These excluded items are described below:
- Recurring charges and gains, including:
- Amortization of acquisition-related intangibles. Intangible assets acquired to date are being amortized on a straight-line basis. Post-acquisition non-competition agreements are amortized over their term.
- Stock-based compensation expense recognized in accordance with ASC 718, Stock-based Compensation.
- Non-recurring charges and gains, including:
- Restructuring and other consists of:
- Restructuring charges incurred as we consolidate the number and size of our facilities and, as a result, reduce the size of our workforce.
- Acquisition-related executive deferred compensation costs, which are dependent on the continuing employment of a former shareholder of an acquired company, are being amortized on a straight-line basis.
- Expenses incurred to integrate businesses acquired during the periods reported and anticipated acquisitions.
- Certain G&A and OI&E expenses, including:
- Acquisition-related transaction costs associated with businesses acquired during the periods reported and anticipated transactions.
- Changes in fair value of contingent consideration. Our management determined that we should analyze the total return provided by the investment when evaluating operating results of an acquired entity. The total return consists of operating profit generated from the acquired entity compared to the purchase price paid, including the final amounts paid for contingent consideration without considering any post-acquisition adjustments related to changes in the fair value of the contingent consideration. Because management believes the final purchase price paid for the acquisition reflects the accounting value assigned to both contingent consideration and to the intangible assets, we exclude the GAAP impact of any adjustments to the fair value of acquisition-related contingent consideration from the operating results of an acquisition in subsequent periods. We believe this approach is useful in understanding the long-term return provided by our acquisitions and that investors benefit from a supplemental non-GAAP financial measure that excludes the impact of this adjustment.
- Imputed net expenses related to sale of building and land. On November 1, 2012, we sold our 294,000 square foot building located at 303 Velocity Way in Foster City, California, which serves as our current corporate headquarters, along with approximately four acres of land and certain other assets related to the property, to Gilead Sciences, Inc. for $179.7 million. We will continue to use the facility for up to one year from the date of the sale of the property, for which rent is not required to be paid. This constitutes a form of continuing involvement that prevents gain recognition. Until we vacate the building, the proceeds from the sale will be recognized as deferred proceeds from property transaction on our Condensed Consolidated Balance Sheet, which is currently $181.1 million, including imputed interest costs. Imputed sublease income of $0.7 million and imputed depreciation of $0.4 million are included in General and Administrative expenses. Imputed interest expense of $0.9 million is included in Interest and other income (expense), net, as of March 31, 2013.
- Expenses incurred during the period related to the upcoming relocation of our corporate headquarters facility are included in Interest and other income (expense), net.
- Tax effect of non-GAAP adjustments
- After excluding the items described above, we apply the principles of ASC 740, Income Taxes, to estimate the non-GAAP income tax provision in each jurisdiction in which we operate.
- To facilitate comparability of our operating performance between 2013 and 2012, we have excluded the following from our non-GAAP net income for the three months ended March 31, 2013:
- Interest accrued on prior year tax reserves of $0.1 million,
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