UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15 (d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

 

Date of Report (Date of earliest event reported): October 23, 2014

 

 

CONMED CORPORATION

(Exact name of registrant as specified in its charter)

 

 

New York	0-16093	16-0977505
(State or other jurisdiction of	(Commission	(I.R.S. Employer
incorporation or organization)	File Number)	Identification No.)

 

 

 

525 French Road

Utica, New York 13502

(Address of principal executive offices, including zip code)

 

 

 

(315) 797-8375

(Registrant's telephone number, including area code)

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (See General Instruction A.2 below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Section 2

Financial Information

Item 2.02

Results of Operations and Financial Condition.

 

On October 23, 2014, CONMED Corporation issued a press release announcing financial results for the third quarter of 2014. A copy of this press release is attached hereto as Exhibit 99.1.

 

The information in this Current Report on Form 8-K that is furnished under “Item 2.02. Results of Operations and Financial Condition” and Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

 

Section 9

Financial Statements and Exhibits

Item 9.01

Financial Statements and Exhibits.

 

(c)

Exhibits

 

The following exhibit is included herewith:

 

 

	Exhibit No.	Description of Exhibit
	99.1	Press Release dated October 23, 2014, issued by CONMED Corporation.

 

 

 

Signature

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

	CONMED CORPORATION
	(Registrant)
	By:	Robert  D. Shallish, Jr.
		Executive Vice President-Finance and
		Chief Financial Officer

 

 

Date: October 23, 2014

 

EXHIBIT INDEX

 

 

 

Exhibit
Number	Exhibit Description
99.1	Press Release, dated October 23, 2014, issued by CONMED Corporation.

 

 

 

 

 

 

	NEWS RELEASE
	CONTACT:
	CONMED Corporation
	Robert Shallish
	Chief Financial Officer
	315-624-3206

 

 

FOR RELEASE: 4:00 PM (Eastern) October 23, 2014

 

CONMED Corporation Announces Third Quarter 2014 Financial Results

 

- Sales of $175.0 Million

- Diluted earnings per share (GAAP) $0.07

- Adjusted EPS of $0.44, growth of 10%

- Company reaffirms guidance

 

 

Utica, New York, October 23, 2014 ----- CONMED Corporation (Nasdaq: CNMD) today announced financial results for the third quarter ended September 30, 2014.

 

Third Quarter 2014 Financial Highlights:

 

·

Sales of $175.0 million decreased 2.4% as reported versus the prior year period.

 

·

Diluted earnings per share (GAAP) were $0.07, compared to $0.20 in the third quarter of 2013 and were affected by special items as described below.

 

·

Adjusted diluted earnings per share of $0.44 increased 10% compared to $0.40 in the prior year period.

 

·

Gross profit margin on a GAAP basis grew 190 basis points to 55.1%. Excluding restructuring costs, adjusted gross profit margin expanded to 55.9% from 55.1% reflecting the continued benefit from the manufacturing consolidation efforts.

 

 

“We are pleased with our results for the quarter, which keep us on track to deliver on our full year revised revenue and earnings commitments. 2014 has been a challenging year in which CONMED has undergone some significant changes. We are working diligently to enhance fundamental strengths of our business to reestablish top line growth while continuing to deliver leveraged earnings growth,” commented Curt R. Hartman, Interim Chief Executive Officer. “We thank our shareholders and employees alike who have shared important ideas focused on value creation for all CONMED stakeholders.”

 

 

Nine-Month 2014 Financial Highlights:

 

·

Sales of $545.1 million decreased 2.5% over the prior year period on a reported basis.

 

·

Diluted earnings per share (GAAP) were $0.75, compared to $0.91 and were affected by special items as described below.

 

·

Adjusted diluted earnings per share of $1.39 increased 8.6% compared to $1.28 in the prior year period.

 

·

Gross profit margin on a GAAP basis grew 120 basis points to 55.0%. Excluding restructuring costs, adjusted gross margin expanded to 55.7% from 55.0% reflecting the continued benefit from the manufacturing consolidation efforts.

 

 

Sales Analysis

 

For the quarter ended September 2014 domestic sales, (49.7% of total sales) and international sales (50.3% of total sales), each declined 2.4% compared to the third quarter of 2013 on a reported basis. The sales decline in the United States was caused by reduced orthopedic and visualization device revenues. Outside the United States, the decline was caused primarily by reduced export sales to Latin American distributors offset to some degree by sales increases by our European subsidiaries. Changes in foreign currency exchange rates including the effects of the FX hedging program had an immaterial impact on sales in the third quarter of 2014 compared to sales in the third quarter of 2013.

 

Earnings Analysis

 

Earnings on a GAAP basis for the September 2014 quarter were significantly affected by costs associated with executive management changes and shareholder activism activities. Adjusting for these special items and others as indicated on the following reconciliation, adjusted net income and EPS increased over the same period of 2013 due to a higher gross margin percentage, and lower selling, general and administrative costs. The income tax rate on adjusted earnings was similar in both periods and equal to 27.7% in the 2014 third quarter compared to 27.4% in the 2013 third quarter.

 

2014 Outlook

 

Based on the third quarter results, the Company affirms the previously provided 2014 annual revenue forecast to be in a range of $735 - $745 million, representing a decline of 2.3% to 3.6%. Further, we affirm the 2014 projected annual adjusted diluted net earnings per share guidance to be $1.85 - $1.95, representing an increase of 2.2% to 7.7% over 2013.

 

The adjusted estimates for the full year 2014 exclude the cost of special items such as restructuring, shareholder activism, and charges related to senior management changes expected to be incurred in 2014. Details of these items through September 2014 are provided in the summary table attached.

 

 

CEO Search Update

 

The CEO Search Committee of the Board of Directors has retained an outside executive search firm and is conducting interviews of potential candidates. Mark Tryniski, Chairman of the Board and the Search Committee stated, “Our search for a permanent CEO is well underway. Both the Committee and the Board are pleased with the progress being made and we are committed to identifying a permanent CEO as expeditiously as possible.”

 

 

Special Charges

 

As reconciled on the following schedule, during the third quarter and first nine-months of 2014, the Company continued the on-going consolidation of certain administrative functions and manufacturing activities. Also incurred were costs due to shareholder activism, changes in senior management, litigation and settlement costs associated with patent and legal disputes, the write-off of New York State tax credits eliminated due to a legislative change, and other costs. Expenses associated with these activities, including severance and relocation costs, amounted to $10.2 million, net of tax, in the third quarter of 2014 and $17.8 million, net of tax, for the first nine months of 2014. These charges are included in the GAAP earnings per share set forth above and are excluded from the adjusted results. For the remainder of 2014, the Company presently anticipates incurring additional pre-tax restructuring and other special costs of $4.0 – $5.0 million for matters currently in process.

 

 

Use of Non-GAAP Financial Measures

 

Management has disclosed adjusted financial measurements in this press announcement that present financial information that is not in accordance with generally accepted accounting principles. These measurements are not a substitute for GAAP measurements, although Company management uses these measurements as aids in monitoring the Company’s on-going financial performance from quarter-to-quarter and year-to-year on a regular basis, and for benchmarking against other medical technology companies. Adjusted net income, adjusted operating income, adjusted gross margin and adjusted earnings per share measure the income of the Company excluding credits or charges that are considered by management to be outside of the normal on-going operations of the Company. Management uses and presents adjusted net income, adjusted operating income, adjusted gross margin and adjusted earnings per share because management believes that in order to properly understand the Company’s short and long-term financial trends, the impact of special items should be eliminated from on-going operating activities. These adjustments for special items are derived from facts and circumstances that vary in frequency and impact on the Company’s results of operations. Management uses adjusted net income, adjusted operating income, adjusted gross margin and adjusted earnings per share to forecast and evaluate the operational performance of the Company as well as to compare results of current periods to prior periods on a consistent basis. Further, the presentation of EBITDA and adjusted EBITDA are non-GAAP measurements that management considers useful for measuring aspects of the Company’s cash flow. Adjusted financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider adjusted measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

 

Conference Call

 

The Company will conduct a conference call and webcast regarding its third quarter 2014 financial results at 4:30 p.m. Eastern Time on Thursday, October 23, 2014. To participate in the conference call, dial 877-703-6103 in the United States, or 857-244-7302 from other locations, and provide passcode 30221985. The webcast can be accessed from CONMED’s web site at www.conmed.com. Replays of the call will be made available through November 30, 2014.

 

CONMED Profile

 

CONMED is a medical technology company with an emphasis on surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology. Headquartered in Utica, New York, the Company’s 3,600 employees distribute its products worldwide from several manufacturing locations. CONMED has a direct selling presence in 16 countries outside the United States and international sales constitute over 50% of the Company’s total sales.

 

 

Forward Looking Information

 

This press release contains forward-looking statements based on certain assumptions and contingencies that involve risks and uncertainties. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and relate to the Company’s performance on a going-forward basis. The forward-looking statements in this press release involve risks and uncertainties which could cause actual results, performance or trends, to differ materially from those expressed in the forward-looking statements herein or in previous disclosures. The Company believes that all forward-looking statements made by it have a reasonable basis, but there can be no assurance that management’s expectations, beliefs or projections as expressed in the forward-looking statements will actually occur or prove to be correct. In addition to general industry and economic conditions, factors that could cause actual results to differ materially from those discussed in the forward-looking statements in this press release include, but are not limited to: (i) the failure of any one or more of the assumptions stated above, to prove to be correct; (ii) the risks relating to forward-looking statements discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013; (iii) cyclical purchasing patterns from customers, end-users and dealers; (iv) timely release of new products, and acceptance of such new products by the market; (v) the introduction of new products by competitors and other competitive responses; (vi) the possibility that any new acquisition or other transaction may require the Company to reconsider its financial assumptions and goals/targets; (vii) increasing costs for raw material, transportation or litigation; (viii) the risk of a lack of allograft tissues due to reduced donations of such tissues or due to tissues not meeting the appropriate high standards for screening and/or processing of such tissues; and/or (ix) the Company’s ability to devise and execute strategies to respond to market conditions.

 

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(In thousands except per share amounts)

(unaudited)

 

		Three months ended								Nine months ended
		September 30,								September 30,
		2013				2014				2013				2014
Net sales		$	179,255			$	174,961			$	559,262			$	545,052
Cost of sales			80,570				77,099				251,751				241,274
Cost of sales, other – Note A			3,261				1,448				6,489				3,754
Gross profit			95,424				96,414				301,022				300,024
Selling and administrative expense			73,476				71,237				228,375				219,081
Research and development			7,108				6,910				19,393				20,674
Medical device excise tax			1,427				1,334				4,413				4,052
Other expense – Note B			4,608				14,484				8,514				20,520
			86,619				93,965				260,695				264,327
Income from operations			8,805				2,449				40,327				35,697
Loss on early extinguishment of debt			—				—				263				—
Interest expense			1,382				1,540				4,131				4,572
Income before income taxes			7,423				909				35,933				31,125
Provision (benefit) for income taxes			1,736				(1,063	)			10,221				10,272
Net income		$	5,687			$	1,972			$	25,712			$	20,853
Per share data:
Net income
Basic		$	0.21			$	0.07			$	0.93			$	0.76
Diluted			0.20				0.07				0.91				0.75
Weighted average common shares
Basic			27,518				27,454				27,744				27,354
Diluted			27,834				27,688				28,111				27,777

 

 

Note A – Included in cost of sales, other in the three and nine months ended September 30, 2013 and 2014 are costs related to the consolidation of our production facilities. Also included in the three and nine months ended September 30, 2013 are costs associated with the termination of a product offering. Refer to the Reconciliation of Reported Net Income to Adjusted Net Income for further details.

 

Note B – Other expense in the three and nine months ended September 30, 2013 and 2014 includes a number of adjusted charges. Refer to the Reconciliation of Reported Net Income to Adjusted Net Income for further details.

 

 

CONMED CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS

(In thousands)

(unaudited)

 

ASSETS
		December 31,				September 30,
		2013				2014
Current assets:
Cash and cash equivalents		$	54,443			$	64,614
Accounts receivable, net			140,426				123,327
Inventories			143,211				162,099
Income taxes receivable			3,805				4,826
Deferred income taxes			13,202				10,831
Prepaid expenses and other current assets			17,045				19,677
Total current assets			372,132				385,374
Property, plant and equipment, net			138,985				135,825
Deferred income taxes			1,183				1,069
Goodwill			248,428				256,217
Other intangible assets, net			319,440				319,176
Other assets			10,340				11,854
Total assets		$	1,090,508			$	1,109,515
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt		$	1,140			$	1,187
Other current liabilities			110,125				120,568
Total current liabilities			111,265				121,755
Long-term debt			214,435				246,830
Deferred income taxes			113,199				115,520
Other long-term liabilities			45,290				32,692
Total liabilities			484,189				516,797
Shareholders’ equity:
Capital accounts			228,002				213,826
Retained earnings			395,889				400,316
Accumulated other comprehensive loss			(17,572	)			(21,424	)
Total equity			606,319				592,718
Total liabilities and shareholders’ equity		$	1,090,508			$	1,109,515

 

CONMED CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)

 

		Nine months ended
		September 30,
		2013				2014
Cash flows from operating activities:
Net income		$	25,712			$	20,853
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization			35,541				34,020
Stock-based compensation			4,102				7,691
Loss on early extinguishment of debt			263				—
Deferred income taxes			6,802				(1,121	)
Increase (decrease) in cash flows from changes in assets and liabilities:
Accounts receivable			8,811				13,699
Inventories			(5,581	)			(30,023	)
Accounts payable			2,019				1,812
Income taxes receivable (payable)			(3,262	)			891
Accrued compensation and benefits			(7,352	)			(2,507	)
Other assets			(2,636	)			375
Other liabilities			(10,781	)			(6,161	)
Net cash provided by operating activities			53,638				39,529
Cash flow from investing activities:
Payments related to a business acquisition			—				(1,245	)
Purchases of property, plant, and equipment			(13,552	)			(12,250	)
Net cash used in investing activities			(13,552	)			(13,495	)
Cash flow from financing activities:
Payments on debt			(742	)			(558	)
Proceeds of debt			64,000				33,000
Payments related to distribution agreement			(34,000	)			(16,667	)
Dividends paid on common stock			(12,568	)			(16,455	)
Payments related to issuance of debt			(1,725	)			—
Net proceeds from common stock issued under employee plans			13,027				1,716
Repurchase of common stock			(44,729	)			(16,862	)
Other, net			2,975				3,220
Net cash used in financing activities			(13,762	)			(12,606	)
Effect of exchange rate change
on cash and cash equivalents			(213	)			(3,257	)
Net increase in cash and cash equivalents			26,111				10,171
Cash and cash equivalents at beginning of period			23,720				54,443
Cash and cash equivalents at end of period		$	49,831			$	64,614

 

CONMED CORPORATION

Sales Summary

(In millions)

 

 

		Three Months Ended September 30,
														Constant
														Currency
		2013				2014				Growth				Growth
Orthopedic surgery		$	95.6			$	92.8				-2.9	%			-3.2	%
General surgery			69.9				69.7				-0.3	%			-0.3	%
Surgical visualization			13.8				12.5				-9.4	%			-9.4	%
		$	179.3			$	175.0				-2.4	%			-2.6	%
Single-use products		$	145.9			$	142.4				-2.4	%			-2.5	%
Capital products			33.4				32.6				-2.4	%			-2.7	%
		$	179.3			$	175.0				-2.4	%			-2.6	%

 

		Nine Months Ended September 30,
														Constant
														Currency
		2013				2014				Growth				Growth
Orthopedic surgery		$	302.4			$	301.1				-0.4	%			-0.1	%
General surgery			210.0				203.9				-2.9	%			-2.6	%
Surgical visualization			46.9				40.1				-14.5	%			-14.7	%
		$	559.3			$	545.1				-2.5	%			-2.3	%
Single-use products		$	447.5			$	439.0				-1.9	%			-1.6	%
Capital products			111.8				106.1				-5.1	%			-5.0	%
		$	559.3			$	545.1				-2.5	%			-2.3	%

 

 

CONMED CORPORATION

RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME

Three Months Ended September 30, 2013 and 2014

(In thousands except per share amounts)

(unaudited)

 

 

		2013				2014
Reported net income		$	5,687			$	1,972
Costs associated with termination of a product offering			2,137				—
Facility consolidation costs included in cost of sales			1,124				1,448
Total cost of sales			3,261				1,448
Administrative consolidation costs			3,133				648
Patent dispute and other matters			1,475				39
Shareholder activism costs			—				2,441
Management restructuring costs			—				11,022
Business acquisition costs			—				334
Total other expense			4,608				14,484
Adjusted expense before income taxes			7,869				15,932
Provision (benefit) for income taxes on adjusted expenses			(2,459	)			(5,736	)
Adjusted net income		$	11,097			$	12,168
Per share data:
Reported net income
Basic		$	0.21			$	0.07
Diluted			0.20				0.07
Net income before adjusted items
Basic		$	0.40			$	0.44
Diluted			0.40				0.44

 

 

Management has provided the above reconciliation of net income to adjusted net income as an additional measure that investors can use to compare operating performance between reporting periods. Management believes this reconciliation provides a useful presentation of operating performance as discussed in the section “Use of Non-GAAP Financial Measures” above.

 

CONMED CORPORATION

RECONCILIATION OF REPORTED NET INCOME TO ADJUSTED NET INCOME

Nine Months Ended September 30, 2013 and 2014

(In thousands except per share amounts)

(unaudited)

 

 

		2013				2014
Reported net income		$	25,712			$	20,853
Costs associated with termination of a product offering			2,137				—
Facility consolidation costs included in cost of sales			4,352				3,754
Total cost of sales			6,489				3,754
Administrative consolidation costs			6,303				1,855
Patent dispute & settlement costs, and other matters			2,211				3,233
Shareholder activism costs			—				3,966
Management restructuring costs			—				11,022
Business acquisition costs			—				444
Total other expense			8,514				20,520
Loss on early extinguishment of debt			263				—
Adjusted expense before income taxes			15,266				24,274
Provision (benefit) for income taxes on adjusted expenses			(5,122	)			(8,739	)
New York State corporate tax reform			—				2,258
Adjusted net income		$	35,856			$	38,646
Per share data:
Reported net income
Basic		$	0.93			$	0.76
Diluted			0.91				0.75
Net income before adjusted items
Basic		$	1.29			$	1.41
Diluted			1.28				1.39

 

 

Management has provided the above reconciliation of net income to adjusted net income as an additional measure that investors can use to compare operating performance between reporting periods. Management believes this reconciliation provides a useful presentation of operating performance as discussed in the section “Use of Non-GAAP Financial Measures” above.

CONMED CORPORATION

RECONCILIATION OF GROSS MARGIN TO ADJUSTED GROSS MARGIN

(In thousands)

(unaudited)

 

 

		Three months ended								Nine months ended
		September 30,								September 30,
		2013				2014				2013				2014
Net sales		$	179,255			$	174,961			$	559,262			$	545,052
Cost of sales, total			83,831				78,547				258,240				245,028
Gross profit			95,424				96,414				301,022				300,024
Add:  Cost of sales, other			3,261				1,448				6,489				3,754
Adjusted gross profit		$	98,685			$	97,862			$	307,511			$	303,778
Gross margin:
Reported			53.2	%			55.1	%			53.8	%			55.0	%
Adjusted			55.1	%			55.9	%			55.0	%			55.7	%

 

 

Management has provided the above reconciliation as an additional measure that investors can use to compare financial results between reporting periods. Management believes this reconciliation provides a useful presentation of financial measures as discussed in the section “Use of Non-GAAP Financial Measures” above.

 

CONMED CORPORATION

RECONCILIATION OF INCOME FROM OPERATIONS TO ADJUSTED

INCOME FROM OPERATIONS

(In thousands)

(unaudited)

 

		Three months ended								Nine months ended
		September 30,								September 30,
		2013				2014				2013				2014
Reported income from operations		$	8,805			$	2,449			$	40,327			$	35,697
Costs associated with termination of a product       offering included in cost of sales			2,137				—				2,137				—
Facility consolidation costs included      in cost of sales			1,124				1,448				4,352				3,754
Administrative consolidation costs included in      other expense			3,133				648				6,303				1,855
Patent dispute & settlement costs, and other matters      included in other expense			1,475				39				2,211				3,233
Shareholder activism costs included in other     expense			—				2,441				—				3,966
Management restructuring costs included in other      expense			—				11,022				—				11,022
Costs associated with a business acquisition      included in other expense			—				334				—				444
Adjusted income from operations		$	16,674			$	18,381			$	55,330			$	59,971
Operating Margin
Reported			4.9	%			1.4	%			7.2	%			6.5	%
Adjusted			9.3	%			10.5	%			9.9	%			11.0	%

 

 

Management has provided the above reconciliation as an additional measure that investors can use to compare financial results between reporting periods. Management believes this reconciliation provides a useful presentation of financial measures as discussed in the section “Use of Non-GAAP Financial Measures” above.

 

 

CONMED CORPORATION

RECONCILIATION OF REPORTED NET INCOME TO EBITDA & ADJUSTED EBITDA

(In thousands)

(unaudited)

 

		Three months ended								Nine months ended
		September 30,								September 30,
		2013				2014				2013				2014
Net income		$	5,687			$	1,972			$	25,712			$	20,853
Provision (benefit) for income taxes			1,736				(1,063	)			10,221				10,272
Interest expense			1,382				1,540				4,131				4,572
Loss on early extinguishment of debt			—				—				263				—
Depreciation			4,533				5,229				13,701				14,702
Amortization			7,046				6,341				21,427				18,880
EBITDA		$	20,384			$	14,019			$	75,455			$	69,279
Stock-based compensation			1,606				1,646				4,102				4,164
Costs associated with termination of a product      offering included in cost of sales			2,137				—				2,137				—
Facility consolidation costs included      in cost of sales			1,124				1,448				4,352				3,754
Administrative consolidation costs included in      other expense			3,133				648				6,303				1,855
Patent dispute & settlement costs, and      other matters included in other expense			1,475				39				2,211				3,233
Shareholder activism costs included in other      expense			—				2,441				—				3,966
Management restructuring costs included in other      expense			—				11,022				—				11,022
Costs associated with a business acquisition      included in other expense			—				334				—				444
Adjusted EBITDA		$	29,859			$	31,597			$	94,560			$	97,717
EBITDA Margin
EBITDA			11.4	%			8.0	%			13.5	%			12.7	%
Adjusted EBITDA			16.7	%			18.1	%			16.9	%			17.9	%

 

Management has provided the above reconciliation as an additional measure that investors can use to compare financial results between reporting periods. Management believes this reconciliation provides a useful presentation of financial measures as discussed in the section “Use of Non-GAAP Financial Measures” above.