Press Release


Genpact Reports Results for the Third Quarter of 2016

Revenues of $649 Million, Up 5% (~7% on a constant currency basis)1
Global Client BPO Revenues of $445 Million, Up 13% (~15% on a constant currency basis)
Diluted EPS of $0.33, Up 5%; Adjusted Diluted EPS2 of $0.37, Up 6%

NEW YORK, November 2, 2016 — Genpact Limited (NYSE: G), a global leader in digitally-powered business process management and services, today announced financial results for the third quarter ended September 30, 2016.

Key Financial Results – Third Quarter 2016

  • Total revenue was $648.8 million, up 5% year over year (up ~7% on a constant currency basis).  
  • Income from operations was $87.1 million, down 0.3% year over year, with a corresponding margin of 13.4%.  Adjusted income from operations was $104.2 million, up 7% year over year, with a corresponding  margin of 16.1%.3
  • Diluted earnings per share were $0.33, up 5% year over year, and adjusted diluted earnings per share were $0.37, up 6% year over year.
  • Genpact repurchased approximately 6.3 million of its common shares during the quarter at an average price of $24.78 per share for a total of approximately $156 million under its $750 million share repurchase program. Since the inception of this program in February 2015, Genpact has repurchased 19.5 million of its common shares at an average price of $24.10 per share for a total of approximately $469 million.

“In the third quarter, our Global Client BPO revenues significantly accelerated to 15% constant currency growth.  We saw recent deal wins ramp and our transformational digital and analytics services, led by our highly differentiated Lean DigitalSM approach, continued to gain traction and grew more than 20%,” said N.V. “Tiger” Tyagarajan, Genpact’s president and CEO. “The fundamentals of our underlying Global Client BPO business remain strong and our pivot to Lean DigitalSM is clearly differentiating us in the marketplace.  As we finish the year, we continue to see pressure in our ITO business as clients across our verticals are taking a very cautious approach towards discretionary IT spending.”

Revenue Details – Third Quarter 2016

  • Revenue from Global Clients was $543 million, up 8% year over year (up ~10% on a constant currency basis), representing approximately 84% of total revenues.
  • Revenue from GE was $106 million, down 8% year over year, representing approximately 16% of total revenues.
  • Total BPO revenue was $526 million, up 9% year over year, representing approximately 81% of total revenues.
  • Global Client BPO revenue was $445 million, up 13% year over year (up ~15% on a constant currency basis).
  • GE BPO revenue was $81 million, down 8% year over year.
  • Total IT revenue was $123 million, down 8% year over year, representing approximately 19% of total revenues.
  • Global Client IT revenue was $98 million, down 9% year over year.
  • GE IT revenue was $25 million, down 7% year over year.

During the nine months ended September 30, 2016, GE divested certain businesses that Genpact continues to serve.  Historically, we have reclassified revenues from these divested GE businesses as Global Client revenues in each fiscal quarter beginning on the date of divestiture.  However, beginning with 2016, we will reclassify such revenue as Global Client revenue only at the end of each fiscal year.  We believe that this change will allow us to provide a more consistent view of the trends underlying our Global Client and GE businesses. If we had reclassified the revenue from such GE-divested businesses during the third quarter, Global Client revenues for the quarter ended September 30, 2016 would have been $563 million and GE revenues would have been $85 million.

Cash Flow from Operations

  • Cash from operations was $144 million in the third quarter of 2016, up 3% from $139 million in the third quarter of 2015.

Other Metrics as of September 30, 2016

  • For the 12-month period ended September 30, 2016, the number of our client relationships generating annual revenue over $5 million increased to 107 from 103 as of September 30, 2015. This includes client relationships generating more than $15 million in annual revenue decreasing to 33 from 34, client relationships generating more than $25 million in annual revenue remaining constant at 16, and client relationships generating more than $50 million in annual revenue increasing to 6 from 4.
  • Genpact's employee attrition rate for the quarter was approximately 27%, measured from the first day of employment, down from 29% for the same period in 2015. 

2016 Outlook

Genpact now expects:

  • Total revenue for 2016 to be $2.57 to $2.58 billion (including an assumed adverse foreign exchange impact of $43 million, almost all of which is reflected in Global Client revenue), which represents a growth range of 4% to 5%, or 6% to 7% on a constant currency basis;
  • Global Client revenue growth to be in the range of 7% to 8%, or 9% to 10% on a constant currency basis;
  • Adjusted income from operations margin of approximately 15.5%;4 and
  • Adjusted diluted EPS of $1.42 to $1.43.5

Conference Call to Discuss Financial Results

Genpact’s management will host an hour-long conference call beginning at 4:30 p.m. ET on November 2, 2016 to discuss the company’s performance for the third quarter of 2016. To participate, callers can dial +1 (877) 654-0173 from within the U.S. or +1 (281) 973-6289 from any other country. Thereafter, callers will be prompted to enter the participant code, 82507920.

A live webcast of the call including slides with our comments will also be made available on the Genpact Investor Relations website at http://investors.genpact.com. For those who cannot participate in the call, a replay and podcast will be available on the Genpact website after the end of the call. A transcript of the call as well as the presentation slides will also be made available on the website.

About Genpact
Genpact (NYSE: G) stands for “generating business impact.”  We are a global leader in digitally-powered business process management and services. We architect the Lean DigitalSM enterprise through our patented Smart Enterprise Processes (SEPSM) framework that reimagines our clients’ operating models end-to-end, including the middle and back offices.  This creates Intelligent OperationsSM that we help design, transform, and run. The impact on our clients is a high return on transformation investments through growth, efficiency, and business agility.  For two decades, first as a General Electric division and later as an independent company, we have been passionately serving our clients. Today, we generate impact for a few hundred strategic clients, including approximately one-fifth of the Fortune Global 500, and have grown to over 75,000 people in 25 countries, with key offices in New York City. The resulting business process and industry domain expertise and experience running complex operations are a unique heritage and focus that help us drive the best choices across technology, analytics, and organizational design. For additional information, visit www.genpact.com.

Safe Harbor
This press release contains certain statements concerning our future growth prospects and forward-looking statements, as defined in the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in such forward-looking statements. These risks, uncertainties and other factors include but are not limited to a slowdown in the economies and sectors in which our clients operate, a slowdown in the business process outsourcing and information technology services sectors, the risks and uncertainties arising from our past and future acquisitions, our ability to convert bookings to revenues, our ability to manage growth, factors which may impact our cost advantage, wage increases, changes in  tax rates and tax legislation, our ability to attract and retain skilled professionals, risks and uncertainties regarding fluctuations in our earnings, foreign currency fluctuations, general economic conditions affecting our industry as well as other risks detailed in our reports filed with the U.S. Securities and Exchange Commission, including Genpact's Annual Report on Form 10-K. These filings are available at www.sec.gov. Genpact may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. Although Genpact believes that these forward-looking statements are based on reasonable assumptions, you are cautioned not to put undue reliance on these forward-looking statements, which reflect management's current analysis of future events and should not be relied upon as representing management's expectations or beliefs as of any date subsequent to the time they are made. Genpact undertakes no obligation to update any forward-looking statements that may be made from time to time by or on behalf of Genpact.

Contacts

Investors
Roger Sachs, CFA
+1 (203) 808-6725
roger.sachs@genpact.com

Media
Danielle D’Angelo
+1 (914) 336-7951
danielle.dangelo@genpact.com


GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
(In thousands, except per share data and share count)

 

 

As of December 31,

 

 

As of September 30,

 

 

 

2015

 

 

2016

 

Assets

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

450,907

 

 

$

419,094

 

Accounts receivable, net

 

 

590,137

 

 

 

609,522

 

Prepaid expenses and other current assets

 

 

154,025

 

 

 

205,177

 

Total current assets

 

$

1,195,069

 

 

$

1,233,793

 

Property, plant and equipment, net

 

 

175,396

 

 

 

189,795

 

Deferred tax assets

 

 

99,395

 

 

 

78,898

 

Investment in equity affiliates

 

 

6,677

 

 

 

6,221

 

Intangible assets, net

 

 

98,601

 

 

 

80,010

 

Goodwill

 

 

1,038,346

 

 

 

1,084,126

 

Other assets

 

 

180,005

 

 

 

220,074

 

Total assets

 

$

2,793,489

 

 

$

2,892,917

 

Liabilities and equity

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Short-term borrowings

 

$

21,500

 

 

$

115,000

 

Current portion of long-term debt

 

 

39,134

 

 

 

39,170

 

Accounts payable

 

 

10,086

 

 

 

10,243

 

Income taxes payable

 

 

24,122

 

 

 

60,831

 

Accrued expenses and other current liabilities

 

 

499,638

 

 

 

472,000

 

Total current liabilities

 

$

594,480

 

 

$

697,244

 

Long-term debt, less current portion

 

 

737,332

 

 

 

707,949

 

Deferred tax liabilities

 

 

2,093

 

 

 

3,632

 

Other liabilities

 

 

155,228

 

 

 

173,797

 

Total liabilities

 

$

1,489,133

 

 

$

1,582,622

 

Redeemable non-controlling interest

 

 

 

 

 

2,058

 

Shareholders equity

 

 

 

 

 

 

 

 

Preferred shares, $0.01 par value, 250,000,000 authorized, none issued

 

 

 

 

 

 

Common shares, $0.01 par value, 500,000,000 authorized,  211,472,312 and 202,738,869 issued and outstanding as of  December 31, 2015 and September 30, 2016, respectively

 

 

2,111

 

 

 

2,024

 

Additional paid-in capital

 

 

1,342,022

 

 

 

1,385,789

 

Retained earnings

 

 

411,508

 

 

 

361,435

 

Accumulated other comprehensive income (loss)

 

 

(451,285

)

 

 

(441,011

)

Total equity

 

$

1,304,356

 

 

$

1,308,237

 

Total liabilities, redeemable non-controlling interest and equity

 

$

2,793,489

 

 

$

2,892,917

 


GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data and share count)

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

Net revenues

 

$

617,831

 

 

$

648,783

 

 

$

1,814,516

 

 

$

1,889,009

 

Cost of revenue

 

 

375,830

 

 

 

392,432

 

 

 

1,099,610

 

 

 

1,149,035

 

Gross profit

 

$

242,001

 

 

$

256,351

 

 

$

714,906

 

 

$

739,974

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

144,723

 

 

 

156,969

 

 

 

442,701

 

 

 

482,315

 

Amortization of acquired intangible assets

 

 

7,219

 

 

 

7,126

 

 

 

21,875

 

 

 

19,764

 

Other operating (income) expense, net

 

 

2,716

 

 

 

5,132

 

 

 

(416

)

 

 

(4,791

)

Income from operations

 

$

87,343

 

 

$

87,124

 

 

$

250,746

 

 

$

242,686

 

Foreign exchange gains (losses), net

 

 

4,210

 

 

 

(654

)

 

 

4,098

 

 

 

3,156

 

Interest income (expense), net

 

 

(2,867

)

 

 

(4,901

)

 

 

(29,244

)

 

 

(11,172

)

Other income (expense), net

 

 

999

 

 

 

5,791

 

 

 

2,268

 

 

 

7,172

 

Income before equity-method investment activity, net and income tax expense

 

$

89,685

 

 

$

87,360

 

 

$

227,868

 

 

$

241,842

 

Gain (loss) on equity-method investment activity, net

 

 

(3,432

)

 

 

(2,117

)

 

 

(7,995

)

 

 

(6,336

)

Income before income tax expense

 

$

86,253

 

 

$

85,243

 

 

$

219,873

 

 

$

235,506

 

Income tax expense

 

 

18,203

 

 

 

17,198

 

 

 

44,469

 

 

 

44,836

 

Net income

 

$

68,050

 

 

$

68,045

 

 

$

175,404

 

 

$

190,670

 

Net loss (income) attributable to redeemable non-controlling interest

 

 

 

 

 

734

 

 

 

 

 

 

1,905

 

Net income attributable to Genpact Limited shareholders

 

$

68,050

 

 

$

68,779

 

 

$

175,404

 

 

$

192,575

 

Net income available to Genpact Limited common shareholders

 

$

68,050

 

 

$

68,779

 

 

$

175,404

 

 

$

192,575

 

Earnings per common share attributable to Genpact Limited common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.32

 

 

$

0.33

 

 

$

0.80

 

 

$

0.92

 

Diluted

 

$

0.31

 

 

$

0.33

 

 

$

0.80

 

 

$

0.91

 

Weighted average number of common shares used in computing earnings per common share attributable to Genpact Limited common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

215,311,322

 

 

 

206,146,007

 

 

 

217,909,722

 

 

 

209,034,741

 

Diluted

 

 

217,595,704

 

 

 

209,376,683

 

 

 

220,301,712

 

 

 

212,357,594

 


GENPACT LIMITED AND ITS SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands) 

 

 

Nine months ended September 30,

 

 

 

2015

 

 

2016

 

Operating activities

 

 

 

 

 

 

 

 

Net income attributable to Genpact Limited shareholders

 

$

175,404

 

 

$

192,575

 

Net income (loss) attributable to redeemable non-controlling interest

 

 

 

 

 

(1,905

)

Net income

 

$

175,404

 

 

$

190,670

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

40,185

 

 

 

40,366

 

Amortization of debt issuance costs (including loss on extinguishment of debt)

 

 

13,154

 

 

 

1,150

 

Amortization of acquired intangible assets

 

 

21,875

 

 

 

19,764

 

Intangible assets write-down

 

 

10,714

 

 

 

11,195

 

Reserve for doubtful receivables

 

 

1,493

 

 

 

7,307

 

Unrealized loss on revaluation of foreign currency asset/liability

 

 

(6,320

)

 

 

1,304

 

Equity-method investment activity, net

 

 

7,995

 

 

 

6,336

 

Excess tax benefit on stock-based compensation

 

 

 

 

 

(13,085

)

Stock-based compensation expense

 

 

17,509

 

 

 

18,344

 

Deferred income taxes

 

 

(15,958

)

 

 

8,454

 

Gain on divestiture

 

 

 

 

 

(5,214

)

Others, net

 

 

(275

)

 

 

29

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Increase in accounts receivable

 

 

(34,282

)

 

 

(33,760

)

Increase in prepaid expenses, other current assets and other assets

 

 

(46,157

)

 

 

(64,252

)

Increase (decrease) in accounts payable

 

 

1,255

 

 

 

(397

)

Increase (decrease) in accrued expenses, other current liabilities and other liabilities

 

 

6,952

 

 

 

(14,797

)

Increase in income taxes payable

 

 

60,036

 

 

 

49,506

 

Net cash provided by operating activities

 

$

253,580

 

 

$

222,920

 

Investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(44,880

)

 

 

(64,441

)

Proceeds from sale of property, plant and equipment

 

 

1,353

 

 

 

334

 

Investment in equity affiliates

 

 

(13,520

)

 

 

(7,519

)

Payment for business acquisitions, net of cash acquired

 

 

(21,363

)

 

 

(41,558

)

Proceeds from divestiture of business, net of cash divested

 

 

 

 

 

17,582

 

Net cash used for investing activities

 

$

(78,410

)

 

$

(95,602

)

Financing activities

 

 

 

 

 

 

 

 

Repayment of capital lease obligations

 

 

(1,645

)

 

 

(1,344

)

Payment of debt issuance and refinancing costs

 

 

(6,584

)

 

 

 

Proceeds from long-term debt

 

 

800,000

 

 

 

 

Repayment of long-term debt

 

 

(674,875

)

 

 

(30,000

)

Proceeds from short-term borrowings

 

 

1,451,500

 

 

 

155,000

 

Repayment of short-term borrowings

 

 

(1,565,000

)

 

 

(61,500

)

Proceeds from issuance of common shares under stock-based compensation plans

 

 

10,040

 

 

 

12,808

 

Payment for net settlement of stock based awards

 

 

(6,826

)

 

 

(461

)

Payment of earn-out/deferred consideration

 

 

(230

)

 

 

(1,406

)

Payment for stock purchased and retired

 

 

(159,036

)

 

 

(242,552

)

Payment for expenses related to stock purchase

 

 

(142

)

 

 

(192

)

Excess tax benefit on stock-based compensation

 

 

 

 

 

13,086

 

Net cash used for financing activities

 

$

(152,798

)

 

$

(156,561

)

Effect of exchange rate changes

 

 

(16,656

)

 

 

(2,570

)

Net increase (decrease) in cash and cash equivalents

 

 

22,372

 

 

 

(29,243

)

Cash and cash equivalents at the beginning of the period

 

 

461,788

 

 

 

450,907

 

Cash and cash equivalents at the end of the period

 

$

467,504

 

 

$

419,094

 

Supplementary information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

17,304

 

 

$

13,267

 

Cash paid during the period for income taxes

 

$

38,735

 

 

$

40,294

 

Property, plant and equipment acquired under capital lease obligations

 

$

1,362

 

 

$

1,667

 


Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To supplement the consolidated financial statements presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures:

  • Adjusted income from operations attributable to shareholders of Genpact Limited, or adjusted income from operations;
  • Adjusted income from operations margin;
  • Adjusted net income attributable to shareholders of Genpact Limited, or adjusted net income;
  • Adjusted diluted earnings per share attributable to shareholders of Genpact Limited, or adjusted diluted earnings per share; and
  • Net revenues on a constant currency basis.

These non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP financial measures used by other companies. Accordingly, these non-GAAP financial measures, the financial statements prepared in accordance with GAAP and the reconciliations of Genpact’s GAAP financial statements to such non-GAAP financial measures should be carefully evaluated.

Prior to July 2012, Genpact’s management used financial statements that excluded significant acquisition-related expenses, amortization of related acquired intangibles, and amortization of acquired intangibles at the company’s formation in 2004 for its internal management reporting, budgeting and decision making purposes, including comparing Genpact’s operating results to that of its competitors. However, considering Genpact’s frequent acquisitions of varying scale and size, and the difficulty in predicting expenses relating to acquisitions and the amortization of acquired intangibles thereof, since July 2012 Genpact’s management has used financial statements that exclude all acquisition-related expenses and amortization of acquired intangibles for its internal management reporting, budgeting and decision-making purposes, including comparing Genpact’s operating results to those of its competitors. For the same reasons, beginning in April 2016, Genpact’s management also excludes the impairment of acquired intangible assets from the financial statements it uses for internal management purposes.

Acquisition-related expenses are excluded in the period in which an acquisition is consummated. Genpact’s management also uses financial statements that exclude stock-based compensation expense. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting ASC 718 “Compensation-Stock Compensation,” Genpact’s management believes that providing non-GAAP financial measures that exclude such expenses allows investors to make additional comparisons between Genpact’s operating results and those of other companies. Additionally, in its calculations of such non-GAAP financial measures, Genpact’s management has adjusted certain gains or losses attributable to equity-method investments and non-controlling interests because management views these interests as part of its ongoing operations. For the purpose of calculating adjusted net income, the combined current and deferred tax effect is determined by multiplying each pre-tax adjustment by the applicable statutory income tax rate.

Genpact’s management provides information about revenues on a constant currency basis so that the revenues may be viewed without the impact of foreign currency exchange rate fluctuations, thereby facilitating period-to-period comparisons of our true business performance. Revenues on a constant currency basis are calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.

Accordingly, Genpact believes that the presentation of adjusted income from operations, adjusted income from operations margin, adjusted net income, adjusted diluted earnings per share and revenues on a constant currency basis, when read in conjunction with the Company’s reported results, can provide useful supplemental information to investors and management regarding financial and business trends relating to its financial condition and results of operations.

A limitation of using adjusted income from operations and adjusted net income versus income from operations and net income calculated in accordance with GAAP is that these non-GAAP financial measures exclude certain recurring costs, namely stock-based compensation and amortization of acquired intangibles. Management compensates for this limitation by providing specific information on the GAAP amounts excluded from adjusted income from operations and adjusted net income.

The following tables show the reconciliation of these adjusted financial measures from GAAP for the three and nine months ended September 30, 2015 and 2016:

Reconciliation of Adjusted Income from Operations
(Unaudited)
(In thousands) 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

Income from operations

 

$

87,343

 

 

$

87,124

 

 

$

250,746

 

 

$

242,686

 

Add: Stock-based compensation

 

 

6,195

 

 

 

4,828

 

 

 

17,509

 

 

 

18,344

 

Add: Amortization and impairment of acquired intangible assets6

 

 

6,015

 

 

 

6,519

 

 

 

18,247

 

 

 

18,207

 

Add: Acquisition-related expenses

 

 

 

 

 

1,334

 

 

 

798

 

 

 

1,836

 

Add: Other income (expense), net

 

 

999

 

 

 

5,791

 

 

 

2,268

 

 

 

7,172

 

Less: Loss on equity-method investment activity, net

 

 

(3,432

)

 

 

(2,117

)

 

 

(7,995

)

 

 

(6,336

)

Add: Net loss attributable to redeemable non-controlling interest

 

 

 

 

 

734

 

 

 

 

 

 

1,905

 

Adjusted income from operations

 

$

97,120

 

 

$

104,213

 

 

$

281,573

 

 

$

283,814

 

Adjusted income from operations margin

15.7%

16.1%

15.5%

15.2%


Reconciliation of Adjusted Net Income
(Unaudited)
(In thousands, except per share data) 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

 

2015

 

 

2016

 

 

2015

 

 

2016

 

Net income attributable to Genpact Limited shareholders

 

$

68,050

 

 

$

68,779

 

 

$

175,404

 

 

$

192,575

 

Add: Stock-based compensation

 

 

6,195

 

 

 

4,828

 

 

 

17,509

 

 

 

18,344

 

Add: Amortization and impairment of acquired intangible assets6

 

 

6,015

 

 

 

6,519

 

 

 

18,247

 

 

 

18,207

 

Add: Acquisition-related expenses

 

 

 

 

 

1,334

 

 

 

798

 

 

 

1,836

 

Less: Tax impact on stock-based compensation

 

 

(1,489

)

 

 

(1,140

)

 

 

(4,506

)

 

 

(4,488

)

Less: Tax impact on amortization and impairment of acquired intangibles

 

 

(1,873

)

 

 

(2,087

)

 

 

(5,692

)

 

 

(5,719

)

Less: Tax impact on acquisition-related expenses

 

 

 

 

 

(80

)

 

 

(229

)

 

 

(139

)

Adjusted net income

 

$

76,898

 

 

$

78,153

 

 

$

201,531

 

 

$

220,616

 

Adjusted diluted earnings per share

 

$

0.35

 

 

$

0.37

 

 

$

0.91

 

 

$

1.04

 


The following tables show the reconciliation of forward-looking adjusted financial measures from GAAP for the year ending December 31, 2016:

Reconciliation of Outlook for Adjusted Income from Operations Margin
(Unaudited)

 

 

Year ending

December 31, 2016

 

Income from operations margin

 

 

13.4%

 

Add: Estimated stock-based compensation

 

 

1.0%

 

Add: Estimated amortization and impairment of acquired intangible assets

 

 

1.0%

 

Add: Estimated acquisition-related expenses

 

 

0.1%

 

Add: Estimated other income (expense), net

 

 

0.3%

 

Less: Estimated loss on equity-method investment activity, net

 

 

(0.4)%

Add: Estimated net loss attributable to redeemable non-controlling interest

 

 

0.1%

 

Adjusted income from operations margin

 

 

15.5%

 


Reconciliation of Outlook for Adjusted Diluted EPS7
(Unaudited)
(Per share data)

 

 

Year ending December 31, 2016

 

 

 

Lower

 

 

Upper

 

Diluted EPS

 

$

1.25

 

 

$

1.26

 

Add: Estimated stock-based compensation

 

 

0.11

 

 

 

0.11

 

Add: Estimated amortization and impairment of acquired intangible assets

 

 

0.11

 

 

 

0.11

 

Add: Estimated acquisition-related expenses

 

 

0.01

 

 

 

0.01

 

Less: Estimated tax impact on stock-based compensation

 

 

(0.03)

 

 

 

(0.03)

 

Less: Estimated tax impact on amortization and impairment of acquired intangibles

 

 

(0.04)

 

 

 

(0.04)

 

Less: Estimated tax impact on acquisition-related expenses

 

 

 

 

 

 

Adjusted diluted EPS

 

$

1.42

 

 

$

1.43

 


Notes:

1 Revenue growth on a constant currency basis is a non-GAAP measure and is calculated by restating current-period activity using the prior fiscal period’s foreign currency exchange rates adjusted for hedging gains/losses in such period.

2 Adjusted diluted earnings per share is a non-GAAP measure. A reconciliation of GAAP diluted earnings per share and adjusted diluted earnings per share is attached to this release.

3 Adjusted income from operations and adjusted income from operations margin are non-GAAP measures. A reconciliation of GAAP income from operations and adjusted income from operations and a reconciliation of GAAP income from operations margin and adjusted income from operations margin are attached to this release.

Adjusted income from operations margin is a non-GAAP measure.   A reconciliation of the outlook for GAAP income from operations margin and adjusted income from operations margin is attached to this release.

5 Adjusted diluted earnings per share is a non-GAAP measure.  A reconciliation of the outlook for GAAP diluted earnings per share and adjusted diluted earnings per share is attached to this release.   

6 See “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” above for a description of the amortization expenses included in this item.

7 Due to rounding, the numbers presented in this table may not add up precisely to the totals provided.

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