Exhibit 99.2
2016 Fourth-Quarter and Fiscal Year Performance March 14, 2017 Financial Results and Company Highlights
Disclaimers Forward-Looking Statements and Preliminary Results This presentation includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements are based on management’s beliefs and assumptions and information currently available to management and are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that the forward-looking information presented in this presentation is not a guarantee of future results, and that actual results may differ materially from those made in or suggested by the forward-looking information contained in this presentation. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “comfortable with,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. A number of important factors could cause actual events to differ materially from those contained in or implied by the forward-looking statements, including those “Risk factors” in our annual report on Form 10-K, for the fiscal year ended January 29, 2017, filed on March 14, 2017 and those described from time to time in our, and HD Supply, Inc.’s, other filings with the U.S. Securities and Exchange Commission, which can be found at the SEC’s website www.sec.gov. Any forward-looking information presented herein is made only as of the date of this presentation, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. Non-GAAP Financial Measures HD Supply supplements its financial results that are determined in accordance with accounting principles generally accepted in the United States of America (“GAAP”) with non-GAAP measurements, including Adjusted EBITDA, Adjusted net income (loss), Adjusted net income (loss) per diluted share, Net Debt and Free Cash Flow. This supplemental information should not be considered in isolation or as a substitute for the GAAP measurements. Additional information regarding Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share referred to in this presentation is included at the end of this presentation under “Reconciliation of Non-GAAP Measures.”
FY’16 Execution Highlights Focused on Controllable Execution +4.4% Net Sales Growth Versus Prior Year (“VPY”) +7.3% Operating Income Growth VPY $196M Net Income in Fiscal 2016 $1,472M Net Income in Fiscal 20151 +5.1% Adjusted EBITDA Growth VPY +51.1% Adjusted Net Income per Diluted Share Growth VPY $432M Free Cash Flow2 +29% Increase VPY +50 Basis Points Gross Margin Improvement VPY 1 Net Income in 2015 included a $1,084M tax benefit from the reversal of the Valuation Allowance 2 Free Cash Flow (FY 2016) is defined as Operating Cash Flow ($513M) Less Capital Expenditures ($81M) (including Cash Flow from Discontinued Operations)
Q4’16 Execution Highlights Focused on Controllable Execution +3.2% Net Sales Growth VPY +10.7% Operating Income Growth VPY $52M Net Income for Fiscal Q4’16 $871 Net Income for Fiscal Q4’151 +1.2% Adjusted EBITDA Growth VPY +63.0% Adjusted Net Income per Diluted Share Growth VPY +60 Basis Points Gross Margin Improvement VPY 1 Net Income in Q4’15 included a $925M tax benefit from the reversal of the Valuation Allowance
FY’16 Execution Examples 200 Atlanta-Based Support Associates Customer Centric Digital Vision Supply Chain Improvements Sold San Diego Headquarters Facility Intense Daily Performance Cadence Controllable Execution +96 Customer Facing Associates Established National Strategic Account Teams Improved Category Management 3.6x Outsized Growth in Fire Protection 2 Locations Opened Advancement in Digital Capabilities 10.9% EBITDA Margin 76% of Branches Double-Digit Adj. EBITDA %, +3 Pts VPY +15% Sales VPY in Top Performing Regions 49 Branches In-store purchases >40% 2 Locations Opened VPY in Priority Districts Sale of Interior Solutions Enhanced Capital Structure Debt and Interest Rate Reduction
Controllable Execution Extend Leadership Positions Sell More to Existing Customers Introduce New Products and Services Expand and Integrate Channels to Reach Our Customers Acquire New Customers Enter New Geographies Deliver Operating Leverage Execute Category Management Save as We Grow Generate Cash Accelerate Debt Reduction Disciplined People, Thought and Action
Improved Future After-tax Cash Flows Proprietary Brands; ~5% Annual Company Purchases Minimal Exposure Pockets of Strength; Non-residential Markets Topics of Recent Investor Interest Free Cash Flow is defined as Operating Cash Flow – Capital Expenditures (including Cash Flow from Discontinued Operations) Topic Consideration 3. Infrastructure 1. Corporate Tax Reform 4. Energy Market Recovery 2. Border Tax Cautiously Optimistic; Impact Likely in 20181 5. Construction Markets 1 Current 2017 Outlook does not reflect any potential future impact of infrastructure spend under the new administration Focused on Controllable Execution Remains Intense; Focused on Controllable Execution 6. Competitive Environment Three Large Businesses 7. Portfolio Waterworks Sales Shift from Q4’16 to Feb.’17 8. Weather
Q4’16 Financial Results $1,584M $1,634M +3% Gross Profit Gross Margin % Operating Income Adj. EBITDA % Op. Income % $534M $560M 33.7% 34.3% $167M $169M $131M $145M 10.5% 10.3% 8.9% +5% +60 BPs -20 BPs +1% ($ in millions, except per share data) $55M $90M +11% Net Sales 1 Net Income in Q4’15 includes a $925M tax benefit from the reversal of the Valuation Allowance 2 See appendix slides 27 and 28 for a reconciliation of Adjusted EBITDA , Adjusted Net Income and Adjusted Net Income per Diluted Share to Net Income and Net Income per Diluted Share, Respectively Q4’15 Adj. EBITDA2 VPY Adj. Net Income2 8.3% +60 BPs Q4’16 $0.27 $0.44 +$0.17 Per Diluted Share +$50M +3% Net Sales Growth +64% Net Income1 $871M $52M -$819M $4.33 $0.26 -$4.07 Per Diluted Share
Q4’16 and FY’16 Segment Results Q4’16 FY’16 $620M $2,762M Q4’16 FY’16 $551M $2,622M Q4’16 FY’16 $466M $2,063M +2% +3% Adj. EBITDA $98M $523M Sales Growth % Growth (4%) (1%) Op. Leverage1 nm nm +3% +4% $42M $234M +2% +5% 0.7x 1.2x +4% +7% $40M $224M +18% +22% 4.1x 3.2x Net Sales ($ in millions) Solid Growth 1 Adjusted EBITDA Growth, Divided by Sales Growth
Q4’16 Taxes and Cash Flow Taxes Cash Flow Favorable Tax Asset with Significant Gross Federal Net Operating Loss Carryforwards of Approximately $1.8 Billion ~$700M Tax-affected Amount of Federal and State NOLs Cash Taxes $1M in Q4’16 $4M – $5M Estimated for Q1’17 $15M – $25M Estimated for FY’17 GAAP Taxes Normalized at Approximately 39% – 40% $3.7B1 Net Debt at the End of Q4’16 4.1x Net Debt to Adjusted EBITDA Repaid $200M 3.75% Secured Term B-1 Loan $22M of Capital Expenditures in Q4’16 $200M Debt Prepayment Note: Contains forward-looking information; please see Disclaimer on slide 2 1 Net Debt is Defined as Total of Long-Term Debt and Current Installments of Long-Term Debt, Less Cash and Cash Equivalents and is reconciled on slide 20
Q4’16 Monthly Average Daily Sales (%) +3% Q4’16 Average Daily Sales Growth +6% Preliminary February Average Daily Sales Growth 2.8% 3.9% 3.7% 6.4% Feb. 0.2% 15.0% 5.3% 2.5% ’16 Selling Days 23 20 20 2.4% 6.4% Facilities Maintenance Waterworks Construction & Industrial (Preliminary) 2.3% 3.6% 3.4% 0.9% 2.9% 3.4% 18 7.0% 9.2% Nov. Dec. Jan. Prior Year $581M $535M $527M HD Supply Net Sales $526M 12.0% 4.5% ’15 Selling Days Q4’16 9.5% 6.4% 11.9% $502M 6.3% (0.9%) 8.4% $586M 12.2% 7.8% 17.1% $484M 7.4% 3.9% 10.4% $514M HD Supply Average Daily Sales Growth VPY ’17 Selling Days 24 20 19 18 Current Year 24 20 19 18
+2% -5% +6% +3% Q1’17 Guidance 5% Sales Growth VPY at Midpoint $1,890M $1,840M $215M $1,781M $220M $205M VPY Q1’16 Q1’17 Q1’16 Q1’17 Q1’17 Net Sales Adj. EBITDA Adj. Net Income Per Diluted Share1 VPY 1 Q1’17 Adjusted Net Income per Share range assumes a fully diluted weighted average share count of ~203 million Note: Contains forward-looking information; please see Disclaimer on slide 2. No reconciliation of the forecasted range for Adjusted EBITDA to Net income or Income from Continuing Operations and Adjusted net income per diluted share to Net income per diluted share or Income from Continuing Operations per diluted share for the first quarter of fiscal 2017 is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. $0.68 $0.60 VPY ($ in millions, except per share amounts) $0.51 . . . . Q1’16 +33% +18% Midpoint $1,865M +5% $213M -1% $0.64 +26%
FY’17 End Market Preliminary Outlook ~2% to 3% End Market Growth for FY’17 Residential Construction Water Infrastructure “Living Space” MRO Primary End Market Non- Residential Construction ~2% to 3% FY’17 End Market Estimates1 1% to 2% Current View as of March’ 17 Mid-Single Digit Low Single Digits to Low Single Digits 1 Management estimate; market estimate is management estimate of the growth of our end markets based on multiple quantitative and qualitative inputs; outlook does not reflect any potential future impact of Infrastructure spend under the new administration Note: Contains forward-looking information; please see Disclaimer on slide 2 Low Single Digits to Mid-Single Digit DC-Based Branch-Based
FY’17 Operating Leverage Framework HDS Market Growth1 ~2-3% + Above Market Growth2 ~300 BPs = End Market Growth Controllable Execution Annual Net Sales Growth1,2 Illustrative Adj. EBITDA Growth Adjusted EBITDA Growth 12% HDS Market Growth 7.5% 5-6% 2.0x 1.5x Operating Leverage Target2,3 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs; outlook does not reflect any potential future impact of Infrastructure spend under the new administration 2 Long-term average growth target based on management estimates and projections 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections Note: These numbers are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of our Form 10-K for the fiscal year ended January 29, 2017. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives Above Market Growth 300 Basis Points Above Market Growth and 1.5x to 2.0x Operating Leverage Target in 2017
FY’17 External Free Cash Flow Framework Building Free Cash Flow Momentum Illustrative Annual Net Sales Growth1, 2 Illustrative Adj. EBITDA Growth Adjusted EBITDA Growth 12% HDS Market Growth 7.5% 5-6% 2.0x 1.5x Operating Leverage Target2,3 Above Market Growth 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and qualitative inputs; outlook does not reflect any potential future impact of Infrastructure spend under the new administration 2 Long-term average growth target based on management estimates and projections 3 Operating Leverage is defined as Adjusted EBITDA growth divided by total Net sales growth; target based on management estimates and projections Note: These numbers are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of our Form 10-K for the fiscal year ended January 29, 2017. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives FY’17 Adjusted EBITDA: Less: Change in NWC Capex Free Cash Flow ~$600M - $650M 1.3% - 1.4% of Annual Net Sales ~15% of Annual Net Sales Growth Cash Interest ~$180M Cash Taxes $15M - $25M
HD Supply Outlook Summary Focused on Controllable Execution Q1’17 FY’17 $1,840M - $1,890M Net Sales Range $205M - $220M Adjusted EBITDA Range $0.60 - $0.68 Adjusted Net Income per Diluted Share Increase Range ~203M Diluted Share Count Illustrative 1 Management estimate; market estimate is management estimate of the growth of our markets based on multiple quantitative and long-term average growth target based on management estimates and projections 2 Long-term average growth target based on management estimates and projections 3 Operating Leverage is defined as Adjusted EBITDA growth divided by Total Net sales growth; target based on management estimates and projections Note: Contains forward-looking information; please see Disclaimer on slide 2. No reconciliation of the forecasted range for Adjusted EBITDA to Net income or Income from Continuing Operations and Adjusted net income per diluted share to Net income per diluted share or Income from Continuing Operations per diluted share for the first quarter of fiscal 2017 or full year 2017, as applicable, is included in this presentation because we are unable to quantify certain amounts that would be required to be included in the GAAP measure without unreasonable efforts. In addition, the company believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors 2% to 3% End Market Growth Range Estimate1 ~300 Basis Points of Growth in Excess of Market Estimate2 1.5x to 2.0x Operating Leverage3 Range
Q&A
Concluding Remarks Solid Continual Improvement +4.4% Net Sales Growth in FY’16 VPY +51.1% Adjusted Net Income per Diluted Share Growth in FY’16 VPY +29.6% Free Cash Flow in FY’16 VPY Focus on 2017 Investment in Long-term Capabilities to Achieve Full Potential Disciplined People, Thought and Action Earned with Hard Work and One Team Execution Disciplined People, Thought and Action Note: “VPY” Denotes Versus Prior Year
Appendix
Capital Structure Overview Q4’16 Debt Balances Secured ABL Secured Term B-1 Secured 1st Lien Notes Senior Unsecured Notes $421 1,250 1,000 6/28/18 8/13/21 12/15/21 Outstanding Debt Less Cash and Cash Equivalents Net Debt $3,737 (75) $3,859 Balance Maturity 1 Represents the stated rate of interest, without including the effect of discounts or premiums 2 Subject to applicable redemption price terms 3 Represents the unamortized portion of discounts and deferred financing costs ~$3.7B Net Debt ($ in millions, unless otherwise noted) 2.38% 3.75% 5.25% Interest Rate1 639 now now 12/15/17 Soft Call Date2 5.75% 4/15/24 4/15/19 Less Discount3 (9) Less Deferred Financing Costs3 (38) Gross Debt $3,812 Secured Term B-2 10/17/23 3.75% 549 now
Illustrative Adjusted EPS Calculation Adjusted EBITDA Adjusted Net Income per Diluted Share Adjusted Net Income = = Diluted Shares Outstanding3 ÷ Illustrative TBD TBD TBD ~203M FY’17 $169M $0.44 $90M ~203M Q4’16 ($ in millions, except per share data) ~203 Q1’17 TBD TBD TBD ~204 Q4’17 Estimates ~203 Q2’17 TBD TBD TBD ~203 Q3’17 Depreciation and Amortization1 ( - ) ($26M) (~26) ($100M – $110M) (~26) Amortization of Acquired Intangibles ( + ) ~$14M $3M ~4 ~3 ~3 ~4 Interest Expense2 ( - ) ($50M) ~($190M) Cash Income Taxes ( - ) ($15M – $25M) ($1M) Stock-based Compensation ( - ) ($5M) (~45) (~45) (~5) (~5) 1 Includes Amounts Recorded Within Cost of Sales 2 Includes Cash and Non-cash Interest Expense 3 Weighted Average Diluted Shares Outstanding Based on Management Estimates Note: These numbers are forward-looking, are subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond the control of the Company and its management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. For discussion of some of the important factors that could cause these variations, please consult the “Risk Factors” section of our Form 10-K for the year ended January 29, 2016. Nothing in this presentation should be regarded as a representation by any person that these objectives will be achieved and the Company undertakes no duty to update its objectives. Actual (~6) (~6) (~6) (~6) (~$24M) TBD TBD (~26) (~26) (~50) (~50) TBD TBD TBD TBD (~5) (~5)
Monthly Net Sales ($) $535M Preliminary February Sales FY’15 Facil. Maint. Waterworks Const. & Ind. ’16 Selling Days ’15 Selling Days ($ in millions) HD Supply Net Sales (Preliminary) FY’16 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. $586M $502M $550M $729M $609M $622M $785M $639M $603M $766M $526M $527M $581M $535M Dec. Jan. Feb. $235 $198 $209 $270 $220 $226 $295 $237 $221 $266 $189 $198 $233 $188 $160 $187 $258 $225 $226 $282 $231 $220 $282 $187 $177 $187 $164 $145 $154 $202 $165 $170 $209 $171 $163 $218 $150 $153 $163 23 20 20 25 20 19 24 20 19 25 18 20 23 24 20 20 25 19 20 24 20 19 25 18 19 24 $198 $184 $153 20 20 ’17 Selling Days 24 20 20 25 19 20 24 20 19 25 18 19 24 20 FY’17
HD Supply Organic Average Daily Sales Growth VPY +6.4% Preliminary Average Daily Sales Growth in February (VPY%) Average Daily Sales – Organic (VPY%) FY’15 (Preliminary) FY’16 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. 4.5% 9.2% 7.9% 5.6% 3.6% 6.2% 3.0% 2.3% 3.7% 4.1% 2.3% 3.6% 3.4% 6.4% Dec. Jan. Feb. Facil. Maint. Waterworks Const. & Ind. ’16 Selling Days ’15 Selling Days ’17 Selling Days 6.3% 9.5% 5.7% 5.4% 0.4% 1.7% 1.4% 0.2% 2.4% 1.0% 0.9% 2.5% 2.8% -0.9% 6.4% 8.5% 4.2% 4.6% 7.9% 1.9% 1.5% 4.4% 6.0% 2.9% 2.4% 3.9% 8.4% 11.9% 10.2% 7.5% 6.6% 10.2% 6.7% 6.2% 4.4% 5.7% 3.4% 6.4% 3.7% 0.2% 15.0% 5.3% 23 20 20 25 20 19 24 20 19 25 18 20 23 24 20 20 25 19 20 24 20 19 25 18 19 24 20 20 24 20 20 25 19 20 24 20 19 25 18 19 24 20 FY’17
Average Daily Sales – Organic1 (VPY%) 1 Adjusted to Exclude Acquisitions, Divestitures, and Selling Days Note: “VPY” Denotes Versus Prior Year (VPY%) Selling Days Facilities Maintenance Waterworks Construction & Industrial HD Supply 65 6.6% 6.1% 9.6% 7.3% Facilities Maintenance Waterworks Construction & Industrial HD Supply Selling Days 12.3% 11.0% 15.3% 12.6% 258 13.7% 17.1% 19.9% 16.5% 65 11.4% 6.3% 16.8% 10.9% 63 14.5% 12.8% 13.4% 13.6% 64 10.1% 9.3% 11.9% 10.3% 66 Facilities Maintenance Waterworks HD Supply Selling Days 7.5% 8.2% 11.1% 8.7% 253 Construction & Industrial 9.6% 8.2% 15.7% 10.6% 65 9.4% 9.5% 8.9% 9.3% 63 64 3.9% 10.6% 9.7% 7.8% 6.9% 3.3% 10.2% 6.4% 61 Facilities Maintenance Waterworks HD Supply Selling Days 7.7% 5.4% 9.3% 7.3% 65 Construction & Industrial 7.5% 10.6% 14.7% 10.4% 63 8.2% 9.8% 14.8% 10.6% 64 7.3% 9.8% 12.4% 9.4% 61 7.7% 9.0% 12.9% 9.5% 253 FY Q1 Q2 Q3 Q4 Facilities Maintenance Waterworks HD Supply Selling Days 5.1% 3.4% 11.2% 6.1% 65 Construction & Industrial 2016 2012 2013 2014 2015 6.9% 5.6% 9.5% 7.1% 63 8.5% 1.4% 8.7% 5.8% 64 8.2% 3.3% 11.8% 7.5% 61 7.2% 3.4% 10.2% 6.6% 253 63 1.1% 4.4% 7.7% 4.1% 1.1% 4.0% 5.5% 3.4% 64 2.3% 3.4% 4.3% 3.2% 61 2.7% 4.5% 6.8% 4.4% 253
Operating Leverage1 (VPY) 1 Operating Leverage is Defined as Adjusted EBITDA Growth Divided by Adjusted Net Sales Growth (adjusted for the 53rd Week in fiscal 2012) Not Meaningful (“nm”) when Sales Growth is Negative and when Prior Period Adjusted EBITDA is Negative or when Adjusted EBITDA Growth is Negative Note: “VPY” Denotes Versus Prior Year 1.5x 1.1x 2.3x 1.9x Facilities Maintenance Waterworks Construction & Industrial HD Supply 1.4x 1.7x 5.4x 2.3x 1.3x 1.8x 5.9x 3.2x 1.3x 1.7x nm 2.1x 1.2x 2.9x 4.7x 2.1x Facilities Maintenance Waterworks Construction & Industrial HD Supply 1.6x 1.0x 3.5x 2.2x 2.7x 3.7x 4.9x 4.2x 1.6x 2.4x 3.2x 2.0x 1.4x 2.7x 3.2x 2.0x 1.3x 2.0x 3.1x 1.6x Facilities Maintenance Waterworks HD Supply Construction & Industrial HD Supply 1.6x 2.1x 2.9x 1.7x 1.2x 1.5x 4.1x 2.3x 1.5x 1.3x 1.9x 1.7x Facilities Maintenance Waterworks HD Supply Construction & Industrial 2.0x 1.7x 1.3x 1.4x 2.1x 2.0x 3.6x 2.1x 1.7x 1.6x 2.3x 1.8x FY Q1 Q2 Q3 Q4 2016 2012 2013 2014 2015 2.3x 2.9x 3.4x 2.4x Facilities Maintenance Waterworks HD Supply Construction & Industrial 1.8x 2.8x 2.8x 2.0x 0.8x 6.7x 4.0x 2.8x nm 4.2x 2.6x 1.2x 1.1x 3.6x 3.2x 2.1x nm 1.4x 4.0x 1.5x nm 1.4x 2.8x 0.1x nm 0.7x 4.1x 0.4x nm 1.2x 3.2x 1.2x
C&I Historical Performance (including HIS) ($ in millions) 1 2012 includes $26M and $2M in Net Sales and Adjusted EBITDA, respectively, for the 53rd week $501M $49M Sales Adjusted EBITDA Selling Days $1,425M $81M 258 $349M $14M 66 $325M $14M 65 $369M $25M 63 Sales Adjusted EBITDA Selling Days $382M $28M 64 $356M $18M $1,553M $107M $376M $21M $402M $32M Sales Adjusted EBITDA Selling Days $419M $36M $411M $29M $461M $41M Sales Adjusted EBITDA Selling Days $481M $43M $400M $26M $1,753M $139M FY Q1 Q2 Q3 Q4 2016 2012 2013 2014 2015 $457M $40M Sales Adjusted EBITDA Selling Days $505M $52M $523M $58M $447M $34M $1,932M $184M $544M $68M $552M $67M $466M $40M $2,063M $224M 253 61 65 63 64 253 61 65 63 64 253 61 65 63 64 253 61 65 63 64
Reconciliation of Non-GAAP Measures: Net Income to Adjusted EBITDA ($ in millions) 1 During the fiscal year ended January 31, 2016, the Company recorded a $1,007 million tax benefit for the reversal of substantially all of the valuation allowance on its U.S. net deferred tax assets and a $189 million tax benefit for the reduction in unrecognized tax benefits as a result of IRS and state audit settlements. 2 Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. 3 Represents the loss on extinguishment of debt including the premium paid to redeem the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modification. 4 Represents the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs. Q4’16 additionally includes a real estate gain of approximately $11M 5 Represents the costs expensed in connection with secondary offerings of Holdings’ common stock by certain of Holdings’ stockholders. Net income $52 $ 871 Less income (loss) from discontinued operations, net of tax — (102) Income from continuing operations 52 973 Interest expense, net 50 83 Provision (benefit) for income taxes 1 (925) Depreciation and amortization 2 26 28 Loss on extinguishment of debt 5 Restructuring charges 3 (7) 5 Stock-based compensation 4 5 2 Adjusted EBITDA $ 169 $ 167 38 — $ 196 $ 1,472 (8) 146 204 1,326 269 394 (1,084) 101 113 179 9 9 20 16 $ 921 $ 876 139 100 Costs related to public offerings — — — 1 5 Other — 1 — 1 Q4’16 Q4’15 FY’16 FY’15 Reconciliation
Reconciliation of Non-GAAP Measures: Net Income to Adjusted Net Income and Adjusted Net Income Per Share ($ in millions, except share and per share amounts) 1 During the fiscal year ended January 31, 2016, the Company recorded a $1,007 million tax benefit for the reversal of substantially all of the valuation allowance on its U.S. net deferred tax assets and a $189 million tax benefit for the reduction in unrecognized tax benefits as a result of IRS and state audit settlements. 2 Represents the loss on extinguishment of debt including the premium paid to redeem the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modification. 3 Represents the costs incurred for strategic alignment of our workforce. These costs include severance, relocation costs and other related costs. Q4’16 additionally includes a real estate gain of approximately $11M 4 Represents the costs expensed in connection with secondary offerings of Holdings’ common stock by certain of Holdings’ stockholders. Weighted average common shares outstanding (in thousands) Basic Diluted Adjusted Net Income Per Share - Basic Adjusted Net Income Per Share - Diluted Net income $ 52 $ 871 Less income (loss) from discontinued operations, net of tax (102) Income (loss) from continuing operations 52 973 Provision (benefit) for income taxes1 38 (925) Cash paid for income taxes (1) (2) Amortization of acquisition related intangible assets (other than - software) Restructuring charges3 5 (7) Loss on extinguishment of debt2 5 Adjusted net income $ 90 $ 55 199,888 198,276 202,587 201,156 $0.45 $0.28 $0.44 $0.27 — — 3 4 $ 196 $ 1,472 146 204 1,326 139 (1,084) (13) (16) 9 9 179 $ 532 $ 351 199,385 197,011 202,000 201,308 $2.67 $1.78 $2.63 $1.74 (8) 100 14 15 Costs related to public offerings4 — — 1 — Q4’16 Q4’15 Q4’16 FY’15 Reconciliation