On a GAAP basis in the fiscal first quarter of 2011:
-- Operating income increased to$28.3 million as compared to an operating loss of$4.4 million in the same quarter last year; -- Net income increased to$20.5 million as compared to a net loss of$1.0 million in the same quarter last year; -- Diluted earnings per share increased to29 cents as compared to a loss of2 cents in the same quarter a year ago.
On a non-GAAP basis in the fiscal first quarter of 2011:
-- Operating income increased 26 percent to$41.3 million from$32.8 million in the same quarter last year; -- Non-GAAP net income increased 30 percent to$29.5 million from$22.7 million in the same quarter last year; -- Non-GAAP diluted earnings per share increased 20 percent to42 cents compared to35 cents in the same quarter last year.
The non-GAAP amounts primarily exclude the amortization of acquired intangibles, stock-based compensation, restructuring and transition costs, acquisition-related costs and purchase accounting adjustments for deferred revenue.
The non-GAAP results noted above and the non-GAAP financial outlook for
2011 discussed below represent non-GAAP financial measures. A
reconciliation of these measures to the appropriate GAAP measures for the
three months ended
Stock Split
In
Shareholders of record as of the close of business on
Quarterly Highlights
-- Akhela, the IT company of
-- Progress announced the general availability of the DataDirect Connect XE® for JDBC,
-- Progress also announced the availability of the new Progress® Integrated Trouble Management (ITM) solution accelerator. This new offering bolsters the Progress communications industry solutions portfolio and empowers communication service providers to dramatically enhance their customers' overall experience. The ITM solution accelerator provides communication service providers with end-to-end management and rules-based problem resolution for customer initiated problems. It also enables the preemptive identification of problems so that operations managers can limit or completely remove any negative impact on their customers.
--
-- Progress launched its
Progress® Apama®
--
-- PLUS-SX (a
-- A new adapter for market data connectivity to
Additional highlights can be found at: http://web.progress.com/inthenews/pressreleases.html.
Business Outlook
-- On a GAAP and non-GAAP basis, revenue is expected to be in the range of
$136 million to $139 million .
-- GAAP diluted earnings per share are expected to be in the range of
27 cents to 31 cents .
-- On a non-GAAP basis, diluted earnings per share are expected to be in
the range of 41 cents to 43 cents .
-- On a GAAP and non-GAAP basis, revenue is expected to be in the range of
$560 million to $570 million .
-- GAAP diluted earnings per share are expected to be in the range of
$1.22 to $1.32 .
-- On a non-GAAP basis, diluted earnings per share are expected to be in
the range of $1.74 to $1.80 .
The outlook for non-GAAP earnings excludes the amortization of acquired intangibles, stock-based compensation, restructuring and transition costs and related tax effects.
Legal Notice Regarding Non-GAAP Financial Information
Conference Call
The
Note to Editors
Note Regarding Forward-Looking Statements
Except for the historical information and discussions contained herein,
statements contained in this release may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform
Act of 1995. These statements, which include statements regarding the
Company's business outlook for its second fiscal quarter, 2011, and the
full 2011 fiscal year and strategic plans, involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially, including but not limited to the following: the receipt and
shipment of new orders; the timely release of enhancements to the Company's
products; the growth rates of certain market segments; the positioning of
the Company's products in those market segments; the customer demand and
acceptance of our new product initiative, the Progress RPM suite;
variations in the demand for professional services and technical support;
pricing pressures and the competitive environment in the software industry;
continuing uncertainty in the U.S. and international economies, which could
result in fewer sales of the Company's products and may otherwise harm the
Company's business; the Company's ability to complete and integrate
acquisitions; the Company's ability to realize the expected benefits and
anticipated synergies from acquired businesses; the Company's ability to
penetrate international markets and manage its international operations;
and changes in exchange rates. The Company undertakes no obligation to
update information contained in this release. For further information
regarding risks and uncertainties associated with the Company's business,
please refer to the Company's filings with the
Actional, Apama, FUSE ESB, FUSE, OpenEdge, Progress, Progress RPM,
Responsive Process Management, Savvion and SonicMQ, Sonic are trademarks or
registered trademarks of
Progress Software Corporation GAAP Condensed Consolidated Statements of Income (In thousands, except per share data) Three Months Ended ----------------------------------- February 28, February 28, Percentage 2011 2010 Change ----------- ----------- --------- Revenue: Software licenses $ 51,336 $ 47,117 9 % Maintenance and services 82,901 80,430 3 % ----------- ----------- --------- Total revenue 134,237 127,547 5 % ----------- ----------- --------- Costs of revenue: Cost of software licenses 2,381 1,989 20 % Cost of maintenance and services 17,768 16,914 5 % Amortization of purchased technology 3,975 5,098 (22)% ----------- ----------- --------- Total costs of revenue 24,124 24,001 1 % ----------- ----------- --------- Gross profit 110,113 103,546 6 % ----------- ----------- --------- Operating expenses: Sales and marketing 44,698 43,206 3 % Product development 20,859 23,387 (11)% General and administrative 11,852 12,782 (7)% Amortization of other acquired intangibles 2,274 2,364 (4)% Restructuring expense 2,114 25,771 (92)% Acquisition-related expenses - 415 (100)% ----------- ----------- --------- Total operating expenses 81,797 107,925 (24)% ----------- ----------- --------- Income (loss) from operations 28,316 (4,379) * ----------- ----------- --------- Other income (expense), net (39) 2,756 * ----------- ----------- --------- Income (loss) before income taxes 28,277 (1,623) * Provision for (benefit from) income taxes 7,756 (617) * ----------- ----------- --------- Net income (loss) $ 20,521 $ (1,006) * =========== =========== ========= Earnings (loss) per share: Basic $ 0.31 $ (0.02) * Diluted $ 0.29 $ (0.02) * =========== =========== ========= Weighted average shares outstanding: Basic 66,986 61,619 9 % Diluted 69,659 61,619 13 % =========== =========== ========= * not meaningfulProgress Software Corporation Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data) Three Months Ended February 28, 2011 ---------------------------------------- As Percentage Reported Adjustments Non-GAAP Change -------- --------- -------- -------- Total revenue (1) $134,237 $ 45 $134,282 5 % Income from operations $ 28,316 $ 13,016 $ 41,332 26 % Purchase accounting adjustments for deferred revenue (1) (45) 45 Amortization of acquired intangibles (6,249) 6,249 Stock-based compensation (2) (4,184) 4,184 Transition expense (3) (424) 424 Restructuring expense (2,114) 2,114 Operating margin percentage 21.1 % 30.8% Other income (expense), net $ (39) $ - $ (39) Provision for income taxes (6) $ 7,756 $ 4,077 $ 11,833 (1)% Net Income $ 20,521 $ 8,939 $ 29,460 30 % Earnings per share $ 0.29 $ 0.42 20 % Diluted shares outstanding 69,659 - 69,659 9 % ======== ========= ======== ======== Three Months Ended February 28, 2010 ------------------------------ As Reported Adjustments Non-GAAP -------- --------- -------- Total revenue (1) $127,547 $ 454 $128,001 Income from operations $ (4,379) $ 37,133 $ 32,754 Purchase accounting adjustments for deferred revenue (1) (454) 454 Amortization of acquired intangibles (7,462) 7,462 Stock-based compensation (2) (4,231) 4,231 Restructuring expense (25,771) 25,771 Other (4) 785 (785) Operating margin percentage (3.4)% 25.6% Other income (expense), net (5) $ 2,756 $ (899) $ 1,857 Provision for income taxes (6) $ (617) $ 12,558 $ 11,941 Net Income $ (1,006) $ 23,676 $ 22,670 Earnings per share $ (0.02) $ 0.35 Diluted shares outstanding (7) 61,619 2,407 64,026 ======== ========= ======== ======== (1) The purchase accounting adjustment for deferred revenue is included within maintenance and services revenue and represents the write-down to fair value of the deferred maintenance revenue of Savvion andIona Technologies at the date of the acquisitions (2) Stock-based compensation expense, representing the fair value of equity awards, is included in the following GAAP expenses: (In thousands) Three Months Ended February 28, 2011 -------------------------------- As Reported Adjustments Non-GAAP --------- ----------- --------- Cost of revenue $ 223 $ (223) $ - Sales and marketing 1,290 (1,290) - Product development 1,269 (1,269) - General and administrative 1,402 (1,402) - --------- ----------- --------- Total $ 4,184 $ (4,184) $ - ========= =========== ========= Three Months Ended February 28, 2010 -------------------------------- As Reported Adjustments Non-GAAP --------- ----------- --------- Cost of revenue $ 263 $ (263) $ - Sales and marketing 1,578 (1,578) - Product development 1,107 (1,107) - General and administrative 1,283 (1,283) - --------- ----------- --------- Total $ 4,231 $ (4,231) $ - ========= =========== ========= In addition, the restructuring expense for the three months endedFebruary 28, 2010 includes approximately$0.3 million of stock-based compensation expense. (3) Transition expenses for the three months endedFebruary 28, 2011 represent incremental costs incurred to transform our cost structure to a more efficient cost model and such expenses are included primarily within our product development and general and administrative expenses. (4) Other adjustments for the three months endedFebruary 28, 2010 include acquisition-related expenses of$0.4 million for the Savvion transaction and a credit of$1.2 million in general and administrative expenses for an insurance reimbursement in excess of previously estimated amounts related to professional service fees associated with the stock option investigation and related shareholder derivative lawsuit. (5) The non-GAAP adjustment in other income for the three months endedFebruary 28, 2010 relates to an insurance settlement gain from a pre-acquisition contingency assumed as part of a prior acquisition. (6) The non-GAAP provision for income taxes was calculated reflecting an effective rate of 28.7% and 34.5% for the three months endedFebruary 28, 2011 and 2010, respectively. The difference between the effective tax rate under GAAP and the effective tax rate utilized in the preparation of non-GAAP financial measures primarily relates to the tax effects of stock-based compensation expense and amortization of acquired intangibles, which are excluded from the determination of non-GAAP net income. (7) The non-GAAP weighted average shares outstanding for the three months endedFebruary 28, 2010 include the effective of dilutive stock awards, which have been excluded from the GAAP weighted average shares outstanding as the impact of including such amounts would be anti-dilutive.Progress Software Corporation Condensed Consolidated Balance Sheets (In thousands) February 28, November 30, 2011 2010 ------------ ------------ Assets Cash and short-term investments $ 370,839 $ 322,396 Accounts receivable 104,381 119,273 Other current assets 41,933 42,189 ------------ ------------ Total current assets 517,153 483,858 ------------ ------------ Property and equipment, net 59,620 58,207 Goodwill and intangibles, net 315,567 321,551 Other assets 73,492 73,207 ------------ ------------ Total $ 965,832 $ 936,823 ============ ============ Liabilities and Shareholders' Equity Accounts payable and other current liabilities $ 80,953 $ 98,715 Short-term deferred revenue 158,088 138,961 ------------ ------------ Total current liabilities 239,041 237,676 ------------ ------------ Long-term deferred revenue 4,777 2,908 Other noncurrent liabilities 7,366 7,907 Shareholders' Equity: Common stock and additional paid-in capital 362,439 347,604 Retained earnings 352,209 340,728 ------------ ------------ Total shareholders' equity 714,648 688,332 ------------ ------------ Total $ 965,832 $ 936,823 ============ ============Progress Software Corporation Condensed Consolidated Statements of Cash Flows (In thousands) Three Months Ended ------------------------ February 28, February 28, 2011 2010 ----------- ----------- Cash flows from operations: Net income $ 20,521 $ (1,006) Depreciation, amortization and other noncash charges 12,645 15,098 Changes in operating assets and liabilities 17,064 20,156 ----------- ----------- Net cash flows from operations 50,230 34,248 Capital expenditures (3,352) (1,502) Acquisitions - (49,086) Issuance (repurchase) of common stock, net (6,120) 11,106 Other 7,685 (8,320) ----------- ----------- Net change in cash and short-term investments 48,443 (13,554) Cash and short-term investments, beginning of period 322,396 224,121 ----------- ----------- Cash and short-term investments, end of period $ 370,839 $ 210,567 =========== ===========Progress Software Corporation Reconciliation of Forward-Looking Guidance Reconciliation of GAAP to Non-GAAP forward-looking guidance range of diluted earnings per share for the three months endedMay 31, 2011 : ---------------- GAAP expectation for diluted earnings per share $ 0.27 to $ 0.31 Adjustment to exclude stock-based compensation $ 0.05 to $ 0.06 Adjustment to exclude amortization of acquired intangibles $ 0.06 to $ 0.06 Adjustment to exclude restructuring & transition-related expenses $ 0.01 to $ 0.02 ---------------- Non-GAAP expectation for diluted earnings per share $ 0.41 to $ 0.43 ================ Reconciliation of GAAP to Non-GAAP forward-looking guidance range of diluted earnings per share for the twelve months endedNovember 30, 2011 : ---------------- GAAP expectation for diluted earnings per share $ 1.22 to $ 1.32 Adjustment to exclude stock-based compensation $ 0.20 to $ 0.21 Adjustment to exclude amortization of acquired intangibles $ 0.23 to $ 0.23 Adjustment to exclude restructuring & transition-related expenses $ 0.05 to $ 0.08 ---------------- Non-GAAP expectation for diluted earnings per share $ 1.74 to $ 1.80 ================
John Stewart Progress Software Corporation (781) 280-4101 jstewart@progress.comKim Karelis Lewis PR (617) 226-8844 progress@lewispr.comTom Barth VP, Investor Relations 1-781-280-4135 Email: tobarth@progress.com
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