Massachusetts (State or other jurisdiction of incorporation or organization) |
04-2746201 (I.R.S. employer identification no.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition | ||||||||
Item 9.01 Financial Statements and Exhibits | ||||||||
SIGNATURES | ||||||||
EX-99.1 Press Release dated, March 20, 2008 |
Item 2.02 | Results of Operations and Financial Condition |
Item 9.01 | Financial Statements and Exhibits |
Date: March 20, 2008 | 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 |
| Progress® Actional® was positioned in the leaders quadrant of the Gartner 2007 Magic Quadrant for Integrated SOA Governance Technology Sets (www.progress.com/actional2007mq). | ||
| Progress Software launched Actional 7.1 comprising unique, new capabilities that position Actional as the industrys only SOA and Web services management product family that can provide unified visibility within existing business process management (BPM) solutions, and beyond the edges of BPM processes into middleware and services. This ability to automatically connect the business process context to the underlying SOA infrastructure is a key requirement of a SOA governance strategy (www.progress.com/actional71). | ||
| Progress Software launches Apama® Smart Order Router (SOR) Accelerator, which advances traders ability to monitor and select trade execution venues and comply with stringent and complex MiFID and Reg NMS best execution requirements from among the many Exchanges, Multi-Lateral Trading Facilities (MTFs) and Dark Liquidity Pools (www.progress.com/apamasor). | ||
| Turquoise, the multi-lateral trading facility (MTF) established by nine leading European investment banks, announced that it has partnered with Progress Software and Detica to deliver a real-time Market Surveillance System. The combination of the Progress Apama Complex Event Processing (CEP) Platform and Deticas market surveillance and trading expertise will deliver a real-time and post-trade market surveillance system that will capture breaches of trading rules, root out market irregularities and develop enhanced trading execution analytics (www.progress.com/turquoise). | ||
| Progress Software released a new version of Progress DataXtend® Semantic Integrator (SI) 8.3. This release will enable Communication Service Providers to more effectively synchronize their disparate and distributed data with new change data capture functionality (www.progress.com/dxsi83). | ||
| Progress Softwares Colleen Smith was recognized as a 2008 CRN Channel Chief; she was chosen for her demonstration of innovative initiatives and accomplishments over the past year (www.progress.com/crnchief). | ||
| Progress Software was recognized for worldwide leadership in the Pure-Play Embedded Database Management Systems Market in an IDC, Worldwide Embedded DBMS 2007-2011 Forecast and 2006 Vendor Shares, Doc # 209653, December 2007 report with the Progress OpenEdge® business application development platform. A strong ISV channel relationship and continuous product development were cited as key contributory factors (www.progress.com/idcleader). | ||
| Progress Software announced the selection of EasyAsk® for Operational Business Intelligence (BI) by South African companies. Nedbank, Europ Assistance, Matrix Vehicle Tracking, and Integrated Healthcare Distribution are extending their use of operational BI using EasyAsk (www.progress.com/southafrica). | ||
| DataDirect Technologies announced the use of DataDirect XQuery® to speed data integration and car crash information lookup by the National Highway Traffic Safety Administration and the Volpe National Transportation Systems Center (Volpe Center), both part of the U.S. Department of Transportation (DOT), to provide automotive |
manufacturers, industry researchers, and the general public access to highway crash information housed in their Electronic Data System (EDS) (www.progress.com/carcrash). |
| Revenue is expected to be in the range of $520 million to $530 million. | ||
| GAAP diluted earnings per share are expected to be in the range of $1.35 to $1.40. | ||
| On a non-GAAP basis, diluted earnings per share are expected to be in the range of $1.92 to $1.97. | ||
| The non-GAAP projections exclude after-tax charges of approximately $13 million (30 cents per share) for stock-based compensation, approximately $11 million (25 cents per share) for amortization of acquired intangibles and an estimate of approximately $1 million (2 cents per share) for professional services fees associated with our ongoing stock option investigation and derivative lawsuits. |
| Revenue is expected to be in the range of $127 million to $129 million. | ||
| GAAP diluted earnings per share are expected to be in the range of 31 cents to 33 cents. | ||
| On a non-GAAP basis, diluted earnings per share are expected to be in the range of 45 cents to 47 cents. | ||
| The non-GAAP projections exclude after-tax charges of approximately $3 million (7 cents per share) for stock-based compensation and $3 million (7 cents per share) for |
amortization of acquired intangibles and professional services fees associated with our ongoing stock option investigation and derivative lawsuits. |
Three Months Ended | ||||||||||||
February 29, | February 28, | Percent | ||||||||||
(In thousands except per share data) | 2008 | 2007 | Change | |||||||||
Revenue: |
||||||||||||
Software licenses |
$ | 45,102 | $ | 44,729 | 1 | % | ||||||
Maintenance and services |
76,465 | 70,500 | 8 | % | ||||||||
Total revenue |
121,567 | 115,229 | 6 | % | ||||||||
Costs of revenue: |
||||||||||||
Cost of software licenses |
2,296 | 1,672 | 37 | % | ||||||||
Cost of maintenance and services |
17,641 | 16,262 | 8 | % | ||||||||
Amortization of purchased technology |
2,673 | 2,491 | 7 | % | ||||||||
Total costs of revenue |
22,610 | 20,425 | 11 | % | ||||||||
Gross profit |
98,957 | 94,804 | 4 | % | ||||||||
Operating expenses: |
||||||||||||
Sales and marketing |
45,842 | 44,645 | 3 | % | ||||||||
Product development |
20,693 | 20,795 | 0 | % | ||||||||
General and administrative |
13,900 | 15,031 | (8) | % | ||||||||
Amortization of other acquired intangibles |
1,374 | 1,980 | ||||||||||
Total operating expenses |
81,809 | 82,451 | (1 | )% | ||||||||
Income from operations |
17,148 | 12,353 | 39 | % | ||||||||
Other income, net |
3,066 | 1,090 | 181 | % | ||||||||
Income before provision for income taxes |
20,214 | 13,443 | 50 | % | ||||||||
Provision for income taxes |
7,378 | 4,705 | 57 | % | ||||||||
Net income |
$ | 12,836 | $ | 8,738 | 47 | % | ||||||
Earnings per share: |
||||||||||||
Basic |
$ | 0.30 | $ | 0.21 | 43 | % | ||||||
Diluted |
$ | 0.29 | $ | 0.20 | 45 | % | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
42,238 | 41,068 | 3 | % | ||||||||
Diluted |
44,174 | 43,437 | 2 | % | ||||||||
Three Months Ended February 29, 2008 | Three Months Ended February 28, 2007 | |||||||||||||||||||||||||||
As | As | Percent | ||||||||||||||||||||||||||
(In thousands except per share data) | Reported | Adjustments | Non-GAAP | Reported | Adjustments | Non-GAAP | Change | |||||||||||||||||||||
Total revenue |
$ | 121,567 | $ | | $ | 121,567 | $ | 115,229 | $ | | $ | 115,229 | 6 | % | ||||||||||||||
Income from operations |
$ | 17,148 | $ | 8,346 | $ | 25,494 | $ | 12,353 | $ | 11,168 | $ | 23,521 | 8 | % | ||||||||||||||
Amortization of acquired intangibles |
(4,047 | ) | 4,047 | | (4,471 | ) | 4,471 | | ||||||||||||||||||||
Stock option investigation (1) |
(329 | ) | 329 | | (1,682 | ) | 1,682 | | ||||||||||||||||||||
Stock-based compensation (2) |
(3,970 | ) | 3,970 | | (5,015 | ) | 5,015 | | ||||||||||||||||||||
Operating margin percentage |
14.1 | % | 21.0 | % | 10.7 | % | 20.4 | % | ||||||||||||||||||||
Other income, net |
$ | 3,066 | $ | | $ | 3,066 | $ | 1,090 | $ | | $ | 1,090 | 181 | % | ||||||||||||||
Effect on provision for income taxes from above adjustments (3) |
$ | 7,378 | $ | 2,618 | $ | 9,996 | $ | 4,705 | $ | 3,663 | $ | 8,368 | 19 | % | ||||||||||||||
Net income |
$ | 12,836 | $ | 5,728 | $ | 18,564 | $ | 8,738 | $ | 7,505 | $ | 16,243 | 14 | % | ||||||||||||||
Earnings per share diluted |
$ | 0.29 | $ | 0.42 | $ | 0.20 | $ | 0.37 | 14 | % | ||||||||||||||||||
Weighted average shares outstanding diluted |
44,174 | 44,174 | 43,437 | 43,437 | 2 | % |
(1) | Stock option investigation expenses are included within general and administrative expenses and primarily represent professional services fees associated with the companys investigation and shareholder derivative lawsuits related to its historical stock option grant practices. | |
(2) | 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 February 29, 2008 | Three Months Ended February 28, 2007 | |||||||||||||||||||||||
GAAP | Adjustments | Non-GAAP | GAAP | Adjustments | Non-GAAP | |||||||||||||||||||
Cost of software licenses |
$ | 22 | $ | (22 | ) | $ | | 31 | $ | (31 | ) | $ | | |||||||||||
Cost of maintenance and services |
267 | (267 | ) | | 357 | (357 | ) | | ||||||||||||||||
Sales and marketing |
1,431 | (1,431 | ) | | 1,847 | (1,847 | ) | | ||||||||||||||||
Product development |
919 | (919 | ) | | 1,151 | (1,151 | ) | | ||||||||||||||||
General and administrative |
1,331 | (1,331 | ) | | 1,629 | (1,629 | ) | | ||||||||||||||||
$ | 3,970 | $ | (3,970 | ) | $ | | $ | 5,015 | $ | (5,015 | ) | $ | | |||||||||||
Amounts primarily represent the fair value of equity awards under SFAS 123R. Stock-base compensation expense for the three months ended February 28, 2007 also includes $0.1 million for the cash settlement of equity awards to former employees for options that were cancelled or expired during the suspension of the issuance of shares under the companys option plans and reimbursements for excise taxes resulting from the exercise of below market options in fiscal 2007. | ||
(3) | The Non-GAAP provision for taxes was calculated reflecting an effective rate of 35% for the three months ended February 29, 2008 and 34% for the three months ended February |
February 29, | November 30, | |||||||
(In thousands) | 2008 | 2007 | ||||||
Assets |
||||||||
Cash and short-term investments |
$ | 224,083 | $ | 339,525 | ||||
Accounts receivable, net |
92,453 | 93,998 | ||||||
Other current assets |
34,563 | 30,900 | ||||||
Total current assets |
351,099 | 464,423 | ||||||
Property and equipment, net |
65,131 | 64,949 | ||||||
Goodwill and intangible assets, net |
212,491 | 208,988 | ||||||
Investments |
95,275 | | ||||||
Other assets |
23,446 | 23,468 | ||||||
Total |
$ | 747,442 | $ | 761,828 | ||||
Liabilities and shareholders equity |
||||||||
Accounts payable and other current liabilities |
$ | 71,902 | $ | 92,983 | ||||
Short-term deferred revenue |
152,441 | 135,487 | ||||||
Total current liabilities |
224,343 | 228,470 | ||||||
Long-term deferred revenue |
10,801 | 11,200 | ||||||
Other liabilities |
10,257 | 4,284 | ||||||
Shareholders equity: |
||||||||
Common stock and additional paid-in capital |
229,416 | 240,647 | ||||||
Retained earnings |
272,625 | 277,227 | ||||||
Total shareholders equity |
502,041 | 517,874 | ||||||
Total |
$ | 747,442 | $ | 761,828 | ||||
Three Months Ended | ||||||||
February 29, | February 28, | |||||||
(In thousands except per share data) | 2008 | 2007 | ||||||
Cash flows from operations: |
||||||||
Net income |
$ | 12,836 | $ | 8,738 | ||||
Depreciation, amortization and other noncash items |
10,618 | 12,022 | ||||||
Other changes in operating assets and liabilities |
(3,642 | ) | (8,510 | ) | ||||
Net cash flows from operations |
19,812 | 12,250 | ||||||
Capital expenditures |
(2,581 | ) | (6,103 | ) | ||||
Investments |
(95,275 | ) | | |||||
Acquisitions, net of cash acquired |
(5,728 | ) | | |||||
Share issuances (repurchases), net |
(34,772 | ) | (13,556 | ) | ||||
Other |
3,102 | (86 | ) | |||||
Net change in cash and short-term investments |
(115,442 | ) | (7,495 | ) | ||||
Cash and short-term investments, beginning of period |
339,525 | 241,315 | ||||||
Cash and short-term investments, end of period |
$ | 224,083 | $ | 233,820 | ||||