DFS Annual Report

Non-GAAP Measures The Company believes that certain Non-GAAP measures, such as Non-GAAP adjusted EBITDA, provide useful information about the Company’s operating results and enhance the overall ability to assess the Company’s financial performance. The Company uses these measures, together with other measures of performance under GAAP, to compare the relative performance of operations in planning, budgeting and reviewing the performance of its business. Non-GAAP adjusted EBITDA allows investors to make a more meaningful comparison between the Company’s core business operating results over different periods of time. The Company believes that Non-GAAP adjusted EBITDA, when viewed with the Company’s results under GAAP and the accompanying reconciliations, provides useful information about the Company’s business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization methods, historic cost and age of assets, financing and capital structures, taxation positions or regimes, restructuring, impairment and other charges and gain or loss on certain equity investments and asset sales, the Company believes that Non-GAAP adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. Non-GAAP adjusted EBITDA is not presented in accordance with GAAP and has important limitations as an analytical tool. These measures should not be considered as a substitute for analysis of the Company’s results as reported under GAAP. In addition, these measures are defined differently by different companies in our industry and, accordingly, such measures may not be comparable to similarly-titled measures of other companies. In addition to the factors listed above, the following items are excluded from Non-GAAP adjusted EBITDA: • Share-based compensation expense . Although share-based compensation is a key incentive offered to certain of the Company’s employees, business performance is evaluated excluding share-based compensation expenses. Depending upon the size, timing and the terms of grants, the non-cash compensation expense may vary but will recur in future periods. Prior periods have been revised to reflect this adjustment. • Spin-off related transaction expenses . The Company has incurred expenses related to the Separation to operate as a standalone publicly traded company. These expenses include third-party consulting fees, employee retention payments, legal fees and other costs related to the Separation. Management does not believe that these expenses are reflective of ongoing operating results. This adjustment does not include expenses incurred prior to the Separation. A reconciliation of GAAP net earnings to Non-GAAP adjusted EBITDA for the years ended December 31, 2016, 2015 and 2014 for these adjustments is presented in the following table: Year ended December 31, 2016 2015 2014 (in millions) Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 59.1 $104.3 $ 57.4 Restructuring, impairment and other charges—net . . . . . . . . . . 5.4 4.4 4.8 Share-based compensation expense . . . . . . . . . . . . . . . . . . . . . . 2.5 1.6 2.1 Spin-off related transaction expenses . . . . . . . . . . . . . . . . . . . . . 4.9 — — Pension settlement charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 95.7 Gain on sale of building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (6.1) Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 43.3 41.7 40.7 Interest expense—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.7 1.1 1.5 Investment and other income—net . . . . . . . . . . . . . . . . . . . . . . . — (0.1) (3.1) Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35.2 67.4 35.0 Non-GAAP adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . $162.1 $220.4 $228.0 2016 Restructuring, impairment and other charges—net. The year ended December 31, 2016 included $3.7 million for employee termination costs, $1.5 million of lease termination and other restructuring costs and $0.2 million for other charges associated with the Company’s decision to withdraw in 2013 from certain multi-employer pension plans serving facilities that continued to operate. 2015 Restructuring, impairment and other charges—net. The year ended December 31, 2015 included $2.3 million for employee termination costs related to the reorganization of certain administrative functions; $1.9 million of lease termination and other restructuring costs and $0.2 million for other charges associated with the Company’s decision to withdraw in 2013 from certain multi-employer pension plans serving facilities that continued to operate. 25