Delaware | 001-35680 | 20-2480422 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I. R. S. Employer Identification No.) |
¨ | 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)) |
Workday, Inc. | |
/s/ Robynne D. Sisco | |
Robynne D. Sisco | |
Chief Financial Officer |
Exhibit Number | Exhibit Title | |
99.1 |
• | Total revenues were $525.3 million, an increase of 40.6% from the second quarter of fiscal 2017. Subscription revenues were $434.5 million, an increase of 42.0% from the same period last year. |
• | Operating loss was $81.6 million, or negative 15.5% of revenues, compared to an operating loss of $86.7 million, or negative 23.2% of revenues, in the same period last year. Non-GAAP operating profit for the second quarter was $49.0 million, or 9.3% of revenues, compared to a non-GAAP operating profit of $6.1 million, or 1.6% of revenues, in the same period last year.1 |
• | Net loss per basic and diluted share was $0.40, compared to a net loss per basic and diluted share of $0.55 in the second quarter of fiscal 2017. Non-GAAP net income per diluted share was $0.24, compared to a non-GAAP net loss per basic and diluted share of $0.04 in the same period last year.1 |
• | Operating cash flows for the second quarter were $15.1 million and free cash flows were negative $23.4 million. For the trailing twelve months, operating cash flows were $376.4 million and free cash flows were $247.5 million.2 |
• | Cash, cash equivalents and marketable securities were $2.1 billion as of July 31, 2017. Unearned revenues were $1.2 billion, a 26.2% increase from the same period last year. |
• | Workday announced its intent to open the Workday Cloud Platform, equipping customers and, eventually, a broader ecosystem of partners, ISVs, and developers with a Platform-as-a-Service (PaaS) offering to build custom extensions and applications for customers’ business needs. |
• | Workday was positioned by Gartner, Inc. in the Leaders quadrant of the first-ever Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large, and Global Enterprises. Workday was recognized as a leader based on its ability to execute and completeness of vision.3 |
• | Workday announced continued medium enterprise momentum with customers across industries deploying Workday and realizing business benefits including the ability to reduce risk, and rapidly scale and adjust their business. |
• | Workday was named one of the Best Large Workplaces in Europe by the Great Place to Work Institute, ranking #3 on this year’s list. Workday was also ranked #1 in the Bay Area News Group's top workplaces for the seventh consecutive year. |
July 31, 2017 | January 31, 2017 | ||||||
*As Adjusted | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 748,599 | $ | 539,923 | |||
Marketable securities | 1,349,191 | 1,456,822 | |||||
Trade and other receivables, net | 370,557 | 409,780 | |||||
Deferred costs | 54,015 | 51,330 | |||||
Prepaid expenses and other current assets | 63,862 | 66,590 | |||||
Total current assets | 2,586,224 | 2,524,445 | |||||
Property and equipment, net | 438,754 | 365,877 | |||||
Deferred costs, noncurrent | 117,736 | 117,249 | |||||
Acquisition-related intangible assets, net | 39,110 | 48,787 | |||||
Goodwill | 158,540 | 158,354 | |||||
Other assets | 66,763 | 53,570 | |||||
Total assets | $ | 3,407,127 | $ | 3,268,282 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 39,948 | $ | 26,824 | |||
Accrued expenses and other current liabilities | 80,410 | 61,582 | |||||
Accrued compensation | 105,229 | 110,625 | |||||
Unearned revenue | 1,118,565 | 1,086,212 | |||||
Current portion of convertible senior notes, net | 332,422 | — | |||||
Total current liabilities | 1,676,574 | 1,285,243 | |||||
Convertible senior notes, net | 216,038 | 534,423 | |||||
Unearned revenue, noncurrent | 104,178 | 135,331 | |||||
Other liabilities | 39,940 | 36,677 | |||||
Total liabilities | 2,036,730 | 1,991,674 | |||||
Stockholders’ equity: | |||||||
Common stock | 208 | 202 | |||||
Additional paid-in capital | 2,945,596 | 2,681,200 | |||||
Accumulated other comprehensive income (loss) | (22,197 | ) | 2,071 | ||||
Accumulated deficit | (1,553,210 | ) | (1,406,865 | ) | |||
Total stockholders’ equity | 1,370,397 | 1,276,608 | |||||
Total liabilities and stockholders’ equity | $ | 3,407,127 | $ | 3,268,282 |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
*As Adjusted | *As Adjusted | ||||||||||||||
Revenues: | |||||||||||||||
Subscription services | $ | 434,527 | $ | 306,070 | $ | 834,263 | $ | 586,238 | |||||||
Professional services | 90,793 | 67,587 | 170,918 | 135,096 | |||||||||||
Total revenues | 525,320 | 373,657 | 1,005,181 | 721,334 | |||||||||||
Costs and expenses (1): | |||||||||||||||
Costs of subscription services | 65,931 | 51,379 | 125,729 | 100,579 | |||||||||||
Costs of professional services | 92,264 | 66,473 | 169,177 | 125,900 | |||||||||||
Product development | 221,103 | 161,886 | 417,542 | 303,664 | |||||||||||
Sales and marketing | 171,952 | 134,899 | 327,661 | 262,518 | |||||||||||
General and administrative | 55,699 | 45,705 | 106,901 | 86,888 | |||||||||||
Total costs and expenses | 606,949 | 460,342 | 1,147,010 | 879,549 | |||||||||||
Operating loss | (81,629 | ) | (86,685 | ) | (141,829 | ) | (158,215 | ) | |||||||
Other income (expense), net | 938 | (21,193 | ) | (725 | ) | (27,031 | ) | ||||||||
Loss before provision for (benefit from) income taxes | (80,691 | ) | (107,878 | ) | (142,554 | ) | (185,246 | ) | |||||||
Provision for (benefit from) income taxes | 1,841 | (65 | ) | 4,022 | 1,070 | ||||||||||
Net loss | $ | (82,532 | ) | $ | (107,813 | ) | $ | (146,576 | ) | $ | (186,316 | ) | |||
Net loss per share, basic and diluted | $ | (0.40 | ) | $ | (0.55 | ) | $ | (0.71 | ) | $ | (0.95 | ) | |||
Weighted-average shares used to compute net loss per share, basic and diluted | 207,028 | 197,223 | 205,453 | 195,887 |
(1) Costs and expenses include share-based compensation expenses as follows: | |||||||||||||||
Costs of subscription services | $ | 6,580 | $ | 4,968 | $ | 12,271 | $ | 9,365 | |||||||
Costs of professional services | 9,301 | 5,969 | 17,322 | 11,262 | |||||||||||
Product development | 56,923 | 38,314 | 107,952 | 71,282 | |||||||||||
Sales and marketing | 25,942 | 20,844 | 49,101 | 39,846 | |||||||||||
General and administrative | 22,777 | 18,127 | 42,665 | 34,702 |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
*As Adjusted | *As Adjusted | ||||||||||||||
Cash flows from operating activities | |||||||||||||||
Net loss | $ | (82,532 | ) | $ | (107,813 | ) | $ | (146,576 | ) | $ | (186,316 | ) | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||||||
Depreciation and amortization | 34,021 | 26,662 | 67,398 | 52,786 | |||||||||||
Share-based compensation expenses | 121,523 | 88,222 | 229,311 | 166,457 | |||||||||||
Amortization of deferred costs | 14,009 | 10,917 | 27,646 | 21,356 | |||||||||||
Amortization of debt discount and issuance costs | 6,785 | 6,690 | 13,735 | 13,289 | |||||||||||
Gain on sale of cost method investment | (526 | ) | (65 | ) | (526 | ) | (65 | ) | |||||||
Impairment of cost method investment | — | 15,000 | — | 15,000 | |||||||||||
Other | 1,933 | 1,918 | 4,611 | 1,600 | |||||||||||
Changes in operating assets and liabilities, net of business combinations: | |||||||||||||||
Trade and other receivables, net | (71,422 | ) | (52,337 | ) | 40,393 | 45,982 | |||||||||
Deferred costs | (19,437 | ) | (19,541 | ) | (30,818 | ) | (28,767 | ) | |||||||
Prepaid expenses and other assets | (8,968 | ) | (10,070 | ) | (12,018 | ) | (7,682 | ) | |||||||
Accounts payable | 10,778 | 1,542 | 10,213 | (180 | ) | ||||||||||
Accrued expenses and other liabilities | (13,472 | ) | (6,517 | ) | (9,383 | ) | (972 | ) | |||||||
Unearned revenue | 22,434 | 51,914 | 1,162 | 76,851 | |||||||||||
Net cash provided by (used in) operating activities | 15,126 | 6,522 | 195,148 | 169,339 | |||||||||||
Cash flows from investing activities | |||||||||||||||
Purchases of marketable securities | (285,197 | ) | (557,180 | ) | (898,448 | ) | (1,191,136 | ) | |||||||
Maturities of marketable securities | 371,471 | 539,315 | 813,341 | 1,164,903 | |||||||||||
Sales of available-for-sale securities | 180,863 | 28,652 | 189,937 | 28,852 | |||||||||||
Business combinations, net of cash acquired | — | (3,670 | ) | — | (3,670 | ) | |||||||||
Owned real estate projects | (22,996 | ) | (6,788 | ) | (52,535 | ) | (25,774 | ) | |||||||
Capital expenditures, excluding owned real estate projects | (38,528 | ) | (26,539 | ) | (69,121 | ) | (61,017 | ) | |||||||
Purchases of cost method investments | (5,000 | ) | (200 | ) | (5,450 | ) | (300 | ) | |||||||
Sale and maturities of cost method investments | 732 | 315 | 732 | 315 | |||||||||||
Other | — | (684 | ) | — | (296 | ) | |||||||||
Net cash provided by (used in) investing activities | 201,345 | (26,779 | ) | (21,544 | ) | (88,123 | ) | ||||||||
Cash flows from financing activities | |||||||||||||||
Proceeds from issuance of common stock from employee equity plans | 32,274 | 25,395 | 34,527 | 28,776 | |||||||||||
Other | (32 | ) | 195 | (76 | ) | 571 | |||||||||
Net cash provided by (used in) financing activities | 32,242 | 25,590 | 34,451 | 29,347 | |||||||||||
Effect of exchange rate changes | 715 | (144 | ) | 583 | 494 | ||||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 249,428 | 5,189 | 208,638 | 111,057 | |||||||||||
Cash, cash equivalents and restricted cash at the beginning of period | 501,104 | 405,955 | 541,894 | 300,087 | |||||||||||
Cash, cash equivalents and restricted cash at the end of period | $ | 750,532 | $ | 411,144 | $ | 750,532 | $ | 411,144 |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Supplemental cash flow data | |||||||||||||||
Cash paid for interest, net of amounts capitalized | $ | 46 | $ | 2,652 | $ | 46 | $ | 2,656 | |||||||
Cash paid for income taxes | 1,262 | 3,566 | 2,608 | 4,147 | |||||||||||
Non-cash investing and financing activities: | |||||||||||||||
Vesting of early exercise stock options | $ | 282 | $ | 460 | $ | 564 | $ | 920 | |||||||
Property and equipment, accrued but not paid | 33,219 | 11,426 | 33,219 | 11,426 | |||||||||||
Non-cash additions to property and equipment | 485 | 394 | 627 | 915 |
July 31, 2017 | July 31, 2016 | ||||||
*As Adjusted | |||||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the statement of cash flows | |||||||
Cash and cash equivalents | $ | 748,599 | $ | 405,529 | |||
Restricted cash included in Other assets | 1,933 | 1,615 | |||||
Restricted cash included in Property and equipment, net | — | 4,000 | |||||
Total cash, cash equivalents and restricted cash | $ | 750,532 | $ | 411,144 |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses (3) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 65,931 | $ | (6,580 | ) | $ | (208 | ) | $ | — | $ | 59,143 | |||||||
Costs of professional services | 92,264 | (9,301 | ) | (379 | ) | — | 82,584 | ||||||||||||
Product development | 221,103 | (56,923 | ) | (6,602 | ) | — | 157,578 | ||||||||||||
Sales and marketing | 171,952 | (25,942 | ) | (1,126 | ) | — | 144,884 | ||||||||||||
General and administrative | 55,699 | (22,777 | ) | (754 | ) | — | 32,168 | ||||||||||||
Operating income (loss) | (81,629 | ) | 121,523 | 9,069 | — | 48,963 | |||||||||||||
Operating margin | (15.5 | )% | 23.1 | % | 1.7 | % | — | % | 9.3 | % | |||||||||
Other income (expense), net | 938 | — | — | 6,785 | 7,723 | ||||||||||||||
Income (loss) before provision for (benefit from) income taxes | (80,691 | ) | 121,523 | 9,069 | 6,785 | 56,686 | |||||||||||||
Provision for (benefit from) income taxes (1) | 1,841 | — | — | — | 1,841 | ||||||||||||||
Net income (loss) | $ | (82,532 | ) | $ | 121,523 | $ | 9,069 | $ | 6,785 | $ | 54,845 | ||||||||
Net income (loss) per share (2) | $ | (0.40 | ) | $ | 0.59 | $ | 0.04 | $ | 0.01 | $ | 0.24 |
(1) | The Company’s GAAP tax provision is primarily related to state taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no tax impact associated with the non-GAAP adjustments. |
(2) | GAAP net loss per share calculated based upon 207,028 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share calculated based upon 225,610 diluted weighted-average shares of common stock. |
(3) | Other operating expenses include total employer payroll tax-related items on employee stock transactions of $4.3 million, and amortization of acquisition-related intangible assets of $4.8 million. |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses (3) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
*As Adjusted | *As Adjusted | ||||||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 51,379 | $ | (4,968 | ) | $ | (133 | ) | $ | — | $ | 46,278 | |||||||
Costs of professional services | 66,473 | (5,969 | ) | (226 | ) | — | 60,278 | ||||||||||||
Product development | 161,886 | (38,314 | ) | (2,566 | ) | — | 121,006 | ||||||||||||
Sales and marketing | 134,899 | (20,844 | ) | (707 | ) | — | 113,348 | ||||||||||||
General and administrative | 45,705 | (18,127 | ) | (924 | ) | — | 26,654 | ||||||||||||
Operating income (loss) | (86,685 | ) | 88,222 | 4,556 | — | 6,093 | |||||||||||||
Operating margin | (23.2 | )% | 23.6 | % | 1.2 | % | — | % | 1.6 | % | |||||||||
Other income (expense), net | (21,193 | ) | — | — | 6,690 | (14,503 | ) | ||||||||||||
Income (loss) before provision for (benefit from) income taxes | (107,878 | ) | 88,222 | 4,556 | 6,690 | (8,410 | ) | ||||||||||||
Provision for (benefit from) income taxes (1) | (65 | ) | — | — | — | (65 | ) | ||||||||||||
Net income (loss) | $ | (107,813 | ) | $ | 88,222 | $ | 4,556 | $ | 6,690 | $ | (8,345 | ) | |||||||
Net income (loss) per share (2) | $ | (0.55 | ) | $ | 0.45 | $ | 0.02 | $ | 0.04 | $ | (0.04 | ) |
(1) | The Company’s GAAP tax provision is primarily related to state taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no tax impact associated with the non-GAAP adjustments. |
(2) | Calculated based upon 197,223 basic and diluted weighted-average shares of common stock. |
(3) | Other operating expenses include total employer payroll tax-related items on employee stock transactions of $3.2 million, and amortization of acquisition-related intangible assets of $1.4 million recorded as part of product development expenses. |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses (3) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 125,729 | $ | (12,271 | ) | $ | (754 | ) | $ | — | $ | 112,704 | |||||||
Costs of professional services | 169,177 | (17,322 | ) | (1,285 | ) | — | 150,570 | ||||||||||||
Product development | 417,542 | (107,952 | ) | (15,564 | ) | — | 294,026 | ||||||||||||
Sales and marketing | 327,661 | (49,101 | ) | (2,800 | ) | — | 275,760 | ||||||||||||
General and administrative | 106,901 | (42,665 | ) | (2,072 | ) | — | 62,164 | ||||||||||||
Operating income (loss) | (141,829 | ) | 229,311 | 22,475 | — | 109,957 | |||||||||||||
Operating margin | (14.1 | )% | 22.8 | % | 2.2 | % | — | % | 10.9 | % | |||||||||
Other income (expense), net | (725 | ) | — | — | 13,735 | 13,010 | |||||||||||||
Income (loss) before provision for (benefit from) income taxes | (142,554 | ) | 229,311 | 22,475 | 13,735 | 122,967 | |||||||||||||
Provision for (benefit from) income taxes (1) | 4,022 | — | — | — | 4,022 | ||||||||||||||
Net income (loss) | $ | (146,576 | ) | $ | 229,311 | $ | 22,475 | $ | 13,735 | $ | 118,945 | ||||||||
Net income (loss) per share (2) | $ | (0.71 | ) | $ | 1.12 | $ | 0.11 | $ | 0.01 | $ | 0.53 |
(1) | The Company’s GAAP tax provision is primarily related to state taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no tax impact associated with the non-GAAP adjustments. |
(2) | GAAP net loss per share calculated based upon 205,453 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share calculated based upon 223,825 diluted weighted-average shares of common stock. |
(3) | Other operating expenses include total employer payroll tax-related items on employee stock transactions of $12.8 million, and amortization of acquisition-related intangible assets of $9.7 million. |
GAAP | Share-Based Compensation Expenses | Other Operating Expenses (3) | Amortization of Debt Discount and Issuance Costs | Non-GAAP | |||||||||||||||
*As Adjusted | *As Adjusted | ||||||||||||||||||
Costs and expenses: | |||||||||||||||||||
Costs of subscription services | $ | 100,579 | $ | (9,365 | ) | $ | (452 | ) | $ | — | $ | 90,762 | |||||||
Costs of professional services | 125,900 | (11,262 | ) | (716 | ) | — | 113,922 | ||||||||||||
Product development | 303,664 | (71,282 | ) | (6,360 | ) | — | 226,022 | ||||||||||||
Sales and marketing | 262,518 | (39,846 | ) | (1,797 | ) | — | 220,875 | ||||||||||||
General and administrative | 86,888 | (34,702 | ) | (1,736 | ) | — | 50,450 | ||||||||||||
Operating income (loss) | (158,215 | ) | 166,457 | 11,061 | — | 19,303 | |||||||||||||
Operating margin | (21.9 | )% | 23.1 | % | 1.5 | % | — | % | 2.7 | % | |||||||||
Other income (expense), net | (27,031 | ) | — | — | 13,289 | (13,742 | ) | ||||||||||||
Income (loss) before provision for (benefit from) income taxes | (185,246 | ) | 166,457 | 11,061 | 13,289 | 5,561 | |||||||||||||
Provision for (benefit from) income taxes (1) | 1,070 | — | — | — | 1,070 | ||||||||||||||
Net income (loss) | $ | (186,316 | ) | $ | 166,457 | $ | 11,061 | $ | 13,289 | $ | 4,491 | ||||||||
Net income (loss) per share (2) | $ | (0.95 | ) | $ | 0.85 | $ | 0.06 | $ | 0.06 | $ | 0.02 |
(1) | The Company’s GAAP tax provision is primarily related to state taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no tax impact associated with the non-GAAP adjustments. |
(2) | GAAP net loss per share calculated based upon 195,887 basic and diluted weighted-average shares of common stock. Non-GAAP net income per share calculated based upon 206,531 diluted weighted-average shares of common stock. |
(3) | Other operating expenses include total employer payroll tax-related items on employee stock transactions of $8.3 million, and amortization of acquisition-related intangible assets of $2.7 million recorded as part of product development expenses. |
Three Months Ended July 31, | Six Months Ended July 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
*As Adjusted | *As Adjusted | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 15,126 | $ | 6,522 | $ | 195,148 | $ | 169,339 | |||||||
Capital expenditures, excluding owned real estate projects | (38,528 | ) | (26,539 | ) | (69,121 | ) | (61,017 | ) | |||||||
Free cash flows | $ | (23,402 | ) | $ | (20,017 | ) | $ | 126,027 | $ | 108,322 | |||||
Trailing Twelve Months Ended July 31, | |||||||||||||||
2017 | 2016 | ||||||||||||||
*As Adjusted | |||||||||||||||
Net cash provided by (used in) operating activities | $ | 376,435 | $ | 320,589 | |||||||||||
Capital expenditures, excluding owned real estate projects | (128,917 | ) | (140,895 | ) | |||||||||||
Free cash flows | $ | 247,518 | $ | 179,694 |
• | Share-based compensation expenses. Although share-based compensation is an important aspect of the compensation of our employees and executives, management believes it is useful to exclude share-based compensation expenses in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies. For restricted stock unit awards, the amount of share-based compensation expenses is not reflective of the value ultimately received by the grant recipients. Moreover, determining the fair value of certain of the share-based instruments we utilize involves a high degree of judgment and estimation and the expense recorded may bear little resemblance to the actual value realized upon the vesting or future exercise of the related share-based awards. Unlike cash compensation, the value of stock options and shares offered under our Employee Stock Purchase Plan, which are elements of our ongoing share-based compensation expenses, is determined using a complex formula that incorporates factors, such as market volatility and forfeiture rates, that are beyond our control. |
• | Other Operating Expenses. Other operating expenses includes employer payroll tax-related items on employee stock transactions and amortization of acquisition-related intangible assets. The amount of employer payroll tax-related items on employee stock transactions is dependent on our stock price and other factors that are beyond our control and do not correlate to the operation of the business. For business combinations, we generally allocate a portion of the purchase price to intangible assets. The amount of the allocation is based on estimates and assumptions made by management and is subject to amortization. The amount of purchase price allocated to intangible assets and the term of its related amortization can vary significantly and are unique to each acquisition and thus we do not believe it is reflective of ongoing operations. |
• | Amortization of debt discount and issuance costs. Under GAAP, we are required to separately account for liability (debt) and equity (conversion option) components of the convertible senior notes that were issued in private placements in June 2013. Accordingly, for GAAP purposes we are required to recognize the effective interest expense on our convertible senior notes and amortize the issuance costs over the term of the notes. The difference between the effective interest expense and the contractual interest expense, and the amortization expense of issuance costs are excluded from management’s assessment of our operating performance because management believes that these non-cash expenses are not indicative of ongoing operating performance. Management believes that the exclusion of the non-cash interest expense provides investors an enhanced view of the Company’s operational performance. |