1
EXHIBIT 99.2
[JDS UNIPHASE LETTERHEAD]
NEWS RELEASE
JDS UNIPHASE ANNOUNCES THIRD QUARTER RESULTS
AND GLOBAL REALIGNMENT PROGRAM
OTTAWA, ONTARIO, AND SAN JOSE, CALIFORNIA, APRIL 24, 2001 -- JDS Uniphase
Corporation (Nasdaq: JDSU and TSE: JDU) today reported sales for its third
quarter ended March 31, 2001 of $920 million and pro forma net income of $160
million or $0.14 per diluted share. The Company also announced a Global
Realignment Program.
The Global Realignment Program reflects the Company's commitment to
remaining the industry leader in optical components and modules for
telecommunications during the current business downturn, and to position the
Company for substantial growth over the longer term. This program has the
following elements:
- Product and Technology Development. The Company is creating global
centers for advanced product development. These centers are intended to
centralize product development teams with the critical mass necessary to
develop future generations of products and fiberoptic technologies. The
Company will also benefit from savings resulting from elimination of
overlapping development programs, and reallocating such resources to
invest in the development of new platforms and capabilities.
- Manufacturing. JDS Uniphase will consolidate the manufacturing of
several of its products from multiple sites into specific locations
around the world. This process involves consolidating product lines,
standardizing on global product designs, relocating products to
operations designated as global centers of manufacturing excellence,
including transferring additional products to China to take greater
advantage of its strong optical expertise and favorable cost and tax
environment.
- Customer Service. The Company is aligning its sales organization to
offer customers a single point of contact for all of their product
requirements, and creating regional and technical centers to streamline
customer interactions with product line managers. It is also building on
its successful information technology implementations to consolidate
administrative functions to provide improved customer service and
realize significant cost savings.
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The Global Realignment Program is intended to align the Company's resources
and operations into a global structure that is competitive now and positions the
Company to remain competitive in the future. This program includes a number of
actions by the Company to reduce costs and expenses and align manufacturing
capacity with customer demand. The Company will close several operations, vacate
25 buildings at operations to be closed, as well as at continuing operations,
and reduce employment by approximately 5,000 people or 20% of current levels.
These actions are being taken in response to current business conditions in a
market the Company continues to believe will experience substantial growth over
the longer term. The Company believes these changes will position JDS Uniphase
well in the current business environment and prepare it for future growth with
increasingly competitive new product offerings and long-term cost structure.
"We believe we have served our customers well during prior periods of
exploding demand. Our industry is in a near-term downturn and we must act
decisively and rapidly," said Jozef Straus, Co-Chairman and CEO. "The Global
Realignment Program we are announcing today is our response both for now and for
the future. While employment reductions of many who have served our customers so
well are extremely difficult, we must prepare for the future by creating a
product portfolio and cost structure that will permit us to continue to serve
the needs of our customers and grow with our markets."
In the fourth quarter of fiscal 2001, the Company will record one time
charges for employee severance, consolidation of product lines, closing of some
operations, vacating approximately 25 buildings, and inventory write-offs
associated with the consolidation of different product designs and manufacturing
processes onto single global manufacturing platforms. In addition to these one
time charges, the Company will incur costs for accelerated depreciation, moving
and employee costs in the first three quarters of fiscal 2002 during the phasing
out of certain facilities and equipment. Generally accepted accounting
principles require the recording of accelerated depreciation of such assets over
the time remaining until phaseout (three to nine months) and the expensing of
such moving and employee costs as incurred. It is anticipated that the costs of
the Global Realignment Program will be between $375 and $425 million, and the
projected effect of the Global Realignment Program will be to reduce the
Company's annual expense levels by over $250 million.
Sales for the third quarter ended March 31, 2001 were 1% below sales of
$925 million for the quarter ended December 30, 2000 and 90% above pro forma
combined sales of $485 million for the quarter ended March 31, 2000. Sales for
the nine months ended March 31, 2001 of $2.6 billion were 133% above pro forma
combined sales for the comparable prior year nine-month period. Pro forma
combined sales for the prior year periods include the separately reported
results of E-TEK Dynamics, Inc., which was acquired on June 30, 2000 in a
transaction accounted for as a purchase. Sales for the quarter include SDL, Inc.
sales subsequent to the acquisition date of SDL, which was acquired on February
13, 2001 in a transaction accounted for as a purchase, and exclude the sales
after that date of the Company's divested Zurich operations.
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Including merger-related charges, reduction in the value of marketable
equity securities, gain on the sale of a subsidiary, purchased intangibles
amortization, payroll taxes on stock option exercises, stock compensation
charges, and activity related to equity investments, the Company reported losses
of $1.3 billion or $1.13 per share for the quarter and $3.2 billion or $3.15 per
share for the fiscal year to date.
On a pro forma basis, excluding merger-related charges, reduction in the
value of marketable equity investments, gain on the sale of a subsidiary,
purchased intangibles amortization, payroll taxes on stock option exercises,
stock compensation charges, and activity related to equity investments, the
Company earned $160 million or $0.14 per share for the quarter as compared to
the $208 million or $0.21 per share earned in the quarter ended December 30,
2000. Pro forma net income for the nine months ended March 31, 2001 was $545
million or $0.51 per share, an increase of 112% from the $257 million or $0.28
per share earned in the comparable prior year period. The impact of pro forma
adjustments listed above are summarized in the Company's pro forma financial
tables that follow in this release.
At March 31, 2001 the Company had over $1 billion in cash. JDS Uniphase
generated $133 million in cash from operations for the quarter and $289 million
for the first nine months of the fiscal year.
The Company is evaluating the carrying value of certain long-lived assets,
consisting primarily of $56.2 billion of goodwill recorded on its balance sheet
at March 31, 2001. Pursuant to accounting rules, the majority of the goodwill
was recorded based on stock prices at the time merger agreements were executed
and announced. The Company's policy is to assess enterprise level goodwill if
the market capitalization of the Company is less than its net assets. Goodwill
will be reduced to the extent that net assets are greater than market
capitalization. At March 31, 2001, the value of the Company's net assets,
including unamortized goodwill exceeded the Company's market capitalization by
approximately $40 billion.
Downturns in telecommunications equipment and financial markets have
created unique circumstances with regard to the assessment of goodwill, and the
Company has sought the counsel of the Staff of the Securities and Exchange
Commission on the interpretation of generally accepted accounting principles
with regard to this matter. The Company anticipates recording additional charges
to reduce the carrying value of the unamortized goodwill and other long-lived
assets and such adjustments could represent a substantial portion of their
carrying value. Some of these charges may be recorded as an adjustment to the
Company's financial statements at March 31, 2001 and the Company would report
such adjustments in subsequent SEC filings.
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The Company anticipates sales and pro forma earnings per share for its
fourth quarter ending June 30, 2001 will be approximately $700 million and
$0.05, respectively. Such pro forma earnings per share would exclude the costs
of the Global Realignment Program and recognize limited cost reduction benefits,
as the program will be implemented for only a portion of the quarter. The
Company has limited visibility as to sales in future periods, and is not
currently providing sales guidance for fiscal 2002.
The following table summarizes JDS Uniphase pro forma results for the quarter:
(in millions, except per share amounts) Three months ended
---------------------------------
March 31, March 31,
2001 2000
--------------- --------------
Net sales $920 $485
Gross profit $447 $251
Income from operations $230 $155
Income before income taxes $242 $167
Net income $160 $108
Net income per diluted share $0.14 $0.11
Diluted weighted average shares outstanding 1,182 972
- --------------------
Pro forma results for the quarter ended March 31, 2001 exclude the $11.5 million
effect on gross profit related to purchase accounting adjustments of the value
of inventory; $2,512.7 million of purchased intangibles amortization and
in-process R&D (IPR&D) charges; $4.2 million of payroll taxes on stock option
exercises; $7.5 million of reduction in the value of marketable equity
securities; $1,768.1 million gain on sale of subsidiary and related costs; $23.7
million of non-cash stock compensation; and $45.4 million in activity related to
investments accounted for under the equity method of accounting. March 31, 2000
pro forma results include the separately reported results of E-TEK Dynamics
Inc., which was acquired on June 30, 2000 in a transaction accounted for as a
purchase. Pro forma results for the quarter ended March 31, 2000 exclude the
$12.3 million effect on gross profit related to purchase accounting adjustments
to the value of inventory, $333.7 million of purchased intangibles amortization
and IPR&D charges, and $6.3 million of payroll taxes on stock option exercises.
The Company will host a conference call at 8:00 AM Eastern Time on April
24, 2001. The dial-in number, 212-896-6042, will be available approximately ten
minutes prior to the start of the conference call. Callers will be placed on
music hold until the conference begins. A replay of the call will be available
on the company's website, beginning at 10:00 AM Eastern time, at
www.jdsuniphase.com under Corporate Information / Investor Relations / Webcasts
& Presentations. The call will be simultaneously webcast on the JDS Uniphase
website at www.jdsuniphase.com under Corporate Information / Investor Relations
/ Webcasts & Presentations. In addition, a replay will be available by phone
from 10:00 AM Eastern Time, April 24, 2001 to 10:00 AM Eastern Time, April 29,
2001 at 800-633-8284 domestic and 858-812-6440 international, access code
18632934.
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JDS Uniphase is a high technology company that designs, develops,
manufactures and distributes a comprehensive range of products for the growing
fiberoptic communications market. These products are deployed by system
manufacturers worldwide to develop advanced optical networks for the
telecommunications and cable television industries. JDS Uniphase Corporation is
traded on the Nasdaq National Market under the symbol JDSU, and the exchangeable
shares of JDS Uniphase Canada Ltd. are traded on The Toronto Stock Exchange
under the symbol JDU. More information on JDS Uniphase is available at
www.jdsuniphase.com.
This press release contains numerous forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include (a) any statements or
implications regarding the Company's ability to remain competitive and the
leader in its industry, and the future growth of the Company, the industry and
the economy in general; (b) statements regarding the expected level and timing
of benefits to the Company from its Global Realignment Program, including (i)
expected cost reductions and their impact on the Company's financial
performance, (ii) expected improvement to the Company's product and technology
development programs, (iii) expected improvements from consolidation of the
Company's manufacturing capabilities, (iv) expected improvements to the
Company's sales and customer service efforts, and (v) the belief that the Global
Realignment Program will position JDS well in the current business environment
and prepare it for future growth with increasingly competitive new product
offerings and long-term cost structure; (c) statements regarding the anticipated
cost of the Global Realignment Program; (d) statements regarding the anticipated
charges to be recorded by the Company to reduce the carrying value of
unamortized goodwill and other long-lived assets; and (e) any and all guidance
provided by the Company regarding its expected financial performance in future
periods, including, without limitation, with respect to anticipated sales, net
income and earnings per share in the fourth quarter of fiscal 2001 and first
quarter of fiscal 2002. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
projected, including, without limitation, the following: (1) the Company's
ongoing integration efforts, including, among other things, the Global
Realignment Program, may not be successful in achieving their expected benefits,
may be insufficient to align the Company's operations with customer demand and
the changes affecting our industry, or may be more costly than currently
anticipated; (2) due to the current economic slowdown, in general, and setbacks
in our customers' businesses, in particular, our ability to predict the
Company's financial performance for future periods is far more difficult than in
previous periods; and (3) our ongoing efforts to reduce product costs to our
customers, through automation and other improved manufacturing processes may be
unsuccessful. For more information on these and other risks affecting our
business, please refer to the "Risk Factors" Section to be included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001,
which we will be filing in the near future. The forward-looking statements
contained in this news release are made as of the date hereof and we do not
assume any obligation to update the reasons why actual results could differ
materially from those projected in the forward-looking statements.
-SELECTED FINANCIAL DATA FOLLOWS-
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JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended Nine months ended
--------------------------- ---------------------------
March 31, March 31, March 31, March 31,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Net sales $ 920.1 $ 394.6 $ 2,631.7 $ 906.4
Cost of sales 494.2 202.1 1,380.7 466.6
---------- ---------- ---------- ----------
Gross profit 425.9 192.5 1,251.0 439.8
Operating expenses
Research and development 98.0 33.3 231.6 72.1
Selling, general and administrative 139.1 49.1 360.9 110.7
Amortization of purchased intangibles 2,129.0 249.6 4,340.6 607.6
Acquired in-process R&D 383.7 84.1 392.6 103.7
---------- ---------- ---------- ----------
Total operating expenses 2,749.8 416.1 5,325.7 894.1
Loss from operations (2,323.9) (223.6) (4,074.7) (454.3)
Gain on sale of subsidiary 1,770.2 -- 1,770.2 --
Activity related to equity investments (45.4) -- (138.8) --
Interest and other income, net 4.6 10.0 30.3 26.2
---------- ---------- ---------- ----------
Loss before income taxes (594.5) (213.6) (2,413.0) (428.1)
Income tax expense 698.6 27.3 792.2 57.8
---------- ---------- ---------- ----------
Net loss $ (1,293.1) $ (240.9) $ (3,205.2) $ (485.9)
========== ========== ========== ==========
Net loss per share $ (1.13) $ (0.32) $ (3.15) $ (0.70)
========== ========== ========== ==========
Number of weighted average shares
outstanding 1,142.5 747.6 1,017.3 696.1
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JDS UNIPHASE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 31, 2001 June 30, 2000
(unaudited)
Current assets:
Cash, cash equivalents and short-term investments $ 1,972.9 $ 1,114.3
Accounts receivable, less allowances for doubtful accounts 705.4 381.6
Inventories 672.9 375.4
Prepaid assets and other current assets 152.5 101.6
---------- ----------
Total current assets 3,503.7 1,972.9
Property, plant, and equipment, net 1,193.2 670.7
Intangible assets 58,443.6 22,337.8
Other assets 1,899.0 1,407.7
========== ==========
TOTAL ASSETS $ 65,039.5 $ 26,389.1
========== ==========
Current liabilities:
Accounts payable $ 285.0 $ 195.2
Accrued payroll and related expenses 169.3 98.8
Income taxes payable 86.9 108.6
Other accrued expenses 293.5 244.6
Deferred income taxes 296.3 0.2
---------- ----------
Total current liabilities 1,131.0 647.2
Deferred tax liabilities 1,178.8 902.1
Other non-current liabilities 28.1 61.2
Stockholders' equity:
Common stock and additional paid-in capital 67,677.4 25,898.3
Accumulated deficit and other stockholders' equity (4,975.8) (1,119.7)
---------- ----------
Total stockholders' equity 62,701.6 24,778.6
========== ==========
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 65,039.5 $ 26,389.1
========== ==========
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JDS UNIPHASE CORPORATION
OPERATING SEGMENT INFORMATION
(in millions)
(unaudited)
Three months ended Nine months ended
--------------------------- ---------------------------
March 31, March 31, March 31, March 31,
2001 2000 2001 2000
---------- ---------- ---------- ----------
Amplification and Transmission:
Shipments $ 441.4 $ 173.1 $ 960.7 $ 417.4
Intersegment sales (7.8) (1.2) (22.9) (1.5)
---------- ---------- ---------- ----------
Net sales to external customers 433.6 171.9 937.8 415.9
Operating income 128.0 46.1 267.3 105.9
WDM, Switching and Thin Film Filters:
Shipments 525.6 242.6 1,775.1 537.9
Intersegment sales (39.6) (19.8) (76.8) (47.2)
---------- ---------- ---------- ----------
Net sales to external customers 486.0 222.8 1,698.4 490.6
Operating income 152.2 76.0 617.8 183.1
Net sales by reportable segments 919.6 394.6 2,636.1 906.5
All other net sales 0.5 -- (4.4) (0.1)
---------- ---------- ---------- ----------
920.1 394.6 2,631.7 906.4
---------- ---------- ---------- ----------
Operating income by reportable segment 280.2 122.1 885.1 289.0
All other operating income (49.9) 6.7 (97.6) 6.5
Unallocated amounts:
Acquisition related charges and
payroll tax on stock option
exercises (2,552.1) (352.3) (4,860.1) (749.8)
Gain on sale of subsidiary and
other related costs 1,768.1 -- 1,768.1 --
Activity related to equity investments (45.4) -- (138.8) --
Interest and other income, net 4.6 10.0 30.3 26.2
---------- ---------- ---------- ----------
Loss before income taxes $ (594.5) $ (213.5) $ (2,413.0) $ (428.1)
========== ========== ========== ==========
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JDS UNIPHASE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Three months ended March 31, 2001
--------------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma*
------------ ------------ ------------
Net sales $ 920.1 $-- $ 920.1
Cost of sales 494.2 (21.5) 472.7
------------ ------------ ------------
Gross profit 425.9 21.5 447.4
Operating expenses:
Research and development 98.0 (6.2) 91.8
Selling, general and administrative 139.1 (13.8) 125.3
Purchased intangibles and in-process R&D 2,512.7 (2,512.7) --
------------ ------------ ------------
Total operating expenses 2,749.8 (2,532.7) 217.1
Income (loss) from operations (2,323.9) 2,554.2 230.3
Gain on sale of subsidiary 1,770.2 (1,770.2) --
Activity related to equity investments (45.4) 45.4 --
Interest and other income, net 4.6 7.5 12.1
------------ ------------ ------------
Income (loss) before income taxes (594.5) 836.9 242.4
Income tax expense 698.7 616.3 82.4
------------ ------------ ------------
Net income (loss) $ (1,293.2) $ 1,453.2 $ 160.0
============ ============ ============
Net income (loss) per share $ (1.13) $ 0.14
============ ============
Net income (loss) per share, diluted basis $ (1.13) $ 0.14
============ ============
Number of weighted average shares outstanding 1,142.5 1,142.5
Number of weighted average shares and equivalents 1,142.5 1,182.3
Three months ended March 31, 2000
------------------------------------------------------------
JDS Pro Forma
Uniphase E-TEK Adjustments Pro Forma*
---------- ---------- ---------- ----------
Net sales $ 394.6 $ 90.6 -- $ 485.2
Cost of sales 202.1 45.7 (13.1) 234.7
---------- ---------- ---------- ----------
Gross profit 192.5 44.9 13.1 250.5
Total operating expenses 416.1 18.3 (339.2) 95.2
---------- ---------- ---------- ----------
Income (loss) from operations (223.6) 26.6 352.3 155.3
Interest and other income, net 10.0 1.9 -- 11.9
---------- ---------- ---------- ----------
Income (loss) before income taxes (213.6) 28.5 352.3 167.2
Income tax expense 27.3 10.8 21.6 59.7
---------- ---------- ---------- ----------
Net income (loss) $ (240.9) $ 17.7 $ 330.7 $ 107.5
========== ========== ========== ==========
Net income per share $ 0.12
==========
Net income per share, diluted basis $ 0.11
==========
Number of weighted average shares outstanding 893.0
Number of weighted average shares and equivalents 972.3
- --------------------
* Pro forma results for the quarter ended March 31, 2001 exclude the $11.5
million effect on gross profit related to purchase accounting adjustments
of the value of inventory; $2,512.7 million of purchased intangibles
amortization and in-process R&D (IPR&D) charges; $4.2 million of payroll
taxes on stock option exercises; $7.5 million of reduction in the value of
marketable equity securities; $1,768.1 million gain on sale of subsidiary
and related costs; $23.7 million of non-cash stock compensation; and $45.4
million in activity related to investments accounted for under the equity
method of accounting. March 31, 2000 pro forma results include the
separately reported results of E-TEK Dynamics Inc., which was acquired on
June 30, 2000 in a transaction accounted for as a purchase. Pro forma
results for the quarter ended March 31, 2000 exclude the $12.3 million
effect on gross profit related to purchase accounting adjustments to the
value of inventory, $333.7 million of purchased intangibles amortization
and IPR&D charges, and $6.3 million of payroll taxes on stock option
exercises.
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JDS UNIPHASE CORPORATION
PRO FORMA STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)
Nine months ended March 31, 2001
--------------------------------------------------
Pro Forma
As Reported Adjustments Pro Forma*
------------ ------------ ------------
Net sales $ 2,631.7 $-- $ 2,631.7
Cost of sales 1,380.7 (73.3) 1,307.4
------------ ------------ ------------
Gross profit 1,251.0 73.3 1,324.3
Operating expenses:
Research and development 231.6 (10.9) 220.7
Selling, general and administrative 360.9 (44.9) 316.0
Purchased intangibles and in-process R&D 4,733.2 (4,733.2) --
------------ ------------ ------------
Total operating expenses 5,325.7 (4,789.0) 536.7
Income (loss) from operations (4,074.7) 4,862.3 787.6
Gain on sale of subsidiary 1,770.2 (1,770.2) --
Activity related to equity investments (138.8) 138.8 --
Interest and other income, net 30.3 7.5 37.8
------------ ------------ ------------
Income (loss) before income taxes (2,413.0) 3,238.4 825.4
Income tax expense 792.2 (511.6) 280.6
------------ ------------ ------------
Net income (loss) $ (3,205.2) $ 3,750.0 $ 544.8
============ ============ ============
Net income (loss) per share $ (3.15) $ 0.54
============ ============
Net income (loss) per share, diluted basis $ (3.15) $ 0.51
============ ============
Number of weighted average shares outstanding 1,017.3 1,017.3
Number of weighted average shares and equivalents 1,017.3 1,071.2
Nine months ended March 31, 2000
--------------------------------------------------------------------
JDS Pro Forma
Uniphase E-TEK Adjustments Pro Forma*
------------ ------------ ------------ ------------
Net sales $ 906.4 223.4 -- $ 1,129.8
Cost of sales 466.6 112.4 (25.2) 553.8
------------ ------------ ------------ ------------
Gross profit 439.8 111.0 25.2 576.0
Total operating expenses 894.1 44.6 (724.6) 214.1
------------ ------------ ------------ ------------
Income (loss) from operations (454.3) 66.4 749.8 361.9
Interest and other income, net 26.2 5.0 -- 31.2
------------ ------------ ------------ ------------
Income (loss) before income taxes (428.1) 71.4 749.8 393.1
Income tax expense 57.8 27.1 51.3 136.2
------------ ------------ ------------ ------------
Net income (loss) $ (485.9) $ 44.3 $ 698.5 $ 256.9
============ ============ ============ ============
Net income per share $ 0.31
============
Net income per share, diluted basis $ 0.28
============
Number of weighted average shares 837.9
outstanding
Number of weighted average shares and 912.3
equivalents
- --------------------
* Pro forma results for the nine months ended March 31, 2001 exclude the
$60.1 million effect on gross profit related to purchase accounting
adjustments of the value of inventory; $4,733.2 million of purchased
intangibles amortization and in-process R&D (IR&D) charges; $42.6 million
of payroll taxes on stock option exercises; $7.5 million of reduction in
the value of investments in marketable equity securities; $1,768.1 million
gain on sale of subsidiary and related costs; $24.2 million of non-cash
stock compensation; and $138.8 million in activity related to investments
accounted for under the equity method of accounting. March 31, 2000 pro
forma results include the separately reported results of E-TEK Dynamics
Inc., which was acquired on June 30, 2000 in a transaction accounted for as
a purchase. Pro forma results for the nine months ended March 31, 2000
exclude the $24.1 million effect on gross profit related to purchase
accounting, $711.3 million of purchased intangibles amortization and IPR&D
charges, and $14.4 million of payroll taxes on stock option exercises.