Review the non-GAAP adjustments listed for this company in Appendix B. (a) Put yourself in the...
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Review the non-GAAP adjustments listed for this company in Appendix B. (a) Put yourself in the position of a company spokesperson. Explain a rationale that the company would communicate to the investment community that supports the use of these specific adjustments. (b) Now put yourself in the position of the staff auditor (Q1 and Q2). Are there characteristics with some of these adjustments that were more important when finalizing this going concern decision for HT? HT 2011 Reconciliation of GAAP to Non-GAAP Earnings Net income (loss) reconciliation: GAAP net loss TAL CLANSSIA D (1) Purchase accounting adjustment (2) Amortization of intangible assets (3) Stock-based compensation (4) Restructuring and integration (5) Litigation provision Non-GAAP net income Preliminary Year Ended Sept. 30, 2011 ($41,062) 5,007 14,996 40,859 10,108 5,900 $35,808 Notes Regarding the Above Adjustments (1) Purchase Accounting Adjustment: When an acquisition occurs in the software industry, GAAP requires the acquirer to record deferred revenue at cost. The above adjustment simply adds an additional amount of revenue that would have been recorded had the companies been stand-alone or combined for the entire period. (2) Amortization of Intangible Assets: In accordance with GAAP, HT amortizes intangible assets acquired in connection with acquisitions, HT excludes these amortization costs in non-GAAP financial measures. (3) Stock-Based Compensation: HT excludes stock-based compensation expense in our non-GAAP measures. Stock- based compensation includes stock options, stock granted to employees, and non-executive directors in our non- GAAP financial measures. (4) Restructuring and Integration: Restructuring costs or benefits related to lease abandonment accruals. These costs represent future cash flows associated with the abandonment of lease contracts. (5) Litigation Provision: In this case, the litigation provision was already accrued and, thus, recorded as an expense on the income statement. Review the non-GAAP adjustments listed for this company in Appendix B. (a) Put yourself in the position of a company spokesperson. Explain a rationale that the company would communicate to the investment community that supports the use of these specific adjustments. (b) Now put yourself in the position of the staff auditor (Q1 and Q2). Are there characteristics with some of these adjustments that were more important when finalizing this going concern decision for HT? HT 2011 Reconciliation of GAAP to Non-GAAP Earnings Net income (loss) reconciliation: GAAP net loss TAL CLANSSIA D (1) Purchase accounting adjustment (2) Amortization of intangible assets (3) Stock-based compensation (4) Restructuring and integration (5) Litigation provision Non-GAAP net income Preliminary Year Ended Sept. 30, 2011 ($41,062) 5,007 14,996 40,859 10,108 5,900 $35,808 Notes Regarding the Above Adjustments (1) Purchase Accounting Adjustment: When an acquisition occurs in the software industry, GAAP requires the acquirer to record deferred revenue at cost. The above adjustment simply adds an additional amount of revenue that would have been recorded had the companies been stand-alone or combined for the entire period. (2) Amortization of Intangible Assets: In accordance with GAAP, HT amortizes intangible assets acquired in connection with acquisitions, HT excludes these amortization costs in non-GAAP financial measures. (3) Stock-Based Compensation: HT excludes stock-based compensation expense in our non-GAAP measures. Stock- based compensation includes stock options, stock granted to employees, and non-executive directors in our non- GAAP financial measures. (4) Restructuring and Integration: Restructuring costs or benefits related to lease abandonment accruals. These costs represent future cash flows associated with the abandonment of lease contracts. (5) Litigation Provision: In this case, the litigation provision was already accrued and, thus, recorded as an expense on the income statement. Review the non-GAAP adjustments listed for this company in Appendix B. (a) Put yourself in the position of a company spokesperson. Explain a rationale that the company would communicate to the investment community that supports the use of these specific adjustments. (b) Now put yourself in the position of the staff auditor (Q1 and Q2). Are there characteristics with some of these adjustments that were more important when finalizing this going concern decision for HT? HT 2011 Reconciliation of GAAP to Non-GAAP Earnings Net income (loss) reconciliation: GAAP net loss TAL CLANSSIA D (1) Purchase accounting adjustment (2) Amortization of intangible assets (3) Stock-based compensation (4) Restructuring and integration (5) Litigation provision Non-GAAP net income Preliminary Year Ended Sept. 30, 2011 ($41,062) 5,007 14,996 40,859 10,108 5,900 $35,808 Notes Regarding the Above Adjustments (1) Purchase Accounting Adjustment: When an acquisition occurs in the software industry, GAAP requires the acquirer to record deferred revenue at cost. The above adjustment simply adds an additional amount of revenue that would have been recorded had the companies been stand-alone or combined for the entire period. (2) Amortization of Intangible Assets: In accordance with GAAP, HT amortizes intangible assets acquired in connection with acquisitions, HT excludes these amortization costs in non-GAAP financial measures. (3) Stock-Based Compensation: HT excludes stock-based compensation expense in our non-GAAP measures. Stock- based compensation includes stock options, stock granted to employees, and non-executive directors in our non- GAAP financial measures. (4) Restructuring and Integration: Restructuring costs or benefits related to lease abandonment accruals. These costs represent future cash flows associated with the abandonment of lease contracts. (5) Litigation Provision: In this case, the litigation provision was already accrued and, thus, recorded as an expense on the income statement. Review the non-GAAP adjustments listed for this company in Appendix B. (a) Put yourself in the position of a company spokesperson. Explain a rationale that the company would communicate to the investment community that supports the use of these specific adjustments. (b) Now put yourself in the position of the staff auditor (Q1 and Q2). Are there characteristics with some of these adjustments that were more important when finalizing this going concern decision for HT? HT 2011 Reconciliation of GAAP to Non-GAAP Earnings Net income (loss) reconciliation: GAAP net loss TAL CLANSSIA D (1) Purchase accounting adjustment (2) Amortization of intangible assets (3) Stock-based compensation (4) Restructuring and integration (5) Litigation provision Non-GAAP net income Preliminary Year Ended Sept. 30, 2011 ($41,062) 5,007 14,996 40,859 10,108 5,900 $35,808 Notes Regarding the Above Adjustments (1) Purchase Accounting Adjustment: When an acquisition occurs in the software industry, GAAP requires the acquirer to record deferred revenue at cost. The above adjustment simply adds an additional amount of revenue that would have been recorded had the companies been stand-alone or combined for the entire period. (2) Amortization of Intangible Assets: In accordance with GAAP, HT amortizes intangible assets acquired in connection with acquisitions, HT excludes these amortization costs in non-GAAP financial measures. (3) Stock-Based Compensation: HT excludes stock-based compensation expense in our non-GAAP measures. Stock- based compensation includes stock options, stock granted to employees, and non-executive directors in our non- GAAP financial measures. (4) Restructuring and Integration: Restructuring costs or benefits related to lease abandonment accruals. These costs represent future cash flows associated with the abandonment of lease contracts. (5) Litigation Provision: In this case, the litigation provision was already accrued and, thus, recorded as an expense on the income statement.
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