Non-GAAP Financial Measures
We have reported our financial results in accordance with generally accepted accounting principles (“GAAP”). A reconciliation of the following non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are set forth below:
Adjusted Revenue
We discussed the revenue growth for the year ended December 31, 2008 using non-GAAP financial measures. To understand trends in the business, we believe that it is helpful to adjust the revenue growth rates to illustrate the impact of the acquisition of GIS by including their estimated revenue for the comparable 2007 period. We refer to this adjusted revenue as “As Adjusted” in the following reconciliation table. Revenue “As Adjusted” adds GIS’s revenues from January 1, 2007 to May 8, 2007 to our 2007 reported revenue. Management believes these measures give investors an additional perspective on revenue trends, as well as the impact to the Company of the acquisition of GIS that was completed in May 2007.
| Year Ended December 31, | ||||||||||||
|
(in millions) |
2008 | 2007 | Change | |||||||||
|
Equipment Sales Revenue: |
||||||||||||
|
As Reported |
$ | 4,679 | $ | 4,753 | (2)% | |||||||
|
As Adjusted |
$ | 4,679 | $ | 4,938 | (5)% | |||||||
|
Post Sale Revenue: |
||||||||||||
|
As Reported |
$ | 12,929 | $ | 12,475 | 4% | |||||||
|
As Adjusted |
$ | 12,929 | $ | 12,681 | 2% | |||||||
|
Total Revenues: |
||||||||||||
|
As Reported |
$ | 17,608 | $ | 17,228 | 2% | |||||||
|
As Adjusted |
$ | 17,608 | $ | 17,619 | — | |||||||
Adjusted Effective Tax Rate
The effective tax rate for the year ended December 31, 2008 is discussed using a non-GAAP financial measure that excludes the effect of charges associated with an equipment write-off; restructuring and asset impairments; certain litigation matters and the settlement of certain previously unrecognized tax benefits. Management believes that it is helpful to exclude these effects to better understand, analyze and compare 2008’s income tax expense and effective tax rate to the 2007 amounts, given the discrete nature and size of these items in 2008.
| Year Ended December 31, 2008 | ||||||||||
|
(in millions) |
Pre-Tax Income |
Income Taxes |
Effective Tax Rate |
|||||||
| As Reported | $ | (79 | ) | $ | (231 | ) | 292.4% | |||
|
Restructuring and asset impairment charges |
426 | 134 | ||||||||
|
Equipment write-off |
39 | 15 | ||||||||
|
Provision for securities litigation matters |
774 | 283 | ||||||||
|
Tax settlements |
— | 41 | ||||||||
| As Adjusted | $ | 1,160 | $ | 242 | 20.9% | |||||
Management believes that these non-GAAP financial measures provide an additional means of analyzing the current-period results against the corresponding prior-period results. However, non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results prepared in accordance with GAAP.