18 Unaudited Quarterly Results

The Company’s unaudited quarterly results are summarized below (in thousands, except per share data):


	First			Second			Third			Fourth
2018	Quarter			Quarter			Quarter			Quarter			Total
Net sales	$	530,670		$	596,219		$	578,021		$	715,019		$	2,419,929
Costs and operating expenses:
Cost of sales		221,421			243,135			241,139			286,869			992,564
Selling and administrative expenses		130,407			136,645			126,997			142,853			536,902
Research and development expenses		34,480			35,644			35,173			38,106			143,403
Purchased intangibles amortization		1,659			1,602			2,114			2,337			7,712
Litigation (settlement) provisions		(1,672	)		—			924			322			(426	)

Total costs and operating expenses		386,295			417,026			406,347			470,487			1,680,155

Operating income		144,375			179,193			171,674			244,532			739,774
Other income (expense)		346			(1,828	)		(811	)		(45,501	)		(47,794	)
Interest expense		(13,838	)		(11,692	)		(11,435	)		(11,676	)		(48,641	)
Interest income		9,666			8,888			9,802			10,451			38,807

Income before income taxes		140,549			174,561			169,230			197,806			682,146
Provision for income taxes		28,598			18,884			28,216			12,654			88,352

Net income	$	111,951		$	155,677		$	141,014		$	185,152		$	593,794

Net income per basic common share		1.42			2.00			1.84			2.48			7.71
Weighted-average number of basic common shares		78,883			77,833			76,575			74,802			76,992
Net income per diluted common share		1.40			1.98			1.83			2.46			7.65
Weighted-average number of diluted common shares and equivalents		79,715			78,438			77,136			75,345			77,618


	First			Second			Third			Fourth
2017	Quarter			Quarter			Quarter			Quarter			Total
Net sales	$	497,969		$	558,250		$	565,584		$	687,275		$	2,309,078
Costs and operating expenses:
Cost of sales		211,095			229,627			235,892			270,453			947,067
Selling and administrative expenses		130,673			130,093			135,206			148,391			544,363
Research and development expenses		30,752			32,937			33,782			35,122			132,593
Purchased intangibles amortization		1,729			1,693			1,682			1,639			6,743
Litigation provisions		—			10,018			—			1,096			11,114
Acquired in-process research and development		5,000			—			—			—			5,000

Total costs and operating expenses		379,249			404,368			406,562			456,701			1,646,880

Operating income		118,720			153,882			159,022			230,574			662,198
Other income (expense)		149			(97	)		12			(404	)		(340	)
Interest expense		(12,725	)		(14,083	)		(14,750	)		(15,281	)		(56,839	)
Interest income		7,343			8,370			9,516			10,849			36,078

Income before income taxes		113,487			148,072			153,800			225,738			641,097
Provision for income taxes		7,930			16,250			17,696			578,910			620,786

Net income (loss)	$	105,557		$	131,822		$	136,104		$	(353,172	)	$	20,311

Net income (loss) per basic common share		1.32			1.65			1.71			(4.44	)		0.25
Weighted-average number of basic common shares		80,073			79,979			79,712			79,454			79,793
Net income (loss) per diluted common share		1.31			1.63			1.69			(4.44	)		0.25
Weighted-average number of diluted common shares and equivalents		80,769			80,756			80,521			79,454			80,604

The Company typically experiences an increase in sales in the fourth quarter, as a result of purchasing habits for capital goods of customers that tend to exhaust their spending budgets by calendar year end. Selling and administrative expenses are typically higher after the first quarter in each year as the Company’s annual payroll merit increases take effect. Selling and administrative expenses will vary in the fourth quarter in relation to performance in the quarter and for the year. In the first quarter of 2018 and third quarter of 2017, the Company recorded $1 million and $4 million of stock compensation expenses, respectively, in selling and administrative expenses related to the modification of certain stock awards upon the retirement of senior executives.

In the second quarter of 2017, the Company incurred a $10 million litigation provision related to the issuance of a verdict in a patent litigation case. In the first quarter of 2018, the Company resolved the case with a final settlement that resulted in a gain of $2 million (see Note 11). In the first quarter of 2017, the Company recorded a $5 million charge related to acquired in-process research and development (see Note 2). In the fourth quarter of 2018, the Company settled a pension plan obligation and recorded a $46 million charge, which consisted of a $6 million cash contribution to the plan and a $40 million non-cash charge related to the reversal of unrecognized actuarial losses recorded in accumulated other comprehensive income in the stockholders’ equity (see Note 16). In the fourth quarter of 2017, the Company recorded a $550 million income tax provision as a result of the 2017 Tax Act (see Note 10).