UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 2013
Progress Software Corporation
(Exact name of registrant as specified in its charter)
Commission file number: 0-19417
Massachusetts | 04-2746201 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
14 Oak Park
Bedford, Massachusetts 01730
(Address of principal executive offices, including zip code)
(781) 280-4000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¬ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¬ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¬ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¬ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Section 2 – Financial Information
Item 2.02 Results of Operations and Financial Condition.
On June 26, 2013, Progress Software Corporation issued a press release announcing its financial results for the fiscal second quarter ended May 31, 2013. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.
This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not deemed incorporated by reference into any other filing of the company, whether made before or after the date of this report, regardless of any general incorporation language in the filing.
Discontinued Operations – As previously disclosed, in June 2013, we entered into a definitive agreement to divest our Apama product line. In connection therewith, beginning in the second quarter of fiscal year 2013, our Apama product line qualified for discontinued operations treatment, and is therefore, excluded from our continuing operations for the three and six months ended May 31, 2013 and 2012, respectively. In addition, we have provided supplemental quarterly information for the three months ended February 29, 2012, August 31, 2012, November 30, 2012, and February 28, 2013, respectively, adjusted for the classification of the Apama product line as discontinued operations.
Non-GAAP Financial Measures – We disclosed non-GAAP financial measures in the press release. These non-GAAP measures include expenses, income from operations, income from continuing operations, earnings per share from continuing operations and operating margin. We provide non-GAAP financial measures to enhance the overall understanding of our current financial performance and prospects for the future as well as to enable investors to evaluate our performance in the same way that management does. We use these non-GAAP measures, and we believe that they assist our investors, to make period-to-period comparisons of our operational performance because they provide a view of our operating results without items that are not, in our view, indicative of our core operating results. Management uses these same non-GAAP financial measures to evaluate performance, allocate resources, and determine compensation. These non-GAAP financial measures are also utilized by analysts to calculate consensus estimates. However, non-GAAP information should not be construed as an alternative to GAAP information as the items excluded from the non-GAAP measures often have a material impact on our financial results. Management uses, and investors should consider, non-GAAP measures in conjunction with our GAAP results.
In the noted fiscal periods, we adjusted for the following items from our GAAP financial results to arrive at our non-GAAP financial measures:
• | Amortization of acquired intangibles – In all periods presented, we excluded amortization of acquired intangibles because such expenses are unrelated to our core operating performance and the intangible assets acquired vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses acquired. |
• | Stock-based compensation – In all periods presented, we excluded stock-based compensation to be consistent with the way management and the financial community evaluates our performance and the methods used by analysts to calculate consensus estimates. |
• | Restructuring expenses – In all periods presented, we excluded restructuring expenses incurred because such expenses distort trends and are not part of our core operating results. |
• | Acquisition-related expenses – In the three and six months ended May 31, 2013, we excluded acquisition-related expenses from our acquisition of Rollbase, Inc. because such expenses distort trends and are not part of our operating results. In the three months ended February 29, 2012 and the six months ended May 31, 2012, we excluded acquisition-related expenses from our acquisition of Corticon Technologies, Inc. because such expenses distort trends and are not part of our core operating results. |
• | Litigation settlement – In the three months ended February 29, 2012 and the six months ended May 31, 2012, we excluded the cost to settle an existing patent infringement action brought by JuxtaComm because such expense distorts trends and is not part of our core operating results. |
• | Proxy contest-related costs – In the three and six months ended May 31, 2012, and the three months ended February 29, 2012 and August 31, 2012, respectively, we excluded the costs incurred for legal and other advice associated with our 2012 Annual Meeting of Shareholders. We excluded these costs because they are not part of our core operating results. |
• | Income tax adjustment – In all periods presented, we adjusted our income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above. |
Constant Currency – Revenue from our international operations has historically represented more than half of our total revenue. As a result, our revenue results have been impacted, and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. For example, if the local currencies of our foreign subsidiaries weaken, our consolidated results stated in U.S. dollars are negatively impacted.
As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue growth rates on a constant currency basis helps improve the ability to understand our revenue results and evaluate our performance in comparison to prior periods. The constant currency information presented is calculated by translating current period results using prior period weighted average foreign currency exchange rates. These results should be considered in addition to, not as a substitute for, results reported in accordance with GAAP.
Section 9 – Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit No. | Description | |
99.1 | Press release issued by Progress Software Corporation dated June 26, 2013 | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | June 26, 2013 | Progress Software Corporation | |
By: | /s/ CHRIS E. PERKINS | ||
Chris E. Perkins | |||
Senior Vice President, Finance and Administration and Chief Financial Officer | |||
 | Exhibit 99.1 | |
P R E S S A N N O U N C E M E N T
Investor Contact: | Press Contact: | |
Tom Barth | Rick Lacroix | |
Progress Software | Progress Software | |
+1 781 280 4135 | +1 781 280 4604 | |
tobarth@progress.com | rlacroix@progress.com | |
Progress Software Reports Strong 2013 Fiscal Second Quarter Results
BEDFORD, MA, June 26, 2013 (BUSINESSWIRE) — Progress Software Corporation (NASDAQ: PRGS), a global software company that simplifies and enables the development, deployment and management of business applications, today announced strong results for its fiscal second quarter ended May 31, 2013.
As previously announced on June 13, 2013, the company entered into a definitive purchase and sale agreement to divest the Apama product line. The sale is expected to close in July. As a result, the Apama product line results are reported in discontinued operations for all periods presented.
Revenue from continuing operations was $81.7 million compared to $74.1 million, a year over year increase of 12% on a constant currency basis, or an increase of 10% using actual exchange rates.
Additional financial highlights included:
On a GAAP basis in the fiscal second quarter of 2013:
• | Income from operations was $14.4 million compared to $12.8 million in the same quarter last year; |
• | Income from continuing operations was $8.1 million compared to $8.9 million in the same quarter last year; |
• | Net income was $3.9 million compared to $(1.9) million in the same quarter last year; and |
• | Diluted earnings per share from continuing operations was $0.15 compared to $0.14 in the same quarter last year. |
On a non-GAAP basis in the fiscal second quarter of 2013:
• | Income from operations was $23.7 million compared to $25.2 million in the same quarter last year; |
• | Operating margin was 29% compared to 34% in the same quarter last year; |
• | Income from continuing operations was $15.0 million compared to $17.3 million in the same quarter last year; and |
• | Diluted earnings per share from continuing operations was $0.27 compared to $0.27 in the same quarter last year. |
Phil Pead, President and Chief Executive Officer of Progress Software, said, “Our focus this year has been on improving the operating performance of the company and building a foundation for future revenue growth. We are pleased that we remain on track to achieve efficiencies previously outlined and that revenue growth is beginning to take hold. The second fiscal quarter results reflect our efforts to energize our customer and partner base through improved product functionality and targeted marketing activities. In addition, we benefited from closing a number of opportunities sooner than expected.”
Pead added, “We are now singularly focused on becoming a leader in the application platform as a service market and while our strong second quarter results demonstrate good progress, our opportunities for continued revenue growth in the future will be driven by increasing the investment in our business."
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Other fiscal second quarter 2013 metrics and recent results included:
• | Completion in May 2013 of the previously announced and implemented 10b5-1 plan to repurchase $250.0 million of common stock by June 30, 2013; |
• | Cash, cash equivalents and short-term investments were $255.8 million; |
• | Cash flows from operations were $13.6 million, a decrease from $15.2 million in the same quarter in fiscal year 2012; and |
• | DSO from continuing operations was 56 days, compared to 65 days in the fiscal first quarter of 2013. |
Earlier this month, Progress launched its new Progress Pacific platform. As part of this, Progress acquired Saratoga, CA-based Rollbase, Inc., a privately held platform-as-a-service vendor which provides innovative technology that enables powerful applications to be built using point-and-click, drag-and-drop tools in a standard browser. Also in June, Progress announced OpenEdge 11.3, the latest version of its flagship application development platform. The new version brings together leading business process management (BPM) and business rules management system (BRMS) capabilities to dramatically streamline business processes and accelerate developer productivity.
Supplemental Quarterly Information
In the financial tables at the end of this release, we have provided quarterly Condensed Consolidated Statements of Income adjusted for the classification of the Apama product line to discontinued operations for the three months ended February 29, 2012, August 31, 2012, November 30, 2012 and February 28, 2013, respectively. We have also provided Reconciliations of GAAP to Non-GAAP Financial Measures for the same time periods, also adjusted for the classification of the Apama product line to discontinued operations.
Business Outlook
Progress Software provides the following guidance for the fiscal third quarter ending August 31, 2013:
• | On a constant currency basis, revenue is expected to be between 2% and 4% growth compared to the fiscal third quarter of 2012; and |
• | Non-GAAP operating margin is expected to be in the range of 24% to 26%. |
The non-GAAP operating margin guidance excludes the items we traditionally exclude from our non-GAAP reporting metrics: amortization of intangible assets of $0.8 million, stock-based compensation of $4.5 million to $5.0 million, and $0.7 million of acquisition related costs, for a GAAP operating margin in the range of 16% to 18%.
Conference Call
The Progress Software quarterly investor conference call to review its fiscal second quarter of 2013 will be broadcast live at 5:00 p.m. ET on Wednesday, June 26, 2013 on the investor relations section of the company’s website, located at www.progress.com. Additionally, you can listen to the call by telephone by dialing 1-888-438-5519, pass code 9239124. The conference call will include only brief comments followed by questions and answers. An archived version of the conference call and supporting materials will be available on the Progress Software website within the investor relations section after the live conference call.
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Legal Notice Regarding Non-GAAP Financial Information
Progress Software provides non-GAAP financial information as additional information for investors. These non-GAAP measures are not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). Progress Software believes that the non-GAAP results described in this release are useful for an understanding of its ongoing operations and provide additional detail and an alternative method of assessing its operating results. Management uses these non-GAAP results to compare the company's performance to that of prior periods for analysis of trends and for budget and planning purposes. A reconciliation of non-GAAP adjustments to the company's GAAP financial results is included in the tables below. Additional information regarding the company's non-GAAP financial information is contained in the company's Current Report on Form 8-K filed with the Securities and Exchange Commission in connection with this press release, which is available on the Progress website at www.progress.com within the investor relations section.
Note Regarding Forward-Looking Statements
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Progress has identified some of these forward-looking statements with words like “believe,” “may,” “could,” “would,” “might,” “should,” “expect,” “intend,” “plan,” “target,” “anticipate” and “continue,” the negative of these words, other terms of similar meaning or the use of future dates. Forward-looking statements in this press release include, but are not limited to, statements regarding Progress's strategic plan and its planned product divestiture and return of capital to shareholders; acquisitions; future revenue growth, operating margin and cost savings; product development, strategic partnering and marketing initiatives; the growth rates of certain markets; and other statements regarding the future operation, direction and success of Progress's business. There are a number of factors that could cause actual results or future events to differ materially from those anticipated by the forward-looking statements, including, without limitation:
(1) Market acceptance of Progress's strategic plan and product development initiatives; (2) disruption caused by implementation of the strategic plan on relationships with employees, customers, ISVs, other channel partners, vendors and other business partners; (3) pricing pressures and the competitive environment in the software industry and Platform-as-a-Service market; (4) Progress' ability to complete the proposed divestiture of its Apama product line on a timely basis, if at all; (5) Progress's ability to make technology acquisitions and to realize the expected benefits and anticipated synergies from such acquisitions; (6) the continuing uncertainty in the U.S. and international economies, which could result in fewer sales of Progress's products and may otherwise harm Progress's business; (7) business and consumer use of the Internet and the continuing adoption of Cloud technologies; (8) the receipt and shipment of new orders; (9) Progress's ability to expand its relationships with channel partners and to manage the interaction of channel partners with its direct sales force; (10) the timely release of enhancements to Progress's products and customer acceptance of new products; (11) the positioning of Progress's products in its existing and new markets; (12) variations in the demand for professional services and technical support; (13) Progress's ability to penetrate international markets and manage its international operations; and (14) changes in exchange rates. For further information regarding risks and uncertainties associated with Progress's business, please refer to Progress's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended November 30, 2012 and its Quarterly Report on Form 10-Q for the fiscal quarter ended February 28, 2013. Progress undertakes no obligation to update any forward-looking statements, which speak only as of the date of this press release.
Progress Software Corporation
Progress Software Corporation (NASDAQ: PRGS) is a global software company that simplifies the development, deployment and management of business applications on-premise or in the cloud, on any platform or device, to any data source, with enhanced performance, minimal IT complexity and low total cost of ownership. Progress Software can be reached at www.progress.com or 1-781-280-4000.
Progress is a trademark or registered trademarks of Progress Software Corporation or one of its subsidiaries or affiliates in the U.S. and other countries. Any other trademarks contained herein are the property of their respective owners.
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended | Six Months Ended | ||||||||||||||||||||
(In thousands, except per share data) | May 31, 2013 | May 31, 2012 | % Change | May 31, 2013 | May 31, 2012 | % Change | |||||||||||||||
Revenue: | |||||||||||||||||||||
Software licenses | $ | 29,347 | $ | 20,506 | 43 | % | $ | 59,254 | $ | 50,179 | 18 | % | |||||||||
Maintenance and services | 52,358 | 53,622 | (2 | )% | 106,184 | 106,420 | — | % | |||||||||||||
Total revenue | 81,705 | 74,128 | 10 | % | 165,438 | 156,599 | 6 | % | |||||||||||||
Costs of revenue: | |||||||||||||||||||||
Cost of software licenses | 1,356 | 1,357 | — | % | 3,446 | 2,743 | 26 | % | |||||||||||||
Cost of maintenance and services | 6,990 | 7,114 | (2 | )% | 14,640 | 14,039 | 4 | % | |||||||||||||
Amortization of acquired intangibles | 143 | 139 | 3 | % | 282 | 383 | (26 | )% | |||||||||||||
Total costs of revenue | 8,489 | 8,610 | (1 | )% | 18,368 | 17,165 | 7 | % | |||||||||||||
Gross profit | 73,216 | 65,518 | 12 | % | 147,070 | 139,434 | 5 | % | |||||||||||||
Operating expenses: | |||||||||||||||||||||
Sales and marketing | 25,890 | 19,373 | 34 | % | 54,532 | 42,115 | 29 | % | |||||||||||||
Product development | 14,671 | 10,387 | 41 | % | 28,293 | 20,699 | 37 | % | |||||||||||||
General and administrative | 14,064 | 18,014 | (22 | )% | 28,730 | 33,414 | (14 | )% | |||||||||||||
Amortization of acquired intangibles | 167 | 208 | (20 | )% | 338 | 415 | (19 | )% | |||||||||||||
Restructuring expenses | 2,766 | 4,736 | (42 | )% | 3,726 | 4,736 | (21 | )% | |||||||||||||
Acquisition-related expenses | 1,272 | — | 100 | % | 1,272 | 215 | 492 | % | |||||||||||||
Total operating expenses | 58,830 | 52,718 | 12 | % | 116,891 | 101,594 | 15 | % | |||||||||||||
Income from operations | 14,386 | 12,800 | 12 | % | 30,179 | 37,840 | (20 | )% | |||||||||||||
Other (expense) income, net | (292 | ) | 249 | (217 | )% | (840 | ) | 519 | (262 | )% | |||||||||||
Income from continuing operations before income taxes | 14,094 | 13,049 | 8 | % | 29,339 | 38,359 | (24 | )% | |||||||||||||
Provision for income taxes | 5,952 | 4,194 | 42 | % | 11,384 | 13,644 | (17 | )% | |||||||||||||
Income from continuing operations | 8,142 | 8,855 | (8 | )% | 17,955 | 24,715 | (27 | )% | |||||||||||||
Income (loss) from discontinued operations, net | (4,232 | ) | (10,763 | ) | 61 | % | 17,073 | (19,134 | ) | 189 | % | ||||||||||
Net income | $ | 3,910 | $ | (1,908 | ) | 305 | % | $ | 35,028 | $ | 5,581 | 528 | % | ||||||||
Earnings per share: | |||||||||||||||||||||
Basic: | |||||||||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.14 | 7 | % | $ | 0.32 | $ | 0.39 | (18 | )% | |||||||||
Discontinued operations | (0.08 | ) | (0.17 | ) | 53 | % | 0.30 | (0.31 | ) | 197 | % | ||||||||||
Net income per share | $ | 0.07 | $ | (0.03 | ) | 333 | % | 0.62 | $ | 0.09 | 589 | % | |||||||||
Diluted: | |||||||||||||||||||||
Continuing operations | $ | 0.15 | $ | 0.14 | 7 | % | $ | 0.31 | $ | 0.39 | (21 | )% | |||||||||
Discontinued operations | (0.08 | ) | (0.17 | ) | 53 | % | 0.30 | (0.30 | ) | 200 | % | ||||||||||
Net income per share | $ | 0.07 | $ | (0.03 | ) | 333 | % | $ | 0.61 | $ | 0.09 | 578 | % | ||||||||
Weighted average shares outstanding: | |||||||||||||||||||||
Basic | 54,919 | 63,051 | (13 | )% | 56,410 | 62,598 | (10 | )% | |||||||||||||
Diluted | 55,736 | 63,051 | (12 | )% | 57,244 | 63,641 | (10 | )% | |||||||||||||
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CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) | May 31, 2013 | November 30, 2012 | |||||
Assets | |||||||
Current assets: | |||||||
Cash, cash equivalents and short-term investments | $ | 255,804 | $ | 355,217 | |||
Accounts receivable, net | 50,772 | 70,793 | |||||
Other current assets | 40,036 | 32,779 | |||||
Assets held for sale | 11,236 | 68,029 | |||||
Total current assets | 357,848 | 526,818 | |||||
Property and equipment, net | 59,352 | 63,071 | |||||
Goodwill and intangible assets, net | 235,870 | 231,229 | |||||
Other assets | 58,023 | 63,859 | |||||
Total assets | $ | 711,093 | $ | 884,977 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable and other current liabilities | $ | 59,281 | $ | 110,944 | |||
Short-term deferred revenue | 102,094 | 103,925 | |||||
Liabilities held for sale | 4,012 | 25,285 | |||||
Total current liabilities | 165,387 | 240,154 | |||||
Long-term deferred revenue | 1,293 | 2,817 | |||||
Other long-term liabilities | 2,175 | 3,607 | |||||
Shareholders’ equity: | |||||||
Common stock and additional paid-in capital | 232,838 | 300,333 | |||||
Retained earnings | 309,400 | 338,066 | |||||
Total shareholders’ equity | 542,238 | 638,399 | |||||
Total liabilities and shareholders’ equity | $ | 711,093 | $ | 884,977 | |||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended | Six Months Ended | ||||||||||||||
(In thousands) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
Cash flows from operating activities: | |||||||||||||||
Net income | $ | 3,910 | $ | (1,908 | ) | $ | 35,028 | $ | 5,581 | ||||||
Depreciation and amortization | 4,076 | 8,417 | 7,477 | 16,979 | |||||||||||
Stock-based compensation | 5,881 | 6,669 | 10,787 | 13,760 | |||||||||||
Net gains on sales of dispositions | — | — | (35,106 | ) | — | ||||||||||
Other non-cash adjustments | 726 | 644 | (2,201 | ) | 1,003 | ||||||||||
Changes in operating assets and liabilities | (952 | ) | 1,338 | (27,403 | ) | 16,366 | |||||||||
Net cash flows from operating activities | 13,641 | 15,160 | (11,418 | ) | 53,689 | ||||||||||
Capital expenditures | (1,488 | ) | (2,199 | ) | (2,386 | ) | (6,141 | ) | |||||||
Redemptions and sales of auction-rate-securities | — | — | 25 | 225 | |||||||||||
Issuances of common stock, net of repurchases | (64,025 | ) | 6,514 | (144,094 | ) | 20,487 | |||||||||
Payments for acquisitions, net of cash acquired | (9,450 | ) | — | (9,450 | ) | — | |||||||||
Proceeds from divestitures, net | — | — | 73,381 | — | |||||||||||
Other | (4,249 | ) | (6,391 | ) | (5,471 | ) | (1,428 | ) | |||||||
Net change in cash, cash equivalents and short-term investments | (65,571 | ) | 13,084 | (99,413 | ) | 66,832 | |||||||||
Cash, cash equivalents and short-term investments, beginning of period | 321,375 | 315,164 | 355,217 | 261,416 | |||||||||||
Cash, cash equivalents and short-term investments, end of period | $ | 255,804 | $ | 328,248 | $ | 255,804 | $ | 328,248 | |||||||
SUPPLEMENTAL INFORMATION
Revenue from continuing operations by Type | |||||||||||||||||||||||||||||||
(In thousands) | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | YTD 2013 | YTD 2012 | |||||||||||||||||||||||
License | $ | 29,673 | $ | 20,506 | $ | 22,637 | $ | 33,810 | $ | 29,907 | $ | 29,347 | $ | 59,254 | $ | 50,179 | |||||||||||||||
Maintenance | 50,165 | 51,350 | 50,285 | 50,891 | 51,456 | 50,419 | 101,875 | 101,515 | |||||||||||||||||||||||
Professional services | 2,633 | 2,272 | 1,449 | 1,941 | 2,370 | 1,939 | 4,309 | 4,905 | |||||||||||||||||||||||
Total revenue | $ | 82,471 | $ | 74,128 | $ | 74,371 | $ | 86,642 | $ | 83,733 | $ | 81,705 | $ | 165,438 | $ | 156,599 | |||||||||||||||
Revenue from continuing operations by Region | |||||||||||||||||||||||||||||||
(In thousands) | Q1 2012 | Q2 2012 | Q3 2012 | Q4 2012 | Q1 2013 | Q2 2013 | YTD 2013 | YTD 2012 | |||||||||||||||||||||||
North America | $ | 36,742 | $ | 32,190 | $ | 34,548 | $ | 39,179 | $ | 39,309 | $ | 37,540 | $ | 76,849 | $ | 68,932 | |||||||||||||||
EMEA | 33,508 | 30,689 | 28,155 | 33,214 | 32,548 | 33,481 | 66,029 | 64,197 | |||||||||||||||||||||||
Latin America | 7,386 | 6,660 | 6,905 | 7,384 | 6,822 | 6,526 | 13,348 | 14,046 | |||||||||||||||||||||||
Asia Pacific | 4,835 | 4,589 | 4,763 | 6,865 | 5,054 | 4,158 | 9,212 | 9,424 | |||||||||||||||||||||||
Total revenue | $ | 82,471 | $ | 74,128 | $ | 74,371 | $ | 86,642 | $ | 83,733 | $ | 81,705 | $ | 165,438 | $ | 156,599 | |||||||||||||||
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RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
Three Months Ended | Six Months Ended | ||||||||||||||
(In thousands, except per share data) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
GAAP income from operations | $ | 14,386 | $ | 12,800 | $ | 30,179 | $ | 37,840 | |||||||
GAAP operating margin | 18 | % | 17 | % | 18 | % | 24 | % | |||||||
Amortization of acquired intangibles | 310 | 347 | 620 | 798 | |||||||||||
Stock-based compensation (1) | 4,981 | 4,581 | 9,470 | 9,299 | |||||||||||
Restructuring expenses | 2,766 | 4,736 | 3,726 | 4,736 | |||||||||||
Acquisition-related expenses | 1,272 | — | 1,272 | 215 | |||||||||||
Litigation settlement | — | — | — | 900 | |||||||||||
Proxy contest-related costs | — | 2,766 | — | 3,238 | |||||||||||
Total operating adjustments | 9,329 | 12,430 | 15,088 | 19,186 | |||||||||||
Non-GAAP income from operations | $ | 23,715 | $ | 25,230 | $ | 45,267 | $ | 57,026 | |||||||
Non-GAAP operating margin | 29 | % | 34 | % | 27 | % | 36 | % | |||||||
GAAP income from continuing operations | $ | 8,142 | $ | 8,855 | $ | 17,955 | $ | 24,715 | |||||||
Operating adjustments (from above) | 9,329 | 12,430 | 15,088 | 19,186 | |||||||||||
Income tax adjustment | (2,464 | ) | (3,959 | ) | (4,169 | ) | (4,770 | ) | |||||||
Total income from continuing operations adjustments | 6,865 | 8,471 | 10,919 | 14,416 | |||||||||||
Non-GAAP income from continuing operations | $ | 15,007 | $ | 17,326 | $ | 28,874 | $ | 39,131 | |||||||
GAAP diluted earnings per share from continuing operations | $ | 0.15 | $ | 0.14 | $ | 0.31 | $ | 0.39 | |||||||
Income from continuing operations adjustments (from above) | 0.12 | 0.13 | 0.19 | 0.23 | |||||||||||
Non-GAAP diluted earnings per share from continuing operations | $ | 0.27 | $ | 0.27 | $ | 0.50 | $ | 0.61 | |||||||
Diluted weighted average shares outstanding | 55,736 | 63,051 | 57,244 | 63,641 | |||||||||||
(1) Stock-based compensation is included in the GAAP statements of income, as follows: | |||||||||||||||
Cost of revenue | $ | 158 | $ | 204 | $ | 367 | $ | 432 | |||||||
Sales and marketing | 881 | 892 | 1,920 | 2,147 | |||||||||||
Product development | 1,225 | 703 | 2,688 | 1,514 | |||||||||||
General and administrative | 2,717 | 2,782 | 4,495 | 5,206 | |||||||||||
Stock-based compensation from continuing operations | $ | 4,981 | $ | 4,581 | $ | 9,470 | $ | 9,299 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(In thousands, except per share data) | May 31, 2013 | May 31, 2012 | May 31, 2013 | May 31, 2012 | |||||||||||
GAAP costs of revenue | $ | 8,489 | $ | 8,610 | $ | 18,368 | $ | 17,165 | |||||||
GAAP operating expenses | 58,830 | 52,718 | 116,891 | 101,594 | |||||||||||
GAAP expenses | 67,319 | 61,328 | 135,259 | 118,759 | |||||||||||
Operating adjustments (from above) | 9,329 | 12,430 | 15,088 | 19,186 | |||||||||||
Non-GAAP expenses | $ | 57,990 | $ | 48,898 | $ | 120,171 | $ | 99,573 | |||||||
7
SUPPLEMENTAL QUARTERLY INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (2)
Three Months Ended | |||||||||||||||
(In thousands, except per share data) | February 29, 2012 | August 31, 2012 | November 30, 2012 | February 28, 2013 | |||||||||||
Revenue: | |||||||||||||||
Software licenses | $ | 29,673 | $ | 22,637 | $ | 33,810 | $ | 29,907 | |||||||
Maintenance and services | 52,798 | 51,734 | 52,832 | 53,826 | |||||||||||
Total revenue | 82,471 | 74,371 | 86,642 | 83,733 | |||||||||||
Costs of revenue: | |||||||||||||||
Cost of software licenses | 1,385 | 1,375 | 1,659 | 2,090 | |||||||||||
Cost of maintenance and services | 6,925 | 7,974 | 7,865 | 7,650 | |||||||||||
Amortization of acquired intangibles | 244 | 139 | 138 | 139 | |||||||||||
Total costs of revenue | 8,554 | 9,488 | 9,662 | 9,879 | |||||||||||
Gross profit | 73,917 | 64,883 | 76,980 | 73,854 | |||||||||||
Operating expenses: | |||||||||||||||
Sales and marketing | 22,742 | 24,970 | 31,753 | 28,642 | |||||||||||
Product development | 10,312 | 12,631 | 11,113 | 13,622 | |||||||||||
General and administrative | 15,400 | 14,375 | 14,200 | 14,666 | |||||||||||
Amortization of acquired intangibles | 207 | 207 | 198 | 171 | |||||||||||
Restructuring expenses | — | 1,411 | 1,057 | 960 | |||||||||||
Acquisition-related expenses | 215 | — | — | — | |||||||||||
Total operating expenses | 48,876 | 53,594 | 58,321 | 58,061 | |||||||||||
Income from operations | 25,041 | 11,289 | 18,659 | 15,793 | |||||||||||
Other (expense) income, net | 270 | 357 | (680 | ) | (548 | ) | |||||||||
Income from continuing operations before income taxes | 25,311 | 11,646 | 17,979 | 15,245 | |||||||||||
Provision for income taxes | 9,450 | 3,902 | 5,485 | 5,432 | |||||||||||
Income from continuing operations | 15,861 | 7,744 | 12,494 | 9,813 | |||||||||||
Income (loss) from discontinued operations, net | (8,372 | ) | (1,906 | ) | 23,531 | 21,305 | |||||||||
Net income | $ | 7,489 | $ | 5,838 | $ | 36,025 | $ | 31,118 | |||||||
Earnings per share: | |||||||||||||||
Basic: | |||||||||||||||
Continuing operations | $ | 0.26 | $ | 0.12 | $ | 0.20 | $ | 0.17 | |||||||
Discontinued operations | (0.13 | ) | (0.03 | ) | 0.37 | 0.37 | |||||||||
Net income per share | $ | 0.12 | $ | 0.09 | 0.57 | $ | 0.54 | ||||||||
Diluted: | |||||||||||||||
Continuing operations | $ | 0.25 | $ | 0.12 | $ | 0.20 | $ | 0.17 | |||||||
Discontinued operations | (0.13 | ) | (0.03 | ) | 0.37 | 0.36 | |||||||||
Net income per share | $ | 0.12 | $ | 0.09 | $ | 0.57 | $ | 0.53 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 62,145 | 63,469 | 62,859 | 57,901 | |||||||||||
Diluted | 63,130 | 64,105 | 63,576 | 58,752 | |||||||||||
(2) As adjusted to reflect the classification of the Apama product line as discontinued operations. | |||||||||||||||
8
SUPPLEMENTAL QUARTERLY INFORMATION
RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES (2)
Three Months Ended | |||||||||||||||
(In thousands, except per share data) | February 29, 2012 | August 31, 2012 | November 30, 2012 | February 28, 2013 | |||||||||||
GAAP income from operations | $ | 25,041 | $ | 11,289 | $ | 18,659 | $ | 15,793 | |||||||
GAAP operating margin | 30 | % | 15 | % | 22 | % | 19 | % | |||||||
Amortization of acquired intangibles | 451 | 346 | 336 | 310 | |||||||||||
Stock-based compensation (3) | 4,718 | 4,759 | 4,103 | 4,489 | |||||||||||
Restructuring expenses | — | 1,411 | 1,057 | 960 | |||||||||||
Acquisition-related expenses | 215 | — | — | — | |||||||||||
Litigation settlement | 900 | — | — | — | |||||||||||
Proxy contest-related costs | 472 | 21 | — | — | |||||||||||
Total operating adjustments | 6,756 | 6,537 | 5,496 | 5,759 | |||||||||||
Non-GAAP income from operations | $ | 31,797 | $ | 17,826 | $ | 24,155 | $ | 21,552 | |||||||
Non-GAAP operating margin | 39 | % | 24 | % | 28 | % | 26 | % | |||||||
GAAP income from continuing operations | $ | 15,861 | $ | 7,744 | $ | 12,494 | $ | 9,813 | |||||||
Operating adjustments (from above) | 6,756 | 6,537 | 5,496 | 5,759 | |||||||||||
Income tax adjustment | (811 | ) | (1,916 | ) | (2,027 | ) | (1,705 | ) | |||||||
Total income from continuing operations adjustments | 5,945 | 4,621 | 3,469 | 4,054 | |||||||||||
Non-GAAP income from continuing operations | $ | 21,806 | $ | 12,365 | $ | 15,963 | $ | 13,867 | |||||||
GAAP diluted earnings per share from continuing operations | $ | 0.25 | $ | 0.12 | $ | 0.20 | $ | 0.17 | |||||||
Income from continuing operations adjustments (from above) | 0.09 | 0.07 | 0.05 | 0.07 | |||||||||||
Non-GAAP diluted earnings per share from continuing operations | $ | 0.35 | $ | 0.19 | $ | 0.25 | $ | 0.24 | |||||||
Diluted weighted average shares outstanding | 63,130 | 64,105 | 63,576 | 58,752 | |||||||||||
(3) Stock-based compensation is included in the GAAP statements of income, as follows: | |||||||||||||||
Cost of revenue | $ | 228 | $ | 157 | $ | 145 | $ | 209 | |||||||
Sales and marketing | 1,255 | 701 | 426 | 1,039 | |||||||||||
Product development | 811 | 861 | 795 | 1,463 | |||||||||||
General and administrative | 2,424 | 3,040 | 2,737 | 1,778 | |||||||||||
Stock-based compensation from continuing operations | $ | 4,718 | $ | 4,759 | $ | 4,103 | $ | 4,489 | |||||||
Three Months Ended | |||||||||||||||
(In thousands, except per share data) | February 29, 2012 | August 31, 2012 | November 30, 2012 | February 28, 2013 | |||||||||||
GAAP costs of revenue | $ | 8,554 | $ | 9,488 | $ | 9,662 | $ | 9,879 | |||||||
GAAP operating expenses | 48,876 | 53,594 | 58,321 | 58,061 | |||||||||||
GAAP expenses | 57,430 | 63,082 | 67,983 | 67,940 | |||||||||||
Operating adjustments (from above) | 6,756 | 6,537 | 5,496 | 5,759 | |||||||||||
Non-GAAP expenses | $ | 50,674 | $ | 56,545 | $ | 62,487 | $ | 62,181 | |||||||
(2) As adjusted to reflect the classification of the Apama product line as discontinued operations. | |||||||||||||||
9