Serena Software Reports Second Quarter Fiscal 2006 Results; GAAP EPS of $0.18; Non-GAAP EPS of $0.32; $32 Million Cash Flow From Operations.SAN MATEO San Mateo (săn mətā`ō), city (1990 pop. 85,486), San Mateo co., W Calif., on San Francisco Bay; inc. 1894. It is a commercial and retail center with some high-technology manufacturing. San Mateo, Spanish for St. , Calif. -- In 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 Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. financial table, the Total Stockholders' Equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. in the column with the heading July July: see month. 31, 2005, should read: 274,723 (sted: 274,273). The corrected release reads as follows: SERENA SERENA Steam Explosion Resolution for Nuclear Applications SOFTWARE REPORTS SECOND QUARTER FISCAL 2006 RESULTS; GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. OF $0.18; NON-GAAP EPS OF $0.32; $32 MILLION 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 Serena Software (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 : SRNA sRNA abbr. soluble RNA ), the largest company solely focused on managing change in the IT environment, announced today results for the second quarter ending July 31, 2005. Total revenue was $59.4 million in the second quarter of fiscal 2006 and represented a 14% increase over the second quarter of fiscal 2005. Software license revenue was $18.8 million, maintenance revenue increased to $34.2 million, up 33% year over year and service revenues were $6.4 million for the second quarter of fiscal 2006. License revenue for the second quarter from software change management was 86% of total license revenue and 64% of total license revenue came from distributed systems Distributed systems (computers) A distributed system consists of a collection of autonomous computers linked by a computer network and equipped with distributed system software. platforms. Net income and net income per fully-diluted share computed in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP") for the second quarter of fiscal 2006 increased to $8.5 million and $0.18 from $0.3 million and $0.01 in the same quarter a year ago. Non-GAAP net income and net income 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 for the second quarter of fiscal 2006 increased 24% and 33%, respectively, to $16.5 million and $0.32 from $13.3 million and $0.24 in the second quarter of fiscal 2005. Non-GAAP net income and net income per share exclude 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. and charges relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the purchase accounting adjustments for the acquisition of Merant (MERANT plc, St. Albans, England, www.merant.com) Originally founded as Micro Focus Group in 1976 in the U.K., MERANT is a software and services company focusing on enterprise change management, Web content management and its PVCS products. , stock-based compensation, amortization of acquired technology and other intangible assets, restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , acquisition and other charges, and acquired in-process research and development. For periods prior to the second quarter, reported non-GAAP net income and net income per share also exclude the revenue impact of the deferred maintenance write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. to fair value. A reconciliation of non-GAAP to GAAP financial results is included in this press release. Total cash and equivalents, restricted cash and investments as of July 31, 2005 was $186 million and cash flow from operations for the second quarter was $32 million. Total deferred revenue was $79.8 million. Days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). in the second fiscal quarter were 45 days, representing a 24 day sequential improvement from 69 days in the prior quarter. The Company repurchased 0.7 million shares of its common stock in the open market during the second quarter of fiscal 2006 for an aggregate price of $14.2 million. "I am pleased we achieved the preliminary results we announced earlier this month, including delivering non-GAAP earnings per share within our original guidance," said Mark Woodward, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Our solid profitability and strong cash flows demonstrate the strength of our business model and the satisfaction within our customer base." The Company also announced its financial outlook for the third quarter of fiscal 2006. Third quarter total revenues on a GAAP basis are expected to be in the range of $60 million to $61 million and non-GAAP net income per fully diluted share is expected to be between $0.32 and $0.33. GAAP net income per fully diluted share is expected to be between $0.18 and $0.19. Second Quarter Highlights --Announced powerful new process capabilities in the world's most popular suite for team-based application development. Serena Professional 9 increases visibility and control over the development process and offers enhanced support for regulatory compliance. --Announced that Serena was named to the SD Times 100 for third consecutive year. Serena was recognized for the successful Merant acquisition, propelling pro·pel tr.v. pro·pelled, pro·pel·ling, pro·pels To cause to move forward or onward. See Synonyms at push. [Middle English propellen, from Latin the company to a leadership position in managing change across IT. --Announced that Serena RTM (1) (RealTime Model) Refers to a system or architecture that performs operations in real time. See real time. (2) (Release/Released To M was named the top requirements management The administration and control of the information needs of users. In order to achieve business objectives within an organization via information systems, user requirements must be defined in a consistent manner, prioritized and monitored. solution by Yphise. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Yphise, Serena RTM proved the best requirements management product overall for lowering the cost of application maintenance. --Launched Serena ProcessView software to visualize and prototype business applications, enabling business users and IT to collaborate for faster, more accurate development. --Eclipse Foundation and Serena Software announced the approval of the Eclipse Application Lifecycle Framework Application Lifecycle Framework or ALF is an Open Integration and Interoperability Framework for ALM Tools currently under incubation as one of Eclipse projects. External links
--Demonstrated ProcessView Composer integration with the Microsoft Visual Studio Microsoft Visual Studio is Microsoft's flagship software development product for computer programmers. It centers on an integrated development environment which lets programmers create standalone applications, web sites, web applications, and web services that run on any platforms Team System at TechEd teched adj. Variant of tetched. 2005 in Orlando, Florida The city of Orlando is a major city in central Florida and is the county seat of Orange County, Florida. According to the 2000 census, the city population was 185,951. A 2006 U.S. June June: see month. 5-10, 2005, showing how it enables business users to rapidly visualize application requirements while integrating with VSTS VSTS Visual Studio Team System (Microsoft) VSTS Voice to Skull Transmission VSTS VLF-LF System Test Set to collaborate more effectively with IT architects, developers and testers. --Announced a new single site offering of Serena Collage collage (kəläzh`, kō–) [Fr.,=pasting], technique in art consisting of cutting and pasting natural or manufactured materials to a painted or unpainted surface—hence, a work of art in this medium. , focused on the SMB market See SMB. , making web content management affordable to organizations of any size. GAAP to non-GAAP Reconciliation Serena management evaluates and makes operating decisions using various operating measures. These measures are generally based on the revenues of its product, maintenance and services operations and certain costs of these operations, such as cost of revenues, research and development, sales and marketing and general and administrative expenses. Such measures include non-GAAP net income and non-GAAP net income per share. Collectively, we refer to these non-GAAP financial measures as "non-GAAP measures." We have outlined below the type and scope of the amounts excluded in calculating these non-GAAP measures and the limitations on the use of these non-GAAP measures as a result of these exclusions. These non-GAAP measures are not an alternative to net income as calculated in accordance with GAAP. Investors and potential investors in our securities should not rely on the use of these non-GAAP measures as a substitute for any GAAP financial measure. In addition, our calculation of these non-GAAP measures may or may not be consistent with that of other companies. We strongly urge investors and potential investors to review the reconciliations to the comparable GAAP financial measures that are included below and not to rely on any single financial measure to evaluate our business. Serena views non-GAAP net income and non-GAAP earnings per share as operating performance measures, and as such it believes that the GAAP financial measures most directly comparable to them are net income and net income per share, respectively. Non-GAAP net income and net income per share differ from comparable GAAP measures in that they exclude the amortization of intangible assets and charges relating to the purchase accounting adjustments for the acquisition of Merant, amortization of acquired technology and intangible assets, stock based compensation, restructuring, acquisition and other charges. Management believes it is useful in measuring Serena's operations to exclude amortization of intangible assets and charges relating to the purchase accounting adjustments for the acquisition of Merant because these costs are primarily fixed at the time of the acquisition and generally cannot be changed by management in the short term, or represent significant costs not related to current operations. Non-GAAP net income and non-GAAP earnings per share are helpful in highlighting trends in its core business that may not otherwise be apparent when relying solely on GAAP financial measures, because these non-GAAP measures eliminate from net income financial items that have less bearing on Serena's operating performance. The Merant acquisition was a particularly large acquisition in Serena's history, and management believes the impact of charges relating to the acquisition can make it more difficult to evaluate the trends of Serena's underlying business, including the performance of its products, maintenance and services operations. Serena believes it is useful to investors to see how management separates initial transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). from its view of Serena's current and future continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the . Management also believes that these non GAAP measures facilitate comparison of the current operating performance of the combined Serena and Merant operations to the past performance of Serena and Merant as separate companies, as it permits the comparison of operating results of the separate companies, viewed together, to Serena's current operating results without the impact of charges relating to the acquisition process rather than the underlying operations of the two companies. Serena's management uses these non-GAAP measures as supplemental financial measures to evaluate the performance of Serena's business because, when viewed with Serena's GAAP results and the accompanying reconciliations, it believes they provide a more complete understanding of factors and trends affecting its business than GAAP results alone. Serena uses these measures to make forecasting, budgeting and operating decisions such as establishment of operating targets, budgets and bonus compensation. Serena communicates these non-GAAP measures to the public through its earnings releases because we understand that they are financial measures commonly used by analysts that cover our industry and our investor base to evaluate our performance. For example, based on communications with analysts and investors, Serena understands that some analysts and investors may value companies based on a measure of discounted future cash flows and that Serena's non-GAAP financial measures can be useful to such analysts in performing such valuations. Management believes that presenting these non-GAAP measures provides investors and analysts with an additional base line for assessing the future earnings potential of Serena. Serena prefers to allow investors to have these supplemental measures since, with reconciliation to GAAP, they may provide additional insight into its financial results. Non-GAAP measures should not be considered a substitute for measures of financial performance prepared in accordance with GAAP. Investors are encouraged to look at GAAP results as the best measure of financial performance. For example, amortization of acquired technology and intangible assets are important to consider because they may represent initial expenditures that under GAAP are reported across future fiscal periods. Stock based compensation and restructuring and acquisition related charges are important because they may represent obligations of Serena that should be considered. All of these metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. are important to financial performance generally. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Though Serena management finds its non-GAAP measures useful in evaluating the performance of its business, its reliance on these measures is limited because items excluded from such measures often have a material effect on its net income and net income per share calculated in accordance with GAAP. Management compensates for the above-described limitations of using a non-GAAP measure by using these non-GAAP measures to supplement Serena's GAAP results to provide a more complete understanding of the factors and trends affecting our business. Commentary Available A conference call to discuss the preliminary results is scheduled for 2:00 PM Pacific time today and may be accessed live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.companyboardroom.com or www.serena.com/Q206results. A replay of the call will be available through September September: see month. 1, 2005 by dialing (800) 642-1687 or (706) 645-9291, ID# 8144874. About Serena Software, Inc. Serena Software (NASDAQ: SRNA) is the largest company solely focused on managing change in the IT environment. Serena's products and services automate To turn a set of manual steps into an operation that goes by itself. See automation. process and control change for teams managing development, web content, and IT infrastructure. Based on 25 years of innovation in process and configuration management, Serena's SAFE(TM) solutions enable customers at more than 15,000 sites worldwide, including 98 of the Fortune 100, to improve IT governance Governance makes decisions that define expectations, grant power, or verify performance. It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems. , mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. risks, support regulatory compliance, and boost productivity and
quality. Serena is headquartered in San Mateo, California San Mateo is a city in San Mateo County, California, in the San Francisco Bay Area. It is one of the larger suburbs on the San Francisco Peninsula, located between Burlingame to the north, Foster City to the East, and Belmont to the south. , with offices
throughout the U.S., Europe, and Asia Pacific. For more information,
please visit www.serena.com.This press 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. " under the Private Securities Reform Act of 1995. There can be no assurance that future results will be achieved, and actual results could differ materially from forecasts and estimates. Factors that could cause or contribute to such differences include, but are not limited to, the percentage of license revenue typically closed at the end of each quarter making estimation estimation In mathematics, use of a function or formula to derive a solution or make a prediction. Unlike approximation, it has precise connotations. In statistics, for example, it connotes the careful selection and testing of a function called an estimator. of operating results prior to the end of the quarter extremely uncertain; weak economic conditions worldwide which may continue to affect the overall demand for software and services, which has resulted in and could continue to result in decreased revenues or lower revenue growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. ; our ability to successfully integrate our acquisition of Merant plc.; changes in revenue mix and seasonality; dependence on revenues from our installed base; the expansion of our international organizations; continued demand for additional mainframe MIPS (Million Instructions Per Second) The execution speed of a computer. For example, .5 MIPS is 500,000 instructions per second; 100 MIPS is a hundred million instructions per second. capacity; our ability to complete the assessment of internal controls over financial reporting as of January 31, 2006, as required by Section 404 of the Sarbanes-Oxley Act See SOX. , which may impact market perception of the reliability of our internal controls over financial reporting and thus adversely affect the market price of our common stock; and our ability to manage our growth. Information about potential factors that could affect the Company's financial results is included in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on April 8, 2005 and Form 10-Q Form 10-Q See 10-Q. filed on June 9, 2005. Serena assumes no obligation to update the forward-looking information contained in this press release. Trademarks Serena, TeamTrack, ChangeMan, Comparex and StarTool are registered trademarks of Serena Software Inc. SAFE is a trademark of Serena Software Inc. All other products or company names mentioned are used for identification purposes only, and may be trademarks of their respective owners. (C) 2005 Serena Software, Inc. All Rights Reserved.
SERENA Software, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited GAAP)
Three Months Ended Six Months Ended
July 31, July 31,
----------------- ------------------
2005 2004 2005 2004
-------- -------- -------- ---------
Revenue:
Software licenses $18,821 $19,416 $ 40,999 $ 35,256
Maintenance 34,218 25,732 67,214 40,497
Professional services 6,366 6,812 12,501 9,949
------- ------- -------- ---------
Total revenue 59,405 51,960 120,714 85,702
------- ------- -------- ---------
Cost of revenue:
Software licenses 919 1,025 1,522 1,351
Maintenance 3,267 3,151 6,687 4,714
Professional services 6,113 6,259 11,959 9,048
Amortization of acquired
technology 4,379 3,932 8,546 5,977
Stock-based compensation 7 14 21 15
-------- ------- -------- ---------
Total cost of revenue 14,685 14,381 28,735 21,105
------- ------- -------- ---------
Gross profit 44,720 37,579 91,979 64,597
------- ------- -------- ---------
Operating expenses:
Sales and marketing 16,694 18,131 34,472 27,488
Research and development 8,563 8,875 17,419 13,824
General and administrative 4,233 4,963 8,864 7,011
Stock-based compensation 352 223 567 240
Amortization of intangible
assets 2,582 2,986 5,396 3,936
Acquired in-process research
and development -- -- -- 10,400
Restructuring, acquisition
and other charges -- 1,556 -- 1,766
------- ------- -------- ---------
Total operating expenses 32,424 36,734 66,718 64,665
------- ------- -------- ---------
Operating income (loss) 12,296 845 25,261 (68)
Interest income 1,378 728 2,490 2,043
Interest expense (825) (825) (1,650) (1,650)
Amortization of debt issuance costs (335) (335) (670) (796)
------- ------- -------- ---------
Income (loss) before income
taxes 12,514 413 25,431 (471)
Income taxes 4,029 157 8,809 3,547
------- ------- -------- ---------
Net income (loss) $ 8,485 $ 256 $ 16,622 ($ 4,018)
======= ======= ======== =========
Net income (loss) per share:
Basic $ 0.21 $ 0.01 $ 0.40 ($ 0.10)
======= ======= ======== =========
Diluted $ 0.18 $ 0.01 $ 0.34 ($ 0.10)
======= ======= ======== =========
Weighted average shares used in
per share calculations:
Basic 41,165 43,955 41,445 41,413
======= ======= ======== =========
Diluted 51,758 43,955 52,273 41,413
======= ======= ======== =========
Net income (loss) $ 8,485 $ 256 $ 6,622 ($ 4,018)
After tax adjustment of
convertible related expenses 697 N/A 1,396 N/A
------- ------- -------- ---------
Adjusted net income (loss) for
diluted net income (loss) per
share calculation $ 9,182 $ 256 $ 18,018 ($ 4,018)
======= ======= ======== =========
Serena Software, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited GAAP)
July 31, January 31,
2005 2005
-------- --------
Assets
Current assets
Cash and cash equivalents $ 88,330 $133,330
Restricted cash 3,300 3,300
Short-term investments 43,232 16,778
Accounts receivable, net 29,876 40,988
Deferred taxes 12,267 12,267
Prepaid expenses and other current assets 6,130 4,964
-------- --------
Total current assets 183,135 211,627
Long-term investments 49,228 39,095
Restricted cash, non-current 1,565 3,157
Property and equipment, net 5,765 5,722
Goodwill, net 326,350 323,671
Other intangible assets, net 100,855 107,790
Other assets 3,397 4,057
-------- --------
Total assets $670,295 $695,119
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,948 $ 3,415
Income taxes payable 32,364 27,667
Accrued expenses 20,417 26,103
Accrued interest on subordinated notes 413 413
Deferred revenue 66,972 63,152
-------- --------
Total current liabilities 122,114 120,750
Deferred revenue, net of current portion 12,829 13,110
Long-term liabilities 2,321 2,660
Deferred taxes 38,308 40,983
Subordinated notes 220,000 220,000
-------- --------
Total liabilities 395,572 397,503
Stockholders' equity:
Total stockholders' equity 274,723 297,616
-------- --------
Total liabilities and stockholders'
equity $670,295 $695,119
======== ========
The following table reconciles the GAAP financial measures to
Non-GAAP:
Three Months Ended Six Months Ended
July 31, July 31,
----------------- -------------------
2005 2004 2005 2004
------- ------- ------- ---------
GAAP net income (loss) $ 8,485 $ 256 $16,622 ($ 4,018)
Amortization of acquired
technology, intangible assets
and stock based compensation 7,320 7,155 14,529 10,168
Acquired in-process research
and development -- -- -- 10,400
Revenue impact of deferred
maintenance write-down,
net of tax -- 4,233 953 4,637
Restructuring and acquisition
charges, net of tax -- 964 -- 1,099
-------- -------- -------- ---------
Non-GAAP net income 15,805 12,609 32,104 22,285
Add back:
After tax adjustment of
convertible related expenses 697 694 1,396 1,464
------- ------- ------- ---------
Non-GAAP net income for
purposes of computing
fully diluted EPS $16,502 $13,303 $33,500 $ 23,749
======= ======= ======= =========
Fully diluted shares
outstanding 51,758 54,539 52,273 52,078
======= ======= ======= =========
Non-GAAP net income per fully
diluted share $ 0.32 $ 0.24 $ 0.64 $ 0.46
======= ======= ======= =========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion