UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): January 19, 2016
Symantec Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware | 000-17781 | 77-0181864 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
350 Ellis Street, Mountain View, CA | 94043 | |||
(Address of Principal Executive Offices) | (Zip Code) |
Registrants Telephone Number, Including Area Code (650) 527-8000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
¨ | 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)) |
Item 1.01 | Entry into a Material Definitive Agreement. |
On January 19, 2016, Symantec Corporation (the Company) and Veritas Holdings Ltd. (f/k/a Havasu Holdings Ltd.), an entity formed and controlled by an affiliate of The Carlyle Group and certain co-investors (the Buyer), entered into an amendment (the Amendment) to the Purchase Agreement dated August 11, 2015 between the Company and the Buyer (the Agreement) relating to the sale of the Companys Veritas information management business (Veritas). Pursuant to the Amendment, the purchase price will be $7.4 billion. The Company and the Buyer also agreed to increase the amount of offshore cash remaining in Veritas from $200 million to $400 million, which will result in a net consideration to Symantec of $7 billion. This consideration will consist of $6.6 billion in cash and a $400 million equity interest in the Buyer. The parties also agreed to remove a net working capital adjustment to the purchase price.
The above description of the Amendment does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Amendment, which is filed as Exhibit 2.1 hereto and incorporated by reference herein.
Item 2.02 | Results of Operations and Financial Condition. |
In connection with the debt financing for a portion of the purchase price payable for the sale by the Company of Veritas to the Buyer, Veritas US Inc. and Veritas Bermuda Ltd. (wholly-owned subsidiaries of the Buyer and the issuers of such debt financing) are disclosing the information set forth in Exhibit 99.1 to this Current Report on Form 8-K regarding certain preliminary results of operation of the Veritas information management business and related information, which is incorporated herein by reference.
The Company anticipates that it will report GAAP Revenue, Non-GAAP Operating Margin and Non-GAAP diluted EPS for the third fiscal quarter of 2016 that are above the midpoint of the guidance provided in its press release dated November 5, 2015. That guidance, and these views on anticipated results for the third quarter, exclude the operations of the Companys Veritas information management business. These views on anticipated results for the third quarter of fiscal year 2016 are based on managements initial review of operations for the third quarter ended January 1, 2016 and are subject to the completion of the Companys customary quarterly closing and review procedure.
The information furnished in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information contained in this Item 2.02 of this Current Report on Form 8-K and in the accompanying Exhibit 99.1 shall not be incorporated by reference into any registration statement or other document filed with the Securities and Exchange Commission by the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
FORWARD-LOOKING STATEMENTS: This Current Report on Form 8-K contains forward looking statements regarding the Companys expected operating results for the third quarter of fiscal 2016 ended January 1, 2016. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results to differ materially from results expressed or implied herein. Such risk factors include the results of the Companys completion of the financial closing process for the third quarter operating results and financial condition. The Company assumes no obligation, and does not intend, to update these forward-looking statements prior to reporting its third quarter results. Additional information concerning risks that could cause actual results to differ from current expectations is contained in Risk Factors, set forth in Part I, Item 1A of the Companys Annual Report on Form 10-K for the fiscal year ended April 3, 2015.
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Item 9.01 | Financial Statements and Exhibits. |
(d)
Exhibit
|
Exhibit Title or Description |
|
2.1 | Amendment, dated January 19, 2016, to Purchase Agreement dated as of August 11, 2015, by and between Symantec Corporation and Veritas Holdings Ltd. | |
99.1 | Disclosure Regarding Preliminary Operating Results of Veritas. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Symantec Corporation | ||||||
Date: January 19, 2016 | By: |
/s/ T HOMAS J. S EIFERT |
||||
Thomas J. Seifert | ||||||
Executive Vice President and Chief Financial Officer |
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Exhibit Index
Exhibit
|
Exhibit Title or Description |
|
2.1 | Amendment, dated January 19, 2016, to Purchase Agreement dated as of August 11, 2015, by and between Symantec Corporation and Veritas Holdings Ltd. | |
99.1 | Disclosure Regarding Preliminary Operating Results of Veritas. |
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Exhibit 2.1
This AMENDMENT dated as of January 19, 2016 (this Amendment ), to the Purchase Agreement, dated as of August 11, 2015 (the Purchase Agreement ), is entered into by and between Symantec Corporation, a Delaware corporation ( Seller ), and Veritas Holdings Ltd. (f/k/a Havasu Holdings Ltd.), a Bermuda exempted company ( Buyer ). Capitalized terms used in this Amendment but not defined in this Amendment shall have the meanings assigned to such terms in the Purchase Agreement.
WHEREAS pursuant to Section 11.6 of the Purchase Agreement, Seller and Buyer have agreed to amend certain provisions of the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1. Amendments to the Purchase Agreement .
1.1 The following definitions in the Purchase Agreement and the references thereto are deleted in their entirety: Closing Net Working Capital Lower Collar, Closing Net Working Capital Target, Closing Net Working Capital Upper Collar, Estimated Working Capital Adjustment Amount, and Final Working Capital Adjustment Amount.
1.2 The references to $200,000,000 in (a) the definitions of Business Cash Deficit Amount and the Business Cash Surplus Amount in Section 1.1 of the Purchase Agreement, (b) Section 6.1(e) of the Purchase Agreement and (c) Section 7.3(g) of the Purchase Agreement are each hereby replaced with $400,000,000.
1.3 The definition of Transaction Documents in the Purchase Agreement is hereby expanded to also include the Memorandum of Association, the Bye-Laws and the Shareholders Agreement (each as defined in this Amendment).
1.4 The definition of Excess Cash is hereby amended and restated in its entirety as follows:
Excess Cash means the aggregate amount by which the Business Cash held in (x) all jurisdictions (other than in the Key Cash Jurisdictions) exceeds $50,000,000, (y) a jurisdiction (or group of jurisdictions) set forth on Schedule 1.1(a)(vii) of the Disclosure Letter exceeds the amount set forth opposite such jurisdiction (or such group of jurisdictions) on Schedule 1.1(a)(vii) of the Disclosure Letter and (z) Singapore exceeds $50,000,000.
1.5 Section 3.1 of the Purchase Agreement is hereby amended and restated in its entirety as follows:
Section 3.1 Purchase Price . The total consideration for the Purchased Shares and the Purchased Assets shall be (a) $7,400,000,000 (the Base Amount ) consisting of (i) an amount equal to $7,000,000,000 (the Purchase Price ), as adjusted pursuant to Section 3.5 and Section 3.6 , payable as described in this Agreement, and (ii) the Share Consideration (which Buyer and Seller agree shall be issued by Buyer to Seller in
satisfaction of $400,000,000 of the Base Amount) and (b) the assumption by Buyer of the Assumed Liabilities. VAT or Transfer Taxes payable in connection with the consummation of the Purchase Transaction and the transfer of the Purchased Shares and the Purchased Assets pursuant to this Agreement are addressed in Section 6.8 and Section 10.3 .
1.6 Section 3.2 of the Purchase Agreement is hereby amended to add the following as a new subsection (c):
(c) On the Closing Date, Buyer shall issue, or cause to be issued, to Seller or its designee, and Seller shall accept and acquire from Buyer, the Share Consideration. As used herein, Share Consideration shall mean 40,000,000 B Shares in Buyer (as defined in the Bye-Laws (as defined in this Amendment)). The Share Consideration shall have the rights, preferences, privileges, conditions and restrictions as set forth in the Bye-Laws and the Shareholders Agreement (each as defined in this Amendment) or as otherwise mutually agreed by Buyer and Seller.
1.7 Section 3.3 of the Purchase Agreement is hereby amended to add the following to the end thereof:
To the extent required by applicable Law, the Share Consideration will be included in the aforementioned procedures as if it were Final Consideration, mutatis mutandis .
Section 2. Acknowledgments . For all purposes of the Purchase Agreement (including without limitation Article 7, Section 8.1, Article 10 and Section 11.7 thereof), Buyer and Seller irrevocably acknowledge and agree that:
2.1 The conditions set forth in Section 7.1(b) and Section 7.3(f)(i) and (ii) of the Purchase Agreement have been satisfied.
2.2 Taking into account all financial, operating and other information relating to or affecting the Business which Buyer, its Affiliates or its or their Representatives has received or otherwise has knowledge as of the date hereof, including the results of the Business for the fiscal quarter ended January 1, 2016, the financial projections for the fiscal quarter ended April 1, 2016 and the 2017 fiscal year and all other information, diligence responses, forecasts, plans and projections provided to Buyer on or prior to the date hereof (collectively, the Information ), Operational Separation has been completed in all material respects in the Principal Jurisdictions on or prior to January 7, 2016.
2.3 Taking into account all Information, to the knowledge of Buyer, (i) since the Agreement Date through the date hereof, there has not occurred a Material Adverse Effect and (ii) Buyer is not currently aware of any Effect, individually or in the aggregate with all other Effects of which Buyer is currently aware, that is a Material Adverse Effect as of the date hereof, or would reasonably be expected to be a Material Adverse Effect as of the Closing Date.
2.4 Taking into account all Information, Buyer is not currently aware of any breach of any representations, warranties, covenants or agreements of Seller contained in the Purchase Agreement or other Transaction Documents.
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2.5 Taking into account all relevant information provided by Buyer to Seller, its Affiliates or its or their Representatives, Seller is not currently aware of any breach of any representations, warranties, covenants or agreements of Buyer contained in the Purchase Agreement or other Transaction Documents.
Section 3. Equity Agreements .
As of the date hereof, Buyer has delivered to Seller true, accurate and complete copies of the latest drafts of the Memorandum of Association, Shareholders Agreement (the Shareholders Agreement ), Management Shareholders Agreement, Amended and Restated Bye-Laws of Buyer (the Bye-Laws ), Veritas Holdings Ltd. Long-Term Incentive Plan and Founders Award Certificate (collectively, the Equity Agreements ). Other than as expressly set forth in such Equity Agreements and except for such changes or agreements which may be agreed between Buyer and Seller or which would not, by its express terms, affect in an adverse manner, the rights and obligations of Seller in its capacity as a shareholder, relative to the rights and obligations of the other Shareholders, there are, and at Closing will be, no other agreements (including side letters or other arrangements) relating to or affecting the terms or conditions of the Share Consideration and/or Sellers rights as a shareholder of Buyer. As of the date hereof, Buyers good faith estimate of the equity capitalization of Buyer after giving effect to the Closing is as set forth in Schedule I hereto. The Share Consideration will be issued at the same per share price as the A Shares (as defined in the Buyer Bye-Laws) in Buyer to be acquired by C-H Holdings and GIC in connection with the Closing pursuant to their respective Equity Commitment Letters.
Section 4. Other Agreements .
4.1 Each of Buyer and Seller hereby reaffirms that it will fulfill all of its obligations under the Purchase Agreement (after giving effect to this Amendment), including without limitation its obligations under Section 6.15 of the Purchase Agreement. Without limiting the generality of the foregoing, Buyer will enforce its rights under the Financing Commitments and Financing Agreements, including through litigation pursued in good faith.
4.2 Seller hereby irrevocably confirms that Seller is prepared, able and would take such actions required of it by the Purchase Agreement to effect the Closing upon the funding of the Equity Financing and Debt Financing.
4.3 Pursuant to Section 8.1 of the Purchase Agreement, Buyer specifies and agrees, and Seller agrees, that the Closing shall occur on January 29, 2016, subject only to the satisfaction of the conditions set forth in Sections 7.1, 7.2 and 7.3 of the Purchase Agreement after giving effect to this Amendment, subject in all respects to the limitations set forth in Section 10.3(d) of the Purchase Agreement.
4.4 Buyer agrees that, based on the Information, it would be able to deliver a solvency certificate as required under the Debt Financing Commitments as of the date hereof.
4.5 Buyer agrees that in the event that the Closing does not occur on January 29, 2016, Buyer will not oppose any effort by Seller to seek expedited proceedings in any litigation by Seller against Buyer seeking specific performance to consummate the transactions contemplated by the Purchase Agreement.
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Section 5. Miscellaneous .
5.1 Nothing in this Amendment shall adversely affect the rights of Seller to seek or obtain any injunction, specific performance or any other equitable relief requiring Buyer to cause the Equity Financing to be funded, to specifically enforce its rights under the Equity Financing Commitments or to cause Buyer to consummate the transactions contemplated by the Purchase Agreement pursuant to Section 11.7 thereof, in each case as and to the extent permitted by the Purchase Agreement. Nothing in this Amendment shall adversely affect the rights of Buyer to obtain any injunction, specific performance or any other equitable relief pursuant to or in connection with the Purchase Agreement.
5.2 Except as expressly set forth herein, this Amendment (a) shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of the parties to the Purchase Agreement and (b) shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Purchase Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect.
5.3 This Amendment and all claims and Proceedings arising out of this Amendment (and any actions of any party hereto in the negotiation, administration, or performance hereof or the interpretation and enforcement of the provisions of this Amendment) shall be governed by, and construed in accordance with, the internal Laws of the State of Delaware (whether arising in contract, tort, equity or otherwise), without regard to any conflicts or choice of law principles that would result in the application of any Law other than the Law of the State of Delaware. Section 11.9 of the Purchase Agreement is incorporated by reference herein mutatis mutandis .
5.4 This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. Copies of executed counterparts transmitted by telecopy, telefax, .pdf email transmission or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 5.4. Once this Amendment is signed, any reproduction of this Amendment made by reliable means (for example, photocopy or facsimile) is considered an original, to the extent permissible under applicable Law.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF , the Parties have caused this Amendment to be duly executed as of the date first above written.
S YMANTEC C ORPORATION | ||
By: |
/s/ Michael A. Brown |
|
Name: |
Michael A. Brown |
|
Title: |
Chief Executive Officer |
|
V ERITAS H OLDINGS L TD . | ||
By: |
/s/ Patrick R. McCarter |
|
Name: |
Patrick R. McCarter |
|
Title: |
Director |
Exhibit 99.1
DISCLOSURE REGARDING PRELIMINARY OPERATING RESULTS OF VERITAS
As used herein, references to we and our refer to Symantecs Veritas information management business.
Below is an update regarding our preliminary expectations with respect to our results of operations for the three-month period ended January 1, 2016. As further described below, the following disclosures with respect to these results are preliminary in nature, have not been reviewed by independent auditors and are subject to closing procedures and adjustments.
We currently expect a year-over-year decline in our results of operations for the three-month period ended January 1, 2016. We believe that this decline is principally being driven by the following factors:
| issues related to our transition to a dedicated sales force and management team independent from Symantec; |
| issues related to the transition to our new ERP system and adjustments to associated business processes; and |
| to a lesser extent, competitive pressures and general reduction in demand in our industry. |
Sales force and sales management transition . In April 2015, we initiated our transition to a dedicated sales force and sales management team independent from Symantec. This transition had a negative impact on our results of operations during the three-month period ended January 1, 2016, a portion of which represents lost business opportunities.
In connection with this transition, we expanded or changed the roles and responsibilities, reporting structures and supervisory relationships for our sales force, including significant changes to the roles of several key sales management executives. Certain of these changes did not generate the intended results, and we believe they had a negative impact on our sales activities during the three-month period ended January 1, 2016. For example, the head of sales for our largest sales region, typically representing approximately half of our sales, was promoted to that position in April 2015 and subsequently replaced in January 2016. In addition, we also made significant changes in both territory and account assignments throughout the sales organization as part of the sales force and sales management transition. As a result of this sales force realignment, we currently have gaps in the coverage of certain territories by our sales personnel. We are in the process of hiring additional sales and leadership personnel, including a newly created position of sales leader for our renewals business. However, there can be no assurance that we will be able to hire key personnel to fill all of these roles in a timely manner or that such new hires will succeed in those roles. Additionally, once hired, it generally takes a period of time before newly hired sales personnel are fully trained and able to effectively generate business.
In addition, due to the highly technical nature of our Information Availability products, these products have one of the longest and most complex sales cycles among our product offerings and, as a result, our transition to a dedicated sales force and sales management team had a greater impact on sales of these products than certain of our other products in the three-month period ended January 1, 2016.
Lastly, implementation of, and transition to, our new ERP system required our sales force to devote significant time to learn to use our new ERP system and conduct customer and partner training initiatives to enable them to use our new ERP system. As a result, our sales force spent less time selling to our existing and potential new customers during the three-month period ended January 1, 2016, which we believe had a negative impact on our sales forces ability to generate sales during such period.
Transition to our new ERP system and adjustments to associated business processes . In connection with the separation of our operations from Symantec, Symantec and Veritas designed and implemented a new ERP system for the Veritas business. This system was designed to better serve our business, channel
partners and customers, including enabling more streamlined and automated business processes. However, the transition to this new system resulted in a delay in generation of renewal quotes, which reduced the time available to obtain renewal orders during the three-month period ended January 1, 2016. As a result, our results were negatively impacted during such period. We expect that a portion of these anticipated renewal orders will instead be received during the three-month period ended April 1, 2016.
In addition, in connection with the implementation of our new ERP system, we initially experienced a higher than normal rate of rejections and cancellations of new and renewal orders, primarily due to some of our customers and partners failing to correctly input the order submission data required to successfully book orders. As a result, we experienced delays in processing orders during the three-month period ended January 1, 2016. In response, we have conducted and continue to conduct customer and partner training and enablement initiatives to help educate our customers and partners with respect to the requirements of our new ERP system and relaxed certain order submission data input requirements. Despite these initiatives, we believe these delays in quoting and processing orders may have resulted in a permanent loss of some revenue, in particular from our BackupExec products due to the lower switching costs associated with such products.
Competitive pressures and general reduction in demand . Competitive pressures and general reduction in demand for certain product categories negatively impacted our results of operations during the three-month period ended January 1, 2016. The information management industry is characterized by intense competition. For example, during this period, certain of our competitors have been aggressive on pricing within the markets in which we compete. We expect this pricing pressure within our industry to continue during the three-month period ended April 1, 2016. In addition, certain market segments in which we participate have recently experienced some decline in demand, which may have impacted our results for the three-month period ended January 1, 2016.
As a result of these factors and the continuing negative impact of foreign currency fluctuations, in particular with respect to the Euro, based on our preliminary operating results, we expect that our net revenue for the three- month period ended January 1, 2016 will be between $550 million and $580 million as compared to $668 million for the three-month period ended January 2, 2015, representing a decline of approximately 13% to 18%. We expect that our Adjusted EBITDA (as defined below) for the three-month period ended January 1, 2016 will be between $140 million and $170 million as compared to $237 million for the three-month period ended January 2, 2015, representing a decline of approximately 28% to 41%. We expect that our net revenue for the nine-month period ended January 1, 2016 will be between $1,724 million and $1,754 million as compared to $1,933 million for the nine-month period ended January 2, 2015, representing a decline of approximately 9% to 11%. We expect that our Adjusted EBITDA for the nine-month period ended January 1, 2016 will be between $484 million and $514 million as compared to $627 million for the nine-month period ended January 2, 2015, representing a decline of approximately 18% to 23%. We expect that our net revenue for the 12-month period ended January 1, 2016 will be between $2,343 million and $2,373 million. We expect that our Adjusted EBITDA for the 12-month period ended January 1, 2016 will be between $656 million and $686 million.
Adjusted EBITDA consists of EBITDA adjusted to (i) eliminate stock-based compensation, (ii) eliminate non-operating income or expense, (iii) eliminate certain unusual items impacting results in a particular period, and (iv) replace historical corporate cost allocations from Symantec to us with estimated standalone costs. EBITDA consists of net income before income tax expense, interest expense, net and depreciation and amortization.
The following table reconciles operating income to Adjusted EBITDA for the ranges presented above:
($ in millions) |
Three-Month
Period Ended January 2, 2015 |
Three-Month
Period Ended January 1, 2016 |
Nine-Month
Period Ended January 2, 2015 |
Nine-Month
Period Ended January 1, 2016 |
12-Month
Period Ended January 1, 2016 |
|||||||||||||||||||||||||||
Actual $ | Low $ | High $ | Actual $ | Low $ | High $ | Low $ | High $ | |||||||||||||||||||||||||
Operating income |
$ | 104 | $ | 95 | $ | 125 | $ | 230 | $ | 178 | $ | 208 | $ | 214 | $ | 244 | ||||||||||||||||
Depreciation and amortization |
38 | 23 | 26 | 116 | 103 | 106 | 140 | 143 | ||||||||||||||||||||||||
Stock-based compensation |
24 | 17 | 20 | 64 | 78 | 81 | 101 | 104 | ||||||||||||||||||||||||
Other |
2 | 1 | 4 | 5 | 6 | 9 | 8 | 11 | ||||||||||||||||||||||||
Transition, transformation, restructuring |
30 | | 3 | 52 | 97 | 100 | 153 | 156 | ||||||||||||||||||||||||
53-week period |
| | | (37 | ) | | | | | |||||||||||||||||||||||
Pro forma standalone cost base adjustment |
39 | | | 197 | 18 | 18 | 35 | 35 | ||||||||||||||||||||||||
Adjusted EBITDA (1) |
$ | 237 | $ | 140 | $ | 170 | $ | 627 | $ | 484 | $ | 514 | $ | 656 | $ | 686 |
(1) | The adjustments to operating income for the three-, nine- and 12-month periods ended January 1, 2016 are shown in ranges for such adjustment on an individual basis. As a result, adjustments with respect to such time periods do not aggregate from operating income to Adjusted EBITDA. |
We include Adjusted EBITDA herein for the reasons described below under Use of Non-U.S. GAAP Financial Measures. Adjusted EBITDA has certain limitations in that it does not reflect all expense items that affect our results of operations. These and other limitations are described in Use of Non-U.S. GAAP Financial Measures.
Some or all of these factors may persist into the three-month period ended April 1, 2016. Additionally, we cannot assure you that one or more of the factors described above, in addition to one or more of those factors described in Risk Factors, will not continue to have an impact on our financial results in future periods, which impact may be material.
We have not yet completed our financial statement closing and review procedures for the three-month period ended January 1, 2016 and the foregoing preliminary financial and other data has been prepared by management based on currently available information. The preliminary operating results set forth in this section have not been compiled or examined by our independent auditors nor have our independent auditors performed any procedures with respect to this information or expressed any opinion or any form of assurance on such information. In addition, the preliminary operating results are subject to revision as we prepare our financial statements and other disclosures as of and for the three-month period ended January 1, 2016, including all disclosures required by U.S. GAAP, and such revisions may be significant. In connection with our quarterly closing and review process for the fiscal quarter with our independent auditors, we may identify items that would require us to make adjustments to the preliminary operating results set forth above. As a result, the final results and other disclosures for the three-month period ended January 1, 2016 may differ materially from this preliminary data. This preliminary financial data should not be viewed as a substitute for full financial statements prepared in accordance with U.S. GAAP or as a measure of performance. Our consolidated financial statements for the three-month period ended January 1, 2016 will not be available until after this offering is consummated, and consequently, will not be available to you prior to investing in this offering.
Use of Non-U.S. GAAP Financial Measures.
We believe that the presentation of this financial measure enhances understanding of our financial performance. We further believe that these financial measures are useful financial metrics to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We also believe that these financial measures provide a useful tool for assessing the comparability between periods of our ability to generate cash from operations sufficient to pay taxes, to service debt and to undertake capital expenditures. We use certain of these financial measures for business planning purposes and in measuring our performance relative to that of our competitors.
Our use of the term Adjusted EBITDA varies from that of others in our industry. These financial measures should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or operating cash flows or as measures of liquidity.
Adjusted EBITDA also has important limitations as an analytical tool and you should not consider it in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of these limitations include the fact that:
| Adjusted EBITDA: |
| does not reflect our cash expenditures or future requirements for capital expenditures or contracted commitments; |
| does not reflect changes in, or cash requirements for, our working capital needs; |
| eliminates the impact of income taxes on our results of operations; and |
| contains certain estimates of standalone costs; |
| although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and |
| other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. |
Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using this financial measure only as a supplement to our U.S. GAAP results.