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Veeco Reports Fourth Quarter and Fiscal Year 2019 Financial Results

Fourth Quarter 2019 Highlights:

  • Revenues of $113.2 million, compared with $99.0 million in the same period last year
  • GAAP net loss of $32.9 million, or $0.69 loss per diluted share
  • Non-GAAP net income of $5.4 million, or $0.11 per diluted share

PLAINVIEW, N.Y., Feb. 13, 2020 (GLOBE NEWSWIRE) -- Veeco Instruments Inc. (VECO) today announced financial results for its fourth quarter and fiscal year ended December 31, 2019. Results are reported in accordance with U.S. generally accepted accounting principles (“GAAP”) and are also reported adjusting for certain items (“Non-GAAP”). A reconciliation between GAAP and Non-GAAP operating results is provided at the end of this press release. 

U.S. Dollars in millions, except per share data
                         
    4th Quarter   Full Year
GAAP Results   Q4 '19   Q4 '18   2019
  2018
Revenue   $ 113.2     $ 99.0     $ 419.3     $ 542.1  
Net income (loss)   $ (32.9 )   $ (144.7 )   $ (78.7 )   $ (407.1 )
Diluted earnings (loss) per share   $ (0.69 )   $ (3.11 )   $ (1.66 )   $ (8.63 )


                         
    4th Quarter   Full Year
Non-GAAP Results   Q4 '19   Q4 '18   2019
  2018
Net income (loss)   $ 5.4   $ (7.5 )   $ (1.3 )   $ 14.2
Operating income (loss)   $ 7.4   $ (6.9 )   $ 5.1     $ 23.2
Diluted earnings (loss) per share   $ 0.11   $ (0.16 )   $ (0.03 )   $ 0.30

“We executed well on the first phase of our transformation in 2019 by improving gross margins and reducing expenses, leading to a return to profitability in the second half of the year.  Our data storage business continued its solid performance.  Furthermore, we are positioning the company for long-term growth in the front-end semiconductor, advanced packaging and compound semiconductor markets by executing on our product roadmaps,” commented William J. Miller, Ph.D., Chief Executive Officer.

“As we enter 2020, we are focused on optimizing our product portfolio, extending our core technologies into new markets, and further increasing our profitability,” concluded Dr. Miller.

Guidance and Outlook

The following guidance is provided for Veeco’s first quarter 2020:

  • Revenue is expected to be in the range of $95 million to $120 million
  • GAAP loss per share is expected to be in the range of ($0.24) to ($0.01)
  • Non-GAAP earnings per share is expected to be in the range of $0.00 to $0.22

Please refer to the tables at the end of this press release for further details.

Conference Call Information

A conference call reviewing these results has been scheduled for today, February 13, 2020 starting at 4:30pm ET. To join the call, dial 1-888-394-8218 (toll free) or 1-646-828-8193 and use passcode 3039225. Participants may also access a live webcast of the call by visiting the investor relations section of Veeco's website at ir.veeco.com. A replay of the webcast will be made available on the Veeco website that evening. We will post an accompanying slide presentation to our website prior to the beginning of the call.

About Veeco

Veeco (VECO) is an innovative manufacturer of semiconductor process equipment. Our proven ion beam, laser annealing, lithography, MOCVD, and single wafer etch & clean technologies play an integral role in the fabrication and packaging of advanced semiconductor devices. With equipment designed to optimize performance, yield and cost of ownership, Veeco holds leading technology positions in the markets we serve. To learn more about Veeco’s systems and service offerings, visit www.veeco.com.

Forward-looking Statements

To the extent that this news release discusses expectations or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the risks discussed in the Business Description and Management's Discussion and Analysis sections of Veeco's Annual Report on Form 10-K for the year ended December 31, 2018 and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements to reflect future events or circumstances after the date of such statements.

-financial tables attached-

Veeco Contacts:  
   
Investors:   Media:
Anthony Bencivenga (516) 252-1438  Kevin Long (516) 714-3978
abencivenga@veeco.com  klong@veeco.com

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)
(unaudited)

  Three months ended December 31,   Year ended December 31,
  2019
  2018
  2019
  2018
Net sales $ 113,202     $ 98,972     $ 419,349     $ 542,082  
Cost of sales   68,232       63,713       261,155       348,363  
Gross profit   44,970       35,259       158,194       193,719  
Operating expenses, net:                      
Research and development   21,655       24,962       90,557       97,755  
Selling, general, and administrative   19,128       21,218       79,749       92,060  
Amortization of intangible assets   4,312       4,249       17,085       32,351  
Restructuring   2,529       887       6,403       8,556  
Acquisition costs         53             2,959  
Asset impairment   4,020       122,829       4,020       375,172  
Other operating expense (income), net   190       42       (42 )     368  
Total operating expenses, net   51,834       174,240       197,772       609,221  
Operating income (loss)   (6,864 )     (138,981 )     (39,578 )     (415,502 )
Interest expense, net   (4,663 )     (4,485 )     (17,405 )     (18,332 )
Other income (expense), net   (20,973 )           (20,973 )      
Income (loss) before income taxes   (32,500 )     (143,466 )     (77,956 )     (433,834 )
Income tax expense (benefit)   371       1,208       777       (26,746 )
Net income (loss) $ (32,871 )   $ (144,674 )   $ (78,733 )   $ (407,088 )
                       
Income (loss) per common share:                      
Basic $ (0.69 )   $ (3.11 )   $ (1.66 )   $ (8.63 )
Diluted $ (0.69 )   $ (3.11 )   $ (1.66 )   $ (8.63 )
                       
Weighted average number of shares:                      
Basic   47,519       46,551       47,482       47,151  
Diluted   47,519       46,551       47,482       47,151  
                               

Veeco Instruments Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in thousands)

  December 31,   December 31,
  2019   2018
         
Assets          
Current assets:          
Cash and cash equivalents $ 129,294   $ 212,273
Restricted cash   657     809
Short-term investments   115,252     48,189
Accounts receivable, net   45,666     66,808
Contract assets   25,351     10,397
Inventories   133,067     156,311
Deferred cost of sales   445     3,072
Prepaid expenses and other current assets   14,966     22,221
Assets held for sale   11,180    
Total current assets   475,878     520,080
Property, plant and equipment, net   75,711     80,284
Operating lease right-of-use assets   14,453    
Intangible assets, net   61,518     85,149
Goodwill   181,943     184,302
Deferred income taxes   1,549     1,869
Other assets   7,036     29,132
Total assets $ 818,088   $ 900,816
           
Liabilities and stockholders’ equity          
Current liabilities:          
Accounts payable $ 21,281   $ 39,611
Accrued expenses and other current liabilities   41,243     46,450
Customer deposits and deferred revenue   54,870     72,736
Income taxes payable   830     1,256
Total current liabilities   118,224     160,053
Deferred income taxes   5,648     5,690
Long-term debt   300,068     287,392
Operating lease long-term liabilities   10,300    
Other liabilities   9,336     9,906
Total liabilities   443,576     463,041
           
Total stockholders’ equity   374,512     437,775
Total liabilities and stockholders’ equity $ 818,088   $ 900,816
           

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data

(in thousands, except per share amounts)
(unaudited)

          Non-GAAP Adjustments        
          Share-Based                
Three months ended December 31, 2019   GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 113,202                 $ 113,202  
Gross profit     44,970     455         29       45,454  
Gross margin     39.7   %               40.2 %
Operating expenses     51,834     (3,287 )   (4,312 )   (6,213 )     38,022  
Operating income (loss)     (6,864 )   3,742     4,312     6,242   ^   7,432  
Net income (loss)     (32,871 )   3,742     4,312     30,262   ^   5,445  
                           
Income (loss) per common share:                          
Basic   $ (0.69 )               $ 0.11  
Diluted     (0.69 )                 0.11  
Weighted average number of shares:                          
Basic     47,519                   47,525  
Diluted     47,519                   48,404  

_________________

^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended December 31, 2019    
Restructuring   2,132  
Asset Impairment   4,020  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   90  
Subtotal   6,242  
Non-cash interest expense   3,257  
Impairment of equity investments   20,973  
Non-GAAP tax adjustment *   (210 )
Total Other   30,262  

_________________

*      - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-based              
Three months ended December 31, 2018     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 98,972                 $ 98,972    
Gross profit     35,259     282         134       35,675    
Gross margin     35.6   %               36.0   %
Operating expenses     174,240     (3,071 )   (4,249 )   (124,327 )     42,593    
Operating income (loss)     (138,981 )   3,353     4,249     124,461   ^   (6,918 )  
Net income (loss)     (144,674 )   3,353     4,249     129,532   ^   (7,540 )  
                           
Income (loss) per common share:                          
Basic   $ (3.11 )               $ (0.16 )  
Diluted     (3.11 )                 (0.16 )  
Weighted average number of shares:                          
Basic     46,551                   46,551    
Diluted     46,551                   46,551    

_________________

^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
Three months ended December 31, 2018    
Restructuring   722
Acquisition related   53
Asset impairment   122,829
Release of inventory fair value step-up associated with the Ultratech purchase accounting   70
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   190
Accelerated depreciation   597
Subtotal   124,461
Non-cash interest expense   3,023
Non-GAAP tax adjustment *   2,048
Total Other   129,532

_________________

*      - The ‘with or without’ method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)

             
    Three months ended   Three months ended
    December 31, 2019   December 31, 2018
GAAP Net income (loss)   $ (32,871 )   $ (144,674 )
Share-based compensation     3,742       3,353  
Amortization     4,312       4,249  
Restructuring     2,132       722  
Acquisition related           53  
Asset impairment     4,020       122,829  
Release of inventory fair value step-up associated with the Ultratech purchase accounting           70  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting     90       190  
Accelerated depreciation           597  
Interest (income) expense, net     4,663       4,485  
Impairment of equity investments     20,973        
Income tax expense (benefit)     371       1,208  
Non-GAAP Operating income (loss)   $ 7,432     $ (6,918 )

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-based              
For the year ended December 31, 2019     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 419,349                 $ 419,349    
Gross profit     158,194     1,903         1,453       161,550    
Gross margin     37.7   %               38.5   %
Operating expenses     197,772     (13,367 )   (17,085 )   (10,841 )     156,479    
Operating income (loss)     (39,578 )   15,270     17,085     12,294   ^   5,071    
Net income (loss)     (78,733 )   15,270     17,085     45,102   ^   (1,276 )  
                           
Income (loss) per common share:                          
Basic   $ (1.66 )               $ (0.03 )  
Diluted     (1.66 )                 (0.03 )  
Weighted average number of shares:                          
Basic     47,482                   47,482    
Diluted     47,482                   47,482    

_________________

^      - See table below for additional details.

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
For the year ended December 31, 2019    
Restructuring   6,006  
Asset impairment   4,020  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   1,270  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   557  
Accelerated depreciation   397  
Other   44  
Subtotal   12,294  
Non-cash interest expense   12,676  
Impairment of equity investments   20,973  
Non-GAAP tax adjustment *   (841 )
Total Other   45,102  

_________________

*    - The 'with or without' method is utilized to determine the income tax effect of all non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in thousands, except per share amounts)
(unaudited)

                           
          Non-GAAP Adjustments        
          Share-based              
For the year ended December 31, 2018     GAAP   Compensation   Amortization   Other   Non-GAAP  
Net sales   $ 542,082                 $ 542,082  
Gross profit     193,719     1,885         2,849       198,453  
Gross margin     35.7   %               36.6 %
Operating expenses     609,221     (14,189 )   (32,351 )   (387,388 )     175,293  
Operating income (loss)     (415,502 )   16,074     32,351     390,237   ^   23,160  
Net income (loss)     (407,088 )   16,074     32,351     372,862   ^   14,199  
                           
Income (loss) per common share:                          
Basic   $ (8.63 )               $ 0.30  
Diluted     (8.63 )                 0.30  
Weighted average number of shares:                          
Basic     47,151                   47,171  
Diluted     47,151                   47,199  
                           

Veeco Instruments Inc. and Subsidiaries
Other Non-GAAP Adjustments
(in thousands)
(unaudited)

     
For the year ended December 31, 2018    
Restructuring   7,395  
Acquisition related   2,959  
Asset impairment   375,172  
Release of inventory fair value step-up associated with the Ultratech purchase accounting   2,516  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting   1,011  
Accelerated depreciation   1,184  
Subtotal   390,237  
Non-cash interest expense   11,762  
Non-GAAP tax adjustment *   (29,137 )
Total Other   372,862  

_________________

*    - The 'with or without' method is utilized to determine the income tax effect of all Non-GAAP adjustments.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors' operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating Income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (loss)
(in thousands)
(unaudited)

             
    Year ended   Year ended
    December 31, 2019   December 31, 2018
GAAP Net income (loss)   $  (78,733 )   $  (407,088 )
Share-based compensation      15,270        16,074  
Amortization      17,085        32,351  
Restructuring      6,006        7,395  
Acquisition related      —        2,959  
Asset impairment      4,020        375,172  
Release of inventory fair value step-up associated with the Ultratech purchase accounting      1,270        2,516  
Depreciation of PP&E fair value step-up associated with the Ultratech purchase accounting      557        1,011  
Accelerated depreciation      397        1,184  
Other      44        —  
Interest (income) expense      17,405        18,332  
Impairment of equity investments      20,973        —  
Income tax expense (benefit)      777        (26,746 )
Non-GAAP Operating income (loss)   $  5,071     $  23,160  

This table includes financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Data
(in millions, except per share amounts)
(unaudited)

                                               
                    Non-GAAP Adjustments                  
Guidance for the three months ending                   Share-based                          
March 31, 2020   GAAP   Compensation   Amortization    Other    Non-GAAP  
Net sales   $ 95     -   $ 120                 $ 95     -   $ 120    
Gross profit     37     -     48     1         38     -     49    
Gross margin     39 %   -     41 %                 39 %   -     41 %  
Operating expenses       ~$44       2   4   1       ~$37      
Operating income (loss)     (7 )   -     4     3   4   1     1     -     12    
Net income (loss)   $ (12 )   -   $ (1 )   3   4   5   $     -   $ 11    
                                               
Income (loss) per diluted common share   $ (0.24 )   -   $ (0.01 )               $ 0.00     -   $ 0.22    
Weighted average number of shares     48           48                   48           48    

Veeco Instruments Inc. and Subsidiaries
Reconciliation of GAAP Net Income (loss) to Non-GAAP Operating Income (Loss)
(in millions)
(unaudited)

                 
Guidance for the three months ending March 31, 2020                
GAAP Net income (loss)   $ (12 )   -   $ (1 )
Share-based compensation     3     -     3  
Amortization     4     -     4  
Restructuring     1     -     1  
Interest expense, net     4     -     4  
Other     1     -     1  
Non-GAAP Operating income (loss)   $ 1     -   $ 12  

Note: Amounts may not calculate precisely due to rounding.

These tables include financial measures adjusted for the impact of certain items; these financial measures are therefore not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These Non-GAAP financial measures exclude items such as: share-based compensation expense; charges relating to restructuring initiatives; non-cash asset impairments; certain other non-operating gains and losses; and acquisition-related items such as transaction costs, non-cash amortization of acquired intangible assets, and certain integration costs.

These Non-GAAP financial measures may be different from Non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. By excluding these items, Non-GAAP financial measures are intended to facilitate meaningful comparisons to historical operating results, competitors’ operating results, and estimates made by securities analysts. Management is evaluated on key performance metrics including Non-GAAP Operating income (loss), which is used to determine management incentive compensation as well as to forecast future periods. These Non-GAAP financial measures may be useful to investors in allowing for greater transparency of supplemental information used by management in its financial and operational decision-making. In addition, similar Non-GAAP financial measures have historically been reported to investors; the inclusion of comparable numbers provides consistency in financial reporting. Investors are encouraged to review the reconciliation of the Non-GAAP financial measures used in this news release to their most directly comparable GAAP financial measures.