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Published: 2023-10-25 16:24:43 ET
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EX-99.1 2 tnet-093023xexhibit991.htm EX-99.1 Document

Exhibit 99.1
 
TriNet Announces Third Quarter 2023 Results

Total Revenues of $1.2 billion
Sequential growth in Ending WSEs of 1%
Net Income per Diluted Share of $1.63 and Adjusted Net Income per Diluted Share of $1.91

DUBLIN, Calif. — October 25, 2023 — TriNet Group, Inc. (NYSE: TNET), a leading provider of comprehensive and flexible human capital management (HCM) solutions for small and medium-size businesses (SMBs), today announced financial results for the third quarter ended September 30, 2023. The third quarter highlights below include non-GAAP financial measures which are reconciled later in this release.
Third quarter highlights include:
•Total revenues decreased 2% to $1.2 billion compared to the same period last year.
•Professional service revenues decreased 2% to $185 million compared to the same period last year.
•Net income was $94 million, or $1.63 per diluted share, compared to net income of $77 million, or $1.22 per diluted share, in the same period last year.
•Adjusted Net Income was $109 million, or $1.91 per diluted share, compared to Adjusted Net Income of $104 million, or $1.64 per diluted share, in the same period last year.
•Adjusted EBITDA was $172 million, representing an Adjusted EBITDA Margin of 14.1%, compared to Adjusted EBITDA of $173 million, representing an Adjusted EBITDA Margin of 14.0% in the same period last year.
•Ending Worksite Employees (WSEs) decreased 5% as compared to the same period last year and increased 1% as compared to the previous quarter, to approximately 336,000.
•Average WSEs decreased 5% as compared to the same period last year and increased 2% as compared to the previous quarter, to approximately 333,000.
•Sales rep count grew by approximately 5% sequentially, resulting in year-to-date total sales rep growth of 19%.
•HRIS Cloud Services Revenues increased 42% to $17 million compared to the same period last year
•Average HRIS Users decreased 15% as compared to the same period last year, to approximately 211,000.

“TriNet achieved significant successes across our business,” said Burton M. Goldfield, TriNet’s President and CEO. “We accelerated our new sales, bought back $1 billion in stock in part through a tender offer, executed a $400 million bond offering in a volatile market, managed our expenses prudently, and delivered strong earnings performance for our shareholders.”
Mr. Goldfield continued, “As we look to build on our momentum into next year, we will always keep our customers at the center of everything we do. We are innovating our product and technology to reach more potential customers and effectively service them throughout their business lifecycles. With our customer retention and NPS scores nearing all-time highs, we are committed more than ever to delivering our product and services how our customers want.”
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Fourth Quarter and Full-Year 2023 Guidance
In addition to announcing our third quarter 2023 results, we provide our fourth quarter and full-year 2023 guidance. Non-GAAP financial measures are reconciled later in this release. Percentages reflect the increase or (decrease) from the prior year quarter and prior year end.
Q4 2023Full Year 2023
LowHighLowHigh
Total Revenues— %4 %— %1 %
Professional Service Revenues(2)%1 %— %1 %
Insurance Cost Ratio92 %88 %85.5 %84.5 %
Diluted net income per share of common stock$0.26 $1.00 $5.43 $6.27 
Adjusted Net Income per share - diluted$0.59 $1.33 $6.90 $7.55 
Quarterly Report on Form 10-Q
We anticipate filing our Quarterly Report on Form 10-Q (“Form 10-Q”) for the nine months ended September 30, 2023 with the U.S. Securities and Exchange Commission (SEC) and making it available at http://www.trinet.com today, October 25, 2023. This press release should be read in conjunction with the Form 10-Q and the related Notes to Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Form 10-Q.
Earnings Conference Call and Audio Webcast
TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its second quarter results for 2023 and provide third quarter and full-year financial guidance for 2023. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: https://dpregister.com/sreg/10183393/fab2294e46. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 317-5426 and requesting the “TriNet Conference Call.” The live webcast of the conference call can be accessed on the Investor Relations section of TriNet’s website at https://investor.trinet.com. Participants can pre-register for the webcast by going to: https://events.q4inc.com/attendee/696724822. A replay of the webcast will be available on this website for approximately one year. A telephonic replay will be available for one week following the conference call at +1 (412) 317-0088 conference ID: 1718914.
About TriNet
TriNet provides small and medium-size businesses (SMBs) with full-service industry-specific HR solutions, providing both professional employer organization (PEO) and human resources information system (HRIS) services. TriNet offers access to human capital expertise, benefits, risk mitigation, compliance, payroll, and R&D tax credit services, all enabled by industry-leading technology. TriNet’s suite of products also includes services and software-based solutions to help streamline workflows by connecting HR, benefits, employee engagement, payroll and time & attendance. Rooted in more than 30 years of supporting entrepreneurs and adapting to the ever-changing modern workplace, TriNet empowers SMBs to focus on what matters most - growing their business and enabling their people For more information, please visit TriNet.com or follow us on X, formerly Twitter, Facebook, LinkedIn and Instagram.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to TriNet’s financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section titled “Non-GAAP Financial Measures.”





2

Forward-Looking Statements
This press release contains, and statements made during the above referenced conference call will contain, statements that are not historical in nature, are predictive in nature, or that depend upon or refer to future events or conditions or otherwise contain forward-looking statements within the meaning of Section 21 of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among other things, TriNet’s expectations and assumptions regarding: TriNet's financial guidance for the fourth quarter and full-year 2023 and the underlying assumptions; TriNet’s future financial performance and long-term growth; the continued value to customers and stockholders of TriNet’s product offerings; our ability to continue to grow new client sales, client tenure and improve retention, including through product and technological innovation; and the ability of our solutions to meet all client needs throughout their business cycle. Forward-looking statements are often identified by the use of words such as, but not limited to, “ability,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” "guidance," “impact,” “intend,” “may,” “plan,” "predict," “project,” “seek,” “should,” “strategy,” “target,” “value,” “will,” “would” and similar expressions or variations intended to identify forward-looking statements. These statements are not guarantees of future performance but are based on management’s expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from our current expectations and any past or future results, performance or achievements expressed or implied by the forward-looking statements. Investors are cautioned not to place undue reliance upon any forward-looking statements.
Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: our ability to manage unexpected changes in workers’ compensation and health insurance claims and costs by worksite employees; our ability to mitigate the unique business risks we face as a co-employer; the effects of volatility in the financial and economic environment on the businesses that make up our client base; loss of clients for reasons beyond our control and the short-term contracts we typically use with our clients; the impact of regional or industry-specific economic and health factors on our operations; the impact of failures or limitations in the business systems and service centers we rely upon; the impact of recovery credits on our business and client loyalty and retention; changes in our insurance coverage or our relationships with key insurance carriers; our ability to improve our services and technology to satisfy client and regulatory expectations; our ability to effectively integrate businesses we have acquired or may acquire in the future; our ability to effectively manage and improve our operational effectiveness and resiliency; our ability to attract and retain qualified personnel; the effects of increased competition and our ability to compete effectively; the impact on our business of cyber-attacks, breaches, disclosures and other data-related incidents; our ability to protect against and remediate cyber-attacks, breaches, disclosures and other data-related incidents, whether intentional or inadvertent and whether attributable to us or our service providers; our ability to comply with constantly evolving data privacy and security laws; our ability to manage changes in, uncertainty regarding, or adverse application of the complex laws and regulations that govern our business; changing laws and regulations governing health insurance and employee benefits; our ability to be recognized as an employer of worksite employees and for our benefits plans to satisfy all requirements under federal and state regulations; changes in the laws and regulations that govern what it means to be an employer, employee or independent contractor; the impact of new and changing laws regarding remote work; our ability to comply with the licensing requirements that govern our HCM solutions; the outcome of existing and future legal and tax proceedings; fluctuation in our results of operations and stock price due to factors outside of our control; our ability to comply with the restrictions of our credit facility and meet our debt obligations; and the impact of concentrated ownership in our stock by Atairos and other large stockholders. Any of these factors could cause our actual results to differ materially from our anticipated results.


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Further information on risks that could affect TriNet’s results is included in our filings with the SEC, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are available on our investor relations website at http://investor.trinet.com and on the SEC website at www.sec.gov. Copies of these filings are also available by contacting TriNet Corporation's Investor Relations Department at (510) 875-7201. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements in this press release, and any forward-looking statements in this press release speak only as of the date of this press release. In addition, we do not assume any obligation, and do not intend, to update any of our forward-looking statements, except as required by law.


Contacts: 
Investors:Media:
Alex BauerRenee Brotherton / Josh Gross
TriNetTriNet
Investorrelations@TriNet.comRenee.Brotherton@TriNet.com
(510) 875-7201Josh.Gross@TriNet.com
(408) 646-5103
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FINANCIAL HIGHLIGHTS
Key Financial and Operating Metrics
We regularly review certain key financial and operating metrics to evaluate growth trends, measure our performance and make strategic decisions. These key financial and operating metrics may change over time. Our key financial and operating metrics for the periods presented were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(in millions, except per share and Operating Metrics data)20232022% Change20232022% Change
Income Statement Data:
Total revenues$1,222 $1,241 (2)%$3,677 $3,659 — %
Operating income116 120 (3)382 443 (14)
Net income94 77 22 308 307 — 
Diluted net income per share of common stock1.63 1.22 34 5.20 4.81 8 
Non-GAAP measures (1):
Adjusted EBITDA 172 173 (1)557 577 (3)
Adjusted Net income 109 104 5 365 378 (3)
Operating Metrics:
Insurance Cost Ratio84 %83 %1 %83 %82 %1 %
Average WSEs (2)
333,286 351,888 (5)329,257 348,833 (6)
Total WSEs at period end (2)
335,741 351,839 (5)335,741 351,839 (5)
Average HRIS Users (3)
210,863 247,375 (15)219,058 251,707 (13)
(1)    Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".
(2)    Total WSEs includes approximately 4,600 additional service recipients and Average WSEs includes approximately 1,500 additional service recipients for the third quarter of 2023, in each case identified as a result of our ongoing effort to ensure that our billing practices best match the expectations of our customers. For details, refer to the heading "Operating Metrics – Worksite Employees (WSEs)" in our Quarterly Report on Form 10-Q for the period ended September 30, 2023.
(3)    For the nine months ended September 30, 2022, reflects HRIS Users from February 15, 2022, the date on which we acquired Zenefits, to the end of the period.
(in millions)September 30, 2023December 31, 2022% Change
Balance Sheet Data:
Working capital150 338 (56)%
Total assets2,966 3,443 (14)
Debt1,091 496 120 
Total stockholders’ equity10 775 (99)
Nine Months Ended September 30,
(in millions)20232022% Change
Cash Flow Data:
Net cash provided by (used in) operating activities$(43)$76 (157)%
Net cash used in investing activities(57)(205)(72)
Net cash used in financing activities(523)(392)33 
Non-GAAP measure (1):
Corporate Operating Cash Flows$386 $436 (11)
(1) Refer to Non-GAAP measures definitions and reconciliations from GAAP measures under the heading "Non-GAAP Financial Measures".
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FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
(in millions except per share data)2023202220232022
Professional service revenues
$185 $189 $567 $565 
Insurance service revenues
1,037 1,052 3,110 3,094 
Total revenues
1,222 1,241 3,677 3,659 
Insurance costs
874 872 2,594 2,547 
Cost of providing services
74 79 231 225 
Sales and marketing
75 72 214 179 
General and administrative
51 63 154 165 
Systems development and programming
15 18 49 54 
Depreciation and amortization of intangible assets
17 17 53 46 
Total costs and operating expenses
1,106 1,121 3,295 3,216 
Operating income
116 120 382 443 
Other income (expense):
Interest expense, bank fees and other
(10)(22)(23)(33)
Interest income
18 5 57 8 
Income before provision for income taxes
124 103 416 418 
Income taxes
30 26 108 111 
Net income
$94 $77 $308 $307 
Other comprehensive income (loss), net of income taxes(2)7 (3)(4)
Comprehensive income
$92 $84 $305 $303 
Net income per share:
Basic
$1.65 $1.23 $5.23 $4.85 
Diluted
$1.63 $1.22 $5.20 $4.81 
Weighted average shares:
Basic
57 62 59 63 
Diluted
58 63 59 64 



 

 
 

6
FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30,December 31,
(in millions, except share and per share data)20232022
ASSETS
Current assets:
Cash and cash equivalents
$170 $354 
Investments
75 76 
Restricted cash, cash equivalents and investments
833 1,263 
Accounts receivable, net
21 19 
Unbilled revenue, net
404 375 
Prepaid expenses, net
75 71 
Other payroll assets226 122 
Other current assets
49 46 
Total current assets
1,853 2,326 
Restricted cash, cash equivalents and investments, noncurrent
154 153 
Investments, noncurrent
143 151 
Property and equipment, net16 24 
Operating lease right-of-use asset24 31 
Goodwill 462 462 
Software and other intangible assets, net169 163 
Other assets
145 133 
Total assets
$2,966 $3,443 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and other current liabilities
$109 $98 
Client deposits and other client liabilities73 106 
Accrued wages
458 437 
Accrued health insurance costs, net
183 174 
Accrued workers' compensation costs, net
51 54 
Payroll tax liabilities and other payroll withholdings
804 1,087 
Operating lease liabilities
15 15 
Insurance premiums and other payables
10 17 
Total current liabilities
1,703 1,988 
Long-term debt, noncurrent
1,091 496 
Accrued workers' compensation costs, noncurrent, net
122 128 
Deferred taxes
5 8 
Operating lease liabilities, noncurrent
30 41 
Other non-current liabilities
5 7 
Total liabilities
2,956 2,668 
Stockholders' equity:
Preferred stock
— — 
Common stock and additional paid-in capital
953 899 
Accumulated deficit(935)(119)
Accumulated other comprehensive loss(8)(5)
Total stockholders' equity
10 775 
Total liabilities & stockholders' equity
$2,966 $3,443 
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FINANCIAL STATEMENTS
TRINET GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30,
(in millions)20232022
Operating activities
Net income
$308 $307 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangible assets53 48 
Amortization of deferred costs31 26 
Amortization of ROU asset, lease modification, impairment, and abandonment5 15 
Stock based compensation43 46 
Deferred income taxes
(2)1 
Provision for doubtful accounts
2 1 
Losses and impairment on investments— 18 
Losses from disposition of assets— 3 
Other1 — 
Changes in operating assets and liabilities:
Accounts receivable, net
(4)10 
Unbilled revenue, net(29)(38)
Prepaid expenses, net (4)3 
Other assets(44)(30)
Other payroll assets(104)(56)
Accounts payable and other liabilities9 5 
Client deposits and other client liabilities(33)(43)
Accrued wages21 40 
Accrued health insurance costs, net9 (10)
Accrued workers' compensation costs, net(9)(5)
Payroll taxes payable and other payroll withholdings(283)(252)
Operating lease liabilities(13)(13)
Net cash provided by (used in) operating activities(43)76 
Investing activities
Purchases of marketable securities
(226)(337)
Proceeds from sale and maturity of marketable securities223 390 
Acquisitions of property and equipment(54)(39)
Acquisition of subsidiary, net of cash acquired— (219)
Net cash used in investing activities
(57)(205)
Financing activities
Repurchase of common stock
(1,109)(383)
Proceeds from issuance of common stock
9 6 
Proceeds from issuance of 2031 Notes400 — 
Awards effectively repurchased for required employee withholding taxes
(14)(15)
Proceeds from revolving credit agreement borrowings
695 — 
Payment of long-term financing fees and debt issuance costs(9)— 
Repayment of borrowings under revolving credit facility(495)— 
Net cash used in financing activities(523)(392)
Net decrease in cash and cash equivalents, unrestricted and restricted(623)(521)
Cash and cash equivalents, unrestricted and restricted:
Beginning of period
1,537 1,738 
End of period
$914 $1,217 
Supplemental disclosures of cash flow information
Interest paid
$21 $18 
Income taxes paid, net$89 $60 
Supplemental schedule of noncash investing and financing activities
Payable for purchase of property and equipment$2 $7 
Acquisitions of subsidiaries paid in stock$— $4 
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FINANCIAL STATEMENTS
Non-GAAP Financial Measures
In addition to the selected financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we monitor other non-GAAP financial measures that we use to manage our business, to make planning decisions, to allocate resources and to use as performance measures in our executive compensation plan. These key financial measures provide an additional view of our operational performance over the long term and provide information that we use to maintain and grow our business.
The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation from, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with GAAP.
Non-GAAP MeasureDefinitionHow We Use The Measure
Adjusted EBITDA• Net income, excluding the effects of:
- income tax provision,
- interest expense, bank fees and other,
- depreciation,
- amortization of intangible assets,
- stock based compensation expense,
- amortization of cloud computing arrangements, and
- transaction and integration costs.
• Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-recurring costs, which include transaction and integration costs, as well as certain non-cash charges such as depreciation and amortization, and stock-based compensation and certain impairment charges recognized based on the estimated fair values. We believe these charges are either not directly resulting from our core operations or not indicative of our ongoing operations.
• Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects.
• Provides a measure, among others, used in the determination of incentive compensation for management.
• We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to total revenues.
Adjusted Net Income• Net income, excluding the effects of:
- effective income tax rate (1),
- stock based compensation,
- amortization of intangible assets, net,
- non-cash interest expense,
- transaction and integration costs, and
- the income tax effect (at our effective tax rate (1) of these pre-tax adjustments.		• Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges.
Corporate Operating Cash Flows• Net cash provided by (used in) operating activities, excluding the effects of:
- Assets associated with WSEs (accounts receivable, unbilled revenue, prepaid expenses, other payroll assets and other current assets) and
- Liabilities associated with WSEs (client deposits and other client liabilities, accrued wages, payroll tax liabilities and other payroll withholdings, accrued health insurance costs, accrued workers' compensation costs, insurance premiums and other payables, and other current liabilities).		• Provides information that our stockholders and management can use to evaluate our cash flows from operations independent of the current assets and liabilities associated with our WSEs.
• Enhances comparisons to prior periods and, accordingly, used as a liquidity measure to manage liquidity between corporate and WSE related activities, and to help determine and plan our cash flow and capital strategies.
(1)     Non-GAAP effective tax rate is 25.6% for the third quarter and full year of 2023 and 25.5% for the third quarter and full year of 2022, which excludes the income tax impact from stock-based compensation, changes in uncertain tax positions, and nonrecurring benefits or expenses from federal legislative changes.

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FINANCIAL STATEMENTS
Reconciliation of GAAP to Non-GAAP Measures
The table below presents a reconciliation of net income to Adjusted EBITDA:
Three Months Ended September 30,Nine Months Ended
September 30,
(in millions)2023202220232022
Net income$94 $77 $308 $307 
Provision for income taxes30 26 108 111 
Stock based compensation15 16 43 46 
Interest expense, bank fees and other (1)
10 22 23 33 
Depreciation and amortization of intangible assets17 17 53 46 
Amortization of cloud computing arrangements3 1 7 3 
Transaction and integration costs3 14 15 31 
Adjusted EBITDA$172 $173 $557 $577 
Adjusted EBITDA Margin14.1 %14.0 %15.1 %15.7 %
(1)    2022 Interest expense, bank fees and other includes $17M of realized investments losses on sales and impairments related to AFS securities.
The table below presents a reconciliation of net income to Adjusted Net Income and Adjusted Net Income per share - diluted:
Three Months Ended September 30,Nine Months Ended
September 30,
(in millions, except per share data)2023202220232022
Net income $94 $77 $308 $307 
Effective income tax rate adjustment(2)— 1 4 
Stock based compensation15 16 43 46 
Amortization of intangible assets5 5 16 13 
Non-cash interest expense— 1 1 1 
Transaction and integration costs3 14 15 31 
Income tax impact of pre-tax adjustments(6)(9)(19)(24)
Adjusted Net Income$109 $104 $365 $378 
GAAP weighted average shares of common stock - diluted58 63 59 64 
Adjusted Net Income per share - diluted$1.91 $1.64 $6.16 $5.94 
The table below presents a reconciliation of net cash provided by (used in) operating activities to Corporate
Operating Cash flows:
Nine Months Ended
September 30,
(in millions)20232022
Net cash provided by operating activities$(43)$76 
  Less: Change in WSE related other current assets(134)(101)
  Less: Change in WSE related liabilities(295)(259)
Net cash used in operating activities - WSE$(429)$(360)
Net cash provided by operating activities - Corporate$386 $436 
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FINANCIAL STATEMENTS
Reconciliation of GAAP to Non-GAAP Measures for the fourth quarter and full-year 2023 guidance.
Low and high percentages represent increases (decreases) from the same periods in the previous year.
The table below presents a reconciliation of net income to Adjusted Net Income and Adjusted Net Income per share - diluted:
Q4 2022Q4 2023 GuidanceFY 2022Year 2023 Guidance
(in millions, except per share data)ActualLowHighActualLowHigh
Net income $49 (73)%6 %$355 (10)%1 %
Effective income tax rate adjustment— 17 50 5 (87)(93)
Stock based compensation16 12 12 62 (2)(4)
Amortization of intangible assets5 5 5 18 18 18 
Non-cash interest expense— (100)(100)1 (16)(16)
Transaction and integration costs6 (84)(84)37 (58)(58)
Income tax impact of pre-tax adjustments(6)(16)(16)(30)(16)(17)
Adjusted Net Income$70 (57)%(3)%$448 (12)%(4)%
GAAP weighted average shares of common stock - diluted62 64 
Adjusted Net Income per share - diluted$1.11 $0.59 $1.33 $7.07 $6.90 $7.55 

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