Slides
Page 1
November 3, 2025 Q4 & FY’25 Financial Results
Page 2
Today’s Presenters Jure Sola Chairman & CEO Jon Faust EVP & CFO 2
Page 3
Certain statements made during this presentation, including our financial outlook for the first quarter fiscal 2026 and expectations for growth generally, constitute forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in these statements as a result of a number of factors, including the risk that the expected benefits from the ZT Systems acquisition may not be realized or may take longer to realize than anticipated; adverse changes in the key markets we target, in particular the cloud and AI infrastructure sectors; the impact of recent or future changes in tariffs and trade policy, which may adversely affect our costs, supply chain, and customer demand; significant uncertainties that can cause our future sales, earnings, and cash flows to be variable; our reliance on a limited number of customers for a substantial portion of our sales; risks arising from our international operations and expansion into new geographic markets; integration risks related to combining ZT Systems’ manufacturing operations with our own; geopolitical uncertainty, and the other risk factors set forth in the Company's annual and quarterly reports filed with the Securities Exchange Commission. In addition, during the course of today's presentation, we will refer to certain non-GAAP financial information. A reconciliation of such non-GAAP financial information to their most directly comparable GAAP measures are included on slide 26 of this presentation. The Company is under no obligation to (and expressly disclaims any such obligation to) update or alter any of the forward-looking statements made in this earnings release, the conference call or the Investor Relations section of our website whether as a result of new information, future events or otherwise, unless otherwise required by law. Safe Harbor Statement 3
Page 4
Cash Flow From Operations $621M Non-GAAP Operating Margin 5.7% FY’25 Highlights Revenue $8.13B 7.4% Y/Y revenue growth Double digit Y/Y growth in Communications Networks, Cloud and AI Infrastructure, Medical, and Defense and Aerospace Non-GAAP operating margin expanded 30 bps Y/Y Non-GAAP diluted EPS growth 14.4% Y/Y Results In Line With Outlook Provided at Beginning of the Year Non-GAAP Diluted EPS $6.04 Refer to GAAP to non-GAAP reconciliation on slide 26. 4
Page 5
Financial Overview Jon Faust
Page 6
Non-GAAP Financial Highlights (Actual vs Outlook) Q4 FY’25 Outlook WAS Revenue: $2.1B $2.0B - $2.1B Gross Margin: 9.4% 8.7% - 9.2% Operating Margin: 6.0% 5.5% - 6.0% Diluted EPS: $1.67 $1.52 - $1.62 Strong Operational Execution Refer to GAAP to non-GAAP reconciliation on slide 26. 6
Page 7
$175 $180 $181 $186 $196 8.7% 9.0% 9.1% 9.1% 9.4% Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 $2,018 $2,006 $1,984 $2,042 $2,096 Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 $1.43 $1.44 $1.41 $1.53 $1.67 Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 Revenue Non-GAAP Gross Margin Non-GAAP Operating Margin Non-GAAP Diluted EPS Q/Q Non-GAAP P&L Performance ($ in millions, except per share data) $107 $113 $111 $116 $126 5.3% 5.6% 5.6% 5.7% 6.0% Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 Refer to GAAP to non-GAAP reconciliation on slide 26. 7
Page 8
*Revenue and non-GAAP gross margin for IMS segment and CPS category includes inter-segment revenues that are eliminated under GAAP, and in the case of gross margin, excludes the same items that are excluded from the calculation of non- GAAP gross margin for the consolidated business. $1,628 $1,623 $1,604 $1,648 $1,681 7.3% 7.9% 7.7% 7.5% 7.8% Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 Integrated Manufacturing Solutions $418 $416 $411 $422 $448 13.6% 12.5% 13.9% 14.7% 14.5% Q4'24 Q1'25 Q2'25 Q3'25 Q4'25 Components, Products and Services Segment Reporting: Revenue and Non-GAAP Gross Margin* ($ in millions) 8
Page 9
$7,568 $8,128 FY'24 FY'25 $5.28 $6.04 FY'24 FY'25 Revenue Non-GAAP Diluted EPSNon-GAAP Operating Income / Margin Non-GAAP Gross Profit / Margin $661 $744 8.7% 9.2% FY'24 FY'25 Y/Y Non-GAAP P&L Performance ($ in millions, except per share data) $406 $465 5.4% 5.7% FY'24 FY'25 Refer to GAAP to non-GAAP reconciliation on slide 26. 7.4% 14.4% 9
Page 10
Balance Sheet Highlights ($ in millions) Robust Balance Sheet Enables Us to Effectively Execute Our Strategic Initiatives Key Takeaways: Strong cash position No borrowings under $800M Revolver at quarter end Q4 non-GAAP pre-tax ROIC: 28.3% Gross leverage ratio of 0.32x Notes: See reconciliation of GAAP pre-tax ROIC to non-GAAP pre-tax ROIC on slide 28. Leverage ratio is the ratio of debt to cash and cash equivalents. Refer to full balance sheet on slide 24. 10 9/27/2025 Cash and cash equivalents 926 Accounts receivable, net 1,400 Contract assets 426 Inventories 1,988 Property, plant and equipment, net 682 Deferred income tax assets 171 Other assets 265 Total assets 5,858$ Accounts payable 1,579 Deferred revenue and customer advances 878 Short-term debt 18 Long-term debt 283 Other liabilities 561 Total stockholders' equity 2,539 Total liabilities and stockholders' equity 5,858$
Page 11
Cash Flow from Operations: $199 million Net CapEx: $62 million Free Cash Flow: $137 million Non-GAAP EBITDA: $156 million FY’25: $585 million Share Repurchases: FY’25: Approximately 1.44 million shares for $113.7 million Strong FY’25 Free Cash Flow of $478 Million All figures for Q4 FY’25, unless indicated otherwise. Free cash flow = Net cash provided by operating activity adjusted for net purchases of property and equipment. Refer to slide 27 for a reconciliation of free cash flow. Refer to slide 29 for a reconciliation of EBITDA. Q4 and FY’25 Cash Flow Highlights ($ in millions) 11
Page 12
ZT Systems Transaction Update
Page 13
Completion of ZT Systems - Transaction Details Original Latest Comments Closing Date Near end of CY’25 October 27, 2025 Received regulatory approval faster than anticipated Closing Purchase Price $3.0 Billion $2.05 Billion – Net Working Capital $2.0 Billion $1.05 Billion Impacted by timing of closing relative to working capital build; subject to post-close true-up – Net PP&E $250 Million $250 Million No change; three state-of-the-art facilities and includes power purchase assets – Premium (Cash and Sanmina Equity) $300 Million $300 Million No change $150 million cash, $150 million of equity 1,151,052 shares at $130.32 price Lock-up period 3 years split equally over three years – Contingent Consideration $450 Million $450 Million Based on the financial performance of the business over the next 3 years 13
Page 14
Strong Balance Sheet & Liquidity Position LiquidityTotal Funded Debt Term Loan A $1,400 Million Term Loan B $800 Million Total Funded Debt $2,200 Million Cash(1) $926 Million Revolver $1,500 Million Term Loan Delayed Draw $600 Million Total Liquidity $3,026 Million Targeting 1.0x-2.0x net leverage ratio over time with goal of achieving investment grade rating Significant available liquidity to support the expected growth of the business 14(1) Represents Sanmina cash only. Does not include additional cash currently at ZT.
Page 15
Q1 FY’26 Outlook Revenue Non-GAAP Operating Margin* Non-GAAP Diluted EPS* $2.9B - $3.2B 5.6% - 6.1% $1.95 - $2.25 Legacy Sanmina revenue of $2.05 billion to $2.15 billion Two months revenue of ZT Systems of $0.85 billion to $1.05 billion ZT Systems margin profile in line with legacy Sanmina ZT Systems is immediately accretive to non-GAAP diluted EPS *This is a forward-looking non-GAAP financial measure that cannot be reconciled to its equivalent GAAP financial measure without unreasonable effort. 15
Page 16
Business Review Jure Sola
Page 17
Overview Q4 strong results Revenue and non-GAAP operating margin at the high-end of our outlook Non-GAAP gross margin and non-GAAP diluted EPS exceeded our outlook FY’25 in line with outlook Consistent Execution – Driving Financial Performance 17
Page 18
FY’25 Top 10 Customers – 51.7% of Revenue Revenue by End-Market ($ in millions) Q4 FY’24 Q4 FY’25 FY’24 FY’25 Industrial and Energy, Medical, Defense and Aerospace, and Automotive $1,253 $1,247 $4,916 $5,023 Communications Networks and Cloud and AI Infrastructure $765 $849 $2,652 $3,105 Total $2,018 $2,096 $7,568 $8,128 18
Page 19
End-Market View: Positive Trends Industrial, Medical, Defense and Aerospace, and Automotive Industrial and Energy Strong base of customers New projects in the pipeline to drive growth in FY’26 Medical Well diversified within the market Nice growth in FY’26 Defense and Aerospace Continue to see solid demand This segment continues to do well, from technology components to full systems Automotive and Transportation Short-term softness Great customer base, new opportunities to drive growth Communications Networks and Cloud and AI Infrastructure High Density/Performance Networks Strong demand for high performance switches and enterprise storage Growing optical advanced packaging - 400G, 800G and 1.6T Cloud and AI Infrastructure AI/ML - strong growth opportunities ZT Systems is well positioned in Cloud and AI end-market Strong pipeline for second half CY’26 and CY’27 19
Page 20
Sanmina AI / ZT Systems “End-to-End” FULL SYSTEM INTEGRATION AT SCALE Stronger Together - Accelerating the Future of Cloud and AI Infrastructure 20
Page 21
Sanmina’s Priorities Focus on Customers Execute on ZT Systems Opportunities Drive Profitable Growth 21 1 32 Maximize Shareholder Value
Page 22
Finished FY’25 with strong momentum Executing on the transformation from a position of strength Expect legacy Sanmina business to continue to grow high single digits Expect solid growth in Cloud and AI end-market in second half of CY’26 and 2027 Our capabilities in Cloud and AI will bring solutions from concept to deployment with quality, speed and flexibility at scale Manufacturing footprint aligned to support customers’ global production requirements, strong U.S. presence Summary 22 Great Opportunities to Drive Profitable Growth
Page 23
Quarter Ended: September 27, 2025 Consolidated Financial Statements Reconciliation of GAAP vs. Non-GAAP
Page 24
24 September 27, 2025 September 28, 2024 ASSETS Current assets: Cash and cash equivalents $ 926,267 $ 625,860 Accounts receivable, net 1,400,129 1,337,562 Contract assets 425,944 384,077 Inventories 1,988,462 1,443,629 Prepaid expenses and other current assets 124,656 79,301 Total current assets 4,865,458 3,870,429 Property, plant and equipment, net 682,354 616,067 Deferred income tax assets 171,218 160,703 Other assets 139,143 175,646 Total assets $ 5,858,173 $ 4,822,845 LIA BILITIES A ND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,578,895 $ 1,441,984 Accrued liabilities 179,605 132,513 Deferred revenue and customer advances 878,474 215,553 Accrued payroll and related benefits 167,541 133,129 Short-term debt, including current portion of long-term debt 17,500 17,500 Total current liabilities 2,822,015 1,940,679 Long-term liabilities: Long-term debt 282,974 299,823 Other liabilities 214,021 220,835 Total long-term liabilities 496,995 520,658 Stockholders' equity 2,539,163 2,361,508 Total liabilities and stockholders' equity $ 5,858,173 $ 4,822,845 Condensed Consolidated Balance Sheets Sanmina Corporation (GAAP) (in thousands) (Unaudited)
Page 25
25 September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net sales $ 2,096,392 $ 2,017,505 $ 8,128,382 $ 7,568,328 Cost of sales 1,905,235 1,846,212 7,412,025 6,927,899 Gross profit 191,157 171,293 716,357 640,429 Operating expenses: Selling, general and administrative 73,521 70,490 290,221 266,194 Research and development 8,669 8,243 31,087 28,514 Acquisition and integration charges 27,082 — 34,162 — Restructuring 3,420 2,970 6,319 10,227 Total operating expenses 112,692 81,703 361,789 304,935 Operating income 78,465 89,590 354,568 335,494 Interest income 4,536 2,799 15,855 12,440 Interest expense (5,190) (5,047) (20,151) (29,183) Other income (expense), net (4,474) (564) (10,844) (1,216) Interest and other, net (5,128) (2,812) (15,140) (17,959) Income before income taxes 73,337 86,778 339,428 317,535 Provision for income taxes 21,364 19,438 73,168 79,784 Net income before noncontrolling interest 51,973 67,340 266,260 237,751 Less: Net income attributable to noncontrolling interest 3,907 5,959 20,367 15,215 Net income attributable to common shareholders $ 48,066 $ 61,381 $ 245,893 $ 222,536 Net income attributable to common shareholders per share: Basic $ 0.90 $ 1.12 $ 4.56 $ 4.00 Diluted $ 0.88 $ 1.09 $ 4.46 $ 3.91 Weighted-average shares used in computing per share amounts: Basic 53,567 54,783 53,947 55,592 Diluted 54,860 56,235 55,178 56,970 Sanmina Corporation Condensed Consolidated Statements of Income (in thousands, except per share amounts) (GAAP) Three Months E nded (Unaudited) Twelve Months E nded
Page 26
26 September 27, 2025 June 28, 2025 March 29, 2025 December 28, 2024 September 28, 2024 September 27, 2025 September 28, 2024 $ 191,157 $ 181,050 $ 176,235 $ 167,915 $ 171,293 $ 716,357 $ 640,429 9.1 % 8.9 % 8.9 % 8.4 % 8.5 % 8.8 % 8.5 % 5,225 4,956 4,931 5,024 4,700 20,136 17,493 — — — 450 (500) 450 850 — — 159 6,703 — 6,862 1,786 $ 196,382 $ 186,006 $ 181,325 $ 180,092 $ 175,493 $ 743,805 $ 660,558 9.4 % 9.1 % 9.1 % 9.0 % 8.7 % 9.2 % 8.7 % $ 112,692 $ 85,173 $ 84,619 $ 79,305 $ 81,703 $ 361,789 $ 304,935 (11,008) (11,125) (10,859) (10,268) (10,789) (43,260) (39,914) (27,082) (7,080) — — — (34,162) — (1,250) — — — 220 (1,250) (280) — — — (169) — (169) (13) (3,420) 3,335 (3,081) (1,436) (2,970) (4,602) (10,227) $ 69,932 $ 70,303 $ 70,679 $ 67,432 $ 68,164 $ 278,346 $ 254,501 $ 78,465 $ 95,877 $ 91,616 $ 88,610 $ 89,590 $ 354,568 $ 335,494 3.7 % 4.7 % 4.6 % 4.4 % 4.4 % 4.4 % 4.4 % 16,233 16,081 15,790 15,292 15,489 63,396 57,407 1,250 — — 450 (720) 1,700 1,130 — — 159 6,872 — 7,031 1,799 27,082 7,080 — — — 34,162 — 3,420 (3,335) 3,081 1,436 2,970 4,602 10,227 $ 126,450 $ 115,703 $ 110,646 $ 112,660 $ 107,329 $ 465,459 $ 406,057 6.0 % 5.7 % 5.6 % 5.6 % 5.3 % 5.7 % 5.4 % $ (5,128) $ (4,467) $ (3,211) $ (2,334) $ (2,812) $ (15,140) $ (17,959) — — — — — — (4,967) $ (5,128) $ (4,467) $ (3,211) $ (2,334) $ (2,812) $ (15,140) $ (22,926) $ 21,364 $ 18,522 $ 17,890 $ 15,392 $ 19,438 $ 73,168 $ 79,784 4,604 4,849 5,201 8,880 (1,175) 23,534 (12,736) $ 25,968 $ 23,371 $ 23,091 $ 24,272 $ 18,263 $ 96,702 $ 67,048 $ 48,066 $ 68,616 $ 64,208 $ 65,003 $ 61,381 $ 245,893 $ 222,536 47,985 19,826 19,030 24,050 17,739 110,891 70,563 — — — — — — (4,967) (4,604) (4,849) (5,201) (8,880) 1,175 (23,534) 12,736 $ 91,447 $ 83,593 $ 78,037 $ 80,173 $ 80,295 $ 333,250 $ 300,868 Bas ic $ 0.90 $ 1.28 $ 1.18 $ 1.20 $ 1.12 $ 4.56 $ 4.00 Diluted $ 0.88 $ 1.26 $ 1.16 $ 1.16 $ 1.09 $ 4.46 $ 3.91 Bas ic $ 1.71 $ 1.56 $ 1.43 $ 1.48 $ 1.47 $ 6.18 $ 5.41 Diluted $ 1.67 $ 1.53 $ 1.41 $ 1.44 $ 1.43 $ 6.04 $ 5.28 Basic 53,567 53,614 54,405 54,206 54,783 53,947 55,592 Diluted 54,860 54,493 55,511 55,853 56,235 55,178 56,970 (1) September 27, 2025 June 28, 2025 March 29, 2025 December 28, 2024 September 28, 2024 September 27, 2025 September 28, 2024 $ 5,225 $ 4,956 $ 4,931 $ 5,024 $ 4,700 $ 20,136 $ 17,493 10,621 10,811 10,580 9,962 10,461 41,974 38,867 387 314 279 306 328 1,286 1,047 $ 16,233 $ 16,081 $ 15,790 $ 15,292 $ 15,489 $ 63,396 $ 57,407 (2) (3) (4) (5) Sanmina Corporation Twelve Months E nded GAAP Gross profit GAAP Gross margin Three Months E nded (Unaudited) (in thousands, except per share amounts) Reconciliation of GAAP to Non-GAAP Measures Stock compensation expense (1) Adjustments Legal (3) Distressed customer charges (4) Non-GAAP Gross profit Non-GAAP Gross margin GAAP Operating expenses Adjustments Stock compensation expense (1) Distressed customer charges (4) Legal (3) Acquisition and integration costs (2) Non-GAAP Operating expenses Restructuring and others GAAP Operating margin GAAP Operating income Stock compensation expense (1) Adjustments Legal (3) Restructuring and others Acquisition and integration costs (2) Distressed customer charges (4) Non-GAAP Operating margin Non-GAAP Operating income Adjustments GAAP Interest and other, net Legal (3) Non-GAAP Interest and other, net Adjustments for taxes (5) GAAP Provision for income taxes Non-GAAP Provision for income taxes GAAP Net income attributable to common shareholders Adjustments: Legal (3) Operating income adjustments (see above) Non-GAAP Net income attributable to common shareholders Adjustments for taxes (5) GAAP Net income attributable to common shareholders per share: Non-GAAP Net income attributable to common shareholders per share: Weighted-average shares used in computing per share amounts: Cost of sales Stock compensation expense w as as follow s: Selling, general and administrative Total Adjustments for taxes include the tax effects of the various adjustments that w e exclude from our non-GAAP measures, and adjustments related to deferred tax and discrete tax items. Relates to accounts receivable and inventory w rite-dow ns associated w ith distressed customers. Represents expenses, charges and recoveries associated w ith certain legal matters. Relates to fees on the bridge loan facility as w ell as professional and legal fees incurred in connection w ith the acquisition of ZT Group Int’l, Inc. from AMD Design, LLC . Research and development
Page 27
27 September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 Net income before noncontrolling interest $ 51,973 $ 67,340 $ 266,260 $ 237,751 Depreciation 29,653 31,654 119,466 122,418 Other, net (2,991) 30,110 45,920 86,637 Net change in net w orking capital 120,444 (77,229) 189,011 (106,590) Cash provided by operating activities 199,079 51,875 620,657 340,216 Purchases of investments (340) (3,300) (15,040) (5,200) Proceeds from sales of investments — — 49,309 — Net purchases of property, plant and equipment (62,304) (22,597) (142,476) (109,196) Cash used in investing activities (62,644) (25,897) (108,207) (114,396) Net sales (repurchases) of shares and other 624 (60,229) (113,320) (222,295) Net borrow ing activities (4,375) — (17,500) (21,570) Payments for tax w ithholding on stock-based compensation (4,473) (183) (43,020) (25,842) Cash used for financing activities (8,224) (60,412) (173,840) (269,707) Effect of exchange rate changes 289 2,585 1,750 2,177 Net change in cash, cash equivalents and restricted cash equivalents $ 128,500 $ (31,849) $ 340,360 $ (41,710) Free cash flow : Cash provided by operating activities $ 199,079 $ 51,875 $ 620,657 $ 340,216 Net purchases of property, plant and equipment (62,304) (22,597) (142,476) (109,196) $ 136,775 $ 29,278 $ 478,181 $ 231,020 Sanmina Corporation Condensed Consolidated Cash Flow Three Months E nded Twelve Months E nded (Unaudited) (in thousands) (GAAP)
Page 28
28 September 27, 2025 September 28, 2024 GAAP Operating income $ 78,465 $ 89,590 x 4.0 4.0 Annualized GAAP Operating income 313,860 358,360 Average invested capital (1) ÷ 1,784,820 1,865,140 GAAP Pre-tax ROIC 17.6 % 19.2 % Non-GAAP Operating income $ 126,450 $ 107,329 x 4.0 4.0 Annualized non-GAAP Operating income 505,800 429,316 Average invested capital (1) ÷ 1,784,820 1,865,140 Non-GAAP Pre-tax ROIC 28.3 % 23.0 % Sanmina Corporation (1) Invested capital is defined as total assets (not including cash and cash equivalents and deferred tax assets) less total liabilities (excluding short-term and long-term debt). Average invested capital is the average of invested capital as at the end of current and prior quarter. Three Months E nded (Unaudited) ($ in thousands) Pre-Tax Return on Invested Capital (ROIC)
Page 29
29 September 27, 2025 September 28, 2024 September 27, 2025 September 28, 2024 EBITDA GAAP Operating Income $ 78,465 $ 89,590 $ 354,568 $ 335,494 Depreciation 29,653 31,654 119,466 122,418 GAAP EBITDA $ 108,118 $ 121,244 $ 474,034 $ 457,912 GAAP EBITDA Margin 5.2 % 6.0 % 5.8 % 6.1 % Non-GAAP Operating Income $ 126,450 $ 107,329 $ 465,459 $ 406,057 Depreciation 29,653 31,654 119,466 122,418 Non-GAAP EBITDA $ 156,103 $ 138,983 $ 584,925 $ 528,475 Non-GAAP E BITDA Margin 7.4 % 6.9 % 7.2 % 7.0 % Sanmina Corporation Twelve Months E ndedThree Months E nded (Unaudited) (in thousands) Reconciliation of GAAP to Non-GAAP Measures: E BITDA
Page 30
30 Schedule 1 The statements above and financial information provided in the fourth quarter earnings release include non-GAAP measures of gross profit, gross margin, operating income, operating margin, net income, earnings per share, ROIC and EBITDA. Management excludes from these measures stock-based compensation, restructuring, acquisition and integration expenses, impairment charges, amortization charges and other unusual or infrequent items, as adjusted for taxes, as more fully described below. Management excludes these items principally because such charges or benefits are not directly related to the Company’s ongoing core business operations. We use such non-GAAP measures in order to (1) make more meaningful period-to-period comparisons of the Company’s operations, both internally and externally, (2) guide management in assessing the performance of the business, internally allocating resources and making decisions in furtherance of Company’s strategic plan, (3) provide investors with a better understanding of how management plans and measures the business and (4) provide investors with a better understanding of our ongoing, core business. The material limitations to management’s approach include the fact that the charges, benefits and expenses excluded are nonetheless charges, benefits and expenses required to be recognized under GAAP and, in some cases, consume cash which reduces the Company’s liquidity. Management compensates for these limitations primarily by reviewing GAAP results to obtain a complete picture of the Company’s performance and by including a reconciliation of non-GAAP results to GAAP results in its earnings releases. Additional information regarding the economic substance of each exclusion, management’s use of the resultant non-GAAP measures, the material limitations of management’s approach and management’s methods for compensating for such limitations is provided below. Stock-based Compensation Expense, which consists of non-cash charges for the estimated fair value of equity awards granted to employees and directors, is excluded in order to permit more meaningful period-to-period comparisons of the Company’s results since the Company grants different amounts and value of equity awards each quarter. In addition, given the fact that competitors grant different amounts and types of equity awards and may use different valuation assumptions, excluding stock-based compensation permits more accurate comparisons of the Company’s core results with those of its competitors. Restructuring, Acquisition and Integration Expenses, which consist of employee severance, lease termination costs, exit costs, environmental investigation, remediation and related employee costs and other charges primarily related to closing and consolidating manufacturing facilities and those associated with the acquisition and integration of acquired businesses, are excluded because such charges (1) can be driven by the timing of acquisitions and exit activities which are difficult to predict, (2) are not directly related to ongoing business results and (3) generally do not reflect expected future operating expenses. In addition, given the fact that the Company’s competitors complete acquisitions and adopt restructuring plans at different times and in different amounts than the Company, excluding these charges or benefits permits more accurate comparisons of the Company’s core results with those of its competitors. Items excluded by the Company may be different from those excluded by the Company’s competitors and restructuring and integration expenses include both cash and non- cash expenses. Cash expenses reduce the Company’s liquidity. Therefore, management also reviews GAAP results including these amounts. Impairment Charges for Goodwill and Other Assets, which consist of non-cash charges, are excluded because such charges are non-recurring and do not reduce the Company’s liquidity. In addition, given the fact that the Company’s competitors may record impairment charges at different times, excluding these charges permits more accurate comparisons of the Company’s core results with those of its competitors. Amortization Charges, which consist of non-cash charges impacted by the timing and magnitude of acquisitions of businesses or assets, are also excluded because such charges do not reduce the Company’s liquidity. In addition, such charges can be driven by the timing of acquisitions, which is difficult to predict. Excluding these charges permits more accurate comparisons of the Company’s core results with those of its competitors because the Company’s competitors complete acquisitions at different times and for different amounts than the Company. Other Unusual or Infrequent Items, such as charges or benefits associated with distressed customers, expenses, charges and recoveries relating to certain legal matters, and gains and losses on sales of assets, are excluded because such items are typically non-recurring, difficult to predict or not directly related to the Company’s ongoing or core operations and are therefore not considered by management in assessing the current operating performance of the Company and forecasting earnings trends. However, items excluded by the Company may be different from those excluded by the Company’s competitors. In addition, these items include both cash and non-cash expenses. Cash expenses reduce the Company’s liquidity. Management compensates for these limitations by reviewing GAAP results including these amounts. Adjustments for Taxes, which consist of the tax effects of the various adjustments that we exclude from our non-GAAP measures, and adjustments related to deferred tax and discrete tax items. Including these adjustments permits more accurate comparisons of the Company's core results with those of its competitors. We determine the tax adjustments based upon the various applicable effective tax rates. In those jurisdictions in which we do not expect to realize a tax cost or benefit (due to a history of operating losses or other factors), a reduced tax rate is applied.
Page 31
Thank you