Massachusetts | 04-2746201 | |
(State or other jurisdiction of | (I.R.S. employer | |
incorporation or organization) | identification no.) |
Item 2.02 Results of Operations and Financial Condition | ||||||||
Item 9.01 Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EX-99.1 Press Release dated June 18, 2009 |
99.1 | Press Release dated June 18, 2009 |
Date: June 18, 2009 | Progress Software Corporation |
|||
By: | /s/ Norman R. Robertson | |||
Senior Vice President, Finance | ||||
and Administration and Chief Financial Officer | ||||
John Stewart
|
Claire Rowberry | |
Progress Software Corporation
|
Lewis PR | |
(781) 280-4101
|
(617) 226-8841 | |
jstewart@progress.com
|
progress@lewispr.com |
| On March 29, 2009, Rick Reidy was appointed President and Chief Executive Officer of Progress Software. Mr. Reidy succeeds Joseph W. Alsop, who co-founded the company in 1981. As President and Chief Executive Officer, Mr. Reidy is responsible for the strategic direction and day-to-day operations of Progress Software (http://www.progress.com/reidy). | ||
| Sabre Holdings selected the Progress FUSE open source product family to become their enterprise standard ESB. Sabre Holdings, whose businesses include Travelocity, Sabre Travel Network and Sabre Airline Solutions, will deploy FUSE as part of their underlying technology to ensure they maintain continuous uptime and customer ease of use within their integration platform (http://www.progress.com/sabre). | ||
| The latest release of the Progress® Actional® 8.0 Enterprise product was announced. The Actional 8.0 Enterprise product includes more than 20 new features that allow businesses to monitor and govern their interconnected services and applications. The product delivers business transaction assurance by providing full design-time to run-time application lifecycle validation, execution-time visibility and control for distributed applications. By using the Actional product, businesses can avoid losing a single important transaction (http://www.progress.com/actional8). | ||
| A hosted version of the Progress Apama® Algorithmic Trading Platform is to be co-located in New Jersey with the eSpeed® Fixed Income trading platform and offered by BGC Partners, Inc. (NASDAQ: BGCP). This offering provides off-the-shelf, low latency, alpha seeking trading for fixed income and futures traders. Traders can now automate their trading strategies quickly with minimal up-front investment of time and resources (http://www.progress.com/apama+bgc). | ||
| The Progress Actional product family was positioned in the leaders quadrant of the March 2009 Gartner Magic Quadrant for Integrated SOA Governance Technology Sets (http://www.progress.com/actional+mq). | ||
| For the eighth consecutive year, DataDirect Technologies was recognized for customer satisfaction excellence. Omega Management Group Corp. awarded the Northface Scoreboard AwardSM that is presented annually to companies, who are rated by their own customers, achieved excellence in customer satisfaction during the prior calendar year (www.progresscom/datadirectsatisfaction). | ||
| The latest release of the Progress Apama Complex Event Processing (CEP) platform was launched with an enhanced Parallel Correlator that delivers significantly superior complex event processing performance by providing developers and business users with unprecedented speed and greater event throughput, resulting in improved real-time visibility and operational responsiveness (http://www.progress.com/apamacep). |
| 3 Italia, the leading 3G provider in Italy, chose the Progress® Apama® Complex Event Processing (CEP) platform to provide real-time visibility and operational responsiveness into its service and billing process (http://www.progress.com/3italia). | ||
| Progress Software announced that Finabank Corretora de Títulos e Valores Mobiliários (Finabank) has deployed the Progress Apama Algorithmic Trading Accelerator to supply its buy-side clients with a new platform for alpha-seeking, statistical arbitrage trading strategies and low latency trading execution. Finabank clients will use the Progress Apama platform to trade on Brazils BM&F Bovespa, the São Paulo Equities and Futures Exchange (http://www.progress.com/finabank). | ||
| Progress Software won two ACORD 2009 Accomplishment Awards the Innovative Implementation Award and the Early Adopter Award from the use of the Progress® DataXtend® Semantic Integrator (SI) product in the insurance industry. The Innovative Implementation Award was given for the companys creation of its Progress DataXtend Browser for ACORD that helps ACORD members view and navigate the Property & Casualty/Surety and Life, Annuity & Health XML standards. Additionally, Progress earned the Early Adopter award for their work in supporting the development of unambiguous mappings between the new ACORD Information Model and its existing XML standards (http://www.progress.com/acord). | ||
| Pensions and investment provider, Scottish Widows, chose an integration suite from Progress Software comprising the Progress® Sonic® ESB (enterprise service bus) to combine and manage its information assets, the DataDirect® Shadow® Mainframe Integration product to provide comprehensive integration with its mainframe server, and the Progress Actional® Web Services and SOA Management product family to provide management and governance of its business transformation infrastructure (http://www.progress.com/widows). | ||
| Progress Software expanded its reach into Central Eastern Europe (CEE), the Commonwealth of Independent States (CIS) and the Middle East with its Apama capital markets platform. Having established the footprint of Apama products successfully in Latin America and Asia Pacific in recent years, it became an opportune time to engage with new markets. The move comes in response to an increase in activities of existing Progress Apama clients within these regions, and the wealth of new opportunities for electronic trading, risk management and surveillance as these markets develop (http://www.progress.com/apamaexpands). |
| GAAP revenue is expected to be in the range of $492 million to $502 million. | ||
| On a non-GAAP basis, revenue is expected to be in the range of $495 million to $505 million. | ||
| GAAP diluted earnings per share are expected to be in the range of 77 cents to 86 cents. | ||
| On a non-GAAP basis, diluted earnings per share are expected to be in the range of $1.72 to $1.81. |
| GAAP revenue is expected to be in the range of $120 million to $123 million. | ||
| On a non-GAAP basis, revenue is also expected to be in the range of $120 million to $123 million. | ||
| GAAP diluted earnings per share are expected to be in the range of 17 cents to 20 cents. | ||
| On a non-GAAP basis, diluted earnings per share are expected to be in the range of 38 cents to 41 cents. |
Three Months Ended | ||||||||||||
May 31, | May 31, | Percent | ||||||||||
(In thousands except per share data) | 2009 | 2008 | Change | |||||||||
Revenue: |
||||||||||||
Software licenses |
$ | 38,513 | $ | 45,015 | (14 | )% | ||||||
Maintenance and services |
78,534 | 82,927 | (5 | )% | ||||||||
Total revenue |
117,047 | 127,942 | (9 | )% | ||||||||
Costs of revenue: |
||||||||||||
Cost of software licenses |
1,527 | 2,164 | (29 | )% | ||||||||
Cost of maintenance and services |
15,997 | 17,715 | (10 | )% | ||||||||
Amortization of purchased technology |
5,069 | 2,817 | 80 | % | ||||||||
Total costs of revenue |
22,593 | 22,696 | 0 | % | ||||||||
Gross profit |
94,454 | 105,246 | (10 | )% | ||||||||
Operating expenses: |
||||||||||||
Sales and marketing |
43,505 | 48,158 | (10 | )% | ||||||||
Product development |
23,023 | 20,530 | 12 | % | ||||||||
General and administrative |
13,831 | 14,605 | (5 | )% | ||||||||
Amortization of other acquired intangibles |
2,474 | 1,349 | 83 | % | ||||||||
Acquisition-related expenses |
110 | | ||||||||||
Restructuring expense |
(30 | ) | | |||||||||
Total operating expenses |
82,913 | 84,642 | (2 | )% | ||||||||
Income from operations |
11,541 | 20,604 | (44 | )% | ||||||||
Other income, net |
(460 | ) | 2,185 | (121 | )% | |||||||
Income before provision for income taxes |
11,081 | 22,789 | (51 | )% | ||||||||
Provision for income taxes |
4,175 | 8,318 | (50 | )% | ||||||||
Net income |
$ | 6,906 | $ | 14,471 | (52 | )% | ||||||
Earnings per share: |
||||||||||||
Basic |
$ | 0.17 | $ | 0.35 | (51 | )% | ||||||
Diluted |
$ | 0.17 | $ | 0.33 | (48 | )% | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
39,997 | 41,483 | (4 | )% | ||||||||
Diluted |
40,697 | 43,238 | (6 | )% | ||||||||
Six Months Ended | ||||||||||||||
May 31, | May 31, | Percent | ||||||||||||
2009 | 2008 | Change | ||||||||||||
Revenue: |
||||||||||||||
Software licenses |
$ | 84,365 | $ | 90,117 | (6 | )% | ||||||||
Maintenance and services |
153,542 | 159,392 | (4 | )% | ||||||||||
Total revenue |
237,907 | 249,509 | (5 | )% | ||||||||||
Costs of revenue: |
||||||||||||||
Cost of software licenses |
3,844 | 4,460 | (14 | )% | ||||||||||
Cost of maintenance and services |
33,330 | 35,356 | (6 | )% | ||||||||||
Amortization of purchased technology |
9,797 | 5,490 | 78 | % | ||||||||||
Total costs of revenue |
46,971 | 45,306 | 4 | % | ||||||||||
Gross profit |
190,936 | 204,203 | (6 | )% | ||||||||||
Operating expenses: |
||||||||||||||
Sales and marketing |
87,820 | 94,000 | (7) | % | ||||||||||
Product development |
47,942 | 41,223 | 16 | % | ||||||||||
General and administrative |
28,406 | 28,505 | 0 | % | ||||||||||
Amortization of other acquired intangibles |
4,840 | 2,723 | 78 | % | ||||||||||
Acquisition-related expenses |
220 | | ||||||||||||
Restructuring expense |
5,448 | | ||||||||||||
Total operating expenses |
174,676 | 166,451 | 5 | % | ||||||||||
Income from operations |
16,260 | 37,752 | (57 | )% | ||||||||||
Other income, net |
769 | 5,251 | (85 | )% | ||||||||||
Income before provision for income taxes |
17,029 | 43,003 | (60 | )% | ||||||||||
Provision for income taxes |
6,471 | 15,696 | (59 | )% | ||||||||||
Net income |
$ | 10,558 | $ | 27,307 | (61 | )% | ||||||||
Earnings per share: |
||||||||||||||
Basic |
$ | 0.26 | $ | 0.65 | (60 | )% | ||||||||
Diluted |
$ | 0.26 | $ | 0.62 | (58 | )% | ||||||||
Weighted average shares outstanding: |
||||||||||||||
Basic |
39,969 | 41,861 | (5 | )% | ||||||||||
Diluted |
40,609 | 43,706 | (7 | )% | ||||||||||
Three Months Ended May 31, 2009 | Three Months Ended May 31, 2008 | |||||||||||||||||||||||||||
As | As | Percent | ||||||||||||||||||||||||||
(In thousands except per share data) | Reported | Adjustments | Non-GAAP | Reported | Adjustments | Non-GAAP | Change | |||||||||||||||||||||
Total revenue |
$ | 117,047 | $ | 695 | $ | 117,742 | $ | 127,942 | $ | | $ | 127,942 | (8) | % | ||||||||||||||
Purchase accounting adjustments for deferre drevenue(1) |
(695 | ) | 695 | | | |||||||||||||||||||||||
Income from operations |
$ | 11,541 | $ | 12,737 | $ | 24,278 | $ | 20,604 | $ | 8,543 | $ | 29,147 | (17) | % | ||||||||||||||
Purchase accounting adjustments for deferred revenue (1) |
(695 | ) | 695 | | | |||||||||||||||||||||||
Amortization of acquired intangibles |
(7,543 | ) | 7,543 | | (4,166 | ) | 4,166 | | ||||||||||||||||||||
Acquisition-related expenses |
(110 | ) | 110 | | | |||||||||||||||||||||||
Restructuring expense |
30 | (30 | ) | | | |||||||||||||||||||||||
Stock option investigation(2) |
(170 | ) | 170 | | (267 | ) | 267 | | ||||||||||||||||||||
Stock-based compensation(3) |
(4,249 | ) | 4,249 | | (4,110 | ) | 4,110 | | ||||||||||||||||||||
Operating margin percentage |
9.9 | % | 20.6 | % | 16.1 | % | 22.8 | % | ||||||||||||||||||||
Other income, net |
$ | (460 | ) | $ | | $ | (460 | ) | $ | 2,185 | $ | | $ | 2,185 | (121) | % | ||||||||||||
Effect on provision for income taxes from above adjustments (4) |
$ | 4,175 | $ | 3,587 | $ | 7,762 | $ | 8,318 | $ | 2,648 | $ | 10,966 | (29) | % | ||||||||||||||
Net income |
$ | 6,906 | $ | 9,150 | $ | 16,056 | $ | 14,471 | $ | 5,895 | $ | 20,366 | (21) | % | ||||||||||||||
Earnings per share diluted |
$ | 0.17 | $ | 0.39 | $ | 0.33 | $ | 0.47 | (17) | % | ||||||||||||||||||
Weighted average shares outstanding diluted |
40,697 | 40,697 | 43,238 | 43,238 | (6) | % |
Six Months Ended May 31, 2009 | Six Months Ended May 31, 2008 | |||||||||||||||||||||||||||
As | As | Percent | ||||||||||||||||||||||||||
Reported | Adjustments | Non-GAAP | Reported | Adjustments | Non-GAAP | Change | ||||||||||||||||||||||
Total revenue |
$ | 237,907 | 2,243 | $ | 240,150 | $ | 249,509 | | $ | 249,509 | (4 | )% | ||||||||||||||||
Purchase accounting adjustments for deferred revenue(1) |
(2,243 | ) | 2,243 | | | |||||||||||||||||||||||
Income from operations |
$ | 16,260 | $ | 30,814 | $ | 47,074 | $ | 37,752 | $ | 16,889 | $ | 54,641 | (14 | )% | ||||||||||||||
Purchase accounting adjustments for deferred revenue(1) |
(2,243 | ) | 2,243 | | | |||||||||||||||||||||||
Amortization of acquired intangibles |
(14,637 | ) | 14,637 | | (8,213 | ) | 8,213 | | ||||||||||||||||||||
Acquisition-related expenses |
(220 | ) | 220 | | | |||||||||||||||||||||||
Restructuring expense |
(5,448 | ) | 5,448 | | | |||||||||||||||||||||||
Stock option investigation(2) |
(201 | ) | 201 | | (596 | ) | 596 | | ||||||||||||||||||||
Stock-based compensation(3) |
(8,065 | ) | 8,065 | | (8,080 | ) | 8,080 | | ||||||||||||||||||||
Operating margin percentage |
6.8 | % | 19.6 | % | 15.1 | % | 21.9 | % | (10 | )% | ||||||||||||||||||
Other income, net |
$ | 769 | $ | | $ | 769 | $ | 5,251 | $ | | $ | 5,251 | (85 | )% | ||||||||||||||
Effect on provision for income taxes from above adjustments (4) |
$ | 6,471 | $ | 9,556 | $ | 16,027 | $ | 15,696 | $ | 5,266 | $ | 20,962 | (24 | )% | ||||||||||||||
Net income |
$ | 10,558 | $ | 21,258 | $ | 31,816 | $ | 27,307 | $ | 11,623 | $ | 38,930 | (18 | )% | ||||||||||||||
Earnings per share diluted |
$ | 0.26 | $ | 0.78 | $ | 0.62 | $ | 0.89 | (12 | )% | ||||||||||||||||||
Weighted average shares outstanding diluted |
40,609 | 40,609 | 43,706 | 43,706 | (7 | )% |
(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 revenue of Iona Technologies at the date of the acquisition. | |
(2) | Stock option investigation expenses are included within general and administrative expenses and primarily represent professional services fees associated with the SECs investigation and shareholder derivative lawsuits related to the companys historical stock option grant practices. | |
(3) | Stock-based compensation expense, representing the fair value of equity awards under SFAS 123R, is included in the following GAAP operating expenses: |
Three Months Ended May 31, 2009 | Three Months Ended May 31, 2008 | |||||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||
Cost of software licenses |
$ | 8 | $ | (8 | ) | $ | | $ | 13 | $ | (13 | ) | $ | | ||||||||||
Cost of maintenance and services |
231 | (231 | ) | | 226 | (226 | ) | | ||||||||||||||||
Sales and marketing |
1,398 | (1,398 | ) | | 1,419 | (1,419 | ) | | ||||||||||||||||
Product development |
1,003 | (1,003 | ) | | 937 | (937 | ) | | ||||||||||||||||
General and administrative |
1,609 | (1,609 | ) | | 1,515 | (1,515 | ) | | ||||||||||||||||
$ | 4,249 | $ | (4,249 | ) | $ | | $ | 4,110 | $ | (4,110 | ) | $ | | |||||||||||
Six Months Ended May 31, 2009 | Six Months Ended May 31, 2008 | |||||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||
Cost of software licenses |
$ | 20 | $ | (20 | ) | $ | | $ | 35 | $ | (35 | ) | $ | | ||||||||||
Cost of maintenance and services |
468 | (468 | ) | | 493 | (493 | ) | | ||||||||||||||||
Sales and marketing |
2,886 | (2,886 | ) | | 2,850 | (2,850 | ) | | ||||||||||||||||
Product development |
1,947 | (1,947 | ) | | 1,856 | (1,856 | ) | | ||||||||||||||||
General and administrative |
2,744 | (2,744 | ) | | 2,846 | (2,846 | ) | | ||||||||||||||||
$ | 8,065 | $ | (8,065 | ) | $ | | $ | 8,080 | $ | (8,080 | ) | $ | | |||||||||||
(4) | The non-GAAP provision for income taxes was calculated reflecting an effective rate of 32.6% and 33.5% for the three months and six months ended May 31, 2009, respectively, and 35.0% for the three and six months ended May 31, 2008. 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. |
May 31, | November 30, | |||||||
(In thousands) | 2009 | 2008 | ||||||
Assets |
||||||||
Cash and short-term investments |
$ | 148,735 | $ | 118,529 | ||||
Accounts receivable, net |
88,880 | 94,795 | ||||||
Other current assets |
42,507 | 32,928 | ||||||
Total current assets |
280,122 | 246,252 | ||||||
Property and equipment, net |
61,859 | 63,147 | ||||||
Goodwill and intangible assets, net |
319,648 | 342,254 | ||||||
Investments in auction-rate securities |
58,205 | 65,214 | ||||||
Other assets |
38,339 | 35,503 | ||||||
Total |
$ | 758,173 | $ | 752,370 | ||||
Liabilities and shareholders equity |
||||||||
Accounts payable and other current liabilities |
$ | 79,754 | $ | 105,599 | ||||
Short-term deferred revenue |
149,181 | 135,786 | ||||||
Total current liabilities |
228,935 | 241,385 | ||||||
Long-term deferred revenue |
5,492 | 7,957 | ||||||
Other liabilities |
15,780 | 21,576 | ||||||
Shareholders equity: |
||||||||
Common stock and additional paid-in capital |
225,958 | 216,261 | ||||||
Retained earnings |
282,008 | 265,191 | ||||||
Total shareholders equity |
507,966 | 481,452 | ||||||
Total |
$ | 758,173 | $ | 752,370 | ||||
Six Months Ended | ||||||||
May 31, | May 31, | |||||||
(In thousands except per share data) | 2009 | 2008 | ||||||
Cash flows from operations: |
||||||||
Net income |
$ | 10,558 | $ | 27,307 | ||||
Depreciation, amortization and other noncash items |
27,754 | 21,568 | ||||||
Other changes in operating assets and liabilities |
(7,284 | ) | (2,044 | ) | ||||
Net cash flows from operations |
31,028 | 46,831 | ||||||
Capital expenditures |
(4,064 | ) | (3,935 | ) | ||||
Investments in auction-rate securities |
5,400 | (71,555 | ) | |||||
Acquisitions, net of cash acquired |
| (5,728 | ) | |||||
Share issuances (repurchases), net |
1,675 | (44,897 | ) | |||||
Other |
(3,833 | ) | (1,215 | ) | ||||
Net change in cash and short-term investments |
30,206 | (80,499 | ) | |||||
Cash and short-term investments, beginning of period |
118,529 | 339,525 | ||||||
Cash and short-term investments, end of period |
$ | 148,735 | $ | 259,026 | ||||
Three Months Ended August 31, 2009 | ||||||||||||
GAAP expectation |
$ | 0.17 | | $ | 0.20 | |||||||
Adjustment to exclude stock-based compensation |
$ | 0.08 | | $ | 0.08 | |||||||
Adjustment to exclude amortization of acquired intangibles |
$ | 0.12 | | $ | 0.12 | |||||||
Adjustment to exclude purchase accounting adjustments
for deferred revenue |
$ | 0.01 | | $ | 0.01 | |||||||
Adjustment to exclude acquisition-related expenses |
$ | 0.00 | | $ | 0.00 | |||||||
Non-GAAP expectation |
$ | 0.38 | | $ | 0.41 | |||||||
Twelve Months Ended November 30, 2009 | ||||||||||||
GAAP expectation |
$ | 0.77 | | $ | 0.86 | |||||||
Adjustment to exclude stock-based compensation |
$ | 0.34 | | $ | 0.35 | |||||||
Adjustment to exclude amortization of acquired intangibles |
$ | 0.47 | | $ | 0.47 | |||||||
Adjustment to exclude purchase accounting adjustments
for deferred revenue |
$ | 0.04 | | $ | 0.04 | |||||||
Adjustment to exclude restructuring expenses |
$ | 0.08 | $ | 0.08 | ||||||||
Adjustment to exclude acquisition-related expenses |
$ | 0.01 | | $ | 0.02 | |||||||
Non-GAAP expectation |
$ | 1.72 | | $ | 1.81 | |||||||