss) per Common Share

The following table sets forth the computation of basic and diluted net income (loss) per common share for the periods presented (in thousands, except per share data):


	Three Months Ended March 31,
	2012			2011
Numerator:
Net income	$	1,029		$	277
Preferred stock dividends		(5,309	)		(5,809	)
Preferred stock repurchase		—			13,688
Less: Net income (loss) attributable to non-controlling interest		(185	)		62

Net income (loss) available to common stockholders	$	(4,095	)	$	8,094


Denominator:
Weighted-average common shares outstanding — basic		80,240			85,362
Effect of dilutive securities:
Stock options		—			1,348
Warrants		—			136
Potentially issuable shares of common stock associated with contingent consideration arrangements		—			107

Weighted-average common shares outstanding — diluted		80,240			86,953


Basic net income (loss) per common share attributable to Alere Inc. and Subsidiaries	$	(0.05	)	$	0.09

Diluted net income (loss) per common share attributable to Alere Inc. and Subsidiaries	$	(0.05	)	$	0.09

For the three months ended March 31, 2012 and 2011, anti-dilutive shares of 13,966 and 14,877, respectively, were excluded from the computations of diluted net income (loss) per common share.

(6) Preferred Stock

For the three months ended March 31, 2012 and 2011, Series B preferred stock dividends amounted to $5.3 million and $5.8 million, respectively, which reduced earnings available to common stockholders for purposes of calculating net income (loss) per common share for each of the respective periods. As of April 16, 2012, payments have been made covering all dividend periods through March 31, 2012.

The Series B preferred stock dividends for the three months ended March 31, 2012 were paid in cash. The Series B preferred stock dividends for the three months ended March 31, 2011 were paid in additional shares of Series B preferred stock.

During the first quarter of 2011, we repurchased in the open market and privately-negotiated transactions 183,000 shares of our Series B preferred stock, which were convertible into approximately 1.1 million shares of our common stock, at a cost of approximately $49.4 million, which we paid in cash. The repurchase of the preferred stock at an average cost of $269.84 per preferred share, an amount less than the weighted average fair value of the preferred shares at issuance, resulted in the allocation of $13.7 million of income attributable to common shareholders.

(7) Stockholders’ Equity and Non-controlling Interests

A summary of the changes in stockholders’ equity and non-controlling interests comprising total equity for the three months ended March 31, 2012 and 2011 is provided below (in thousands):


	Three Months Ended March 31,
	2012									2011
	Total Stockholders’ Equity			Non- controlling Interests			Total Equity			Total Stockholders’ Equity			Non- controlling Interests		Total Equity
Equity, beginning of period	$	2,229,234		$	2,340		$	2,231,574		$	2,575,038		$	2,688	$	2,577,726
Issuance of common stock and warrants in connection with acquisitions		—			—			—			1,000			—		1,000
Exercise of common stock options, warrants and shares issued under employee stock purchase plan		7,674			—			7,674			11,824			—		11,824
Repurchase of common stock		—			—			—			(618	)		—		(618	)
Repurchase of preferred stock		—			—			—			(49,380	)		—		(49,380	)
Preferred stock dividends		(5,323	)		—			(5,323	)		(33	)		—		(33	)
Stock-based compensation related to grants of common stock options		3,874			—			3,874			5,808			—		5,808
Excess tax benefits on exercised stock options		104			—			104			1,169			—		1,169
Net income (loss)		1,214			(137	)		1,077			215			62		277
Total other comprehensive income		37,353			—			37,353			22,260			—		22,260

Equity, end of period	$	2,274,130		$	2,203		$	2,276,333		$	2,567,283		$	2,750	$	2,570,033

A summary of the changes in redeemable non-controlling interest recorded in the mezzanine section of the balance sheet for the three months ended March 31, 2012 is provided below. There was no redeemable non-controlling interest during the three months ended March 31, 2011 (in thousands):


	Three Months Ended March 31, 2012
Redeemable non-controlling interest, beginning of period	$	2,497
Net loss		(49	)

Redeemable non-controlling interest, end of period	$	2,448

(8) Business Combinations

Acquisitions are accounted for using the acquisition method and the acquired companies’ results have been included in the accompanying consolidated financial statements from their respective dates of acquisition. During the three months ended March 31, 2012 and 2011, we expensed acquisition-related costs of $1.5 million and $1.9 million, respectively, in general and administrative expense.

Our business acquisitions have historically been made at prices above the fair value of the acquired net assets, resulting in goodwill, based on our expectations of synergies by combining the businesses. These synergies include elimination of redundant facilities, functions and staffing; use of our existing commercial infrastructure to expand sales of the acquired businesses’ products; and use of the commercial infrastructure of the acquired businesses to cost-effectively expand product sales.

Net assets acquired are recorded at their fair value and are subject to adjustment upon finalization of the fair value analysis. We are not aware of any information that indicates the final fair value analysis will differ materially from the preliminary estimates. Determination of the estimated useful lives of the individual categories of intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with finite lives is recognized over the shorter of the respective lives of the agreement or the period of time the assets are expected to contribute to future cash flows. We amortize our finite-lived intangible assets based on patterns on which the respective economic benefits are expected to be realized.

(a) Acquisitions in 2012

During the three months ended March 31, 2012, we acquired the following businesses for a preliminary aggregate purchase price of $32.8 million, which included cash payments totaling $31.8 million and a contingent consideration obligation with an aggregate acquisition date fair value of $1.0 million.

•

Reatrol Comercializacao De Produtos De Saude, LDA, subsequently renamed Alere Lda, located in Vila Nova de Gaia, Portugal, a distributor of products for drugs of abuse testing (Acquired January 2012)

•

Kullgren Holding AB, or Kullgren, located in Gensta, Sweden, a company that manufactures and distributes high quality intimacy and pharmaceutical products (Acquired February 2012)

•

Wellogic ME FZ-LLC, or Wellogic UAE, located in Dubai, United Arab Emirates, a company that provides development services to Alere Wellogic, LLC, which acquired the assets of Method Factory, Inc. (d/b/a Wellogic), or Wellogic, in December 2011 (Acquired February 2012)

•

certain assets, primarily including customer and patient lists, of AmMed Direct LLC, or AmMed, located near Nashville, Tennessee, a privately-owned mail-order provider of home-diabetes testing products and supplies (Acquired March 2012)

The operating results of Alere Lda and AmMed are included in our professional diagnostics reporting unit and business segment. The operating results of Wellogic UAE are included in our health management reporting unit and business segment. The operating results of Kullgren are included in our consumer diagnostics reporting unit and business segment.

Our consolidated statement of operations for the three months ended March 31, 2012 included revenue totaling approximately $1.4 million related to these businesses. Goodwill has been recognized in all of the acquisitions and amounted to approximately $10.2 million. Goodwill related to the acquisition of AmMed, which totaled $7.5 million, is deductible for tax purposes. The goodwill related to the remaining 2012 acquisitions is not expected to be deductible for tax purposes.

A summary of the preliminary fair values of the net assets acquired for the acquisitions consummated in 2012 is as follows (in thousands):


Current assets (1)	$	2,112
Property, plant and equipment		1,610
Goodwill		10,185
Intangible assets		26,862

Total assets acquired		40,769

Current liabilities		1,671
Non-current liabilities		6,330

Total liabilities assumed		8,001

Net assets acquired		32,768
Less:
Contingent consideration		1,000

Cash paid	$	31,768

(1)	Includes cash acquired of approximately $0.5 million.

The following are the intangible assets acquired and their respective fair values and weighted-average useful lives (dollars in thousands):


	Amount		Weighted- Average Useful Life
Core technology and patents	$	8,403		21.0 years
Trademarks and trade names		530		2.0 years
Customer relationships		17,929		7.6 years

Total intangible assets	$	26,862

(b) Acquisitions in 2011

During 2011, we acquired the following businesses for a preliminary aggregate purchase price of $787.3 million, which included cash payments totaling $603.7 million, 831,915 shares of our common stock with an acquisition date fair value of $16.2 million, a previously-held investment with a fair value totaling $113.2 million, contingent consideration obligations with an aggregate acquisition date fair value of $48.7 million and deferred purchase price consideration with an acquisition date fair value of $4.2 million.

•

90% interest in BioNote, Inc., or BioNote, headquartered in South Korea, a manufacturer of diagnostic products for the veterinary industry (Acquired January 2011). We previously owned a 10% interest in BioNote.

•

assets, including domain name, of Pregnancy.org, LLC, or Pregnancy.org, a U.S.-based company providing a website for preconception, pregnancy and newborn care content, tools and sharing (Acquired January 2011)

•

Home Telehealth Limited, subsequently renamed Alere Connected Health Limited, or Alere Connected Health, located in Cardiff, Wales, a company that focuses on delivering integrated, comprehensive services and programs to health and social care providers and insurers (Acquired February 2011)

•

Bioeasy Diagnostica Ltda., or Bioeasy, located in Belo Horizonte, Brazil, a company that markets and sells rapid diagnostic tests and systems for laboratory diagnosis, prevention and monitoring of immunological diseases and fertility (Acquired March 2011)

•

80.92% interest in Standing Stone, Inc., or Standing Stone, located in Westport, Connecticut, a company that focuses on disease state management by enhancing the quality of care provided to patients who require long-term therapy for chronic disease management (Acquired May 2011)

•

certain assets, rights, liabilities and properties of Drug Detection Devices, Inc., or 3DL, located in Alpharetta, Georgia, a distributor that promotes, markets, distributes and sells drugs of abuse diagnostic products, including consumables, point-of-care diagnostic kits and related products and services (Acquired July 2011)

•

Colibri Medical AB, or Colibri, located in Helsingborg, Sweden, a distributor of point-of-care drugs of abuse diagnostic products primarily to the Scandinavian marketplace (Acquired July 2011)

•

Laboratory Data Systems, Inc., or LDS, located in Tampa, Florida, a provider of healthcare software products, services, consulting and solutions (Acquired August 2011)

•

certain assets, liabilities and properties of Abatek Medical LLC, or Abatek, located in Dover, New Hampshire, a distributor that promotes, markets, distributes and sells drugs of abuse diagnostic products, including consumables, point-of-care diagnostic kits and related products and services (Acquired September 2011)

•

Forensics Limited, or ROAR, located in Worcestershire, United Kingdom, a company that provides forensic quality toxicology services across the United Kingdom (Acquired September 2011)

•

Mahsan Diagnostika Vertriebsgesellschaft mbH, or Mahsan, located in Reinbek, Germany, a distributor of in vitro diagnostic drugs of abuse products primarily to the German marketplace (Acquired October 2011)

•

Avee Laboratories Inc. and related companies, which we refer to collectively as Avee, located in Tampa, Florida, a privately-owned provider of drug testing services in the field of pain management (Acquired October 2011)

•

Medical Automation Systems Inc., or MAS, located in Charlottesville, Virginia, a provider of network-based software solutions for point-of-care testing (Acquired October 2011)

•

Axis-Shield plc, or Axis-Shield, located in Dundee, Scotland, a U.K. publicly traded company focused on the development and manufacture of in vitro diagnostic tests for use in clinical laboratories and at the point of care (Acquired November 2011)

•

certain assets and properties of 1 Medical Distribution, Inc., or 1 Medical, located in Worthington, Ohio, a distributor that promotes, markets, distributes and sells drugs of abuse diagnostic products, including consumables, point-of-care diagnostic kits and related products and services (Acquired November 2011)

•

Arriva Medical LLC, or Arriva, located in Coral Springs, Florida, a privately-owned mail-order provider of home-diabetes testing products and supplies (Acquired November 2011)

•

Wellogic, headquartered in Waltham, Massachusetts, a provider of software solutions designed to connect the healthcare community (Acquired December 2011)

The operating results of BioNote, Bioeasy, 3DL, Colibri, LDS, Abatek, ROAR, Mahsan, Avee, MAS, Axis-Shield, 1 Medical and Arriva are included in our professional diagnostics reporting unit and business segment. The operating results of Pregnancy.org, Alere Connected Health, Standing Stone and Wellogic are included in our health management reporting unit and business segment.

Our consolidated statement of operations for the three months ended March 31, 2011 included revenue totaling approximately $3.0 million related to these businesses. Goodwill has been recognized in all of the acquisitions, with the exception of 1 Medical, and amounted to approximately $358.1 million. Goodwill related to the acquisitions of Pregnancy.org, 3DL, Abatek, LDS and Wellogic, which totaled $32.3 million, is expected to be deductible for tax purposes. The goodwill related to the remaining 2011 acquisitions is not expected to be deductible for tax purposes.

A summary of the preliminary fair values of the net assets acquired for the acquisitions consummated in 2011 is as follows (in thousands):


Current assets (1)	$	135,635
Property, plant and equipment		68,473
Goodwill		358,106
Intangible assets		416,624
Other non-current assets		27,679

Total assets acquired		1,006,517

Current liabilities		89,208
Non-current liabilities		129,962

Total liabilities assumed		219,170

Net assets acquired		787,347
Less:
Fair value of previously-held equity investment		113,168
Contingent consideration		48,685
Fair value of common stock issued		16,183
Loan forgiveness		1,489
Deferred purchase price consideration		4,170

Cash paid	$	603,652

(1)	Includes cash acquired of approximately $23.2 million.

The following are the intangible assets acquired and their respective fair values and weighted-average useful lives (dollars in thousands):


	Amount		Weighted- Average Useful Life
Core technology and patents	$	76,659		10.1 years
Database		64		3.0 years
Trademarks and trade names		14,197		10.1 years
Customer relationships		243,725		12.3 years
Non-compete agreements		8,306		5.3 years
Software		7,400		10.9 years
Other		7,767		15.6 years
In-process research and development		58,506		N/A

Total intangible assets	$	416,624

(c) Restructuring Plans of Acquisitions

In connection with several of our acquisitions consummated during 2008 and prior, we initiated integration plans to consolidate and restructure certain functions and operations, including the costs associated with the termination of certain personnel of these acquired entities and the closure of certain of the acquired entities’ leased facilities. These costs have been recognized as liabilities assumed in connection with the acquisition of these entities and are subject to potential adjustments as certain exit activities are refined. The following table summarizes the liabilities established for exit activities related to these acquisitions and the total exit costs incurred since inception of each plan (in thousands):


	Balance at December 31, 2011		Adjustments to the Reserve (1)			Amounts Paid			Balance at March 31, 2012		Exit Costs Since Inception

Acquisition of Matria Healthcare Inc.:
Severance-related costs	$	68	$	—		$	—		$	68	$	13,664
Facility costs		395		(111	)		(36	)		248		4,674

Total costs for Matria Healthcare Inc.		463		(111	)		(36	)		316		18,338

Acquisition of Cholestech Corporation:
Severance-related costs		—		—			—			—		5,845
Facility costs		1,304		—			(55	)		1,249		2,732

Total costs for Cholestech Corporation		1,304		—			(55	)		1,249		8,577

Total costs for all plans	$	1,767	$	(111	)	$	(91	)	$	1,565	$	26,915

(1)	These adjustments resulted in a change in the aggregate purchase price and related goodwill for each related acquisition.

Of the total $1.6 million liability outstanding as of March 31, 2012, $0.5 million is included in accrued expenses and other current liabilities and $1.1 million is included in other long-term liabilities.

Although we believe our plans and estimated exit costs for our acquisitions are reasonable, actual spending for exit activities may differ from current estimated exit costs.

(9) Restructuring Plans

The following table sets forth aggregate restructuring charges recorded in our consolidated statements of operations for the three months ended March 31, 2012 and 2011 (in thousands):


	Three Months Ended March 31,
Statement of Operations Caption	2012		2011
Cost of net revenue	$	964	$	1,350
Research and development		624		18
Sales and marketing		827		1,012
General and administrative		3,113		3,819

Total operating expenses		5,528		6,199
Interest expense, including amortization of original issue discounts and deferred financing costs		60		49
Equity earnings of unconsolidated entities, net of tax		—		193

Total charges	$	5,588	$	6,441

(a) 2012 Restructuring Plans

In 2012, management developed cost reduction efforts within our professional diagnostics business segment, including the integration of our businesses in Brazil. Additionally, management developed new plans to continue our efforts to reduce costs within our health management business segment. The following table summarizes the restructuring activities related to our 2012 restructuring plans for the three months ended March 31, 2012 (in thousands):


	Professional Diagnostics		Health Management		Total
Severance-related costs - cash	$	1,973	$	797	$	2,770
Inventory impairments - non-cash		—		5		5

Total charges	$	1,973	$	802	$	2,775

We anticipate incurring approximately $0.5 million in additional costs under our 2012 restructuring plan related to our professional diagnostics business segment in Brazil and may develop additional plans over the remainder of 2012. As of March 31, 2012, $1.9 million in severance costs remain unpaid.

(b) 2011 Restructuring Plans

In 2011, management executed a company-wide cost reduction plan, which impacted our corporate and other business segment, as well as the health management and professional diagnostics business segments. Management also developed plans within our professional diagnostics business segment to consolidate operating activities among certain of our European and Asia Pacific subsidiaries, including transferring the manufacturing of our Panbio products from Australia to our Standard Diagnostics facility in South Korea. Additionally, within our health management business segment, management executed plans to further reduce costs and improve efficiencies, as well as cease operations at our GeneCare Medical Genetics Center, Inc., or GeneCare, facility in Chapel Hill, North Carolina, and transfer the majority of our Quality Assured Services, Inc. operation in Orlando, Florida to our facility in Livermore, California. The following table summarizes the restructuring activities related to our 2011 restructuring plans for the three months ended March 31, 2012 and 2011 and since inception (in thousands):

Professional Diagnostics


	Three Months Ended March 31,				Since
	2012		2011		Inception
Severance-related costs	$	1,965	$	1,037	$	14,012
Facility and transition costs		649		—		1,010

Cash charges		2,614		1,037		15,022
Fixed asset and inventory impairments		134		524		793

Total charges	$	2,748	$	1,561	$	15,815

Health Management


	Three Months Ended March 31,					Since
	2012			2011		Inception
Severance-related costs	$	—		$	1,247	$	2,254
Facility and transition costs		(86	)		—		6,255
Other exit costs		25			—		119

Cash charges		(61	)		1,247		8,628
Fixed asset and inventory impairments		—			—		864
Intangible asset impairments		—			2,935		2,935
Other non-cash charges		—			—		761

Total charges	$	(61	)	$	4,182	$	13,188

Corporate and Other


	Three Months Ended March 31,				Since
	2012		2011		Inception
Severance-related costs	$	17	$	—	$	1,210

Cash charges		17		—		1,210
Fixed asset and inventory impairments		—		—		3

Total charges	$	17	$	—	$	1,213

We anticipate incurring approximately $2.6 million in additional costs under these plans related to our professional diagnostics business segment, primarily related to severance and facility exit costs, and may also incur impairment charges on assets as plans are finalized. We anticipate incurring approximately $1.0 million in additional costs under these plans related to our health management business segment, primarily related to facility lease obligations through 2014. As of March 31, 2012, $4.9 million in cash charges remain unpaid.

In 2010, management developed several plans to reduce costs and improve efficiencies within our health management and professional diagnostics business segments. In May 2008, management decided to close our facility located in Bedford, England and initiated steps to cease operations at this facility and transition the manufacturing operations principally to our manufacturing facilities in Shanghai and Hangzhou, China. Additionally in 2008, management developed and initiated plans to transition the businesses of Cholestech to our San Diego, California facility. The following table summarizes the restructuring activities related to these restructuring plans for the three months ended March 31, 2012 and 2011 and since inception (in thousands):

Professional Diagnostics


	Three Months Ended March 31,				Since
	2012		2011		Inception
Severance-related costs	$	—	$	35	$	8,897
Facility and transition costs		74		382		8,386
Other exit costs		19		9		4,437

Cash charges		93		426		21,720
Fixed asset and inventory impairments		—		—		10,309

Total charges	$	93	$	426	$	32,029

Health Management


	Three Months Ended March 31,				Since
	2012		2011		Inception
Severance-related costs	$	—	$	—	$	4,647
Facility and transition costs		—		39		2,476
Other exit costs		16		40		304

Cash charges		16		79		7,427
Fixed asset and inventory impairments		—		—		165

Total charges	$	16	$	79	$	7,592

We anticipate incurring an additional $1.7 million in facility lease obligation charges related to the Cholestech plan through 2017 and do not anticipate incurring significant additional charges under the other plans. As of March 31, 2012, $1.5 million in facility related costs remain unpaid.

In addition to the restructuring charges discussed above, certain charges associated with the Bedford facility closure were borne by SPD, our 50/50 joint venture with the Procter & Gamble Company, or P&G. Of the restructuring charges recorded by SPD, 50% has been included in equity earnings of unconsolidated entities, net of tax, in our consolidated statement of operations. The following table summarizes the 50% portion of the restructuring charges borne by SPD and included in equity earnings of unconsolidated entities, net of tax, for the three months ended March 31, 2011 and since inception (in thousands):


	Three Months Ended March 31, 2011		Since Inception
Severance-related costs	$	11	$	5,797
Facility and transition costs		110		5,396
Other exit costs		—		283

Cash charges		121		11,476
Fixed asset and inventory impairments		72		4,635

Total charges included in equity earnings of unconsolidated entities, net of tax	$	193	$	16,111

We do not anticipate incurring significant additional restructuring charges under this plan.

(e) Restructuring Reserves

The following table summarizes our restructuring reserves related to the plans described above, of which $6.2 million is included in accrued expenses and other current liabilities and $2.0 million is included in other long-term liabilities on our consolidated balance sheets (in thousands):


	Severance- related Costs			Facility and Transition Costs			Other Exit Costs			Total
Balance, December 31, 2011	$	3,380		$	5,215		$	593		$	9,188
Cash charges		4,752			637			60			5,449
Payments		(4,355	)		(2,038	)		(72	)		(6,465	)
Currency adjustments		54			4			—			58

Balance, March 31, 2012	$	3,831		$	3,818		$	581		$	8,230

(10) Long-term Debt

We had the following long-term debt balances outstanding (in thousands):


	March 31, 2012			December 31, 2011
A term loans (1)	$	909,375		$	917,188
B term loans		920,375			922,688
Incremental B-1 term loans		249,375			250,000
Incremental B-2 term loans		198,004			—
3% Senior subordinated convertible notes		150,000			150,000
9% Senior subordinated notes		391,643			391,233
7.875% Senior notes		245,849			245,621
8.625% Senior subordinated notes		400,000			400,000
Lines-of-credit		19,271			19,603
Other		32,623			32,210

		3,516,515			3,328,543
Less: Current portion		(62,932	)		(61,092	)

	$	3,453,583		$	3,267,451

(1)	Includes “A” term loans and “Delayed-Draw” term loans under our secured credit facility.

In connection with our significant long-term debt issuances, we recorded interest expense, including amortization and write-offs of deferred financing costs and original issue discounts, in our consolidated statements of operations for the three months ended March 31, 2012 and 2011, respectively, as follows (in thousands):


	Three Months Ended March 31,
	2012		2011
Secured credit facility (1)	$	22,851	$	—
Former secured credit facility (2)		—		12,054
3% Senior subordinated convertible notes		1,246		1,246
9% Senior subordinated notes		10,354		9,730
7.875% Senior notes		5,758		5,365
8.625% Senior subordinated notes		9,274		8,908

	$	49,483	$	37,303

(1)

Includes “A” term loans, including the “Delayed-Draw” term loans; “B” term loans; “Incremental B-1” term loans; “Incremental B-2” term loans; and revolving line of credit loans. For three months ended March 31, 2012, amount includes $1.3 million related to the amortization of fees paid for certain debt modifications.

(2)	Includes loans under First Lien Credit Agreement and Second Lien Credit Agreement.

The following summarizes the material terms of our secured credit facility that have changed significantly since December 31, 2011. All other terms of our secured credit facility as described in our Annual Report on Form 10-K for the year ended December 31, 2011, but omitted below, have not changed since that date.

On March 28, 2012, we and certain of our subsidiaries entered into a third amendment to the credit agreement that governs our secured credit facility, or the credit agreement. The third amendment provides for an additional term loan facility consisting of “Incremental B-2” term loans in the aggregate principal amount of $200.0 million and thereby increases the total amount of the credit available to us under the secured credit facility to $2.55 billion in aggregate principal amount, consisting of term loans in the aggregate principal amount of $2.3 billion and, subject to our continued compliance with the credit agreement, a $250.0 million revolving line of credit; the revolving line of credit continues to include a sublimit for the issuance of letters of credit. On March 28, 2012, we borrowed the entire $200.0 million principal amount of the “Incremental B-2” term loans.

Under the terms of the third amendment, we must repay the principal amount of the “Incremental B-2” term loans in twenty consecutive quarterly installments, beginning on June 30, 2012 and continuing through March 31, 2017, in the amount of $0.5 million each, and a final installment on June 30, 2017 in the amount of $190.0 million; notwithstanding the foregoing, and subject to certain exceptions provided for in the credit agreement, in the event that any of our existing 3% senior subordinated convertible notes, 9% senior subordinated notes or 7.875% senior notes remain outstanding on the date that is six months prior to the relevant maturity date thereof, respectively, then the “Incremental B-2” term loans (as well as all other term loans and all revolving credit loans under the secured credit facility) shall instead mature in full on the relevant prior date. Otherwise, the terms and conditions, including the interest rates, that apply to the “Incremental B-2” term loans under the credit agreement are substantially the same as the terms and conditions, including the interest rates, that apply to the existing “B” term loans under the credit agreement.

(11) Derivative Financial Instruments

We manage our economic and transaction exposure to certain market-based risks through the use of derivative instruments. Our objective for holding derivative instruments has been to reduce volatility of net earnings and cash flows associated with changes in interest rates and foreign currency exchange rates. We do not hold or issue derivative financial instruments for speculative purposes.

(a) Interest Rate Risk

We used interest rate swap contracts in the management of our interest rate exposure related to our former secured credit facility. On June 30, 2011, we entered into a new secured credit facility and, in connection therewith, repaid in full all outstanding indebtedness under and terminated our former secured credit facility and related interest rate swaps.

(b) Foreign Currency Risk

In connection with our acquisition of Axis-Shield, we acquired a number of foreign currency forward contracts. The specific risk hedged in these contracts is the undiscounted foreign currency spot rate risk on forecasted foreign currency revenue. As of March 31, 2012 and December 31, 2011, the notional value of these contracts was approximately $3.5 million and CHF 3.2 million and $16.6 million and CHF 5.4 million, respectively. We report the effective portion of the gain or loss on a cash flow hedge as a component of other comprehensive income, and it is subsequently reclassified into net earnings in the period in which the hedged transaction affects net earnings or the forecasted transaction is no longer probable of occurring.

The following tables summarize the fair value of our derivative instruments and the effect of derivative instruments on/in our accompanying consolidated balance sheets and consolidated statements of operations (in thousands):


Derivative Instruments	Balance Sheet Caption	Fair Value at March 31, 2012		Fair Value at December 31, 2011
Foreign currency forward contracts	Prepaid expenses and other current assets	$	641	$	—

Foreign currency forward contracts	Accrued expenses and other current liabilities	$	—	$	447


Derivative Instruments	Location of Gain Recognized in Income	Amount of Gain Recognized During the Three Months Ended March 31, 2012		Amount of Gain Recognized During the Three Months Ended March 31, 2011
Foreign currency forward contracts	Other comprehensive income	$	1,107	$	—
Interest rate swap contracts	Other comprehensive income		—		1,617

Total gain	Other comprehensive income	$	1,107	$	1,617

(12) Fair Value Measurements

We apply fair value measurement accounting to value our financial assets and liabilities. Fair value measurement accounting provides a framework for measuring fair value under U.S. GAAP and requires expanded disclosures regarding fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value.

Described below are the three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities. Our Level 1 assets and liabilities include investments in marketable securities.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our Level 2 assets and liabilities include foreign exchange forward contracts and interest rate swap contracts.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The fair value of the contingent consideration obligations related to our acquisitions is valued using Level 3 inputs.

The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2012 and December 31, 2011, and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value (in thousands):


Description	March 31, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Marketable securities	$	3,776	$	3,776	$	—	$	—
Foreign exchange forward contracts ⁽¹⁾		641		—		641		—

Total assets	$	4,417	$	3,776	$	641	$	—

Liabilities:
Contingent consideration obligations ⁽²⁾	$	146,301	$	—	$	—	$	146,301

Total liabilities	$	146,301	$	—	$	—	$	146,301


Description	December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
Assets:
Marketable securities	$	3,340	$	3,340	$	—	$	—

Total assets	$	3,340	$	3,340	$	—	$	—

Liabilities: Foreign exchange forward contracts ⁽¹⁾	$	447	$	—	$	447	$	—
Contingent consideration obligations ⁽²⁾		140,047		—		—		140,047

Total liabilities	$	140,494	$	—	$	447	$	140,047

(1)	The fair value of the foreign exchange forward contracts was measured using readily observable market inputs, such as quotations on forward foreign exchange points and foreign interest rates.

(2)

The fair value measurements for our contingent consideration obligations relate to acquisitions completed after January 1, 2009 and are valued using Level 3 inputs. We determine the fair value of the contingent consideration obligations based on a probability-weighted approach derived from earn-out criteria estimates and a probability assessment with respect to the likelihood of achieving the various earn-out criteria. The measurement is based upon significant inputs not observable in the market. Changes in the fair value of these contingent consideration obligations are recorded as income or expense within operating income in our consolidated statements of operations.

Changes in the fair value of our Level 3 contingent consideration obligations during the three months ended March 31, 2012 were as follows (in thousands):


Fair value of contingent consideration obligations, January 1, 2012	$	140,047
Acquisition date fair value of contingent consideration obligations recorded		1,000
Foreign currency		277
Payments		(67	)
Present value accretion		3,457
Adjustments, net (income) expense		1,587

Fair value of contingent consideration obligations, March 31, 2012	$	146,301

At March 31, 2012 and December 31, 2011, the carrying amounts of cash and cash equivalents, restricted cash, receivables, accounts payable and other current liabilities approximated their estimated fair values.

The carrying amount and estimated fair value of our long-term debt were $3.5 billion at March 31, 2012. The carrying amount and estimated fair value of our long-term debt were $3.3 billion at December 31, 2011. The estimated fair value of our long-term debt was determined using market sources that were derived from available market information (Level 2 in the fair value hierarchy) and may not be representative of actual values that could have been or will be realized in the future.

(13) Defined Benefit Pension Plan

Our subsidiary in England, Unipath Ltd., has a defined benefit pension plan established for certain of its employees. The net periodic benefit costs are as follows (in thousands):


	Three Months Ended March 31,
	2012			2011
Service cost	$	—		$	—
Interest cost		198			202
Expected return on plan assets		(152	)		(155	)
Amortization of prior service cost		104			106
Realized losses		—			—

Net periodic benefit cost	$	150		$	153

(14) Financial Information by Segment

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision-making group is composed of the chief executive officer and members of senior management. Our reportable operating segments are Professional Diagnostics, Health Management, Consumer Diagnostics and Corporate and Other. Our operating results include license and royalty revenue which are allocated to Professional Diagnostics and Consumer Diagnostics on the basis of the original license or royalty agreement.

We evaluate performance of our operating segments based on revenue and operating income (loss). Segment information for the three months ended March 31, 2012 and 2011 is as follows (in thousands):


	Professional Diagnostics		Health Management			Consumer Diagnostics		Corporate and Other			Total
Three Months Ended March 31, 2012:
Net revenue	$	518,357	$	130,784		$	21,988	$	—		$	671,129
Operating income (loss)	$	70,179	$	(19,356	)	$	365	$	(16,130	)	$	35,058
Depreciation and amortization	$	82,148	$	23,774		$	1,259	$	221		$	107,402
Restructuring charge	$	4,794	$	717		$	—	$	17		$	5,528
Stock-based compensation	$	—	$	—		$	—	$	3,874		$	3,874
Three Months Ended March 31, 2011:
Net revenue	$	415,812	$	143,063		$	23,589	$	—		$	582,464
Operating income (loss)	$	60,262	$	(11,933	)	$	3,361	$	(20,785	)	$	30,905
Depreciation and amortization	$	65,249	$	28,314		$	1,259	$	153		$	94,975
Restructuring charge	$	1,978	$	4,221		$	—	$	—		$	6,199
Stock-based compensation	$	—	$	—		$	—	$	5,808		$	5,808
Assets:
As of March 31, 2012	$	5,835,623	$	613,419		$	188,454	$	251,785		$	6,889,281
As of December 31, 2011	$	5,826,756	$	624,305		$	199,422	$	22,218		$	6,672,701

The following tables summarize our net revenue from the professional diagnostics and health management reporting segments by groups of similar products and services for the three months ended March 31, 2012 and 2011 (in thousands):

Professional Diagnostics Segment


	Three Months Ended March 31,
	2012		2011
Cardiology	$	138,826	$	129,855
Infectious disease		151,016		140,426
Toxicology		121,740		85,504
Diabetes		28,161		—
Other		75,706		54,000

Net product sales and services revenue		515,449		409,785
License and royalty revenue		2,908		6,027

Professional diagnostics net revenue	$	518,357	$	415,812

Health Management Segment


	Three Months Ended March 31,
	2012		2011
Disease and case management	$	53,380	$	61,455
Wellness		27,026		29,805
Women’s & children’s health		29,771		28,575
Patient self-testing services		20,607		23,228

Health management net revenue	$	130,784	$	143,063

(15) Related Party Transactions

In May 2007, we completed the formation of SPD, our 50/50 joint venture with P&G, for the development, manufacturing, marketing and sale of existing and to-be-developed consumer diagnostic products, outside the cardiology,

diabetes and oral care fields. Upon completion of the arrangement to form the joint venture, we ceased to consolidate the operating results of our consumer diagnostic products business related to the joint venture and instead account for our 50% interest in the results of the joint venture under the equity method of accounting.

We had a net receivable from the joint venture of $2.1 million and $2.5 million as of March 31, 2012 and December 31, 2011, respectively. Included in the $2.1 million receivable balance as of March 31, 2012 is approximately $1.6 million of costs incurred in connection with our 2008 SPD-related restructuring plans. Included in the $2.5 million receivable balance as of December 31, 2011 is approximately $1.5 million of costs incurred in connection with our 2008 SPD-related restructuring plans. We have also recorded a long-term receivable totaling approximately $16.0 million and $15.5 million as of March 31, 2012 and December 31, 2011, respectively, related to the 2008 SPD-related restructuring plans. Additionally, customer receivables associated with revenue earned after the joint venture was completed have been classified as other receivables within prepaid and other current assets on our accompanying consolidated balance sheets in the amount of $10.7 million and $7.3 million as of March 31, 2012 and December 31, 2011, respectively. In connection with the joint venture arrangement, the joint venture bears the collection risk associated with these receivables. Sales to the joint venture under our manufacturing agreement totaled $17.1 million and $16.3 million during the three months ended March 31, 2012 and 2011, respectively. Additionally, services revenue generated pursuant to the long-term services agreement with the joint venture totaled $0.3 million during each of the three-month periods ended March 31, 2012 and 2011. Sales under our manufacturing agreement and long-term services agreement are included in net product sales and services revenue, respectively, in our accompanying consolidated statements of operations.

Under the terms of our product supply agreement, the joint venture purchases products from our manufacturing facilities in the U.K. and China. The joint venture in turn sells a portion of those tests back to us for final assembly and packaging. Once packaged, the tests are sold to P&G for distribution to third-party customers in North America. As a result of these related transactions, we have recorded $6.7 million and $8.9 million of trade receivables which are included in accounts receivable on our accompanying consolidated balance sheets as of March 31, 2012 and December 31, 2011, respectively, and $19.1 million and $19.3 million of trade accounts payable which are included in accounts payable on our accompanying consolidated balance sheets as of March 31, 2012 and December 31, 2011, respectively. During the three months ended March 31, 2012, we received $6.1 million in cash from SPD as a return of capital.

(16) Material Contingencies and Legal Settlements

(a) Legal Proceedings

We are not a party to any pending legal proceedings that we currently believe could have a material adverse impact on our sales, operations or financial performance. However, because of the nature of our business, we may be subject at any particular time to lawsuits or other claims arising in the ordinary course of our business, and we expect that this will continue to be the case in the future.

(b) Acquisition-related Contingent Consideration Obligations

The following summarizes our principal contractual acquisition-related contingent consideration obligations as of March 31, 2012 that have changed significantly since December 31, 2011. Other acquisition-related contingent consideration obligations that were presented in our Annual Report on Form 10-K for the year ended December 31, 2011, but omitted below, represent those that have not changed significantly since that date.

•

AmMed

With respect to AmMed, the terms of the acquisition agreement require us to pay an earn-out upon successfully meeting certain operational targets within six months of the acquisition date. The maximum amount of the earn-out payment is $2.0 million.

(c) FDA Inspection and Office of Inspector General Subpoena

In March 2012, the Food & Drug Administration, or FDA, began an inspection of our San Diego facility related to our Alere Triage products. During the inspection, the FDA expressed concern about the alignment between certain aspects of our labeling for the Alere Triage products and the quality control release method that had been in effect prior to the inspection. To our knowledge, the FDA has not yet closed the inspection and has not issued any inspectional observations on Form 483. We are continuing to engage in discussions with the FDA regarding the Alere Triage products and have adopted an interim revised release method which we have been shipping against since early April 2012, with plans to further tighten the release method by September 30, 2012. Although the discussions with the FDA are ongoing, we expect that resolution of the issues raised by the FDA will involve a recall of unexpired lots of Alere Triage products that do not satisfy the revised quality control release method set through such resolution. Based on customer order patterns, expected customer inventory levels and the passage of time between March 31, 2012 and the date of any potential recall, we do not believe that the quantity or value of products that were sold on or before March 31, 2012 that may ultimately be returned will be material and, accordingly, we do not believe that any such recall will have a material impact on our results of operations for the quarter ended March 31, 2012. However, because the quality control release methods that we will apply in the future have not been determined, at this time we are unable to determine the scope of any anticipated recall, including the type and number of products that may be returned. Similarly, we are unable to determine the impact on our ability to ship existing inventory of, and to continue to manufacture, Alere Triage products that satisfy such release methods. Consequently, we are also unable to determine whether the anticipated recall or the revised release methods will have a material impact on our revenues, results of operations, earnings, cash flows or financial condition.

Also, in May 2012, we received a subpoena from the Office of Inspector General of the Department of Health and Human Services. The subpoena seeks documents relating primarily to the quality control testing and performance characteristics of Alere Triage products. We are cooperating with the government and are in the process of responding to the subpoena.

We are unable to predict when these matters will be resolved, what action, if any, the government will take in connection with these matters or what impact, if any, these matters or ensuing proceedings, if any, will have on our financial condition, results of operations or cash flows.

(17) Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position, results of operations, comprehensive income or cash flows upon adoption.

Recently Adopted Standards

Effective January 1, 2012, we adopted Accounting Standards Update, or ASU, No. 2011-08, Intangibles — Goodwill and Other (Topic 350): Testing for Goodwill Impairment, or ASU 2011-08. ASU 2011-08 allows an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step impairment test. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative two-step impairment test is required; otherwise, no further testing is required. This update does not change the current guidance for testing other indefinite-lived intangible assets for impairment. The adoption of this standard did not have an impact on our financial position, results of operations, comprehensive income or cash flows.

Effective January 1, 2012, we adopted ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, or ASU 2011-05. ASU 2011-05 (1) eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; (2) requires the consecutive presentation of the statement of net income and other comprehensive income; and (3) requires an entity to present reclassification adjustments on the face of the financial statements from other comprehensive income to net income. This update does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income nor do the amendments affect how earnings per share is calculated or presented. Effective January 1, 2012, the FASB issued ASU No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05, or ASU 2011-12. As these accounting standards only require enhanced disclosure, the adoption of these standards did not impact our financial position, results of operations, comprehensive income or cash flows.

Effective January 1, 2012, we adopted ASU No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, or ASU 2011-04. ASU 2011-04 provides common requirements for measuring fair value and disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards.

(18) Equity Investments

We account for the results from our equity investments under the equity method of accounting in accordance with ASC 323, Investments — Equity Method and Joint Ventures, based on the percentage of our ownership interest in the business. Our equity investments primarily include the following:

(a) SPD

In May 2007, we completed the formation of SPD, our 50/50 joint venture with P&G for the development, manufacturing, marketing and sale of existing and to-be-developed consumer diagnostic products, outside the cardiology, diabetes and oral care fields. Upon completion of the arrangement to form SPD, we ceased to consolidate the operating results of our consumer diagnostics business related to SPD. For the three months ended March 31, 2012 and 2011, we recorded earnings of $2.8 million and $0.4 million, respectively, in equity earnings of unconsolidated entities, net of tax, in our accompanying consolidated statements of operations, which represented our 50% share of SPD’s net income for the respective periods.

(b) TechLab

In May 2006, we acquired 49% of TechLab, Inc., or TechLab, a privately-held developer, manufacturer and distributor of rapid non-invasive intestinal diagnostics tests in the areas of intestinal inflammation, antibiotic-associated diarrhea and parasitology. For the three months ended March 31, 2012 and 2011, we recorded earnings of $0.7 million and $0.5 million, respectively, in equity earnings of unconsolidated entities, net of tax, in our accompanying consolidated statements of operations, which represented our minority share of TechLab’s net income for the respective periods.

Summarized financial information for SPD and TechLab on a combined basis is as follows (in thousands):

Combined Condensed Results of Operations:


	Three Months Ended March 31,
	2012		2011
Net revenue	$	52,525	$	55,554

Gross profit	$	35,179	$	35,465


Net income after taxes	$	6,993	$	1,834

Combined Condensed Balance Sheets:


	March 31, 2012		December 31, 2011
Current assets	$	72,019	$	84,376
Non-current assets		40,930		37,659

Total assets	$	112,949	$	122,035

Current liabilities	$	42,724	$	49,453
Non-current liabilities		8,155		6,326

Total liabilities	$	50,879	$	55,779

(19) Guarantor Financial Information

Our 9% senior subordinated notes due 2016, our 7.875% senior notes due 2016, and our 8.625% senior subordinated notes due 2018 are guaranteed by certain of our consolidated wholly owned subsidiaries, or the Guarantor Subsidiaries. The guarantees are full and unconditional and joint and several. The following supplemental financial information sets forth, on a consolidating basis, balance sheets as of March 31, 2012 and December 31, 2011, the related statements of operations, statements of comprehensive income and statements of cash flows for each of the three months ended March 31, 2012 and 2011, for Alere Inc., the Guarantor Subsidiaries and our other subsidiaries, or the Non-Guarantor Subsidiaries. The supplemental financial information reflects the investments of Alere Inc. and the Guarantor Subsidiaries in the Guarantor and Non-Guarantor Subsidiaries using the equity method of accounting.

We have extensive transactions and relationships between various members of the consolidated group. These transactions and relationships include intercompany pricing agreements, intellectual property royalty agreements and general and administrative and research and development cost-sharing agreements. Because of these relationships, it is possible that the terms of these transactions are not the same as those that would result from transactions among wholly unrelated parties.

For comparative purposes, certain amounts for prior periods have been reclassified to conform to the current period classification.

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2012

(in thousands)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net product sales	$	—		$	219,216		$	289,800		$	(33,229	)	$	475,787
Services revenue		—			146,133			46,301			—			192,434

Net product sales and services revenue		—			365,349			336,101			(33,229	)		668,221
License and royalty revenue		—			4,229			2,621			(3,942	)		2,908

Net revenue		—			369,578			338,722			(37,171	)		671,129

Cost of net product sales		850			103,921			153,879			(33,096	)		225,554
Cost of services revenue		—			77,703			13,157			—			90,860

Cost of net product sales and services revenue		850			181,624			167,036			(33,096	)		316,414
Cost of license and royalty revenue		—			—			5,586			(3,942	)		1,644

Cost of net revenue		850			181,624			172,622			(37,038	)		318,058

Gross profit (loss)		(850	)		187,954			166,100			(133	)		353,071

Operating expenses:
Research and development		5,196			16,576			17,228			—			39,000
Sales and marketing		1,057			77,559			79,962			—			158,578
General and administrative		11,631			58,301			50,503			—			120,435

Total operating expenses		17,884			152,436			147,693			—			318,013

Operating income (loss)		(18,734	)		35,518			18,407			(133	)		35,058
Interest expense, including amortization of original issue discounts and deferred financing costs		(49,716	)		(11,006	)		(3,315	)		13,310			(50,727	)
Other income (expense), net		(8,074	)		9,428			23,787			(13,310	)		11,831

Income (loss) before provision (benefit) for income taxes		(76,524	)		33,940			38,879			(133	)		(3,838	)
Provision (benefit) for income taxes		(26,998	)		12,305			13,167			71			(1,455	)

Income (loss) before equity earnings of unconsolidated entities, net of tax		(49,526	)		21,635			25,712			(204	)		(2,383	)
Equity in earnings of subsidiaries, net of tax		49,895			(348	)		—			(49,547	)		—
Equity earnings of unconsolidated entities, net of tax		660			—			2,736			16			3,412

Net income (loss)		1,029			21,287			28,448			(49,735	)		1,029
Less: Net income attributable to non-controlling interests		—			—			(185	)		—			(185	)

Net income (loss) attributable to Alere Inc. and Subsidiaries		1,029			21,287			28,633			(49,735	)		1,214
Preferred stock dividends		(5,309	)		—			—			—			(5,309	)

Net income (loss) available to common stockholders	$	(4,280	)	$	21,287		$	28,633		$	(49,735	)	$	(4,095	)

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended March 31, 2011

(in thousands)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net product sales	$	—		$	237,976		$	199,970		$	(30,703	)	$	407,243
Services revenue		—			151,525			16,027			—			167,552

Net product sales and services revenue		—			389,501			215,997			(30,703	)		574,795
License and royalty revenue		—			2,474			6,633			(1,438	)		7,669

Net revenue		—			391,975			222,630			(32,141	)		582,464

Cost of net product sales		770			107,162			112,135			(30,380	)		189,687
Cost of services revenue		—			78,535			6,181			—			84,716

Cost of net product sales and services revenue		770			185,697			118,316			(30,380	)		274,403
Cost of license and royalty revenue		—			—			3,292			(1,438	)		1,854

Cost of net revenue		770			185,697			121,608			(31,818	)		276,257

Gross profit (loss)		(770	)		206,278			101,022			(323	)		306,207

Operating expenses:
Research and development		4,741			17,781			14,020			—			36,542
Sales and marketing		651			82,860			49,698			—			133,209
General and administrative		14,636			60,201			30,714			—			105,551

Total operating expenses		20,028			160,842			94,432			—			275,302

Operating income (loss)		(20,798	)		45,436			6,590			(323	)		30,905
Interest expense, including amortization of original issue discounts and deferred financing costs		(25,606	)		(28,179	)		(4,369	)		19,849			(38,305	)
Other income (expense), net		3,365			13,854			4,966			(19,849	)		2,336

Income (loss) before provision (benefit) for income taxes		(43,039	)		31,111			7,187			(323	)		(5,064	)
Provision (benefit) for income taxes		(20,795	)		14,136			2,454			(125	)		(4,330	)

Income (loss) before equity earnings of unconsolidated entities, net of tax		(22,244	)		16,975			4,733			(198	)		(734	)
Equity in earnings of subsidiaries, net of tax		22,053			—			—			(22,053	)		—
Equity earnings of unconsolidated entities, net of tax		468			—			490			53			1,011

Net income (loss)		277			16,975			5,223			(22,198	)		277
Less: Net income attributable to non-controlling interests		—			—			62			—			62

Net income (loss) attributable to Alere Inc. and Subsidiaries		277			16,975			5,161			(22,198	)		215
Preferred stock dividends		(5,809	)		—			—			—			(5,809	)
Preferred stock repurchase		13,688			—			—			—			13,688

Net income (loss) available to common stockholders	$	8,156		$	16,975		$	5,161		$	(22,198	)	$	8,094

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2012

(in thousands)


	Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	1,029	$	21,287	$	28,448		$	(49,735	)	$	1,029

Other comprehensive income, before tax:
Changes in cumulative translation adjustment		328		74		34,872			665			35,939
Unrealized gains on available for sale securities		430		1		—			—			431
Unrealized gains on hedging instruments		17		—		1,090			—			1,107
Minimum pension liability adjustment		—		—		(165	)		—			(165	)

Other comprehensive income, before tax		775		75		35,797			665			37,312
Income tax benefit related to items of other comprehensive income		—		—		(41	)		—			(41	)

Other comprehensive income, net of tax		775		75		35,838			665			37,353

Comprehensive income (loss)		1,804		21,362		64,286			(49,070	)		38,382
Less: Comprehensive loss attributable to non-controlling interests		—		—		(185	)		—			(185	)

Comprehensive income (loss) attributable to Alere Inc. and Subsidiaries	$	1,804	$	21,362	$	64,471		$	(49,070	)	$	38,567

CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME

For the Three Months Ended March 31, 2011

(in thousands)


	Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net income (loss)	$	277	$	16,975	$	5,223		$	(22,198	)	$	277

Other comprehensive income, before tax:
Changes in cumulative translation adjustment		608		137		17,237			3,533			21,515
Unrealized gains (losses) on available for sale securities		131		—		(346	)		—			(215	)
Unrealized gains on hedging instruments		1,617		—		—			—			1,617
Minimum pension liability adjustment		—		—		(38	)		—			(38	)

Other comprehensive income, before tax		2,356		137		16,853			3,533			22,879
Income tax provision (benefit) related to items of other comprehensive income		629		—		(10	)		—			619

Other comprehensive income, net of tax		1,727		137		16,863			3,533			22,260

Comprehensive income (loss)		2,004		17,112		22,086			(18,665	)		22,537
Less: Comprehensive income attributable to non-controlling interests		—		—		62			—			62

Comprehensive income (loss) attributable to Alere Inc. and Subsidiaries	$	2,004	$	17,112	$	22,024		$	(18,665	)	$	22,475

CONSOLIDATING BALANCE SHEET

March 31, 2012

(in thousands)


	Issuer			Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	243,062		$	63,996	$	207,039	$	—		$	514,097
Restricted cash		—			1,579		1,105		—			2,684
Marketable securities		—			775		317		—			1,092
Accounts receivable, net of allowances		—			203,267		285,995		—			489,262
Inventories, net		—			121,403		193,936		(5,418	)		309,921
Deferred tax assets		9,907			22,797		6,192		1,894			40,790
Receivable from joint venture, net		—			1,894		243		—			2,137
Prepaid expenses and other current assets		(84,603	)		141,143		80,032		—			136,572
Intercompany receivables		392,474			411,451		78,994		(882,919	)		—

Total current assets		560,840			968,305		853,853		(886,443	)		1,496,555
Property, plant and equipment, net		2,381			273,773		230,882		(529	)		506,507
Goodwill		—			1,530,258		1,309,894		(4,981	)		2,835,171
Other intangible assets with indefinite lives		—			7,100		65,334		—			72,434
Finite-lived intangible assets, net		26,488			970,494		759,251		—			1,756,233
Deferred financing costs, net and other non-current assets		91,655			5,797		9,696		—			107,148
Receivable from joint venture, net of current portion		—			—		15,977		—			15,977
Investments in subsidiaries		3,545,610			49,159		3,000		(3,597,769	)		—
Investments in unconsolidated entities		32,459			—		52,933		—			85,392
Marketable securities		2,684			—		—		—			2,684
Deferred tax assets		—			—		11,180		—			11,180
Intercompany notes receivable		1,894,186			915,127		—		(2,809,313	)		—

Total assets	$	6,156,303		$	4,720,013	$	3,312,000	$	(7,299,035	)	$	6,889,281


LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	45,000		$	595	$	17,337	$	—		$	62,932
Current portion of capital lease obligations		—			1,409		4,387		—			5,796
Accounts payable		5,841			50,076		83,606		—			139,523
Accrued expenses and other current liabilities		(277,121	)		481,300		193,270		—			397,449
Intercompany payables		444,483			116,147		322,283		(882,913	)		—

Total current liabilities		218,203			649,527		620,883		(882,913	)		605,700

Long-term liabilities:
Long-term debt, net of current portion		3,429,233			—		24,350		—			3,453,583
Capital lease obligations, net of current portion		—			1,814		9,912		—			11,726
Deferred tax liabilities		(30,241	)		291,722		109,650		59			371,190
Other long-term liabilities		23,557			46,986		97,758		—			168,301
Intercompany notes payables		241,421			1,786,460		779,135		(2,807,016	)		—

Total long-term liabilities		3,663,970			2,126,982		1,020,805		(2,806,957	)		4,004,800

Redeemable non-controlling interest		—			—		2,448		—			2,448

Stockholders’ equity		2,274,130			1,943,504		1,665,661		(3,609,165	)		2,274,130
Non-controlling interests		—			—		2,203		—			2,203

Total equity		2,274,130			1,943,504		1,667,864		(3,609,165	)		2,276,333

Total liabilities and equity	$	6,156,303		$	4,720,013	$	3,312,000	$	(7,299,035	)	$	6,889,281

CONSOLIDATING BALANCE SHEET

December 31, 2011

(in thousands)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Current assets:
Cash and cash equivalents	$	12,451		$	85,838		$	200,884	$	—		$	299,173
Restricted cash		—			1,591			7,396		—			8,987
Marketable securities		—			770			316		—			1,086
Accounts receivable, net of allowances		—			199,547			276,277		—			475,824
Inventories, net		—			136,091			189,886		(5,708	)		320,269
Deferred tax assets		10,912			22,813			7,266		1,984			42,975
Receivable from joint venture, net		—			2,301			202		—			2,503
Prepaid expenses and other current assets		(74,078	)		138,329			78,659		—			142,910
Intercompany receivables		397,914			426,136			27,871		(851,921	)		—

Total current assets		347,199			1,013,416			788,757		(855,645	)		1,293,727
Property, plant and equipment, net		2,542			274,588			214,206		(131	)		491,205
Goodwill		—			1,530,324			1,295,791		(4,844	)		2,821,271
Other intangible assets with indefinite lives		—			7,100			62,446		—			69,546
Finite-lived intangible assets, net		28,685			1,011,852			745,388		—			1,785,925
Deferred financing costs, net, and other non-current assets		88,153			5,532			4,101		—			97,786
Receivable from joint venture, net of current portion		—			—			15,455		—			15,455
Investments in subsidiaries		3,586,625			32,512			3,005		(3,622,142	)		—
Investments in unconsolidated entities		29,021			—			56,117		—			85,138
Marketable securities		2,254			—			—		—			2,254
Deferred tax assets		—			—			10,394		—			10,394
Intercompany notes receivable		1,934,366			(196,820	)		—		(1,737,546	)		—

Total assets	$	6,018,845		$	3,678,504		$	3,195,660	$	(6,220,308	)	$	6,672,701


LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	43,000		$	—		$	18,092	$	—		$	61,092
Current portion of capital lease obligations		—			1,550			4,533		—			6,083
Short-term debt		6,240			—			—		—			6,240
Accounts payable		6,704			53,978			94,782		—			155,464
Accrued expenses and other current liabilities		(259,010	)		455,366			199,217		—			395,573
Intercompany payables		429,644			104,257			318,018		(851,919	)		—

Total current liabilities		226,578			615,151			634,642		(851,919	)		624,452

Long-term liabilities:
Long-term debt, net of current portion		3,243,341			—			24,110		—			3,267,451
Capital lease obligations, net of current portion		—			2,175			10,454		—			12,629
Deferred tax liabilities		(25,936	)		303,837			102,730		69			380,700
Other long-term liabilities		24,407			47,135			81,856		—			153,398
Intercompany notes payables		321,221			658,573			754,650		(1,734,444	)		—

Total long-term liabilities		3,563,033			1,011,720			973,800		(1,734,375	)		3,814,178

Redeemable non-controlling interest		—			—			2,497		—			2,497

Stockholders’ equity		2,229,234			2,051,633			1,582,381		(3,634,014	)		2,229,234
Non-controlling interests		—			—			2,340		—			2,340

Total equity		2,229,234			2,051,633			1,584,721		(3,634,014	)		2,231,574

Total liabilities and equity	$	6,018,845		$	3,678,504		$	3,195,660	$	(6,220,308	)	$	6,672,701

CONSOLIDATING STATEMENT OF CASH FLOWS

For the Three Months Ended March 31, 2012

(in thousands)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Cash Flows from Operating Activities:
Net income (loss)	$	1,029		$	21,287		$	28,448		$	(49,735	)	$	1,029
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries, net of tax		(49,895	)		348			—			49,547			—
Non-cash interest expense, including amortization of original issue discounts and write-off of deferred financing costs		5,219			59			—			—			5,278
Depreciation and amortization		2,074			57,303			48,086			(61	)		107,402
Non-cash stock-based compensation expense		1,007			1,377			1,490			—			3,874
Impairment of inventory		—			5			—			—			5
Impairment of long-lived assets		—			134			—			—			134
Loss on sale of fixed assets		—			508			58			—			566
Equity earnings of unconsolidated entities, net of tax		(660	)		—			(2,736	)		(16	)		(3,412	)
Deferred income taxes		(11,105	)		(614	)		(2,033	)		—			(13,752	)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable, net		—			(3,721	)		(9,221	)		—

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company