VERINT SYS : Verint Announces Second Quarter Results
09/08/2011| 07:35am US/Eastern
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Verint® Systems Inc. (NASDAQ: VRNT), a
global leader in Actionable Intelligence® solutions and value-added
services, today announced results for the quarter ended July 31, 2011.
"We are pleased with our second quarter performance, which reflects
strong sequential revenue growth in both workforce optimization and
security intelligence. Behind Verint's success is a commitment to
innovation, as we continue to invest for long-term growth and sustained
leadership in the actionable intelligence market," said Dan Bodner, CEO
and President of Verint Systems Inc.
Below is selected financial information for the three and six months
ended July 31, 2011 and 2010 prepared in accordance with generally
accepted accounting principles ("GAAP") and not prepared in accordance
with GAAP ("non-GAAP").
(Dollars in thousands, except per share data)
Selected GAAP Information
Three Months Ended July 31,
Six Months Ended July 31,
2011
2010
2011
2010
Revenue
$
194,959
$
180,676
$
371,291
$
353,289
Gross Profit
125,850
120,330
246,833
235,136
Gross Margin
64.6%
66.6%
66.5%
66.6%
Operating Income
21,410
23,799
40,244
19,817
Operating Margin
11.0%
13.2%
10.8%
5.6%
Diluted Net Income (Loss) per Common Share Attributable to Verint
Systems Inc.
$
0.17
$
0.23
$
0.08
$
(0.35)
Selected Non-GAAP Information
Three Months Ended July 31,
Six Months Ended July 31,
2011
2010
2011
2010
Revenue
$
195,686
$
180,676
$
372,253
$
353,289
Gross Profit
130,303
123,785
255,140
243,232
Gross Margin
66.6%
68.5%
68.5%
68.8%
Operating Income
40,386
46,323
79,903
88,602
Operating Margin
20.6%
25.6%
21.5%
25.1%
Diluted Net Income per Common Share Attributable to Verint Systems
Inc.
$
0.57
$
0.69
$
1.13
$
1.25
Outlook for the Year Ending January 31, 2012
We are increasing our annual revenue growth guidance from
approximately 8% to approximately 9% compared to the year ended
January 31, 2011.
We are targeting a non-GAAP operating margin in the low 20%.
Conference Call Information
We will be conducting a conference call today at 8:30 a.m. to discuss
our results for the second quarter and outlook for the year ending
January 31, 2012. An on-line, real-time webcast of the conference call
will be available on our website at www.verint.com.
The conference call can also be accessed live via telephone at
1-888-713-4214 (United States) and 1-617-213-4866 (international) and
the passcode is 56607528. Please dial in 5-10 minutes prior to the
scheduled start time.
About Non-GAAP Financial Measures
This press release and the accompanying tables include non-GAAP
financial measures. For a description of these non-GAAP financial
measures, including the reasons management uses each measure, and
reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures prepared in accordance with GAAP,
please see Table 2 as well as "Supplemental Information About Non-GAAP
Financial Measures" at the end of this press release. Because we do not
predict special items that might occur in the future, and our outlook is
developed at a level of detail different than that used to prepare GAAP
financial measures, we are not providing a reconciliation to GAAP of our
forward-looking financial measures for the year ending January 31, 2012.
About Verint Systems Inc.
Verint® Systems Inc. is a global leader in Actionable
Intelligence® solutions and value-added services. Our
solutions enable organizations of all sizes to make timely and effective
decisions to improve enterprise performance and make the world a safer
place. More than 10,000 organizations in over 150 countries--including
over 85 percent of the Fortune 100--use Verint Actionable Intelligence
solutions to capture, distill, and analyze complex and underused
information sources, such as voice, video, and unstructured text.
Headquartered in Melville, New York, we support our customers around the
globe directly and with an extensive network of selling and support
partners. Visit us at our website www.verint.com.
Cautions About Forward-Looking Statements
This press release contains forward-looking statements, including
statements regarding expectations, predictions, views, opportunities,
plans, strategies, beliefs, and statements of similar effect relating to
Verint Systems Inc. These forward-looking statements are not guarantees
of future performance and they are based on management's expectations
that involve a number of risks and uncertainties, any of which could
cause actual results to differ materially from those expressed in or
implied by the forward-looking statements. Some of the factors that
could cause actual future results or conditions to differ materially
from current expectations include: uncertainties regarding the impact of
general economic conditions in the United States and abroad,
particularly in information technology spending and government budgets,
on our business; risks due to aggressive competition in all of our
markets, including with respect to maintaining margins and sufficient
levels of investment in our business; risks associated with keeping pace
with technological changes and evolving industry standards in our
product offerings and with successfully introducing new, quality
products which meet customer needs and achieve market acceptance; risks
created by continued consolidation of competitors or introduction of
large competitors in our markets with greater resources than we have;
risks associated with successfully competing for, consummating, and
implementing mergers and acquisitions, including risks associated with
capital constraints, costs and expenses, management distraction,
post-acquisition integration activities, and potential asset
impairments; risks that customers or partners delay or cancel orders or
are unable to honor contractual commitments due to liquidity issues,
challenges in their business, or otherwise; risks relating to our
implementation and maintenance of adequate systems and internal controls
for our current and future operations and reporting needs and related
risks of financial statement omissions, misstatements, restatements, or
filing delays; risks associated with being a consolidated, controlled
subsidiary of Comverse Technology, Inc. ("Comverse") and formerly part
of Comverse's consolidated tax group, including risks of any future
impact on us resulting from Comverse's extended filing delay or any
other future issues; risks associated with Comverse controlling our
board of directors and the outcome of all matters submitted for
stockholder action, including the approval of significant corporate
transactions, such as certain equity issuances or mergers and
acquisitions, as well as speculation or announcements regarding
Comverse's strategic plans; risks that products may contain undetected
defects, which could expose us to substantial liability; risks
associated with allocating limited financial and human resources to
business, development, strategic or other opportunities that may not
come to fruition or produce satisfactory returns; risks associated with
significant foreign and international operations, including exposure to
regions subject to political instability and fluctuations in exchange
rates; risks associated with complex and changing local and foreign
regulatory environments; risks associated with our ability to recruit
and retain qualified personnel in geographies in which we operate;
challenges in accurately forecasting revenue and expenses and
maintaining profitability; risks relating to our ability to improve our
infrastructure to support growth; risks that our intellectual property
rights may not be adequate to protect our business or assets or that
others may make claims on our intellectual property or claim
infringement on their intellectual property rights; risks associated
with a significant amount of our business coming from domestic and
foreign government customers, including the ability to maintain security
clearances for certain projects; risks that we improperly handle
sensitive or confidential information or the perception of such
mishandling; risks associated with our dependence on a limited number of
suppliers or original equipment manufacturers ("OEMs") for certain
components of our products; risks that we are unable to maintain and
enhance relationships with key resellers, partners, and systems
integrators; risks that contract terms may expose us to unlimited
liability or other unfavorable positions and risks that we may
experience losses that are not covered by insurance; risks that we will
experience liquidity or working capital issues and related risks that
financing sources will be unavailable to us on reasonable terms or at
all; risks associated with significant leverage resulting from our
current debt position; risks that we will be unable to comply with the
leverage ratio covenant under our credit facility; risks that our credit
rating could be downgraded or placed on a credit watch; risks relating
to timely implementation of new accounting pronouncements or new
interpretations of existing accounting pronouncements and related risks
of future restatements or filing delays; risks associated with future
regulatory actions or private litigations relating to our extended
filing delay and related circumstances; and risks that use of our tax
benefits may be restricted or eliminated in the future. We assume no
obligation to revise or update any forward-looking statement, except as
otherwise required by law. For a detailed discussion of these risk
factors, see our Annual Report on Form 10-K for the fiscal year ended
January 31, 2011.
VERINT, the VERINT logo, ACTIONABLE INTELLIGENCE, POWERING ACTIONABLE
INTELLIGENCE, INTELLIGENCE IN ACTION, ACTIONABLE INTELLIGENCE FOR A
SMARTER WORKFORCE, VERINT VERIFIED, WITNESS ACTIONABLE SOLUTIONS,
STAR-GATE, RELIANT, VANTAGE, X-TRACT, NEXTIVA, EDGEVR, ULTRA, AUDIOLOG,
WITNESS, the WITNESS logo, IMPACT 360, the IMPACT 360 logo, IMPROVE
EVERYTHING, EQUALITY, CONTACTSTORE, EYRETEL, BLUE PUMPKIN SOFTWARE, BLUE
PUMPKIN, the BLUE PUMPKIN logo, EXAMETRIC and the EXAMETRIC logo,
CLICK2STAFF, STAFFSMART, AMAE SOFTWARE and the AMAE logo are trademarks
and registered trademarks of Verint Systems Inc. Other trademarks
mentioned are the property of their respective owners.
Table 1
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share data)
Three Months Ended July 31,
Six Months Ended July 31,
2011
2010
2011
2010
Revenue:
Product
$
100,423
$
93,103
$
183,701
$
185,173
Service and support
94,536
87,573
187,590
168,116
Total revenue
194,959
180,676
371,291
353,289
Cost of revenue:
Product
33,214
29,866
55,745
56,718
Service and support
33,210
28,260
63,378
56,982
Amortization of acquired technology
2,685
2,220
5,335
4,453
Total cost of revenue
69,109
60,346
124,458
118,153
Gross profit
125,850
120,330
246,833
235,136
Operating expenses:
Research and development, net
26,808
22,049
53,176
48,481
Selling, general and administrative
72,217
69,144
142,452
156,161
Amortization of other acquired intangible assets
5,415
5,338
10,961
10,677
Total operating expenses
104,440
96,531
206,589
215,319
Operating income
21,410
23,799
40,244
19,817
Other income (expense), net
Interest income
146
117
294
200
Interest expense
(7,857
)
(5,936
)
(16,651
)
(11,884
)
Loss on extinguishment of debt
-
-
(8,136
)
-
Other income (expense), net
738
(2,448
)
1,750
(6,146
)
Total other expense, net
(6,973
)
(8,267
)
(22,743
)
(17,830
)
Income before provision for income taxes
14,437
15,532
17,501
1,987
Provision for income taxes
3,163
3,141
4,672
5,212
Net income (loss)
11,274
12,391
12,829
(3,225
)
Net income attributable to noncontrolling interest
799
916
2,466
1,508
Net income (loss) attributable to Verint Systems Inc.
10,475
11,475
10,363
(4,733
)
Dividends on preferred stock
(3,707
)
(3,554
)
(7,256
)
(6,957
)
Net income (loss) attributable to Verint Systems Inc. common
shares
$
6,768
$
7,921
$
3,107
$
(11,690
)
Net income (loss) per common share attributable to Verint Systems
Inc.
Basic
$
0.18
$
0.24
$
0.08
$
(0.35
)
Diluted
$
0.17
$
0.23
$
0.08
$
(0.35
)
Weighted-average common shares outstanding
Basic
38,557
33,272
37,984
32,972
Diluted
39,377
35,006
39,239
32,972
Table 2
Verint Systems Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Results
(Unaudited)
(In thousands, except per share data)
Three Months Ended July 31,
Six Months Ended July 31,
2011
2010
2011
2010
Table of Reconciliation from GAAP Revenue to
Non-GAAP Revenue
GAAP revenue
$
194,959
$
180,676
$
371,291
$
353,289
Revenue adjustments related to acquisitions
727
-
962
-
Non-GAAP revenue
$
195,686
$
180,676
$
372,253
$
353,289
Table of Reconciliation from GAAP Gross
Profit to Non-GAAP Gross Profit
GAAP gross profit
$
125,850
$
120,330
$
246,833
$
235,136
Revenue adjustments related to acquisitions
727
-
962
-
Amortization of acquired technology
2,685
2,220
5,335
4,453
Stock-based compensation expenses
627
1,235
1,596
3,643
Other adjustments
414
-
414
-
Non-GAAP gross profit
$
130,303
$
123,785
$
255,140
$
243,232
Table of Reconciliation from GAAP Operating
Income to Non-GAAP Operating Income
GAAP operating income
$
21,410
$
23,799
$
40,244
$
19,817
Revenue adjustments related to acquisitions
727
-
962
-
Amortization of acquired technology
2,685
2,220
5,335
4,453
Amortization of other acquired intangible assets
5,415
5,338
10,961
10,677
Stock-based compensation expenses
6,641
8,035
14,191
26,004
Other adjustments
3,491
864
7,202
1,371
Expenses related to our filing delay
17
6,067
1,008
26,280
Non-GAAP operating income
$
40,386
$
46,323
$
79,903
$
88,602
Table of Reconciliation from GAAP Other
Expense, Net to Non-GAAP Other Expense, Net
GAAP other expense, net
$
(6,973
)
$
(8,267
)
$
(22,743
)
$
(17,830
)
Loss on extinguishment of debt
-
-
8,136
-
Unrealized (gains) losses on derivatives, net
(377
)
(3,796
)
730
(7,763
)
Non-GAAP other expense, net
$
(7,350
)
$
(12,063
)
$
(13,877
)
$
(25,593
)
Table of Reconciliation from GAAP Provision
for Income Taxes to Non-GAAP Provision for Income Taxes
GAAP provision for income taxes
$
3,163
$
3,141
$
4,672
$
5,212
Non-cash tax adjustments
471
(948
)
2,591
143
Non-GAAP provision for income taxes
$
3,634
$
2,193
$
7,263
$
5,355
Table of Reconciliation from GAAP Net Income
(Loss) Attributable to Verint Systems Inc. to Non-GAAP Net Income
Attributable to Verint Systems Inc.
GAAP net income (loss) attributable to Verint Systems Inc.
$
10,475
$
11,475
$
10,363
$
(4,733
)
Revenue adjustments related to acquisitions
727
-
962
-
Amortization of acquired technology
2,685
2,220
5,335
4,453
Amortization of other acquired intangible assets
5,415
5,338
10,961
10,677
Stock-based compensation expenses
6,641
8,035
14,191
26,004
Other adjustments
3,491
864
7,202
1,371
Expenses related to our filing delay
17
6,067
1,008
26,280
Loss on extinguishment of debt
-
-
8,136
-
Unrealized (gains) losses on derivatives, net
(377
)
(3,796
)
730
(7,763
)
Non-cash tax adjustments
(471
)
948
(2,591
)
(143
)
Total GAAP net income (loss) adjustments
18,128
19,676
45,934
60,879
Non-GAAP net income attributable to Verint Systems Inc.
$
28,603
$
31,151
$
56,297
$
56,146
Table of Reconciliation from GAAP Net Income
(Loss) Attributable to Verint Systems Inc. Common Shares to
Non-GAAP Net Income Attributable to Verint Systems Inc. Common
Shares
GAAP net income (loss) attributable to Verint Systems Inc. common
shares
$
6,768
$
7,921
$
3,107
$
(11,690
)
Total GAAP net income (loss) adjustments
18,128
19,676
45,934
60,879
Non-GAAP net income attributable to Verint Systems Inc. common shares
$
24,896
$
27,597
$
49,041
$
49,189
Table Comparing GAAP Diluted Net Income
(Loss) Per Common Share Attributable to Verint Systems Inc. to
Non-GAAP Diluted Net Income Per Common Share Attributable to
Verint Systems Inc.
GAAP diluted net income (loss) per common share attributable to
Verint Systems Inc.
$
0.17
$
0.23
$
0.08
$
(0.35
)
Non-GAAP diluted net income per common share attributable to Verint
Systems Inc.
$
0.57
$
0.69
$
1.13
$
1.25
Shares used in computing GAAP diluted net income (loss) per common
share (in thousands)
39,377
35,006
39,239
32,972
Shares used in computing non-GAAP diluted net income per common
share (in thousands)
49,949
45,178
49,760
45,071
Table 3
Verint Systems Inc. and Subsidiaries
Segment Revenue
(Unaudited)
(In thousands)
Three Months Ended July 31,
Six Months Ended July 31,
2011
2010
2011
2010
GAAP Revenue By Segment
Workforce Optimization Segment
$
105,654
$
94,795
$
202,923
$
191,675
Video Intelligence Segment
39,939
37,060
69,974
68,605
Communications Intelligence Segment
49,366
48,821
98,394
93,009
Total Video and Communications Intelligence
89,305
85,881
168,368
161,614
GAAP Total Revenue
$
194,959
$
180,676
$
371,291
$
353,289
Revenue adjustments related to acquisitions
$
727
$
-
$
962
$
-
Non-GAAP Revenue By Segment
Workforce Optimization Segment
$
105,654
$
94,795
$
202,923
$
191,675
Video Intelligence Segment
40,666
37,060
70,936
68,605
Communications Intelligence Segment
49,366
48,821
98,394
93,009
Total Video and Communications Intelligence
90,032
85,881
169,330
161,614
Non-GAAP Total Revenue
$
195,686
$
180,676
$
372,253
$
353,289
Table 4
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share and per share data)
July 31,
January 31,
2011
2011
Assets
Current Assets:
Cash and cash equivalents
$
179,147
$
169,906
Restricted cash and bank time deposits
15,647
13,639
Accounts receivable, net
155,309
150,769
Inventories
19,722
16,987
Deferred cost of revenue
5,529
6,269
Prepaid expenses and other current assets
49,384
44,374
Total current assets
424,738
401,944
Property and equipment, net
24,386
23,176
Goodwill
753,972
738,674
Intangible assets, net
146,927
157,071
Capitalized software development costs, net
6,064
6,787
Long-term deferred cost of revenue
17,330
21,715
Other assets
32,608
26,760
Total assets
$
1,406,025
$
1,376,127
Liabilities, Preferred Stock, and Stockholders' Equity
Current Liabilities:
Accounts payable
$
39,596
$
36,861
Accrued expenses and other current liabilities
148,161
163,029
Current maturities of long-term debt
6,000
-
Deferred revenue
145,553
142,465
Liabilities to affiliates
1,964
1,847
Total current liabilities
341,274
344,202
Long-term debt
591,105
583,234
Long-term deferred revenue
30,237
40,424
Other liabilities
41,391
45,038
Total liabilities
1,004,007
1,012,898
Preferred Stock - $0.001 par value; authorized 2,500,000 shares.
Series A convertible preferred stock; 293,000 shares issued and
outstanding; aggregate liquidation preference and redemption value
of $345,257 at July 31, 2011.
285,542
285,542
Commitments and Contingencies
Stockholders' Equity:
Common stock - $0.001 par value; authorized 120,000,000 shares.
Issued 39,070,000 and 37,349,000 shares, respectively; outstanding
38,787,000 and 37,089,000 shares, as of July 31, 2011 and January
31, 2011, respectively.
39
38
Additional paid-in capital
540,744
519,834
Treasury stock, at cost - 283,000 and 260,000 shares as of July 31,
2011 and January 31, 2011, respectively.
(7,466
)
(6,639
)
Accumulated deficit
(384,394
)
(394,757
)
Accumulated other comprehensive loss
(36,364
)
(42,069
)
Total Verint Systems Inc. stockholders' equity
112,559
76,407
Noncontrolling interest
3,917
1,280
Total liabilities stockholders' equity
116,476
77,687
Total liabilities, preferred stock, and stockholders' equity
$
1,406,025
$
1,376,127
Table 5
Verint Systems Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Six Months Ended July 31,
2011
2010
Cash flows from operating activities:
Net income (loss)
$
12,829
$
(3,225
)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization
25,539
23,952
Stock-based compensation
11,640
15,636
Non-cash losses on derivative financial instruments, net
1,907
3,347
Loss on extinguishment of debt
8,136
-
Other non-cash items, net
3,294
867
Changes in operating assets and liabilities, net of effects of
business combination:
Accounts receivable
(4,491
)
(5,447
)
Inventories
(2,860
)
(2,124
)
Deferred cost of revenue
5,692
9,273
Prepaid expenses and other assets
(3,417
)
2,936
Accounts payable and accrued expenses
(16,207
)
(3,798
)
Deferred revenue
(10,432
)
(33,273
)
Other, net
(3,792
)
(2,632
)
Net cash provided by operating activities
27,838
5,512
Cash flows from investing activities:
Cash paid for business combinations, net of cash acquired
(11,958
)
(15,292
)
Purchases of property and equipment
(6,715
)
(3,550
)
Settlements of derivative financial instruments not designated as
hedges
(1,178
)
(11,997
)
Cash paid for capitalized software development costs
(1,662
)
(858
)
Change in restricted cash and bank time deposits
(1,883
)
(9,720
)
Other investing activities
(1,230
)
-
Net cash used in investing activities
(24,626
)
(41,417
)
Cash flows from financing activities:
Proceeds from borrowings, net of original issuance discount
597,000
-
Repayments of borrowings and other financing obligations
(583,786
)
(22,679
)
Payment of debt issuance and other debt-related costs
(15,034
)
(3,688
)
Proceeds from exercises of stock options
8,716
11,650
Purchases of treasury stock
(827
)
(4,146
)
Other financing activities
(2,004
)
-
Net cash provided by (used in) financing activities
4,065
(18,863
)
Effect of exchange rate changes on cash and cash equivalents
1,964
(1,368
)
Net increase (decrease) in cash and cash equivalents
9,241
(56,136
)
Cash and cash equivalents, beginning of period
169,906
184,335
Cash and cash equivalents, end of period
$
179,147
$
128,199
Supplemental disclosures of cash flow information:
Cash paid for interest
$
15,427
$
10,236
Cash paid for income taxes, net of refunds received
$
7,780
$
3,244
Non-cash investing and financing transactions:
Accrued but unpaid purchases of property and equipment
$
659
$
936
Inventory transfers to property and equipment
$
332
$
87
Liabilities for contingent consideration in business combinations
$
904
$
3,224
Stock options exercised, proceeds received subsequent to period end
$
17
$
285
Accrued but unpaid debt issuance and other debt-related costs
$
-
$
310
Supplier financing arrangements
$
-
$
1,480
Verint Systems Inc. and Subsidiaries Supplemental
Information About Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. Table 2
includes a reconciliation of each non-GAAP financial measure presented
in this press release to the most directly comparable GAAP financial
measure. Non-GAAP financial measures should not be considered in
isolation or as a substitute for comparable GAAP financial measures. The
non-GAAP financial measures we present have limitations in that they do
not reflect all of the amounts associated with our results of operations
as determined in accordance with GAAP, and these non-GAAP financial
measures should only be used to evaluate our results of operations in
conjunction with the corresponding GAAP financial measures. These
non-GAAP financial measures do not represent discretionary cash
available to us to invest in the growth of our business, and we may in
the future incur expenses similar to or in addition to the adjustments
made in these non-GAAP financial measures.
We believe that the non-GAAP financial measures we present provide
meaningful supplemental information regarding our operating results
primarily because they exclude certain non-cash charges or items that we
do not believe are reflective of our ongoing operating results when
budgeting, planning and forecasting, determining compensation, and when
assessing the performance of our business with our individual operating
segments or our senior management. We believe that these non-GAAP
financial measures also facilitate the comparison by management and
investors of results between periods and among our peer companies.
However, those companies may calculate similar non-GAAP financial
measures differently than we do, limiting their usefulness as
comparative measures.
Adjustments to Non-GAAP Financial Measures
Revenue adjustments related to acquisitions. We exclude from our
non-GAAP revenue the impact of fair value adjustments required under
GAAP relating to acquired customer support contracts which would have
otherwise been recognized on a standalone basis. We exclude these
adjustments from our non-GAAP financial measures because these are not
reflective of our ongoing operations.
Amortization of acquired intangible assets, including acquired
technology. When we acquire an entity, we are required under GAAP to
record the fair value of the intangible assets of the acquired entity
and amortize it over their useful lives. We exclude the amortization of
acquired intangible assets, including acquired technology, from our
non-GAAP financial measures. These expenses are excluded from our
non-GAAP financial measures because they are non-cash charges. In
addition, these amounts are inconsistent in amount and frequency and are
significantly impacted by the timing and size of acquisitions. Thus, we
also exclude these amounts to provide better comparability of pre- and
post-acquisition operating results.
Stock-based compensation expenses. We exclude stock-based
compensation expenses related to stock options, restricted stock awards
and units, and phantom stock from our non-GAAP financial measures. These
expenses are excluded from our non-GAAP financial measures because they
are primarily non-cash charges. In recent periods, we also incurred
significant cash-settled stock compensation due to our extended filing
delay and restrictions on our ability to issue new shares of common
stock to our employees.
Other adjustments. We exclude from our non-GAAP financial
measures legal, other professional fees and certain other expenses
associated with acquisitions and certain extraordinary transactions, in
both cases, whether or not consummated. Also excluded are changes in the
fair value of contingent consideration liabilities associated with
business combinations. These expenses are excluded from our non-GAAP
financial measures because we believe that they are not reflective of
our ongoing operations.
Expenses related to our filing delay. We exclude from our
non-GAAP financial measures expenses related to our restatement of
previously filed financial statements and our extended filing delay.
These expenses included professional fees and related expenses, as well
as expenses associated with a special cash retention program. These
expenses are excluded from our non-GAAP financial measures because we
believe that they are not reflective of our ongoing operations.
Unrealized (gains) losses on derivatives, net. We exclude from
our non-GAAP financial measures unrealized gains and losses on interest
rate swaps and foreign currency derivatives. These gains and losses are
excluded from our non-GAAP financial measures because they are non-cash
transactions.
Loss on extinguishment of debt. We exclude from our non-GAAP
financial measures loss on extinguishment of debt attributable to
refinancing of our debt because we believe it is not reflective of our
ongoing operations.
Non-cash tax adjustments. Non-cash tax adjustments represent the
difference between the amount of taxes we actually paid and our GAAP tax
provision on an annual basis. On a quarterly basis, this adjustment
reflects our expected annual effective tax rate on a cash basis.
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