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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): September 6, 2017

_______________________________________________________________

Guidewire Software, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________




Delaware	001-35394	36-4468504
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1001 East Hillsdale Blvd., Suite 800

Foster City, CA 94404

(Address of principal executive offices, including zip code)

(650) 357-9100

(Registrant’s telephone number, including area code)

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:



¨	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))

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 ☐

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. ¨

Item 2.02 Results of Operations and Financial Condition.

On September 6, 2017, Guidewire Software, Inc. (the "Company") issued a press release announcing unaudited financial results for its fourth quarter and fiscal year ended July 31, 2017. A copy of the press release is attached as Exhibit 99.1.

In accordance with General Instruction B.2 on Form 8-K, certain of the information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished under Item 2.02 and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.



Exhibit No.		Description of Exhibits
99.1		Press release dated September 6, 2017, titled "Guidewire Software Announces Fourth Quarter and Fiscal 2017 Financial Results"

SIGNATURES

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.

Date: September 6, 2017



GUIDEWIRE SOFTWARE, INC.

By:	/s/ Richard Hart
	Richard Hart
	Chief Financial Officer

EXHIBIT INDEX



Exhibit No.		Description of Exhibits
99.1		Press release dated September 6, 2017, titled "Guidewire Software Announces Fourth Quarter and Fiscal 2017 Financial Results"

Exhibit

Exhibit 99.1

Guidewire Software Announces Fourth Quarter and Fiscal Year 2017 Financial Results

Foster City, CA - September 6, 2017 - Guidewire Software, Inc. (NYSE: GWRE), a provider of software products for property and casualty (P&C) insurers, today announced its financial results for the fiscal fourth quarter and fiscal year ended July 31, 2017.

“Revenue and profitability exceeded our guidance for the fourth quarter and fiscal 2017,” said Marcus Ryu, chief executive officer, Guidewire Software. “We look back on a year of significant progress toward our goal of industry leadership, with new core system mandates from major insurers in the United States and Europe, momentum for our data management and digital engagement solutions, acquisitions broadening our platform, and multiple cloud-based deployments of our two core system offerings.”

Ryu continued, “We see P&C insurers of all sizes responding with urgency to changing end market behavior, non-traditional competitors, and new analytical approaches to risk modeling and insurance product design. We see a wealth of opportunities to invest productively to serve the global industry as it progresses toward a more digital and automated future.”

Fiscal 2017 Financial Highlights

Revenue


•	License and other revenue for fiscal year 2017 was $271.5 million, an increase of 24% from fiscal year 2016. Maintenance revenue was $68.6 million, an increase of 15% and services revenue was $174.2 million, an increase of 20%. Total revenue for fiscal year 2017 was $514.3 million, an increase of 21% from fiscal year 2016.


•	Rolling four-quarter recurring term license and other and maintenance revenue was $327.0 million, an increase of 22% compared to fiscal year 2016.

Profitability


•	GAAP income from operations was $26.6 million for fiscal year 2017, compared with $16.4 million for fiscal year 2016.


•	Non-GAAP income from operations was $110.5 million for fiscal year 2017, compared with $84.9 million for fiscal year 2016.


•	GAAP net income was $21.2 million for fiscal year 2017, compared with $15.0 million for fiscal year 2016. GAAP earnings per diluted share was $0.28 for fiscal year 2017, based on diluted weighted average shares outstanding of 75.3 million, compared to $0.20 earnings per diluted share for fiscal year 2016, based on diluted weighted average shares outstanding of 73.8 million.


•	Non-GAAP net income was $78.8 million for fiscal year 2017, compared to $62.0 million for fiscal year 2016. Non-GAAP earnings per diluted share was $1.05 for fiscal year 2017, based on diluted weighted average shares outstanding of 75.3 million, compared to $0.84 earnings per diluted share for fiscal year 2016, based on diluted weighted average shares outstanding of 73.8 million.

Fourth Quarter Fiscal Year 2017 Financial Highlights

Revenue


•	License and other revenue for the fourth quarter of fiscal 2017 was $109.7 million, an increase of 24% from the fourth quarter of fiscal 2016. Maintenance revenue was $18.7 million, an increase of 10% and services revenue was $52.7 million, an increase of 47%. Total revenue was $181.1 million, an increase of 28% from the same quarter in fiscal 2016.

Profitability


•	GAAP income from operations was $41.0 million for the fourth quarter of fiscal 2017, compared with $23.5 million in the comparable period in fiscal 2016.


•	Non-GAAP income from operations was $64.0 million for the fourth quarter of fiscal 2017, compared with $42.7 million in the comparable period in fiscal 2016.


•	GAAP net income was $26.9 million for the fourth quarter of fiscal 2017, compared with $16.1 million for the comparable period in fiscal 2016. GAAP earnings per diluted share was $0.36 for the fourth quarter of fiscal 2017, based on diluted

weighted average shares outstanding of 75.8 million, compared with $0.22 earnings per diluted share for the comparable period in fiscal 2016, based on diluted weighted average shares outstanding of 74.2 million.

•

Non-GAAP net income was $44.8 million for the fourth quarter of fiscal 2017, compared with $28.7 million in the comparable period in fiscal 2016. Non-GAAP earnings per diluted share was $0.59 for the fourth quarter of fiscal 2017, based on diluted weighted average shares outstanding of 75.8 million, compared with $0.39 earnings per diluted share in the comparable period in fiscal 2016, based on diluted weighted average shares outstanding of 74.2 million.

Balance Sheet

•

The Company had $687.8 million in cash, cash equivalents and investments at July 31, 2017, compared to $735.8 million at July 31, 2016. The decrease in cash, cash equivalents and investments was primarily due to $154.1 million cash used for the acquisition of ISCS and $33.5 million used for the acquisition of FirstBest. The Company generated $137.2 million cash flow from operations in fiscal year 2017, compared to cash flow from operations of $99.9 million in fiscal year 2016.

Business Outlook

Guidewire is issuing the following outlook for the first quarter and fiscal year 2018, based on current expectations:



(in $ millions, except per share outlook)	First Quarter Fiscal Year 2018				Full Year Fiscal Year 2018
Revenue	98.0		-	102.0	611.5	-	623.5
License and other revenue	26.0		-	28.0	298.0	-	310.0
Maintenance revenue	17.5		-	18.5	72.0	-	75.0
Services revenue	54.0		-	56.0	235.0	-	245.0
GAAP income/(loss) from operations	(44.0	)	-	(40.0)	6.2	-	18.2
Non-GAAP income/(loss) from operations	(20.0	)	-	(16.0)	106.0	-	118.0
GAAP net income/(loss)	(28.4	)	-	(25.8)	6.7	-	14.6
GAAP net income/(loss) per share	(0.38	)	-	(0.34)	0.09	-	0.19
Non-GAAP net income/(loss)	(12.9	)	-	(10.2)	74.8	-	83.0
Non-GAAP net income/(loss) per share	(0.17	)	-	(0.14)	0.97	-	1.08

Non-GAAP operating income and non-GAAP net income exclude stock-based compensation expense and amortization of intangible assets. The GAAP and non-GAAP estimated annual tax rates used to compute net income and EPS exclude discrete items such as tax benefits related to share-based compensation.

Conference Call Information


What:	Guidewire Software Fourth Quarter Fiscal 2017 Financial Results Conference Call


When:	Wednesday, September 6, 2017


Time:	2:00 p.m. PT (5:00 p.m. ET)


Live Call:	(888) 778-9064, Domestic

(719) 325-4910, International


Replay:	(844) 512-2921, Passcode 4055731, Domestic

(412) 317-6671, Passcode 4055731, International


Webcast:	http://ir.guidewire.com (live and replay)

The webcast will be archived on Guidewire's website for a period of three months.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP operating income, Non-GAAP net income, Non-GAAP net income per share and Non-GAAP tax provision. These Non-GAAP financial measures exclude stock-based compensation and amortization of intangibles, and the tax effect of these adjustments for Non-GAAP net income and Non-GAAP net income per share.

Guidewire believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Guidewire’s financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Management of the Company does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Guidewire urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

About Guidewire Software

Guidewire delivers the software that Property and Casualty (P&C) insurers need to adapt and succeed in a time of rapid industry change. We combine three elements - core operations, data and analytics, and digital engagement - into a technology platform that enhances insurers’ ability to engage and empower their customers and employees. More than 300 P&C insurers around the world have selected Guidewire products. For more information, please visit www.guidewire.com. Follow us on twitter: @Guidewire_PandC.

NOTE: Guidewire, Guidewire Software, Guidewire ClaimCenter, Guidewire PolicyCenter, and Guidewire BillingCenter are registered trademarks of Guidewire Software, Inc. in the United States and/or other countries.

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, market positioning, and future investments. These forward-looking statements are made as of the date they were first issued and were based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Guidewire’s control. Guidewire’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Guidewire’s most recent Forms 10-K and 10-Q filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. In particular, the following factors, among others, could cause results to differ materially from those expressed or implied by such forward-looking statements: the market for our software may develop more slowly than expected or than it has in the past; quarterly and annual operating results may fluctuate more than expected; seasonal and other variations related to our revenue recognition may cause significant fluctuations in our results of operations and cash flows; our reliance on sales to and renewals from a relatively small number of large customers for a substantial portion of our revenues; our services revenues produce lower gross margins than our license and maintenance revenues; assertions by third parties that we violate their intellectual property rights could substantially harm our business; we face intense competition in our market; weakened global economic conditions may adversely affect the P&C insurance industry including the rate of information technology spending; our product development and sales cycles are lengthy; the risk of losing key employees; changes in foreign exchange rates; general political or destabilizing events, including war, conflict or acts of terrorism; and other risks and uncertainties. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Guidewire’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Guidewire undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Guidewire’s views as of any date subsequent to the date of this press release.

Media Contact:

Diana Stott

Guidewire Software, Inc.

(650) 356-4941

dstott@guidewire.com

Investor Contact:

Garo Toomajanian

ICR, LLC

(650) 357-5282

ir@guidewire.com



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands)

	July 31, 2017			July 31, 2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	263,176		$	223,582
Short-term investments	310,027			404,655
Accounts receivable	79,433			62,792
Prepaid expenses and other current assets	26,604			16,643
Total current assets	679,240			707,672
Long-term investments	114,585			107,565
Property and equipment, net	14,376			12,955
Intangible assets, net	71,315			14,204
Deferred tax assets, net	37,430			31,364
Goodwill	141,851			30,080
Other assets	20,104			12,338
TOTAL ASSETS	1,078,901			916,178
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	13,416			9,929
Accrued employee compensation	48,882			41,267
Deferred revenues, current	91,243			60,270
Other current liabilities	10,075			7,617
Total current liabilities	163,616			119,083
Deferred revenues, noncurrent	19,892			9,745
Other liabilities	2,112			3,415
Total liabilities	185,620			132,243
STOCKHOLDERS’ EQUITY:
Common stock	8			7
Additional paid-in capital	830,014			742,690
Accumulated other comprehensive loss	(5,796		)	(6,593		)
Retained earnings	69,055			47,831
Total stockholders’ equity	893,281			783,935
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	1,078,901		$	916,178



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands except share and per share data)

	Three Months Ended July 31,					Fiscal Year Ended July 31,
	2017		2016			2017		2016
Revenues:
License and other	$	109,695	$	88,239		$	271,462	$	219,751
Maintenance	18,671		16,986			68,643		59,931
Services	52,734		35,952			174,179		144,764
Total revenues	181,100		141,177			514,284		424,446
Cost of revenues: ⁽¹⁾
License and other	6,627		2,306			17,046		7,184
Maintenance	3,513		3,402			13,397		11,547
Services	47,121		37,048			161,116		133,103
Total cost of revenues	57,261		42,756			191,559		151,834
Gross profit:⁽¹⁾
License and other	103,068		85,933			254,416		212,567
Maintenance	15,158		13,584			55,246		48,384
Services	5,613		(1,096		)	13,063		11,661
Total gross profit	123,839		98,421			322,725		272,612
Operating expenses: ⁽¹⁾
Research and development	35,458		32,142			130,323		112,496
Sales and marketing	31,431		27,905			109,239		92,765
General and administrative	15,902		14,899			56,551		50,914
Total operating expenses	82,791		74,946			296,113		256,175
Income from operations	41,048		23,475			26,612		16,437
Interest income, net	1,574		1,185			5,854		4,850
Other income (expense), net	1,146		(344		)	811		(505		)
Income before provision for income taxes	43,768		24,316			33,277		20,782
Provision for income taxes	16,841		8,219			12,053		5,806
Net income	$	26,927	$	16,097		$	21,224	$	14,976
Earnings per share:
Basic	$	0.36	$	0.22		$	0.29	$	0.21
Diluted	$	0.36	$	0.22		$	0.28	$	0.20
Shares used in computing earnings per share:
Basic	74,776,333		72,792,357			73,994,577		72,026,694
Diluted	75,769,530		74,202,966			75,328,343		73,765,960


⁽¹⁾	Amounts include stock-based compensation expense, see table below.



	Three Months Ended July 31,				Fiscal Year Ended July 31,
	2017		2016		2017		2016
	(unaudited, in thousands)
Stock-based compensation expenses:
Cost of license and other revenue	$	142	$	134	$	373	$	433
Cost of maintenance revenues	429		384		1,694		1,491
Cost of services revenues	4,652		4,392		18,622		17,878
Research and development	4,498		4,083		18,123		15,555
Sales and marketing	4,166		4,442		16,663		15,090
General and administrative	4,246		4,811		16,319		15,684
Total stock-based compensation expenses	$	18,133	$	18,246	$	71,794	$	66,131



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)

	Three Months Ended July 31,						Fiscal Year Ended July 31,
	2017			2016			2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	26,927		$	16,097		$	21,224		$	14,976
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	6,517			3,007			18,725			8,842
Stock-based compensation	18,133			18,246			71,794			66,131
Excess tax benefit from exercise of stock options and vesting of restricted stock units ("RSUs")	(10,029		)	(6,536		)	(9,067		)	(7,102		)
Deferred taxes	5,552			199			(1,227		)	(4,568		)
Amortization of premium on available-for-sale securities	239			611			1,413			3,283
Other non-cash items affecting net income	22			187			49			(767		)
Changes in operating assets and liabilities:
Accounts receivable	15,995			(1,643		)	(9,750		)	(75		)
Prepaid expenses and other assets	(2,291		)	(2,691		)	(9,463		)	(7,668		)
Accounts payable	765			1,294			1,311			603
Accrued employee compensation	10,727			12,209			7,138			4,114
Other liabilities	9,296			6,549			8,211			5,993
Deferred revenues	3,770			1,730			36,802			16,138
Net cash provided by operating activities	85,623			49,259			137,160			99,900
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of available-for-sale securities	(118,274		)	(159,543		)	(462,035		)	(652,017		)
Sales and maturities of available-for-sale securities	104,800			123,108			547,630			597,405
Purchase of property and equipment	(2,650		)	(1,868		)	(5,886		)	(7,111		)
Capitalized software development costs	(410		)	—			(784		)	—
Strategic investment	—			—			(4,677		)	—
Acquisitions of business, net of cash acquired	—			—			(187,590		)	(39,530		)
Net cash used in investing activities	(16,534		)	(38,303		)	(113,342		)	(101,253		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon exercise of stock options	2,144			2,419			5,563			7,840
Taxes remitted on RSU awards vested	—			—			—			(1,488		)
Excess tax benefit from exercise of stock options and vesting of RSUs	10,029			6,536			9,067			7,102
Net cash provided by financing activities	12,173			8,955			14,630			13,454
Effect of foreign exchange rate changes on cash and cash equivalents	1,748			(934		)	1,146			(881		)
Net Increase in Cash and Cash Equivalents	83,010			18,977			39,594			11,220
Cash and Cash Equivalents — Beginning of period	180,166			204,605			223,582			212,362
Cash and Cash Equivalents—End of period	$	263,176		$	223,582		$	263,176		$	223,582



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands except share and per share data)

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP financial measures for the periods indicated below:

	Three Months Ended July 31,						Fiscal Year Ended July 31,
	2017			2016			2017			2016
Income from operations reconciliation:
GAAP income from operations	$	41,048		$	23,475		$	26,612		$	16,437
Non-GAAP adjustments:
Stock-based compensation ⁽¹⁾	18,133			18,246			71,794			66,131
Amortization of intangibles ⁽¹⁾	4,776			1,001			12,089			2,295
Non-GAAP income from operations	$	63,957		$	42,722		$	110,495		$	84,863

Net income reconciliation:
GAAP net income	$	26,927		$	16,097		$	21,224		$	14,976
Non-GAAP adjustments:
Stock-based compensation ⁽¹⁾	18,133			18,246			71,794			66,131
Amortization of intangibles ⁽¹⁾	4,776			1,001			12,089			2,295
Tax effect on non-GAAP adjustments ⁽²⁾	(5,080		)	(6,649		)	(26,323		)	(21,444		)
Non-GAAP net income	$	44,756		$	28,695		$	78,784		$	61,958

Tax provision (benefits) reconciliation:
GAAP tax provision	$	16,841		$	8,219		$	12,053		$	5,806
Non-GAAP adjustments:
Stock-based compensation	5,973			5,420			23,145			20,743
Amortization of intangibles	1,573			306			3,913			720
ISO deduction	55			52			166			244
Tax effect on GAAP profit before taxes due to different tax rates between GAAP and non-GAAP	(2,521		)	871			(901		)	(263		)
Non-GAAP tax provision	$	21,921		$	14,868		$	38,376		$	27,250

Earnings per share reconciliation:
GAAP earnings per share - Diluted	$	0.36		$	0.22		$	0.28		$	0.20
Amortization of intangibles acquired in business combinations	0.06			0.01			0.16			0.03
Stock-based compensation	0.24			0.25			0.96			0.90
Less: tax benefit of non GAAP items	(0.07		)	(0.09		)	(0.35		)	(0.29		)
Non-GAAP dilutive shares excluded from GAAP EPS calculation ⁽³⁾	—			—			—			—
Non-GAAP earnings per share - Diluted	$	0.59		$	0.39		$	1.05		$	0.84

Shares used in computing non-GAAP per share amounts:
Weighted average shares - Diluted	75,769,530			74,202,966			75,328,343			73,765,960
Non-GAAP dilutive shares excluded from GAAP EPS calculation ⁽³⁾	—			—			—			—
Pro forma weighted average shares - Diluted	75,769,530			74,202,966			75,328,343			73,765,960
(1) Adjustments relate to amortization of acquired intangibles and stock-based compensation recognized during the period for GAAP purposes. (2) Adjustment reflects the tax benefit resulting from all non-GAAP adjustments.
(3) Due to the occurrence of a net loss on a GAAP basis, potentially dilutive securities were excluded from the calculation of GAAP earnings per share, as they would have an anti-dilutive effect. However, as net income was earned on a Non-GAAP basis, these shares have a dilutive effect on Non-GAAP earnings per share and are included here.



GUIDEWIRE SOFTWARE, INC. AND SUBSIDIARIES
Reconciliation of GAAP to Non-GAAP Outlook

The following tables reconcile the specific items excluded from GAAP in the calculation of non-GAAP outlook for the periods indicated below. The GAAP and non-GAAP estimated annual tax rates used to compute net income and EPS exclude discrete items such as tax benefits related to share-based compensation.

(Dollar in millions)	First Quarter Fiscal Year 2018				Full Year Fiscal Year 2018
Outlook reconciliation: GAAP and non-GAAP income/(loss) from operations
GAAP income/(loss) from operations	(44.0	)	-	(40.0)	6.2		-	18.2
Non-GAAP adjustments:
Stock-based compensation	18.8		-	19.8	79.2		-	82.2
Amortization of intangibles	4.5		-	5.0	18.6		-	19.6
Non-GAAP income/(loss) from operations	(20.0	)	-	(16.0)	106.0		-	118.0

Outlook reconciliation: GAAP and non-GAAP net income/(loss)
GAAP net income/(loss)	(28.4	)	-	(25.8)	6.7		-	14.6
Non-GAAP adjustments:
Stock-based compensation	18.8		-	19.8	79.2		-	82.2
Amortization of intangibles	4.5		-	5.0	18.6		-	19.6
Non-GAAP tax impact	(8.6	)	-	(8.5)	(31.7	)	-	(31.5)
Non-GAAP net income/(loss)	(12.9	)	-	(10.2)	74.8		-	83.0