CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

Third Quarter of

First Three Quarters of

2012

2011

2012

2011

Revenues:

        Product

$ 386,902

$ 333,262

$1,187,638

$1,004,378

        Service

64,237

44,517

185,262

112,288

        Subscription

53,624

39,654

151,690

92,229

Total revenues

504,763

417,433

1,524,590

1,208,895

Cost of sales:

        Product

185,102

163,774

577,281

494,899

        Service

23,615

19,823

67,591

50,525

        Subscription

17,451

11,956

47,860

27,730

        Amortization of purchased intangible assets

15,728

10,321

42,145

23,918

Total cost of sales

241,896

205,874

734,877

597,072

Gross margin

262,867

211,559

789,713

611,823

Gross margin (%)

52.1%

50.7%

51.8%

50.6%

Operating expenses

    Research and development

61,181

49,928

185,721

139,452

    Sales and marketing

76,481

70,662

230,094

195,359

    General and administrative

45,722

44,088

142,595

114,717

    Restructuring

301

647

1,894

1,775

    Amortization of purchased intangible assets

15,712

13,786

47,170

32,830

       Total operating expenses

199,397

179,111

607,474

484,133

Operating income 

63,470

32,448

182,239

127,690

Non-operating income, net

    Interest expense, net

(3,925)

(2,942)

(11,561)

(4,184)

    Foreign currency transaction gain (loss), net

174

(4,022)

(1,843)

2,780

    Income from equity method investments, net

6,453

4,789

19,708

10,970

    Other income (expense), net

650

(388)

1,897

(892)

       Total non-operating income, net

3,352

(2,563)

8,201

8,674

Income before taxes

66,822

29,885

190,440

136,364

Income tax provision

13,022

2,689

33,403

16,118

Net income

53,800

27,196

157,037

120,246

Less: Net gain (loss) attributable to noncontrolling interests 

436

(775)

(837)

(1,106)

Net income attributable to Trimble Navigation Ltd.

$   53,364

$   27,971

$   157,874

$   121,352

Earnings per share attributable to Trimble Navigation Ltd.

     Basic

$      0.42

$      0.23

$        1.26

$        0.99

     Diluted

$      0.42

$      0.22

$        1.23

$        0.96

Shares used in calculating earnings per share:

    Basic

125,871

122,969

125,202

122,485

    Diluted

128,379

125,894

128,144

125,980

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

Third Quarter

Fiscal Year End

As of 

2012

2011

Assets

Current assets:

   Cash and cash equivalents

$     141,840

$         154,621

   Accounts receivables, net

320,904

275,201

   Other receivables

13,374

7,103

   Inventories, net

234,301

232,063

   Deferred income taxes

43,037

44,632

   Other current assets

24,569

19,437

      Total current assets

778,025

733,057

Property and equipment, net

81,653

62,724

Goodwill

1,551,886

1,297,692

Other purchased intangible assets, net

510,987

476,791

Other non-current assets

98,942

82,211

      Total assets

$  3,021,493

$      2,652,475

Liabilities 

Current liabilities:

   Current portion of long-term debt

$       89,909

$          65,918

   Accounts payable

107,719

97,956

   Accrued compensation and benefits

82,328

73,894

   Deferred revenue

127,602

105,066

   Accrued warranty expense

16,083

18,444

   Other accrued liabilities

61,425

50,045

      Total current liabilities

485,066

411,323

Non-current portion of long-term debt

553,198

498,518

Non-current deferred revenue

6,346

13,113

Deferred income taxes

99,412

95,594

Other non-current liabilities

52,418

45,025

      Total liabilities

1,196,440

1,063,573

Commitments and contingencies

Equity

Shareholders' equity:

   Common stock

965,035

878,514

   Retained earnings

836,903

685,639

   Accumulated other comprehensive income

6,692

5,140

Total Trimble Navigation Ltd. shareholders' equity

1,808,630

1,569,293

Noncontrolling interests 

16,423

19,609

      Total equity

1,825,053

1,588,902

      Total liabilities and equity

$  3,021,493

$      2,652,475

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In thousands)

(Unaudited)

First Three Quarters of

2012

2011

Cash flow from operating activities:

    Net Income

$     157,037

$  120,246

    Adjustments to reconcile net income to net cash provided by

       operating activities:

         Depreciation expense

16,910

14,683

         Amortization expense

89,315

56,747

         Provision for doubtful accounts

1,428

954

         Deferred income taxes

646

(10,175)

         Stock-based compensation

23,628

21,033

         Income from equity method investments

(19,708)

(11,001)

         Excess tax benefit for stock-based compensation

(16,673)

(11,698)

         Provision for excess and obsolete inventories

6,372

6,915

         Other non-cash items

(3,019)

2,738

    Add decrease (increase) in assets:

         Accounts receivables

(39,496)

(43,117)

         Other receivables

(7,996)

13,471

         Inventories

(4,650)

(11,344)

         Other current and non-current assets

(2,844)

7,005

    Add increase (decrease) in liabilities:

         Accounts payable

7,828

2,039

         Accrued compensation and benefits

6,375

(1,921)

         Deferred revenue

12,390

7,638

         Accrued warranty expense

(2,491)

402

         Other current and non-current liabilities

18,842

(2,794)

 Net cash provided by operating activities 

243,894

161,821

 Cash flow from investing activities: 

      Acquisitions of businesses, net of cash acquired 

(355,484)

(758,243)

      Acquisition of property and equipment 

(34,126)

(16,002)

      Acquisitions of intangible assets 

(795)

(1,666)

      Purchases of equity method investments 

(3,267)

      Dividends received 

2,140

7,500

      Other 

303

(168)

 Net cash used in investing activities 

(387,962)

(771,846)

 Cash flow from financing activities: 

      Issuance of common stock, net 

37,142

40,182

      Excess tax benefit for stock-based compensation 

16,673

11,698

      Proceeds from long-term debt and revolving credit lines 

478,556

702,225

      Payments on short-term and long-term debt  

(401,062)

(225,942)

 Net cash provided by financing activities 

131,309

528,163

 Effect of exchange rate changes on cash and cash equivalents 

(22)

(671)

 Net decrease in cash and cash equivalents 

(12,781)

(82,533)

 Cash and cash equivalents - beginning of period 

154,621

220,788

 Cash and cash equivalents - end of period 

$     141,840

$  138,255

REPORTING SEGMENTS

(Dollars in thousands)

(Unaudited)

Reporting Segments

Engineering

and

Field

Mobile

Advanced

Construction

Solutions

Solutions

Devices

THIRD QUARTER OF FISCAL 2012 :

Revenues

$     287,244

$ 102,993

$  83,830

$  30,696

Operating income before corporate allocations:

$       68,451

$   36,021

$    8,218

$    5,684

Operating margin (% of segment external net revenues)

23.8%

35.0%

9.8%

18.5%

THIRD QUARTER OF FISCAL 2011 :

Revenues

$     241,106

$   91,106

$  58,101

$  27,120

Operating income before corporate allocations:

$       42,634

$   31,030

$    2,503

$    3,970

Operating margin (% of segment external net revenues)

17.7%

34.1%

4.3%

14.6%

FIRST THREE QUARTERS OF FISCAL 2012 :

Revenue

$     820,304

$ 373,863

$ 243,615

$  86,808

Operating income before corporate allocations:

$     168,001

$ 145,005

$  21,200

$  12,936

Operating margin (% of segment external net revenues)

20.5%

38.8%

8.7%

14.9%

FIRST THREE QUARTERS OF FISCAL 2011 :

Revenue

$     667,808

$ 318,188

$ 142,747

$  80,152

Operating income (loss) before corporate allocations:

$     112,400

$ 126,078

$   (1,515)

$  10,441

Operating margin (% of segment external net revenues)

16.8%

39.6%

-1.1%

13.0%

GAAP TO NON-GAAP RECONCILIATION

(Dollars in thousands, except per share data)

(Unaudited)

Third Quarter of

First Three Quarters of

2012

2011

2012

2011

Dollar

% of

Dollar

% of

Dollar

% of

Dollar

% of

Amount

Revenue

Amount

Revenue

Amount

Revenue

Amount

Revenue

GROSS MARGIN:

GAAP gross margin:

$   262,867

52.1%

$   211,559

50.7%

$   789,713

51.8%

$   611,823

50.6%

Restructuring

( A )

60

0.0%

47

0.0%

139

0.0%

335

0.0%

Amortization of purchased intangible assets

( B )

15,728

3.1%

10,321

2.5%

42,145

2.8%

23,918

2.0%

Stock-based compensation

( C )

502

0.1%

491

0.1%

1,480

0.1%

1,461

0.1%

Amortization of acquisition-related inventory step-up

( D )

547

0.1%

1,354

0.3%

677

0.0%

3,063

0.3%

Non-GAAP gross margin: 

$   279,704

55.4%

$   223,772

53.6%

$   834,154

54.7%

$   640,600

53.0%

OPERATING EXPENSES:

GAAP operating expenses:

$   199,397

39.5%

$   179,111

42.9%

$   607,474

39.8%

$   484,133

40.0%

Restructuring

( A )

(301)

-0.1%

(647)

-0.2%

(1,894)

-0.1%

(1,775)

-0.1%

Amortization of purchased intangible assets

( B )

(15,712)

-3.1%

(13,785)

-3.3%

(47,170)

-3.1%

(32,829)

-2.7%

Stock-based compensation

( C )

(7,182)

-1.3%

(6,615)

-1.6%

(22,148)

-1.5%

(19,572)

-1.6%

Acquisition costs

( E )

(1,804)

-0.4%

(7,281)

-1.7%

(14,385)

-0.9%

(12,775)

-1.1%

Non-GAAP operating expenses:

$   174,398

34.6%

$   150,783

36.1%

$   521,877

34.2%

$   417,182

34.5%

OPERATING INCOME:

GAAP operating income:

$     63,470

12.6%

$    32,448

7.8%

$   182,239

12.0%

$   127,690

10.6%

Restructuring

( A )

361

0.1%

694

0.2%

2,033

0.1%

2,110

0.2%

Amortization of purchased intangible assets

( B )

31,440

6.2%

24,106

5.8%

89,315

5.9%

56,747

4.7%

Stock-based compensation

( C )

7,684

1.5%

7,106

1.7%

23,628

1.6%

21,033

1.6%

Amortization of acquisition-related inventory step-up

( D )

547

0.1%

1,354

0.3%

677

0.0%

3,063

0.3%

Acquisition costs

( E )

1,804

0.4%

7,281

1.7%

14,385

0.9%

12,775

1.1%

Non-GAAP operating income: 

$   105,306

20.9%

$    72,989

17.5%

$   312,277

20.5%

$   223,418

18.5%

NON-OPERATING INCOME, NET:

GAAP non-operating income, net:

$      3,352

$     (2,563)

$      8,201

$       8,674

Acquisition gain

( E )

(334)

(1,220)

(447)

(71)

Debt issuance cost write-off

( F )

-

-

-

377

Foreign exchange (gain) loss associated with acquisitions

( G )

-

2,190

1,578

(3,456)

Non-GAAP non-operating income, net: 

$      3,018

$     (1,593)

$      9,332

$       5,524

GAAP and 

GAAP and 

GAAP and 

GAAP and 

Non-GAAP

Non-GAAP

Non-GAAP

Non-GAAP

Tax Rate %

( I )

Tax Rate %

( I )

Tax Rate %

( I )

Tax Rate %

( I )

INCOME TAX PROVISION:

GAAP income tax provision:

$     13,022

19%

$      2,689

9%

$    33,403

18%

$     16,118

12%

Non-GAAP items tax effected:

( H )

8,088

3,737

22,873

10,478

Non-GAAP income tax provision: 

$     21,110

19%

$      6,426

9%

$    56,276

18%

$     26,596

12%

NET INCOME:  

GAAP net income attributable to Trimble Navigation Ltd.

$     53,364

$    27,971

$   157,874

$   121,352

Restructuring

( A )

361

694

2,033

2,110

Amortization of purchased intangible assets

( B )

31,440

24,106

89,315

56,747

Stock-based compensation

( C )

7,684

7,106

23,628

21,033

Amortization of acquisition-related inventory step-up

( D )

547

1,354

677

3,063

Acquisition costs

( E )

1,470

6,061

13,938

12,705

Debt issuance cost write-off

( F )

-

-

-

377

Foreign exchange (gain) loss associated with acquisitions

( G )

-

2,190

1,578

(3,456)

Non-GAAP tax adjustments

( H )

(8,088)

(3,737)

(22,873)

(10,478)

Non-GAAP net income attributable to Trimble Navigation Ltd.

$     86,778

$    65,745

$   266,170

$   203,453

DILUTED NET INCOME PER SHARE:

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

$        0.42

$        0.22

$        1.23

$         0.96

Restructuring

( A )

-

0.01

0.02

0.02

Amortization of purchased intangible assets

( B )

0.24

0.19

0.70

0.45

Stock-based compensation

( C )

0.06

0.06

0.18

0.17

Amortization of acquisition-related inventory step-up

( D )

-

0.01

0.01

0.02

Acquisition costs

( E )

0.01

0.05

0.11

0.10

Debt issuance cost write-off

( F )

-

-

-

-

Foreign exchange (gain) loss associated with acquisitions

( G )

-

0.01

0.01

(0.03)

Non-GAAP tax adjustments

( H )

(0.05)

(0.03)

(0.18)

(0.08)

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

$        0.68

$        0.52

$        2.08

$         1.61

OPERATING LEVERAGE:

Increase in non-GAAP operating income

$     32,317

$    20,417

$    88,859

$     52,137

Increase in revenue

$     87,330

$    99,223

$   315,695

$   238,307

Operating leverage (increase in non-GAAP operating 

income as a % of increase in revenue)

37.0%

20.6%

28.1%

21.9%

GAAP TO NON-GAAP RECONCILIATION (CONTINUED)

(Dollars in thousands, except per share data)

(Unaudited)

Third Quarter of

First Three Quarters of

2012

2011

2012

2011

% of Segment

% of Segment

% of Segment

% of Segment

SEGMENT OPERATING INCOME:

Revenue

Revenue

Revenue

Revenue

Engineering and Construction

GAAP operating income before corporate allocations:

$ 68,451

23.8%

$ 42,634

17.7%

$ 168,001

20.5%

$ 112,400

16.8%

Stock-based compensation

( J )

2,675

1.0%

2,579

1.1%

8,730

1.0%

7,360

1.1%

Non-GAAP operating income before corporate allocations:

$ 71,126

24.8%

$ 45,213

18.8%

$ 176,731

21.5%

$ 119,760

17.9%

Field Solutions

GAAP operating income before corporate allocations:

$ 36,021

35.0%

$ 31,030

34.1%

$ 145,005

38.8%

$ 126,078

39.6%

Stock-based compensation

( J )

628

0.6%

559

0.6%

1,952

0.5%

1,619

0.5%

Non-GAAP operating income before corporate allocations:

$ 36,649

35.6%

$ 31,589

34.7%

$ 146,957

39.3%

$ 127,697

40.1%

Mobile Solutions

GAAP operating income (loss) before corporate allocations:

$   8,218

9.8%

$   2,503

4.3%

$  21,200

8.7%

$   (1,515)

(1.1%)

Stock-based compensation

( J )

682

0.8%

668

1.2%

1,710

0.7%

2,473

1.8%

Non-GAAP operating income before corporate allocations:

$   8,900

10.6%

$   3,171

5.5%

$  22,910

9.4%

$       958

0.7%

Advanced Devices

GAAP operating income before corporate allocations:

$   5,684

18.5%

$   3,970

14.6%

$  12,936

14.9%

$  10,441

13.0%

Stock-based compensation

( J )

544

1.8%

636

2.4%

1,716

2.0%

1,955

2.5%

Non-GAAP operating income before corporate allocations:

$   6,228

20.3%

$   4,606

17.0%

$  14,652

16.9%

$  12,396

15.5%

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 and acquisition costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs and acquisition bonus payments 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 and acquisition costs associated with external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs and acquisition bonus payments. 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, net

We believe this measure helps investors evaluate our non-operating income trends. Non-GAAP non-operating income, net excludes acquisition gains associated with unusual acquisition related items such as an adjustment to a gain on bargain purchase (resulting from the fair value of identifiable net assets acquired exceeding the consideration transferred), adjustments to the fair value of earn-out liabilities. These costs are specific to particular acquisitions and vary significantly in amount and timing. Non-GAAP non-operating income, net also excludes the write-off of debt issuance costs associated with a terminated credit facility as well as foreign exchange (gains) losses specifically associated with hedges for two of our acquisitions. We believe that these exclusions provide investors with a supplemental view of our ongoing financial results.

Non-GAAP income tax provision

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

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 costs, a write-off of debt issuance costs associated with a terminated credit facility, foreign exchange (gains) losses from hedges associated with two acquisitions, 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 costs, a write-off of debt issuance costs associated with a terminated credit facility, foreign exchange (gains) losses from hedges associated with two acquisitions, 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 is 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. 

Non-GAAP segment operating income

Non-GAAP segment operating income excludes stock-based compensation from GAAP segment operating income (loss). We believe this information is useful to investors because some may exclude stock-based compensation as an alternative view when assessing trends in the operating income of our segments. 

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, amortization of acquisition-related inventory step-up, acquisition costs, a write-off of debt issuance costs associated with a terminated credit facility, foreign exchange (gains) losses from hedges associated with two acquisitions, and non-GAAP tax adjustments.  For detailed explanations of the adjustments made to comparable GAAP measures, see items (A) - ( J ) 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.  

( B )

Amortization of purchased intangible assets. Included in our GAAP presentation of gross margin, operating expenses, operating income, and net income 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 enhances comparability by allowing investors to compare our operations pre-acquisition to those post-acquisitions and to those of our competitors that have pursued internal growth strategies.

( 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 the first three quarters of fiscal 2012 and 2011, stock-based compensation was allocated as follows: 

Third Quarter of

First Three Quarters of

(Dollars in thousands)

2012

2011

2012

2011

Cost of sales

$                 502

$                 491

$              1,480

$               1,461

Research and development

1,163

1,151

3,869

3,373

Sales and Marketing

1,616

1,672

5,244

4,966

General and administrative

4,403

3,791

13,035

11,233

$              7,684

$              7,105

$            23,628

$             21,033

( 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 costs.  Included in our GAAP presentation of operating expenses, acquisition costs consist of external and incremental costs resulting directly from merger and acquisition activities such as legal, due diligence, integration costs and acquisition bonus payments.  Included in our GAAP presentation of non-operating income, net, acquisition costs include unusual acquisition related items such as an adjustment to a gain on bargain purchase (resulting from the fair value of identifiable net assets acquired exceeding the consideration transferred), and adjustments to the fair value of earn-out liabilities. 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 )

Debt issuance cost write-off.   Included in our non-operating income, net this amount represents a write-off of debt issuance cost for a terminated credit facility.  We excluded the debt issuance cost write-off from our non-GAAP measures. We believe that investors benefit from excluding this item from our non-operating income to facilitate a more meaningful evaluation of our non-operating income trends.

( G )

Foreign exchange (gain) loss associated with acquisitions.    This amount represents the (gain) loss on foreign exchange hedges associated with two of our acquisitions.  We excluded the foreign exchange (gain) loss from our non-GAAP measures because we believe that the exclusion of this item provides investors an enhanced view of the cost structure of our operations and facilitates comparisons with the results of other periods.                     

( H )

Non-GAAP items tax effected.   This amount adjusts the provision for income taxes to reflect the effect of the non-GAAP items (A) - (G) 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 )

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.

( J )