UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
Date of Report (Date of earliest event reported): March 16, 2004
Progress Software Corporation
Commission file number: 0-19417
Massachusetts (State or other jurisdiction of incorporation or organization) |
04-2746201 (I.R.S. employer identification no.) |
| 14 Oak Park Bedford, Massachusetts 01730 (Address of principal executive offices, including zip code) |
(781) 280-4000
(Registrant’s telephone number, including area code)
Item 7. Financial Statements and Exhibits
(c) Exhibits
The exhibit listed below is being furnished with this Form 8-K.
| Exhibit | ||||||||
| Number |
Description |
|||||||
99.1 |
Press Release dated March 16, 2004. | |||||||
Item 12. Results of Operations and Financial Condition
On March 16, 2004, Progress Software Corporation (the Company) announced via press release the Company’s financial results for the first quarter ended February 29, 2004. A copy of the Company’s press release is attached as Exhibit 99.1. This Form 8-K, the information contained herein, and the attached exhibit are furnished under Item 12 of Form 8-K and are furnished to, but not filed with, the SEC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: March 16, 2004 | Progress Software Corporation | ||||
| By: | /s/ Norman R. Robertson | ||||
| Senior Vice President, Finance and Administration and Chief Financial Officer |
|||||
FOR IMMEDIATE RELEASE
Press Contacts: |
||
Candace
Clemens Progress Software Corporation (781) 280-4101 cclemens@progress.com |
Sarah Conway Schwartz Communications, Inc. (781) 684-0770 progress@schwartz-pr.com |
|
PROGRESS SOFTWARE REPORTS FIRST QUARTER RESULTS
Revenue Increases 20 Percent to an All-Time High
BEDFORD, Mass., March 16, 2004—Progress Software Corporation (Nasdaq: PRGS), a supplier of leading technology to develop, deploy, integrate and manage business applications, today announced results for its first quarter ended February 29, 2004. Revenue for the quarter was a record $86.4 million, up 20 percent (11 percent at constant currency) from $71.8 million in the first quarter of 2003. Software license revenue increased 33 percent (24 percent at constant currency) to $33.9 million from $25.5 million in the same quarter last year.
On a generally accepted accounting principles (GAAP) basis, operating income increased 20 percent to $6.3 million from $5.3 million in the first quarter of fiscal 2003. Net income increased 9 percent to $4.6 million from $4.2 million in the same quarter last year. Diluted earnings per share were 12 cents per share, the same as in the first quarter of 2003. The results for the first quarter of fiscal 2004 included an after-tax charge of $1.8 million for in-process research and development related to the acquisition of DataDirect Technologies and an after-tax charge of $1.1 million for amortization of purchased intangibles. The results for the first quarter of fiscal 2003 included an after-tax charge of $0.1 million for in-process research and development related to the acquisition of eXcelon Corporation and an after-tax charge of $0.3 for amortization of purchased intangibles.
On a pro forma basis, operating income increased 77 percent to $10.5 million from $5.9 million in the same quarter last year. Pro forma net income increased 59 percent to $7.5 million from $4.7 million in the same quarter last year and pro forma diluted earnings per share increased 46 percent to 19 cents per share from 13 cents in the first quarter of fiscal 2003. The pro forma results for each quarter presented exclude amortization of purchased intangibles and acquisition-related charges for in-process research and development.
The company’s cash and short-term investments at the end of the quarter totaled $149 million. During the first quarter, the company purchased approximately 46,000 shares of its stock at a cost of $1.0 million. The company’s existing repurchase authorization, under which 9.9 million shares remain available for repurchase, expires on September 30, 2004.
“Progress Software continues to significantly outperform other major software companies, and we have demonstrated our ability to rapidly integrate new operations and leverage our growth to deliver greater operating margins and sharply increased pro forma operating income, net income and EPS,” said Joseph W. Alsop, co-founder and chief executive officer of Progress Software Corporation (PSC). “We not only saw a significant revenue contribution from our new DataDirect Technologies operation, but the Progress Company, Sonic Software and ObjectStore all demonstrated solid revenue increases.”
New Customers and Partners
Highlights include recent adoption of PSC technology, and solutions based on PSC
technology, by new customers and partners including: Battens Solicitors,
Chick-fil-A, Inc., El Dante SA, Enraf BV, First Command Financial Services,
General Parts, Groupe Go Sport, Intersperse, Inc., Interwoven, Jireh Metal
Products, Kilroy Invest, Kypera Systems Africa (Pty), Lawson Software, Minacs
Worldwide, Movaris, Novalab Oy, Prologic, Record Rent A Car, Snowdrop Systems,
Vertex, Vivo Stockholm and Wuppermann Datenservice.
Other Recent Highlights
PSC announced the completion of the DataDirect acquisition.
http://phx.corporate-ir.net/phoenix.zhtml?c=86919&p=IROL-NRText&t=Regular&id=480278&
The Progress Company announced the release of Progress® OpenEdge™ 10, the
foundation for its component-based approach to building distributed applications
for Service Oriented Architectures (SOA).
http://www.progress.com/company_info/news_views/pressrelease_207195/pritem.ssp?
Prebon Yamane, a premier broker for worldwide financial institutions, selected
SonicMQ® as its global messaging infrastructure.
http://www.sonicsoftware.com/news_events/press/pressitem/pressrelease_192543/index.ssp?
PeerDirect Corporation announced PeerDirect™ Remote Office, a product suite
that provides independent software vendors (ISVs) and enterprise IT departments
with the ability to build applications and deploy data directly to remote
offices while synchronized and managed from a single data center.
http://www.peerdirect.com/news/pressitem/pressrelease_196663/index.ssp?
ObjectStore announced the first EPC-compliant database technology for Radio
Frequency Identification (RFID).
http://www.progress.com/company_info/news_views/pressrelease_188974/pritem.ssp?
DataDirect Technologies’ SupportLink Technical Support Program won the NorthFace
Award for customer service for the third year in a row.
http://www.datadirect.com/news/releases/20040224.asp
Business Outlook
The company is providing the following guidance for the fiscal second quarter
ending May 31, 2004:
| • | Revenue is expected to be in the range of $88 million to $90 million. GAAP operating income is expected to be in the range of $10 million to $11 million, including amortization of purchased intangibles of $1.9 million. | |||
| • | GAAP diluted earnings per share are expected to be in the range of 19 cents to 20 cents. | |||
| • | On a pro forma basis, operating income is expected to be in the range of $11.9 million to $12.9 million excluding amortization of purchased intangibles of $1.9 million. | |||
| • | On a pro forma basis, diluted earnings per share are expected to be in the range of 22 cents to 23 cents excluding approximately 3 cents per share for amortization of purchased intangibles. | |||
The company is providing the following guidance for the fiscal year ended November 30, 2004:
| • | Revenue is expected to be in the range of $360 million to $365 million. GAAP operating income is expected to be in the range of $40 million to $43 million, including amortization of purchased intangibles of $7.1 million and in-process research and development of $2.6 million. | |||
| • | GAAP diluted earnings per share are expected to be in the range of 73 cents to 76 cents. | |||
| • | On a pro forma basis, operating income is expected to be in the range of $49.7 million to $52.7 million excluding amortization of purchased intangibles of $7.1 million and in-process research and development of $2.6 million. | |||
| • | On a pro forma basis, diluted earnings per share are expected to be in the range of 90 cents to 93 cents excluding approximately 12 cents per share for amortization of purchased intangibles and approximately 5 cents per share for an acquisition-related charge for in-process research and development. | |||
Legal Notice Regarding Pro Forma Financial Information
The company provides pro forma operating income, net income and earnings per
share as additional information for investors. These measures are not in
accordance with, or an alternative to, generally accepted accounting principles
in the United States (GAAP). Such measures are intended to supplement GAAP and
may be different from pro forma measures used by other companies. The company
believes that the pro forma results described in this release are useful for an
understanding of its ongoing operations and provide additional detail and an
alternative method of assessing its operating results. Management of the company
uses these pro forma results to compare the company’s performance to that of
prior periods for analysis of trends, and for budget and planning purposes. A
reconciliation of pro forma adjustments to the company’s GAAP financial results
is included in the tables below.
Conference Call
PSC’s conference call to discuss its first quarter results will be Webcast live
today at 9:00 a.m. Eastern via CCBN on the company’s Web site, located at
www.progress.com/investors. The call will also be Webcast live via Yahoo
(www.yahoo.com), Motley Fool (www.fool.com), Streetevents
(www.streetevents.com), TD Waterhouse (www.tdwaterhouse.com) and Fidelity.com
(www.fidelity.com). An archived version of the conference call will be available
for replay.
About Progress Software Corporation
Progress Software Corporation (PSC) (Nasdaq: PRGS) supplies industry-leading
technologies for all aspects of the development, deployment, integration and
management of business applications. PSC, headquartered in Bedford, MA, operates
through the Progress Company, Sonic Software Corporation, DataDirect
Technologies, ObjectStore and PeerDirect Corporation. PSC can be reached at
www.progress.com or +1-781-280-4000.
###
Safe Harbor Statement
Except for the historical information and discussions contained herein,
statements contained in this release may constitute “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements involve a number of risks, uncertainties and other factors that
could cause actual results to differ materially, including but not limited to
the following: the receipt and shipment of new orders, the timely release of
enhancements to the company’s products, the growth rates of certain market
segments, the positioning of the company’s products in those market segments,
variations in the demand for customer service and technical support, pricing
pressures and the competitive environment in the software industry, business and
consumer use of the Internet, and the company’s ability to penetrate
international markets and manage its international operations. The company
undertakes no obligation to update information contained in this release. For
further information regarding risks and uncertainties associated with the
company’s business, please refer to the company’s filings with the Securities
and Exchange Commission.
Progress and OpenEdge are trademarks or registered trademarks of Progress Software Corporation in the U.S. and other countries. SonicMQ is a registered trademark of Sonic Software Corporation in the U.S. and other countries. PeerDirect is a trademark or registered trademark of PeerDirect Corporation in the U.S. and Canada. Any other trademarks or service marks contained herein are the property of their respective owners.
Progress Software Corporation
Condensed Consolidated Statements of Income
| Three Months Ended | ||||||||||||
| February 29, | February 28, | Percent | ||||||||||
| (In thousands except per share data) | 2004 | 2003 | Change | |||||||||
Revenue: |
||||||||||||
Software licenses |
$ | 33,895 | $ | 25,454 | 33 | % | ||||||
Maintenance and services |
52,480 | 46,368 | 13 | % | ||||||||
Total revenue |
86,375 | 71,822 | 20 | % | ||||||||
Costs and expenses: |
||||||||||||
Cost of software licenses |
2,592 | 2,163 | ||||||||||
Cost of maintenance and services |
12,826 | 13,117 | ||||||||||
Sales and marketing |
36,180 | 29,231 | ||||||||||
Product development |
14,609 | 12,458 | ||||||||||
General and administrative |
9,676 | 8,913 | ||||||||||
Amortization of purchased intangibles |
1,559 | 478 | ||||||||||
In-process research and development |
2,600 | 200 | ||||||||||
Total costs and expenses |
80,042 | 66,560 | 20 | % | ||||||||
Income from operations |
6,333 | 5,262 | 20 | % | ||||||||
Other income, net |
392 | 792 | ||||||||||
Income before provision for income taxes |
6,725 | 6,054 | 11 | % | ||||||||
Provision for income taxes |
2,085 | 1,816 | ||||||||||
Net income |
$ | 4,640 | $ | 4,238 | 9 | % | ||||||
Earnings per share: |
||||||||||||
Basic |
$ | 0.13 | $ | 0.13 | 0 | % | ||||||
Diluted |
$ | 0.12 | $ | 0.12 | 0 | % | ||||||
Weighted average shares outstanding: |
||||||||||||
Basic |
35,644 | 33,411 | 7 | % | ||||||||
Diluted |
38,955 | 35,576 | 9 | % | ||||||||
Pro Forma Condensed Consolidated Statements of Income
| Three Months Ended February 29, 2004 |
Three Months Ended February 28, 2003 |
|||||||||||||||||||||||||||
| As | Pro Forma | As | Pro Forma | Percent | ||||||||||||||||||||||||
| (In thousands except per share data) | Reported | Adjustments | Pro Forma | Reported | Adjustments | Pro Forma | Change | |||||||||||||||||||||
Revenue: |
||||||||||||||||||||||||||||
Software licenses |
$ | 33,895 | $ | 33,895 | $ | 25,454 | $ | 25,454 | 33 | % | ||||||||||||||||||
Maintenance and services |
52,480 | 52,480 | 46,368 | 46,368 | 13 | % | ||||||||||||||||||||||
Total revenue |
86,375 | 86,375 | 71,822 | 71,822 | 20 | % | ||||||||||||||||||||||
Costs and expenses: |
||||||||||||||||||||||||||||
Cost of software licenses |
2,592 | 2,592 | 2,163 | 2,163 | ||||||||||||||||||||||||
Cost of maintenance and services |
12,826 | 12,826 | 13,117 | 13,117 | ||||||||||||||||||||||||
Sales and marketing |
36,180 | 36,180 | 29,231 | 29,231 | ||||||||||||||||||||||||
Product development |
14,609 | 14,609 | 12,458 | 12,458 | ||||||||||||||||||||||||
General and administrative |
9,676 | 9,676 | 8,913 | 8,913 | ||||||||||||||||||||||||
Amortization of purchased intangibles |
1,559 | $ | (1,559 | ) | — | 478 | $ | (478 | ) | — | ||||||||||||||||||
In-process research and development |
2,600 | (2,600 | ) | — | 200 | (200 | ) | — | ||||||||||||||||||||
Total costs and expenses |
80,042 | (4,159 | ) | 75,883 | 66,560 | (678 | ) | 65,882 | 15 | % | ||||||||||||||||||
Income from operations |
6,333 | 4,159 | 10,492 | 5,262 | 678 | 5,940 | 77 | % | ||||||||||||||||||||
Other income, net |
392 | 392 | 792 | 792 | ||||||||||||||||||||||||
Income before provision for income taxes |
6,725 | 4,159 | 10,884 | 6,054 | 678 | 6,732 | 62 | % | ||||||||||||||||||||
Provision for income taxes |
2,085 | 1,289 | 3,374 | 1,816 | 203 | 2,019 | ||||||||||||||||||||||
Net income |
$ | 4,640 | $ | 2,870 | $ | 7,510 | $ | 4,238 | $ | 475 | $ | 4,713 | 59 | % | ||||||||||||||
Earnings per share: |
||||||||||||||||||||||||||||
Basic |
$ | 0.13 | $ | 0.21 | $ | 0.13 | $ | 0.14 | 50 | % | ||||||||||||||||||
Diluted |
$ | 0.12 | $ | 0.19 | $ | 0.12 | $ | 0.13 | 46 | % | ||||||||||||||||||
Weighted average shares outstanding: |
||||||||||||||||||||||||||||
Basic |
35,644 | 35,644 | 33,411 | 33,411 | 7 | % | ||||||||||||||||||||||
Diluted |
38,955 | 38,955 | 35,576 | 35,576 | 9 | % | ||||||||||||||||||||||
Progress Software Corporation
Condensed Consolidated Balance Sheets
| February 29, | November 30, | |||||||
| (In thousands) | 2004 | 2003 | ||||||
Assets |
||||||||
Cash and short-term investments |
$ | 148,787 | $ | 219,131 | ||||
Accounts receivable, net |
66,112 | 52,065 | ||||||
Other current assets |
25,539 | 22,534 | ||||||
Total current assets |
240,438 | 293,730 | ||||||
Property and equipment, net |
36,123 | 35,572 | ||||||
Goodwill and intangible assets, net |
103,083 | 21,530 | ||||||
Other assets |
17,205 | 16,938 | ||||||
Total |
$ | 396,849 | $ | 367,770 | ||||
Liabilities and shareholders’ equity |
||||||||
Accounts payable and other current liabilities |
$ | 57,038 | $ | 63,115 | ||||
Deferred revenue |
105,972 | 82,614 | ||||||
Total current liabilities |
163,010 | 145,729 | ||||||
Shareholders’ equity: |
||||||||
Common stock and additional paid-in capital |
60,616 | 53,102 | ||||||
Retained earnings |
173,223 | 168,939 | ||||||
Total shareholders’ equity |
233,839 | 222,041 | ||||||
Total |
$ | 396,849 | $ | 367,770 | ||||
Condensed Consolidated Statements of Cash Flows
| Three Months Ended |
||||||||
| February 29, | November 30, | |||||||
| (In thousands except per share data) | 2004 | 2003 | ||||||
Cash flows from operations: |
||||||||
Net income |
$ | 4,640 | $ | 4,238 | ||||
Depreciation, amortization and other noncash charges |
6,751 | 3,134 | ||||||
Other changes in operating assets and liabilities |
1,932 | 10,592 | ||||||
Net cash flows from operations |
13,323 | 17,964 | ||||||
Capital expenditures |
(2,071 | ) | (1,066 | ) | ||||
Acquisitions, net of cash acquired |
(87,520 | ) | (25,164 | ) | ||||
Stock issuances (buybacks), net |
5,178 | (698 | ) | |||||
Other |
746 | 540 | ||||||
Net change in cash and short-term investments |
(70,344 | ) | (8,424 | ) | ||||
Cash and short-term investments, beginning of period |
219,131 | 177,193 | ||||||
Cash and short-term investments, end of period |
$ | 148,787 | $ | 168,769 | ||||
