EX-99.3 5 tyl-ex993_8.htm EX-99.3 tyl-ex993_8.htm

Exhibit 99.4

Use of Non-GAAP Financial Measures

The Company has provided in this Current Report on Form 8-K/A financial information that has not been prepared in accordance with generally accepted accounting principles (“GAAP”). This information includes non-GAAP net income and non-GAAP earnings per diluted share. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP measures are provided to enhance investors’ overall understanding of the acquisition and its impact on the Company’s financial performance.  The Company believes that the non-GAAP financial measures presented herein are useful because they will allow for meaningful comparison of Tyler’s pro forma combined results in the periods presented with such results in future periods.  The usefulness of the non-GAAP financial measures presented herein is limited by the fact that the adjustments are merely estimates of what the performance would have been with the adjustments discussed herein.

Non-GAAP financial measures discussed below add back write-downs of acquisition-related deferred revenue, write-downs of acquisition-related real estate income, share-based compensation expense, the employer portion of payroll tax related to employee stock transactions, acquisition-related costs, and amortization of intangibles arising from business combinations.  These non-GAAP financial measures may not be completely comparable to similarly titled measures of other companies due to potential differences in the exact method of calculation between companies.  

The reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures is shown below.

TYLER TECHNOLOGIES, INC.

 

PRO FORMA RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

 

(Amounts in thousands, except per share amounts)

 

(Unaudited)

 

 

 

Nine Months

 

 

Twelve Months

 

 

 

Ended

 

 

Ended

 

Reconciliation of non-GAAP net income and earnings per share

 

September 30,

2015

 

 

December 31,

2014

 

Pro forma GAAP net income

 

$

52,569

 

 

$

44,436

 

Pro forma non-GAAP adjustments included in total revenues:

 

 

 

 

 

 

 

 

  Add:  Acquisition-related deferred revenue write-down

 

 

579

 

 

 

19,411

 

  Add:  Acquisition-related real estate write-down

 

 

125

 

 

 

165

 

Pro forma non-GAAP adjustments included in cost of revenues:

 

 

 

 

 

 

 

 

  Add:  Share-based compensation expense

 

 

2,349

 

 

 

2,177

 

Pro forma non-GAAP adjustments included in selling, general and administrative expenses:

 

 

 

 

 

 

 

 

  Add:  Share-based compensation expense

 

 

12,110

 

 

 

12,642

 

  Add:  Employer portion of payroll tax related to employee stock transactions

 

 

333

 

 

 

514

 

  Add:  Non-recurring compensation related to acquisitions

 

 

13,007

 

 

 

15,870

 

  Add:  Acquisition-related costs

 

 

379

 

 

 

 

  Add:  Amortization of acquired software

 

 

16,221

 

 

 

21,534

 

  Add:  Amortization of customer and trade name intangibles

 

 

9,901

 

 

 

12,967

 

Pro forma non-GAAP adjustments subtotal

 

 

55,004

 

 

 

85,280

 

Less:  Tax impact related to non-GAAP adjustments

 

 

(18,334

)

 

 

(28,899

)

Pro forma non-GAAP net income

 

$

89,239

 

 

$

100,817

 

 

 

 

 

 

 

 

 

 

Shares used in computing Pro forma non-GAAP diluted earnings per share

 

 

38,299

 

 

 

37,537

 

Pro forma non-GAAP earnings per diluted share

 

$

2.33

 

 

$

2.69