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Cray Inc. Reports Second Quarter 2018 Financial Results

July 31, 2018

SEATTLE, July 31, 2018 (GLOBE NEWSWIRE) -- Global supercomputer leader Cray Inc. (Nasdaq: CRAY) today announced financial results for its second quarter ended June 30, 2018.

All figures in this release are based on U.S. GAAP unless otherwise noted. A reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Revenue for the second quarter of 2018 was $120.2 million, compared to $87.1 million in the second quarter of 2017. Net loss for the second quarter of 2018 was $11.0 million, or $0.27 per diluted share, compared to a net loss of $6.8 million, or $0.17 per diluted share in the second quarter of 2017. Non-GAAP net loss was $8.1 million, or $0.20 per diluted share for the second quarter of 2018, compared to non-GAAP net loss of $8.0 million, or $0.20 per diluted share in the second quarter of 2017.

For the second quarter of 2018, overall gross profit margin on a GAAP and non-GAAP basis was 31% and 32%, respectively, compared to 33% on a GAAP and non-GAAP basis in the second quarter of 2017.

Operating expenses for the second quarter of 2018 were $50.2 million, compared to $39.8 million in the second quarter of 2017. Non-GAAP operating expenses for the second quarter of 2018 were $47.1 million, compared to $37.5 million in the second quarter of 2017. Operating expenses for the second quarter of 2018 were impacted by lower research and development credits compared to the second quarter of 2017.

As of June 30, 2018, cash, investments, and restricted cash totaled $144 million. Working capital at the end of the second quarter was $325 million, compared to $332 million at March 31, 2018.

“Our second quarter was highlighted by a number of new AI wins, several installations of supercomputers and storage systems around the world, and expanded storage and AI offerings,” said Peter Ungaro, president and CEO of Cray. “We continue to see signs of improvement in our target market and, although it is still early to predict the extent of the rebound, I remain confident that our market is returning to growth. While we have work left to do, we remain focused on executing on our outlook for the remainder of 2018 and setting the company up for strong long-term growth.”

OutlookFor 2018, while a wide range of results remains possible, Cray expects revenue to be in the range of $450 million. For the third quarter of 2018, revenue is expected to be about $90 million. For 2018, GAAP and non-GAAP gross margins are expected to be in the low-30% range. Non-GAAP operating expenses for 2018 are expected to be in the range of $190 million. For 2018, non-GAAP adjustments are expected to total about $14 million, driven primarily by share-based compensation. For the year, GAAP operating expenses are anticipated to be about $12 million higher than non-GAAP operating expenses, and GAAP gross profit is expected to be about $2 million lower than non-GAAP gross profit.

Based on this outlook, Cray’s effective GAAP and non-GAAP tax rates for 2018 are both expected to be in the low-single digit range, on a percentage basis.

While a wide range of results remains possible and it is still early in the planning process, Cray expects 2019 annual revenue to grow modestly compared to its current 2018 outlook.

Actual results for any future periods are subject to large fluctuations given the nature of Cray’s business.

Recent Highlights

-- In July, Cray announced that it has delivered and installed an XC50 supercomputer at the National Astronomical Observatory of Japan (NAOJ). The supercomputer is the world’s most powerful system dedicated to astrophysical calculations. -- In July, Cray announced that the Indian Institute of Technology Bombay has selected a Cray XC50 supercomputer and Cray ClusterStor scale-out Lustre storage system. The new solution will support IIT Bombay in its mission to deliver transformative education to create leaders and innovators. -- In June, Cray announced a new AI workflow software suite and reference system configurations to jump-start AI and analytics deployments. The company introduced the Cray Urika-CS AI and Analytics software suite for the Cray CS series, and new Cray Accel AI reference configurations to help both IT and AI teams. -- In June, Cray announced the ClusterStor L300F Lustre-based scalable flash storage solution, designed for applications that need high-performance scratch storage to quickly store and retrieve intermediate results. Also in June, Cray announced that the latest GENCI supercomputer in France, integrated by ATOS, will include a five petabyte Cray ClusterStor storage solution. -- In June, Cray announced that it had partnered with UK Innovation Center Digital Catapult and its Machine Intelligence Garage to help organizations of all sizes speed the development of machine intelligence systems. -- In May, Cray announced that the Japan Meteorological Agency was in the process of implementing two Cray XC50 supercomputers at its site in Kiyose, Tokyo. These systems are expected to deliver a combined peak performance of more than 18 petaflops.

Conference Call InformationCray will host a conference call today, Tuesday, July 31, 2018 at 1:30 p.m. PT (4:30 p.m. ET) to discuss its second quarter ended June 30, 2018 financial results. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at (855) 894-4205. International callers should dial (765) 889-6838 and use the conference ID #9872838. To listen to the audio webcast, go to the Investors section of the Cray website at www.cray.com/company/investors.

If you are unable to attend the live conference call, an audio webcast replay will be available in the Investors section of the Cray website for 180 days. A telephonic replay of the call will also be available by dialing (855) 859-2056, international callers dial (404) 537-3406, and entering the conference ID #9872838. The conference call replay will be available for 72 hours, beginning at 4:45 p.m. PT on Tuesday, July 31, 2018.

Use of Non-GAAP Financial MeasuresThis press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission (“SEC”). A reconciliation of U.S. generally accepted accounting principles, or GAAP, to non-GAAP results is included in the financial tables included in this press release. Management believes that the non-GAAP financial measures that we have set forth provide additional insight for analysts and investors and facilitate an evaluation of Cray’s financial and operational performance that is consistent with the manner in which management evaluates Cray’s financial performance. However, these non-GAAP financial measures have limitations as an analytical tool as they exclude the financial impact of transactions necessary or advisable for the conduct of Cray’s business, such as the granting of equity compensation awards, and are not intended to be an alternative to financial measures prepared in accordance with GAAP. Hence, to compensate for these limitations, management does not review these non-GAAP financial metrics in isolation from its GAAP results, nor should investors. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements and is not intended to represent a measure of performance in accordance with or disclosures required by GAAP. These measures are adjusted as described in the reconciliation of GAAP to non-GAAP numbers at the end of this release, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent, or non-recurring. Non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, financial measures determined in accordance with GAAP. Investors are advised to carefully review and consider this non-GAAP information as well as the GAAP financial results that are disclosed in Cray’s SEC filings.

Additionally, we have not quantitatively reconciled the non-GAAP guidance measures disclosed under “Outlook” to their corresponding GAAP measures because we do not provide specific guidance for the various reconciling items such as share-based compensation, adjustments to the provision for income taxes, amortization of intangibles, costs related to acquisitions, purchase accounting adjustments, and gain on significant asset sales, as certain items that impact these measures have not occurred, are out of our control, or cannot be reasonably predicted. Accordingly, reconciliations to the non-GAAP guidance measures are not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact our financial results.

About Cray Inc.Global supercomputing leader Cray Inc. (Nasdaq: CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia, and government to meet existing and future simulation and analytics challenges. Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency, and scalability. Cray’s Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture allowing customers to meet the market’s continued demand for realized performance. Go to www.cray.com for more information.

Safe Harbor Statement This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, including, but not limited to, statements related to Cray’s financial guidance and expected operating results, Cray’s competitive position in the high-end supercomputing market and the timing and extent of a rebound in that market, Cray’s ability to grow in the future, and its product development, sales, and delivery plans. These statements involve current expectations, forecasts of future events, and other statements that are not historical facts. Inaccurate assumptions and estimates as well as known and unknown risks and uncertainties can affect the accuracy of forward-looking statements and cause actual results to differ materially from those anticipated by these forward-looking statements. Factors that could affect actual future events or results include, but are not limited to, the risk that Cray does not achieve the operational or financial results that it expects, the risk that Cray will not be able to secure orders for Cray systems to be accepted in the future when or at the levels expected, the risk that the segments of the high-end of the supercomputing market that Cray targets do not recover from the current downturn as early or as completely as expected or at all, the risk that the systems ordered by customers are not delivered when expected, do not perform as expected once delivered, or have technical issues that must be corrected before acceptance, the risk that the acceptance process for delivered systems is not completed, or customer acceptances are not received, when expected or at all, the risk that Cray is not able to successfully sell products and services in the big data, artificial intelligence, and commercial markets as expected or at all, the risk that Cray is not able to reach new customers through cloud services offerings as expected or at all, the risk that Cray is not able to expand and penetrate its addressable market as expected or at all, the risk that the expense and/or effort to address Cray systems at customer sites that have issues with third party components or with Cray components is material, the risk that Cray is not able to successfully complete its planned product development efforts in a timely fashion or at all, the risk that government funding to Cray for research and development projects is less than expected, the risk that new third-party processors and other components for our systems are not available with the anticipated performance, timing, or pricing, the risk that Cray is not able to achieve anticipated gross margin or expense levels, and such other risks as identified in Cray’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, and from time to time in other reports filed by Cray with the SEC. You should not rely unduly on these forward-looking statements, which apply only as of the date of this release. Cray undertakes no duty to publicly announce or report revisions to these statements as new information becomes available that may change Cray’s expectations.

Urika, CRAY and the stylized CRAY mark are registered trademarks of Cray Inc. in the United States and other countries, and Accel AI, ClusterStor, and the CS and XC families of supercomputers are trademarks of Cray Inc.

Cray Media: Investors: Juliet McGinnis Paul Hiemstra 206/701-2152 206/701-2044 pr@cray.com ir@cray.com

CRAY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 ----------- ---------- ----------- ----------- Revenue: Product $ 83,379 $ 51,531 $ 127,833 $ 72,659 Service 36,824 35,604 71,964 73,507 --------- - -------- - --------- - --------- - Total revenue 120,203 87,135 199,797 146,166 --------- - -------- - --------- - --------- - Cost of revenue: Cost of product revenue 65,274 39,515 99,319 54,266 Cost of service revenue 17,122 19,277 35,719 39,748 --------- - -------- - --------- - --------- - Total cost of revenue 82,396 58,792 135,038 94,014 --------- - -------- - --------- - --------- - Gross profit 37,807 28,343 64,759 52,152 --------- - -------- - --------- - --------- - Operating expenses: Research and development, net 29,382 17,325 59,274 49,965 Sales and marketing 15,218 15,247 30,883 29,900 General and administrative 5,624 7,205 11,403 16,002 Restructuring — — 476 — --------- - -------- - --------- - --------- - Total operating expenses 50,224 39,777 102,036 95,867 --------- - -------- - --------- - --------- - Loss from operations (12,417 ) (11,434 ) (37,277 ) (43,715 ) Other income, net 430 155 48 1,197 Interest income, net 667 897 1,380 1,775 Loss before income taxes (11,320 ) (10,382 ) (35,849 ) (40,743 ) Income tax benefit (expense) 370 3,542 (109 ) 14,688 --------- - -------- - --------- - --------- - Net loss $ (10,950 ) $ (6,840 ) $ (35,958 ) $ (26,055 ) - ------- - - ------ - - ------- - - ------- - Basic net loss per common share $ (0.27 ) $ (0.17 ) $ (0.89 ) $ (0.65 ) - ------- - - ------ - - ------- - - ------- - Diluted net loss per common share $ (0.27 ) $ (0.17 ) $ (0.89 ) $ (0.65 ) - ------- - - ------ - - ------- - - ------- - Basic weighted average shares outstanding 40,616 40,051 40,527 40,022 --------- - -------- - --------- - --------- - Diluted weighted average shares outstanding 40,616 40,051 40,527 40,022 --------- - -------- - --------- - --------- -

CRAY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands, except share data) June 30, December 2018 31, 2017 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 142,157 $ 137,326 Restricted cash 1,300 1,964 Short-term investments — 6,997 Accounts and other receivables, net 113,138 162,034 Inventory 148,153 186,307 Prepaid expenses and other current assets 23,134 25,015 --------- - --------- - Total current assets 427,882 519,643 Long-term restricted cash 1,030 1,030 Long-term investment in sales-type lease, net 16,409 23,367 Property and equipment, net 37,880 36,623 Goodwill 14,182 14,182 Intangible assets other than goodwill, net 3,760 4,345 Other non-current assets 18,536 19,567 --------- - --------- - TOTAL ASSETS $ 519,679 $ 618,757 - ------- - - ------- - LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable $ 16,758 $ 57,207 Accrued payroll and related expenses 16,994 18,546 Other accrued liabilities 10,885 9,471 Customer contract liabilities 58,575 80,119 --------- - --------- - Total current liabilities 103,212 165,343 Long-term customer contract liabilities 32,917 38,622 Other non-current liabilities 12,823 14,495 --------- - --------- - TOTAL LIABILITIES 148,952 218,460 Shareholders’ equity: Preferred stock — Authorized and undesignated, 5,000,000 shares; no shares issued or — — outstanding Common stock and additional paid-in capital, par value $.01 per share — Authorized, 75,000,000 shares; issued and outstanding 40,815,172 and 40,464,963 shares, 639,782 633,408 respectively Accumulated other comprehensive income 1,946 915 Accumulated deficit (271,001 ) (234,026 ) --------- - --------- - TOTAL SHAREHOLDERS’ EQUITY 370,727 400,297 --------- - --------- - TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 519,679 $ 618,757 - ------- - - ------- -

CRAY INC. AND SUBSIDIARIES Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures (Unaudited; in millions, except EPS) Three Months Ended June 30, 2018 Net Loss Diluted Operating Gross Profit Operating Expenses EPS Loss --------- --------- --------- ------------ ------------------ GAAP $ (11.0 ) $ (0.27 ) $ (12.4 ) $ 37.8 $ 50.2 Share-based compensation (1) 3.2 3.2 0.2 3.0 Amortization of acquired and other (2) 0.3 0.3 0.2 0.1 intangibles Income tax on reconciling items (3) (0.7 ) Other items impacting tax provision (4) 0.1 ------- - --------- --------- ------------ Total reconciling items 2.9 0.07 3.5 0.4 3.1 Non-GAAP. $ (8.1 ) $ (0.20 ) $ (8.9 ) $ 38.2 $ 47.1 - ----- - - ----- - - ----- - - ---- ----- - ---- ----------- Three Months Ended June 30, 2017 Net Loss Diluted Operating Gross Profit Operating Expenses EPS Loss --------- --------- --------- ------------ ------------------ GAAP $ (6.8 ) $ (0.17 ) $ (11.4 ) $ 28.3 $ 39.8 Share-based compensation (1) 2.3 2.3 0.1 2.2 Amortization of acquired and other (2) 0.1 0.1 0.1 intangibles Income tax on reconciling items (3) (1.0 ) Other items impacting tax provision (4) (2.6 ) ------- - --------- --------- ------------ Total reconciling items (1.2 ) (0.03 ) 2.4 0.1 2.3 Non-GAAP $ (8.0 ) $ (0.20 ) $ (9.0 ) $ 28.4 $ 37.5 - ----- - - ----- - - ----- - - ---- ----- - ---- ----------- Notes (1) Adjustments to exclude non-cash expenses related to share-based compensation (2) Adjustments to exclude amortization of acquired intangible and other intangible assets (3) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 21% for the current year period, and 35% for the prior year comparative period (4) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (3) above). And when applicable, we also adjust for changes related to the utilization or increase of our net operating loss carryforwards and for changes in our valuation allowance held against deferred tax assets and any applicable change in tax law, including the Tax Cuts and Jobs Act of 2017.

CRAY INC. AND SUBSIDIARIES Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures (Unaudited; in millions, except EPS) Six Months Ended June 30, 2018 Net Loss Diluted Operating Gross Profit Operating Expenses EPS Loss --------- --------- --------- ------------ ------------------ GAAP $ (36.0 ) $ (0.89 ) $ (37.3 ) $ 64.8 $ 102.0 Share-based compensation (1) 6.1 6.1 0.4 5.7 Amortization of acquired and other (2) 0.5 0.5 0.4 0.1 intangibles Restructuring (3) 0.5 0.5 0.5 Income tax on reconciling items (4) (1.5 ) Other items impacting tax provision (5) 0.8 ------- - --------- --------- ------------ Total reconciling items 6.4 0.16 7.1 0.8 6.3 Non-GAAP $ (29.6 ) $ (0.73 ) $ (30.2 ) $ 65.6 $ 95.7 - ----- - - ----- - - ----- - - ---- ----- - ----- ---------- Six Months Ended June 30, 2017 Net Loss Diluted Operating Gross Profit Operating Expenses EPS Loss --------- --------- --------- ------------ ------------------ GAAP $ (26.1 ) $ (0.65 ) $ (43.7 ) $ 52.2 $ 95.9 Share-based compensation (1) 5.0 5.0 0.2 4.8 Amortization of acquired and other (2) 0.3 0.3 0.3 intangibles Income tax on reconciling items (4) (2.0 ) Other items impacting tax provision (5) (13.7 ) ------- - --------- --------- ------------ Total reconciling items (10.4 ) (0.26 ) 5.3 0.2 5.1 Non-GAAP. $ (36.5 ) $ (0.91 ) $ (38.4 ) $ 52.4 $ 90.8 - ----- - - ----- - - ----- - - ---- ----- - ----- ---------- Notes (1) Adjustments to exclude non-cash expenses related to share-based compensation (2) Adjustments to exclude amortization of acquired intangible and other intangible assets (3) Adjustments to exclude restructuring costs (4) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 21% for the current year period, and 35% for the prior year comparative period (5) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (4) above). And when applicable, we also adjust for changes related to the utilization or increase of our net operating loss carryforwards and for changes in our valuation allowance held against deferred tax assets and any applicable change in tax law, including the Tax Cuts and Jobs Act of 2017.

CRAY INC. AND SUBSIDIARIES

Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures(Unaudited; in millions, except percentages)

Three Months Ended June 30, 2018 Product Service Total Gross Gross Gross Gross Profit Margi Gross Profit Margi Gross Profit Margi n n n ------------ ---- ------------ ---- ------------ ---- GAAP $ 18.1 22 % $ 19.7 54 % $ 37.8 31 % Share-based compensation (1) 0.1 0.1 0.2 Amortization of acquired and other intangibles (2) 0.2 — 0.2 Total reconciling items 0.3 — % 0.1 — % 0.4 1 % Non-GAAP $ 18.4 22 % $ 19.8 54 % $ 38.2 32 % - ---- ----- -- - - ---- ----- -- - - ---- ----- -- - Three Months Ended June 30, 2017 Product Service Total Gross Gross Gross Gross Profit Margi Gross Profit Margi Gross Profit Margi n n n ------------ ---- ------------ ---- ------------ ---- GAAP $ 12.0 23 % $ 16.3 46 % $ 28.3 33 % Share-based compensation (1) — 0.1 0.1 Total reconciling items — — % 0.1 — % 0.1 — % Non-GAAP $ 12.0 23 % $ 16.4 46 % $ 28.4 33 % - ---- ----- -- - - ---- ----- -- - - ---- ----- -- - Notes (1) Adjustments to exclude non-cash expenses related to share-based compensation (2) Adjustments to exclude amortization of acquired intangible and other intangible assets

CRAY INC. AND SUBSIDIARIES Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures (Unaudited; in millions, except percentages) Six Months Ended June 30, 2018 Product Service Total Gross Gross Gross Gross Profit Margi Gross Profit Margi Gross Profit Margi n n n ------------ ---- ------------ ---- ------------ ---- GAAP $ 28.5 22 % $ 36.3 50 % $ 64.8 32 % Share-based compensation (1) 0.2 0.2 0.4 Amortization of acquired and other intangibles (2) 0.4 — 0.4 Total reconciling items 0.6 1 % 0.2 1 % 0.8 1 % Non-GAAP $ 29.1 23 % $ 36.5 51 % $ 65.6 33 % - ---- ----- -- - - ---- ----- -- - - ---- ----- -- - Six Months Ended June 30, 2017 Product Service Total Gross Gross Gross Gross Profit Margi Gross Profit Margi Gross Profit Margi n n n ------------ ---- ------------ ---- ------------ ---- GAAP $ 18.4 25 % $ 33.8 46 % $ 52.2 36 % Share-based compensation (1) 0.1 0.1 0.2 Total reconciling items 0.1 — % 0.1 — % 0.2 — % Non-GAAP. $ 18.5 25 % $ 33.9 46 % $ 52.4 36 % - ---- ----- -- - - ---- ----- -- - - ---- ----- -- - Notes (1) Adjustments to exclude non-cash expenses related to share-based compensation (2) Adjustments to exclude amortization of acquired intangible and other intangible assets

CRAY INC. AND SUBSIDIARIES

Reconciliation of GAAP to non-GAAP Net Loss(Unaudited; in millions except per share amounts and percentages)

Three Months Ended Six Months Ended June 30, June 30, 2018 2017 2018 2017 --------- --------- --------- --------- GAAP Net Loss $ (11.0 ) $ (6.8 ) $ (36.0 ) $ (26.1 ) Non-GAAP adjustments impacting gross profit: Share-based compensation (1) 0.2 0.1 0.4 0.2 Amortization of acquired and other intangibles (2) 0.2 — 0.4 — Total adjustments impacting gross profit 0.4 0.1 0.8 0.2 Non-GAAP gross margin percentage 32 % 33 % 33 % 36 % Non-GAAP adjustments impacting operating expenses: Share-based compensation (1) 3.0 2.2 5.7 4.8 Amortization of acquired and other intangibles (2) 0.1 0.1 0.1 0.3 Restructuring (3) — — 0.5 — Total adjustments impacting operating expenses 3.1 2.3 6.3 5.1 Non-GAAP adjustments impacting tax provision: Income tax on reconciling items (4) (0.7 ) (1.0 ) (1.5 ) (2.0 ) Other items impacting tax provision (5) 0.1 (2.6 ) 0.8 (13.7 ) ------- - ------- - ------- - ------- - (0.6 ) (3.6 ) (0.7 ) (15.7 ) --------- --------- --------- --------- Non-GAAP Net Loss $ (8.1 ) $ (8.0 ) $ (29.6 ) $ (36.5 ) - ----- - - ----- - - ----- - - ----- - Non-GAAP Diluted Net Loss per common share $ (0.20 ) $ (0.20 ) $ (0.73 ) $ (0.91 ) - ----- - - ----- - - ----- - - ----- - Diluted weighted average shares 40.6 40.1 40.5 40.0 Notes (1) Adjustments to exclude non-cash expenses related to share-based compensation (2) Adjustments to exclude amortization of acquired intangible and other intangible assets (3) Adjustments to exclude restructuring costs (4) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 21% for the current year period, and 35% for the prior year comparative period (5) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (4) above). And when applicable, we also adjust for changes related to the utilization or increase of our net operating loss carryforwards and for changes in our valuation allowance held against deferred tax assets and any applicable change in tax law, including the Tax Cuts and Jobs Act of 2017.

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