CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share data)

(Unaudited)

Third Quarter of

First Three Quarters of

2015

2014

2015

2014

Revenues:

        Product

$373.0

$415.6

$1,168.2

$1,327.1

        Service

103.9

98.3

310.5

291.7

        Subscription

85.4

70.9

252.0

212.9

Total revenues

562.3

584.8

1,730.7

1,831.7

Cost of sales:

        Product

175.5

189.3

554.0

605.4

        Service

39.4

36.8

123.0

108.6

        Subscription

26.1

21.8

75.8

58.4

        Amortization of purchased intangible assets

23.3

20.1

68.8

61.0

Total cost of sales

264.3

268.0

821.6

833.4

-

-

Gross margin

298.0

316.8

909.1

998.3

Gross margin (%)

53.0%

54.2%

52.5%

54.5%

Operating expenses

    Research and development

79.6

79.0

251.3

237.2

    Sales and marketing

89.1

95.8

281.8

288.8

    General and administrative

63.2

111.4

192.1

230.2

    Restructuring charges

2.7

0.2

9.0

1.3

    Amortization of purchased intangible assets

17.4

19.3

53.4

56.8

       Total operating expenses

252.0

305.7

787.6

814.3

Operating income 

46.0

11.1

121.5

184.0

Non-operating income (expense), net

    Interest expense, net

(6.4)

(3.0)

(19.1)

(9.8)

    Foreign currency transaction gain (loss)

0.1

(3.2)

1.2

(3.8)

    Income from equity method investments

4.7

2.8

14.1

11.5

    Other income (expense), net

(0.9)

(0.6)

5.8

12.5

       Total non-operating income (expense), net

(2.5)

(4.0)

2.0

10.4

Income before taxes

43.5

7.1

123.5

194.4

Income tax provision (benefit)

6.5

(4.7)

26.7

36.4

Net income

37.0

11.8

96.8

158.0

(0.1)

-

(0.3)

(0.3)

Net income attributable to Trimble Navigation Ltd.

$  37.1

$  11.8

$     97.1

$   158.3

Earnings per share attributable to Trimble Navigation Ltd.

     Basic

$  0.15

$  0.05

$     0.38

$     0.61

     Diluted

$  0.14

$  0.04

$     0.37

$     0.60

Shares used in calculating earnings per share:

    Basic

254.8

260.3

257.5

260.4

    Diluted

257.2

264.4

260.3

265.1

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

Third Quarter of

Fiscal Year End

2015

2014

Assets

Current assets:

   Cash and cash equivalents

$           123.6

$            148.0

   Accounts receivable, net

344.5

362.0

   Other receivables

15.4

29.5

   Inventories, net

271.4

278.1

   Deferred income taxes

51.9

45.6

   Other current assets

46.2

39.4

      Total current assets

853.0

902.6

Property and equipment, net

162.0

157.4

Goodwill

2,083.7

2,085.8

Other purchased intangible assets, net

502.1

594.5

Other non-current assets

119.1

118.6

      Total assets

$        3,719.9

$         3,858.9

Liabilities 

Current liabilities:

   Current portion of long-term debt

$           150.3

$              64.4

   Accounts payable

97.2

103.8

   Accrued compensation and benefits

82.7

98.9

   Deferred revenue

243.0

211.6

   Accrued warranty expense

19.1

20.6

   Other current liabilities

95.2

89.0

      Total current liabilities

687.5

588.3

Non-current portion of long-term debt

609.1

674.0

Non-current deferred revenue

32.0

26.3

Deferred income taxes

93.8

121.1

Other non-current liabilities

94.3

95.8

      Total liabilities

1,516.7

1,505.5

Equity

Shareholders' equity:

   Common stock

1,216.0

1,207.3

   Retained earnings

1,133.2

1,211.0

   Accumulated other comprehensive loss

(147.0)

(76.7)

Total Trimble Navigation Ltd. shareholders' equity

2,202.2

2,341.6

Noncontrolling interests 

1.0

11.8

      Total equity

2,203.2

2,353.4

      Total liabilities and equity

$        3,719.9

$         3,858.9

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In millions)

(Unaudited)

First Three Quarters of

2015

2014

Cash flow from operating activities:

    Net Income

$                96.8

$158.0

    Adjustments to reconcile net income to net cash provided by

       operating activities:

         Depreciation expense

27.0

24.1

         Amortization expense

122.2

117.8

         Provision for doubtful accounts

1.7

2.9

         Deferred income taxes

(0.5)

(1.2)

         Stock-based compensation

37.3

32.1

         Income from equity method investments

(14.1)

(11.5)

         Gain on an equity sale

-

(15.1)

         Acquisition / divestiture (gain) loss

(5.8)

6.0

         Excess tax benefit for stock-based compensation

(1.4)

(14.1)

         Provision for excess and obsolete inventories

5.1

3.5

         Other non-cash items

9.0

(0.6)

    Add decrease (increase) in assets:

         Accounts receivables

12.3

(12.7)

         Other receivables

6.5

(4.7)

         Inventories

(6.4)

(27.2)

         Other current and non-current assets

(9.5)

(12.9)

    Add increase (decrease) in liabilities:

         Accounts payable

(6.9)

(6.8)

         Accrued compensation and benefits

(15.4)

(9.3)

         Deferred revenue

38.6

41.9

         Accrued warranty expense

(1.4)

2.7

         Other liabilities

(18.7)

37.6

 Net cash provided by operating activities 

276.4

310.5

 Cash flow from investing activities: 

      Acquisitions of businesses, net of cash acquired 

(101.7)

(170.9)

      Acquisitions of property and equipment 

(35.7)

(35.0)

      Purchases of equity investments 

(3.6)

(10.9)

      Acquisitions of intangible assets 

(0.1)

(7.0)

      Net proceeds from sale of business 

12.1

-

      Dividends received from equity method investments 

15.3

25.9

      Other 

0.3

(4.5)

 Net cash used in investing activities 

(113.4)

(202.4)

 Cash flow from financing activities: 

      Issuance of common stock, net of tax withholdings 

29.1

53.6

      Payments related to repurchases of common stock 

(234.4)

(65.0)

      Excess tax benefit for stock-based compensation 

1.4

14.1

      Proceeds from debt and revolving credit lines 

458.0

42.0

      Payments on debt and revolving credit lines 

(431.1)

(153.3)

 Net cash used in financing activities 

(177.0)

(108.6)

 Effect of exchange rate changes on cash and cash equivalents 

(10.4)

(7.2)

 Net decrease in cash and cash equivalents 

(24.4)

(7.7)

 Cash and cash equivalents - beginning of period 

148.0

147.2

 Cash and cash equivalents - end of period 

$               123.6

$139.5

REPORTING SEGMENTS

(Dollars in millions)

(Unaudited)

Reporting Segments

and

Field

Mobile

Advanced

Construction

Solutions

Solutions

Devices

THIRD QUARTER OF FISCAL 2015 :

Revenue

$       326.4

$    73.5

$  131.6

$    30.8

Operating income before corporate allocations

$        68.8

$    19.5

$    23.1

$    10.8

Operating margin (% of segment external net revenue)

21.1%

26.5%

17.6%

35.1%

THIRD QUARTER OF FISCAL 2014 :

Revenue

$       342.2

$    88.8

$  121.2

$    32.6

Operating income before corporate allocations

$        74.2

 ( A ) 

$    26.1

 ( A ) 

$    19.5

 ( A ) 

$      9.6

 ( A ) 

Operating margin (% of segment external net revenue)

21.7%

29.4%

16.1%

29.4%

FIRST THREE QUARTERS OF 2015 :

Revenue

$       964.2

$  275.9

$  388.1

$  102.5

Operating income before corporate allocations

$       166.3

$    85.0

$    62.5

$    37.1

Operating margin (% of segment external net revenue)

17.2%

30.8%

16.1%

36.2%

FIRST THREE QUARTERS OF 2014 :

Revenue

$    1,019.6

$  341.4

$  362.7

$  108.0

Operating income before corporate allocations

$       231.0

 ( A ) 

$  119.4

 ( A ) 

$    58.5

 ( A ) 

$    34.4

 ( A ) 

Operating margin (% of segment external net revenue)

22.7%

35.0%

16.1%

31.9%

( A ) Beginning with the first quarter of fiscal 2015,  the Company changed its methodology for allocating stock-based compensation. Historically, the Company allocated stock-based compensation to each business segment. Beginning in the first quarter of fiscal 2015, stock-based compensation is considered a corporate expense and not reflected in segment results.  The Company has adjusted the segment operating income for all prior periods to conform to the current year methodology. 

GAAP TO NON-GAAP RECONCILIATION

(Dollars in millions, except per share data)

(Unaudited)

Third Quarter of

First Three Quarters of

2015

2014

2015

2014

Dollar

% of

Dollar

% of

 Dollar 

% of

Dollar

% of

Amount

Revenue

Amount

Revenue

 Amount 

Revenue

Amount

Revenue

GROSS MARGIN:

GAAP gross margin:

$ 298.0

53.0%

$ 316.8

54.2%

$  909.1

52.5%

$    998.3

54.5%

Restructuring charges

( A )

0.3

0.1%

0.1

0.0%

0.8

0.0%

0.3

0.0%

Amortization of purchased intangible assets

( B )

23.3

4.1%

20.1

3.4%

68.8

4.0%

61.0

3.3%

Stock-based compensation

( C )

1.0

0.2%

0.8

0.1%

2.9

0.2%

2.3

0.1%

Amortization of acquisition-related inventory step-up

( D )

-

0.0%

0.5

0.1%

-

0.0%

0.6

0.1%

Non-GAAP gross margin: 

$ 322.6

57.4%

$ 338.3

57.8%

$  981.6

56.7%

$ 1,062.5

58.0%

OPERATING EXPENSES:

GAAP operating expenses:

$ 252.0

44.8%

$ 305.7

52.3%

$  787.6

45.5%

$    814.3

44.5%

Restructuring charges

( A )

(2.7)

-0.5%

(0.2)

0.0%

(9.0)

-0.5%

(1.3)

-0.1%

Amortization of purchased intangible assets

( B )

(17.4)

-3.1%

(19.3)

-3.3%

(53.4)

-3.1%

(56.8)

-3.1%

Stock-based compensation

( C )

(11.8)

-2.1%

(10.2)

-1.8%

(34.4)

-2.0%

(29.8)

-1.6%

Acquisition / divestiture items

( E )

(2.4)

-0.4%

(4.1)

-0.7%

(8.0)

-0.4%

(7.5)

-0.4%

Litigation

( F )

-

0.0%

(52.0)

-8.9%

-

0.0%

(52.0)

-2.9%

Non-GAAP operating expenses:

$ 217.7

38.7%

$ 219.9

37.6%

$  682.8

39.5%

$    666.9

36.4%

OPERATING INCOME:

GAAP operating income:

$   46.0

8.2%

$   11.1

1.9%

$  121.5

7.0%

$    184.0

10.0%

Restructuring charges

( A )

3.0

0.5%

0.3

0.0%

9.8

0.6%

1.6

0.1%

Amortization of purchased intangible assets

( B )

40.7

7.2%

39.4

6.7%

122.2

7.1%

117.8

6.4%

Stock-based compensation

( C )

12.8

2.3%

11.0

1.9%

37.3

2.1%

32.1

1.8%

Amortization of acquisition-related inventory step-up

( D )

-

0.0%

0.5

0.1%

-

0.0%

0.6

0.0%

Acquisition / divestiture items

( E )

2.4

0.5%

4.1

0.7%

8.0

0.5%

7.5

0.4%

Litigation

( F )

-

0.0%

52.0

8.9%

-

0.0%

52.0

2.9%

Non-GAAP operating income: 

$ 104.9

18.7%

$ 118.4

20.2%

$  298.8

17.3%

$    395.6

21.6%

NON-OPERATING INCOME (EXPENSE), NET:

GAAP non-operating income (expense), net:

$    (2.5)

$    (4.0)

$      2.0

$      10.4

Acquisition / divestiture items

( E )

(0.2)

1.7

(5.8)

6.0

Gain on an equity sale

( G )

-

-

-

(15.1)

Non-GAAP non-operating income (expense), net: 

$    (2.7)

$    (2.3)

$     (3.8)

$        1.3

GAAP and 

GAAP and 

GAAP and 

GAAP and 

Non-GAAP

Non-GAAP

Non-GAAP

Non-GAAP

Tax Rate %

( L )

Tax Rate %

( L )

Tax Rate %

( L )

Tax Rate %

( L )

INCOME TAX PROVISION:

GAAP income tax provision:

$     6.5

15%

$    (4.7)

-66%

$    26.7

22%

$      36.4

19%

Non-GAAP items tax effected 

( H )

8.8

13.9

37.8

36.3

Difference in GAAP and Non-GAAP tax rate

( I )

9.2

-

6.3

-

Tax on gain on an equity sale

( J )

-

-

-

(5.8)

Tax on RDS litigation

( K )

-

19.8

-

19.8

Non-GAAP income tax provision: 

$   24.5

24%

$   29.0

25%

$    70.8

24%

$      86.7

22%

NET INCOME:  

GAAP net income attributable to Trimble Navigation Ltd.

$   37.1

$   11.8

$    97.1

$    158.3

Restructuring charges

( A )

3.0

0.3

9.8

1.6

Amortization of purchased intangible assets

( B )

40.7

39.4

122.2

117.8

Stock-based compensation

( C )

12.8

11.0

37.3

32.1

Amortization of acquisition-related inventory step-up

( D )

-

0.5

-

0.6

Acquisition / divestiture items

( E )

2.2

5.8

2.2

13.5

Gain on an equity sale

( G )

-

-

-

(15.1)

Litigation

( F )

-

52.0

-

52.0

Non-GAAP tax adjustments

( H ) - ( K )

(18.0)

(33.7)

(44.1)

(50.3)

Non-GAAP net income attributable to Trimble Navigation Ltd.

$   77.8

$   87.1

$  224.5

$    310.5

DILUTED NET INCOME PER SHARE:

GAAP diluted net income per share attributable to Trimble Navigation Ltd.

$   0.14

$   0.04

$    0.37

$      0.60

Restructuring charges

( A )

0.01

-

0.04

0.01

Amortization of purchased intangible assets

( B )

0.16

0.15

0.47

0.44

Stock-based compensation

( C )

0.05

0.04

0.14

0.12

Amortization of acquisition-related inventory step-up

( D )

-

-

-

-

Acquisition / divestiture items

( E )

0.01

0.02

0.01

0.05

Gain on an equity sale

( G )

-

-

-

(0.06)

Litigation

( F )

-

0.20

-

0.20

Non-GAAP tax adjustments

( H ) - ( K )

(0.07)

(0.12)

(0.17)

(0.19)

Non-GAAP diluted net income per share attributable to Trimble Navigation Ltd.

$   0.30

$   0.33

$    0.86

$      1.17

OPERATING LEVERAGE:

Increase (decrease) in non-GAAP operating income

$  (13.5)

$     0.2

$   (96.8)

$      46.8

Increase (decrease) in revenue

$  (22.5)

$   28.3

$ (101.0)

$    142.8

Operating leverage (increase in non-GAAP operating 

income as a % of increase in revenue)

N/A

0.7%

N/A

32.8%

FOOTNOTES TO GAAP TO NON-GAAP RECONCILIATION

(Unaudited)

Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures. The non-GAAP financial measures included in the previous table as well as detailed explanations to the adjustments to comparable GAAP measures, are set forth below:

Non-GAAP gross margin

We believe our investors benefit by understanding our non-GAAP gross margin as a way of understanding how product mix, pricing decisions and manufacturing costs influence our business.  Non-GAAP gross margin excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation and amortization of acquisition-related inventory step-up from GAAP gross margin. We believe that these exclusions offer investors additional information that may be useful to view trends in our gross margin performance.

Non-GAAP operating expenses

We believe this measure is important to investors evaluating our non-GAAP spending in relation to revenue. Non-GAAP operating expenses exclude restructuring costs, amortization of purchased intangible assets, stock-based compensation, acquisition/divestiture costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, and integration costs and litigation expenses from GAAP operating expenses. We believe that these exclusions offer investors supplemental information to facilitate comparison of our operating expenses to our prior results. 

Non-GAAP operating income

We believe our investors benefit by understanding our non-GAAP operating income trends which are driven by revenue, gross margin, and spending. Non-GAAP operating income excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition/divestiture costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, and integration costs and litigation expenses. We believe that these exclusions offer an alternative means for our investors to evaluate current operating performance compared to results of other periods. 

Non-GAAP non-operating income (expense), net

We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income (expense), net excludes acquisition and divestiture gains/losses associated with unusual acquisition related items such as intangible asset impairment charges and gains or losses related to the acquisition or sale of certain businesses and investments, and a gain on an equity sale. These gains/losses are specific to particular acquisitions and divestitures and vary significantly in amount and timing. We believe that these exclusions provide investors with a supplemental view of our ongoing financial results.

Non-GAAP income tax provision

We believe that providing investors with the non-GAAP income tax provision is beneficial because it provides for consistent treatment of the excluded items in our non-GAAP presentation.  In fiscal 2015 we began calculating a non-GAAP tax rate separate from the GAAP rate as we expect this to add consistency in the quarterly non-GAAP trends.  We have not retroactively gone back to prior periods to restate our quarterly non-GAAP results with a similar separate rate.  Therefore, comparability between periods may be affected. 

Non-GAAP net income

This measure provides a supplemental view of net income trends which are driven by non-GAAP income before taxes and our non-GAAP tax rate. Non-GAAP net income excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a gain on an equity sale, litigation and non-GAAP tax adjustments from GAAP net income. We believe our investors benefit from understanding these exclusions and from an alternative view of our net income performance as compared to our past net income performance.

Non-GAAP diluted net income per share

We believe our investors benefit by understanding our non-GAAP operating performance as reflected in a per share calculation as a way of measuring non-GAAP operating performance by ownership in the company. Non-GAAP diluted net income per share excludes restructuring costs, amortization of purchased intangible assets, stock-based compensation, amortization of acquisition-related inventory step-up, acquisition and divestiture costs, a gain on an equity sale, litigation and non-GAAP tax adjustments from GAAP diluted net income per share. We believe that these exclusions offer investors a useful view of our diluted net income per share as compared to our past diluted net income per share. 

Non-GAAP operating leverage

We believe this information is beneficial to investors as a measure of how much incremental revenue contributed to our operating income. Non-GAAP operating leverage is the increase in non-GAAP operating income as a percentage of the increase in revenue. We believe that this information offers investors supplemental information to evaluate our current performance and to compare to our past non-GAAP operating leverage. 

These non-GAAP measures can be used to evaluate our historical and prospective financial performance, as well as our performance relative to competitors. We believe some of our investors track our "core operating performance" as a means of evaluating our performance in the ordinary, ongoing, and customary course of our operations. Core operating performance excludes items that are non-cash, not expected to recur or not reflective of ongoing financial results.  Management also believes that looking at our core operating performance provides a supplemental way to provide consistency in period to period comparisons.  Accordingly, management excludes from non-GAAP those items relating to restructuring, amortization of purchased intangible assets, stock based compensation, acquisition and divestiture costs, a gain on an equity sale, a write off of debt issuance costs and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP measures, see items (A) - ( I ) below,

( A )

Restructuring costs.Included in our GAAP presentation of cost of sales and operating expenses, restructuring costs recorded are primarily for employee compensation resulting from reductions in employee headcount in connection with our company restructurings.  We exclude restructuring costs from our non-GAAP measures because we believe they do not reflect expected future operating expenses, they are not indicative of our core operating performance, and they are not meaningful in comparisons to our past operating performance.  We have incurred restructuring expense in each of the periods presented however the amount incurred can vary significantly based on whether a restructuring has occurred in the period and the timing of headcount reductions. 

( B )

Amortization of purchased intangible assets.Included in our GAAP presentation of gross margin and operating expenses is amortization of purchased intangible assets. US GAAP accounting requires that intangible assets are recorded at fair value and amortized over their useful lives. Consequently, the timing and size of our acquisitions will cause our operating results to vary from period to period, making a comparison to past performance difficult for investors. This accounting treatment may cause differences when comparing our results to companies that grow internally because the fair value assigned to the intangible assets acquired through acquisition may significantly exceed the equivalent expenses that a company may incur for similar efforts when performed internally. Furthermore, the useful life that we expense our intangible assets over may be substantially different from the time period that an internal growth company incurs and recognizes such expenses. We believe that by excluding the amortization of purchased intangible assets, which primarily represents technology and/or customer relationships already developed, it provides an alternative way for investors to compare our operations pre-acquisition to those post-acquisitions and to those of our competitors that have pursued internal growth strategies. However, we note that companies that grow internally will incur costs to develop intangible assets that will be expensed in the period incurred, which may make a direct comparison more difficult.     

( C )

Stock-based compensation. Included in our GAAP presentation of cost of sales and operating expenses, stock-based compensation consists of expenses for employee stock options and awards and purchase rights under our employee stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.   For the third quarter and first three quarters of fiscal 2015 and 2014, stock-based compensation was allocated as follows: 

Third Quarter of

First Three Quarters

(Dollars in millions)

2015

2014

2015

2014

Cost of sales

$                  1.0

$                  0.8

$                  2.9

$                          2.3

Research and development

2.1

1.6

6.4

4.8

Sales and Marketing

2.2

2.0

6.7

6.0

General and administrative

7.5

6.6

21.3

19.0

$                12.8

$                11.0

$                37.3

$                        32.1

( D )

Amortization of acquisition-related inventory step-up.  The purchase accounting entries associated with our business acquisitions require us to record inventory at its fair value, which is sometimes greater than the previous book value of the inventory.  Included in our GAAP presentation of cost of sales, the increase in inventory value is amortized to cost of sales over the period that the related product is sold.  We exclude inventory step-up amortization from our non-GAAP measures because it is a non-cash expense that we do not believe is indicative of our ongoing operating results.  We further believe that excluding this item from our non-GAAP results is useful to investors in that it allows for period-over-period comparability.

( E )

Acquisition / divestiture items.  Included in our GAAP presentation of operating expenses, acquisition costs consist of external and incremental costs resulting directly from merger and acquisition and strategic investment activities such as legal, due diligence, and integration costs as well as adjustments to the fair value of earn-out liabilities.  Included in our GAAP presentation of non-operating income (expense) net, acquisition / divestiture items includes unusual acquisition, investment, or divestiture gains/losses. Although we do numerous acquisitions, the costs that have been excluded from the non-GAAP measures are costs specific to particular acquisitions. These are one-time costs that vary significantly in amount and timing and are not indicative of our core operating performance.

( F )

Litigation.  The fiscal 2014 amount represents $0.7M of costs based on an arbitration agreement, as well as $51.3M of estimated costs that were reserved during the third quarter based on a jury verdict in favor of the plaintiff, Recreational Data Services, Inc. and then reversed during the fourth quarter after the judge overturned the verdict. We have excluded these costs from our non-GAAP measures because they are non-recurring expenses that are not indicative of our ongoing operating results. We further believe that excluding these items from our non-GAAP results is useful to investors in that it allows for period-over-period comparability.              

( G )

Gain on an equity sale.   Included in our GAAP presentation of non-operating income (expense), net this amount represents a gain on a partial equity sale of Virtual Site Solutions.  We excluded the gain from our non-GAAP measures. We believe that investors benefit from excluding this item from our non-GAAP measures because it facilitates an evaluation of our non-operating income trends.

( H )

Non-GAAP items tax effected.   This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items ( A ) - ( E ) on non-GAAP net income.   We believe this information is useful to investors because it provides for consistent treatment of the excluded items in this non-GAAP presentation. 

( I )

Difference in GAAP and Non-GAAP tax rate.   This amount represents the difference between the GAAP and Non-GAAP tax rates applied to the Non-GAAP Operating Income plus the Non-GAAP Non-Operating Income (Loss), Net.  In fiscal 2015 we began calculating a non-GAAP tax rate separate from the GAAP rate as we expect this to add consistency in the quarterly trends.  We have not retroactively gone back to prior periods to restate them with a similar separate rate.  Therefore, comparability between periods may be affected.  

( J )

Tax on gain on an equity sale.  This amount represents the tax effect of a gain on a partial equity sale of Virtual Site Solutions.  We excluded this item as it represents the tax effect of a non-recurring gain.  We believe that investors benefit from excluding this item from our non-GAAP income tax provision because it facilitates a comparison of the non-GAAP tax rate in 2014 to the non-GAAP tax rates in the current and prior periods.

( K )

Tax on Recreational Data Services Inc. litigation.  This amount represents the tax effect of loss recorded as a result of a jury verdict in favor of Recreational Data Services, Inc.  We excluded this item as it represents the tax effect of a non-recurring expense.  We believe that investors benefit from excluding this item from our non-GAAP income tax provision because it allows for period-over-period comparability.

( L )

GAAP and non-GAAP tax rate %.  These percentages are defined as GAAP income tax provision as a percentage of GAAP income before taxes and non-GAAP income tax provision as a percentage of non-GAAP income before taxes.   We believe that investors benefit from a presentation of non-GAAP tax rate percentage as a way of facilitating a comparison to non-GAAP tax rates in prior periods.  However, this comparability may be impacted since we began separately calculating a non-GAAP tax rate in fiscal 2015.