Citrix Reports Third Quarter Earnings Results; Year-over-year Quarterly Revenue Growth of 21%; Diluted Earnings Per Share of $0.23; Adjusted Diluted Earnings Per Share of $0.29.FORT LAUDERDALE Fort Lauderdale (lô`dərdāl), residential, commercial, and resort city (1990 pop. 149,377), seat of Broward co., SE Fla., on the Atlantic coast; settled around a fort built (c.1837) in the Seminole War, inc. 1911. , Fla. -- Citrix Systems Citrix Systems' (NASDAQ: CTXS) is an American technology company, based in Fort Lauderdale, Florida, with subsidiary operations in California and Massachusetts, with additional development centers in Australia, India and the UK. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :CTXS CTXS Citrix Systems (NASDAQ stock ticker symbol) ), the global leader in access infrastructure solutions, today reported financial results for its third quarter of fiscal 2005 ended September September: see month. 30, 2005. Financial Results In the third quarter of fiscal 2005, Citrix (Citrix Systems, Inc., Ft. Lauderdale, FL, www.citrix.com) The leader in access infrastructure solutions, which includes network access, single sign-on, VPN capabilities, presentation services, remote control and remote support applications. achieved revenue of $226.9 million, compared to $187.6 million in the third quarter of fiscal 2004, representing 21 percent revenue growth. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). Results Net income for the third quarter of fiscal 2005 was $41.0 million or $0.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share - which includes a $7.0 million expense charge for in-process research and development associated with the NetScaler acquisition - compared to net income of $38.4 million or $0.22 per diluted share, for the third quarter of fiscal 2004. Non-GAAP Results Net income, adjusted to exclude the effects of amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , amortization of deferred stock-based compensation and in-process research and development, was $52.2 million for the third quarter of fiscal 2005 or $0.29 per diluted share, compared to $42.3 million or $0.24 per diluted share, in the comparable period last year. "Our third quarter results were excellent," said Mark Templeton Mark Templeton (b. 1975) is Principal Trombone of the London Philharmonic Orchestra. Mark studied at the Guildhall School of Music and Drama 1994-1998 with Eric Crees, Simon Wills and Peter Gane. During this time he became principal of the Gustav Mahler Youth Orchestra. , president and chief executive officer for Citrix. "Good momentum drove solid growth in revenue, adjusted earnings per share and cash flow. "We saw strong performance and accelerating momentum from our new products, especially with our online services, gateways and application networking product lines. The results indicate that customers are finding our much broader portfolio of products and services to be the most compelling set of access infrastructure solutions on the market. "We just kicked off the fourth quarter with Citrix iForum, explaining our vision for access to a record number of customers and previewing new technologies and capabilities. The excitement and interest was high, and we look forward to capitalizing on the momentum generated at iForum in the coming quarters." Q3 Financial Summary In reviewing the third quarter results of 2005: --The Americas A·mer·i·cas , the See America. region grew revenue 18 percent; the EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. region grew 14 percent, and the Pacific region grew 11 percent compared to the third quarter of 2004. --Product license revenue increased 10 percent compared to the third quarter of 2004. --Online services contributed $26.2 million of revenue, up 86 percent year over year on a GAAP basis and 63 percent when considering purchase accounting adjustments compared to the third quarter of 2004. --Revenue from license updates grew 20 percent compared to the third quarter of 2004. --Technical services revenue, which is comprised of consulting, education and technical support, grew 30 percent compared to the third quarter of 2004. --Deferred revenue totaled $255 million compared to $202 million in the third quarter of 2004. --Operating margin was 20 percent for the quarter; adjusted operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: was 27 percent for the quarter excluding the effects of amortization of intangible assets, amortization of deferred stock-based compensation, and the write off of in-process research and development related to business combinations. --Cash flow from operations was over $76 million, compared to $62 million in the third quarter of 2004. This brings total trailing twelve months In commerce, the trailing twelve months (TTM) is a moving measurement (for example, an average or a sum) over the 12 previous months, using the most recent data available. Also sometimes known as last twelve months (LTM). cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses to $295 million. --In its stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. activity, the company repurchased 3.4 million shares of its common stock at an average net price per share of $23.99. The company has over $100 million remaining under the current repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. authorization The right or permission to use a system resource; the process of granting access. See access control. . Financial Outlook for Fourth Quarter 2005 Citrix management offers the following guidance for the fourth quarter of 2005. --Net revenue is expected to be in the range of $243 million to $251 million. --Total adjusted operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. are expected to increase 7 percent to 8 percent sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . --GAAP diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of is expected to be in the range of $0.25 to $0.27, and diluted earnings per share adjusted to exclude the effects of amortization of intangible assets and amortization of deferred stock-based compensation is expected to be in the range of $0.30 to $0.32. The above statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and actual results may differ materially. Financial Outlook for Fiscal Year 2005 Citrix management offers the following guidance, which includes the impact of the NetScaler acquisition, for the fiscal year 2005. The company expects net revenue to be in the range of $883 million to $891 million. The company expects GAAP diluted earnings per share to be in the range of $0.85 to $0.87, and adjusted diluted earnings per share to be in the range of $1.10 to $1.12. Adjusted diluted earnings per share excludes the effects of amortization of intangible assets, amortization of deferred stock-based compensation, the write down of in-process research and development and tax provision related to the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign earnings under the American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Jobs Creation Act (AJCA AJCA American Jobs Creation Act of 2004 (US) AJCA American Jersey Cattle Association AJCA Association of Juvenile Compact Administrators AJCA All Japan Cooks Association AJCA Alabama Junior Cattlemen’s Association ). The above statements are based on current expectations. These statements are forward-looking and actual results may differ materially. Company, Product and Alliance Highlights During the third quarter 2005, Citrix: --Received Microsoft's Global ISV (Independent Software Vendor) A person or company that develops software. It implies an organization that specializes in software only and is not part of a computer systems or hardware manufacturer. Partner of the Year Award for 2005. In the three years that Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. has bestowed this award, Citrix won the top honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. in 2003 and 2005, and was a finalist in 2004. --Announced the general availability of Citrix Access Essentials(TM), specifically developed, packaged and priced to bring secure application virtualization A smaller umbrella term within the larger umbrella term of "virtualization." It refers to several techniques that make running applications more protected, more flexible or easier to manage. See virtualization, network virtualization and storage virtualization. and efficient centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. management of information resources (1) The data and information assets of an organization, department or unit. See data administration. (2) Another name for the Information Systems (IS) or Information Technology (IT) department. See IT. within easy reach of small and mid-sized businesses. --Announced powerful new tools in Citrix(R) GoToMeeting GoToMeeting is a Web-hosted service created and marketed by Citrix Online, a division of Citrix Systems. It is remote meeting and desktop sharing software, which means that it enables the user to meet with other computer users via the Internet. (TM) 2.0 for conducting online meetings, training sessions and group presentations with fast, secure and reliable on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front performance. --Completed the acquisition of privately held NetScaler Inc., strengthening Citrix's customer value proposition by improving the performance of any application delivered through the Citrix Access Platform. --Announced the validation See validate. validation - The stage in the software life-cycle at the end of the development process where software is evaluated to ensure that it complies with the requirements. of the integration of Citrix Access Suite(TM) version 4.0 with Oracle's JD Edwards See J.D. Edwards. EnterpriseOne version 8.11. Conference Call Information Citrix will host a conference call today at 4:45 p.m. ET to discuss its financial results, quarterly highlights, and business outlook. The call will include a slide presentation and participants are encouraged to listen to and view the presentation via webcast at http://www.citrix.com/investors. The conference call may also be accessed by dialing: 706-634-0155 or 888-799-0519 using passcode: CITRIX. A replay of the webcast can be viewed by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Citrix corporate Web site at http://www.citrix.com/investors for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. thirty days. In addition, an audio replay of the conference call will be available through October October: see month. 21, 2005, by dialing 800-642-1687 or 706-645-9291 (passcode required: 9780020). About Citrix Citrix Systems, Inc. (Nasdaq:CTXS) is the global leader and most trusted name in on-demand access. More than 160,000 organizations around the world use the Citrix Access Platform to provide the best possible access experience to any application for any user. Citrix customers include 100% of the Fortune 100 companies and 98% of the Fortune Global 500, as well as hundreds of thousands of small businesses and individuals. Citrix has approximately 6,200 channel and alliance partners in more than 100 countries. Citrix annual revenues in 2004 were $741 million. Learn more at http://www.citrix.com. For Citrix Investors This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. which are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements by management, the statements contained in the Financial Outlook for Fourth Quarter 2005, Financial Outlook for Fiscal Year 2005 and in the reconciliation of non-GAAP financial measures to comparable U.S. GAAP measures concerning management's forecast of revenues and earnings per share, statements regarding existing and new products and services, and management's plans, objectives and strategies, constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, including, without limitation, the success of the company's product lines, the company's product concentration and its ability to develop and commercialize new products and services, the success of investments in foreign operations and vertical and geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. markets, the company's ability to successfully integrate the operations and employees of acquired companies, and the possible failure to achieve anticipated revenues and profits from acquisitions, the company's ability to maintain and expand its core business in large enterprise accounts, the company's ability to attract and retain small sized customers, the size, timing and recognition of revenue from significant orders, the effect of new accounting pronouncements on revenue and expense recognition, the company's reliance on and the success of the company's independent distributors and resellers for the marketing and distribution of the company's products and the success of the company's marketing and licensing programs, increased competition, changes in the company's pricing policies or those of its competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. ; management of operations and operating expenses, charges in the event of the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of assets acquired through business combinations and licenses, the management of anticipated future growth and the recruitment recruitment /re·cruit·ment/ (re-krldbomact´ment) 1. the gradual increase to a maximum in a reflex when a stimulus of unaltered intensity is prolonged. 2. and retention of qualified employees, competition and other risks associated with the market for our Web-based access, training and customer assistance products, as well as risks of downturns in economic conditions generally; political and social turmoil, and the uncertainty in the IT spending environment and other risks detailed in the company's filings with the Securities and Exchange Commission. Citrix assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein. Use of Non-GAAP Financial Measures In our earnings release, conference call, slide presentation or webcast, we may use or discuss non-GAAP financial measures as defined by SEC Regulation G. The GAAP financial measure most directly comparable to each non-GAAP financial measure used or discussed and a reconciliation of the differences between each non-GAAP financial measure and the comparable GAAP financial measure are included in this press release after the condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated financial statement Consolidated financial statement A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries. and can be found on the Investor Relations page of the Citrix corporate Web site at http://www.citrix.com/investors. Citrix(R), Citrix Access Suite(TM), Citrix iForum(TM), GoToMeeting(TM) and Citrix Access Essentials(TM) are trademarks of Citrix Systems, Inc. and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. one or more of its subsidiaries, and may be registered in the U.S. Patent and Trademark Office and in other countries. All other trademarks and registered trademarks are property of their respective owners.
CITRIX SYSTEMS, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data - unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
-----------------------------------
Revenues:
Product licenses $97,262 $88,455 $279,304 $263,597
License updates 84,511 70,406 242,141 196,284
Services 45,174 28,717 118,621 67,309
------------------------------------
Total net revenues 226,947 187,578 640,066 527,190
Cost of revenues:
Cost of product license
revenues 4,828 853 8,473 3,022
Cost of services revenues 6,611 4,543 16,521 11,535
Amortization of core and
product technology 4,477 3,379 11,488 10,011
------------------------------------
Total cost of
revenues 15,916 8,775 36,482 24,568
Gross margin 211,031 178,803 603,584 502,622
Operating expenses:
Research and development 27,055 21,832 78,522 63,043
Sales, marketing and support 96,092 82,612 282,521 237,544
General and administrative 31,755 26,142 89,119 78,730
Amortization of other
intangible assets 3,147 1,894 7,538 4,493
Amortization of deferred
stock-based
compensation 1,189 -- 1,386 --
In-process research and
development 7,000 -- 7,000 18,700
------------------------------------
Total operating
expenses 166,238 132,480 466,086 402,510
------------------------------------
Income from operations 44,793 46,323 137,498 100,112
Write-off of deferred debt
issuance costs -- -- -- (7,219)
Other income, net 5,570 3,307 15,641 8,382
------------------------------------
Income before income taxes 50,363 49,630 153,139 101,275
Income taxes 9,410 11,182 45,740 22,027
------------------------------------
Net income $40,953 $38,448 $107,399 $79,248
====================================
Earnings per share - diluted $0.23 $0.22 $0.61 $0.46
====================================
Weighted average shares
outstanding - diluted 178,210 172,870 176,441 173,911
====================================
Adjusted net income $52,240 $42,320 $142,058 $110,524
====================================
Adjusted earnings per share -
diluted $0.29 $0.24 $0.81 $0.64
====================================
Note: See accompanying reconciliation of non-GAAP financial
measures to comparable U.S. GAAP measures (unaudited).
CITRIX SYSTEMS, INC.
Condensed Consolidated Balance Sheets
(In thousands - unaudited)
September 30, December 31,
2005 2004
--------------------------
ASSETS:
Cash and cash equivalents $508,231 $73,485
Short-term investments -- 159,656
Accounts receivable, net 111,130 108,399
Other current assets 75,198 85,040
--------------------------
Total current assets 694,559 426,580
Restricted cash equivalents and
investments 63,742 149,051
Long-term investments 51,347 183,974
Property and equipment, net 70,061 69,281
Goodwill and other intangible assets, net 714,890 448,624
Other long-term assets 19,675 8,574
--------------------------
Total assets $1,614,274 $1,286,084
==========================
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $160,055 $131,287
Current portion of deferred revenues 239,271 210,872
--------------------------
Total current liabilities 399,326 342,159
Long-term debt 75,000 --
Long-term portion of deferred revenues 16,223 14,271
Other liabilities 1,328 4,749
Stockholders' equity 1,122,397 924,905
--------------------------
Total liabilities and stockholders'
equity $1,614,274 $1,286,084
==========================
CITRIX SYSTEMS, INC.
Condensed Consolidated Statement of Cash Flows
(In thousands - unaudited)
Nine Months
Ended September
30, 2005
-------------------
OPERATING ACTIVITIES
Net Income $107,399
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization and depreciation 34,871
Amortization of deferred stock-based
compensation 1,386
In-process research and development 7,000
Provision for accounts receivable allowances 4,144
Tax benefit related to the exercise of non-
statutory stock options and disqualifying
dispositions of incentive stock options 19,306
Other non-cash items (136)
-------------------
Total adjustments to reconcile net
income to net cash provided by
operating
activities 66,571
Changes in operating assets and liabilities:
Accounts receivable 963
Prepaid expenses and other current
assets 3,678
Other assets 211
Deferred tax assets, net (3,475)
Accounts payable and accrued
expenses 17,745
Deferred revenues 24,861
Other liabilities (2,952)
-------------------
Total changes in operating assets
and liabilities 41,031
-------------------
Net cash provided by operating activities 215,001
INVESTING ACTIVITIES
Net proceeds from sales, maturities and purchases
of available-for-sale investments 373,814
Cash paid for acquisition, net of cash acquired (137,770)
Purchases of property and equipment (16,699)
-------------------
Net cash provided by investing activities 219,345
FINANCING ACTIVITIES
Proceeds from issuance of common stock 60,933
Net proceeds from term loan and revolving credit
facility 75,000
Cash paid under stock repurchase programs (135,533)
-------------------
Net cash provided by financing activities 400
-------------------
Change in cash and cash equivalents 434,746
Cash and cash equivalents at beginning of period 73,485
-------------------
Cash and cash equivalents at end of period $508,231
===================
Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures (Unaudited) We utilize certain non-GAAP financial measures to evaluate our performance. We consider these measures important indicators of our success. In addition, Citrix provides these non-GAAP measures of the company's performance to investors to enable them to, among other things, better compare Citrix's most recent results of operations against financial models prepared by the company's investors and securities analysts, and to provide additional information concerning the impact of business acquisitions on Citrix's results of operations. These measures should not be considered an alternative to measurements required by accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("GAAP") such as net income and earnings per share and should not be considered measures of our liquidity. In addition, our non-GAAP financial measures may not be comparable to similar measures reported by other companies. The following tables reconcile non-GAAP financial measures used in this release to the most comparable GAAP measure for the respective periods (in thousands, except for per share information and percentages):
CITRIX SYSTEMS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF INCOME
TO THE NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
Three Months Ended Three Months Ended
September 30, 2005 September 30, 2004
-------------------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
-------------------------------------------------------
Revenues:
Product
licenses $97,262 -- $97,262 $88,455 -- $88,455
License
updates 84,511 -- 84,511 70,406 -- 70,406
Services 45,174 -- 45,174 28,717 -- 28,717
-------------------------------------------------------
Total net
revenues 226,947 -- 226,947 187,578 -- 187,578
Cost of
revenues:
Cost of
product
license
revenues 4,828 -- 4,828 853 -- 853
Cost of
services
revenues 6,611 -- 6,611 4,543 -- 4,543
Amortization
of core and
product
technology 4,477 (4,477)A -- 3,379 (3,379)A --
-------------------------------------------------------
Total cost of
revenues 15,916 (4,477) 11,439 8,775 (3,379) 5,396
Gross margin 211,031 4,477 215,508 178,803 3,379 182,182
Operating
expenses:
Research and
development 27,055 -- 27,055 21,832 -- 21,832
Sales,
marketing
and support 96,092 -- 96,092 82,612 -- 82,612
General and
administrative 31,755 -- 31,755 26,142 -- 26,142
Amortization
of other
intangible
assets 3,147 (3,147)A -- 1,894 (1,894)A --
Amortization
of deferred
stock-based
compensation 1,189 (1,189)B -- -- -- --
In-process
research and
development 7,000 (7,000)C -- -- -- --
-------------------------------------------------------
Total
operating
expenses 166,238 (11,336) 154,902 132,480 (1,894) 130,586
-------------------------------------------------------
Income from
operations 44,793 15,813 60,606 46,323 5,273 51,596
Other income,
net 5,570 -- 5,570 3,307 -- 3,307
-------------------------------------------------------
Income before
income taxes 50,363 15,813 66,176 49,630 5,273 54,903
Income taxes 9,410 4,526D 13,936 11,182 1,401E 12,583
-------------------------------------------------------
Net Income $40,953 11,287 $52,240 $38,448 $3,872 $42,320
=======================================================
Earnings per
common share -
diluted $0.23 $0.06 $0.29 $0.22 $0.02 $0.24
=======================================================
Weighted
average shares
outstanding -
diluted 178,210 178,210 172,870 172,870
=======================================================
A - To exclude the effects of the amortization of core and product
technology and other intangible assets primarily related to business
combinations.
B - To exclude the effect of amortization of deferred stock-based
compensation.
C - To exclude the effect of the write off of in-process research
and development related to business combinations.
D - To exclude the tax effects of amortization of core and product
technology and other intangible assets, the amortization of deferred
stock-based compensation and the write off of in-process research and
development related to business combinations.
E - To exclude the tax effects of amortization of core and product
technology and other intangible assets.
CITRIX SYSTEMS, INC.
RECONCILIATION OF CONDENSED CONSOLIDATED STATEMENTS OF INCOME
TO THE NON-GAAP CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data - unaudited)
Nine Months Ended Nine Months Ended
September 30, 2005 September 30, 2004
----------------------------------------------------------
GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP
----------------------------------------------------------
Revenues:
Product
licenses $279,304 -- $279,304 $263,597 -- $263,597
License
updates 242,141 -- 242,141 196,284 -- 196,284
Services 118,621 -- 118,621 67,309 -- 67,309
----------------------------------------------------------
Total net
revenues 640,066 -- 640,066 527,190 -- 527,190
Cost of
revenues:
Cost of
product
license
revenues 8,473 -- 8,473 3,022 -- 3,022
Cost of
services
revenues 16,521 -- 16,521 11,535 -- 11,535
Amortization
of core and
product
technology 11,488 (11,488)A -- 10,011 (10,011)A --
----------------------------------------------------------
Total cost
of revenues 36,482 (11,488) 24,994 24,568 (10,011) 14,557
Gross margin 603,584 11,488 615,072 502,622 10,011 512,633
Operating
expenses:
Research and
development 78,522 -- 78,522 63,043 -- 63,043
Sales,
marketing
and support 282,521 -- 282,521 237,544 -- 237,544
General and
admini-
strative 89,119 -- 89,119 78,730 -- 78,730
Amortization
of other
intangible
assets 7,538 (7,538)A -- 4,493 (4,493)A --
Amortization
of deferred
stock-based
compensation 1,386 (1,386)B -- -- -- --
In-process
research
and
development 7,000 (7,000)C -- 18,700 (18,700)C --
----------------------------------------------------------
Total
operating
expenses 466,086 (15,924) 450,162 402,510 (23,193) 379,317
----------------------------------------------------------
Income from
operations
Income from
operations 137,498 27,412 164,910 100,112 33,204 133,316
Write-off of
deferred
debt
issuance
costs -- -- -- (7,219) 7,219D --
Other
income, net 15,641 -- 15,641 8,382 -- 8,382
----------------------------------------------------------
Income
before
income
taxes 153,139 27,412 180,551 101,275 40,423 141,698
Income taxes 45,740 (7,247)E 38,493 22,027 9,147F 31,174
----------------------------------------------------------
Net Income $107,399 $34,659 $142,058 $79,248 $31,276 $110,524
==========================================================
Earnings per
common
share -
diluted $0.61 $0.20 $0.81 $0.46 $0.18 $0.64
==========================================================
Weighted
average
shares
outstanding
- diluted 176,441 176,441 173,911 173,911
==========================================================
A - To exclude the effects of the amortization of core and product
technology and other intangible assets primarily related to business
combinations.
B - To exclude the effect of amortization of deferred stock-based
compensation.
C - To exclude the effect of the write-off of in-process research
and development related to business combinations.
D - To exclude the effect of the write-off of deferred debt
issuance costs due to the redemption of the Company's convertible
subordinated debentures.
E - To exclude the tax effect of amortization of core and product
technology and other intangible assets, the amortization of deferred
stock-based compensation, the write-off of in-process research and
development related to business combinations and the tax provision
related to the repatriation of foreign earnings under the AJCA.
F - To exclude the tax effect of amortization of core and product
technology and other intangible assets, the write-off of in-process
research and development related to business combinations and the
write-off of deferred debt issuance costs.
Forward-looking Guidance
for the Three Months Ended December 31, 2005
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Earnings Per Share
Range - Diluted
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U.S. GAAP measure $0.25 to $0.27
Adjustments to exclude the effects of
amortization of intangible assets and
amortization of deferred stock-based
compensation $0.05
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Adjusted figures $0.30 to $0.32
===========================
Forward-looking Guidance
for Fiscal Year Ended December 31, 2005
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Earnings Per Share
Range - Diluted
---------------------------
U.S. GAAP measure $0.85 to $0.87
Adjustments to exclude the effects of
amortization of intangible assets,
amortization of deferred stock-based
compensation, the write-off of in-
process research and development, and
the tax provision related to the
repatriation of foreign earnings
related to the AJCA $0.25
---------------------------
Adjusted figures $1.10 to $1.12
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