Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
SUPPLEMENT TO PROXY STATEMENT
This Supplement to the Definitive Proxy Statement on Schedule 14A filed on December 20, 2016, which we refer to as the
Definitive Proxy Statement
, by Brocade Communications Systems, Inc., which we refer to as the
Company
or
Brocade
, is being filed to supplement the Definitive Proxy Statement as described in
the Explanatory Note below.
EXPLANATORY NOTE
In connection with the Merger, five purported class action complaints have been filed on behalf of Company stockholders against the Company
and its directors in the United States District Court for the Northern District of California. Two of the five complaints also named Ultimate Parent, Broadcom Corporation and Merger Sub as defendants. The five complaints are captioned as follows:
Steinberg v. Brocade Communications Systems, Inc., et al.
(filed December 12, 2016);
Gross v. Brocade Communications Systems, Inc., et al.
(filed December 15, 2016);
Bragan v. Brocade Communications Systems, Inc., et
al.
(filed December 21, 2016);
Jha v.
Brocade Communications Systems, Inc., et al.
(filed December 21, 2016);
and
Chuakay v. Brocade Communications Systems, Inc., et al.
(filed January 5, 2017). We
refer to these five actions collectively as the
Stockholder Actions
.
The Company believes that no supplemental
disclosures are required under applicable laws; however, to avoid the risk of the Stockholder Actions delaying or adversely affecting the Merger and to minimize the expense of defending the Stockholder Actions, and without admitting any liability or
wrongdoing, the Company is making certain disclosures below that supplement and revise those contained in the Definitive Proxy Statement, which we refer to as the
litigation-related supplemental disclosures
. The litigation-related
supplemental disclosures contained below should be read in conjunction with the Definitive Proxy Statement, which is available on the Internet site maintained by the Securities and Exchange Commission at http://www.sec.gov, along with periodic
reports and other information the Company files with the Securities and Exchange Commission. The Company and the other named defendants have denied, and continue to deny, that they have committed or assisted others in committing any violations of
law or breaches of duty to Company stockholders, and expressly maintain that, to the extent applicable, they have complied with their fiduciary and other legal duties and are providing the litigation-related supplemental disclosures below solely to
try to eliminate the burden and expense of further litigation, to put the claims that were or could have been asserted to rest, and to avoid any possible delay to the closing of the Merger that might arise from further litigation. Nothing in the
litigation-related supplemental disclosures shall be deemed an admission of the legal necessity or materiality under applicable laws of any of the litigation-related supplemental disclosures. To the extent that the information set forth herein
differs from or updates information contained in the Definitive Proxy Statement, the information set forth herein shall supersede or supplement the information in the Definitive Proxy Statement. References to sections and subsections herein are
references to the corresponding sections or subsections in the Definitive Proxy Statement, all page references are to pages in the Definitive Proxy Statement, and terms used herein, unless otherwise defined, have the meanings set forth in the
Definitive Proxy Statement.
Forward-Looking Statements
This Supplement to the Definitive Proxy Statement and the documents to which we refer you in this Supplement to the Definitive Proxy Statement,
as well as information included in oral statements or other written statements made or to be made by us, contain statements that, in our opinion, may constitute forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be typically identified by such words as may, will,
should, would, expect, anticipate, plan, likely, believe, estimate, project, intend, potential, predict,
aim, and other similar expressions, among others, which appear in a number of places in this Supplement to the Definitive Proxy Statement (and the documents to which we refer you in this Supplement to the Definitive Proxy Statement) and
include, but are not limited to, all statements relating directly or indirectly to the timing or likelihood of consummating the Merger, plans for future growth and other business development activities as well as capital expenditures, financing
sources and the effects of regulation and competition and all other statements regarding our intent, plans, beliefs or expectations or those of our directors or officers. These forward-looking statements reflect the current analysis of existing
information and are subject to various risks and uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, our actual results may differ materially from our expectations or
projections.
The following factors, among others, could cause our actual results to differ materially from those described or implied in
these forward-looking statements:
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the risk that the conditions to the closing of the Merger are not satisfied (including a failure of our stockholders to approve, on a timely basis or otherwise, the Merger and the risk that regulatory approvals required
for the Merger, including antitrust approvals and clearance from CFIUS, are not obtained, on a timely basis or otherwise, or are obtained subject to conditions that are not anticipated);
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the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement and risk that the circumstances of such termination could require us to pay Parent a
$195 million termination fee;
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litigation or other legal proceedings relating to the Merger;
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uncertainties as to the timing of the consummation of the Merger and the ability of each of the Company, Ultimate Parent and Parent to consummate the Merger;
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risks that the proposed transaction disrupts the current plans and operations, and diverts the attention of management or employees of the Company or Ultimate Parent;
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the ability of the Company to retain and hire key personnel;
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competitive responses to the proposed Merger;
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unexpected costs, charges or expenses resulting from the Merger;
|
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potential adverse reactions or changes to business relationships resulting from the announcement or consummation of the Merger; and
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legislative, regulatory and economic developments.
|
The foregoing review of important factors
that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included herein and elsewhere, including the risk factors included in the Companys and
Ultimate Parents respective most recent Annual Reports on Form
10-K
and more recent other reports filed with the SEC. The Company and Ultimate Parent can give no assurance that the conditions to the
Merger will be satisfied. Except as required by applicable law, neither the Company nor Ultimate Parent undertakes any obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result
of new information, future events or otherwise.
SUPPLEMENTAL DISCLOSURES TO DEFINITIVE PROXY STATEMENT RELATED TO STOCKHOLDER ACTIONS
The section of the Definitive Proxy Statement under the heading The Merger Opinion of Evercore Group L.L.C. is
hereby amended by:
Amending the second full paragraph on page 55 in the section titled Sum of the Parts Analysis as
follows (with new text in underline):
For the Storage Networking component, Evercore performed a discounted cash flow analysis to
estimate the implied enterprise value as of October 31, 2016, using (1) the unlevered,
after-tax
free cash flows that were projected to be generated by the Company
from the Storage Networking
component
from the period from November 1, 2016 through October 31, 2021, plus (2) the
portion of the
estimated terminal value of the Company
attributable to the Storage Networking component
as of October 31,
2021 based on a perpetuity growth rate of
-6.0%
to
-4.0%,
reflecting the Companys perspective on the prospects for the Storage Networking component. The total cash
flows
attributable to the Storage Networking component
were then discounted to present value using an estimate range of discount rates from 8.5% to 11.0%. Evercore estimated the Storage Networking components weighted average cost of
capital based on application of the capital asset pricing model and its professional judgment given the nature of the Storage Networking component. The resulting range of implied enterprise values for the Storage Networking component was
approximately $2.8 billion to $3.6 billion.
Amending the third full paragraph on page 55 in the section titled Sum of
the Parts Analysis as follows (with new text in underline):
For the SRA and Software Networking component, Evercore performed a
discounted cash flow analysis to estimate the implied enterprise value as of October 31, 2016, using (1) the unlevered,
after-tax
free cash flows that were projected to be generated by the Company
from the SRA and Software Networking component
from the period from November 1, 2016 through October 31, 2026, plus (2) the
portion of the
estimated terminal value of the Company
attributable to the SRA and Software
Networking component
as of October 31, 2026 based on an Adjusted EBITDA multiple of 10.0x to 12.0x. Evercore estimated the terminal value multiple based on the financial projections provided by the Companys management, the trading
multiples for the companies included in the selected publicly traded companies analysis, and its professional judgment given the nature of the SRA and Software Networking component. The total cash flows
attributable to the SRA and Software
Networking component
were then discounted to present value using an estimate range of discount rates from 8.5% to 11.0%. Evercore estimated the SRA and Software Networking components weighted
average cost of capital based on application of the capital asset pricing model and its professional judgment given the nature of the SRA and Software Networking component. The resulting range of
implied enterprise values for the SRA and Software Networking component was approximately $1.1 billion to $1.6 billion.
Amending the fourth full paragraph on page 55 in the section titled Sum of the Parts Analysis as follows (with new text in
underline):
For the Campus component, Evercore assumed a multiple range of 1.0x to 1.5x managements projection of the
Companys estimated fiscal year 2017 revenue
from the Campus component
. The multiple range was derived by analyzing the results from an analysis of the revenue multiples for the companies included in the selected publicly traded
companies analysis and took into account qualitative judgments for the nature of the business. The resulting range of implied enterprise values for the Campus component was approximately $0.3 billion to $0.5 billion.
Amending the second sentence in the first full paragraph on page 57 in the section titled Miscellaneous as follows (with new
text in underline):
Pursuant to the terms of its engagement letter, Evercore is entitled to receive (1) an opinion fee of
$2 million, regardless of the conclusion reached therein, which was earned upon delivery of its fairness opinion and which is fully creditable, to the extent previously paid, against any transaction fee payable and (2) a transaction fee,
comprised of a success fee
currently estimated to equal $29.7
million
and a discretionary component
currently estimated to equal $5.9
million
(the payment of which was approved by the Company Board
at a meeting on November 1, 2016), currently estimated to total approximately $35.6 million,
the entirety of
which Evercore will earn subject to and upon the consummation of the Merger.
Inserting the following paragraph below the first full paragraph on page 57 in the section titled Miscellaneous:
For services rendered by it as the Companys financial advisor in the acquisition by the Company of Ruckus, Evercore received, in total,
$6.5 million as compensation. Other than compensation paid or payable to Evercore in connection with the acquisition of Ruckus and the proposed acquisition of the Company, for the period from October 2013 through October 2016, Evercore has
received $1.4 million as compensation in connection with other engagements by the Company. Other than ongoing services in connection with the acquisitions of the Company and Ruckus, no future engagement is currently mutually understood to be
contemplated between the Company and Evercore.
The section of the Definitive Proxy Statement under the heading The
Merger Certain Company Forecasts is hereby amended by:
Amending and restating footnote 9 on page 61 in the section
titled The September Management Case as follows:
(9)
|
Unlevered Free Cash Flow is calculated as Non-GAAP EBITDA
, adjusted for stock-based compensation expense, cash taxes
, capital expenditures, changes in net working capital
and
changes in deferred revenue
. Forecasts of Unlevered Free Cash Flow were not included in the financial projections provided to Ultimate Parent or to the other parties who participated in the solicitation process.
|
Inserting the following paragraph and table below the table and related footnotes that appear under the heading
The September Management Case on page 60.
Within the September Management Case, projections and extrapolations derived
therefrom were prepared for the four components of the Companys business (its Storage Networking component; its SRA and Software Networking component; its Campus component; and its Ruckus component) on a stand-alone basis, and portions of such
projections and extrapolations derived therefrom were used in the sum of the parts analysis (described in The Merger Opinion of Evercore Group L.L.C. beginning on page 48). Such forecasts and extrapolations derived therefrom
are set forth below. Unlevered free cash flow was not derived for the Companys Campus and Ruckus components or for fiscal year 2016 for the Storage Networking and SRA and Software Networking components in the September Management Case.
Storage Networking
(1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
1,438
|
|
|
$
|
1,383
|
|
|
$
|
1,346
|
|
|
$
|
1,290
|
|
|
$
|
1,238
|
|
|
$
|
1,189
|
|
Unlevered Free Cash Flow
|
|
|
|
|
|
$
|
451
|
|
|
$
|
443
|
|
|
$
|
426
|
|
|
$
|
398
|
|
|
$
|
380
|
|
(1)
|
For each of fiscal years 2016, 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The September Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the September Management Case projections for fiscal years 2016 through 2019 as described above.
|
SRA and Software Networking
(1)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
2022E(2)
|
|
|
2023E(2)
|
|
|
2024E(2)
|
|
|
2025E(2)
|
|
|
2026E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
439
|
|
|
$
|
426
|
|
|
$
|
495
|
|
|
$
|
607
|
|
|
$
|
735
|
|
|
$
|
834
|
|
|
$
|
911
|
|
|
$
|
985
|
|
|
$
|
1,051
|
|
|
$
|
1,121
|
|
|
$
|
1,197
|
|
Unlevered Free Cash Flow
|
|
|
|
|
|
$
|
(89
|
)
|
|
$
|
(49
|
)
|
|
$
|
(9
|
)
|
|
$
|
7
|
|
|
$
|
39
|
|
|
$
|
61
|
|
|
$
|
78
|
|
|
$
|
93
|
|
|
$
|
105
|
|
|
$
|
119
|
|
(1)
|
For each of fiscal years 2016, 2017, 2018, 2020, 2021, 2022, 2023 and 2026, the Companys fiscal year end is the final Saturday in October. For each of fiscal years 2019, 2024 and 2025, the Companys fiscal
year end is the first Saturday in November.
|
(2)
|
The September Management Case projections for fiscal years 2020 through 2026 were prepared by extrapolating from trends in the September Management Case projections for fiscal years 2016 through 2019 as described above.
|
Campus
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
282
|
|
|
$
|
328
|
|
|
$
|
357
|
|
|
$
|
387
|
|
|
$
|
399
|
|
|
$
|
411
|
|
(1)
|
For each of fiscal years 2016, 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The September Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the September Management Case projections for fiscal years 2016 through 2019 as described above.
|
Ruckus
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
399
|
|
|
$
|
493
|
|
|
$
|
615
|
|
|
$
|
762
|
|
|
$
|
896
|
|
|
$
|
1,008
|
|
(1)
|
For each of fiscal years 2016, 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The September Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the September Management Case projections for fiscal years 2016 through 2019 as described above.
|
Amending and restating footnote 8 on page 62 in the section titled The October Management Case as
follows:
(8)
|
Unlevered Free Cash Flow is calculated as Non-GAAP EBITDA, adjusted for stock-based compensation expense, cash taxes
, capital expenditures, changes in net working capital and
changes in
deferred revenue
. Forecasts of Unlevered Free Cash Flow were not included in the financial projections provided to Ultimate Parent or to the other parties who participated in the solicitation process.
|
Inserting the following paragraph and table below the table and related footnotes that appear under the heading The October
Management Case beginning on page 61.
Within the October Management Case, projections and extrapolations derived therefrom were
prepared for the four components of the Companys business (its Storage Networking component; its SRA and Software Networking component; its Campus component; and its Ruckus component) on a stand-alone basis, and portions of such projections
and extrapolations derived therefrom were used in the sum of the parts analysis (described in The Merger Opinion of Evercore Group L.L.C. beginning on page 48). Such forecasts and extrapolations derived therefrom are set
forth below. Unlevered free cash flow was not derived for the Companys Campus component or for fiscal year 2016 for the Storage Networking, SRA and Software Networking, and Campus components in the October Management Case.
Storage Networking
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
1,451
|
|
|
$
|
1,383
|
|
|
$
|
1,346
|
|
|
$
|
1,290
|
|
|
$
|
1,243
|
|
|
$
|
1,208
|
|
Unlevered Free Cash Flow
|
|
|
|
|
|
$
|
454
|
|
|
$
|
443
|
|
|
$
|
426
|
|
|
$
|
397
|
|
|
$
|
373
|
|
(1)
|
For each of fiscal years 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The October Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the October Management Case projections for fiscal years 2016 through 2019 as described above.
|
SRA and Software Networking
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
2022E(2)
|
|
|
2023E(2)
|
|
|
2024E(2)
|
|
|
2025E(2)
|
|
|
2026E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
|
$427
|
|
|
|
$426
|
|
|
|
$495
|
|
|
|
$607
|
|
|
$
|
684
|
|
|
$
|
762
|
|
|
$
|
829
|
|
|
$
|
891
|
|
|
$
|
947
|
|
|
$
|
1,008
|
|
|
$
|
1,072
|
|
Unlevered Free Cash Flow
|
|
|
|
|
|
|
($ 92
|
)
|
|
|
($ 49
|
)
|
|
|
($ 9
|
)
|
|
$
|
34
|
|
|
$
|
61
|
|
|
$
|
85
|
|
|
$
|
108
|
|
|
$
|
117
|
|
|
$
|
124
|
|
|
$
|
132
|
|
(1)
|
For each of fiscal years 2017, 2018, 2020, 2021, 2022, 2023 and 2026, the Companys fiscal year end is the final Saturday in October. For each of fiscal years 2019, 2024 and 2025, the Companys fiscal year end
is the first Saturday in November.
|
(2)
|
The October Management Case projections for fiscal years 2020 through 2026 were prepared by extrapolating from trends in the October Management Case projections for fiscal years 2016 through 2019 as described above.
|
Campus
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
282
|
|
|
$
|
328
|
|
|
$
|
357
|
|
|
$
|
387
|
|
|
$
|
414
|
|
|
$
|
435
|
|
(1)
|
For each of fiscal years 2016, 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The October Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the October Management Case projections for fiscal years 2016 through 2019 as described above.
|
Ruckus
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016E
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E(2)
|
|
|
2021E(2)
|
|
|
|
(in millions)
|
|
Revenue
|
|
$
|
393
|
|
|
$
|
493
|
|
|
$
|
615
|
|
|
$
|
762
|
|
|
$
|
873
|
|
|
$
|
961
|
|
Unlevered Free Cash Flow
|
|
|
|
|
|
$
|
16
|
|
|
$
|
48
|
|
|
$
|
73
|
|
|
$
|
112
|
|
|
$
|
131
|
|
(1)
|
For each of fiscal years 2017, 2018, 2020 and 2021, the Companys fiscal year end is the final Saturday in October. For fiscal year 2019, the Companys fiscal year end is the first Saturday in November.
|
(2)
|
The October Management Case projections for fiscal years 2020 and 2021 were prepared by extrapolating from trends in the October Management Case projections for fiscal years 2016 through 2019 as described above.
|
Amending and restating the section under the
heading The Management Case Forecasts beginning on page 62 as follows:
The Company management believes
non-GAAP
financial measures provide useful information to investors by offering (1) the ability to make more meaningful
period-to-period
comparisons of the Companys ongoing operating results, (2) the ability to make more meaningful comparisons of the Companys operating
performance relative to its competitors, (3) the ability to better identify trends in the Companys underlying business and to perform related trend analyses and (4) a better understanding of how management plans and measures the
Companys underlying business. The Company has presented below a reconciliation of each
non-GAAP
financial measure utilized in the September Management Case and the October Management Case to the most
comparable GAAP financial measure. These reconciliations constitute forward-looking statements as described above. The Company believes that such reconciliations are inherently unreliable. The inclusion of these reconciliations and the
GAAP financial measures presented therein therefore should not be regarded as an indication that the Company management, the Company Board, its advisors or any other person considers such reconciliations or such GAAP financial measures to be a
reliable prediction of actual future results, and should not be relied upon as such. The Company does not regularly forecast most of the reconciling items presented below, and the Company views providing such reconciliations as a purely speculative
exercise as the actual amounts of most of the reconciling items presented are highly uncertain due to the combination of the variability and volatility of the amounts of such items incurred or recorded historically over time. Without limitation of
the foregoing: (a) the actual acquisition and integration expense and the actual amortization expense associated with acquired intangibles to be incurred in future periods will be directly related to the nature and timing of future acquisitions
by the Company, which is impossible to predict; (b) the actual restructuring charges to be recorded in future periods will be directly related to the nature and timing of future restructuring actions taken by the Company, which are similarly
impossible to predict; (c) the actual impairment charges to be recorded in future periods will be directly related to the future fair values of assets subject to impairment testing, which cannot be forecasted accurately; and (d) the actual
gains or losses relating to sales of assets will be directly related to the nature and timing of future sales of assets by the Company, which also cannot be forecasted accurately. For purposes of presenting the reconciliations below, the Company has
assumed that no such acquisition and integration expenses, amortization expenses associated with acquired intangibles, restructuring charges, asset impairment charges or gains or losses relating to sales of assets will be incurred or recorded in any
of the future periods presented. As a result, and particularly given the historical variability, volatility and magnitude of those items, actual results likely will differ, and may differ materially, from those implied by the reconciliations below.
For purposes of the below reconciliations, amounts provided for fiscal year 2016 are based on the actual fiscal year 2016 results available to Company management at the time of the preparation of these reconciliations and therefore differ from the
estimated amounts for fiscal year 2016 used at the time of the preparation of the forecasts.
The September Management Case
A reconciliation of
Non-GAAP
Gross Profit,
Non-GAAP
Operating
Income,
Non-GAAP
EBITDA,
Non-GAAP
Net Income and
Non-GAAP
EPS to their respective most comparable GAAP financial measures is set
forth below.
Non-GAAP
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
Stock-based compensation expense included in cost of revenues
|
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
20
|
|
|
$
|
22
|
|
|
$
|
23
|
|
Amortization expense associated with acquired intangibles included in cost of revenues
|
|
|
29
|
|
|
|
50
|
|
|
|
46
|
|
|
|
43
|
|
|
|
42
|
|
|
|
38
|
|
Purchase accounting adjustments to inventory
|
|
|
31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit impact from
non-GAAP
adjustments
|
|
$
|
77
|
|
|
$
|
73
|
|
|
$
|
65
|
|
|
$
|
63
|
|
|
$
|
64
|
|
|
$
|
61
|
|
Stock-based compensation expense included in research and development
|
|
|
29
|
|
|
|
24
|
|
|
|
25
|
|
|
|
27
|
|
|
|
29
|
|
|
|
31
|
|
Stock-based compensation expense included in sales and marketing
|
|
|
53
|
|
|
|
41
|
|
|
|
44
|
|
|
|
48
|
|
|
|
51
|
|
|
|
54
|
|
Stock-based compensation expense included in general and administrative
|
|
|
31
|
|
|
|
21
|
|
|
|
22
|
|
|
|
24
|
|
|
|
26
|
|
|
|
27
|
|
Amortization expense associated with acquired intangibles included in operating expenses
|
|
|
16
|
|
|
|
28
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
Acquisition and integration costs
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains or losses relating to sales of assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income impact from
non-GAAP
adjustments
|
|
$
|
234
|
|
|
$
|
187
|
|
|
$
|
179
|
|
|
$
|
185
|
|
|
$
|
193
|
|
|
$
|
196
|
|
Non-cash
portion of the interest expense on the
Companys 1.375% convertible senior unsecured notes due 2020
|
|
|
15
|
|
|
|
16
|
|
|
|
17
|
|
|
|
18
|
|
|
|
3
|
|
|
|
|
|
Effects of certain intercompany transactions on the tax provision
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effect of
non-GAAP
adjustments
|
|
|
(58
|
)
|
|
|
(40
|
)
|
|
|
(37
|
)
|
|
|
(37
|
)
|
|
|
(32
|
)
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net income impact from
non-GAAP
adjustments
|
|
$
|
219
|
|
|
$
|
163
|
|
|
$
|
159
|
|
|
$
|
166
|
|
|
$
|
164
|
|
|
$
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
45
|
|
|
$
|
58
|
|
|
$
|
57
|
|
|
$
|
56
|
|
|
$
|
39
|
|
|
$
|
34
|
|
Income tax
|
|
|
48
|
|
|
|
73
|
|
|
|
102
|
|
|
|
123
|
|
|
|
136
|
|
|
|
145
|
|
Depreciation and amortization (including amortization expense associated with acquired
intangibles)
|
|
|
124
|
|
|
|
179
|
|
|
|
179
|
|
|
|
183
|
|
|
|
190
|
|
|
|
193
|
|
Stock-based compensation expense
|
|
|
130
|
|
|
|
103
|
|
|
|
110
|
|
|
|
119
|
|
|
|
128
|
|
|
|
135
|
|
Acquisition and integration expense
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains or losses relating to sales of assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments to inventory
|
|
|
31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA impact from
non-GAAP
adjustments
|
|
$
|
406
|
|
|
$
|
419
|
|
|
$
|
448
|
|
|
$
|
481
|
|
|
$
|
493
|
|
|
$
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Gross Profit
|
|
$
|
1,515
|
|
|
$
|
1,688
|
|
|
$
|
1,846
|
|
|
$
|
1,998
|
|
|
$
|
2,129
|
|
|
$
|
2,242
|
|
Total gross profit impact from
non-GAAP
adjustments
|
|
|
77
|
|
|
|
73
|
|
|
|
65
|
|
|
|
63
|
|
|
|
64
|
|
|
|
61
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Gross Profit
|
|
$
|
1,592
|
|
|
$
|
1,761
|
|
|
$
|
1,911
|
|
|
$
|
2,061
|
|
|
$
|
2,193
|
|
|
$
|
2,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Operating Income
|
|
$
|
307
|
|
|
$
|
391
|
|
|
$
|
531
|
|
|
$
|
616
|
|
|
$
|
641
|
|
|
$
|
677
|
|
Total operating income impact from
non-GAAP
adjustments
|
|
|
234
|
|
|
|
187
|
|
|
|
179
|
|
|
|
185
|
|
|
|
193
|
|
|
|
196
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Income
|
|
$
|
541
|
|
|
$
|
578
|
|
|
$
|
710
|
|
|
$
|
801
|
|
|
$
|
834
|
|
|
$
|
873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP EBITDA to GAAP net income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Net Income
|
|
$
|
214
|
|
|
$
|
261
|
|
|
$
|
370
|
|
|
$
|
437
|
|
|
$
|
466
|
|
|
$
|
498
|
|
Total EBITDA impact from
non-GAAP
adjustments
|
|
|
406
|
|
|
|
419
|
|
|
|
448
|
|
|
|
481
|
|
|
|
493
|
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EBITDA
|
|
$
|
620
|
|
|
$
|
680
|
|
|
$
|
818
|
|
|
$
|
918
|
|
|
$
|
959
|
|
|
$
|
1,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Net Income
|
|
$
|
214
|
|
|
$
|
261
|
|
|
$
|
370
|
|
|
$
|
437
|
|
|
$
|
466
|
|
|
$
|
498
|
|
Total net income impact from
non-GAAP
adjustments
|
|
|
219
|
|
|
|
163
|
|
|
|
159
|
|
|
|
166
|
|
|
|
164
|
|
|
|
165
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Net Income
|
|
$
|
433
|
|
|
$
|
424
|
|
|
$
|
529
|
|
|
$
|
603
|
|
|
$
|
630
|
|
|
$
|
663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions, except per share amounts)
|
|
GAAP Net Income per share
|
|
$
|
0.51
|
|
|
$
|
0.63
|
|
|
$
|
0.90
|
|
|
$
|
1.07
|
|
|
$
|
1.14
|
|
|
$
|
1.22
|
|
Total impact on net income per share from
non-GAAP
adjustments
|
|
|
0.53
|
|
|
|
0.40
|
|
|
|
0.39
|
|
|
|
0.40
|
|
|
|
0.40
|
|
|
|
0.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EPS
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
|
$
|
1.29
|
|
|
$
|
1.47
|
|
|
$
|
1.54
|
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of unlevered free cash flow to
Non-GAAP
EBITDA (for which the reconciliation to net income has been presented in the tables above) is set forth below.
Non-GAAP
EBITDA to unlevered free cash flow reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
Non-GAAP
EBITDA
|
|
$
|
680
|
|
|
$
|
818
|
|
|
$
|
918
|
|
|
$
|
959
|
|
|
$
|
1,005
|
|
Stock-based compensation expense
|
|
|
(103
|
)
|
|
|
(110
|
)
|
|
|
(119
|
)
|
|
|
(128
|
)
|
|
|
(135
|
)
|
Cash taxes
|
|
|
(100
|
)
|
|
|
(126
|
)
|
|
|
(143
|
)
|
|
|
(148
|
)
|
|
|
(155
|
)
|
Capital expenditures
|
|
|
(90
|
)
|
|
|
(96
|
)
|
|
|
(104
|
)
|
|
|
(112
|
)
|
|
|
(118
|
)
|
Changes in net working capital
|
|
|
(78
|
)
|
|
|
(49
|
)
|
|
|
(62
|
)
|
|
|
(59
|
)
|
|
|
(46
|
)
|
Changes in deferred revenue
|
|
|
21
|
|
|
|
22
|
|
|
|
24
|
|
|
|
26
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered free cash flow
|
|
$
|
330
|
|
|
$
|
459
|
|
|
$
|
513
|
|
|
$
|
538
|
|
|
$
|
578
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The October Management Case
A reconciliation of
Non-GAAP
Gross Profit,
Non-GAAP
Operating
Income,
Non-GAAP
EBITDA,
Non-GAAP
Net Income and
Non-GAAP
EPS to their respective most comparable GAAP financial measures is set
forth below.
Non-GAAP
adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
Stock-based compensation expense included in cost of revenues
|
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
19
|
|
|
$
|
20
|
|
|
$
|
21
|
|
|
$
|
22
|
|
Amortization expense associated with acquired intangibles included in cost of revenues
|
|
|
29
|
|
|
|
50
|
|
|
|
46
|
|
|
|
43
|
|
|
|
42
|
|
|
|
38
|
|
Purchase accounting adjustments to inventory
|
|
|
31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross profit impact from
non-GAAP
adjustments
|
|
$
|
77
|
|
|
$
|
73
|
|
|
$
|
65
|
|
|
$
|
63
|
|
|
$
|
63
|
|
|
$
|
60
|
|
Stock-based compensation expense included in research and development
|
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
25
|
|
|
$
|
27
|
|
|
$
|
29
|
|
|
$
|
30
|
|
Stock-based compensation expense included in sales and marketing
|
|
|
53
|
|
|
|
41
|
|
|
|
44
|
|
|
|
48
|
|
|
|
50
|
|
|
|
52
|
|
Stock-based compensation expense included in general and administrative
|
|
|
31
|
|
|
|
21
|
|
|
|
22
|
|
|
|
24
|
|
|
|
26
|
|
|
|
28
|
|
Amortization expense associated with acquired intangibles included in operating expenses
|
|
|
16
|
|
|
|
28
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
|
|
23
|
|
Acquisition and integration expense
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains or losses relating to sales of assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating income impact from
non-GAAP
adjustments
|
|
$
|
234
|
|
|
$
|
187
|
|
|
$
|
179
|
|
|
$
|
185
|
|
|
$
|
191
|
|
|
$
|
193
|
|
Non-cash
portion of the interest expense on the
Companys 1.375% convertible senior unsecured notes due 2020
|
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
17
|
|
|
$
|
18
|
|
|
$
|
3
|
|
|
$
|
|
|
Effects of certain intercompany transactions on the tax provision
|
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax effect of
non-GAAP
adjustments
|
|
|
(58
|
)
|
|
|
(39
|
)
|
|
|
(36
|
)
|
|
|
(36
|
)
|
|
|
(31
|
)
|
|
|
(31
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net income impact from
non-GAAP
adjustments
|
|
$
|
219
|
|
|
$
|
164
|
|
|
$
|
160
|
|
|
$
|
167
|
|
|
$
|
163
|
|
|
$
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
$
|
45
|
|
|
$
|
58
|
|
|
$
|
57
|
|
|
$
|
56
|
|
|
$
|
39
|
|
|
$
|
34
|
|
Income tax
|
|
|
48
|
|
|
|
73
|
|
|
|
103
|
|
|
|
124
|
|
|
|
143
|
|
|
|
151
|
|
Depreciation and amortization (including amortization expense associated with acquired
intangibles)
|
|
|
124
|
|
|
|
179
|
|
|
|
175
|
|
|
|
179
|
|
|
|
181
|
|
|
|
182
|
|
Stock-based compensation expense
|
|
|
130
|
|
|
|
103
|
|
|
|
110
|
|
|
|
119
|
|
|
|
126
|
|
|
|
132
|
|
Acquisition and integration expense
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
|
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gains or losses relating to sales of assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase accounting adjustments to inventory
|
|
|
31
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA impact from
non-GAAP
adjustments
|
|
$
|
406
|
|
|
$
|
419
|
|
|
$
|
445
|
|
|
$
|
478
|
|
|
$
|
489
|
|
|
$
|
499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Gross Profit
|
|
$
|
1,515
|
|
|
$
|
1,688
|
|
|
$
|
1,846
|
|
|
$
|
1,998
|
|
|
$
|
2,103
|
|
|
$
|
2,200
|
|
Total gross profit impact from
non-GAAP
adjustments
|
|
|
77
|
|
|
|
73
|
|
|
|
65
|
|
|
|
63
|
|
|
|
63
|
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Gross Profit
|
|
$
|
1,592
|
|
|
$
|
1,761
|
|
|
$
|
1,911
|
|
|
$
|
2,061
|
|
|
$
|
2,166
|
|
|
$
|
2,260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Operating Income
|
|
$
|
307
|
|
|
$
|
391
|
|
|
$
|
531
|
|
|
$
|
616
|
|
|
$
|
673
|
|
|
$
|
708
|
|
Total operating income impact from
non-GAAP
adjustments
|
|
|
234
|
|
|
|
187
|
|
|
|
179
|
|
|
|
185
|
|
|
|
191
|
|
|
|
193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Operating Income
|
|
$
|
541
|
|
|
$
|
578
|
|
|
$
|
710
|
|
|
$
|
801
|
|
|
$
|
864
|
|
|
$
|
901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EBITDA to GAAP net income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Net Income
|
|
$
|
214
|
|
|
$
|
260
|
|
|
$
|
369
|
|
|
$
|
436
|
|
|
$
|
491
|
|
|
$
|
523
|
|
Total EBITDA impact from
non-GAAP
adjustments
|
|
|
406
|
|
|
|
419
|
|
|
|
445
|
|
|
|
478
|
|
|
|
489
|
|
|
|
499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EBITDA
|
|
$
|
620
|
|
|
$
|
679
|
|
|
$
|
814
|
|
|
$
|
914
|
|
|
$
|
980
|
|
|
$
|
1,022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
GAAP Net Income
|
|
$
|
214
|
|
|
$
|
260
|
|
|
$
|
369
|
|
|
$
|
436
|
|
|
$
|
491
|
|
|
$
|
523
|
|
Total net income impact from
non-GAAP
adjustments
|
|
|
219
|
|
|
|
164
|
|
|
|
160
|
|
|
|
167
|
|
|
|
163
|
|
|
|
162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Net Income
|
|
$
|
433
|
|
|
$
|
424
|
|
|
$
|
529
|
|
|
$
|
603
|
|
|
$
|
654
|
|
|
$
|
685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016A
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions, except per share amounts)
|
|
GAAP Net Income per share
|
|
$
|
0.51
|
|
|
$
|
0.63
|
|
|
$
|
0.90
|
|
|
$
|
1.06
|
|
|
$
|
1.20
|
|
|
$
|
1.28
|
|
Total impact on net income per share from
non-GAAP
adjustments
|
|
|
0.53
|
|
|
|
0.40
|
|
|
|
0.39
|
|
|
|
0.41
|
|
|
|
0.40
|
|
|
|
0.39
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
EPS
|
|
$
|
1.04
|
|
|
$
|
1.03
|
|
|
$
|
1.29
|
|
|
$
|
1.47
|
|
|
$
|
1.60
|
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of unlevered free cash flow to
Non-GAAP
EBITDA (for which the reconciliation to net income has been presented in the tables above) is set forth below.
Non-GAAP
EBITDA to unlevered free cash flow reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
|
|
(in millions)
|
|
Non-GAAP
EBITDA
|
|
$
|
679
|
|
|
$
|
814
|
|
|
$
|
914
|
|
|
$
|
980
|
|
|
$
|
1,022
|
|
Stock-based compensation expense
|
|
|
(103
|
)
|
|
|
(110
|
)
|
|
|
(119
|
)
|
|
|
(126
|
)
|
|
|
(132
|
)
|
Cash taxes
|
|
|
(100
|
)
|
|
|
(126
|
)
|
|
|
(143
|
)
|
|
|
(155
|
)
|
|
|
(162
|
)
|
Capital expenditures
|
|
|
(90
|
)
|
|
|
(93
|
)
|
|
|
(101
|
)
|
|
|
(104
|
)
|
|
|
(109
|
)
|
Changes in net working capital
|
|
|
(78
|
)
|
|
|
(48
|
)
|
|
|
(61
|
)
|
|
|
(44
|
)
|
|
|
(40
|
)
|
Changes in deferred revenue
|
|
|
21
|
|
|
|
22
|
|
|
|
24
|
|
|
|
25
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered free cash flow
|
|
$
|
329
|
|
|
$
|
459
|
|
|
$
|
514
|
|
|
$
|
577
|
|
|
$
|
607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBMISSION OF PROXIES
If you have already voted, you are not required to take any further action.
If you have already voted but wish to change your vote, you may still do so. If you hold your shares through a broker, bank, or other nominee,
you have the right to change or revoke your proxy at any time before the vote is taken at the special meeting by following the directions received from your broker, bank or other nominee to change those instructions. If you hold your shares in your
name as a stockholder of record, you have the right to change or revoke your proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting at a later date through any of the methods available to
you, by giving written notice of revocation to our Corporate Secretary, which must be filed with our Corporate Secretary by the time the special meeting begins, or by attending the special meeting and voting in person.
If you have not yet voted your shares, EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO EITHER SUBMIT A PROXY FOR YOUR SHARES
ELECTRONICALLY ON THE INTERNET, BY TELEPHONE OR BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD AS SOON AS POSSIBLE.