-- Amortization expense. ev3 excludes amortization expense from its non- GAAP financial measures primarily because such expense, while constituting an ongoing and recurring expense, is not an expense that requires cash settlement and is not used by ev3's management to assess the core profitability of ev3's business operations. ev3's management also believes that excluding this item from ev3's non-GAAP results is useful to investors to understand ev3's operational performance, liquidity and its ability to invest in research and development and fund acquisitions and capital expenditures.
Material Limitations Associated with the Use of Non-GAAP Financial Measures and Manner in which ev3 Compensates for these Limitations
Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for ev3's financial results prepared in accordance with GAAP. Some of the limitations associated with ev3's use of these non-GAAP financial measures are:
-- Items such as stock-based compensation do not directly affect ev3's cash flow position; however, such items reflect economic costs to ev3 and are not reflected in ev3's "non-GAAP adjusted net income (loss)" or "non-GAAP adjusted net earnings (loss) per share," and therefore these non-GAAP measures do not reflect the full economic effect of these items.
-- Items such as the research collaboration asset impairment do not directly affect ev3's cash flow position; however, such items represent a reduction in value of ev3's assets. The expense associated with this reduction in value is not included in ev3's "non-GAAP adjusted net income (loss)" or "non-GAAP adjusted net earnings (loss) per share," and therefore these non-GAAP measures do not reflect the full economic effect of the reduction in value of this asset.
-- Non-GAAP financial measures are not based on any co
|SOURCE ev3 Inc.|
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