HD Supply
HD Supply Holdings, Inc. (Form: 8-K, Received: 08/02/2017 06:04:45)

 

 

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): August 1, 2017

 

Commission File
Number

 

Exact name of Registrant as specified in its
charter, Address of principal executive offices
and Telephone number

 

State of
incorporation

 

I.R.S. Employer
Identification
Number

001-35979

 

HD SUPPLY HOLDINGS, INC.
3100 Cumberland Boulevard, Suite 1480
Atlanta, Georgia 30339
(770) 852-9000

 

Delaware

 

26-0486780

 

 

 

 

 

 

 

333-159809

 

HD SUPPLY, INC.
3100 Cumberland Boulevard, Suite 1480
Atlanta, Georgia 30339
(770) 852-9000

 

Delaware

 

75-2007383

 

Not Applicable

(Former name or former address, if changed since last report.)

 

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:

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 8.01 Other Events.

 

On August 1, 2017, HD Supply Holdings, Inc. (the “Company” or “HD Supply”), HD Supply, Inc.’s indirect parent company, issued a press release announcing the completion of the sale of its Waterworks business unit to funds managed by Clayton, Dubilier & Rice, a copy of which is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

In accordance with Accounting Standards Codification 205-20, “Discontinued Operations,” the results of the Waterworks business will be reflected as discontinued operations beginning in the second quarter of fiscal 2017.  On June 6, 2017, the Company disclosed in its earnings release its unaudited quarterly results of operations for the first quarter of fiscal 2017 and for full years fiscal 2016 and fiscal 2015, in each case, revised to reflect the Waterworks business as discontinued operations.  In connection with the closing of the sale of the Waterworks business, the Company is filing as Exhibit 99.2 hereto and incorporating herein by reference further revised unaudited quarterly results of operations for such periods to reflect immaterial adjustments in the treatment of certain expenses for each quarter of fiscal 2016 and the third and fourth quarters of fiscal 2015. These adjustments did not result in any modifications to the full year results of operations for fiscal 2016 or fiscal 2015 as revised to reflect the Waterworks business as discontinued operations.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.

 

Description of Exhibit

99.1

 

Press Release “HD Supply Completes Sale of its Waterworks Business Unit to Clayton, Dubilier & Rice,” dated August 1, 2017.

 

 

 

99.2

 

Revised unaudited quarterly results of operations for HD Supply.

 

2



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 1, 2017

HD Supply Holdings, Inc.

 

 

 

 

 

 

 

By:

/s/ Dan S. McDevitt

 

 

 

 

 

Dan S. McDevitt

 

 

 

 

 

General Counsel and Corporate Secretary

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: August 1, 2017

HD Supply, Inc.

 

 

 

 

 

 

 

By:

/s/ Dan S. McDevitt

 

 

 

 

 

Dan S. McDevitt

 

 

 

 

 

General Counsel and Corporate Secretary

 

3



 

EXHIBIT INDEX

 

Exhibit No.

 

Description of Exhibit

99.1

 

Press Release “HD Supply Completes Sale of its Waterworks Business Unit to Clayton, Dubilier & Rice,” dated August 1, 2017.

 

 

 

99.2

 

Revised unaudited quarterly results of operations for HD Supply.

 

4


Exhibit 99.1

 

 

Investor Contact:

Charlotte McLaughlin

HD Supply Investor Relations

770-852-9100

InvestorRelations@hdsupply.com

 

Media Contact:

Quiana Pinckney, APR

HD Supply Public Relations

770-852-9057

Quiana.Pinckney@hdsupply.com

 

FOR IMMEDIATE RELEASE

 

HD Supply Completes Sale of its Waterworks Business Unit to Clayton, Dubilier & Rice

 

ATLANTA — August 1, 2017 — HD Supply Holdings, Inc. (NASDAQ: HDS) today announced it has completed the previously announced sale of its Waterworks business unit, the nation’s largest distributor of water, sewer, storm and fire protection products, to funds managed by Clayton, Dubilier & Rice. Goldman Sachs & Co, LLC served as financial advisor and King & Spalding served as legal counsel to HD Supply on the transaction.

 

About HD Supply

 

HD Supply (www.hdsupply.com) is one of the largest industrial distributors in North America. The company provides a broad range of products and value-add services to approximately 500,000 customers with leadership positions in maintenance, repair and operations and specialty construction sectors. Through approximately 260 locations across 36 states and six Canadian provinces, the company’s approximately 11,000 associates provide localized, customer-driven services including jobsite delivery, will call or direct-ship options, diversified logistics and innovative solutions that contribute to its customers’ success.

 

About Clayton, Dubilier & Rice

 

Founded in 1978, Clayton, Dubilier & Rice is a private investment firm. Since inception, CD&R has managed the investment of more than $24 billion in 74 companies representing a broad range of industries with an aggregate transaction value of more than $100 billion. The firm has offices in New York and London. For more information, visit www.cdr-inc.com.

 

###

 


 

Exhibit 99.2

 

Results Revised for Discontinued Operations

 

On August 1, 2017, HD Supply Holdings, Inc. (the “Company” or “HD Supply”), HD Supply, Inc.’s indirect parent company, announced the completion of the sale of its Waterworks business, a provider of water and wastewater transmission products in the non-residential and residential markets, to Clayton, Dubilier & Rice.

 

In accordance with Accounting Standards Codification 205-20, “Discontinued Operations,” the results of the Waterworks business will be reflected as a discontinued operation beginning in the second quarter of fiscal 2017. The presentation of discontinued operations includes revenue and expenses of the discontinued operations, net of tax, as one line item on the Consolidated Statements of Operations for all periods presented.

 

The following tables present HD Supply’s quarterly results of operations for the first quarter of fiscal 2017, fiscal 2016, and fiscal 2015, revised to reflect the Waterworks operations as discontinued operations. These financial statements also include the previous revisions reflecting Interior Solutions and Power Solutions as discontinued operations, as noted in our Fiscal 2016 Form 10-K.

 

HD SUPPLY HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Amounts in millions, except share and per share data, Unaudited

 

 

 

Q1-2017

 

Net sales

 

$

1,216

 

Cost of sales

 

732

 

Gross profit

 

484

 

Operating expenses:

 

 

 

Selling, general and administrative

 

334

 

Depreciation and amortization

 

21

 

Total operating expenses

 

355

 

Operating income

 

129

 

Interest expense

 

49

 

Loss on extinguishment & modification of debt

 

3

 

Income from continuing operations before provision for income taxes

 

77

 

Provision for income taxes

 

19

 

Income from continuing operations

 

58

 

Income from discontinued operations, net of tax

 

27

 

Net income

 

$

85

 

 

 

 

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

Basic

 

200,708

 

Diluted

 

203,017

 

Basic Earnings Per Share (1) :

 

 

 

Income from continuing operations

 

$

0.29

 

Income from discontinued operations

 

0.13

 

Net income

 

$

0.42

 

Diluted Earnings Per Share (1) :

 

 

 

Income from continuing operations

 

$

0.29

 

Income from discontinued operations

 

0.13

 

Net income (loss)

 

$

0.42

 

Non-GAAP financial data:

 

 

 

Adjusted EBITDA

 

$

157

 

Adjusted Net Income

 

$

80

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

Basic

 

200,708

 

Diluted

 

203,017

 

Adjusted Net income per share - Basic

 

$

0.40

 

Adjusted Net income per share - Diluted

 

$

0.39

 

 


(1)          May not foot due to rounding.

 

1



 

 

 

Q1-16

 

Q2-16

 

Q3-16

 

Q4-16

 

Fiscal
2016

 

Net sales

 

$

1,176

 

$

1,283

 

$

1,275

 

$

1,085

 

$

4,819

 

Cost of sales

 

707

 

770

 

763

 

654

 

2,894

 

Gross profit

 

469

 

513

 

512

 

431

 

1,925

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

308

 

317

 

329

 

315

 

1,269

 

Depreciation and amortization

 

21

 

21

 

21

 

21

 

84

 

Restructuring

 

7

 

4

 

3

 

(7

)

7

 

Total operating expenses

 

336

 

342

 

353

 

329

 

1,360

 

Operating income

 

133

 

171

 

159

 

102

 

565

 

Interest expense

 

85

 

69

 

65

 

50

 

269

 

Loss on extinguishment & modification of debt

 

115

 

 

59

 

5

 

179

 

Income (loss) from continuing operations before provision for income taxes

 

(67

)

102

 

35

 

47

 

117

 

Provision (benefit) for income taxes

 

(26

)

41

 

15

 

21

 

51

 

Income (loss) from continuing operations

 

(41

)

61

 

20

 

26

 

66

 

Income from discontinued operations, net of tax

 

27

 

37

 

40

 

26

 

130

 

Net income (loss)

 

$

(14

)

$

98

 

$

60

 

$

52

 

$

196

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

198,808

 

199,250

 

199,593

 

199,888

 

199,385

 

Diluted

 

198,808

 

201,978

 

202,007

 

202,587

 

202,000

 

Basic Earnings Per Share (1) :

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

(0.21

)

$

0.31

 

$

0.10

 

$

0.13

 

$

0.33

 

Income from discontinued operations

 

0.14

 

0.19

 

0.20

 

0.13

 

0.65

 

Net income (loss)

 

$

(0.07

)

$

0.49

 

$

0.30

 

$

0.26

 

$

0.98

 

Diluted Earnings Per Share (1) :

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

(0.21

)

$

0.30

 

$

0.10

 

$

0.13

 

$

0.33

 

Income (loss) from discontinued operations

 

0.14

 

0.18

 

0.20

 

0.13

 

0.64

 

Net income (loss)

 

$

(0.07

)

$

0.49

 

$

0.30

 

$

0.26

 

$

0.97

 

Non-GAAP financial data:

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

167

 

$

203

 

$

188

 

$

122

 

$

680

 

Adjusted Net Income

 

$

57

 

$

104

 

$

94

 

$

47

 

$

302

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

198,808

 

199,250

 

199,593

 

199,888

 

199,385

 

Diluted

 

201,231

 

201,978

 

202,007

 

202,587

 

202,000

 

Adjusted Net income per share - Basic

 

$

0.29

 

$

0.52

 

$

0.47

 

$

0.24

 

$

1.51

 

Adjusted Net income per share - Diluted

 

$

0.28

 

$

0.51

 

$

0.47

 

$

0.23

 

$

1.50

 

 


(1)          May not foot due to rounding.

 

2



 

 

 

Q1-15

 

Q2-15

 

Q3-15

 

Q4-15

 

Fiscal
2015

 

Net sales

 

$

1,090

 

$

1,236

 

$

1,238

 

$

1,051

 

$

4,615

 

Cost of sales

 

660

 

745

 

754

 

642

 

2,801

 

Gross profit

 

430

 

491

 

484

 

409

 

1,814

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

292

 

305

 

297

 

290

 

1,184

 

Depreciation and amortization

 

24

 

25

 

24

 

24

 

97

 

Restructuring

 

 

 

3

 

5

 

8

 

Total operating expenses

 

316

 

330

 

324

 

319

 

1,289

 

Operating income

 

114

 

161

 

160

 

90

 

525

 

Interest expense

 

106

 

106

 

99

 

83

 

394

 

Loss on extinguishment & modification of debt

 

 

 

100

 

 

100

 

Other (income) expense, net

 

 

1

 

 

 

1

 

Income (loss) from continuing operations before provision for income taxes

 

8

 

54

 

(39

)

7

 

30

 

Provision (benefit) for income taxes

 

(188

)

8

 

7

 

(997

)

(1,170

)

Income (loss) from continuing operations

 

196

 

46

 

(46

)

1,004

 

1,200

 

Income (loss) from discontinued operations, net of tax

 

46

 

63

 

296

 

(133

)

272

 

Net income

 

$

242

 

$

109

 

$

250

 

$

871

 

$

1,472

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

195,347

 

196,893

 

197,529

 

198,276

 

197,011

 

Diluted

 

200,716

 

201,809

 

197,529

 

201,156

 

201,308

 

Basic Earnings Per Share (1) :

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

1.00

 

$

0.23

 

$

(0.23

)

$

5.06

 

$

6.09

 

Income (loss) from discontinued operations

 

0.24

 

0.32

 

1.50

 

(0.67

)

1.38

 

Net income

 

$

1.24

 

$

0.55

 

$

1.27

 

$

4.39

 

$

7.47

 

Diluted Earnings Per Share (1) :

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.98

 

$

0.23

 

$

(0.23

)

$

4.99

 

$

5.96

 

Income (loss) from discontinued operations

 

0.23

 

0.31

 

1.50

 

(0.66

)

1.35

 

Net income

 

$

1.21

 

$

0.54

 

$

1.27

 

$

4.33

 

$

7.31

 

Non-GAAP financial data:

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

144

 

$

191

 

$

193

 

$

122

 

$

650

 

Adjusted Net Income

 

$

8

 

$

52

 

$

62

 

$

13

 

$

135

 

Weighted Average Common Shares Outstanding (thousands)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

195,347

 

196,893

 

197,529

 

198,276

 

197,011

 

Diluted

 

200,716

 

201,809

 

201,546

 

201,156

 

201,308

 

Adjusted Net income per share - Basic

 

$

0.04

 

$

0.26

 

$

0.31

 

$

0.07

 

$

0.69

 

Adjusted Net income per share - Diluted

 

$

0.04

 

$

0.26

 

$

0.31

 

$

0.06

 

$

0.67

 

 


(1)          May not foot due to rounding.

 

3



 

Reconciliation of Non-GAAP Measures

 

Adjusted EBITDA and Adjusted net income are not recognized terms under GAAP and do not purport to be alternatives to Net income (loss) as a measure of operating performance. We present Adjusted EBITDA and Adjusted net income because each is a primary measure used by management to evaluate operating performance. In addition, we present Adjusted net income to measure our overall profitability as we believe it is an important measure of our performance. We believe the presentation of Adjusted EBITDA and Adjusted net income enhances investors’ overall understanding of the financial performance of our business.

 

Adjusted EBITDA is based on “Consolidated EBITDA,” a measure which is defined in our senior credit facilities and used in calculating financial ratios in several material debt covenants. Adjusted EBITDA is defined as Net income (loss) less Income (loss) from discontinued operations, net of tax, plus (i) Interest expense and Interest income, net, (ii) Provision (benefit) for income taxes, (iii) depreciation and amortization and further adjusted to exclude loss on extinguishment of debt, non-cash items and certain other adjustments to Consolidated Net Income permitted in calculating Consolidated EBITDA under our senior credit facilities.

 

Adjusted net income is defined as Net income (loss) less Income (loss) from discontinued operations, net of tax, further adjusted for loss on extinguishment of debt, certain non-cash, non-recurring or unusual items, net of tax.

 

We compensate for the limitations of using non-GAAP financial measures by using them to supplement GAAP results to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone. Because not all companies use identical calculations, our presentation of Adjusted EBITDA and Adjusted net income may not be comparable to other similarly titled measures of other companies.

 

Adjusted EBITDA and Adjusted net income have limitations as analytical tools and should not be considered in isolation or as substitutes for analyzing our results as reported under GAAP. Some of these limitations are:

 

·                        Adjusted EBITDA and Adjusted net income do not reflect changes in, or cash requirements for, our working capital needs;

·                        Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt;

·                        Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes;

·                        Adjusted EBITDA and Adjusted net income do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and although depreciation and amortization charges 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.

 

Adjusted EBITDA

 

The following tables present a reconciliation of Net income (loss) and Income (loss) from continuing operations, the most directly comparable financial measures under GAAP, revised to reflect the Waterworks operations as discontinued operations for all periods presented, to Adjusted EBITDA for the first quarter of fiscal 2017 and quarterly results for fiscal 2016 and fiscal 2015 (amounts in millions):

 

 

 

Q1-2017

 

Net income

 

$

85

 

Less income from discontinued operations, net of tax

 

27

 

Income from continuing operations

 

58

 

Interest expense, net

 

49

 

Provision for income taxes (i)

 

19

 

Depreciation and amortization (ii)

 

22

 

Stock-based compensation

 

6

 

Restructuring charges (iii)

 

 

Loss on extinguishment of debt (iv)

 

3

 

Costs related to public offerings (v)

 

 

Other

 

 

Adjusted EBITDA

 

$

157

 

 

4



 

 

 

Q1-16

 

Q2-16

 

Q3-16

 

Q4-16

 

Fiscal
2016

 

Net income (loss)

 

$

(14

)

$

98

 

$

60

 

$

52

 

$

196

 

Less income from discontinued operations, net of tax

 

27

 

37

 

40

 

26

 

130

 

Income (loss) from continuing operations

 

(41

)

61

 

20

 

26

 

66

 

Interest expense, net

 

85

 

69

 

65

 

50

 

269

 

Provision (benefit) for income taxes (i)

 

(26

)

41

 

15

 

21

 

51

 

Depreciation and amortization (ii)

 

21

 

23

 

22

 

22

 

88

 

Stock-based compensation

 

6

 

5

 

4

 

5

 

20

 

Restructuring charges (iii)

 

7

 

4

 

3

 

(7

)

7

 

Loss on extinguishment & modification of debt (iv)

 

115

 

 

59

 

5

 

179

 

Costs related to public offerings (v)

 

 

 

 

 

 

Other

 

 

 

 

 

 

Adjusted EBITDA

 

$

167

 

$

203

 

$

188

 

$

122

 

$

680

 

 

 

 

Q1-15

 

Q2-15

 

Q3-15

 

Q4-15

 

Fiscal
2015

 

Net income

 

$

242

 

$

109

 

$

250

 

$

871

 

$

1,472

 

Less income (loss) from discontinued operations, net of tax

 

46

 

63

 

296

 

(133

)

272

 

Income (loss) from continuing operations

 

196

 

46

 

(46

)

1,004

 

1,200

 

Interest expense, net

 

106

 

106

 

99

 

83

 

394

 

Provision (benefit) for income taxes (i)

 

(188

)

8

 

7

 

(997

)

(1,170

)

Depreciation and amortization (ii)

 

25

 

26

 

25

 

24

 

100

 

Stock-based compensation

 

5

 

5

 

4

 

2

 

16

 

Restructuring charges (iii)

 

 

 

3

 

5

 

8

 

Loss on extinguishment & modification of debt (iv)

 

 

 

100

 

 

100

 

Costs related to public offerings (v)

 

 

1

 

 

 

1

 

Other

 

 

(1

)

1

 

1

 

1

 

Adjusted EBITDA

 

$

144

 

$

191

 

$

193

 

$

122

 

$

650

 

 


(i)                                      During fiscal 2015, the company recorded a $1,007 million tax benefit for the reversal of substantially all of the valuation allowance on its U.S. net deferred tax assets and a $189 million tax benefit for the reduction in unrecognized tax benefits as a result of IRS and state audit settlements.

 

(ii)                                   Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations and Comprehensive Income.

 

(iii)                                Represents the costs incurred for strategic alignment of our workforce and branch closures or consolidations. These costs include occupancy costs, severance, relocation costs, and other costs incurred to exit a location.

 

(iv)                               Represents the loss on extinguishment of debt including the premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications.

 

(v)                                  Represents the costs expensed in connection with secondary offerings of the company’s common stock by certain of the company’s shareholders.

 

5



 

Adjusted Net Income

 

The following tables present a reconciliation of Net income (loss) and Income (loss) from continuing operations, the most directly comparable financial measures under GAAP, revised to reflect the Waterworks operations as discontinued operations for all periods presented, to Adjusted Net Income for the first quarter of fiscal 2017 and quarterly results for fiscal 2016 and fiscal 2015 (amounts in millions):

 

 

 

Q1-2017

 

Net income

 

$

85

 

Less income from discontinued operations, net of tax

 

27

 

Income from continuing operations

 

58

 

Provision for income taxes (i)

 

19

 

Cash paid for income taxes

 

(3

)

Amortization of acquisition-related intangible assets (other than software)

 

3

 

Restructuring charges (ii)

 

 

Loss on extinguishment of debt (iii)

 

3

 

Costs related to public offerings (iv)

 

 

Adjusted Net income

 

$

80

 

 

 

 

Q1-16

 

Q2-16

 

Q3-16

 

Q4-16

 

Fiscal
2016

 

Net income (loss)

 

$

(14

)

$

98

 

$

60

 

$

52

 

$

196

 

Less income from discontinued operations, net of tax

 

27

 

37

 

40

 

26

 

130

 

Income (loss) from continuing operations

 

(41

)

61

 

20

 

26

 

66

 

Provision (benefit) for income taxes (i)

 

(26

)

41

 

15

 

21

 

51

 

Cash paid for income taxes

 

(1

)

(5

)

(6

)

(1

)

(13

)

Amortization of acquisition-related intangible assets (other than software)

 

3

 

3

 

3

 

3

 

12

 

Restructuring charges (ii)

 

7

 

4

 

3

 

(7

)

7

 

Loss on extinguishment & modification of debt (iii)

 

115

 

 

59

 

5

 

179

 

Costs related to public offerings (iv)

 

 

 

 

 

 

Adjusted Net income

 

$

57

 

$

104

 

$

94

 

$

47

 

$

302

 

 

 

 

Q1-15

 

Q2-15

 

Q3-15

 

Q4-15

 

Fiscal
2015

 

Net income

 

$

242

 

$

109

 

$

250

 

$

871

 

$

1,472

 

Less income (loss) from discontinued operations, net of tax

 

46

 

63

 

296

 

(133

)

272

 

Income (loss) from continuing operations

 

196

 

46

 

(46

)

1,004

 

1,200

 

Provision (benefit) for income taxes (i)

 

(188

)

8

 

7

 

(997

)

(1,170

)

Cash paid for income taxes

 

(3

)

(6

)

(5

)

(2

)

(16

)

Amortization of acquisition-related intangible assets (other than software)

 

3

 

3

 

3

 

3

 

12

 

Restructuring charges (ii)

 

 

 

3

 

5

 

8

 

Loss on extinguishment & modification of debt (iii)

 

 

 

100

 

 

100

 

Costs related to public offerings (iv)

 

 

1

 

 

 

1

 

Adjusted Net income

 

$

8

 

$

52

 

$

62

 

$

13

 

$

135

 

 


(i)                                      During fiscal 2015, the company recorded a $1,007 million tax benefit for the reversal of substantially all of the valuation allowance on its U.S. net deferred tax assets and a $189 million tax benefit for the reduction in unrecognized tax benefits as a result of IRS and state audit settlements.

 

(ii)                                   Represents the costs incurred for strategic alignment of our workforce and branch closures or consolidations. These costs include occupancy costs, severance, relocation costs, and other costs incurred to exit a location.

 

(iii)                                Represents the loss on extinguishment of debt including the premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications.

 

(iv)                               Represents the costs expensed in connection with secondary offerings of the company’s common stock by certain of the company’s shareholders.

 

6