Arrow ErgoPack and AC3 Optimus Product Overview
Appendix D - Tickmarks
(A) Restructuring, restructuring related and impairment items -In 2014 and 2015, the majority of these charges were related to facility consolidations. In 2016, these charges include; (i) charges related to facility
consolidations, (ii) a pre-tax, non-cash $41.0 million impairment charge and a $14.9 million reduction in related deferred tax liabilities in connection with discontinuation of an in-process research and development
project; (iii) $2.4 million in pre-tax, non-cash impairment charges related to two properties, one of which was classified as an asset held for sale and (iv) a $0.7 million reduction in related deferred tax liabilities. For
the twelve months ended December 31, 2017 and December 31, 2018, pre-tax restructuring related charges were $14.6 million and $14.7 million, respectively. For the twelve months ended December 31, 2017
and December 31, 2018, pre-tax impairment charges were $0.0 million and $19.1 million, respectively. For the twelve months ended December 31, 2019 pre-tax restructuring charges were $15.2 million, pre-tax
restructuring related charges were $16.3 million, and pre-tax impairment charges were $7.0 million. For the twelve months ended December 31, 2020, pre-tax restructuring charges were $17.1 million, pre-tax
restructuring related charges were $26.7 million, and pre-tax impairment charges were $21.4 million.
(B) Acquisition, integration and divestiture related items - In 2014 and 2015, the majority of these charges were related to contingent consideration liabilities, somewhat offset by acquisition costs. In 2016, the
majority of these charges were related to reversals related to contingent consideration liabilities, including $8.3 million related to the discontinuation of an in-process research and development project, and the gain
on a sale of assets, somewhat offset by acquisition costs. For the twelve months ended December 31, 2017, these charges were primarily related to our acquisitions of Vascular Solutions and NeoTract, as well as
contingent consideration liabilities. For the twelve months ended December 31, 2018, these charges were primarily related to contingent consideration liabilities and our acquisition of NeoTract. For the twelve
months ended December 31, 2019, these charges primarily related to contingent consideration liabilities and our acquisition of Essential Medical, Inc., partially offset by the gain on sale of a business and two
assets. For the year ended December 31, 2020, these items primarily related to the reversal of contingent consideration liabilities, partially offset by charges primarily related to our acquisitions of IWG High
Performance Conductors, Inc. and Z-Medica, LLC. and the reversal of previously recognized income related to a distributor conversion in Japan.
(C) Other items In 2015, the majority of these charges were related to the medical device excise tax and a litigation verdict against the Company with respect to a non-operating joint venture. In 2016, the
majority of these charges were related to relabeling costs and costs associated with a facility that was exited. For the twelve months ended December 31, 2017, other items included both gains and losses
associated with litigation settlements, the reversal of previously recognized income due to distributor acquisitions related to Vascular Solutions, the reversal of previously recognized income due to our distributor to
direct sales conversion in China, and relabeling costs. For the twelve months ended December 31, 2018, other items included the reversal of previously recognized income due to distributor acquisitions related to
Vascular Solutions, losses associated with settlement of ligation relating to an intellectual property matter, expenses associated with a franchise tax audit, and relabeling costs. Other items for the twelve months
ended December 31, 2018 included a charge we incurred, as a result of the Tax Cuts and Jobs Act ("TCJA"), on our consolidated operations. During the second quarter of 2018, we identified provisions of the
TCJA that could have adverse consequences due to our organizational structure. We implemented certain changes in the organizational structure (with, pursuant to tax law, retroactive impact back to 2017), as a
result of which, we incurred a $1.9 million net worth tax in a foreign jurisdiction with respect to the 2017 tax year. Because the decision to make the change resulting in the net worth tax occurred in the second
quarter of 2018, and as permitted under GAAP, we recorded the net worth tax charge in 2018, and the adjustment eliminating the charge is included in the table for the year ended December 31, 2018. For the
twelve months ended December 31, 2019, other items included debt modification and extinguishment expenses, expenses associated with a franchise tax audit, and product relabeling costs, partially offset by a
credit associated with an insurance settlement. For the year ended December 31, 2020, other items included expenses associated with a franchise tax audit and prior year tax matters.
(D) Intangible Amortization - For the twelve months ended December 31,2018 and December 31, 2019, we reclassified $81.6 million and $82.6 million respectively, from selling, general and administrative
expenses to cost of goods sold. For the year ended December 31, 2020 intangible asset amortization expense of $84.4 million is included in cost of goods sold.
(E) MDR For the twelve months ended December 31, 2020 and December 31, 2019, these costs were associated with our efforts to comply with the European Medical Device Regulation. The costs associated
with the European Medical Device Regulation initiative include $0.3 million that were a component of the "Other items" line item in the reconciliation table for the three months ended March 31, 2019 included in our
first quarter 2019 earnings release.
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