Green Dot 2011 Annual Report Download - page 107

Reconciliation of Non-GAAP Financial Measures
The Company’s consolidated fi nancial statements are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).
To supplement these fi nancial statements, the Company uses measures of operating results that are adjusted to exclude, among other things, employee stock-
based compensation expense and stock-based retailer incentive compensation expense. The letter to stockholders contained in this annual report (the stockholder
letter) includes non-GAAP total operating revenues and non-GAAP diluted earnings per share. These non-GAAP fi nancial measures are not calculated or presented in
accordance with, and are not alternatives or substitutes for, fi nancial measures prepared in accordance with GAAP, and should be read only in conjunction with the
Company’s fi nancial measures prepared in accordance with GAAP. The Company’s non-GAAP fi nancial measures may be different from similarly-titled non-GAAP
fi nancial measures used by other companies.
The Company believes that the presentation of non-GAAP fi nancial measures provides useful information to management and investors regarding underlying trends
in its consolidated fi nancial condition and results of operations. The Company also believes that the non-GAAP fi nancial measures contained in the stockholder letter
are useful to investors in evaluating the Company’s operating performance for the following reasons:
• Stock-based retailer incentive compensation is a non-cash GA AP accounting charge that is an offset to the Company’s actual revenues from operations as the Company
has historically calculated them. This charge results from the monthly lapsing of the Company’s right to repurchase a portion of the 2,208,552 shares it issued to its
largest distributor, Walmart, in May 2010. By adding back this charge to the Company’s GAAP 2010 and future total operating revenues, investors can make direct
comparisons of the Company’s revenues from operations prior to and after May 2010 and thus more easily perceive trends in the Company’s core operations. Further.
because the monthly charge is based on the then-current fair market value of the shares as to which the Company’s repurchase right lapses, adding back this charge
eliminates fl uctuations in the Company’s operating revenues caused by variations in its month-end stock prices and thus provides insight on the operating revenues
directly associated with those core operations; and
• The Company records employee stock-based compensation from period to period, and recorded employee stock-based compensation expenses of approximately
$9.5 million and $7.3 million for the years ended December 31, 2011 and 2010, respectively. By comparing the Company’s non-GAAP net income in different historical
periods, investors can evaluate the Company’s operating results without the additional variations caused by employee stock-based compensation expense, which is
not comparable from period to period due to changes in the fair market value of the Company’s Class A common stock (which is infl uenced by external factors like
the volatility of public markets and the fi nancial performance of the Company’s peers) and is not a key measure of the Company’s operations.
The Company’s management regularly uses these supplemental non-GAAP fi nancial measures internally to understand, manage and evaluate the Company’s business
and make operating decisions. For additional information regarding the Company’s use of non-GAAP fi nancial measures and the items excluded by the Company
from one or more of its non-GAAP fi nancial measures, investors are encouraged to review the reconciliations of the Company’s non-GAAP fi nancial measures to the
comparable GAAP fi nancial measures, which can be found by clicking on “Financial Information” in the Investor Relations section of our website at ir.greendot.com.
Reconciliation of Total Operating Revenues to Non-GAAP Total Operating Revenues
(Unaudited)
Years Ended December 31
2011 2010
(in thousands)
Reconciliation of total operating revenues to non-GAAP total operating revenues
Total operating revenues $467,398 $363,888
Stock-based retailed incentive compensation* 17,337 13,369
Non-GAAP total operating revenues $484,735 $377,257
Reconciliation of Net Income to Non-GAAP Net Income
(Unaudited) Years Ended December 31
2011 2010
Reconciliation of net income to non-GAAP net income (in thousands)
Net income $52,083 $42,232
Employee stock-based compensation expense, net of tax 5,904 4,401
Stock-based retailed incentive compensation, net of tax 10,748 8,108
Non-GAAP net income $68,735 $54,741
Diluted earnings per share**
GAAP $ 1.19 $ 0.98
Non-GAAP $ 1.55 $ 1.27
Diluted weighted-average shares issued and outstanding***
GAAP 42,065 27,782
Non-GAAP 44,221 42,978
Reconciliation of GAAP to non-GAAP diluted weighted-average shares issued and outstanding
Diluted weighted-average shares issued and outstanding*** 42,065 27,782
Assumed conversion of weighted-average shares of preferred stock 451 13,803
Weighted-average shares subject to repurchase 1,705 1,393
Non-GAAP diluted weighted-average shares issued and outstanding 44,221 42,978
* The Company does not include any income tax impact of the associated non-GAAP adjustment to non-GAAP total operating revenues because this non-GAAP fi nancial
measure is provided before income tax expense.
** Reconciliations between GAAP and non-GAAP diluted weighted-average shares issued and outstanding are provided in the next table.
*** Diluted weighted-average Class A shares issued and outstanding is the most directly comparable GAAP measure for the periods indicated.