1 Ultimate's Enterprise sales team targets companies with 1,501 employees and larger, including companies with 100,000 employees and more; our Mid-Market sales team targets companies with 501- 1,500 employees; and our Strategic sales team targets companies with 300 to 500 employees.
2 All G2 Crowd assessments that we reference were pulled from its website, g2crowd.com, on January 29, 2016, and we acknowledge that the 2016 G2 scores that are calculated on a real-time basis could change when additional user reviews are posted subsequent to January 29th in 2016. G2's "Best of 2015 User's Choice" winners are final results.
3 For more detail on awards and recognition, see the Business Highlights section of this report.
4 NON-GAAP MEASURES
This Annual Report contains non-GAAP financial measures. Ultimate believes that non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to Ultimate's financial condition and results of operations. Ultimate's management uses these non-GAAP results to compare Ultimate's performance to that of prior periods for trend analyses, for purposes of determining executive incentive compensation, and for budget and planning purposes. These measures are used in monthly financial reports prepared for management and in quarterly financial reports presented to Ultimate's Board of Directors. These measures may be different from non-GAAP financial measures used by other companies.
These non-GAAP measures should not be considered in isolation or as an alternative to such measures determined in accordance with the generally accepted accounting principles in the United States (GAAP). The principal limitation of these non-GAAP financial measures is that they exclude significant expenses that are required by GAAP to be recorded. In addition, they are subject to inherent limitations as they reflect the exercise of judgement by management about which expenses are excluded from the non-GAAP financial measures.
To compensate for these limitations, Ultimate presents its non-GAAP financial measures in connection with its GAAP results. Ultimate strongly urges investors and potential investors in Ultimate's securities to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures that are included in this Annual Report (under the caption "Unaudited Reconciliation of Non-GAAP Financial Measures") and not rely on any single financial measure to evaluate its business.
Ultimate presents the following non-GAAP financial measure in this Annual Report: non-GAAP operating income and non-GAAP operating income, as a percentage of total revenues (or non-GAAP operating margin). We exclude the following items from these non-GAAP financial measures, as appropriate:
Stock-based compensation expense. Ultimate's non-GAAP financial measures exclude stock-based compensation expense, which consists of expenses for stock options and stock and stock unit awards recorded in accordance with Accounting Standards Codification 718, "Compensation - Stock Compensation." For the years ended December 31, 2015, 2014 and 2013, stock-based compensation expense was $82.4 million, $46.2 million and $32.8 million on a pre-tax basis, respectively. Stock-based compensation expense is excluded from the non-GAAP financial measures because it is a non-cash expense that Ultimate does not consider part of ongoing operations when assessing its financial performance. Ultimate believes that such exclusion facilitates the comparison of results of ongoing operations for current and future periods with such results from past periods.
Amortization of acquired intangible assets. In accordance with GAAP, operating expenses include amortization of acquired intangible assets over the estimated useful lives of such assets. For the years months ended December 31, 2015, 2014 and 2013, the amortization of acquired intangible assets was $1.0 million, $1.1 million and $0.2 million, respectively. Amortization of acquired intangible assets is excluded from Ultimate's non-GAAP financial measures because it is a non-cash expense that Ultimate does not consider part of ongoing operations when assessing its financial performance. Ultimate believes that such exclusion facilitates comparisons to its historical operating results and to the results of other companies in the same industry, which have their own unique acquisition histories.
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
(Dollars in Thousands)